2015 (7) TMI 964 - SC - Central Excise

Clandestine removal of goods - Undervaluation of goods - second show cause notice on the same cause of action - Held that - On the statement of respondent No.5 given earlier, the adjudicating authority had dropped the proceedings accepting the explanation furnished. In view thereof, the CESTAT has held that there could not have been second show cause notice on the same cause of action. In this behalf we do not find any error in the order passed by the CESTAT. Adjudicating authority had studied not only the evidence but also discussed the same in the show cause notice. He found that even when those particulars and materials which are against the respondent No.1 as disclosed in the show cause notice, the respondent No.1 said nothing in defence. This is precisely the reason given by the adjudicating authority in confirming the demand. Thus, we do not agree with the findings of the CESTAT that adjudicating authority has not given any reasons or discussed the evidence. When there was no repetition of the material and the evidence mentioned in the show cause notice by the respondent No.1 it was not necessary to discuss the same on that account and this course was adopted by the adjudicating authority, and rightly so, to avoid repetition. Thus, insofar as the issue of under-valuation is concerned, we find substance in these appeals and to that extent order of the CESTAT is contrary to law and is accordingly set aside. - Decided partly in favour of Revenue.

Summary

Issues:
1. Clandestine removal of goods.
2. Under-valuation of goods.

Clandestine Removal of Goods:
The Assistant Commissioner issued a show cause notice to the respondent for clandestine removal of goods and undervaluation. The adjudicating authority confirmed a demand for both issues and imposed penalties. The Commissioner's order was challenged before CESTAT, which allowed the appeals filed by the respondent and dismissed the Revenue's appeal. The Revenue appealed to the Supreme Court, contesting the CESTAT's decision. The Court found that since the adjudicating authority had dropped proceedings based on a statement from respondent No.5, issuing a second show cause notice on the same cause of action was not justified. The Court upheld the CESTAT's decision on this issue.

Under-Valuation of Goods:
Regarding the under-valuation issue, the CESTAT set aside the adjudicating authority's order, citing a lack of findings or evidence discussion to support the demand confirmation. The Court examined the adjudicating authority's order and found that it had discussed evidence and reasons for confirming the demand. The authority noted that the respondent did not provide any defense against the under-valuation allegations. The Court disagreed with the CESTAT, stating that there was no need for the authority to repeat the evidence mentioned in the show cause notice when the respondent did not address it. Therefore, the Court concluded that the CESTAT's decision was contrary to the law and set it aside, dismissing the demand confirmed by the adjudicating authority for under-valuation. The appeals were allowed on this issue.

In conclusion, the Supreme Court upheld the CESTAT's decision on the issue of clandestine removal of goods but set aside the CESTAT's decision on the under-valuation issue. The Court dismissed the demand confirmed by the adjudicating authority for under-valuation, finding that the authority had provided sufficient reasons and evidence for its decision, and the respondent's failure to address the evidence justified the confirmation of the demand.