2016 (2) TMI 641 - AT - Central Excise

Application for settlement - Rejection of application on the preliminary ground of ineligibility in terms of Section 32E(1) of Central Excise Act, 1932 (non obtaining of Central Excise Registration) - Held that - It will be fit and proper for the original authority to examine the case afresh with the appellants defense in respect of second SCN dated 16.04.2004. This is necessary as there was no defense for the appellants during the original proceedings and the appellants made elaborate submissions on facts covering among other things- duty calculation based on correct MRP on the seized goods, eligibility of cenvat credit based on documents now submitted and their eligibility to SSI exemption for own products as well as branded products. These aspects require examination of all the documents now being first time submitted by the appellants in appeal. Here, we take note of the submissions by the Ld. AR that the matter is already 10 years old and all the records and documents which were part of investigation were already made available to the appellants at the time of original adjudication proceedings itself. Hence, the appellants may be given specific time limit to furnish their defense so that the adjudication could be completed expeditiously. The Ld. Counsel for the appellants submitted that they are in possession of all the relevant records and the reply along with supporting evidence will be submitted within 4 weeks.

Summary

Issues:
1. Initiation of proceedings based on search and subsequent investigation.
2. Two separate Show Cause Notices (SCNs) issued.
3. Appeal against the order dated 25.11.2005.
4. Appellants' plea to approach Settlement Commission.
5. Lack of detailed written reply for the second SCN.
6. Rejection of settlement application.
7. Examination of appellants' defense in respect of the second SCN.
8. Requirement for the original authority to examine the case afresh.
9. Time limit for the submission of defense by the appellants.
10. Decision on the appeals by way of remand to the original authority.

Analysis:
The judgment revolves around three appeals where proceedings were initiated against the appellants following a search and investigation by Central Excise officers. Two separate SCNs were issued, one dealing with ceased goods and the other with duty demand for the period 2000-2001. The appeals were directed against the order dated 25.11.2005. The appellants expressed interest in approaching the Settlement Commission for closure of the case, citing a gap of over 3 years between the SCNs. However, the adjudication proceedings concluded before they could do so, leading to the lack of a detailed written reply and their inability to attend the personal hearing.

The Ld. Commissioner considered the records on file due to the appellants not availing the opportunity for a personal hearing, resulting in the order under appeal. The Tribunal noted the rejection of the appellants' settlement application on the grounds of ineligibility. It was observed that the Original Authority did not have detailed submissions or oral hearings from the appellants to consider all issues properly. The appellants subsequently filed an application for settlement, which was rejected based on non-compliance with the Central Excise Act.

In light of the above, the Tribunal deemed it appropriate for the original authority to re-examine the case with the appellants' defense regarding the second SCN from 16.04.2004. The appellants were directed to provide their defense within a specific time frame to expedite the adjudication process. The appeals were allowed by way of remand to the original authority, with a directive to decide the case afresh, preferably within 3 months. The appellants were instructed to cooperate with the proceedings without seeking unnecessary adjournments.