2017 (1) TMI 1022 - HC - Central Excise

Manufacture of calcined alumina by heating process - only in the year 1995, appellant obtained power connection from the Tamil Nadu Electricity Board and then only, it was possible for them to manufacture calcined alumina of green bars and prior to that, they do not have any such facility. However, the Original Authority went on presumption that the respondent/assessee would have used alternative sources of power to produce the calcined alumina of green bars and the said findings are only surmises and conjunctions - Held that - unfortunately, no materials made available to the Original Authority to reach such conclusion. Freight charges - Held that - the freight charges were paid only on the basis of number of boxes and not on the basis of weighment and the freight bill would also evidence the said fact and as such, the Revenue cannot draw a presumption as to the unit rate of freight. The Tribunal further found that the yellow bars are used first for rubbing the polishing and then, the green bars are used and it was in the ratio of 5 1 (5 yellow bars and 1 green bar) and the statements of the dealers recorded during the cross-examination would also substantiate the said fact. The tribunal has rightly reached the conclusion that the material aspect have not been properly appreciated by the Original Authority and rightly remanded the matter once again to the Original Authority for fresh adjudication. As rightly contended by the learned Counsel for the respondent / assessee, but for the entertainment of this appeal, the Original Authority would have passed the order long back, after remand, but the fact remains that on account of the pendency of this matter for nearly 11 years, it could not be done so. Therefore, the substantial questions of law raised by the appellant / revenue are answered in negative - appeal dismissed.

Summary

Issues Involved:
1. Tribunal's decision to remand the case for denova adjudication.
2. Application of Evidence Act by the Tribunal.
3. Rejection of lower authority's decision by the Tribunal regarding the production and utilization of calcined alumina in the manufacture of Green Bars.

Analysis:

Issue 1: Tribunal's decision to remand the case for denova adjudication
The Revenue challenged the order of remand by the Customs, Excise & Service Tax Appellate Tribunal, Southern Region Bench, Chennai. The appellant argued that the Commissioner of Central Excise had thoroughly addressed the factual aspects in the original order, especially concerning the manufacture of calcined alumina and clandestine removal of goods. The appellant contended that the Tribunal should not have interfered with these findings. However, the respondent argued that the Tribunal rightfully remanded the case as evidence suggested that the respondent started manufacturing calcined alumina of green bars only after obtaining a power connection in 1995. The respondent also highlighted the ratio of 5:1 for yellow and green bars, supported by statements from dealers. The High Court agreed with the Tribunal's decision, noting the lack of evidence from the Revenue to prove production before 1995 and the relevance of dealer statements in determining the usage ratio.

Issue 2: Application of Evidence Act by the Tribunal
The appellant questioned the Tribunal's adherence to the Evidence Act instead of the concept of preponderance of probabilities. However, the respondent argued that the Tribunal correctly relied on evidence, such as statements from dealers, to establish the usage ratio of yellow and green bars. The High Court supported the Tribunal's approach, emphasizing the importance of considering all available evidence in reaching a decision. The Court found that the Tribunal's decision was justified based on the evidence presented.

Issue 3: Rejection of lower authority's decision by the Tribunal
The Tribunal rejected the lower authority's decision regarding the production and utilization of calcined alumina in the manufacture of Green Bars. The appellant contended that the lower authority's findings should have been upheld. However, the respondent argued that the lower authority made assumptions without concrete evidence, whereas the Tribunal considered statements and documents related to the illicit clearance of Green Bars before January 1995. The High Court agreed with the Tribunal's decision, emphasizing the importance of evidence and dealer statements in assessing the case. The Court upheld the Tribunal's remand for fresh adjudication by the Original Authority.

In conclusion, the High Court dismissed the appeal, confirming the Tribunal's decision to remand the case for further adjudication. The Court found that the Tribunal's analysis of the evidence and the lack of material from the Revenue supported the remand order. The judgment highlighted the significance of evidence and dealer statements in determining the usage ratio of yellow and green bars, ultimately upholding the Tribunal's decision.