2017 (11) TMI 646 - AT - Central Excise

Waste - clearances of fibres in the guise of waste - whether the appellant, in the garb of waste have been clearing the finished products? - natural justice - Held that - the learned Commissioner has failed to present the witnesses of revenue, the statements of which have been relied, for cross-examination - also, learned Commissioner has failed to exercise the jurisdiction vested on him to ensure the attendance of witnesses in the course of adjudication proceedings - under the provisions of law all the powers of a Civil Court are vested in the adjudicating authority in ensuring the attendance of witness, which we find from the findings on record, have not been resorted to. Thus the order is vitiated for failure to exercise jurisdiction vested in the learned Commissioner - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Whether the appellant was clearing finished products under the guise of waste.
2. Whether the principles of natural justice were violated by denying cross-examination of witnesses.
3. Whether the show cause notice was barred by limitation.

Issue-wise Detailed Analysis:

1. Clearing Finished Products as Waste:
The core issue in the appeal was whether the appellant was evading excise duty by clearing finished products, specifically Polyester Fibre/tow, under the guise of uncut-crimped waste. The revenue alleged that the appellant removed 4,19,418.00 Kg of tow without paying appropriate excise duty, using invalid gate passes, and suppressed production of 23,464.8 Kg of polyester fibre, evading duty amounting to ?1,42,67,764.60 and ?84,15,521.12 respectively. The revenue's inquiries suggested that the appellant consigned polyester fibre/tow to various firms at low prices, which were then sold at higher prices without any processing, indicating that the goods were not waste but finished products used for manufacturing blended yarn. The appellant's defense was that the goods were indeed waste, and the entire show cause notice was barred by limitation.

2. Violation of Principles of Natural Justice:
The appellant contended that their right to cross-examine the witnesses, whose statements were relied upon by the revenue, was denied, violating the principles of natural justice. The Supreme Court had earlier directed that if the Collector intended to rely on any witness statements, the appellant should be given an opportunity for cross-examination. Despite multiple remands by the Tribunal and the Supreme Court’s direction, the Commissioner failed to produce the witnesses for cross-examination. The Commissioner claimed efforts were made to locate the witnesses, but they were untraceable due to the passage of time. The Tribunal found that the Commissioner did not exercise the full extent of his powers to ensure the witnesses' attendance, rendering the order unsustainable.

3. Barred by Limitation:
The appellant argued that the show cause notice issued on 03/07/1978 was barred by limitation since the impugned period was from 14th August 1973 to 29th November 1977. At the time of issuance, the limitation period was six months, which was increased from three months effective from 06/08/1977. The appellant claimed that due to the physical control system and appropriate declarations filed under Rule 173B, no case of suppression or clandestine removal was made out. The Tribunal did not conclusively address the limitation issue, leaving it open for future determination.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order on the grounds that the Commissioner failed to comply with the Supreme Court and Tribunal's directions to provide an opportunity for cross-examination of the witnesses. The Tribunal found that the Commissioner did not fully exercise his jurisdiction to ensure the witnesses' attendance, thus violating the principles of natural justice. The question of limitation was left open for future consideration.

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