2017 (12) TMI 1303 - AT - Central Excise

Clandestine removal - principles of natural justice - Held that - Since, the department has not specified as to the particular entry or particular page or entry in such movement register, which relates to the transaction particulars of the appellant, it can be concluded that the appellant was not in a position to effectively present its case. The goods were removed from the factory of the appellant at Bhiwadi to its depot at Delhi under the cover of ST-39 forms prescribed under the Sales Tax Laws. Such documents have also not been verified by the department for confirming the adjudged demand against the appellant - the impugned order has been passed in gross violation of the principles of natural justice - matter remanded back to the original authority for passing a detailed speaking/reasoned order with regard to the issues involved in this case - appeal allowed by way of remand.

Summary

Issues:
Confirmation of Central Excise duty demand, imposition of penalties, confiscation of goods, violation of principles of natural justice.

Analysis:

Confirmation of Central Excise Duty Demand:
The appellant appealed against the order confirming a Central Excise duty demand of ?30,83,056.45 along with penalties and confiscation of goods. The appellant argued that since the goods were removed from the factory on payment of duty and sold to customers, no further duty demand should be confirmed. The appellant also contended that the confiscated goods were not seized from its premises, and no statements were recorded regarding any clandestine removal. The appellant highlighted that the department solely relied on movement registers from a Sales Tax Check Post, which did not correlate properly with the appellant's transactions. The Tribunal found that the department's reliance on these movement registers was unjustified as they were not part of the show cause notice, leading to a violation of natural justice principles.

Confiscation of Goods:
The appellant emphasized that the goods were removed from its factory to a depot under proper documentation, yet the department proceeded with confiscation based on incomplete evidence. The Tribunal noted that the department failed to verify the ST-39 forms used for the goods' movement, indicating a lack of thorough investigation. The Tribunal concluded that the confiscation and duty demand confirmation lacked proper substantiation and violated the appellant's right to present a robust defense.

Violation of Principles of Natural Justice:
The Tribunal observed that the department's actions, based on incomplete and unverified documents, infringed upon the principles of natural justice. The Tribunal set aside the impugned order and remanded the matter to the original authority for a detailed, reasoned decision. The Tribunal directed the original authority to provide the appellant with a personal hearing and consider all submissions before issuing a new order. This remand was deemed necessary to ensure a fair and just determination of the issues involved, in accordance with the principles of natural justice.

In conclusion, the Tribunal allowed the appeal by remanding the case back to the adjudicating authority for a proper fact-finding process and a comprehensive decision on the issues raised. The appellant's right to a fair hearing and a thorough examination of the evidence was underscored, emphasizing the importance of upholding procedural fairness and natural justice in legal proceedings.