2018 (11) TMI 65 - AT - Central Excise

Principles of natural justice - SSI Exemption - crossing of threshold limit - the value of clearance of all excisable goods had exceeded the prescribed limit of ₹ 3 crores during the previous year - N/N. 08/2003-CE, as amended - Held that - The court below have erred in not granting adequate opportunity of hearing to the appellant. After the receipt of the report of Deputy Commissioner, the Additional Commissioner have not given any opportunity to the appellant nor made them aware with such a report which has been collected behind the back of the appellant. The impugned order is bad, in violation of the principles of natural Justice and accordingly fit to be set aside - matter remnaded back to the file of the Adjudicating Authority to re-adjudicate the show cause notice after providing a copy of the said report of the Deputy Commissioner of Central Excise Division-III, Kanpur - appeal allowed by way of remand.

Summary

Issues:
1. Eligibility for SSI exemption under Notification No. 06/2002-CE and Notification No.08/2003-CE.
2. Allegation of wrongful exemption from duty.
3. Invocation of extended period of limitation under Section 11A(1).
4. Penalty imposition on the Director under Rule 26 of CER, 2002.
5. Adequate opportunity of hearing to the appellant.

Analysis:

1. The appellant, engaged in manufacturing 'PARAS' brand products, was found to have exceeded the prescribed limit for duty exemption under Notification No. 06/2002-CE. The Revenue contended that the turnover, including exempted goods, surpassed the SSI exemption limit, thereby disqualifying the appellant from the exemption under Notification No.08/2003-CE. Consequently, duty was levied on the clearances of 'PARAS' brand products.

2. The Revenue alleged that the appellant wrongfully availed exemption from duty on certain products, leading to the invocation of Section 11A(1) for an extended period of limitation. The appellant's declaration regarding the exemption was scrutinized, and discrepancies were noted, suggesting false information provided by the appellant.

3. The appellant contested the show cause notice, arguing against the invocation of the extended period of limitation due to the submission of a declaration in the prescribed format. However, the Deputy Commissioner reported that the appellant had not submitted any such declaration, contradicting the appellant's claims. This discrepancy led to the confirmation of the proposed demands.

4. The Adjudicating Authority confirmed the demands and imposed penalties on the appellant, including the Director, under Rule 26 of CER, 2002. The matter was appealed before the Commissioner (appeals), who upheld the decision on the company but set aside the penalty on the Director.

5. Upon further appeal before the Tribunal, it was observed that the appellant was not granted adequate opportunity of hearing, as crucial reports were collected without their knowledge. Citing the principles of natural justice, the Tribunal set aside the impugned order and remanded the matter back to the Adjudicating Authority for re-adjudication after providing the necessary reports to the appellant and ensuring a fair hearing.

In conclusion, the Tribunal allowed the appeal by way of remand, emphasizing the importance of procedural fairness and the right to be heard in matters of taxation and duty exemptions.