2018 (12) TMI 1027 - AT - Central Excise

Clandestine removal - CTD bars - utilization of raw materials, i.e. MS ingots obtained from their suppliers - principles of natural justice - Held that - The findings stand vitiated owing to the breach of the mandatory requirement of adjudication proceedings. Consequently, the show cause notice is required to be adjudicated afresh - the matter remanded back to the original authority with the direction that the submissions made by the appellants in personal hearing - appeal allowed by way of remand.

Summary

Issues:
1. Duty liability on finished goods of 'CTD bars' alleged to have been clandestinely produced and cleared.
2. Imposition of penalties under section 11AC of the Central Excise Act, 1944 and rule 26 of Central Excise Rules, 2002.
3. Allegation of utilization of raw materials without records.
4. Non-appearance of the appellant-company during proceedings.
5. Disregard of justifications for high fuel and electricity consumption.
6. Lack of personal hearing for one of the appellants.
7. Breach of principles of natural justice by the adjudicating authority.

Analysis:
The case involves two appeals challenging an order confirming duty liability on clandestinely produced 'CTD bars' and imposing penalties under the Central Excise Act. The primary allegation is the unauthorized utilization of raw materials without proper records, leading to duty liability and penalties. The adjudicating authority, based on voluntary statements, found that goods received were not accounted for and removed without recording production, justifying duty imposition. The appellant-company did not appear during proceedings, while one appellant lacked a personal hearing, raising concerns about natural justice principles.

The appellant contested the allegations by citing high fuel and electricity consumption justifications, which were disregarded by the adjudicating authority. The authority's dismissal of these justifications as unconvincing, without proper examination, was criticized for not considering common industry practices. Additionally, the lack of personal hearing for one appellant, with reliance on previous submissions, violated natural justice principles. The judgment highlighted these procedural irregularities, leading to the setting aside of the impugned order and remanding the case for fresh adjudication. The direction emphasized the need for a fair hearing, consideration of submissions, and review of records to ensure a proper decision in compliance with natural justice principles.