2019 (4) TMI 437 - HC - Central Excise

Clandestine removal - fly ash bricks containing 48.2% of ESP dust by weight - appellants were alleged to have manufactured fly ash bricks and not ESP dust bricks - suppression of facts or not - extended period of limitation - Held that - The issue as to whether the appellants are entitled to concessional duty rate or exemption under Notification No. 5/2009-C.E. has been dealt with by the Tribunal in its order dated 9-2-2017 by substituting para 4 of its previous order dated 29-9-2016 by leaving it on the jurisdictional authority to verify the accounts maintained by the appellants and on fulfilment of such conditions for exemption under the subject notification, exemption available shall be extended to the appellants. The appellants have admittedly neither maintained any record nor filed any return even though they were selling goods as fly ash bricks, therefore, extended period of limitation in terms of Section 11A of the Act has rightly been invoked. The present is a case of wilful evasion of duty. Denial of cross-examination of chemical examiner whose report has been used against them - Held that - At this stage, it would be appropriate to refer to the appellants reply to the show cause notice (Annexure-A/4) stating that the report of chemical examiner is not on record, therefore, copy of the same may be provided to them. This itself makes it apparent that the department has not relied on the chemical examiner s report, therefore, there was no question of affording the appellants an opportunity to cross-examine the chemical examiner. The Schedule forming part of profit and loss accounts of the appellants for the period ending on 31-3-2005 and 31-3-2006 would refer to the items sold during the period specifically mentioning sales of fly ash bricks . Thus the appellants themselves were treating the bricks manufactured by them as fly ash bricks and not ESP dust bricks. Similar is the situation with the accounts ending on 31-3-2007. All the substantial questions of law are answered against the appellants - Appeal dismissed.

Summary

Issues Involved:
1. Classification of product as "Fly Ash Bricks" for central excise duty assessment.
2. Bar of limitation under Section 11A of the Central Excise Act, 1944.
3. Denial of opportunity for cross-examination of the chemical examiner.
4. Reliability of findings against the Assessee regarding the nature of the material.

Classification of Product - "Fly Ash Bricks":
The case involved the manufacture and clearance of fly ash bricks containing ESP dust without payment of central excise duty. The Revenue alleged that the appellants manufactured fly ash bricks and not ESP dust bricks, leading to a demand for duty, interest, and penalty. The Commissioner found that since the appellants sold bricks as "Fly Ash Bricks" containing fly ash, they were liable for duty. The Tribunal affirmed this decision, noting the appellants' admission of selling bricks as fly ash bricks with more than 48% fly ash content. The appellants argued that they produced ESP dust bricks, but their own admissions and commercial invoices contradicted this claim.

Bar of Limitation under Section 11A:
The Revenue invoked the extended period of limitation under Section 11A, alleging suppression of material facts by the appellants to evade duty payment. The Commissioner's order highlighted the lack of proper accounts or monthly returns regarding the use of fly ash, justifying the invocation of the extended limitation period. The Tribunal upheld this decision, deeming it a case of willful duty evasion.

Denial of Cross-Examination Opportunity:
The appellants contended that they were denied the right to cross-examine the chemical examiner, whose report was used against them. However, the adjudicating authority's order revealed that the adverse findings were based on the appellants' own admission of the fly ash content in the bricks they manufactured. As the decision was not reliant on the chemical examiner's report, the denial of cross-examination was deemed unwarranted. The appellants' admission in their replies and accounting records further supported the classification of the bricks as fly ash bricks.

Reliability of Findings Against the Assessee:
The judgment emphasized that the findings against the Assessee regarding the nature of the material were based on their own admissions and not solely on the chemical examiner's report. The Tribunal's decision was upheld, stating that the appellants' admission of selling fly ash bricks, coupled with the lack of proper records, justified the imposition of duty and penalty. The judgment referenced a Supreme Court case to support the invocation of the extended limitation period due to non-disclosure and non-payment of duty by the appellants.

In conclusion, all substantial questions of law were answered against the appellants, leading to the dismissal of the Appeals for lack of merit.