2019 (12) TMI 389 - AT - Central Excise

Principles of Natural Justice - demand of Excise duty alongwith penalties - the original authority had dropped the proceedings for want of appreciable evidence to sustain the allegations in the SCN - HELD THAT - In the light of the extensive scrutiny of the claim of retraction, silence on the part of the first appellate authority in countering the claim made by the appellants before him is not an appropriate response. The veracity of the various documents submitted by the appellant, as well as the claim of the statements having been retracted, can be decided only at the level of the appropriate authority - There is no doubt that the Tribunal, in the absence of any empowerment to remand, had ordered the first appellate authority to issue an order on merit. His lack of wherewithal to render a finding on the other aspects submitted before him cannot be held to discredit the said order. The direction appears to have, even though only superficially, been complied with. Matter remanded back to the original authority with a direction to consider the various submissions and ascertain the extent to which those can counter the allegations in the show cause notice - appeal allowed by way of remand.

Issues Involved:
1. Breach of principles of natural justice.
2. Validity of the impugned order confirming levy of duty and imposing penalties.
3. Sufficiency and credibility of evidence, including statements and documents.
4. Authority and power to remand the matter.
5. Allegations of clandestine removal and related penalties.

Detailed Analysis:

1. Breach of Principles of Natural Justice:
The appellants, M/s Nashik Metal Pvt Ltd and Shri Mahendra S Tank, argued that the breach of principles of natural justice affected the validity of the impugned order. They contended that the retraction of statements by Shri Farukh Shaikh and Shri MS Tank was ignored by the first appellate authority during the denovo proceedings. The Tribunal noted that the original authority had dropped the proceedings due to insufficient evidence and the non-acceptability of statements during cross-examination. The first appellate authority, however, had remanded the matter back to the original authority, which was beyond its statutory power.

2. Validity of the Impugned Order Confirming Levy of Duty and Imposing Penalties:
The impugned order confirmed the levy of duty and imposed various penalties based on the appeal by Revenue against the original authority's decision to drop the proceedings. The Tribunal found that the first appellate authority placed overwhelming reliance on the non-acceptability of the claim of retraction, which was a significant factor in setting aside the original authority's order.

3. Sufficiency and Credibility of Evidence, Including Statements and Documents:
The Tribunal scrutinized the evidence presented, including the statements of Shri Farukh Shaikh and Shri MS Tank, and the documents recovered during the investigation. The first appellate authority relied on these statements and documents to confirm the allegations of clandestine removal. The Tribunal observed that the retraction of statements was not tendered before the competent authority and subsequent statements did not mention the retraction, casting suspicion on the retraction claims. The Tribunal also noted that the payment of Central Excise duty by NSPL before the statement of MST was recorded indicated an acceptance of guilt.

4. Authority and Power to Remand the Matter:
The Tribunal held that the first appellate authority did not have the statutory power to remand the matter back to the original authority. The Tribunal had previously directed the Commissioner (Appeals) to decide the matter based on the available evidence. The Tribunal emphasized that the veracity of the documents and the claim of retraction could only be decided at the level of the appropriate authority.

5. Allegations of Clandestine Removal and Related Penalties:
The Tribunal found that the department had concrete evidence against the respondents to prove clandestine removal of goods. The statements of FS and MST, corroborated by the seized diaries and other records, supported the allegations. The Tribunal noted that the retractions were more of an afterthought and did not detract from the value of the initial confessional statements. The Tribunal also highlighted that the payment of duty by NSPL before the recording of MST's statement further indicated guilt.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter back to the original authority with directions to consider the various submissions and ascertain the extent to which those can counter the allegations in the show cause notice. The Tribunal emphasized the need to comply with the principles of natural justice and directed the original authority to conduct an appropriate test of ascertainment of the submissions made by the appellants. The appeals were accordingly remanded.

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