2023 (12) TMI 300 - AT - Central Excise

Clandestine removal - facts not verified properly - violation of principles of natural justice - HELD THAT - It is seen that in the year 1996-97 itself, the appellant has made more than 15 clearances under DSL. Similarly in respect of exports through others while the Adjudicating Authority has considered only two shipping Bills/Invoices, the Appellant has given the details of nine clearances during 1999-98 and 21 clearances during the period 1998-99. For each of these Invoices, the Appellant has also enclosed the relevant Shipping Bill, E-Way Bill/Bill of Lading and other documentary evidence. This shows that the Adjudicating Authority has not gone through all the documentary evidence properly before coming to his conclusion. The entire proceedings have been taken up on the basis of the turnover shown by the Appellant in their Profit Loss Account and Balance Sheet. When the Appellant provides the proof that turnover also consists of direct exports and exports through merchant exporters along with the documentary evidence, it is the duty of the Adjudicating Authority to get these facts properly verified and to give a detailed findings as to why the documentary evidence submitted would not be sufficient to prove their exports, if he intends to confirm demand. As the matter pertains to 1996-97 and 1997-98 and denovo adjudication was to be taken up in 2008, much better and larger efforts should have been made by the Adjudicating Authority to follow the principles of natural justice and to get proper verification done, which has not been done in this case - Appeal allowed by way of remand.

Summary

Issues Involved:
The issues involved in the judgment are the remand of the matter to the Adjudicating Authority, proper verification of documentary evidence, consideration of SSI exemption claim, and verification of inflated income figures for better credit facilities.

Remand to Adjudicating Authority:
The Tribunal remanded the matter to the Adjudicating Authority with specific directions for proper verification of detailed documentary evidence provided by the Appellant. The Adjudicating Authority was instructed to thoroughly examine the invoices, shipping bills, and other linked documents to make a detailed determination. Additionally, the claim for Small Scale Industry (SSI) exemption was to be properly considered, and a detailed order was required on this aspect as well.

Verification of Documentary Evidence:
The Appellant had submitted extensive documentary evidence, including details of direct exports, exports through merchant exporters, and sales of manufactured goods. However, the Adjudicating Authority failed to adequately review all the submitted documents before confirming the demand. The Tribunal noted discrepancies between the evidence provided by the Appellant and the Adjudicating Authority's findings, emphasizing the need for a thorough verification process to establish the accuracy of the turnover figures.

Consideration of SSI Exemption Claim:
The Appellant had also sought Small Scale Industry (SSI) exemption for certain turnover amounts applicable during the relevant period. Despite the Appellant's submission of detailed year-wise, invoice-wise, and item-wise information to support their claim, the Adjudicating Authority did not appropriately address this aspect. The Tribunal directed the Adjudicating Authority to carefully review the SSI exemption claim and issue a detailed order in this regard.

Verification of Inflated Income Figures:
The Tribunal directed the Adjudicating Authority to investigate the Appellant's claim of inflating income figures for better credit facilities. While acknowledging that this practice was not legally correct, the Tribunal recognized its prevalence among firms seeking improved loan facilities. The Appellant was instructed to provide specific details on the inflated figures in their balance sheets, with all relevant documents to be scrutinized by the Adjudicating Authority. A detailed order on this issue was deemed necessary for a comprehensive resolution of the case.