2002 (1) TMI 177 - AT - Central Excise

Summary

Issues involved: Alleged evasion of duty, liability to confiscation of seized goods, liability to penalty on manufacturers and traders, denial of natural justice in inspection and cross-examination of octroi registers.

Summary:

1. The appellant processed grey fabrics and discrepancies were found in gate passes indicating evasion of duty. Statements of involved parties confirmed irregularities.

2. Investigations revealed deliberate discrepancies in lot registers under instructions of a Director. Statements and records from octroi naka supported the show cause notice.

3. Show cause notices issued for duty evasion, confiscation of goods, and penalties. Orders passed by Collector were challenged by the processing house and sales depot.

4. Counsel argued that confiscation and penalties were not permissible under the law at the material time. Alleged violations of natural justice were raised regarding inspection and cross-examination.

5. Reference to legal judgments emphasizing the right to present a case and cross-examine witnesses. Counsel cited cases to support the argument of lack of hard evidence.

6. Revenue supported the Collector's order.

7. Rival submissions and case law were considered.

8. Orders of confiscation and penalties were set aside due to lacuna in the law at the material time.

9. Basis of duty demand challenged, emphasizing the need for inspection and cross-examination of octroi registers.

10. Octroi register not seized by Excise authorities, making the request for inspection baseless.

11. Assessees did not attempt to verify entries leading to evasion allegations.

12. Cross-examination of octroi register authors deemed impractical due to staff rotation and multiple entry points.

13. Despite lack of octroi records, admissions by Excise Clerk and involved parties corroborated evasion claims.

14. Traders confirmed receiving processed fabrics without duty payment, supporting the evasion allegations.

15. Sufficient corroboration found beyond octroi records, making cited judgments irrelevant.

16. Distinction made from Supreme Court judgment due to the nature of the case.

17. Cross-examination of certain dealers not mandatory in all cases as per Tribunal judgments.

18. Irrelevance of certain judgments to the proceedings.

19. Arguments made for further reduction in confirmed duty amount accepted.

20. Orders of penalty imposition and confiscation set aside, matter remanded for fresh quantification of duty evasion.

21. Appeals allowed partly, with specific directions for further proceedings.