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TMI Blog2016 (8) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, and exceeded in his jurisdiction, the Tribunal passed an order, impugned before us, elaborating, as to how, adjudication has to be done, with reference to the aspect of clandestine removal of raw materials, which in our considered opinion, is jurisdictionally erroneous. On the facts and circumstances of the case, we hold that the directions issued by the appellate authority and that of the Tribunal, run contrary to the principle of "no reformatio in peius". Decided partly in favor of appellant with direction of re-adjudicate the issue to the limited extent. - C.M.A.No.1160 of 2016, C.M.P.No.8765 of 2016 - - - Dated:- 15-7-2016 - S. Manikumar And D. Krishna Kumar, JJ. For the Appellant : Mr. K. Jayachandran For the Respondent : Mr. A. P. Srinivas JUDGMENT ( Judgement of this Court was made by S. Manikumar, J. ) Civil Miscellaneous Appeal is directed against the order of the Customs Excise and Service Tax Appellate Tribunal, Chennai, dated 04.02.2016, in Final Order No.40315 of 2016 in Appeal No.E/42574/2013-SM, of the assessee, by which, the Tribunal has remanded the matter to the Adjudicating Authority, with certain observations and directions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and for other reasons, stated in the reply. 5. The appellant has further submitted that the Additional Commissioner of Central Excise, Puducherry/adjudicating authority, has passed an Order-in-Original No.48 of 2011, dated 29.09.2011, by which, he has categorically held that 36 loose slips, alone cannot be sufficient to prove clandestine removal of raw materials and therefore, restricted the demand only to the shortage noticed by the officers. Consequently, the adjudicating authority has passed an order to demand a sum of ₹ 7,60,135/- from Unit I of the appellant and a further sum of ₹ 1,61,490/- from Unit II. He has also imposed penalty and interest. Under protest, the appellant has paid the abovesaid amount. 6. Being aggrieved by the Order-in-Original No.48/2011, dated 29.09.2011, passed by the Additional Commissioner of Central Excise, Puducherry, the appellant has preferred an appeal in Appeal No.23/2013 (P), to the Commissioner of Central Excise (Appeals) and by order, dated 03.12.2013, the first appellate authority, while confirming the order of the adjudicating authority, has remanded the matter to the adjudicating authority, to reconsider dropping of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed finality and which did not form the subject matter of appeal before the first respondent appellate authority 8. Mr.K.Jayachandran, learned counsel for the appellant submitted that the entire proceedings against the appellant were made on the basis of stock verification on 15.07.2008 and 16.07.2008, in Units I and II, respectively; the stock was not properly verified, and the re-conciliation statement filed by the appellant was not at all considered. He further submitted that the first appellate authority and Tribunal, have acted beyond the scope of the appeal and exceeded in their jurisdiction, especially, when there was no appeal by the department, against the Order-in-Original No.48/2011, dated 29.09.2011. 9. Mr.K.Jayachandran, learned counsel for the appellant further submitted that the appellant cannot be put in a worse position, on their appeal, in the absence of any appeal or cross objection by the department. He further submitted that when the appellant has approached the appellate authority to redress his grievance, on the aspect of shortage of raw materials only, and not on the alleged clandestine removal of raw materials, which allegation has been found, as n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval of goods and therefore, the said aspect, forms part of the subject matter of the remand and therefore, there is no illegality in the impugned order, warranting interference. He further added that unless the aspect of clandestine removal, which resulted in shortage of raw-materials, is adjudged on the materials, as directed by the appellate authority and Tribunal, adjudication would not be conclusive. Heard the learned counsel for the parties and perused the materials available on record. 14. On the above rival contentions, this Court frames the following substantial question of law, (1) Whether the appellate authority has exceeded in its jurisdiction, in acting beyond the scope of the appeal, filed by the assessee and thus, erred in remanding the matter to the adjudicating authority, on the aspect of alleged clandestine removal of raw-materials, in the absence of the department filing any appeal, against the finding recorded against the revenue or cross-objections, in the appeal, filed by the assessee? (2) Whether the Tribunal has failed to advert to the erroneous exercise of jurisdiction by the appellate authority? 15. Let us consider, as to how, the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion to the effect that the said slips were used for clearance of cenvated inputs. Ultimately, while recording the findings on the disputed facts, the adjudicating authority, at Paragraphs 14 to 18, held as follows: 14. From the above findings, I find that there was no ambiguity in stock taking by the officers and the assessees have not come out with any concrete evidence to prove that stock taking by the officers was not proper, i also find that the entire stock taking was done in the presence of the authorized signatory of the assessees and the Mahazars were drawn in their presence. In view of the above, the shortage of 118329.8 kgs of raw material at Unit-I and 975.65 Kgs of raw materials (granules), 25 Kgs. of Master Batch and 57600 Nos. of oven sacks and fabrics (all inputs) at Unit-II are proved beyond any doubt. 15. Regarding 36 loose slips seized from the security office room, I find that there is no clinching documentary evidences found during the course of investigation of the case to corroborate the clandestine removal of raw materials from SPL Unit-I to Unit II and to M/s. Sandeep Industries. 16. The statements obtained from the security person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prejudice to the action initiated under these Show Cause Notices and such action under the above Rule will, therefore, not vitiate the present proceedings. Thus, on the aspect of alleged clandestine removal of raw materials, the adjudicating authority, vide order, dated 29.09.2011, has categorically held that the documents, stated supra, are not sufficient to prove clandestine removal of raw materials, from Unit I to Unit II of the appellant and therefore, the adjudicating authority has held that the allegation of clandestine removal fails. 16. When the appellant was aggrieved over the demand, on shortage of raw-materials and assailed the correctness of the Order-in-Original No.48 of 2011, dated 29.09.2011, on the grounds, stated in the memorandum of grounds of appeal, in Order-in-Appeal No.23 of 2013 (P), the appellate authority, vide order, dated 03.12.2013, while confirming the demand of duty of ₹ 7,60,135/- on shortage of raw-materials, has passed further orders. Paragraphs 14 (iv) to (vi), in the appeal, which adversely affect the interest of the appellant, are extracted hereunder: (iv) The decision of dropping part of the demand without proper explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal authority, for the shortage of raw materials noticed, which includes, allegation of clandestine removal of raw materials, the finding of the original authority against the revenue, on the latter, is clear. When the department has not chosen to challenge the finding of the original authority, on the allegation of clandestine removal of raw materials nor filed any cross-objection to the appeal filed by the assessee, we are of the view that the finding rendered, by the original authority, in favour of the assessee, has reached finality. 20. In such circumstances, there cannot be any order, by the appellate authority, adversely affecting the interest of the assessee, in the appeal filed by the assessee. Thus, the directions of the appellate authority, in Appeal No.23/2013 (P), dated 03.12.2013, Paragraphs 14 (iv) to (vi), are certainly beyond the scope of the appeal, and thus, as rightly contended by the learned counsel for the appellant that the appellate authority has exceeded in his jurisdiction, in exercise of powers, under Section 35-A of the Central Excise Act, 1944. 21. Now, let us consider, as to how, the Tribunal has considered the abovesaid aspect. At Paragraphs 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts thereof and considering defence plea shall adjudicate the matter. 7.4. The materials proposed to be utilised in readjudication proposed by this order, shall be confronted to the appellant for defence.The loose slips gathered in the cause of search should be examined and evidentiaryvalue thereof evaluated for the purpose of use in the adjudication. Defence if any on that aspect shall also be considered by adjudicating Authority.The appellant is entitled to the confrontation of every material sought to be used against it during hearing and the defence led by the appellant shall be thoroughly examined to ass a reasoned and speaking order. 23. At Paragraph 8 of the impugned order, the Tribunal has directed that the outcome of the loose slips be examined in detail to arrive at the proper duty demand if any, to serve the interest of justice. The Tribunal has also directed the original authority to examine the contents of the notebook and to evaluate the evidence thereof, to arrive at the duty demand, if any. The Tribunal has further observed that, It may so happen that all the materials and evidence may corroborate with each other. That aspect may be specifically dealt. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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