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TMI Blog2018 (2) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... d and Block Boards falling under Chapter 44 of the Chapter to CETA 1985. During the course of investigation, it appeared that some records namely delivery notes, invoices of unused receipts were not only related to APPD but also to another two units viz; The Veera Silver Frames (hereinafter referred to as VSF) and Sri Ambigai Lumber Board Works (hereinafter referred to ALBW). On visit to VSF, department officers found one Glue / Resin make machine in working condition and one hot press machinery was in repair condition. EB connection was found common for both APPD and VSF. It further emerged that ALBW was functioning within the compound of one Ambigai Saw Mills and that following machineries were found installed therein namely (a) Jamauna make peeling machine (b) Jamauna make cutting machine (c) Portable like cutting machine and (d) table cutting machine. Core stock of 80,000 sq.fts. was also found. It further appeared that the records of all the three units were kept at one place. Pursuant to investigations, the department took the view that although three units in the names of APPD, VSF, ALBW were apparently engaged in manufacture of Plywood and Block Boards, in reality only one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Partner of APPD 75,00,000 5. Shri G. Vinoth Kumar, Partner of APPD 25,00,000 6. V. Veeraraghavan, Partner of APPD 25,00,000 7. G. Chendil Kumar, Partner of APPD 25,00,000 8. V. Veera Rajendran, Managing Partner of VSF 25,00,000 9. G.Kasthuri, Partner of VSF 15,00,000 10. V. Anitha, Partner of VSF 15,00,000 11. V. Ganesan, Managing Partner of ALBW 10,00,000 12. M. Sujatha, Partner of ALBW 10,00,000 13. S. Maheswari, Partner of ALBW 10,00,000 Aggrieved, all the above persons have filed appeals E/41822/2014 to E/41835/2014 as listed in the preamble to this order. 4.1 All these appellants were represented by Shri S. Durairaj, Ld. Advocate who made a preliminary objection on the maintainability of the proceedings itself. 4.2 Ld. Advocate drew our attention to the two SCNs dt. 08.11.2012 & 08.01.2013 and to the statement of demand dt. 30.12.2013 to point out that the Notices/Demand required only Ambi Ply Panels and Doors (APPD) to show cause not only concerning proposal for invocation of extended period, demand of differential duty and interest and imposition of penalty on APPD but also concerning proposals for imposition of penalties on all the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oticee to show cause why such penalty should not be imposed on him under the relevant provisions of the Act / Rules. Thus, a show cause notice gives the noticee the opportunity to present his case. 5.1 On the other hand, on behalf of Revenue, Ld. A.R Shri K.Veerabhadra Reddy while supporting the impugned order vehemently opposes the prayer of the Ld. Advocate to set aside proceedings on technical grounds. 5.2 Ld. AR submits that while only APPD have been asked to show cause and other persons have not been so asked individually, this is a minor discrepancy since copies of SCN had been marked to all the other persons. Ld. A.R also contends that there is no dispute that SCNs were received by all the persons concerned. It is also not disputed that all these persons were represented by a common advocate during the adjudication process and that many submissions on merits had been then made. He submits that appellant cannot now take shelter under a contention that SCN was not specifically issued to each of them. 5.3 With regard to ld. Advocates argument that the entire proceedings get vitiated due to non-issue of SCNs to the dummy units, ld. A.R states that the Tribunal in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... analogues to a court. Moreover, even in the absence of any charge, the severity of the impact of a discretionary decision on the interest of an individual may suffice in itself to attract an implied duty to comply with this maxim. [Halsbury's Laws of England (4th Edn.), Vol.1, para. 74.] 7.3 This is the essence of the maxim Audi Alteram Partem, namely no man should be condemned unheard. The maxim, being a cardinal principle of justice, is required to be followed in all judicial proceedings. Non-adherence to this cardinal principle of law will undoubtly result in a decision which can only be termed as discretionary and which due to the inherent lack of natural justice accorded to the accused, will then have the result of becoming vitiated abi initio. Unless the statute expressly excludes the application of this maxim, the principle of natural justice must be invariably followed. But possibly, certain laws relating to preventive detention, all statutes of law ordain that the person against whom action adverse to his rights or action adverse to him is intended to be taken, there has to be a notice issued to such person giving an opportunity of putting forth his stand, defending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds. On the issue of trafficking of license we find that Department has accepted that goods in question were sold on high sea sales basis and permitted M/s Bentam Industries to amend the Bill of Entry changing into their name as importers. There is a clear finding that goods are not covered by additional licenses of export houses which are alleged to be transferred. When once there is a finding that goods are not covered by such licenses, the transfer of such licenses has no bearing on importation and importation has to be adjudged independently whether importation was legal or otherwise. Since goods are not covered by licence and such license is not valid for goods in question, any transfer of such license amounts to void transaction which confers no rights and obligations on respective parties. If the goods are covered by such license, the position would have been different and in the facts and circumstances of the case, we do not find such transfer resulted in illegal importation. Apart from this, the appellants other than M/s Bentam Industries were not called upon to show cause or to file an explanation for the charges levelled against them. We are not convinced with the argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CN therein did not contain any allegation on the Directors of part nor did it call upon them even to show cause. Hence the penalties arrived at on the Directors cannot be upheld. Appeal filed by the department was dismissed by the Hon'ble Apex Court as reported in 2015 (324) ELT 631 (SC) wherein, inter alia Apex Court held that the finding of the Tribunal are pure finding of facts and after due consideration of the entire material on record". 7.10 We thus find that on this issue there are a number of Tribunal decisions which have consistently held that non-issue of SCN on the affected persons would vitiate the proceedings. As discussed, appeals by the Department against at least two of these Tribunal decisions have been dismissed by the Hon'ble Supreme Court. 7.11 Viewed in this light, and in particular following the settled law in the matter we have no hesitation in holding that the penalties imposed on VSF (E/41828/2014), ALBW (E/41832/2014), G.Madhan Kumar (E/41823/2014), V. Sivaa Kumar (E/41824/2014), G.VinothKumar (E/41825/2014), V. Veeraraghavan (E/41826/2014), G.Chendil Kumar (E/41827/2014), V.Veera Rajendran (E/41829/2014), G.Kasthuri (E/41830/2014), V.Anitha (E/41831/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner are vitiated. That is how it has been held to be prejudiced. In any event, the appeals have been allowed also by holding that this is not a case where M/s. Sapna Engineering have carried out activities of manufacturing coils on which the duty has been demanded. Such an evidence does not exist. The finding of fact is that the appellants did not have the capacity to manufacture all the parts of air-conditioner and refrigerator appliances on which duty has been demanded. The finding of fact about absence of co-relation appearing in paras 4(iv) and 4(v) would denote that the allegations in the show cause notice could not be substantiated against M/s. Sapna Engineering as well. The finding further goes that there is independent evidence supporting the contention of M/s. Sapna Engineering that defective coils were repaired by M/s. Neha Refrigeration and duly confirmed by all employees of M/s. Voltas Limited. M/s. Voltas Limited have been completely exonerated. It is in these circumstances that the Commissioners Order was set aside. Both the appeals were allowed. Thus, these are findings not just on any legal issues but on merits. The appreciation and appraisal of the documentar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant-company, it was noticed that the unit came into existence in the year 1992 and skeleton machinery was installed at the site. There was commonality of directors between the two companies. On the basis of investigation carried out by the Excise Department, the noticee was called upon to show cause why excise duty of Rs. 4,97,348/- already paid should not be recovered and confirmed under the Central Excise Act and why interest and penalty should not be levied. 3.3 Importantly, without any notice to the appellant-company, the proceedings were conducted, which culminated into confirmation of duty, interest and penalty demands. 3.4 The appellant-company filed claims for refund for a sum of Rs. 4,97,348/- recovered by the Department from the appellant. Such refund claim was rejected by the competent authority by an order dated 8-3-2002 on the ground that the appellant-company and the noticee were both one and the same company and the adjudicating authority had already appropriated the said sum of Rs. 4,97,348/- towards excise duty liability. Against this order, the appellant approached the Tribunal after unsuccessfully filing appeal before the Commissioner (Appeals). The Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arent company, requirement of hearing the appellant-company would not be done away with. It was on this basis that the Tribunal found that the Department had committed an error and had therefore, directed service of copy of the notice to the appellant-company. These findings of the Tribunal and the ultimate directions have not been challenged by the Department. The conclusion that the order of recovery of tax, interest and penalty could not have been passed without hearing the appellant, thus becomes final. If that be so, the question is mere supply of copy of the show cause notice to the company be sufficient The show cause notice, we may recall, was issued against the original noticee company and there was neither any proposal against the appellant-company nor a copy was served to the appellant. Under the circumstances, by supplying a mere copy thereof, the Department cannot initiate proceedings against the appellant. In any case, it was neither the duty nor the authority of the Tribunal to direct so. If, after the Tribunal found that no order adverse to the appellant-company could have been passed without a hearing, the Department was inclined to initiate the proceedings against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 120) E.L.T. 732 (T) = 2000 (39) RLT 528 (CEGAT) 4. Expo Combines v. CCE, Bombay - 1995 (75) E.L.T. 513 5. CCE v. Sompura Ceramics - 2001 (130) E.L.T. 195 (T) = 2001 (42) RLT 399 (T) 18. The ratio of all the above decisions have been individually discussed by the learned Member (Technical) in his proposed order, but has not been followed by him by observing that the show cause notice in question was marked to M/s. Reliable Corpn. who had also filed a reply to the same and have participated in the adjudication proceedings by attending personal hearing before the Commissioner. My learned brother has also referred to the various paragraphs in the show cause notice alleging in detail the grounds on which M/s. Reliable Corpn. is proposed to be held as a dummy unit of M/s. Poly Resins and has concluded that from a detailed allegation in the show cause notice, the main unit and the dummy unit were aware and conscious of the allegations and the dummy unit has also accepted that the show cause notice has been served on them and have replied to the show cause notice and actively participated in the proceedings and defended their case and the appellant herein (i.e. M/s. PR) cannot take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply filed by M/s. Reliable Corpn., which stands annexed with the order proposed by ld. Member (Technical) that they have mentioned that - the present reply, is filed by way of abundant caution and it cannot be treated that RC is participating in the proceedings. As such in my views the ratio of the precedent decisions of the Tribunal as discussed earlier is fully applicable to the present case and the impugned order is liable to be set aside on this sole ground itself. I would also like to observe here that the Hon'ble Supreme Courts decision in the case of CCE, Coimbatore v. V. Madhu [2002 (146) E.L.T. 252 (S.C.) = 2002 (105) ECR 273 (S.C.)] referred to by ld. Member (Technical) is not applicable to the facts of the instant case inasmuch as the ratio of the above decision is to the effect that where a common show cause notice is issued to the two units, whose clearances are required to be clubbed, the same would not vitiate the proceedings. However, in the present case it is not a question of issuance of a common show cause notice to the two units, but whether the show cause notice was at all issued to M/s. RC requiring them to show cause notice against the proposed action." I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountries such as Sri Lanka, Singapore and Australia. Imports were also made in the names of several dummy units created by CFI. The Managing Director of CFI admitted that the other importers (firms) were his creation. All the related Bills of Entry for import of photocopier sub-assemblies were seen to have been assessed under CSH 9009.90 i.e. photocopier parts/components. The brands included Canon, Modi Xerox and Agfa. Printouts of data retrieved from the CPUs seized from CFI premises showed details of transactions in photocopier parts and photocopiers by CFI during 2001-02 and 2002-03 (12/01 to 1/03). The data showed transactions by CFI in the names of dummies also. Various statements recorded from Shri K.A. Shabu, Managing Director of CFI revealed that CFI had thus imported subassemblies and components of second-hand photocopiers of various brands through Chennai port. The photocopiers were assembled in the godowns of CFI at Saidapet and Anna Salai. The photocopiers were sold to dealers at Delhi, Mumbai, Calcutta, Bangalore etc. The proceeds were received in the names of CFI and other dummy concerns. Transactions were entered in computers under names such as CFI, ABC, Abci, PCB, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sold them under brand names not owned by them. Therefore, excise duty was payable on the seized goods and the clandestine removals. In computing the clearance value transactions in the names of various concerns accounted in the computer records were taken into account. The Commissioner found sufficient evidence to hold that all the transactions were conducted at the behest of Shri K.A. Shabu by the employees of CFI. CPUs were seized from the CFI premises. The data could be accessed only with the password known to Ms. Radha, who was an Accounts Assistant of CFI. Statements of the staff of CFI confirmed transactions under fictitious names like Abci, RAM, RAD which were actual transactions of CFI. They agreed that Gearsrepresented assembled photocopiers. CPUs were operated and printouts taken in the presence of CFI staff under mahazar. Corroborations of transactions by buyers lent authenticity to the transactions found in the computer records." The Tribunal's order on an application for rectification of mistake in the aforecited case of Copier Force India Ltd. [reported in 2009 (245) ELT 478 (Tri.-Chennai)] is reproduced below :- "5. We have carefully considered the ROM petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari Packs & Others Vs CCE Salem in Appeals E/188/2009 etc., following earlier Tribunal's decision in the case of Poly Resins (supra) and Hon'ble Calcutta High Court's decision in CCE Kolkata Vs Diamond Scaffolding Co. 2011 (274) ELT 10 (Cal.), held that proceedings without notice to one of the parties in holding adverse view against such party is not sustainable. The relevant portion of the order is reproduced below : "5. We have heard both sides and perused the appeal records. Regarding the appeals by the assessee-appellant, we note that as correctly contested by the ld. consultant that, there is a serious legal infirmity in the proceedings concluded by the lower authorities. Admittedly, no notice was issued making allegation about the legal status of M/s.The Coastal Paper Packaging. The lower authorities held the said units as fictitious. Though the appellant strongly contested on merit and established the legal status and independence of M/s.The Coastal Paper Packaging, since no notice was issued to them, the whole proceedings are in violation of principles of natural justice. We note the proceedings without notice to one of the parties and holding the adverse view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices have been issued and received by them; that further they participated in the adjudication proceedings; that therefore they are estopped from raising the contention at appellate stage that they have not been issued Show Cause Notice as provided under Section 11A (1) of Central Excise Act, 1944. We have already discussed that mere issuance of copy of show cause notice to "dummy unit" without calling upon them to show cause why their clearances should not be clubbed is not sufficient for initiating proceedings under Section 11A (1) against dummy unit. Even their participation in the adjudication proceedings pursuant to receiving a copy of notice merely marked to them will not redeem the proceedings which have been conducted outside the provisions of law. The statute provides that Show Cause Notice has to be issued. There can be no estoppel against the statute. 7.22 The Ld.AR has also contended that the allegations against the 'dummy units' have been clearly explained in the SCN. Omission to call upon the 'dummy units' to show cause why their clearances should not be clubbed and why penalties should not be imposed, was only a technical lapse and since the allegat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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