Customs, Excise and Gold Tribunal - Tamil Nadu
Jai Bhawani Steel Enterprises Ltd. And ... vs Commissioner Of Central Excise, ... on 12 October, 2001
JUDGMENT
Jeet Ram Kait, Hon'ble Member (T)
1. For hearing the stay application, the appellant re required to predeposit an amount of Rs.45,46,677/- being the differential duty payable by M/s.JBSC on account of re-determination of the Annual Capacity f Production of the Induction Furnace in terms of proviso to Section 11A (1) of the CE Act read with Rule 3(3) of Induction Furnace Annual Capacity Determination Rules, 1997. An amount of Rs. 1,17,50,066/- being the short paid by M/s.JBSE in respect of duty already determined based on the ACP fixed taking the total furnace capacity as 5 MTs in terms of Ruls 96 ZO(3) of CE Rules and imposed a penalty of Rs.45,46,677/- on M/s.JBSE in terms of Section 11AC and also interest on the duty of Rs.45,46,677/- in terms of Section 11AB of the CE Act. A penalty of Rs.50 lakhs on M/s.JSBE under Rule 173Q of CE Rules and penalty of Rs. 10 lakhs on Shri Pramod Kuamr Saraf, Director, M/s. Jai Bhawani Steel Enterprises (P) Ltd. under Rule 209A of CE Rules, 1944.
2. Sr. Counsel Shri G.L. Rawal while reiterating the submissions made in appeal memorandum has invited our attention to various contradiction in the order. Ld. Commissioner had taken a decision at the back by relying on the letter dated 20.4.2001 which was received by her from the Deputy Commissioner of Central Excise, Chennai - V Division, based on the report of the Superintendent, Pannari Range who has repled that M/s. JBSE were using the following types of material in their induction furnace from 1997 onwards:
i. Bushelling scrap ii. Shredded scrap iii. Heavy metal scrap iv. Non-alloy steel scrap v. Waste & scrap re-melting /M.S.Skull vi. Waste & scrap procured from local market. Sponge iron was not one of the charge materials as per this report.
3. Ld.Counsel submits that the order-in-original No. 7/2001 dated 20.4.2001 was passed almost the same date when the report from the Deputy Commissioner vide his letter dated 20.4.2001 was received by her and they have not been given an opportunity to rebutt the report of the Deputy Commissioner of Central Excise which was based on the report of the Superintendent of Central Excise, Pannari Range. Sr. Counsel Further submitted that these were not the allegation in the show cause notice and this report has been obtained and has been relied in the order passed by the Ld. Commissioner at their back. They have also invited our attention to para 21 (III) in which Ld. Commissioner on a careful consideration found that no evidence has been brought to substantiate the allegation that M/s. ABB Ltd. has issued a false certificate and that was the only basis on which show cause notice was issued. Further, the Ld. Commissioner held that under Rule 209A knowledge is necessary condition for imposition of penalty. Hence she found that M/s. ABB Ltd., a juristic person is incapable of such knowledge to merit penalty under Rule 209A CE Rules. In view of the abvoe circumstances, she found that no penalty would be imposed on M/s. ABB Ltd. under Rule 209A(ibid). She also submitted that the certificate issued by M/s.ABB Ltd. being a true certificate accepted the capacity as 5MTs whereas they have been (SIC) with the duty by taking into consideration the capacity of the furnace as 5.88MTs which is not legal and proper. They further submitted that the Ld. Commissioner should not have confirmed the duty of Rs.1,17,50,066/- in the view of the back that appeal were prepare with the Hon'ble Supreme Court in Civil Appeal 52-63/98 in the case of UOI Vs. Supreme Steels and General Mills & Ors. As she had kept in abeyance the action regard (SIC) penalty and interest which she has reserved her right to take necessary action in view of the final decision as and when delivered by the Hon'ble Supreme Court. Ld.Counsel has requested that in view of the above decision, the demand of Rs.1,17,50,066/- for duty short paid by M/s. JBSE may be set aside. He further submitted that demand of Rs.45,46,677/- has been confirmed because of the report from the Deputy Commissioner dated 20.4.2001 a copy of which has not been supplied. This allegation was not part of the show cause notice. Therefore, this demand is also required to be quashed. Similarly, the penalty of equal amount on M/s. JBSE in terms of Section 11AC of CE Act may also be quashed. They have also urged that penalty under Rule 173Q of Rs. 50 lakhs and Rs.10 lakhs on Shri Pramod Kumar Saraf, Director, M/s. Jai Bhawani Steel Enterprises (P) Ltd. under Rule 209A of CE Rules, 1944 also deserved to be set aside.
4. Ld.SDR reiterated the departmental view and has submitted that the matter can be re-adjudicated on the basis of the report dated 20.4.2001 of the Deputy Commissioner of Central Excise.
5.We have considered the submission made by both sides and found that the Ld. Commissioner has come to the conclusion that there is no proof for giving false certificate by M/s.ABB Ltd. and because of this no penalty was imposed on M/s. ABB Ltd. But the new evidence has been collected at the back showing that sponge iron was not used and therefore their capacity could be increased to that extent. We, therefore, find that there is clear violation of the principles of natural justice in the matter. Therefore, we waive the pre-deposit and decided the main appeal itself.
6. In view of the fact that the principles of natural justice has been violated and evidence had been collected at their back and a copy of which has not been given to them, we therefore direct the Commissioner to (SIC) copy of the final report which has been obtained by her from the Deputy Commissioner vide his letter dated 20.4.2001 and shall give a reasonable opportunity to them to rebutt this evidence. She may also give reasonable opportunity for producing any additional evidence which the appellant may like to put for in the interest of natural justice to satisfy the department about the capacity and their parameters which are being mentioned in the letter dated 20.4.2001 of the Deputy Commissioner. The appeal succeeds by way of remand. Ordered accordingly.
(Pronounced & Dictated in the open court)