Customs, Excise and Gold Tribunal - Tamil Nadu
Asiatic Oxygen Ltd. vs Cce on 28 February, 2000
Equivalent citations: 2000(93)ECR316(TRI.-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The Appellants in the present Appeal are manufacturers of liquified gases namely Oxygen and Nitrogen falling under Chapter 28 of the Schedule to the Central Excise Tariff Act 1985 and were availing the facility of Modvat credit on inputs and capital goods under Rule 57A and 57Q respectively of the Central Excise Rules during the period of dispute. They took Modvat credit on storage tanks of the aforesaid liquified gases installed in sites at Bhimavaram and Vishakhapatnam, which were away from the appellants' factory premises at Ranipet. The credit so taken was to the tune of Rs. 2,43,657/-. Such credit was taken on 1.1.1996. The Department proposed to disallow this credit alleging that capital goods situated outside the Appellants factory premises were not eligible for the Modvat credit under Rule 57Q ibid. The show cause notice containing this proposal was issued on 9.10.1998. The party contested the proposed action of the department by way of the reply to the show cause notice. The matter was heard by the jurisdictional Deputy Commissioner of Central Excise on 22.2.1999. An addendum to the show cause notice was issued subsequent to this hearing incorporating an additional proposal to impose penalty of equal amount under Section 11AC of the Central Excise Act by invoking the proviso to Section 11A(1) of the Act. The party replied to this addendum to the show cause notice on 19.4.1999. This was followed by another hearing. The Adjudicating Authority passed his order dated 11.5.1999 confirming the demand of Rs. 2,43,657/- and imposing of penalty equal amount on the party under Section 11AC of the Central Excise Act and further imposing a penalty of Rs. 40,000/- on them under Rule 173Q of the Central Excise Rules. Since the party had already deposited the aforesaid duty well before issuance of the show cause notice, the adjudicating authority, in his order of adjudication, appropriated the said amount towards the duty confirmed by him. In the appeal filed by aggrieved party against this order of adjudication, the Commissioner of Central Excise (Appeals) passed order dated 29.10.1999, which is impugned in the present appeal before me.
2. I have carefully examined the impugned order and connected records of the case. I have also heard Shri Nazeer Abdullah, Ld. Counsel for the Appellants and Shri M. Khuni Kannan, Ld. D.R. for the Revenue.
3. It appears from the records that the lower appellate authority had passed an interim order in the stay application filed by the Appellants in the Appeal before that authority praying for waiver of predeposit of the penalty amounts, pending that appeal. As per that order, which was passed without hearing the party, the lower Appellate Authority had granted waiver of predeposit of penalty amount imposed under Section 11AC of the Act after reaching the finding that the Appellants had been able to establish a prima facie case in their favour. Commissioner (Appeals) however refused to grant waiver of predeposit of penalty of Rs. 40,000/- imposed under Rule 173Q of the Rules and directed the party to deposit the said amount by 29.10.1999. It, however, appears from the record that, on 29.10.1999, there was no appearance before the Commissioner (Appeals) by the Appellants, nor was there any written report of compliance with the requirement of the predeposit of the penalty amount. The Commissioner (Appeals), in such circumstances, straightaway proceeded to dispose of the appeal on the sole ground of non-compliance with the provisions of Section 35F of the Act and passed the impugned order without entering into the merits of the case. It is this order of the Commissioner (Appeals) that is under challenge before the Tribunal at present.
4. The ld. Counsel for the Appellants has reiterated the grounds of the present appeal and has submitted that the lower Appellate Authority has grossly violated the principles of natural justice by passing the interim stay order without hearing the party and also by taking up the appeal for final hearing on 29.10.1999 to which date of Appeal had not been posted for hearing. According to the Ld. Counsel, on 29.10.1999, only the stay application stood posted for reporting compliance of the interim stay order of the lower Appellate Authority and not the Appeal. He, has therefore, submitted that the impugned order rejecting the appeal itself finally on 29.10.1999 without issuance of any notice of hearing therein to the Appellants was in gross violation of the principles of natural justice. The Ld. Counsel therefore prays for setting aside the order of the Commissioner (Appeals) and for remanding the matter to that authority for fresh decision in accordance with the law and the principles of natural justice.
5. The Ld. D.R. has opposed the above contention of the Ld. Counsel. He has, however, fairly conceded that the stay application as well as the appeal were disposed of by the Ld. Commissioner (Appeals) without hearing the party.
6. I have heard the rival submissions. I am convinced of the fact that the lower Appellate Authority has acted in violation of the principles of natural justice. Firstly, he disposed of the stay application without hearing the party as per order directing them to deposit the penalty amount of Rs. 40,000/-. He posted the case to 29.10.1999 for reporting compliance with the direction for depositing the penalty amount. On 29.10.1999 he found that there was neither any appearance of the party nor any report of compliance of the predeposit of the amount. In these circumstances, he ought to have issued a show cause notice to the party asking them to show cause why the appeal should not be rejected on the ground of non-compliance with the direction to deposit penalty amount under Section 35F of the Central Excise Act. Instead of doing this, the Ld. Commissioner (Appeals) straightaway proceeded to dispose of the appeal without hearing the party and without going into the merits thereof. This clearly violated the principles of natural justice which has got to be mended by way of an order of remand. Accordingly, I set aside both the interim stay order and the order-in-Appeal passed by the Commissioner (Appeals) and allow the present appeal by way of remand, directing the lower Appellate Authority to consider, in the first instance, the Appellant's Stay Application on its merits and pass a speaking order after hearing the party, and then to dispose of the Appeal on its merits after affording a reasonable opportunity to the Appellants of being heard and pass speaking order therein, subject to the results of the stay application.
7. At this stage, I note, the Commissioner (Appeals) had already found a prima facie case in favour of the party, even without hearing them, on the question whether a pre-deposit of penalty under Section 11AC of the Act should be insisted on for the purpose of hearing their appeal on merits. In view of this, I would make it clear, in this order, that the said question regarding the penalty imposed under Section 11AC ibid shall not be reopened by the Lower Appellate Authority during his de nova consideration of the party's stay application. The de novo consideration and disposal of the Stay Application shall, in other words, be restricted to penalty imposed under Rule 173Q of the Central Excise Rules.
(Order dictated and pronounced in the open court).