Custom, Excise & Service Tax Tribunal
Cce, Allahabad vs M/S Bharat Rolling Mills on 30 September, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Date of Hearing : 30.9.2011 Excise Appeal No. 2697 of 2009-SM with CO/27/2009-SM [Arising out of the Order-in-Appeal No. 76 to 80-CE/ALLD/2009 dated 22.6.2009 passed by the Commissioner (Appeals), Central Excise, Allahabad] Coram: Honble Mr. Mathew John, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Whether their Lordships wish to see the fair copy of the order? 4. Whether order is to be circulated to the Department Authorities? CCE, Allahabad Appellant Vs. M/s Bharat Rolling Mills Respondents
Appearance:
Appeared for Appellant : Shri A. Khanna, DR
Appeared for Respondent : Shri S.P. Ojha, Consultant
CORAM: Honble Mr. Mathew John, Member (Technical)
Order No.dated.
Per Mathew John:
The Respondents were manufacturers of Mild Steel Round Bars and Strips. During 2002-03, they were availing exemption under notification 8/2002-CE dated 01-03-2002 providing exemption for SSI units.
2. On 24-01-03, the department conducted a verification of stocks and entries in their books of accounts. The officers found excess of 83.204 MTs of MS Bars not accounted in the books of accounts. The department was also of the view that the Respondent had crossed the exemption limit of Rs. One crore prescribed in the notification 8/2002-CE when clearances for the period 01-04-2002 to 24-01-2003 were considered. The department was also of the view that M/s Balajee Steels and M/s J. K. Steels, two trading units, were involved in the sale of goods clandestinely cleared by the Respondent. A show cause notice was issued proposing-
(i) Confiscation under Rule 25 of the Central Excise Rules of the excess goods found during stock taking
(ii) Demanding duty amounting to Rs. 3,95,133.60 for clearances in excess of Rs. 1 crore during the financial year along with penalty under section 11AC of the Act
(iii) Further penalties were proposed on the trading units and the persons concerned with the trading units.
3. The first order adjudicating the Show cause Notice was set aside by the First Appellate Authority and remanded for a denovo adjudication. The matter was re-adjudicated by the Assistant Commissioner vide order dated 31-03-2008. In the order the excess goods found and seized were confiscated and allowed to be redeemed on payment of a fine of Rs. 50,000/-. Further duty amounting to Rs. 3,95,000/- was confirmed under section 11A of the central Excise Act and a penalty equal to the said amount was imposed on the Respondents under section 11AC. Further penalties were imposed under Rule 26 of the Central Excise Rules on the trading units and the persons connected with the trading units.
4. Aggrieved by the said adjudication order the parties filed appeal with Commissioner (Appeals) who vide his order dated 31-03-09 held that the duty demand against the Respondents is not sustainable and therefore he set aside the duty demand from the Respondents and also penalties imposed on all the parties. Further the Commissioner (Appeal) also held that that the seizure itself was bad in law and therefore set aside the confiscation, redemption fine and penalty. Aggrieved by the finding that the seizure was bad in law Revenue has filed this appeal. It is to be noted that there is no appeal against the finding that the Respondents had not crossed the exemption limit on the date of the verification and there is no duty to be demanded from the Respondents.
5. The Ld. DR submits that the Commissioner (Appeal) had held that process of weighing was not correctly done and for this procedural defect only the Commissioner (Appeal) set aside the seizure. He submits that the weighing process was started at 10.30 Hrs on 24-01-03 and concluded only by 25-01-03 and he submitted the detailed work sheets noting down the weight of 541 bundles which work sheets were signed by Shri. Harakh Chand Jaiswal partner of the Respondents. He contends that what is admitted need not be proved. So he contests that the finding of the Commissioner (Appeal) in the matter of the legality of seizure is not correct.
6. The Ld. Counsel submits that as per the panchanama the weighing started at 10.00 Hrs on 24-01-03 and concluded on 25-01-03 and time by which weighing was concluded is not noted in the mahazar. He contests that 148 MTS of finished goods and 56 MTs of raw material could not have been weighed in such a short time using a scale which has maximum weighing capacity of 150 Kgs. He further submits that the note sheets showing the weights recorded are not signed by the witnesses. According to him the excess as recorded in the mahazar was made just on estimation basis.
7. He also points out that there are other reasons to hold the seizure to be invalid. It was found that they would not have crossed the limit of Rs. 1 crore even after taking into account the seized goods. So there was no duty liability that would arise. When there was no duty to be evaded or intention to evade duty provisions of Rule 24 of the Central Excise Rules could not have been invoked. So the seizure was bad in law.
8. Considered arguments on both sides. There is no prayer in the appeal to uphold the confiscation. The prayer is only to uphold the seizure to be valid. For the sake of clarity the prayer is reproduced below:
It is therefore, most humbly prayed that the Honble Tribunal may pass either the suitable orders for setting aside the Order-in-Appeal No. 76 to 80-CE/ALLD/2009 dated 22.6.2009 passed by the Commissioner (Appeals), Central Excise, Allahabad to the extent of holding the seizure invalid on the grounds of vitiated process of weighment or necessary orders may be issued as deemed fit.
9. I have considered the arguments on either side and scrutinized the panchnama dated 24-01-03 drawn at the factory, and the finding of the Commissioner (Appeal) on the issue is as under:
Now, I have to examine the case in the light of the terms of remand as well as the observation made by the adjudicating authority in the impugned order.
I find that the adjudicating authority neither afforded the opportunity to the cross examine the witnesses nor gave specific observation on the document and affidavits presented by the appellants in their support. Rather he passed the order in stereotyped manner without following the specific direction in the remand order by this forum.
I am of the view that when the process of weighment was challenged by the appellant through certain witnesses in their respective affidavits then the only course left before the adjudicating authority was to cross-examine the witnesses to arrive at the correct conclusion. This thing was not done even when there was a specific direction in the remand order by this forum. The affidavit itself cannot be brushed aside without giving findings contrary to its contents. As such, I am of the opinion that the adjudicating authority failed to follow the specific direction by the appellate authority and hence defeated the course of natural justice. Accordingly, I hold that the process of weighment was vitiated by procedural defects as a consequence I hold that the discrepancies detected by the Revenue in the stock of inputs as well as finished goods was not correctly ascertained and hence wrong.
10. It is seen that the weighing slips were not signed by the witnesses. It is not surprising that the Commissioner (Appeal) directed cross examination of the witnesses. This direction was not complied with in remand proceedings. Reason for not doing so is not specified in the Appeal memorandum either. These being the facts I do not find any reason to interfere with the impugned order. Further the outcome sought from the prayer for just holding the process of weighing to be proper is not coming out from the appeal. Therefore the Appeal filed by Revenue is rejected. The cross-objection filed by the Respondents also is disposed of.
(Pronounced in open Court) (Mathew John) Member (Technical RM