Custom, Excise & Service Tax Tribunal
M/S Meenakshi Re-Rollers Pvt. Ltd vs Commissioner Of Central Excise, Nagpur on 24 August, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Application No. E/S/1019 & 1020/0 in Appeal No. E/702 & 703/09 (Arising out of Order-in-Original No. 05/2009/C dated 15.5.2009 passed by the Commissioner of Central Excise & Customs, Nagpur). For approval and signature: Honble Shri P.G. Chacko, Member (Judicial) Honble Shri A.K. Srivastava, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Meenakshi Re-rollers Pvt. Ltd. Shri Nikhil Bansal Appellants Vs. Commissioner of Central Excise, Nagpur Respondent Appearance: Shri R. Santhanam Advocate for Appellant Shri R.K. Vig Jt. CDR for Respondent CORAM: SHRI P.G. CHACKO, MEMBER (JUDICIAL) SHRI A.K. SRIVASTAVA, MEMBER (TECHNICAL) Date of Hearing: 24.08.2009 Date of Decision: 24.08.2009 ORDER NO. WZB/MUM/2009 Per: P.G. Chacko
After examining of records and hearing both sides, we find that the appeals themselves have to be disposed of at this stage. Accordingly, after dispensing with pre-deposit, we take up the appeals for final disposal.
2. M/s Meenakshi Re-rollers Pvt. Ltd., one of the appellants, are aggrieved by a total demand of duty of over Rs.7.5 crores as also by the penalties imposed on them. Shri Nikhil Bansal, the other appellant, a Director of the said company, is aggrieved by the penalty imposed on him. The above demand of duty is on MS Ingots found to have been clandestinely manufactured and removed by the company during the period February, 2004 to July, 2006. The relevant show-cause notice was issued by the department on 8.8.2008 invoking the proviso to Section 11A(1) of the Central Excise Act. The investigation culminating in the show-cause notice was commenced as early as in December, 2005, when the investigating officers of the department visited the appellants factory and conducted experiments estimating the quantity of final product which might have been manufactured by making use of the electrical energy actually consumed during the material period. On the said occasion, non-accountal of inputs was also found, which was recorded in the Panchnama dated 8.12.2005. Subsequently, statements were recorded under Section 14 of the Central Excise Act from several persons including the Panch witnesses. The persons from whom such statements were recorded included Shri Vinod Agarwal, Director of the company, Shri Nikhil Bansal, another Director of the company, and Shri Burnwal, Accounts Officer of the company. Several records were also seized from the factory and the same were also noted in the above Panchnama. Certain documents were seized from external sources and the same were referred to in the statements of the persons concerned. Based on these investigative materials, the aforesaid show-cause notice was issued.
3. In the show-cause notice, the department relied, inter alia, on an opinion taken from Prof. N.K. Batra, IIT, Kanpur for the purpose of determining the energy consumption per MT of the final product. The show-cause notice worked out the amount of duty to be over Rs.6.4 crores on the basis of the said expert opinion. The rest of the demand of duty (around Rs.55 lakhs) was based on the premise that unaccounted inputs were clandestinely used in the manufacture of MS Ingots, which were clandestinely cleared without payment of duty. The total amount of duty worked out to over Rs.7.5 crores. As the appellants had paid an amount of over Rs.5 lakhs during the course of investigation, the show-cause notice proposed to appropriate the same. Having invoked the extended period of limitation on the ground of suppression of facts etc., the notice also proposed a penalty on the appellant-company under Section 11AC of the Central Excise Act. Separate penalty under Rule 25 of the Central Excise Rules, 2002 was also proposed on the company, besides a penalty on the Director under Rule 26.
4. In their reply dated 12.12.2008, the appellants requested the adjudicating authority (a) to supply copies of all the documents mentioned in the list of documents appended to the notice, (b) to supply the records mentioned in the panchnama, (c) to supply English translation of the statements and documents recorded in Hindi, and (d) to permit cross-examination of 18 witnesses including 4 officers of the department, who recorded the statements, 2 panch witnesses and 12 others from whom statements were recorded under Section 14 of the Act and relied upon in the show-cause notice. The learned Commissioner allowed cross-examination of two officers, who conducted the investigations. Cross-examination of others was declined on the ground that no valid reasons were mentioned by the appellants. After repeated entreaties of the appellants, copies of the relied-documents were supplied in March, 2009. Copies of all non-relied upon documents were supplied in February, 2009. However, the request for supply of English translation was rejected. The learned Commissioner posted the case to 16.3.2009 for crossexamination of the two officers (Superintendents of Central Excise). As the Counsel for the appellants was not available on that date, the case was adjourned to 24.3.2009. The party and their Counsel requested for further adjournment on the ground that the Counsel would be abroad for a period of time. The Commissioners order came to be passed on 01.06.2009.
5. In the present appeals, the main grievance of the appellants is that natural justice was denied to them. The Counsel for the appellants has reiterated this grievance with specific reference to the various stages of the adjudication proceedings. He has also referred to the date on which the learned Commissioner signed the order. According to the Counsel, the Commissioner could not have signed the order on 1.6.2009, inasmuch as, on that date, his successor assumed charge as Commissioner of Central Excise, Nagpur. Though we are not inclined to give much credence to this submission of the Counsel, we are appreciative of the plea of negation of natural justice. It is on record that the Panchnama dated 8.12.2005 contained the record of experiments by the departmental officers in the appellants factory. Those experiments yielded a formula by which the total production of MS Ingots for the period of dispute could be worked out. The said formula, however, was not relied upon in the show-cause notice or the Commissioners order. What was relied upon by the department is the opinion of the IIT Professor, which is presently under challenge. The appellants wanted to cross-examine the experimenting officers as well as the Panch witnesses, who are said to have witnessed the experiments. This was not allowed. They also wanted to cross-examine all those persons, whose statements were recorded under Section 14 of the Act and relied upon in the show-cause notice and the Commissioners order, which was not allowed on the ground that any valid reason was not offered by the party.
6. After a perusal of the reply dated 12.12.2008, we find that the appellants stated certain reasons for cross-examining the witnesses. It appears, these reasons were not considered by the adjudicating authority. We are of the view that the appellants request for cross-examining all the witnesses should have been considered by the Commissioner. The appellants ask for English translation of documents recorded in Hindi. It is submitted that the Counsel for the appellants, not being literate in Hindi, will not be in a position to cross-examine the witnesses effectively without understanding the statements correctly. The same Counsel is before us today and we are impressed with the reasons stated in the support of the appellants request for English translation. It is also necessary that the appellants be given an effective opportunity of replying to the show-cause notice itself. This is possible only if all the English translations are made available to them. For all these reasons, it is necessary that the case be adjudicated afresh.
7. In the result, we set aside the impugned order and allow these appeals by way of remand directing the learned Commissioner to pass fresh order of adjudication in accordance with law after giving the appellants a reasonable opportunity of (a) obtaining English translation of all Hindi documents, (b) cross-examination of the witnesses named in the preliminary reply dated 12.12.2008, and (c) being personally heard. It goes without saying that the evidence collected by the investigating officers through the Panchnama cannot be rejected without stating cogent reasons. We trust, a speaking order will be passed by the learned Commissioner on all issues.
(Dictated and pronounced in Court)
(A.K. Srivastava) (P.G. Chacko) Member (Technical) Member (Judicial)
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