ORDER
M. Veeraiyan, Member (T)
1. This is a Department’s appeal against the order of the Commissioner (Appeals) No. 192-193/2006(Ahd-I) dt.25/8/2006. None appears for the respondent in spite of notice. There is no request for adjournment also.
2. Heard ld. SDR for the department and perused the records.
3. The relevant facts, in brief are, as follows:
a. On 6/9/2001 when the officers visited the respondent’s unit and verified stock of raw materials, they found shortage of 450 mts. of iron and steel scrap materials valued at Rs. 31,50,000/-.
b. Shri Rajnibhai Chimanlal Parikh, Director of the company, in his statement dt.6/9/2001 stated that the raw materials found short were, in fact, cleared by them as such without issuing any invoice, without payment of Central Excise duty and without accounting the same in any of the records as they were in urgent need of cash flow.
c. They paid a sum of Rs. two lakhs on 7/9/2001 and balance of Rs. 3,04,000/- on 9/9/2001.
d. Show cause notice dt.2/1/2006 was issued and the Original Authority vide his order dt.31/3/2006 passed orders confirming the demand of duty of Central excise duty of Rs. 5,04,000/- on 450 mts. of Iron & steel scrap valued at Rs. 31,50,000/- illicitly cleared; imposing a penalty of Rs. 2,50,000/-(Rupees two lakhs fifty thousands only) on M/s. Shree Pramukh Industries P. Ltd.; imposing a penalty of Rs. 20,000/- (Rupees twenty thousand only) on Shri Rajnibhai Chimanlal Parikh, Director of M/s. Shree Pramukh Industries P. Ltd.; ordering recovery of interest at the prescribed rate.
e. On appeal, the Commissioner(Appeals) allowed the appeal of the party and gist of his findings, observations, comments are extracted below:
Thereafter, there was total peace and tranquility for the department as well as the appellant, as only on 2/1/2006, the Jt. Commissioner issued the SCN on the basis of panchnama and statement and on so called shortage of input material…
I have no slight hesitation to conclude that the Revenue was gravely prejudiced and biased against the assessee in as much as the shortage of input was got admitted from the throat of Mr. Parikh as beyond that there is no evidence what-so-ever at all….
He has stated that the clearance was for open market and the name of the parties was not known to him and the transaction was in cash….
After critical examination of the facts and circumstances of the case, I am of the view that the appellants admitted the liability just to buy the peace or perhaps for the reason so that no further investigation could be carried out for any specific item or for anything else….
It appears someone may have pointed that against payment made in Sept., 2001, the assessment is still pending for reclamation & finalization and hence SCN was slapped on the appellant on 2nd January, 06. On part of the departmental officers in issuing SCN after a lapse of nearly four and half years there exists some liability against them….
I do find that there is no case at all, no evidence at all, no allegation at all for sustaining the demand against the appellant barring a pure and simple dictated confession on part of Mr. Parikh, one of the non-working and part time Director….
Knowing well that an amount has been already paid but as Commr. (A), an authority vested with the power to re-examine the evidence in appeal, I find it difficult to sustain the cause of action as confirmed at original stage….
I do find that this was a case of non-evidence and the duty amount was got collected by putting the knife on the neck of the director of the appellant firm….
Everything was got written and were got signed so that one automatically reached to dead end of investigation….
Neither the date has been identified nor the purchasers had been identified nor the money received has been identified or brought on record….
The best option left to the Revenue was not to issue the SCN in such cases and to remain contended with the money they had already have collected…
Therefore that part of the order is set aside. If the date of clearance is not known, how it could be known when there was no such clearance at all, how the interest could be confirmed. That part of OIO is also not sustainable.’
4. The ld. SDR strongly pleads for setting aside the order of the Commissioner (Appeals) and restoration of the order of the Original Authority.
5.1. I have given anxious consideration to the various findings of the Commissioner (Appeals).
5.2. The Commissioner (Appeals) has been empowered to hear appeals against orders passed by any officer lower in rank than a Commissioner of Central Excise as provided in Section-35 and Commissioner (Appeals) has been empowered under Section-35A to pass such order as he thinks just and proper, confirming, modifying or annulling decision or order appealed against. As a statutory authority hearing appeals, he has every right and in fact duty bound to appreciate the evidence placed before him. However, an appeal proceeding cannot be treated as if a disciplinary proceedings against the investigating officers and the Adjudicating Authority.
5.3. There are certain strong and adverse findings against the Department and its officers, which are, prima facie, even beyond the allegations and submissions made by the appellants before him. Most of these observations are unsubstantiated as the order does not contain/disclose the grounds/reasons, if any, for such conclusions. As per investigation and as per the findings of the original authority, there was a shortage of huge volume of 450 M.T.s of scrap noticed in presence of panchas; in a statement given under Section 14 of the Central Excise Act, the director of the company admitted the shortage; he paid the duty involved in two instalments; there appears to be no retraction of the statement till the show cause was issued. Commissioner (appeals) not only did not find the evidence acceptable but held that the director was totally innocent and a hapless victim; Revenue was gravel prejudiced against the assessee; the statement of the director was got written and got signed; the statement was a pure and simple dictated confession; the amount was collected by putting knife on the neck of the director. Thus he has not only held that the assessee is innocent but found the investigator’s conduct is highly objectionable and dangerous but with out disclosing the materials, if any, to warrant such conclusions.
5.4 For example, the observation that “the duty amount was got collected by putting the knife on the neck of the director of the appellant firm” is totally unwarranted. No reason has been cited in support of the findings that the shortage was got admitted from the throat of Mr. Parikh. It is not clear whether there was any reliable retraction by the persons who have given confessional statements warranting such conclusions by the commissioner (appeals). There is a finding that everything was got written and were got signed so that one automatically reached to dead end of investigation. Such a find definitely requires to be substantiated. But the material has not been disclosed and discussed. Further, I find that there are other conclusions, findings, observations without indicating the reasons for arriving at such conclusions.
5.5. If there were no materials to support the above findings and observations, then the order suffers from serious flaw. Such an approach of finding fault with other statutory authorities with out valid materials deserves to be discouraged. One can disagree and over rule with out being nasty.
6.1. More importantly, the order lacks clarity on the core issue, namely, of duty demand.
6.2. In many places, the Commissioner (Appeals) laid stress on the fact that the duty involved have been paid promptly, and has expressed the view that no penalty is imposable. There are clear findings by him that penalty on the appellant firm and on the Director were not warranted. He has also discussed about the sustainability of the interest confirmed and held that the same was also not sustainable.
6.3. However, there is no discussion about the confirmation or otherwise of the duty demand confirmed by the original authority, which stands paid on 7/9/2001 and 9/9/2001. Whether he intended to set aside the duty demand is not clear. If the duty demand is set aside the penalty and interest automatically goes.
6.4. There is discussion about the delay in issue of show cause notice. However there is no finding on the consequence of such delay. Whether the same was discussed in the context of time bar is not clear as no finding to this effect has been given.
6.5. While, in most places, the order gives the impression that duty demand may not be in dispute, in the operative portion the entire order of the original authority stands set aside.
7. Therefore, for the reasons mentioned above, I am inclined to set aside the order of the Commissioner (Appeals) and remand the matter for de-novo consideration of the entire issues by the commissioner (appeals) after giving reasonable opportunity of hearing to the respondents. I like to clarify that any observation made in this order by me should not be taken as comments on the merits of the case and the Commissioner (Appeals) will decide afresh all the issues.
8. Appeal of the department is allowed by way of remand.
(Dictated & Pronounced in Court)