ORDER
S.L. Peeran, Member (J)
1. This stay application arises from Order-in-Appeal No. 51/98-CE., dated 7-1-1998, which disposed of two Order-in-Original Nos. 41/96-97, dated 12/19-2-1996 and 215/96, dated 1-8-1996, both the orders passed by the Assistant Commissioner of Central Excise, Bangalore. The total amount involved in the Order-in-Original is Rs. 64,62,480/-. The appellants have sought for waiver of pre-deposit and stay of recovery. They have also complained that there is violation of principles of natural justice and hence the matter may be remanded for de novo consideration.
2. The short facts of the case are that on scrutiny of declaration dated 6-4-1995 by the Assistant Commissioner and subsequent letter dated 3-5-1995 by M/s. Premchand Paramanand Reshamwala, the Deputy Commissioner visited the appellants premises on 24-8-1995 and recovered documents as detailed in the impugned order. Search warrant was executed and appellant’s statement was recorded. Two show cause notices were issued for the period 16-3-1995 to 22-8-1995 and upto 31-5-1996 by the Assistant Commissioner invoking the larger period with regard to manufacture of goods and clearances of the same without payment of duty. Appellants have contended the item manufactured by them is an embroidery thread. However, this was not accepted. Samples were drawn and the same was sent for test. The appellant’s contention was that the item is rightly classified under Heading 5403.41 of Central Excise Tariff as it is not a sewing thread and exempted under Notification No. 35/95-C.E., dated 16-3-1995. The test results were obtained after the hearing was concluded and without giving a copy of such test report and an opportunity of contesting the same and making submissions also, the Assistant Commissioner proceeded to pass the order relying on the said test result and held that the item is classified as ‘sewing thread’ under Heading 5401.20 and denying the benefit of said Notification.
3. Before the Commissioner, the appellants raised the points of violation of principles of natural justice. However, the said plea was overruled and the Commissioner relied on the another test result dated 3-10-1997, copy of which has also not been given to the appellants.
4. Arguing for the appellants, the learned Counsel submits that they have a strong prima facie case both on merits as well as exemption they are claiming. It is their contention that the samples having been drawn, they were entitled for a copy of test reports, the same was not given. The same was relied on by the Assistant Commissioner in detail in the impugned order. They had challenged the correctness of test results before the Commissioner. However, the Commissioner has not given detail findings on the technical aspect of the matter and has relied on another test results thereby there is a clear violation of principles of natural justice at both stages. It is, therefore, his contention that the test result is also challengable and they got sufficient material to prove and to sustain their claim. The learned Counsel submits that the Commissioner relied on the test report dated 3-10-1997 has also been put to challenge and they have asked for re-test of the said test results, which is subject matter of another proceedings. It is his contention that what is the subject matter of another proceedings, could not have been relied by the Commissioner in this proceedings.
5. The learned DR submits that both the authorities have rightly relied upon the technical opinion expressed by the Textile Commissioner and Chief Chemist. However, he reiterated the submissions with regard to non-furnishing of test results to the party.
6. On a careful consideration of the submissions, we notice that the appellants have made out a strong prima facie case in violation of principles of natural justice, and therefore, we grant waiver of pre-deposit and stay the recovery and also take up the appeals itself for disposal as per law.
7. We notice from the Order-in-Original No. 41/96, dated 12-2-1996 (19-2-1996) that the Assistant Commissioner himself has mentioned that the samples were drawn and sent for test results. He has detailed the test results in his order and repeatedly relied on the same. The test report was dated 4-1-1996, while personal hearing was on 17-11-1995. Copy of test results has not been furnished to the appellants and no opportunity was given to contest the same. Therefore, it is very clear on reading of Order-in-Original as well as Order-in-Appeal that there is clear violation of principles of natural justice, inasmuch as the test results has been totally relied without giving a copy to the appellants.
8. In view of the above, we set aside the impugned orders and remand the matter to the Assistant Commissioner for de novo consideration. The appellants shall furnish a copy of the test result and they are entitled to challenge the same and they shall given an opportunity of hearing after filing sufficient evidence to the test results relied on by the department.
9. Thus, both the appeals are allowed by remand to the original authority.