ORDER
Shiben K. Dhar, Member (T)
1. These appeals are directed against the order dated 27-2-1989 passed by the Additional Collector of Central Excise. The appellants are alleged to have manufactured and removed steam without payment of duty during the period August, 1983 to April, 1984 and May, 1984 to February, 1986. The Additional Collector upheld the demand amounting to Rs. 25,216.50 P and demanded duty of Rs. 1,33,458/- and imposed a penalty of Rs. 60,000/- in E/Appeal No. 1734/89-D.
2. Arguing on behalf of the appellants, the learned Counsel submits that they are fully eligible to exemption under Notification No. 179/77, dated 18-6-1977 which exempts the goods if in relation to the manufacture, no process is carried out with the aid of power. In their case the manufacture is without the aid of power. The diesel operated pump to which the Additional Collector referred, is used only for drawing water from the well and to lift it to the overhead tank. Thus it is not used merely for making steam but is also used for other purposes in the factory and, therefore, it cannot be said that steam as such is manufactured with the aid of power. In this regard, he refers to the investigations carried out by the Additional Collector by visiting the factory and thereafter, passing his order on the result of such investigations without purring them on notice.
3. The learned DR reiterates the department’s findings and submits that there was only an attempt to ascertain the correct facts through visit to the factory.
4. We have heard both sides. In this case, personal hearing was held on 1-12-1988. The Addl. Collector has recorded that he personally visited the unit on 13-1-1989 to study the process of manufacture of steam. He recorded that water is lifted to an overhead tank about 60 feet high. The water has to be pumped in the boiler at a great pressure. It is obvious that he based his conclusion on an investigation done by him after personal hearing was over without putting the appellants on notice. Once personal hearing had been fixed, the appellants were heard in the matter, the Addl. Collector could not have relied on further investigation conducted by him. If notice had been given to them. They perhaps would have been in a better position to argue the case and plead the circumstances in which their factory works. Carrying out investigation and basing his conclusion thereon without putting the appellants on notice has injected an obvious infirmity in the order. In the result, we set aside the impugned order and remand the matter to the concerned Collector for de novo decision after affording reasonable opportunity of hearing and observing the principles of natural justice.