ORDER
D.N. Panda, Member (J)
1. Appellant was in appeal before this forum against the order dated 19.12.03 passed by the ld. Commissioner of Central Excise, Bolpur confirming duty demand of Rs. 11,67,532/- with an equal amount of penalty and interest payable as per law. While passing the order, ld. Commissioner also imposed a penalty of Rs. 5,00,000/- on Shri Chandra Bhushan Sharma, Vice President of the Appellant-Company. However, we did not find any appeal petition of Shri Chandra Bhushan Sharma, Vice President, while disposing of the appeal of the Appellant. Neither side also mentioned whether any such appeal was pending. Therefore, appeal of the Company-Appellant was taken up for hearing by this order.
2. The Appellant was called upon to show-cause as to why :-
(i) Central Excise duty amounting to Rs. 11,67,532/- should not be demanded and recovered from them in terms of 1st proviso to Section 11A(1) of the Act and Rs. 12,00,000/-already paid by them should not be appropriated against the said demand.
(ii) Interest at appropriate rate should not be charged and recovered from them in terms of Section 11AB of the Act and
(iii) Penalty under Rule 13(1 & 2) of Cenvat Credit Rules, 2002 and Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Act should not be imposed upon them.
The Appellant filed its reply on 3.7.03. On consideration of various submissions made by the Appellant, the ld. Commissioner arrived at the conclusion that the above demand shall be just and proper. In the impugned, order at page 13, the ld. Commissioner stated that four submissions of the Appellant deserved his consideration which are as follows:
(i) Shortage has been shown on the basis of eye estimation i.e. by presumption and assumption only and not by actual weighment.
(ii) Double duty has been demanded by way of raising demand on inputs and at the same time on final products which were manufactured out of those inputs.
(iii) Statements are not voluntary, but under threat and coercion.
(iv) Show-cause notice is time barred as suppression of facts, etc. has not been established and penal provisions are not warranted.
So far as the first submission is concerned, the ld. Commissioner held that the plea was afterthought and there was no eye estimation for the purposes of finding discrepancy of finished goods i.e. M.S. Ingots weighing 47.865 MT. So far as the submission of double taxation of input is concerned, he held that 383.669 MT of assorted inputs having enjoyed Cenvat Credit were removed otherwise shall be liable to duty. He found that 501.01 MT of M.S. Ingots were removed clandestinely for which the Appellant should suffer duty and penalty. So far as the plea relating to no suppression of facts and statements recorded under pressure and threat is concerned, he held that was not so, but in order. Therefore, the proceeding was not time barred.
3. The impugned order precisely throws light that the demand arose on three counts, i.e.
(i) Finished goods of 47.865 MT were not physically found at the time of inspection;
(ii) Assorted inputs of 383.669 MT were removed otherwise availing Cenvat Credit;
(iii) 501.01 MT of M.S. Ingots were removed clandestinely.
4. Surprisingly, the show-cause notice did not specifically state the break-up of the duty involved in respect of all the three allegations aforesaid although the aggregate duty involved was worked out to be Rs. 11,67,532/-. It was noticed that the Appellant had deposited Rs. 12,00,000/- during pendency of adjudication in view of discrepancies noticed as above.
5. Shri K.K. Banerjee, ld. Advocate appearing for Appellant, vehemently challenged the impugned order on the ground that shortage of finished goods noticed was without proper weighment even though that was objected that was not looked into by Authorities below. In respect of inputs weighing 383.669 MT was concerned, he urged that the same was not at all removed without notice of the Central Excise Authorities and there was no clandestine removal of 501.01 MT of M. S. Ingots for which Revenue has not brought any credible evidence. Ld. Counsel also submitted that the Appellant was not clearly put to notice to show-cause in respect of duty amount of Rs. 7,06,906/- relating to allegation of removal of 453.145 MT of M.S. Ingots without issuance of Central Excise Invoice. So far as the Registers seized carrying identification mark as Annexure D-I and Annexure D-2 were concerned, those were used against the Appellant without examining contents thereof but mere allegation was made, even though there was no suppression of production of 325.610 MT of Steel Ingots made by the Appellant. There was violation of natural justice and without a categorical allegation in SCN to plead defence the proceeding suffers from legal infirmity being arbitrary and prejudicial to the interest of justice.
6. Ld. JDR appearing for the Revenue submitted that the order passed by the ld. Commissioner was proper and the same having elaborately discussed on all points made, needs no intervention.
7.1 Heard both sides and perused the case records. No doubt search was conducted on 20th March, 2002 and the Investigating Officers conducted physical verification of the goods and found 47.865 MT of finished goods (M.S. Ingot) not physically available. Impugned order does not throw light whether the Investigating Squad made evaluation of the seized documents to arrive at the conclusion that the other two charges relating to shortage of input of 383.669 MT had enjoyed Cenvat Credit and whether suppression of production of 325.610 MT of Steel Ingots as alleged in Annexure C-3 of SCN (sic) there was any clandestine removal of finished goods of 501.01 MT as found by Authorities below.
7.2 The ld. Adjudicating Authority at page 13 of the Order of Adjudication dealt with four issues as stated by him in the impugned aforesaid without examining the allegation of duty evasion of Rs. 11,67,532/- whether constituted specific charges relating to above 3 issues stated in Para 3 above. In absence of specific allegation on each count of evasion of duty to grant opportunity of rebuttal, the impugned order suffers from legal infirmity without being a speaking order and absence of reason to hold against the Appellant called for intervention by this forum.
7.3 We noticed that input of 383.669 MT alleged to have been removed remained unrebutted and that input had also enjoyed Cenvat Credit by the Appellant. That was also admitted to be an offence and in absence of any cogent evidence on record to come to rescue of the Appellant, duty demand of Rs. 3,91,700/- on such count as reflected in Annexure C-2 to SCN is confirmed.
7.4. So far as the allegation of shortage of Ingots is concerned, the ld. Counsel was fair to agree that the statement recorded from the Appellant proved against the Appellant and that calls for a demand of Rs. 68,925/- on such account. Therefore, the demand on such count also sustains.
7.5. So far as the demand arose out of (sic) seized Note Book under seizure identification marks Annexure D-1 & D-2 is concerned, the impugned order does not show clear finding how the duty involvement of Rs. 7,06,906/- was worked out. There was absence of nexus of live link of evidence. However, bare perusal of page 3 and page 4 of the impugned order throws light that certain deliveries were made by the Appellant to some persons. But the Authorities failed to summon those persons to examine the veracity nor carried out investigation to ascertain truth of contents. They failed to discharge burden of proof for the allegation they made. No speaking order was passed to demonstrate a re-conciliation nor probe was made to establish evasion of duty of Rs. 7,06,906/- whether made. Without categorical charge in the show-cause notice and in absence of cogent evidence, it transpires that the Appellant was deprived of due process of justice for leading defence. This goes to the root of the matter. Violation of principle of natural justice is not a curable defect by this forum. Accordingly, there shall be no demand of Rs. 7,06,906/- on the Appellant on the allegation which was the subject matter of Annexure C-1 to the show-cause notice. Thus, the impugned order is not sustainable in respect of this demand.
8. Having arrived at the conclusion that the impugned order is sustainable on the aforesaid two allegations, we were satisfied that the ld. Appellate Authority was right to hold that the proceeding was not time barred. Accordingly, it would be proper to direct the Appellant to suffer penalty of Rs. 4,60,625/- without any hesitation. This should only meet ends of justice. In the result, the appeal is partly allowed.
Operative part of the Order was pronounced in the open Court on 27.11.2007.