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CX – AA is bound to make assessee aware with the materials collected behind their back and to give them adequate opportunity to meet the case of Revenue – Matter remanded: CESTAT

2019-TIOL-2002-CESTAT-ALL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH, ALLAHABAD
COURT NO. I

Appeal No. E/1899/2008-EX[SM]

Arising out of Order-in-Appeal No.237-238-CE/APPL/KNP/2008, Dated: 30.05.2008
Passed by Commissioner (Appeals), Customs and Central Excise, Kanpur

Date of Hearing: 16.03.2018
Date of Decision: 16.03.2018

M/s SHIVAM MASALE PVT LTD

Vs

COMMISSIONER OF CENTRAL EXCISE
KANPUR

Appellant Rep by: Shri Ashish Kumar Shukla & Shri Mitul Agarwal, Advs.
Respondent Rep by: Shri Sandeep Kumar Singh, Dy. Commr. AR

CORAM: Anil Choudhary, Member (J)

CX – The assessee is engaged in manufacture of ‘PARAS’ brand Gulab Jamun Mix and Nutree, Spices and Pickles – Most of their items of production were exempt from payment of duty under Notfn 06/2002-CE as amended – It appeared to revenue that the value of clearance of all excisable goods had exceeded the prescribed limit of Rs. 3 crores during the previous year – Accordingly, it appeared that the assessee was not entitled to SSI exemption and duty was levied – It was further alleged that assessee have wrongfully availed exemption from duty on the clearances of ‘PARAS’ brand Gulab Jamun Mix and ‘PARAS’ brand Nutree in Financial Year 2003-04 by deliberately considering the fact that they were not eligible for SSI exemption and hence the provisions of Section 11A(1) for invocation of extended period of limitation was invocable – The court below have erred in not granting adequate opportunity of hearing to the assessee – After the receipt of the report of Deputy Commissioner, the Additional Commissioner have not given any opportunity to the assessee nor made them aware with such a report which has been collected behind the back of the assessee – Accordingly, the impugned order is in the teeth of the ruling of Supreme Court in case of Dhakeshwari Cotton MIIIs wherein it is observed in said ruling that an Adjudicating Authority is bound to make assessee aware with the materials collected behind the assessee and to give them adequate opportunity to meet the case of Revenue – Accordingly, the impugned order is set aside and matter is remanded back to the file of Adjudicating Authority to re-adjudicate the SCN after providing a copy of the said report of Deputy Commissioner after perusing the reply and on objections of assessee and after hearing them to pass de novo order in accordance with law – Thus the appeal is allowed by way of remand: CESTAT

Matter remanded

FINAL ORDER NO.72275/2018

Per: Anil Choudhary

The appellant is engaged in manufacture of ‘PARAS’ brand Gulab Jamun Mix and Nutree, Spices and Pickles. Most of their items of production were exempt from payment of duty under Notification No.06/2002-CE dated 01.03.2002, as amended. During visit by the Central Excise Officers on 08.10.2004, it appeared to the officers that the value of clearance of all excisable goods had exceeded the prescribed limit of Rs. 3 crores during the previous year. Accordingly, it appeared that the appellant was not entitled to SSI exemption and duty was levied. Accordingly show cause notice dated 14.09.2005 was issued wherein their turnover for the period 2002-03 was found as under: –

TOTAL SALE OF ALL EXCISABLE GOODS DURING THE FINANCIAL YEAR 2002-03
SI. NoDescription of goodsSales Amount (in Rs.)
1.Spices (Paras Brand)Rs. 13,78,60,350/-
2.Nutree (Paras Brand)Rs. 12,19,374/-
3.Gulab Jamun Mix (Paras Brand)Rs. 17,35,895/-
TotalRs. 14,08,15,619/-

2. It further appeared to Revenue that the total turnover including that of exempted goods for the Financial Year 2002-03 exceeded the SSI exemption limit of Rs. 3 crores. Accordingly they were not eligible for SSI exemption under Notification No.08/2003-CE, as amended, and further Central Excise duty @ 16% should have been paid by them on the clearances of ‘PARAS’ brand Gulab Jamun Mix and Nutree/Soya Badi in the Financial Year 2003-04 and onwards. Accordingly, the duty payable was worked out as follows:-

Sr. No.Description of the GoodsClearances effected during 2003-2004Clearances effected during 2004-2005 (upto 07/10/2004)
ASSESSABLE VALUEDUTY INVOLVEMENTASSESSABLE VALUEDUTY INVOLVEMENT
1“PARAS” BRAND GULAB JAMUN MIXRs.4,73,865.00Rs.75,818.40Rs.4,46,565.00Rs.71,450.40
2“PARAS” BRAND NUTREE (SOYA BADI)Rs.14,17,098.60Rs.2,26,735.78Rs.11,64,451.20Rs. 1.86,3 12 19
TotalRs.18,90,963.60Rs.3,02,554.18Rs.16,11,016.20Rs.2,57,762.59

3. It was further alleged that appellant have wrongfully availed exemption from duty on the clearances of ‘PARAS’ brand Gulab Jamun Mix and ‘PARAS’ brand Nutree in the Financial Year 2003-04 by deliberately considering the fact that they were not eligible for SSI exemption and hence the provisions of Section 11A(1) for invocation of extended period of limitation was invocable. Further penalty was also proposed on Venu Gopal Khanna, Director under Rule 26 of CER, 2002 with further proposal to appropriate the amount of Rs.5,60,317/-along with proposal to impose penalty.

4. The appellant had contested the show cause notice and among other grounds also taken the ground that the extended period of limitation was not invocable as there was no suppression of facts from the Revenue and the appellant had filed the required declaration in the prescribed format before Deputy Commissioner of Central Excise Division-III, Kanpur stating that they have not taken to apply for Central Excise Registration Certificate in proper format as soon as value of goods mentioned in the said Schedule cleared for home consumption for the Financial Year which is full of exemption limit. The said intimation bears the acknowledgement of the office of the Concerned Deputy Commissioner dated 15.04.2003. In the said declaration the appellant had given all the details as required, the location of the factory for description of goods manufactured by them, value of clearances during the preceding Financial Year wherein they have declared clearance of spices and pickles at Rs. 13.79 crore, Nutree/Soya Badi Rs.12.19 lakhs, Gulab Jamun Mix Rs. 17.36 lakhs, further stating that both Nutree and Gulab Jamun Mix were cleared under brand name ‘PARAS’ owned by the appellant. However, their contention was not accepted and the proposed demands confirmed. Being aggrieved appellant had preferred appeal before Commissioner (appeals) in the earlier round of litigation wherein the matter was remanded to the Adjudicating Authority for de novo adjudication, with specific direction to verify the genuineness of the declaration made by the appellant on 15.04.2003 and to consider the issue of limitation. Pursuant to remand by Order-in-Original dated 27.02.2008 the Deputy Additional Commissioner called for a report from the division – Judicial Deputy Commissioner to verify whether the declaration was received, they have found or not. If yes, on which date (with documentary evidence) and what action was taken on the declaration at their end. In reply the Deputy Commissioner of Central Excise Division-III, Kanpur informed as follows: –

“From perusal of receipt register of the division for the month of April’2003 it has been noticed that M/s Shivam Masala Pvt. Ltd., Kanpur have not submitted any declaration in the aforesaid period.”

He was further queried whether the stamp appearing on the photocopy of declaration dated 10.04.2003 (Copy enclosed) is that which was being used in the relevant period and whether the signature appearing on the receipt is of the person posted in that branch at the relevant time. In reply to these queries the A.O. Central Excise Division-III Kanpur informed vide his letter dated 18.07.2007 that as per office record impression of rubber stamp used in the month of April’2003 and used in the declaration dated 01.04.2003 are different. Further he also denied the signature of the officer posted in the dispatch branch to be of the signature appearing on the declaration dated 10.04.2003 and stated it to be different. As such I am of the view that the declaration submitted by the party in their defence to the extended proviso invoked seems to be false and misleading.

Further, since the very fact that the party never filed any declaration has been found to be false as such all the case law relied in support of their contention fail at the very outset and the department plea for extended period is correct from all the aspects.

5. Accordingly, the Additional Commissioner concluded that the appellant had never filed any declaration based on the report of the Deputy Commissioner of the division and thereafter adjudicated the show cause notice on merits and confirmed the proposed demand alongwith appropriation and also imposed equal amount of penalty under Section 11AC and further penalty was Rs.5,62,772/- on Shri Venu Gopal Khanna, the Director under Rule 26 of CER, 2002. Being aggrieved the appellant had preferred appeal before learned Commissioner (appeals) who vide the impugned order was pleased to accept the findings of the Additional Commissioner and confirmed the demand alongwith penalty against the company. However, he was pleased to set aside the penalty on the Director under Rule 26 of CER, 2002.

6. Being aggrieved the appellant company before this Tribunal.

7. Heard the parties.

8. Having considered the rival contentions, I find that the court below have erred in not granting adequate opportunity of hearing to the appellant. After the receipt of the report of Deputy Commissioner, the Additional Commissioner have not given any opportunity to the appellant nor made them aware with such a report which has been collected behind the back of the appellant. Accordingly, I find that the impugned order is in the teeth of the ruling of Hon’ble Supreme Court in the case of Dhakeshwari Cotton MIIIs versus Commissioner of Income Tax. Hon’ble Supreme Court have observed in the said ruling that an Adjudicating Authority is bound to make assessee aware with the materials collected behind the assessee and to give them adequate opportunity to meet the case of Revenue. This having not been done, I hold that the impugned order is bad, in violation of the principles of natural Justice and accordingly fit to be set aside. Accordingly, I set aside the impugned order and remand the matter back to the file of the Adjudicating Authority to re-adjudicate the show cause notice after providing a copy of the said report of the Deputy Commissioner of Central Excise Division-III, Kanpur, after perusing the reply and on objections of the appellant and after hearing them to pass de novo order in accordance with law. Thus the appeal is allowed by way of remand.

(Dictated & Pronounced in Court)

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