Judgment:
1. The impugned order is passed in terms of the orders of this Tribunal in Order No. 310/93, dated 6-10-1993. The facts of the case are that the appellants are stated to be the manufacturers of Copper and Bronze Alloys. The molten Copper and Bronze Alloys which settle down in cruibles are taken out and poured in moulds. They did not register the unit with the Central Excise authorities nor possessed any certificate.
Therefore show cause notice was issued against them requiring them to show causes why the duty should not be charged for the above said process which was carried out in their factory. After adjudication, the demand of Rs. 2,97,914/- is raised against the appellants and a penalty of Rs. 30,000/- was imposed.
2. The learned Advocate Shri Raghavan appearing for the appellants contended before us that there are several people who are doing the very same business and the appellant alone is proceeded against. This point was raised before the adjudicating authority and the adjudicating authority is silent on this aspect. He pleaded that when others are not charged in this regard the appellants always had a bona fide belief that these are not dutiable and this factor will be relevant with respect to the limitation aspect which was pleaded by the appellant. He further pointed out that the appellant was not actually doing the operations in this regard. He pointed out that these alloys were sent to the job workers and the job-worker has done the work in this regard.
Therefore the manufacturer is the job-worker and not the appellant.
This fact was pleaded by the appellant and in the paper book filed before the adjudicating authority from pages 68 to 90 the names of the job workers as well as several consignments which given to them were furnished to the adjudicating authority. He also pointed out that sample documents to justify this plea were also produced by the appellants before the adjudicating authority which are now at pages 91 to 101 of the paper book. But these aspects were not looked into by the adjudicating authority. He merely brushed aside the same without considering this aspect pleaded by the appellant and the relevant portion of para 12.6 of the impugned order is brought to our notice which is as follows : "This plea is also not corroborated with any other tangible evidence excepting for alleged statements of details of the labour charges paid to certain persons for separation of scrap and a few delivery challans and labour bills filed in the paper book before the Hon'ble CEGAT. No attempt has been made to correlate the entries in the statements or in the delivery challan or the labour bills, with the goods alleged to have been manufactured individual item-wise. No evidences have been let in to indicate the nature of the relationship of the Notice and the persons to whom the labour charges are alleged to have been paid for separation process as to whether it was on principal to principal basis. Hence this plea also loses its significance." He pointed out that in the impugned order it was stated that the appellant had to show that it was on principal to principal basis, which is not correct when the appellant had produced evidence to show that these goods were supplied for processing, it was for the Department to show that it was not on principal to principal basis. In any case further documents should have been looked into by the learned adjudicating authority and investigations should have been done in this regard with the job workers. Without such investigation the same could not be disposed of by stating that there was no correlation between these goods as well as the goods which are stated to have been manufactured. He pointed out that such questions do not arise at all during the adjudication proceedings and therefore this finding in para 12.6 is not legal and proper. He therefore pointed out that the principles of natural justice are violated in view of the fact that all the documents which are placed before the adjudicating authority were not taken into consideration and the same was brushed aside without making any investigation in this behalf.
3. We have heard the learned JDR Shri Arulswamy. He drew our attention to para 12.4 of the impugned order and stated that the learned Collector had taken notice of the statement given by Shri Sundararajan one of the partners and it was extracted in the impugned order. He pointed out that in that statement Shri Sundararajan has clearly stated that the process was carried out in a particular manner, but nowhere in the statement he had submitted that this process was not carried on by the appellants. He also relied on the reasonings in para 12.5 of the impugned order and justified the same.
4. We have considered the submissions of both the sides. The point for determination is whether the duty demand in this case against the appellant holding them as the manufacturer is borne out by the evidences on record. We have perused para 12.5 of the impugned order.
The learned adjudicating authority has merely stated that in his statement Shri Sundararajan stated the processes through which the copper was moulded but nowhere in the statement it was mentioned that the appellant was not carrying on the manufacture. The mere fact that the appellant had not stated in his statement that they were not the manufacturer itself will not go to show that they are the actual manufacturers.
5. Any how it is seen that the statement has not been looked into in the proper perspective. Nowhere in the statement the appellant had admitted that they were doing the manufacture by themselves. On the contrary the appellants have produced evidence to show that the goods were sent to the job-workers and the job-workers were carrying on manufacturing processes. Therefore the adjudicating authority was required to look into those documents and cross-verify to find out the truth or otherwise of the same. It was for the Department to verify as to whether the relationship between the manufacturers and the appellants was on principal to principal basis or otherwise. It is also likely that part of the goods may be manufactured by the appellant and part might have been manufactured by other manufacturers. However we are not expressing any opinion in this regard. These evidences are to be looked into by the adjudicating authority and thereafter a conclusion should have been drawn in the impugned order. No such exercise has been done by the adjudicating authority as could be seen from para 12.6 of the impugned order. For this reason the orders passed by the adjudicating authority is not proper.
6. As far as the limitation aspect is concerned it is seen that the appellant has taken a plea that there are several other manufacturers who are doing the same process and the Department has not proceeded against any one of them. The contention of the learned Advocate is that in view of the fact that the Department has not proceeded against any one of them, the appellant had a bona fide belief that these are not chargeable to duty. It is further seen that bi-metal scraps were sold to many parties by the manufacturers of bi-metal powder and the position should have been verified in this regard. If there is a general practice in the trade with respect to this aspect and if the Department also has not taken any proceedings against others, then this fact will be relevant for deciding the issue of limitation which was pleaded by the appellant. The learned lower authority has not adverted to this plea of the appellant which is very material for deciding the limitation aspect in this case. Therefore in view of the above reasonings we set aside the impugned order and allow the appeal by remand for de novo adjudication by the adjudicating authority in terms of our observations mentioned above. All legal pleas with respect to the Modvat credit as well as valuation are allowed to be raised by the appellants during the adjudication proceedings.