Full Judgment
2. The appellants are operating a Hot Air Stenter installed in their factory and they are manufacturing specified textile fabrics falling under Chapter heading Nos.52.07,52.08,52.09,54.06,54.07,55.11,55.12,55.13 and 5514 of the Central Excise Tariff Act, 1985. These items are chargeable to duty in terms of Section 3A of the Central Excise Act, 1944 read with Notification No. 42/98-CE(NT) dated 10.12.98. The Commissioner of Central Excise, Chandigarh-II vide his Order dated 25.5.95 determined the annual capacity of production of the appellants at Rs. 474.48 lacs w.e.f. 16.12.98 under the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998. Subsequently, the Commissioner passed another order dated 22.7.99 under Rule 96 ZQ(2) of Central Excise Rules, 1944 in which he determined an amount of Rs.1,14,282/- available as abatment to the party as against their claim of Rs. 1,30,645/- for the closure their stenter form 3.1.99 to 12.1.99.
The Commissioner in this order further observed that as per the determination made by him earlier, the duty liability of the party came to Rs. 5,06,100/- per month. The party was therefore, required to pay Rs. 2,61,216/- as duty for the month of December, 1998 and a sum of Rs.5,06,100/-for the month of January, 1999. Thus, he has held that the party is liable to pay a sum of Rs.7,67,316/- whereas they have paid only Rs.6,82,665/- for these months. Accordingly the Commissioner in his order has determined that the party is liable to pay the balance of Rs.84,651/- as duty short paid along with the interest @ 36% per annum and a penalty of equivallent amount. Consequently he has ordered the Range Officer to adjust the abatement amount of Rs. 1,14,282/- against this amount.
3. The present appeal is against the above order of the Commissioner. I have heard Shri K.K.Anand Adv. for appellants and Shri A.K.Jain,SDR for the respondents. Ld.Adv. for the appellants states that he does not dispute the determination of Rs. 7,67,316/- liable to be paid by his clients as compounded levy for the month of December,98 and January 99.
However, it is contended that the Commissioner has reduced their abatement claim from Rs.1,30,645/- to Rs.114,282/- without giving them any opportunity of hearing and further he has subjected them to an interest @ 36% per annum for the balance amount Rs. 84,651/- and has also imposed a penalty of an equal amount without assigning any reason.
It is argued that is an opportunity is given to them, they can establish before the Commissioner that there is no penalty liable to be imposed on them and also, the interest, if any, is liable to be charged only on Rs. 84,651/-.
4. I have carefully considered the above submissions. On perusal of the impugned order, indeed it is found that appellants have been given no opportunity to explain their case with regard to the adjustment to Rs.1,14,682/- and the reduction of their claim of abatement. The order passed by the Commissioner is in violation of the principles of natural justice. Therefore, this order is set aside and the matter is remanded to him for passing a fresh speaking order after giving a reasonable opportunity to the appellants to state their case. The appeal is thus allowed by remand in these terms.