Judgment:
1. This batch of applications covers 3 different adjudication orders captioned above in respect of 3 different assessees. The facts of the case and the allegations made in the show cause notices as well as the findings are common in the above orders in respect of the assessees. On hearing both the sides, we find that the appeals themselves could be taken up for disposal together in this single order. Both the sides agreeing, this was done after granting waiver of pre-deposit of duty and penalty indicated against each applicant:2. Name of the party Duty (in Rs.) Penalty Gupta Cranes & Storage 3,00,000 C.T. Jain 15,00,000 Emtee Poly Yarn 1,27,53,988 1,27,53,988 Lata Polyster Ltd. 51,57,899 51,57,899 R.H. Agarwal 5,00,000 A.No.E/1813/01 3,70,000 A. No. E/1923/01 1,00,000 3. Although, the facts are common we will take one order as illustrative of the facts i.e. Order-in-Original No. 10 of 2001 dated 26-2-01 issued on 5-3-2001.
4. M/s. Emtee Poly Yarn Ltd. (M/s. EPY) were engaged in the manufacture of Polyester Texturised yarn/Twisted yarn having a unit at Silvasa. The Director General of Anti-Evasion investigated the intelligence of under-valuation and evasion on the part of M/s. EPY. Enquiries revealed that RG I registers maintained by M/s. EPY did not show the details such as denierage etc. of the polyester texturised yarn/twisted yarn.
It was found that the invoices issued under Rule 52A bore only the names of the buyers and did not contain details such as their address etc. It was found that the goods leaving the factory were taken to godown in Bhivandi where they were stored. The brokers used to locate the potential buyers and used to introduce them to M/s. EPY. The prices for such yarn were negotiated by the buyers and M/s. EPY and the payments were made by way of third party bearer cheque. These goods were then lifted by the buyers from the godown on the basis of the delivery orders given by the Head Office of the M/s. EPY. The local movements were done by transporters. The transporters were found to have in their possession a number of rubber stamps bearing the names of different parties which rubber stamps were impressed on the delivery orders by the transporters on the directions and at the instance of M/s. EPY. Investigations also showed that M/s. EPY had hypothecated the stock of such yarn with a bank and had filed periodical statements with the bank showing much higher value of such stocks. Statements of the persons concerned of manufacturers, transporters, and brokers were recorded. At the end of the investigations, show cause notices were issued alleging suppression. It was alleged that the prices declared to the Bank by M/s. EPY were comparable with those at which another manufacturer in Silvasa engaged in the same activity of polyester texturised/twisted yarn had sold their goods. The prices declared to the Bank were taken to be the appropriate prices at which the goods should have suffered the burden of duty. On that basis, the differential duty was calculated and the show cause notices were issued seeking recovery of the differential duty so calculated alleging contravention of the various provisions of law and seeking imposition of penalty on the concerned persons. The cases were adjudicated by the Commissioner, Central Excise (Adj.) Mumbai confirming duties and imposing penalties as shown above. The persons aggrieved by the said orders have filed the appeals and the present applications.
5. Shri T. Viswanathan, the counsel appearing for the appellants at Sr.
No. 2, 3, 4 & 5 made various arguments on merits but stressed his arguments on the denial of natural justice on the part of the Commissioner while adjudicating the cases. He drew attention to the list of events in A. No. E/1766/2001-Mum. and also showed us related correspondence. On receipt of the show cause notice dated 5-3-2000, M/s. EPY acknowledged receipt of some of the documents listed in Annexure B to the show cause notice and applied for copies of documents such as panchanama, annexures thereto, note book containing impression of rubber stamp appended to the panchanama drawn at Sainath Roadways Pvt. Ltd. which have not been received by them. At the end of July, 2000, they sought extention of 3 months for filing reply to the Show cause notice. At the end of November, 2000 they wrote to the Additional Directorate General of Anti Evasion requesting for copies of the documents and the request was repeated in January and February, 2001.
In Feb. 2001, in addition to asking for documents not yet supplied, the appellants requested for cross examination of certain persons at the time of personal hearing. Interim reply to the show cause notice was filed on 26-2-2001 which is at the same date as that of the passing of the impugned order which was received by the appellants on 15-3-2001.
6. Shri Viswanathan maintained that in the absence of the documents relied upon, the assessee could not make effective defence. This was brought to the notice of the Commissioner repeatedly. In the face of lack of supply of document also the Commissioner passed the impugned orders. Shri Viswanathan maintained that the orders suffer from denial of natural justice and deserve to be set aside on that ground alone.Sanghi Textile Processors (P) Ltd. v. CCE, 1993 (65) E.L.T. 357 (S.C.), the Supreme Court was dealing with a situation where a similar grievance was made by the assessee. The Supreme Court accepted that where the documents were voluminous, the department could not reasonably supply copies of each and every document but observed that the department could identify the essential documents and permit the assessees to take copies thereof or to make inspection thereof. We find that this is what the present applicants were seeking to do.
8. In dealing with a situation where the stakes involved were high and the copies of the documents were not supplied, the Tribunal in the case of Shivom Ply-N-Wood Pvt. Ltd. v. CCE, 2001 (133) E.L.T. 435 observed that it was incumbent on the part of the department to supply copies of all relied documents considered vital for the assessee's defence and that there was no use in supplying part of the documents relied upon and passing the ex parte order.
9. Shri V.D. Taralgati, Advocate, appeared for M/s. Sainath Roadways Ltd., and the plea advanced was that penalties imposed upon them were the result of findings of the adjudicating authority as to the culpability of the manufacturers and the claim was also made that transporters were functioning in the normal course of business and could not be charged with knowledge of any alleged conspiracy on the part of the manufacturers.
10. Shri Sarkar, D.R. arguing on behalf of Revenue highlighted the aspect of valuation. He submitted that the valuation found to be at par with the prices at which the similar goods were cleared by another manufacturer in the same society. He supports the findings of the Commissioner on other aspects also.
11. We have carefully considered the submissions. The date chart filed by the counsels in each case shows that at no stage, the complete documents relied upon to substantiate the grounds made in the show cause notice were supplied to the assessees. The counsel appearing for the appellants M/s. EPY also submitted that the request for supply of documents not relied upon, was also not granted. He relied upon the judgment of the Madhya Pradesh High Court in the case reported in 2001 (127) E.L.T. 44 (M.P.) Methodex Systems Ltd. v. UOI as to the importance of such documents. Where a show cause notice puts a burden on an assessee, it is necessary that the assessees are given a clear picture and also the chance to rebut the various allegations made in the show cause notice. In order to do this, he must have in his possession all the documents which were relied upon by the department and also those which are not relied upon but which would assist him. He should also, where the documents are voluminous have sufficient opportunity to submit his reply and to present it to the adjudicator.
Ideally, all the documents should accompany the show cause notice but where it is not done, the adjudicating authority must make them available to the assessees in time and also give them sufficient opportunity to state their case. From the documents placed before us as also from the arguments made, it is very clear that this was not done.
12. We thus find that in dealing with the issues raised in the show cause notices and in passing the adjudication orders now impugned before us, the ld. Commissioner had not given sufficient opportunity to the appellants to state their case before her. Her orders, therefore, suffer from denial of natural justice and do not sustain. We set aside the same.
13. We have, in our Order No. C-I/291 to 414/WZB/2002, dated 28-1-2002 [2002 (143) E.L.T. 179 (Tribunal)] in the case of JBF Industries Ltd. & others and also in Order No. C-I/477-88/WZB/2002, dated 8-2-2002 in the case of Nufab Ind. Ltd. & others, in the same facts and circumstances of the case, remanded the cases back to the appropriate jurisdictional authority for adjudication de novo. Following the same, in these cases also, the proceedings are remanded back to the appropriate jurisdictional authority for adjudication de novo. Since the revenue involved is large, we deem it proper to prescribe a time frame for the de novo proceedings. The appropriate adjudicating authority shall within two months from the receipt of this order shall make available documents as asked for by the noticee. The noticees shall file complete and proper replies to the various allegations within two months after the receipt of the documents by them. The appropriate adjudicating authority shall, thereafter, direct them to appear before him giving sufficient time for them to appear and then pass appropriate orders.
Both sides agree to comply with these directions.