Full Judgment
In September, 1990, pursuant to the arrangement IFT coils were manufactured produced in the premises of M/s Pixie Industries and after they were produced, the final alignment, inspection, quality control check & packing was done by the appellants. The coils were recorded and cleared only after payment of appropriate duty of Excise in the rocrds of the appellants.
2. On 6.8.91, a team of the Central Excise Officers visited the unit conducted inquiries especially regarding 21 Nos. of winding apparatus and clearance of 89,800 nos of IFT Coil & details about the availment of modvat credit. They also drew a panchnama dated 14.8.91. A Show Cause dated 5.2.92 was there after issued.
2.2 The notice alleged during the period from Oct 90 & till 06/08/91, the assessee had wrongly availed modvat credit of Rs. 1,26,051.82, on inputs used in the manufacture of IFT coils, and violated the provisions of Rule 57 A. A detail reply was thereafter sent by the appellant and a hearing was held on 20.8.96. A corrigendum to the Show Cause Notice dated 5.2.92 was issued and again a hearing was fixed on 29.11.96, since the letter intimating this new hearing was received only on 28.11.96 the appellants could not attend the hearing.
Subsequently, a order dated 22.2.97 was issued by the Commissioner ordering- i) A demand of duty mentioned in para 1 and 3 of Show Cause Notice were confirmed along with interest under Section 11AB. ii) A reversal of credit under 2 and 4 was considered under 57(I) and interest was required to be made.
iii) Penalty of Rs. 5,00,000.00 was imposed on M/s Pixie Industries Ltd and M/s Penguine Electricals Pvt. Ltd under Rule 173Q(1) along interest of Rs. 50,000 each on Shri. R.N. Garodia and Arun Garodia under Rule 209A electrical transformers valued at Rs. 179800/- and fine of Rs. 50,000 was imposed.
iv) M/s Pixie Industries Ltd and M/s Penguine Electricals Pvt. Ltd were confiscated under 158Q as proposed in para and fine confiscation of 1 lakh was imposed and Hence these appeals.
(a) The perusal of the order does not reveal and mention the issue of corrigendum to the subject Show Cause Notice. Appellants have being shown to have attended the personal hearing fixed on 29.11.1996 is recorded. The issues of a corrigendum after a personal hearing cannot upheld & order passed cannot be approved.
(b) The order of the Commissioner on perusal reveals to be not a speaking order, it is merely based on the initial statements of Shri. N.R. Garodia and Shri R N Garodia without discussing the materials brought on records including statements made subsequently.
Such a order passed without considering the defence made cannot be up held. (c) The order in original appears to have been passed without examining the documents filed and the adjudicator has not given any reasons how the duty demands made by the appellants and the clearance documents filed by them about the coils made on job work in the premises of M/s Pixie Industries Ltd cannot be accepted.
Where the coils attained the marketable status would be vital as certain operations are claimed to have been conducted not on M/s Pixie premises but us appellants premises.
(d) The order also imposes a penalty in lieu of confiscation without specifying how much of it is on M/s Pixie Industries Ltd and how much on the appellant assessee as it is imposed in a consolidation fashion. It cannot be up held as imposed.
(e) in the facts and circumstance of this case we find that a prima facie case has been made out to come to conclusion that the principals of natural justice have been violated by the adjudicator and the decision impugned herein as arrived is required to be set aside with directions that the notices should be heard and defence reply/materials considered and thereafter a finding arrived on the issues involved in this case. This appeal is therefore required to be allowed as remand to the Commissioner.
(f) Since we have come to a finding that, the matter requires denova consideration we refrain from arriving at any findings on other grounds on merits as raised before us to demonstrate the manufacture of the said entities and also as regards time bar and penalties in this case. All issues are kept therefore open & left for the appellants to raise before the adjudicating authority who will arrive at the appropriate decision thereon.
4. In view of above, these appeals are allowed as remand to the original authorities.