Fosroc Chemicals (i) Pvt. Ltd. Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. the stay application was heard on 8th april, 2004. it was the submission of the learned counsel that the. commissioner had heard the appellants only on one show cause notice in terms of order passed by the tribunal in final order no. 1541/2002, dated 28-11-2002, however, in the impugned order, she has also taken up two other show cause notices which were pending adjudication and has passed the impugned order thereby, there is a violation of principles of natural justice.it was submitted that the appellants were not put to notice that the other pending show cause notices would also be taken up for hearing and appellants were not given an opportunity to make their submissions on the other two pending show cause notices. therefore, the bench called for a report from the commissioner and para-wise comments in the matter.2. learned sdr has filed the para-wise comments received from the commissioner. the commissioner has submitted that as the issue was common, therefore, the other two show cause notices were also taken up for adjudication to pass a fresh order. there is a clear indication in the para-wise comments that the appellants were not put to notice with regard to the other two pending show cause notices. in view of this situation, the bench is of the considered opinion that there is a violation of principles of natural justice. the prayer for allowing the stay application was considered along with the prayer that the appeal to be taken up for consideration and for remand for de novo proceedings. we have heard both sides in the matter.3. while allowing the stay application, the appeal was taken up for consideration. it was pointed out by the learned counsel that the appellants were dealing with 17 items which are falling under various chapter sub-headings under chapters 28, 29, 32, 38, 39 and 40. all the materials were different in nature and in use. they were not construction chemicals and they were paying duty in respect of sodium silicate falling under chapter sub-heading 2839.10; tuffprime falling under chapter sub-heading 2905.90; resicast and foxocat falling under chapter headings 3907.00 and 3824.00 and also in respect of urestly falling under chapter heading 3824.90. it is their submission that wherever there is a chapter note holding that the process of re-packing and re-labelling amounts to manufacture, they have complied with the terms of the chapter note in discharging the duty. it is his submission that no such chapter note exists in respect of headings 32 (except 3204), 39 and 40. it is his submission that the revenue has not produced evidence with regard to their contention that all the items are construction chemicals falling under chapter heading 3824.90 while the appellants had produced evidence to show that each of the 17 items are different in nature and falls specifically in different headings as pointed out. it is his submission that the board itself had issued a circular in this regard, which has also not been considered at length by the commissioner, in the order. it is his further submission that the commissioner ought to have given specific findings on the classification issue of the 17 items. as there is no specific finding on each of the item but has concluded that all items fall under chapter heading 3824.90, therefore, the order is not a speaking order and requires to be set aside and remanded for de novo consideration.4. learned sdr, in reply, pointed out that it is the department's case that all the items were construction chemicals requiring them to be classified under chapter heading 3824.90 as the chapter heading had a note stating that repacking and re-labelling amounts to a process of manufacture, therefore, the finding recorded that the items are nothing but construction chemicals is a correct finding and it is not required for remand in the matter.5. on a careful consideration, we notice from the remand order of the tribunal in the appellant's case that the tribunal had noted the 17 items and have also found the various classifications adopted by the appellants, including the brand name of the same. it was for the commissioner to have taken up the item-wise classification and dealt with the same. the same has not been considered and only a general finding has been arrived at that the items are construction chemicals.as the findings are not recorded with regard to each item in the impugned order, therefore, the order is not a speaking order.furthermore, the commissioner ought to have put the appellants on notice with regard to the other two pending show cause notices at the time of personal hearing. as no hearing has been given with regard to the said two pending show cause notices, the order cannot be said to be sustainable. in view of these defects in the impugned order, we are constrained to set aside the same and remand the matter to the commissioner for de novo consideration. at this stage, the learned counsel also submits that in terms of apex court judgment rendered in the case of elgi equipments [2001 (128) e.l.t. 52 (s.c.)], mandatory penalty equivalent to the duty cannot be imposed. the commissioner shall take up the appeals on this point also and decide the case expeditiously within a period of three months. the appellants should be given full opportunity to contest the matter and make their submissions. thus the appeal is allowed by way of remand.

Judgment:
1. The stay application was heard on 8th April, 2004. It was the submission of the learned Counsel that the. Commissioner had heard the appellants only on one Show Cause Notice in terms of order passed by the Tribunal in Final Order No. 1541/2002, dated 28-11-2002, However, in the impugned order, she has also taken up two other Show Cause Notices which were pending adjudication and has passed the impugned order thereby, there is a violation of principles of natural justice.

It was submitted that the appellants were not put to notice that the other pending Show Cause Notices would also be taken up for hearing and appellants were not given an opportunity to make their submissions on the other two pending show cause notices. Therefore, the Bench called for a report from the Commissioner and para-wise comments in the matter.

2. Learned SDR has filed the para-wise comments received from the Commissioner. The Commissioner has submitted that as the issue was common, therefore, the other two Show Cause Notices were also taken up for adjudication to pass a fresh order. There is a clear indication in the para-wise comments that the appellants were not put to notice with regard to the other two pending Show Cause Notices. In view of this situation, the Bench is of the considered opinion that there is a violation of principles of natural justice. The prayer for allowing the stay application was considered along with the prayer that the appeal to be taken up for consideration and for remand for de novo proceedings. We have heard both sides in the matter.

3. While allowing the stay application, the appeal was taken up for consideration. It was pointed out by the learned Counsel that the appellants were dealing with 17 items which are falling under various chapter sub-headings under Chapters 28, 29, 32, 38, 39 and 40. All the materials were different in nature and in use. They were not construction chemicals and they were paying duty in respect of Sodium Silicate falling under chapter sub-heading 2839.10; Tuffprime falling under chapter sub-heading 2905.90; Resicast and Foxocat falling under Chapter Headings 3907.00 and 3824.00 and also in respect of Urestly falling under Chapter Heading 3824.90. It is their submission that wherever there is a chapter note holding that the process of re-packing and re-labelling amounts to manufacture, they have complied with the terms of the chapter note in discharging the duty. It is his submission that no such chapter note exists in respect of Headings 32 (except 3204), 39 and 40. It is his submission that the Revenue has not produced evidence with regard to their contention that all the items are construction chemicals falling under Chapter Heading 3824.90 while the appellants had produced evidence to show that each of the 17 items are different in nature and falls specifically in different headings as pointed out. It is his submission that the Board itself had issued a Circular in this regard, which has also not been considered at length by the Commissioner, in the order. It is his further submission that the Commissioner ought to have given specific findings on the classification issue of the 17 items. As there is no specific finding on each of the item but has concluded that all items fall under Chapter Heading 3824.90, therefore, the order is not a speaking order and requires to be set aside and remanded for de novo consideration.

4. Learned SDR, in reply, pointed out that it is the Department's case that all the items were construction chemicals requiring them to be classified under Chapter Heading 3824.90 as the chapter heading had a note stating that repacking and re-labelling amounts to a process of manufacture, therefore, the finding recorded that the items are nothing but construction chemicals is a correct finding and it is not required for remand in the matter.

5. On a careful consideration, we notice from the remand order of the Tribunal in the appellant's case that the Tribunal had noted the 17 items and have also found the various classifications adopted by the appellants, including the brand name of the same. It was for the Commissioner to have taken up the item-wise classification and dealt with the same. The same has not been considered and only a general finding has been arrived at that the items are construction chemicals.

As the findings are not recorded with regard to each item in the impugned order, therefore, the order is not a speaking order.

Furthermore, the Commissioner ought to have put the appellants on notice with regard to the other two pending Show Cause Notices at the time of personal hearing. As no hearing has been given with regard to the said two pending Show Cause Notices, the order cannot be said to be sustainable. In view of these defects in the impugned order, we are constrained to set aside the same and remand the matter to the Commissioner for de novo consideration. At this stage, the learned Counsel also submits that in terms of Apex Court judgment rendered in the case of Elgi Equipments [2001 (128) E.L.T. 52 (S.C.)], mandatory penalty equivalent to the duty cannot be imposed. The Commissioner shall take up the appeals on this point also and decide the case expeditiously within a period of three months. The appellants should be given full opportunity to contest the matter and make their submissions. Thus the appeal is allowed by way of remand.