Chakan Vegoils Mills Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. after hearing both sides for some time on the application for waiver of pre-deposit of duty of rs. 82,00,990/-, we found that it was possible to decide appeal at this stage and hence proceed to do so after waiving pre-deposit.2. the appellants herein are registered with directorate of vanaspati, vegoils & fats with the department of sugar and edible oils, ministry of foods & consumers affairs, government of india. they are also registered as users of solvent extraction oils with directorate of vanaspati and fats. they were issued with a licence for the manufacture of edible vegetable oil. concessional rate of duty has been prescribed in respect of crude vegetable oils under sr. no. 31 of notification no.17/01-cus, read with condition no. 4 and sr. no. 30 of notification no.16/00-cus read with condition no. 4. the condition is that the importer should follow the procedure proscribed in customs (import of goods at concessional rate of duty for manufacture of excisable goods) rules, 1966. on the basis of investigation carried out by the department it was of the view that the imported crude oil required for the purpose of vanaspati was not being received in the factory of the appellant but being diverted. show cause notice dated 24^th june 2005 was issued to the appellant proposing recovery of duty on the imported edible oil covering the period 30.06.2000 to 29.07.2001. the demand was confirmed by the adjudicating authority and uphold by the lower appellate authority, rejecting the contention of the appellants that there was no diversion of the imported vegetable oil.3. we find that the appellants have been in correspondence with the department from time to time bringing it to the notice of the authorities that the inspection of the relied upon documents had not taken place and, therefore, they do not have any copies of the relied upon documents as well as copies of the documents not relied upon, but necessary for them to prepare their defence. there is nothing on record to confirm that inspection had been carried out and that the appellants have copies of the relied upon documents and there is also nothing on record to show that any un relied upon documents sought by the appellants were supplied to them. further as seen from the impugned order, the appellant had produced documents in the form of return submitted to the directorate of vegoils etc. which according to them would show receipt of imported crude oil in their factory, while case of the department is that of diversion of the imported items. however, commissioner (appeals) has not considered these documents on the ground that they were not produced before the adjudicating authority.4. we are of the view that interest of justices require that the matter should go back for fresh decision to the adjudicating authority. we, therefore, set aside the impugned order and remit the case back to the adjudicating authority who shall first permit inspection of the relied upon documents and permit the appellants to take copies thereof and also furnish copies of the documents (not relied upon) asked for by the appellants to prepare their defence. the appellants are at liberty to file additional reply to the show cause notice after obtaining copies of the relied upon documents and other documents not relied upon and fresh order should be passed after extending a reasonable opportunity to the appellants of being heard in their defence.

Judgment:
1. After hearing both sides for some time on the application for waiver of pre-deposit of duty of Rs. 82,00,990/-, we found that it was possible to decide appeal at this stage and hence proceed to do so after waiving pre-deposit.

2. The appellants herein are registered with Directorate of Vanaspati, Vegoils & Fats with the Department of Sugar and Edible Oils, Ministry of Foods & Consumers Affairs, Government of India. They are also registered as users of solvent extraction oils with Directorate of Vanaspati and Fats. They were issued with a licence for the manufacture of edible vegetable oil. Concessional rate of duty has been prescribed in respect of crude vegetable oils under Sr. No. 31 of Notification No.17/01-Cus, read with condition No. 4 and Sr. No. 30 of Notification No.16/00-Cus read with Condition No. 4. The condition is that the importer should follow the procedure proscribed in Customs (Import of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 1966. On the basis of investigation carried out by the department it was of the view that the imported crude oil required for the purpose of Vanaspati was not being received in the factory of the appellant but being diverted. Show cause notice dated 24^th June 2005 was issued to the appellant proposing recovery of duty on the imported edible oil covering the period 30.06.2000 to 29.07.2001. The demand was confirmed by the adjudicating authority and uphold by the lower appellate authority, rejecting the contention of the appellants that there was no diversion of the imported vegetable oil.

3. We find that the appellants have been in correspondence with the department from time to time bringing it to the notice of the authorities that the inspection of the relied upon documents had not taken place and, therefore, they do not have any copies of the relied upon documents as well as copies of the documents not relied upon, but necessary for them to prepare their defence. There is nothing on record to confirm that inspection had been carried out and that the appellants have copies of the relied upon documents and there is also nothing on record to show that any un relied upon documents sought by the appellants were supplied to them. Further as seen from the impugned order, the appellant had produced documents in the form of return submitted to the Directorate of Vegoils etc. which according to them would show receipt of imported crude oil in their factory, while case of the department is that of diversion of the imported items. However, Commissioner (Appeals) has not considered these documents on the ground that they were not produced before the adjudicating authority.

4. We are of the view that interest of justices require that the matter should go back for fresh decision to the adjudicating authority. We, therefore, set aside the impugned order and remit the case back to the adjudicating authority who shall first permit inspection of the relied upon documents and permit the appellants to take copies thereof and also furnish copies of the documents (not relied upon) asked for by the appellants to prepare their defence. The appellants are at liberty to file additional reply to the show cause notice after obtaining copies of the relied upon documents and other documents not relied upon and fresh order should be passed after extending a reasonable opportunity to the appellants of being heard in their defence.