2002 (12) TMI 538 - AT - Central Excise

Summary

Issues:
Appeal against demand of duty, interest, and penalty - Validity of evidence from recovered note books - Invocation of Sections 11AC and 11AB for penalty and interest.

Analysis:
The case involved an appeal by M/s. Balbir Steels Pvt. Ltd. against the demand of duty confirmed by the Commissioner (Appeals), while the Revenue appealed against the setting aside of interest under Section 11AB and a penalty on the Managing Director. The dispute arose from the recovery of note books from M/s. Narendra Re-rolling Mills, indicating receipt of M.S. Ingots from M/s. Balbir Steels Pvt. Ltd. The initial demand was based on the alleged non-payment of duty on a portion of the ingots received. The adjudicating authority confirmed the demand and imposed penalties, which were upheld by the Commissioner (Appeals).

During the proceedings, the appellants contended that they had requested copies of evidence and statements from the note books' author, which were not provided by the Revenue. They argued that the demand solely based on the note books without proper investigation or verification was not sustainable. The Revenue, on the other hand, relied on the note books as evidence of parallel clearances by the appellants to M/s. Narendra Re-rolling Mills, claiming non-payment of duty on those transactions. However, it was noted that no statements from employees of M/s. Narendra Re-rolling Mills were recorded regarding the note books.

The Tribunal found that the note books, recovered from a third party's premises, required proper verification and examination to establish their validity. Notably, the Trade Tax Tribunal had previously quashed proceedings against the appellants, emphasizing the importance of the note books' author in assessing turnover. As the Revenue failed to record statements from M/s. Narendra Re-rolling Mills or utilize the statements made before the Assessment Officer, the demand based solely on the note books was deemed unsustainable. Consequently, the Tribunal allowed the appeal by the appellants, dismissing the Revenue's appeals due to lack of merit.

In conclusion, the Tribunal set aside the demand based on insufficiently verified note books and emphasized the necessity of proper investigation and cross-examination for evidence validity. The judgment highlighted the importance of due process and the burden of proof in establishing tax liabilities, ultimately ruling in favor of the appellants and rejecting the Revenue's appeals.