2023 (9) TMI 289 - AT - Central Excise

Principles of natural justice - SCN not decided completely but in piecemeal - non-ascertainment of MRP - non-adjudication of the issue of time bar/extended period - HELD THAT - Time and again the Hon ble Supreme Court has deprecated the practice of piecemeal adjudication. If the piecemeal adjudication is permitted and department is permitted to demand duty after carrying out the exercise as directed in the impugned order then another issue will crop up whether another show cause notice be issued for the very same period/goods for which earlier show cause notice has already been adjudicated - the adjudicating authority ought to have worked out the MRP and after allowing admissible abatement should have worked out the duty demand instead of issuing directions to the department to do the same after determining the same under Rule 4 ibid. After working out the duty the adjudicating authority ought to have adjudicated on the issue of penalty or interest also. The invocation of extended period of limitation which is very important aspect of the matter has also been left open whereas the same ought to have been decided before going into the other issues because if the assessee succeeds on that issue then there would have been very less period or no period left for adjudicating the issue on merits. Piecemeal adjudication is the least of the judicial virtues which is not approved. So far as the denial of cross-examination of the officers who investigated the case is concerned there are no valid justification for denying the same to the assessee because justice should not only be done but must be seen to be done. Matter remanded back to the adjudicating authority for deciding the same afresh after following the principle of natural justice and giving proper opportunity of hearing to the assessee.

Summary

Issues Involved:
The judgment deals with the issue of piecemeal adjudication by the Adjudicating Authority, specifically whether leaving certain issues open while deciding a show cause notice is justified.

Adjudication in Piecemeal:
The appeals were filed by the department and the assessee challenging part of the Order passed by the Commissioner. The main issue was whether the Commissioner was justified in not deciding the show cause notice completely but in piecemeal, leaving open issues such as ascertaining the MRP and adjudicating the issue of time bar/extended period. The show cause notice involved misclassification, undervaluation, and evasion of Central excise duty. The Commissioner dropped a demand amount, upheld the classification, and directed determination of MRP under Rule 4 of Central Excise Rules, leaving issues about time bar and penalties open until MRP determination.

Arguments and Analysis:
The Assessee's counsel argued against piecemeal adjudication, stating that the Notification specifying goods for MRP application did not cover the products in question. They also sought cross-examination of investigation officers. The Revenue's representative contended that the adjudication authority erred in keeping time bar and penalties open, and defended the methodology used to ascertain MRP. The Tribunal noted that piecemeal adjudication is discouraged by the Supreme Court and that the adjudicating authority should have determined MRP, duty liability, interest, and penalty in one go.

Decision and Remand:
The Tribunal found shortcomings in the impugned order, criticizing the delegation of determining duty after MRP calculation and allowing CVD credit without deciding the demand issue. They emphasized that extended period invocation should have been decided first. The Tribunal set aside the impugned order and remanded it back to the adjudicating authority for a fresh decision, stressing the importance of natural justice and proper hearing. The appeals were allowed by way of remand for a comprehensive reevaluation.

Separate Judgement:
The judgment was delivered by MR. C J MATHEW, MEMBER (TECHNICAL) AND MR. AJAY SHARMA, MEMBER (JUDICIAL).