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2016 (7) TMI 234 - CALCUTTA HIGH COURT

2016 (7) TMI 234 - CALCUTTA HIGH COURT - 2016 (338) E.L.T. 491 (Cal.) - Waiver of pre-deposit - Demand of duty - clandestine removal of goods - Maintainability of writ petition - alternative appellant remedy - Despite there being an appellate remedy under Section 35B of the Act, the petitioners claim that the appeal would not be efficacious in view of the statutory pre-deposit that is required to be made and that, in any event, the challenge is primarily on the ground of the breach of the princi .....

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impression, such evidence has first to be discredited upon a cogent discussion thereon before the original suspicion of wrongdoing is exalted to a final finding. It is such exercise which has been missed in the impugned order. It is for such reason that the decision-making process cannot stand the scrutiny in this extraordinary jurisdiction of overall superintendence. - That does not mean that these petitioners are paragons of virtue. It is evident from the material obtained by the departmen .....

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ed to their purchasers as to their status may not have been the only relevant consideration for the Commissioner. - However, to the extent it is evident from even the submission of the petitioners as recorded in the order impugned that the petitioners may have represented themselves as manufacturers to their purchasers, it is necessary that the petitioners be put on terms and required to make a deposit for the matter to be considered afresh by the concerned Commissioner. - Petitioner dir .....

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he petitioners have been held to be manufacturers within the meaning of Section 2(f) of the Central Excise Act, 1944 and found to have evaded excise duty in excess of ₹ 11 crore and, as such, liable to a substantial penalty. Despite there being an appellate remedy under Section 35B of the Act, the petitioners claim that the appeal would not be efficacious in view of the statutory pre-deposit that is required to be made and that, in any event, the challenge is primarily on the ground of the .....

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he petitioners say that they have held themselves out as manufacturers to their purchasers, but that would not imply that the petitioners can be deemed to be manufacturers under the said Act for the purpose of making the petitioners liable to pay excise duty on the goods purchased from suppliers and sold to end-users. In particular, the petitioners complain of the department and the concerned officer having picked on four of the petitioners suppliers as specimen suppliers and condemning the peti .....

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rse of the findings rendered in the order impugned without reference to the evidence on record. The petitioners seek to demonstrate that the major findings are contrary to the evidence and without any discussion on the evidence at all. Several show-cause notices were issued to the petitioners for the petitioners being perceived to have evaded excise duty for the period February, 2011 to March, 2013 and, thereafter, for the subsequent periods upto the end of financial year 2014-15. The principal .....

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to have purchased divers goods were non-existent. The reason for the department perceiving the four entities to be non-existent was that the Kolkata Municipal Corporation did not have records of such entities, or some of them, having any live trade licence. Though the petitioners attempted to furnish some documents emanating from at least two of such four entities and apparently confirming the transactions between such entities and the petitioners, the concerned commissioner who authored the imp .....

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the inquiry was made or was responded to, though the same may have been several years after the relevant transactions had taken place. The other suppliers cited by the petitioners were not taken into consideration by the concerned commissioner, whether as to their existence or as to the credibility of the documents evidencing transactions between such suppliers and the petitioners, in the order impugned. As to the manufacturing facility at Bellilious Road, there was an internal report prepared .....

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he Landis machine was found to be uninstalled and old and covered with dust and filth … ; and, the brick furnace carried a similar observation. The raw materials discovered at the premises were described as old and rusted. Clearly, when the department s team visited the premises to make an inventory of the manufacturing facility or the raw materials or the finished products thereat, some old and rusted raw materials were discovered and some machines were found but such machines did not co .....

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he premises and the Landis machine was found to be partly lying uninstalled in its outer shell without its integral component. There was no chimney found for the furnace at the facility to be used or operated. It may not have been necessary to notice either the department s inventory report or the private chartered engineer s report in any great detail had it not been for some of the seemingly broad statements made in course of the findings rendered in the impugned order that there was no eviden .....

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ho were indicated as such by the petitioners, but only four of them were picked out for a sweeping finding that all of the petitioners suppliers were non-existent and, since the petitioners had admittedly sold goods to their purchasers, the petitioners were, in a sense, presumed to have manufactured the goods somewhere. After all, the petitioners claimed that only a small percentage of the goods sold by them had been manufactured on job-work basis. The order impugned does not contradict such pos .....

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the evidence and without discrediting the same. That is a facet of the principle of natural justice. It is not enough for a deaf ear to be turned to a citizen in the mechanical observation of the rules of natural justice. A citizen has to be listened to and not merely heard. For the compliance of such rules, what is said by a citizen has to be considered on its content and not merely registered as a sound. The meaningful hearing of a citizen, in such circumstances, would be the appreciation of .....

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ecords or documents evidencing that the raw material or semi-finished goods were sent for job-work. If only to take an example, paragraph 11.13 of the order impugned may be referred to in such context as the failure to produce the evidence in such regard is recorded therein. It is apparent from the petitioners reply to the show-cause notice (specifically, Volume VI, page 664-665 of the present papers) that the petitioners furnished the particulars, not once but twice. Yet again, the Commissioner .....

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ge on the grounds of breach of natural justice and, even, the abdication of the authority possessed by him. The object of the present exercise is not to dissect the order or tear it to shreds. The Commissioner has otherwise exercised his jurisdiction with consummate aplomb; except that he may have slipped on prejudice. It is only to point out that when a citizen is charged with having done something wrong and some material is provided by such citizen to disabuse the authority of its impression, .....

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organisations, including government companies and private sector undertakings, that the petitioners held themselves out of as manufacturers of the electrical and transmission goods that the petitioners sold to such purchasers. This apparent misrepresentation by the petitioners appears to have overwhelmed the Commissioner and the Commissioner may have been under an impression that the petitioners were not required, upon their apparent admission, to be independently found to have manufactured the .....

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rom even the submission of the petitioners as recorded in the order impugned that the petitioners may have represented themselves as manufacturers to their purchasers, it is necessary that the petitioners be put on terms and required to make a deposit for the matter to be considered afresh by the concerned Commissioner. Accordingly, WP No.392 of 2016 is allowed by setting aside the order impugned dated December 22, 2015, subject to the petitioners depositing a sum of ₹ 50 lakh with the dep .....

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