SREE RAMAKRISHNA CATTLE FEED Vs. CCE

JUDGEMENT

(1.) M /s. Sree Ramakrishna Cattle Feed Manufacturers (SRK, for short) were engaged in the manufacture of cattle feed out of rice bran and molasses. Officers of Central Excise visited their factory on 9 -8 -96 and conducted scrutiny of their statutory records and other documents. Later on, statements were recorded from Sri S. Ramachandran, proprietor of the above business and also from numerous other persons who were dealing in rice bran. It appeared to the department that a quantity of 214.44 MTs of molasses procured duty -free from various sugar mills during the period 21 -5 -91 to 24 -7 -96 for manufacture of cattle feed was not utilised for the said purpose and was removed illicitly. Therefore, a show cause notice was issued to them demanding duty on the said quantity of molasses under Rule 196(2)(iv) of the Central Excise Rules, 1944 and proposing penalties on the party under Rules 173Q and 209 of the said Rules. M/s. SRK denied the allegations of the department and contested the demand of duty. The Commissioner of Central Excise, who adjudicated on the dispute, confirmed the above demand of duty against the party and imposed a penalty of Rs. 5000/ - on the proprietor, Sri Ramachandran. Hence the present appeals by M/s. SRK and Sri Ramachandran.

(2.) LD . Counsel for the appellants submitted that the demand of duty was based on the allegation that M/s. SRK had unauthorizedly sold duty -free molasses at high price to M/s. Sakthi and Devi Oil Mills, Virudhunagar. SCN noted that such unauthorized sale of molasses was admitted by Sri Ramachandran and Sri Anandrajan of Sakthi and Devi Oil Mills. Ld. Counsel pointed out that Sri Ramachandran never made any such admission in any of his statements and also that no copy of any statement of Sri Anandrajan had been supplied to the appellants. According to Id. Counsel, the demand of duty was ill -founded and also violative of natural justice. The Commissioner's order upholding the allegations raised in the SCN is not sustainable, according to Id. Counsel. Ld. JDR reiterated the findings of the Commissioner.

(3.) WE note that two statements, one dated 14 -2 -97 and the other dated 26 -3 -97, were recorded from Sri Ramachandran. We have perused both these statements and have found that it was clearly stated by Sri Ramachandran that the duty -free molasses bought by them had not been used for any purpose other than manufacture of cattle fodder. Nowhere in these statements did we come across any such admission by Sri Ramachandran as claimed by the department. It is also noticed that any statement of Sri Anandrajan does not figure in the list of documents relied upon in the SCN (vide Annexure -I to the SCN), though his statement was actually relied upon in the notice. It is obvious that any copy of Sri Anandrajan's statement was not supplied to the appellants. Hence there is clear negation of natural justice to the party in this case. This infirmity of the SCN is not reparable at this stage.