Annai Poly Packs vs. Deputy Director

Held

The Court held that the petitioners' argument regarding the necessity of cross-examination in light of the Supreme Court's decision in Andaman Timber Industries Ltd. was not applicable. The Court found that the impugned orders prima facie indicated that the respondents had merely relied on the statements of buyers, which corroborated the records maintained by the petitioners, rather than solely relying on statements against the petitioners. Therefore, the demand was not solely based on such statements, negating the need for cross-examination. The Court also noted that it did not wish to make comments on the merits of the clubbing of clearances, as this issue was to be decided by the appellate authority. Consequently, the Court dismissed the writ petitions, granting the petitioners liberty to file a statutory appeal before the Commissioner of Central Excise (Appeals) within thirty days, with the condition that such appeals would be entertained and disposed of on merits without reference to limitation, provided the pre-deposit requirement under Section 35F of the Central Excise Act, 1944, was met. The Appellate Commissioner was directed to pass orders on merits without being influenced by any observations made in this order.

Facts

The petitioners, Annai Poly Packs and Banu Poly Packs, represented by their respective proprietors, challenged an Order-in-Original dated December 22, 2017, passed by the Commissioner of CGST & Central Excise, Madurai. This order confirmed demands raised by show cause notices dated January 1, 2016, and April 4, 2017. The impugned order treated the two firms as a single manufacturer, clubbed their clearances for the periods January 2012 to June 2014 and July 2015 to May 2016, confirmed confiscation of goods, imposed redemption fines, confirmed a demand of Rs. 2,61,31,886/- towards Central Excise duty, Educational Cess, and S&H Education Cess, and imposed penalties under Section 11AC and other rules. The petitioners sought to quash this order.

Key Issues

1. Whether the impugned Order-in-Original, which confirmed the demand of duty, confiscation of goods, redemption fine, and penalties, is sustainable in law, particularly concerning the clubbing of clearances of two firms and the reliance on statements without allowing cross-examination? Petitioner's Arguments: The petitioners contended that the impugned order was unsustainable. They argued that the respondents relied heavily on statements recorded under Section 108 of the Customs Act, 1962, without providing an opportunity for cross-examination, which violates the principles laid down in Andaman Timber Industries Ltd. vs. Commissioner of Central Excise, B.G.R. Industries Ltd. vs. Commissioner of Central Excise, and D.K. Basu vs. State of West Bengal. They also argued that the clubbing of clearances of the two units was incorrect. Revenue's Arguments: The respondents did not explicitly record arguments in the judgment regarding the specific grounds of challenge, but their actions in issuing the show cause notices and the impugned order suggest they relied on the investigation findings, including statements and seized goods, to establish evasion of duty.