The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that piecemeal adjudication was not permissible and remanded the matter to determine the MRP as per Rule 4 of the Central Excise (Determination of Retail Sale Price of Excise Goods) Rules, 2008.
Three appeals had been filed by Sunders International and the revenue respectively assailing part of the impugned Order passed by the Commissioner of Customs, Central Excise and Service Tax, Goa. A common challenge made in all these appeals was about the manner of adjudication of the show cause notice by the Adjudicating Authority.
The show cause notice stated that Sunder’s International had misclassified the products manufactured by them, undervalued the said product by not adopting MRP-based assessment under section 4A of Central Excise Act, 1944, and also clandestinely cleared them from the factory to evade the Central Excise duty and demanded Rs.1,36,29,729/-.
The counsel who appeared on behalf of the company submitted that the appeals had been filed for not deciding the issue of extended period and determination of RSP/MRP and re-determination of the MRP under Rule 4 of the Determination of Retail Sale Price of Excise Goods) Rules for the past period. He stated that the notification relied on by the department which stated the goods on which the provision of Section 4A of the Central Excise Act would apply do not fall within the ambit of the said notification therefore Section 4A of the Central Excise Act has no application at all and there was no need for affixing any MRP/ RSP on the packing.
He further submitted that they had sought to cross-examine the investigation officers to ascertain how they arrived at the RSP/MRP but the same was not granted. He also stated that the extended period should not be invoked as the classification of product was within the knowledge of the department as they were regularly filing their returns and that there was no malafide intention or suppression of facts on their part.
The counsel who appeared on behalf of the revenue submitted that the methodology adopted by the department, for ascertaining the MRP of similar products of other manufacturers, to work out the duty liability of the appellant was as per law and the adjudicating did not fulfill its function as a quasi-judicial authority as the duty liability along with interest and penalty was not decided by them. He further submitted that the adjudication of show cause notice cannot be done piecemeal but in its entirety.
The two-member bench consisting of C J Mathew (Technical Member) and Ajay Sharma (Judicial Member) after hearing both sides held that “Piecemeal adjudication is the least of the judicial virtues which we do not approve. The learned Commissioner has completed only a part while another part either has been left open or left to the department and by this approach he would be triggering another round of litigation”. They held that the denial of cross-examining the officers who investigated the case was not justified because justice should not only be done but must be seen to be done.
The bench also approved the dropping demand of Rs.1,36,29,729/- as it was accepted by the department and no appeal was filed against it by the company, having attained finality. The appeals were allowed by way of remand.
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