CCE Delhi Vs Jindal Nickel And Alloys Ltd & Ors (Delhi High Court)
The case involves an appeal by the Revenue (Union of India) against an order passed by CESTAT, New Delhi, concerning the alleged clandestine manufacture and removal of stainless steel (SS) flats by Jindal Nickel & Alloys Ltd. The Department claimed that the company had a production capacity of 13,580 MT per annum for SS Ingots, while the company submitted evidence, including a Chartered Engineer certificate, indicating a capacity of 1,963 MT per annum. The core dispute centered on whether the company’s installed furnaces could simultaneously produce the claimed quantities of ingots and whether the alleged removal of excisable goods was substantiated.
The proceedings began with a show-cause notice issued in August 2005, followed by an Order-in-Original in December 2009, which confirmed a duty demand. The company appealed to CESTAT, which remanded the matter for further adjudication, directing the Commissioner to allow cross-examination of witnesses, verify actual production against electricity and fuel consumption, and consider technical opinions regarding furnace capacity. CESTAT emphasized that reliance solely on third-party documents and statements without cross-examination violated principles of natural justice.
During the remand proceedings, cross-examinations revealed that scrap dealers and other witnesses lacked documentary records to corroborate their statements, undermining the Department’s allegations. The Commissioner also failed to obtain independent technical opinions on furnace capacity, instead relying on assumptions and documents later disputed. Evidence showed that only one transformer was installed at the time of the inspection, limiting production capacity, contrary to the Department’s assertion that multiple shifts and furnaces could achieve higher outputs. Computer printouts and loose slips seized from third parties were found inadmissible under Section 36B of the Central Excise Act, as the strict conditions for their use as evidence were not met.
