1 2025:CGHC:45228-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAX CASE No. 153 of 2018 The Principal Commissioner Central Tax And Central Excise Central Excise Building, Dhamtari Road, Tikrapara, Raipur, Chhattisgarh., District : Raipur, Chhattisgarh ... Appellant versus 1 - M/s Devi Iron And Power Pvt. Ltd. Village Tanda, Dharsiva Raipur, Chhattisgarh. 2 - Shri Ramanand Agrawal Director Of M/s Devi Iron And Power Pvt. Ltd. Raipur Chhattisgarh. 3 - Shri Arun Kumar Gupta Ex- Director Of M/s Devi Iron And Power Pvt. Ltd. Raipur, Chhattisgarh. 4 - Shri V. P. Goswami Manager (Sales), Of Mahamaya Steel Industries Ltd. Raipur, Chhattisgarh. ... Respondents For Appellant : Mr. Maneesh Sharma, Advocate For Respondents : Mr. Amrito Das, Advocate HARNEET KAUR Digitally signed by HARNEET KAUR Date: 2025.09.08 17:47:42 +0530 2 DB- Hon'ble Shri Justice Sanjay K. Agrawal Hon’ble Shri Justice Sanjay Kumar Jaiswal Judgment On Board 04.09.2025 1. This appeal preferred under Section 35-G(1) of the Central Excise Act, 1944 (for brevity, “the Act of 1644”) is directed against the impugned order final order No. A/51694- 51697/2018-EX(DB) dated 20/04/2018 (Annexure A/1) by which the Customs, Excise & Service Tax Appellate Tribunal (hereinafter referred as the “Tribunal”) has allowed the appeals filed by the respondents herein. 2. The instant appeal was admitted for hearing on 02/07/2019 by formulating the following substantial questions of law :- “(i) Whether the CESTAT is correct in holding that no corroborative evidence is available in this case, without going into the merits as discussed in O-in-O no. RPR/EXCUS/000/COM/04/2017 dated 10.02.2017 ? (ii) Whether the CESTAT was legally justified in disposing off the appeal before it referring to the case of Continental Cement Company Vs. Union of India 2014 reported at 2014(309) ELT 411 (All.), without appreciating the distinguishing factors of the case before it making its facts distinct from the facts of the precedents relied ?” 3. The aforesaid substantial questions of law have arisen for consideration in this appeal on the basis of following factual backdrop :- 3 (i) On 02/12/2008, the office-cum-factory premises of M/s Devi Iron and Power Pvt. Ltd. as well as the residential premises of Mohammed Nazirooddin Sheikh, proprietor of M/s KGN Consultants, Raipur, were searched and several incriminating documents/records related to alleged clandestine production and clearance of sponge iron were seized and panchnama was prepared. The factory premises of the respondent Firm was again searched and some more documents and records related to clandestine production and clearances of sponge iron by them were seized under panchnama dated 18/12/2008. (ii) The statements of several persons were recorded under Section 14 of the Act of 1944 and from the scrutiny of the seized documents, it appeared that during the period from January, 2006 to November, 2008, the respondent Company had suppressed production of 32,477.705 metric tonnes of sponge iron valued at Rs. 36,74,40,591/- and subsequently, removed the same without accounting for in the books of accounts, without issue of invoice and without payment of appropriate duty of Central Excise amounting to Rs. 5,89,93,480/-. (iii) Accordingly, show cause notice dated 14/12/2010 (Annexure A/2) was issued to the respondent Firm stating as under :- 4 “18. Now, therefore, M/s. Devi Iron & Power Pvt Ltd, Vill: Tanda, Dharsiwa Siltara Industrial Area, Raipur (C.G.) are required to show cause to the Commissioner, Central Excise Raipur having office at Central Excise Building, A/B Block, 1st Floor Tikrapara, Raipur within 30 days of the receipt of this notice as to why; (a) Central Excise duty, amounting to Rs. 5,89,93,480/- (Rupees Five Crores, Eighty Nine Lakhs, Ninety Three Thousands Four Hundreds and Eighty Only) inclusive of Education Cess and Secondary and Higher Education cess, leviable on clandestine clearance of 32477.705 MTs of Sponge Iron valued at Rs. 36,74,40,591/- as detailed in Annexure – A to this show cause notice, should not be demanded and paid by them under first proviso to sub-section (1) of Section -11A of the Central Excise Act, 1944 (b) An amount of Rs. 25,00,000/- (Rs Twenty Five Lakhs only) already deposited by M/s Devi Iron vide Challan dated 28.07.2010 should not be appropriated against the above demand; (c) Interest at the appropriate rate, on the above Central Excise duty determined to be payable under the provisions of Section 11A of the Central Excise Act, 1944, should not be charged and recovered from them, under Section 11AB of the Central Excise Act, 1944. (d) Finished goods (i.e., 32477.705 MTs of Sponge Iron) valued at Rs. 36,74,40,591/- (Rs. Thirty six crores, Seventy four lakhs, forty thousands, five hundred and ninety one only) cleared by M/s Devi Iron without issue of invoices and without payment of central excise duty, should not be confiscated under Rule 25 of Central Excise Rules, 2002. As the said goods are not available for confiscation, as to why fine in lieu of confiscation should not be imposed on them, under Section 34 of Central Excise Act, 1944. (e) Penalty should not be imposed upon them, under Section 11AC of the Central Excise Act, 1944. (f) Penalty should not be imposed upon them under Rule 25 of the Central Excise Rules, 2002” 5 (iv) The said show cause notice was adjudicated by the learned Adjudicating Authority vide OIO No. Commissioner/RPR/CEX/128/2012 dated 31/12/2012 (Annexure A/4), however, being aggrieved by the said order, the parties filed appeal before the Tribunal and vide Final Order No. 58279-58285/2013 dated 12/11/2013, the Tribunal remanded the matter to the Adjudicating Authority and thereafter, the Commissioner passed the adjudication order No. RPR/EXCUS/000/COM/04/2017 dated 10/02/2017 (Annexure A/3) whereby he confirmed the demand amounting to Rs. 5,89,93,480/- against the respondent Firm and ordered its recovery along with interest under Sections 11A and 11AB of the Act of 1944 and further imposed equal penalty under Section 11AC of the Act on respondent No. 1 and other respondents therein. (v) Feeling aggrieved and dissatisfied with the order passed by the Adjudicating Authority (Annexure A/3), the respondents preferred an appeal before the Tribunal (Appellate Authority), who by impugned Final Order No. A/51694-51697/2018-EX(DB) dated 20/04/2018 (Annexure A/1) allowed the appeal holding that clandestine removal is a very serious charge which has not been proved by the Department and no corroborative evidence was there except the loose papers which are still ambiguous and 6 relying upon the decision rendered by the Allahabad High Court in the matter of Continental Cement Company v. Union of India1, proceeded to set aside the order passed by the Adjudicating Authority, against which this appeal has been preferred by the appellant. 4. Mr. Maneesh Sharma, learned counsel for the appellant, would submit that the Tribunal is absolutely unjustified in holding that there is no corroborative evidence available on record as the Tribunal did not consider the merits of the case as discussed in detail by learned Adjudicating Authority in Order in Original dated 10/02/2017 (Annexure A/3) and further the Tribunal has wrongly placed reliance upon the decision of the Allahabad High Court in the matter of Continental Cement Company (supra) which is clearly distinguishable to the facts of the case. As such, the order impugned passed by the Tribunal be set aside and the matter be remanded to the Tribunal for deciding it afresh on the merits of the case after going through the material available on record. 5. Per contra, Mr. Amrito Das, learned counsel for the respondents, would support the impugned order and submit that the learned Tribunal is absolutely justified in setting aside the order of the Adjudicating Authority after 1 2014 (309) ELT 411 (All.) 7 clearly recording a finding that clandestine removal is a very serious charge and it has not been proved by the Department by leading corroborative evidence. Therefore, the instant appeal is liable to be dismissed. 6. We have heard learned counsel for the parties, considered their rival submissions made herein-above and perused the records meticulously. 7. It is not in dispute that the search and seizure was made by the Department in the factory premises of M/s Devi Iron & Power Pvt. Ltd., Raipur and in residential premises of Mohammed Nazirooddin Sheikh, Proprietor of M/s KGN Consultants, Raipur and thereafter, show cause notice dated 14/12/2010 (Annexure A/2) was issued to the respondent Firm for clandestine removal of finished goods, which was adjudicated by the Adjudicating Authority and after considering the statements of the witnesses and after considering 58 documents, the Order in Original dated 10/02/2017 (Annexure A/3) was passed in detail in second round of litigation whereby he confirmed the demand amounting to Rs. 5,89,93,480/- against the respondent Firm and ordered for its recovery with interest and also imposed equal penalty, which was then put to challenge by the respondent Firm before the Tribunal by filing the appeal and by impugned order dated 20/04/2018 (Annexure A/1), 8 the Tribunal allowed the appeal and set aside the order of the Adjudicating Authority by briefly recording its findings in paragraphs 7 and 8, which state as under :- “7. In the instant case, the sole basis for demanding the duty is the diary and loose paper sheets from Shri Mohammed Nazirooddin Sheikh but the fact remains that he was working for the appellant for supervising the production as well as supplying the labour. Shri Mohammed Nazirooddin Sheikh was also having other clients for providing similar services. In the loose papers and diary the names of other clients were mentioned. Except this evidence no other corroborative documents have been collected by the Department. Neither the suppliers of the raw material nor any buyer of the finished goods were found or examined by the Department. Transportation of the clandestine good was also not traced. At the time of search a sum of Rs. 25 Lakhs was surrendered by the Director. In this regard, during the course of arguments the Ld. Counsel for the appellant submits that the surrender was made under the compulsion by the Department. 8. Clandestine removal is a very serious charge which has not been proved by the Department and no corroborative evidence was there except the loose papers which are still ambiguous as the names of the other clients were mentioned in the papers. No shortage was found pertaining to the raw material or finished goods.” 8. A careful perusal of the impugned order (relevant portion as quoted herein-above) as well as the material available on record would show that though the Adjudicating Authority has considered the evidence of the parties as well as 58 documents brought on record before passing the order dated 10/02/2017 (Annexure A/3) which is a reasoned and speaking order, but the Tribunal (being the Appellate 9 Authority) did not consider any of the said evidence as well as documents available on record and straightway came to the conclusion that clandestine removal is a serious charge which has not been proved by the Department as no corroborative evidence has been brought on record and after relying upon the decision rendered by the Allahabad High Court in the matter of Continental Cement Company (supra) proceeded to allow the appeal and set aside the order of the Adjudicating Authority. 9. The Adjudicating Authority, in its order dated 10/02/2017 (Annexure A/3), has recorded the following issues for consideration :- “23…. The issues to be decided are as under : (i) Whether Central Excise Duty amounting to Rs. 5,89,93,480/- is recoverable from the Noticee No. 1 ? (ii) Whether extended period of limitation provided under the first proviso to sub-section (1) of Section 11-A of the Central Excise Act, 1944 is invokable for recovery of the aforesaid duty ? (iii) Whether interest at the appropriate rate on the above Central Excise duty determined to be payable under the provisions of Section 11A of the Central Excise Act, 1944 is recoverable under Section 11AB of the Central Excise Act, 1944 ? (iv) If 32477.705 MTs Sponge Iron is held to be cleared by M/s Devi Iron without issue of invoices and without payment of central excise duty, whether it can be confiscated under Rule 25 of Central Excise Rules, 2002 and whether fine in lieu of confiscation should be imposed on it, under Section 34 of Central Excise Act, 1944 as the said goods are not available for confiscation ? 10 (v) Whether penalty can be imposed upon the Noticee No. 1 under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002 ? (vi) Whether penalty can be imposed upon Shri Ramanand Agrawal and Shri Arun Gupta, Directors of M/s Devi Iron, Shri V.P. Goswami and Md. Nazirooddin Sheikh under Rule 26 of the Central Excise Rules, 2002 ?” 10. After recording the aforesaid issues for consideration, the Adjudicating Authority has considered the issues and decided them collectively and has passed a detailed and reasoned order after considering the evidence of the parties and material available on record, however, in the appeal preferred by the respondent Firm against the order of the Adjudicating Authority holding clandestine removal of finished goods by the respondent Firm, the Tribunal, being the Appellate Authority, neither formulated any point/question for determination and without considering the evidence and other documents available on record, proceeded to record a brief finding that the sole basis for demanding the duty is the diary and loose paper sheets seized from Shri Mohammed Nazirooddin Sheikh, however, since clandestine removal is a very serious charge and no corroborative evidence has been brought on record by the Department to prove the same, proceeded to set aside the order of the Adjudicating 11 Authority, which in our considered opinion, is unsustainable and bad in law. 11. It is well settled that the judgment of the appellate court must reflect its conscious application of mind and record findings supported by reasons, on all the issues arising along with the contentions put forth, and pressed by the parties for decision of the appellate court (See: Santosh Hazari v. Purushottam Tiwari (Deceased) by LRS2). 12. In view of the aforesaid legal discussion and analysis, we are of the considered opinion that the Tribunal, being the first Appellate Authority, ought to have recorded points for determination and after consideration and a detailed discussion on each of the points so framed, ought to have recorded its findings supported by reasons thereof, which has not been done. As such, the impugned order dated 20/04/2018 (Annexure A/1) is hereby set aside and the substantial questions of law are answered in favour of the appellant and against the respondent Firm. Matter is remitted to the Tribunal for considering the appeal afresh on merits and to decide it in accordance with law after hearing the parties and considering the material available on record within a period of three months from the date of receipt of a copy of this order. It is made clear that this 2 (2001) 3 SCC 179 12 Court has not expressed any opinion on the merits of the matter. 13. Accordingly, this appeal is allowed to the extent indicated herein-above. A copy of this order be sent to the concerned Tribunal for information and compliance. Sd/- Sd/- (Sanjay K. Agrawal) (Sanjay Kumar Jaiswal) Judge Judge Harneet