Judgment R. Sudhakar, J. 1. This civil miscellaneous appeal, at the instance of the Revenue, raises the following substantial questions of law:- ''(1) While the Hon'ble Supreme Court in the case of State of Punjab v. Bhag Singh reported in 2004 (164) ELT 137 (SC) has held that the first Court of appeal ought to have re-appreciated the entire evidence on record independently and rendered its findings objectively as regards the guilt or otherwise, whether the Hon'ble Tribunal is right to set aside the Order-in-Appeal without deciding the case on its merits without even remanding the case to its original jurisdiction for a decision afresh on the ground of violation of the principles of natural justice? (2) While the Hon'ble Tribunal, Delhi in the case of Paras Laminates (P) Ltd., reported in 2004 (176) ELT 656 in the similar facts and circumstances of cases, has categorically held that no violation of the principles of natural justice if the Manager was not produced for cross examination especially when the assessee themselves have already admitted the contents of the statements and acted on it by complying with the payment of duty, whether the conclusion of the Hon'ble Tribunal in the present case to set aside the case solely on the ground of violation of principles of natural justice, is not patently perverse? 2. The brief facts that led to the above appeal are as follows. The respondent-assessee is engaged in the manufacture of pneumatic products, namely, pneumatic cylinder, pneumatic valves and parts thereof and the dispute in this case related to the period 1994 to 1999. They manufactured tools, dies and moulds required for the pneumatic products and had filed the declarations under Rule 173B and 173C(1) of the Central Excise Rules, 1944 declaring the classification and prices for such moulds, tools and dies before the department. They also paid the applicable excise duty on 25.6.99 and 13.7.99 and cleared the goods to the job workers. After payment of excise duty, the respondent/assessee availed the Modvat credit on the duty paid in the months of June & July, 1999 and the department was also duly informed. However, the department did not accept it. Therefore, the assessee addressed a letter dated 5.11.99 requesting the Additional Commissioner of Central Excise to clarify the issue as to whether the assessee would be entitled to avail the Modvat credit on the excise duty paid. However, the department did not accept it. Therefore, the assessee addressed a letter dated 5.11.99 requesting the Additional Commissioner of Central Excise to clarify the issue as to whether the assessee would be entitled to avail the Modvat credit on the excise duty paid. The matter was referred to the Chief Commissioner of Central Excise and finally by a letter dated 1.2.2000, the Additional Commissioner of Central Excise informed the assessee that necessary instructions had been issued to the Deputy Commissioner of Central Excise to allow the Modvat credit for the tools, dies and moulds cleared to the job workers prior to 1999, which was done without payment of duty. However, it was claimed by the respondent-assessee that permission was sought from the jurisdictional Assistant Commissioner of Central Excise and the goods were cleared on the basis of such permission letter. A show cause notice was issued on 23.12.99 alleging that the tools, dies and moulds were cleared to the job workers without payment of duty and for recovery of the credit of Rs.8,83,320/-. The assessee filed a reply to the notice. However, the adjudicating authority did not accept the stand of the assessee and passed an order as follows:- ''(i) Demanding and confirming an amount of Rs.8,83,320/-as the duty payable on the tools, dies and moulds cleared by the assessee during the relevant period under the proviso to Section 11A(1) of the Central Excise Act, 1944. (ii) Appropriating a sum of Rs.8,83,320/- already paid by the assessee towards the duty liability. (iii) Imposing a penalty of Rs.8,83,320/-under Section 11AC of the Central Excise Act, 1944 read with Rule 173Q of the Central Excise Rules, 1944. (iv) Demanding interest at appropriate rates under Section 11AB of the Central Excise Act, 1944 on the sum of Rs.8,83,320/-. (v) Disallowing the Modvat credit of Rs.8,83,320/-availed by the assessee and ordering recovery of the said amount under Rule 57U(3) of the Central Excise Rules, 1944. (vi) Imposing penalty of Rs.8,83,320/-under Rule 57U(6) read with Rule 173Q of the Central Excise Rules, 1944. (vii) Demanding interest at appropriate rates under Section 11AB of the Central Excise Act, 1944 on the amount disallowed under Col.(v).'' 3. As against the above order, an appeal was filed to the Commissioner of Central Excise (Appeals). (vi) Imposing penalty of Rs.8,83,320/-under Rule 57U(6) read with Rule 173Q of the Central Excise Rules, 1944. (vii) Demanding interest at appropriate rates under Section 11AB of the Central Excise Act, 1944 on the amount disallowed under Col.(v).'' 3. As against the above order, an appeal was filed to the Commissioner of Central Excise (Appeals). The first appellate authority confirmed the order of the adjudicating authority, except reducing the penalty imposed under Section 57U(6) of the Central Excise Act read with Rule 173Q of the Central Excise Rules from Rs.8,83,320/- to Rs.2,00,000/-. In its order, the first appellate authority relied upon a statement of one Mr. Muralidharan and came to the conclusion that the finding of the adjudicating authority as to the removal of goods to the job workers without payment of duty, was correct. The first appellate authority confirmed the order of the adjudicating authority in other aspects, except with regard to penalty. 4. Aggrieved by the said order, the assessee went before the Customs, Excise and Service Tax Appellate Tribunal and the Tribunal, placing reliance on the decision in ITC Ltd. v. Commissioner of Customs, Chennai (2003) 153 ELT 366, was of the view that the reliance placed by the first appellate authority on the statement of Mr. Muralidharan and the allegations based on such statement were neither dealt with in the show cause notice nor in the order of the adjudicating authority and therefore the order travelled beyond the stand of the department and therefore the impugned order was set aside solely on the ground that there has been a violation of the principles of natural justice and as a result, the penalty and interest also stood expunged. It is against the said order, the Revenue is in appeal before us. 5. Mr. S. Thirumavalavan, learned standing counsel contended that the two substantial questions of law raised in this appeal are not on the merits of the claim of the respondent-assessee, but on the manner in which the Tribunal has proceeded to allow the appeal finding fault with the order of the first appellate authority in placing reliance upon a statement of a person which did not form part of the show cause notice or the adjudication order. Even if this statement is to be eschewed for the purpose of appeal, the Tribunal should have gone into the merits of the case as has been adjudicated by the original authority and even if the findings of the first appellate authority are erroneous, at best, it should have remanded the matter to consider the issue on merits de hors the statement. But in this case, the Tribunal has simply allowed the appeal without delving into the merits of the case. This approach of the Tribunal cannot be sustained, as the Tribunal should have at least re-appreciated the entire gamut of the case as adjudicated by the original authority and should have come to a definite conclusion as to whether the department's claim for excise duty and penalty is justified or not. 6. We heard Mr. K. Jayachandran, learned counsel for the respondent-assessee, who was at pains to point out that on merits they have an excellent case, inasmuch as the duty was paid by the assessee and only thereafter the goods were cleared to the job workers, as a consequence, the assessee is entitled to avail the Modvat credit on the duty paid. This is an issue on facts which cannot be re-agitated before the Tribunal or the Commissioner of Central Excise (Appeals), as the case may be. It is also the case of the assessee that there was no suppression of information about the clearance of goods, as permission was sought for, and thereafter the goods were sent to the job workers. This issue should have been gone into by the Tribunal on merits. 7. We find that the order of the Tribunal suffers from an error apparent on the face of the record, as the statement of the said Mr. Muralidharan, on which reliance was placed by the first appellate authority, is one factor which could have been considered for the purpose of deciding the appeal. If the Tribunal was of the view that such statement should be eschewed as inadmissible, it ought to have gone into the merits of the case, on the basis of the adjudication order which was the subject matter of challenge. If the Tribunal was of the view that such statement should be eschewed as inadmissible, it ought to have gone into the merits of the case, on the basis of the adjudication order which was the subject matter of challenge. It is another matter if the Tribunal had set aside the order of the first appellate authority finding error in relying upon the statement which did not form part of the show cause notice and remanded the matter to the said authority. We express no opinion on that for the present. But the Tribunal, if not inclined to accept such a statement, should have decided the issue on merits, as it had all the powers to appreciate the entire gamut of the case of the assessee as well as the department. As the Tribunal has failed to do so, we find the said order in error. In the result, we allow the appeal setting aside the order of the Tribunal and remand the matter to the Tribunal for fresh consideration on all aspects of the case. Accordingly, the first substantial question of law is answered in favour of the Revenue. We find no reason to answer the second substantial question of law, which is purely factual in nature, in view of the findings rendered above. There is no order as to costs.