2023 (2) TMI 777 - HC - Central Excise

Violation of principles of natural justice - non-grant of opportunity of hearing - denial of cross-examination - entire Show Cause Notice is based on the Statements recorded under Section 14 of Central Excise Act and the impugned order has confirmed the demand qua M/s.Gyscoal Limited on the basis of those statements which are not subjected to cross examination - HELD THAT - It is observed that all the hearings were granted physical hearing that too during complete lockdown and last hearing was virtual hearing granted only to main noticee with respect to only one show cause notice and noticee had sent the correction in record of personal hearing, which is not taken on record. However, there is an admission on the part of the Original Adjudicating Authority in its order in para 38.2. In this view, non-granting of effective hearing itself is in gross violation of natural justice. Denial of cross-examination - HELD THAT - The Hon ble Apex Court in case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II 2015 (10) TMI 442 - SUPREME COURT , was dealing with a case where the assessee had not been allowed cross examination of the witnesses by the adjudicating authority though the statement of those witnesses were made the basis of the impugned order. It was held by Supreme Court that not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. The authority concerned is seeking to rely upon certain statements following the various decisions of this Court, the dialect of which is not necessary and the decision of the Apex Court is sufficient enough to bring to the fore the requirement of permitting the cross examination of witnesses whose statements are sought to be relied upon by the authorities - the order impugned passed by the authority concerned deserves to be quashed and set aside. Let the adjudicating authority decide the issue of the cross examination of the witnesses in two weeks thereafter - petition alllowed.

Summary

Issues involved:
1. Challenge to ex-parte Order-in-Original for alleged violation of natural justice.
2. Non-availment of opportunity for cross-examination and personal hearing.

Analysis:

Issue 1: Challenge to ex-parte Order-in-Original
The petitioners challenged the ex-parte Order-in-Original passed by the Commissioner Central GST and Central Excise, alleging a violation of natural justice as they were not heard. The petitioners, including a company and individuals, were accused of availing Cenvat Credit without receiving goods mentioned in invoices. The petitioners contended that statements were recorded without cross-examination, and personal hearings were scheduled during a nationwide lockdown, impacting their ability to present their case effectively. The petitioners sought various reliefs, including quashing the impugned order and allowing cross-examination of witnesses.

Issue 2: Non-availment of opportunity for cross-examination and personal hearing
The High Court found a complete denial of natural justice as the petitioners were not granted effective personal hearings and the opportunity for cross-examination of witnesses, as required by law. The Court emphasized the importance of maintaining a record of personal hearings and written submissions. Referring to a Supreme Court judgment, the Court highlighted the necessity of permitting cross-examination of witnesses whose statements are relied upon by authorities. The Court concluded that the impugned order deserved to be quashed and set aside, remitting the matters for the authority to provide an opportunity for personal hearing and decide on cross-examination within a specified timeline.

In conclusion, the High Court allowed all petitions, quashed the impugned order, and directed the authority to expedite the adjudication process while ensuring cooperation from all parties involved.