2009 (11) TMI 795 - AT - Central Excise

Summary

Issues:
Alleged clandestine removal of processed fabric without duty payment; Cross-examination denial; Evidence sufficiency for duty liability; Application of natural justice principles.

Analysis:
The case involved allegations of clandestine removal of processed fabric without duty payment by two appellant companies. The Tribunal ordered one company to pay duty of Rs. 86,01,121 along with interest and penalty, while the other company and their directors were subjected to penalties. The appellants contended that the finding of clandestine removal lacked concrete evidence and was based on statements without providing an opportunity for cross-examination. They argued that the accusation was primarily due to discrepancies in records, which they attempted to explain, and lacked confirmation from buyers. The respondent, however, defended the findings, citing statements of deponents and other evidence supporting the duty liability. The Tribunal considered precedents and found fault with only part of the duty liability, specifically Rs. 64 lakhs, as the statements lacked sufficient corroboration. They noted the failure to allow cross-examination as a breach of natural justice, directing the deposit of Rs. 22 lakhs with interest, waiving the remaining amount pending appeal disposal. Compliance was required by a specified date.

The Tribunal scrutinized the evidence and arguments presented by both parties. While acknowledging the weight of statements from deponents, they emphasized the necessity of corroborative evidence to establish duty liability. The Tribunal found fault with the lack of corroboration for a significant portion of the duty imposed, reducing the liability to Rs. 64 lakhs. They highlighted the importance of natural justice principles, particularly the right to cross-examination, and deemed the denial of this right as a failure in the proceedings. Consequently, the Tribunal ordered the deposit of a reduced amount, allowing for the appeal process to proceed without the immediate payment of the remaining liability. The decision aimed to balance the interests of both parties while upholding procedural fairness and legal standards.