2010 (4) TMI 850 - HC - Central Excise

Whether the appellant has been denied a fair and reasonable opportunity to establish it s case strictly in accordance with the principles of natural justice - contention of respondent that in not making available Sri Bhavani Kishore the Accountant of the appellant company as his whereabouts are not traced no prejudice is caused to the appellant inasmuch as the clues furnished by Sri Bhavani Kishore have been got verified and the corroborative material gathered has been made available to the appellant - duplicate invoice was not found accompanying the goods. The explanation offered by the appellant-company was that an error was committed in loading the truck - order-in-original passed by the sole respondent is set aside and the matter is remitted back for fresh consideration

Issues Involved:
1. Alleged duty evasion by the appellant.
2. Validity of statements obtained under duress.
3. Denial of cross-examination opportunity.
4. Principles of natural justice.

Detailed Analysis:

1. Alleged Duty Evasion by the Appellant:
The appellant, a manufacturer of Man Made Fabrics (MMF), was accused of wilful evasion of duty on goods cleared without payment of duty. The investigation by the Commissionerate of Customs and Central Excise revealed several irregularities, including inaccurately maintained books of account, unaccounted goods, and the interception of a truck carrying excess goods without duty. The adjudicating authority concluded that large quantities of MMF were clandestinely removed without payment of duty, resulting in a demand of Rs. 31,14,524/- towards duty avoided and an equal amount as a penalty under Section 11(A)(C) of the Central Excise Rules, 1944. The Tribunal dismissed the appellant's appeal, leading to the present appeals.

2. Validity of Statements Obtained Under Duress:
The appellant contended that the duty demand was based primarily on the statement of the Managing Director, obtained under duress and in a surcharged atmosphere. It was argued that the statement was full of contradictions and was retracted by the Managing Director through a sworn affidavit. The appellant claimed that the statement was not corroborated by other material evidence, making the duty evasion conclusion speculative.

3. Denial of Cross-Examination Opportunity:
The appellant argued that the denial of the opportunity to cross-examine the Managing Director and the Accountant, whose statements were crucial to the case, violated the principles of natural justice. The appellant cited precedents emphasizing the necessity of cross-examination to ensure a fair hearing, particularly when statements are retracted or obtained under duress.

4. Principles of Natural Justice:
The court emphasized that natural justice requires a fair and reasonable opportunity for the appellant to defend against serious allegations like duty evasion. The court noted that the principles of natural justice include the right to cross-examine witnesses whose statements implicate the appellant. The court found that the failure to make the Managing Director available for cross-examination denied the appellant a fair opportunity to defend itself, thus violating the principles of natural justice.

Judgment:
The court concluded that the principles of natural justice were not fully complied with, particularly the denial of cross-examination of the Managing Director. However, the court found no prejudice in the non-availability of the Accountant for cross-examination, as the corroborative material gathered from his statement was made available to the appellant. The court remitted the matter back to the respondents for fresh consideration, ensuring that a fair and reasonable opportunity is provided to the appellant to present its case. The court directed that the enquiry be completed expeditiously, preferably within six months.

Conclusion:
The appeals were allowed, and the order-in-original was set aside. The matter was remitted back for fresh consideration, with instructions to ensure compliance with the principles of natural justice.

← Previous Next →