2011 (11) TMI 550 - AT - Central Excise

Violation of principle of natural justice - Opportunity for cross examination not granted. - Held that - there was no request for cross examination during the adjudication stage. The appellants have not been able to produce any evidence that such request was made. Therefore, raising any objection at the stage of first appeal or second appeal in this matter deserves no consideration. We do not see any merit in such argument. If the uncontroverted statement of the purchaser of the goods is taken to be correct, the case against the appellants is proved and therefore, we do not want to interfere with the order of the Commissioner (Appeals) - decided against assessee.

Summary

Issues:
1. Duty liability on cotton yarn in cone, cheese, etc.
2. Reliance on statements of third parties for duty liability.
3. Admissibility of diary as evidence.
4. Cross-examination of third party for natural justice.
5. Request for cross-examination during adjudication stage.
6. Appeal against Commissioner (Appeals) decision.
7. Principles of natural justice violation.

Analysis:
1. The appellants, manufacturers of cotton yarn, were found to be clearing cotton yarn in cone, cheese, etc. without paying excise duty, misdeclaring the goods as plain reel hanks exempted from duty. A show cause notice was issued demanding duty payment, interest, and penalty under Section 11AC. The Adjudication confirmed duty payment of Rs. 1,45,332 along with interest and penalty. The Commissioner (Appeals) upheld this decision.

2. The main ground of appeal before the Tribunal was the reliance on statements of third-party buyers for establishing duty liability. The appellants argued that the Commissioner (Appeals) relied on a diary not considered by the lower adjudicating authority, exceeding the scope of the original order. They also contended that the denial of cross-examination of the third party violated principles of natural justice.

3. The Department argued that the appellants were part of cases booked for duty evasion, similar to other parties whose appeals were rejected by the Tribunal. They highlighted that the request for cross-examination was raised only before the Commissioner (Appeals), suggesting it was an afterthought and did not violate natural justice principles.

4. The Tribunal found no merit in the appellants' argument regarding cross-examination, noting the absence of any request during the adjudication stage. Without evidence of such a request, objections raised during subsequent appeals were deemed invalid. Upholding the uncontroverted statements of the buyers as correct, the Tribunal declined to interfere with the Commissioner (Appeals) decision, dismissing the appeals.

5. In conclusion, the Tribunal's decision affirmed the duty liability on the appellants for misdeclaration of cotton yarn, emphasizing the importance of timely procedural objections and the weight given to unchallenged statements as evidence in excise duty cases. The dismissal of the appeals underscored the significance of procedural regularity and the evidentiary value of unchallenged statements in establishing duty liability.