2015 (9) TMI 199 - AT - Central Excise

Duty Demand - Imposition of penalty - Violation of principle of natural justice - Opportunity of cross examination not given - Held that - Appellants sought for the cross examination of the Works Manager and the job workers which was turned down. In the interest of justice, we are of the opinion that adjudicating authority should make effort in granting cross-examination of the relied upon witnesses and, thereafter pass a reasoned order in this case. Accordingly, we set aside the Order-in-Original dated 29/3/2011 and remand the case to the adjudicating authority for de novo consideration after allowing the cross-examination of the witnesses which appellants have sought as cross-examination. We make it clear that this Bench has not expressed any opinion on the merits of the case and all issues have been kept open for the adjudicating authority to deliberate upon. - matter remanded back - Decided in favour of assessee.

Issues:
- Confirmation of demand against the main appellant
- Penalties imposed on directors and works manager
- Cross-examination of witnesses
- Validity of Order-in-Original
- Remand for de novo consideration

Confirmation of demand against the main appellant:
The appellants filed stay applications and appeals against the Order-in-Original confirming a demand of Rs. 4,27,05,196 against the main appellant, along with penalties imposed on directors and works manager. The main appellant argued that no machinery/raw material for manufacturing transformers were found during verification, and cross-examination of witnesses was not provided. The Tribunal observed that demands based solely on statements require cross-examination of relied-upon witnesses. As cross-examination was denied, the Order-in-Original was set aside, and the case was remanded for de novo consideration after allowing cross-examination.

Penalties imposed on directors and works manager:
Directors and works manager of the main appellant had penalties imposed on them. The main appellant argued for cross-examination of witnesses, which was not granted. The Tribunal emphasized the importance of cross-examination in cases based on statements, setting aside the Order-in-Original and remanding the case for reevaluation after allowing cross-examination. The Tribunal did not express any opinion on the merits of the case, leaving all issues open for the adjudicating authority to consider.

Cross-examination of witnesses:
The main appellant sought cross-examination of witnesses, including the works manager and job workers, but it was denied. The Tribunal highlighted that in cases relying on statements, cross-examination of witnesses is crucial for a fair decision. As cross-examination was not allowed, the Order-in-Original was set aside, and the case was remanded for a fresh consideration after granting the requested cross-examination.

Validity of Order-in-Original:
The Order-in-Original dated 29/3/2011 confirming the demand against the main appellant and imposing penalties on directors and works manager was challenged through stay applications and appeals. The Tribunal found that the case was primarily based on statements without cross-examination, leading to the Order-in-Original being set aside and the case remanded for a fresh consideration after allowing cross-examination.

Remand for de novo consideration:
The Tribunal remanded the case to the adjudicating authority for de novo consideration after setting aside the Order-in-Original due to the denial of cross-examination of witnesses. The Tribunal emphasized the importance of cross-examination in cases based on statements and directed the adjudicating authority to allow cross-examination before making a reasoned decision. All issues were kept open for the adjudicating authority to deliberate upon, and the appeals were allowed by way of remand.

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