2015 (10) TMI 1241 - AT - Central Excise

Clandestine manufacture and removal of goods - Imposition of penalty - Held that - It is observed that appellant requested for cross examination of the panch witnesses, which was not granted. As per Para 11.12 of the O.I.A. Dated 19.04.2011 a Report was called by the appellate authority from the Jurisdictional Assistant Commissioner. Jurisdictional Assistant Commissioner in his letter Dated 06.04.2011 stated that the affidavits filed were as a result of afterthought. Statement of Shri Hitesh Pathak and statement of Shri Chetan R. Dhruv, Managing Director Dated 16.11.2005 etc., have been mentioned in the observations of the first appellate authority. It is the case of the appellant that all these statements were not relied upon statements in the Show Cause Notice therefore, the same cannot be made the basis for deciding the case. It is observed that there has been a violation of the principles of natural justice for which the case is required to be remanded back to the Adjudicating Authority with the directions that all the statements mentioned in the findings of the first appellate Authority s order dated 19.04.2011, and not mentioned in the Show Cause Notice, should be made available to the appellants for defending their case properly. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Appeal against O.I.A. No. 75 To 77/2011COMMR(A)/CMC/RAJ Dated 19.04.2011 confirming a demand of Rs. 11,66,639/- for clandestine manufacture and clearance, along with penalties imposed on individuals.

Analysis:
The appellant appealed against the O.I.O. No. 30/ADC/2009 Dated 22.09.2009, which confirmed a demand against the main appellant for clandestine activities. The Production Manager and Managing Director were also penalized. The appellant's representative argued that the case was based on a retracted statement and additional statements not included in the Show Cause Notice were considered by the first appellate authority. The representative contended that the proceedings should be set aside due to this. The appellant also presented challan copies to demonstrate that there was no clandestine removal, as some inputs were sent to job workers under job work challans. Additionally, the appellant raised concerns about the lack of cross-examination of panch witnesses.

The Revenue's representative argued that cross-examination of panch witnesses was unnecessary as they were employees of the appellant. The Revenue contended that stock weighment and shortage were determined as per Panchnama in the presence of the appellant. The Revenue supported the relevance of additional statements considered by the first appellate authority, emphasizing that they were recorded during the investigation.

After hearing both sides and examining the case records, the judge noted that the appellant's request for cross-examination of panch witnesses was not granted. The judge highlighted that certain statements not included in the Show Cause Notice were relied upon by the first appellate authority, leading to a violation of natural justice principles. Consequently, the case was remanded back to the Adjudicating Authority for proper defense by providing all relevant statements to the appellants and allowing cross-examination of panch witnesses in denovo proceedings.

The appeals filed by the appellants were allowed by way of remand to the adjudicating authority. The judge emphasized that no views on the merits of the case were offered, keeping all issues open. The appellants were granted an opportunity for a personal hearing before the final order is passed in the remand proceedings.