2018 (3) TMI 2016 - HC - Central Excise

Clandestine production and removal - demand based on electricity consumption - Requirement to give an opportunity of the cross examination to the assessee in absence of any such prayer made - cross examination can be claimed by the parties as their legal right or not - HELD THAT - Taking into consideration the fact that the finding with regard to electricity consumption is contrary to decision of Supreme Court in COMMISSIONER OF C. EX. MEERUT-I VERSUS RA CASTINGS PVT. LTD. 2010 (9) TMI 669 - ALLAHABAD HIGH COURT the said issue is required to be answered in favour of the assessee and against the department - it was held in the said case that we are of the view that the findings of the Tribunal are based on the material on record and they cannot be said to be without any material and perverse. We find that the Revenue has invoked the proviso to Section 11A(1)of the Act but no case has been made out in the show cause notices or in the adjudication order that there were any misstatement suppression of fact or fraud on the part of the respondents. No substantial question of law arises from the order of the Tribunal . The other issue which has been raised by both the parties relying on the documents which have been recovered during search from M/s. Sharma Steel Rolling Mills Pvt. Ltd. the matter requires reconsideration by original authority as the addition was also based on the documents found during surprise visit made by the authorities to the factory premises of the assessee and was not solely based on electricity consumption. The matter is remitted back to the original authority after setting aside the order of tribunal - Appeal allowed by way of remand.

Summary

Issues Involved:
1. Necessity of cross-examination opportunity for the assessee.
2. Tribunal's interference with the findings of facts regarding power consumption, clandestine removal, and procurement of raw materials.
3. Tribunal's error in passing contradictory orders in connected matters.
4. Justification for de-tagging files of connected cases.

Detailed Analysis:

1. Necessity of Cross-Examination Opportunity for the Assessee:
The court examined whether it is necessary to provide an opportunity for cross-examination to the assessee in the absence of any such prayer and in light of settled law that cross-examination cannot be claimed as a legal right when documentary evidence is available. The court referred to various precedents, including the decision in *Basudev Garg vs. Commissioner of Custom* (2013) where it was held that the right to cross-examine is a valuable right in quasi-judicial proceedings and should be granted unless exceptional circumstances exist as specified under section 9D of the Central Excise Act, 1944.

2. Tribunal's Interference with Findings of Facts:
The Tribunal's interference with the findings of facts, particularly regarding power consumption, clandestine removal, and procurement of raw materials, was scrutinized. The court referred to the decision in *Continental Cement Company vs. Union of India* (2014) which emphasized that demands cannot be confirmed solely on the basis of presumptions and assumptions without clinching evidence. The court also considered the decision in *Commissioner Vs. R.A. Castings Pvt. Ltd.* (2011), which held that excess production cannot be estimated based only on higher electricity consumption without linking it to clandestine removal of goods.

3. Tribunal's Error in Passing Contradictory Orders:
The court addressed whether the Tribunal committed an error by passing contradictory orders in connected matters, absolving raw material suppliers from the charge of clandestine supply while confirming the same upon the final product manufacturer. The decision in *Shree Parvati Metals vs. Union of India* (2017) was cited, where it was held that issues should not be decided solely on the basis of statements without considering corroborative evidence.

4. Justification for De-Tagging Files of Connected Cases:
The court considered whether the Tribunal was right in de-tagging the files of connected cases which were interlinked, resulting in contradictory orders. The court emphasized the need for consistent and coherent adjudication in interconnected cases and referred to the decision in *Commissioner of Central Excise vs. Omkar Textile Mills Pvt. Ltd.* (2010), which highlighted the importance of corroborative material in cases of alleged clandestine removal.

Conclusion:
The court remitted the matter back to the original authority for reconsideration, emphasizing the need for providing documents to the parties, allowing cross-examination if desired, and strictly following the principles of natural justice. The original authority was directed to pass a reasoned order and complete the proceedings within a specified period. The court set aside the Tribunal's order and the original order, remanding the case for fresh adjudication based on the available documents and evidence.