2016 (6) TMI 465 - AT - Central Excise

Clandestine removal of goods - shortages in the finished goods - Seeking cross-examination of witnesses who allegedly maintained the log books Held that - non-examination of the concerned person, whose statements have been relied upon is in violation of Section 9D of the Act, which provides that where any statements are to be relied upon of any person, in any proceedings under the Act, then such person must be examined in the proceedings under the Act, which includes adjudication proceedings. Further, cross-examination has to be essentially given in the facts of in the present case as statements of the concerned persons are recorded at the back of the appellants. Therefore, the impugned order is set aside and remand the matter for denovo adjudication by the Commissioner with direction that he shall examine and witnesses in presence of the appellant Company, Director and/or their Authorized Representative and shall also offer his witnesses for cross-examination . The appellant shall be provided inspection of documents either relied upon and/or not relied upon, a copy of which, if they have not been given earlier shall be provided. Thereafter, the appellants, if they so desire, can file supplementary reply to the show-cause notice and after hearing the parties, the adjudication order shall be recorded by the authority. Appeal allowed by way of remand

Summary

Issues:
Appeal against O/O No.15/Commissioner/Noida/2012-13 dated 27.07.2012, Adequate opportunity of hearing, Compliance with direction of predeposit, Manufacturing un-coated kraft papers from waste, Excess stock of un-coated kraft paper found, Shortages of un-coated kraft paper grade II, Lack of stock register maintenance, Deductions made from quantity of waste paper, Clandestine removal of finished goods, SCN proposing duty levy and penalties, Confirmation of duty demand and penalties, Lack of cross-examination opportunity, Reliance on third-party premises evidence, Rejection of cross-examination request, Violation of Section 9D of the Act, Remand for denovo adjudication, Examination of witnesses and cross-examination, Stay of balance dues, Appearance before Commissioner within 45 days.

Analysis:

The case involves an appeal against an order dated 27.07.2012, where the Tribunal remanded the matter for further proceedings. The appellant company, involved in manufacturing un-coated kraft papers from waste, faced issues related to excess stock discrepancies and shortages, along with the lack of proper stock register maintenance. The Revenue alleged clandestine removal of finished goods without duty payment, leading to a substantial duty levy proposed through a show-cause notice (SCN) along with penalties against the company and its directors.

Upon adjudication, a significant amount of duty was confirmed, penalties imposed, and the appellant challenged the lack of adequate hearing opportunities, specifically the denial of cross-examination of relevant persons whose statements were crucial in the case. The Tribunal noted the importance of cross-examination and the reliance on third-party premises evidence, emphasizing the violation of Section 9D of the Act regarding examination of persons in proceedings.

In light of these findings, the Tribunal set aside the impugned order and remanded the matter for denovo adjudication by the Commissioner. The directive included examining witnesses in the presence of the appellant company and offering cross-examination opportunities. The appellants were granted the right to inspect documents and file supplementary replies, ensuring a fair adjudication process before the authority.

As a result, all appeals were allowed by way of remand, with miscellaneous applications disposed of, and a stay of balance dues granted until the new order is passed. The appellants were instructed to appear before the Commissioner within 45 days to seek a proper opportunity of hearing in compliance with the Tribunal's directions.