2016 (12) TMI 919 - AT - Central Excise

Classification - Whether the machine named as computerized pattern maker manufactured by the appellant is computerized or mechanical? - Use of software in the machine - principles of natural justice - Exemption from payment of duty under Notification No.-6/2002 dated 01.03.2002 - Held that - we are of the view that the appellant has not been allowed cross examination of the persons whose statements/opinions were relied upon to sustain the charges made in the respective Show Cause Notices. The said denial of cross examination is violation of the principles of natural justice. The Hon ble Supreme Court in the case of Andaman Timber Industries vs. CCE 2015 (10) TMI 442 - SUPREME COURT on this issue has observed that, According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. - Matter remanded back.

Summary

Issues:
1. Whether the machine named as computerized pattern maker manufactured by the appellant is computerized or mechanical?

Analysis:
The case involves two appeals by M/s Sumatex Services (P) Ltd. against separate orders. The main issue in both appeals is determining whether the machine in question, a computerized pattern maker, is computerized or mechanical. The appellant's advocates argued that the machine utilizes software to draw complex patterns, which is an integral part of the machine and is sold together. They emphasized that the software is necessary for designing on the computer, as acknowledged by the buyers and software developers. Additionally, they contested the reliance on technical opinions from textile institutes by the Department, highlighting the need to consider reports in their entirety. The appellant also raised concerns about the denial of cross-examination of witnesses by the Department, citing violations of natural justice principles.

The Revenue argued against granting duty exemption to the machine under a specific notification, supporting the lower revenue authorities' findings. However, the Tribunal found that the denial of cross-examination to the appellant was a violation of natural justice principles. Citing previous legal precedents, including a Supreme Court case and a Delhi High Court case, the Tribunal emphasized the importance of the right to cross-examine witnesses in quasi-judicial proceedings. Consequently, the appeals were remanded to the Adjudicating authority for a fresh decision, stressing the need for a fair hearing and cross-examination of relevant persons whose statements were pivotal in the case.

In conclusion, the Tribunal allowed both appeals by remanding the case for a fresh determination, emphasizing the importance of upholding natural justice principles, including the right to cross-examine witnesses in quasi-judicial proceedings. The decision highlighted the need for a fair hearing and a thorough examination of all relevant evidence before reaching a final judgment.