2017 (7) TMI 437 - AT - Central Excise

Clandestine manufacture and removal - Sponge iron - natural justice - Held that - the appellants were seeking the cross examination of various persons and the same having not been granted to them, the impugned order is unsustainable on this ground only - there is violation of principles of natural justice and the impugned order needs to be set aside - matter remitted back to the adjudicating authority to reconsider the issue afresh after following the provisions of Section 9D of the CEA, 1944 in respect of the witnesses of whom appellant had sought cross examination - appeal allowed by way of remand.

Summary

Issues:
- Allegation of clandestine manufacturing and clearance of goods
- Request for cross-examination of witnesses
- Adjudicating authority's reliance on statements without cross-examination
- Violation of principles of natural justice

Analysis:
1. Allegation of Clandestine Manufacturing and Clearance of Goods:
The case involved allegations against the appellant for clandestinely manufacturing and clearing sponge iron during a specific period. The department officials conducted a visit to the appellant's premises, gathered evidence, and issued a show cause notice based on their findings. The adjudicating authority confirmed the demands, interest, and penalties after due process, including granting cross-examination of only a limited number of witnesses.

2. Request for Cross-Examination of Witnesses:
The appellant contested the show cause notice on merits and limitations, seeking cross-examination of various individuals whose statements were relied upon by the lower authorities. The appellant argued that the adjudicating authority's conclusion based on these statements was incorrect, emphasizing the importance of cross-examination in the proceedings.

3. Adjudicating Authority's Reliance on Statements Without Cross-Examination:
The crucial issue in the judgment revolved around the adjudicating authority's reliance on statements of witnesses who were not produced for cross-examination. The tribunal highlighted the settled law on examination and cross-examination, citing the provisions of Section 9D of the Central Excise Act, 1944. The tribunal emphasized that the law mandates following a specific procedure before admitting statements as evidence, ensuring fairness and adherence to natural justice principles.

4. Violation of Principles of Natural Justice:
The tribunal found that the impugned order was unsustainable due to the failure of the adjudicating authority to provide the requested cross-examination of witnesses. By not following the provisions of Section 9D and denying the opportunity for cross-examination, the tribunal concluded that there was a violation of principles of natural justice. As a result, the tribunal set aside the impugned order and remitted the matter back to the adjudicating authority for reconsideration while emphasizing the importance of following natural justice principles.

In conclusion, the judgment highlighted the significance of adhering to procedural fairness, particularly regarding the examination and cross-examination of witnesses in adjudication proceedings. The tribunal's decision to set aside the impugned order and remand the case underscored the importance of upholding principles of natural justice in legal proceedings.