2017 (10) TMI 431 - AT - Central Excise

Principles of Natural Justice - Valuation - dummy units - the appellants specifically sought cross examination of the witnesses and argued that in terms of section 9D of the CEA, 1944, the statement of witnesses cannot be relied upon - Held that - the adjudication order has been passed in violation of procedure laid down in section 9D of the Central Excise Act, 1944. Therefore, the matter needs examination in terms of procedures laid down in Section 9D of the Act - appeal allowed by way of remand.

Summary

Issues involved:
Appeal against confirmed demand and penalty imposition on M/s.Shiv Shakti Earth Movers, cross-examination request denial, reliance on witness statements, procedural violation of Section 9D of the Central Excise Act, 1944.

Analysis:

Issue 1: Appeal against confirmed demand and penalty imposition
The appellants challenged the impugned order confirming the demand against M/s.Shiv Shakti Earth Movers and imposing penalties. The adjudicating authority held M/s.Robot Industries as a dummy unit and imposed the entire duty on M/s.SSE. The appellants contended that this exceeded the scope of the show cause notice, citing the decision of M/s. Balrampur Industries Ltd. The Tribunal found the demands unsustainable due to this discrepancy.

Issue 2: Cross-examination request denial
The appellant sought cross-examination of witnesses, including those whose statements were relied upon by the adjudicating authority. The request was rejected, leading to reliance on the decision of Kuber Tobacco India Limited and Jindal Drugs Pvt.Ltd. The Tribunal emphasized the importance of cross-examination under Section 9D of the Act and previous judicial pronouncements, ruling that the denial violated procedural requirements.

Issue 3: Reliance on witness statements
The adjudicating authority relied on statements of witnesses like Shri Santosh and his bank account without making him a party to the show cause notice. The appellants argued that this reliance was unjustified, especially regarding deposits in personal bank accounts of other individuals. The Tribunal noted the necessity of following proper procedures and considering all relevant evidence before reaching a decision.

Issue 4: Procedural violation of Section 9D
The Tribunal examined the procedural violation of Section 9D of the Central Excise Act, 1944, as highlighted by the appellants. Referring to the decisions of Kuber Tobacco India Limited and Jindal Drugs Pvt.Ltd., the Tribunal emphasized the need for adherence to the prescribed procedures for relying on witness statements in adjudication proceedings. The impugned order was set aside, and the matter remanded for proper examination and consideration of all issues in accordance with the law.

In conclusion, the Tribunal disposed of the appeals by remanding the matter back to the adjudicating authority to ensure compliance with Section 9D procedures and address all raised issues appropriately. The judgment highlighted the significance of following legal procedures, including cross-examination rights and proper evidence consideration, in adjudication proceedings under the Central Excise Act, 1944.