2017 (11) TMI 440 - HC - Central Excise

Principles of Natural Justice - CENVAT credit - S.S. Sheet/S.S. Coils without actually using the same in or in relation to the manufacture of dutiable finished goods - job-work - non-furnishing of documents - non-accountal of procured materials - cross-examination of persons. Held that - We have already tabulated the details of the persons whom the petitioner wanted to cross-examine and the reasons for the petitioner making such a request. The first witness whom the petitioner wanted to cross-examine, was their own General Manager (Production). Admittedly he was an employee of the petitioner. The petitioner has made an allegation that though he was fully aware of the nature of the activities in the factory and especially the manufacturing process, he deliberately kept quiet and failed in his duty to portray the correct position in the factory - Insofar as the remaining three witnesses whom the petitioner wanted to summon for cross-examination are concerned, the Adjudicating Authority has recorded categorically that their statements were supported by records maintained by their firms/companies and that the details of such records were also indicated in Annexures C-16, C-18 and C-21 to the show cause notice - the factual grounds on which the Adjudicating Authority rejected the request for cross-examination, are cogent and convincing. The statements of third party witnesses were in fact shown to one of the Directors of the petitioner/Company by name Babulal Doshi and he is stated to have confirmed those statements. In Surjeet Singh Chhabra v. Union of India 1996 (10) TMI 106 - SUPREME COURT OF INDIA , the Supreme Court was concerned with a case arising under the Foreign Exchange Regulation Act and the Customs Act. Though the decision in Surjeet Singh Chhabra was a very brief order, the Supreme Court rejected the contention that the denial of cross-examination tantamounted to the violation of the principles of natural justice. The right to cross-examine is not absolute at least insofar as the cases of this nature are concerned. If there are factual grounds to show that the denial of cross-examination was based upon the sound logic, then the order of adjudication cannot be interfered with. We are not convinced that the impugned order could be set aside solely on the ground of denial of permission to cross-examine the witnesses - petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Violation of principles of natural justice due to denial of cross-examination.
2. Non-compliance with the remand order of CESTAT regarding cross-examination and document furnishing.

Detailed Analysis:

Violation of Principles of Natural Justice:

The petitioner argued that the refusal to allow cross-examination of certain witnesses violated the principles of natural justice. The Adjudicating Authority rejected the request for cross-examination based on both factual and legal grounds. Factually, the Authority noted that the statements of the witnesses were corroborated by other evidence and that one of the Directors of the petitioner company had already confirmed these statements. Legally, the Authority cited the Supreme Court's rulings in Telestar Travels Pvt. Ltd. v. Special Director of Enforcement, M/s. Kanungo & Co. v. Collector of Customs, and Surjeet Singh Chhabra v. Union of India, which held that denial of cross-examination does not always violate natural justice principles. The court agreed with the Adjudicating Authority, stating that the factual grounds for denial were cogent and convincing, and the legal precedent supported the decision.

Non-Compliance with CESTAT’s Remand Order:

The petitioner contended that the Adjudicating Authority's refusal to permit cross-examination contradicted the CESTAT's remand order. However, the court found that the CESTAT's order primarily focused on the non-furnishing of documents and did not explicitly mandate cross-examination. The CESTAT had set aside the initial order due to the lack of document availability and directed the Adjudicating Authority to pass a well-reasoned order after providing the necessary documents. The court concluded that the petitioner's claim of non-compliance with the CESTAT's order was misconceived, as the Tribunal had not issued a categorical directive for cross-examination.

Conclusion:

The court dismissed the writ petition, affirming the Adjudicating Authority's decision. It held that the refusal to allow cross-examination was justified both factually and legally. The petitioner was advised to pursue the alternative remedy of appeal before the appropriate authority. The period during which the writ petition was pending would be excluded from the limitation period for filing an appeal.