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2017 (12) TMI 731 - HC - CustomsWhether in the facts and circumstances of the case the Hon ble CESTAT has passed a cryptic and non-speaking order without showing any reasoning or deliberation of the materials that were placed before it for consideration? Held that - reliance placed in the case of M/s. A & S Textiles Ltd. Versus The Commissioner of Central Excise Coimbatore 2017 (9) TMI 352 - MADRAS HIGH COURT where it was held that Decision in NGA Steels (P) Limited s case 2016 (7) TMI 127 - MADRAS HIGH COURT squarely applies to the case on hand where it was held that When a specific plea regarding violation of principles of natural justice is raised CESTAT Chennai is bound to record a specific finding which is conspicuously absent. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the CESTAT passed a cryptic and non-speaking order. 2. Whether CESTAT overlooked material evidence vital to the determination of issues. 3. Whether the demand was confirmed without corroborative or affirmative evidence. 4. Application of the principles of preponderance of probabilities versus proof beyond reasonable doubt in adjudication under the Central Excise Act. 5. Burden of proof in the absence of witness cross-examination. 6. Justification of the penalty under Rule 26 of the Central Excise (No.2) Rules, 2001. Issue-Wise Detailed Analysis: 1. Cryptic and Non-Speaking Order: The appellant challenged the CESTAT’s final order on the grounds that it was cryptic and non-speaking, lacking reasoning or deliberation on the materials presented. The court found that the Tribunal’s order was indeed a non-speaking order, failing to address the appellant's claims and the department's denials comprehensively. The court emphasized the necessity for the appellate forum to discuss the evidence, refer to the pleadings, and provide valid reasons for its conclusions. This was supported by precedents such as HVPNL v. Mahavir and Tata Engineering & Locomotive Co. Ltd. v. Collector of Central Excise, Pune, where the Supreme Court mandated detailed reasoning in judgments. 2. Overlooking Material Evidence: The appellant argued that the CESTAT committed serious infirmity by overlooking vital material evidence. The court noted that the Tribunal did not adequately address the issue of cross-examination of witnesses whose statements were critical to the case. The court referred to the case of NGA Steels (P) Ltd. v. CESTAT, Chennai, where a similar issue of non-permission for cross-examination was deemed a violation of natural justice. The Tribunal’s failure to consider this aspect rendered its order deficient. 3. Confirmation of Demand Without Corroborative Evidence: The appellant contended that the demand was confirmed without corroborative or affirmative evidence. The court highlighted that the Tribunal did not discuss whether the statements of third parties alone were sufficient to establish clandestine removal of goods without payment of duty. This issue was also raised in NGA Steels (P) Ltd., where the necessity for corroborative evidence was emphasized. The court concluded that the Tribunal’s order lacked a specific finding on this critical aspect. 4. Principles of Preponderance of Probabilities vs. Proof Beyond Reasonable Doubt: The appellant sought clarity on whether the principles of preponderance of probabilities or proof beyond reasonable doubt applied in adjudication under the Central Excise Act. The court did not provide a direct answer but implied that the adjudication process should adhere to principles ensuring fairness and justice, particularly in the context of cross-examination and reliance on statements. 5. Burden of Proof in Absence of Cross-Examination: The appellant questioned whether the burden of proof was discharged in the absence of cross-examination of witnesses whose statements formed the basis of the show cause notice. The court referred to Karan Traders v. Joint Commissioner of C. Ex., Salem, where it was held that if witnesses were unavailable for cross-examination, their statements should not be relied upon. The court concluded that the Tribunal failed to address this issue adequately, necessitating a remand for fresh consideration. 6. Justification of Penalty Under Rule 26: In a separate but related appeal by the Managing Director, the appellant challenged the penalty imposed under Rule 26 of the Central Excise (No.2) Rules, 2001. The court found that the Tribunal did not discuss the specific plea regarding the necessity of cross-examination and the sufficiency of third-party statements to justify the penalty. The court followed its reasoning in the main appeal and allowed this appeal as well, remanding the matter for reconsideration. Conclusion: The court allowed the appeals, setting aside the CESTAT’s orders and remanding the matters for fresh consideration. The Tribunal was directed to specifically address the issues regarding cross-examination of witnesses and provide detailed reasoning in its findings. The substantial questions of law were answered in favor of the appellant, emphasizing the importance of a fair adjudication process and the necessity for a speaking order.
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