2017 (12) TMI 948 - AT - Central Excise

Principles of Natural justice - Section 9D of Central Excise Act, 1944 - Held that - the appellant in the reply to the show cause notice had made a specific request for cross examination of the panchas, but the original authority has given no finding at all on this request - the procedure under Section 9D ibid has not been followed by the adjudicating authority - there has been gross violation of natural justice caused to the appellants in the proceedings before the adjudicating authority. The matter needs to be remanded back to the adjudicating authority for de novo adjudication by following the procedure under Section 9D of the Act and by observing the principles of natural justice - appeal allowed by way of remand.

Issues:
1. Denial of natural justice due to the refusal of cross-examination of panchas.
2. Alleged non-compliance with the procedure under Section 9D of the Central Excise Act, 1944.
3. Lack of corroborative evidence apart from the shortage.
4. Non-consideration of the accountant's affidavit by the adjudicating authority.

Issue 1: Denial of natural justice - Cross-examination of panchas
The appellant requested cross-examination of the panchas during the investigation, but the original authority did not address this request in the findings. The failure to allow cross-examination was deemed prejudicial as the case heavily relied on the panchnama. Citing legal precedents, it was established that denial of cross-examination violated principles of natural justice. The judgment highlighted the importance of allowing cross-examination to ensure a fair hearing, as demonstrated in the cases of Manek Chemicals Pvt. Ltd. Vs. Union of India and Jindal Drugs Pvt. Ltd. Vs. Union of India.

Issue 2: Alleged non-compliance with Section 9D procedure
The adjudicating authority was found to have not followed the procedure under Section 9D of the Central Excise Act, 1944. The judgment emphasized the necessity of scrupulously adhering to this procedure, similar to criminal proceedings, to ensure fairness. Failure to follow this procedure, as per legal interpretations, could lead to the exclusion of statements made during investigation if not examined before the adjudicating authority. The judgment underscored the importance of allowing cross-examination to test evidence and the need for compliance with Section 9D to uphold natural justice.

Issue 3: Lack of corroborative evidence
Apart from the shortage of materials, the appellant argued that there was no other corroborative evidence supporting the allegations. Legal references were made to emphasize the significance of corroborative evidence in such cases. The judgment noted the reliance on precedents to highlight the requirement of substantial evidence beyond mere allegations to establish liability.

Issue 4: Non-consideration of accountant's affidavit
The appellant's accountant had submitted an affidavit during the personal hearing, which the adjudicating authority allegedly did not consider. The judgment pointed out the failure to address this affidavit in the decision-making process, indicating a lack of thorough consideration of all relevant evidence. This non-consideration was viewed as a procedural flaw that warranted a remand for a fresh adjudication, ensuring all submitted evidence is duly evaluated.

In conclusion, the judgment concluded that there was a gross violation of natural justice in the proceedings, necessitating a remand back to the adjudicating authority for a fresh adjudication. The appellants were to be granted a fair opportunity to present their case in accordance with the procedure under Section 9D and principles of natural justice.

← Previous Next →