2018 (1) TMI 103 - AT - Central Excise

Principles of Natural Justice - CENVAT credit - Section 9D of CEA, 1944 - Held that - there was no adherence to provisions of Section 9D of CEA, 1944. It is evident that the proper procedure under Section 9D has not been followed by the adjudicating authority. It is clear that there has been gross violation of principles of natural justice at the adjudication stage as well as at the first appellate stage. In these circumstances, it will be in the interest of justice that the appellant are provided RUDs and the matter is adjudicated afresh. The matter is remanded back to the adjudicating authority to decide the case afresh after providing the required RUDs to the appellant and to follow procedure laid down in Section 9D of the Act - appeal allowed by way of remand.

Summary

Issues: Denial of Cenvat credit, Adherence to procedural requirements, Violation of principles of natural justice, Remand for fresh adjudication

Denial of Cenvat credit:
The appellant, a manufacturer of tractors, received thinner from a supplier against whom an investigation revealed no manufacturing facility for producing thinner. Consequently, a show cause notice was issued to the appellant for denial of Cenvat credit. The adjudicating authority confirmed the demand along with interest and penalty. The appellant's appeal against this decision was rejected by the Commissioner (Appeals), leading to the current appeal. The appellant argued that certain crucial documents were not provided to them, and they were denied the opportunity to cross-examine key individuals. The appellate tribunal found that the appellant had not received important documents and that there was a lack of adherence to procedural requirements under Section 9D of the Central Excise Act, 1944. Citing the judgment in the case of Jindal Drugs (P) Ltd. Vs. Union of India, the tribunal emphasized the need for following proper procedures in such cases.

Adherence to procedural requirements:
The tribunal noted that the adjudicating authority had failed to follow the provisions of Section 9D of the Central Excise Act, 1944, which led to a violation of principles of natural justice at both the adjudication and appellate stages. It was observed that the appellant was not provided with necessary documents and was denied the opportunity for a fair defense. The tribunal emphasized the importance of following the prescribed procedure under Section 9D, as highlighted in the judgment of Jindal Drugs (P) Ltd. Vs. Union of India. The tribunal, therefore, remanded the matter back to the adjudicating authority for a fresh adjudication, ensuring that the appellant is given a fair opportunity to defend their case.

Violation of principles of natural justice:
The tribunal found that there had been a gross violation of principles of natural justice due to the failure to provide essential documents to the appellant and the denial of the opportunity for cross-examination. The adjudicating authority's dismissive approach towards the appellant's requests and the lack of proper adherence to procedural requirements further exacerbated the violation of natural justice. In light of these shortcomings, the tribunal deemed it necessary to remand the matter for a fresh adjudication, emphasizing the importance of upholding principles of natural justice throughout the adjudication process.

Remand for fresh adjudication:
Ultimately, the tribunal disposed of the appeal by remanding the matter back to the adjudicating authority for a fresh adjudication. The tribunal directed the adjudicating authority to provide the required documents to the appellant, follow the procedure laid down in Section 9D of the Act, and ensure that the appellant is given a fair opportunity to defend their case. By remanding the matter, the tribunal sought to rectify the procedural lapses and violations of natural justice that had occurred during the initial adjudication, thereby upholding the principles of fairness and due process in the legal proceedings.