2018 (8) TMI 10 - AT - Central Excise

Clandestine removal - excesses of stock found - Cross examination of various witnesses not granted - Section 9D of the Act not followed - test reports as regards samples not found - confiscation of inputs u/r 25 of CER - Statement of Sh. Sudhakar Dwevedi was not provided at the stage of adjudication and at the stage of Commissioner (Appeals). Held that - The request for cross examination has not been examined afresh by the adjudicating authority and there is adoption of findings of previous adjudicating authority without fresh application of mind - Such an approach is also in violation of the principles of natural justice. Procedure laid down under Section 9D of the Act followed - Held that - The adjudicating authority has not followed the procedure laid down under Section 9D of the Act in respect of the goods found at factory premises and the goods lying at the head office. The procedure has not been followed in respect of other goods also by the adjudicating authority. It is settled position in law that the procedure laid down under Section 9D of the Act is required to be followed by the adjudicating authority. The adjudicating authority has not followed the procedure laid down under Section 9D of the Act and also violated the tenets of natural justice - the impugned order is liable to be set aside and the matter requires to be adjudicated afresh by following the procedure laid down under Section 9D ibid and by following the principles of natural justice. Appeal allowed by way of remand.

Issues Involved:
1. Cross-examination of witnesses.
2. Reliance on statements without following Section 9D of the Central Excise Act.
3. Non-provision of test reports for goods.
4. Confiscation of inputs under Rule 25 of the Central Excise Rules.
5. Non-provision of the statement of Sh. Sudhakar Dwevedi at the adjudication stage.

Issue-wise Detailed Analysis:

1. Cross-examination of witnesses:
The appellants contended that their request for cross-examination of various witnesses was not granted by the adjudicating authority. The adjudicating authority adopted the findings of the previous adjudicating authority without fresh application of mind, which was deemed a violation of the principles of natural justice. The Tribunal noted that the request for cross-examination was not reconsidered afresh, as required by law, and thus, the denial violated the principles of natural justice.

2. Reliance on statements without following Section 9D of the Central Excise Act:
The appellants argued that the adjudicating authority relied on the statements of witnesses without following the procedure laid down under Section 9D of the Central Excise Act. The Tribunal highlighted that the procedure under Section 9D was not followed, which mandates that statements recorded during investigation cannot be relied upon unless the person who made the statement is examined as a witness before the adjudicating authority. The Tribunal referred to the judgment of the Punjab & Haryana High Court in M/s Ambika International & ors. Vs. UOI, which emphasized the necessity of following the procedure under Section 9D to admit such statements as evidence.

3. Non-provision of test reports for goods:
The appellants claimed that the department withdrew samples to ascertain whether the goods were final products or not but did not provide the test reports. The Tribunal found that without the test reports, the confiscation of the goods was not sustainable. The lack of test reports prevented the appellants from knowing whether the goods were final products, which was crucial for their defense.

4. Confiscation of inputs under Rule 25 of the Central Excise Rules:
The appellants argued that there is no provision under Rule 25 to confiscate inputs as the rule applies only to finished goods. The Tribunal noted this contention but did not provide a detailed analysis or ruling on this specific issue in the judgment summary.

5. Non-provision of the statement of Sh. Sudhakar Dwevedi at the adjudication stage:
The appellants contended that the statement of Sh. Sudhakar Dwevedi was not provided to them at the adjudication and Commissioner (Appeals) stages. The Tribunal found that the statement was provided at the Tribunal stage and that the adjudicating authority's findings indicated that the statement was confirmed to have been received in writing by the appellants' consultant. However, the Tribunal noted that the appellants continued to raise the issue of non-supply of the statement, suggesting dilatory tactics.

Conclusion:
The Tribunal concluded that the adjudicating authority failed to follow the procedure laid down under Section 9D of the Central Excise Act and violated the principles of natural justice. Consequently, the impugned order was set aside, and the matter was remanded back to the adjudicating authority for re-adjudication following the proper procedure and principles of natural justice. The appeals were allowed by way of remand.

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