2019 (5) TMI 324 - AT - Central Excise

CENVAT Credit - input - CR stainless steel without receiving the same from M/s Shah Foils Ltd. - rebuttal of statements in cross-examination - denial of cross-examination - HELD THAT - The proprietor of the job-worker Shri Chhail Singh Deora explaining the meaning of terms Bill Sales , Bombay Sales etc. referred in the private record recovered from premises of the appellant, indicated that the goods were sold without the cover of invoices and payment of duty, hence it is concluded that the material on which the credit availed by the appellant has not been received by them. The appellant vehemently argued to rebut the said statement of M/s Chhail Singh Deora by way of cross-examination. The appellant should be allowed cross-examination of the witness Mr. Chhail Singh Deora, whose evidence is vital and relied in confirming the demand. Matter remanded to the adjudicating authority for cross-examination of the witnesses Shri Chhail Singh Deora and decide the matter accordingly - appeal allowed by way of remand.

Summary

Issues:
- Availing inadmissible credit of duty paid on inputs
- Denial of cross-examination of witnesses
- Violation of principles of natural justice

Analysis:

Issue 1: Availing inadmissible credit of duty paid on inputs
The case involved the appellant being issued a show-cause notice for allegedly availing credit of duty paid on inputs without actually receiving the physical input material in their factory. The demand was confirmed against the appellant, and they appealed the decision. The appellant argued that the statements of the Director of the supplier company were in their favor, indicating that the denial of cross-examination of a key witness resulted in a violation of natural justice. The Tribunal found that the reliance on the witness's statement without allowing cross-examination was not justified, and the appellant should have been given the opportunity to cross-examine the witness to ensure a fair hearing.

Issue 2: Denial of cross-examination of witnesses
The appellant vehemently requested cross-examination of a crucial witness, Shri Chhail Singh Deora, who provided statements that were relied upon by the authorities to confirm the demand against the appellant. The appellant argued that the denial of cross-examination violated the principles of natural justice. The Tribunal agreed with the appellant, citing the judgment of the Hon'ble Supreme Court in Andaman Timber Industries case, emphasizing the importance of allowing cross-examination to ensure a fair and just decision. The Tribunal set aside the impugned order and remanded the case for cross-examination of the witness.

Issue 3: Violation of principles of natural justice
The Tribunal considered the appellant's argument that the denial of cross-examination of the witness resulted in a violation of the principles of natural justice. The appellant contended that the witness's statement was crucial in confirming the demand against them, and not being allowed to cross-examine the witness hindered their ability to present a complete defense. The Tribunal agreed with the appellant, emphasizing the importance of cross-examination in ensuring a fair hearing and proper examination of evidence. As a result, the impugned order was set aside, and the appeals were remanded for further proceedings, including the cross-examination of the witnesses.

In conclusion, the Tribunal found in favor of the appellant, highlighting the significance of allowing cross-examination of witnesses to uphold the principles of natural justice and ensure a fair adjudication process. The case serves as a reminder of the importance of procedural fairness and the right to cross-examine witnesses in administrative and legal proceedings.