2019 (8) TMI 1366 - HC - Central Excise

Principles of natural justice - whether in the facts and circumstances of the present case, the CESTAT, was justified in concluding that there was any failure of natural justice so as to warrant setting aside of the orders of Adjudicating Authority and consequent remand to the Adjudicating Authority for fresh adjudication? - HELD THAT - There is no clarity as to whether this issue of adjournment applied to all the appeals before the CESTAT. Ms. Desai, learned counsel for the Commissioner submits that such a ground clearly did not apply to all the appeals pending before the CESTAT. In any case, mere refusal of an adjournment in proceedings, which were spread over several dates, according to us, will not amount to breach of principles of natural justice and fair play, particularly, when the party concerned has failed to plead and establish any prejudice. Besides, the CESTAT has even made observation with regard to the conduct of the Assessees and observed that they were bent upon delaying the adjudication proceedings. The CESTAT has observed that in other cases proper hearing was given. Setting aside the orders of the Adjudicating Authority and consequent remand on the first ground that in one of the matters, on one of the dates, no adjournment was granted to one of the parties, is in our opinion, is not at all a good ground to set aside the orders of the Adjudicating Authority and to remand the matter for fresh consideration. Whether the CESTAT had jurisdiction and in any case was justified in ordering the retention of the pre-deposit amount after setting aside the order of the Adjudicating Authority and remanding the matter to the Adjudicating Authority for fresh decision? - HELD THAT - The CESTAT has itself observed that this is a minor deviation in the adjudication order which does not render that order fatal or even require full waiver of the pre-deposit amount on the face of fraudulent transactions leading to loss of customs duty and wrong availment of CENVAT credit which have not been disputed. If the CESTAT has itself recorded a finding that non tallying of entries, is at the highest, only some minor deviation which does not affect the validity of the orders of the Adjudicating Authority, then obviously, there was no reason to set aside the orders of the Adjudicating Authority and order a remand for fresh consideration - The remand cannot be ordered in such a casual manner, particularly, in a matter in which the CESTAT itself records that the Adjudicating Authority has made extensive examination and after granting fair opportunity of hearing to the parties came to the conclusion that there was violation of provisions of the Customs Act, 1962 and Central Excise Act, 1944. - Order of CESTAT not sustainable.

Summary

Issues Involved:
1. Whether the CESTAT was justified in concluding that there was a failure of natural justice warranting remand to the Adjudicating Authority.
2. Whether the CESTAT had jurisdiction to order the retention of the pre-deposit amount after setting aside the order of the Adjudicating Authority and remanding the matter for fresh decision.
3. Whether the remand ordered by the CESTAT was legally justified.
4. Whether the CESTAT erred in ordering pre-deposit under Section 129E of the Customs Act, 1962.
5. Whether the findings of the CESTAT regarding the conduct of the Assessee were perverse and without application of mind.

Detailed Analysis:

1. Justification of CESTAT's Conclusion on Natural Justice:
The CESTAT set aside the orders of the Adjudicating Authority and ordered a remand for fresh consideration on two grounds:
- One of the parties was not granted an adjournment and a fresh date of hearing.
- The adjudication orders did not expressly refer to the credit entries in the RG 23 register and tally the same with the amounts in the related invoices.

The High Court found these grounds insufficient for remand. The court emphasized that mere refusal of an adjournment does not amount to a breach of natural justice, especially when the party failed to demonstrate any consequent prejudice. Additionally, the CESTAT itself noted that the issue with the RG 23 register entries was a minor deviation, which did not justify setting aside the adjudication orders.

2. Jurisdiction to Order Retention of Pre-Deposit:
The Assessees argued that once the CESTAT set aside the orders of the Adjudicating Authority, it ceased to have jurisdiction to direct the retention of the pre-deposit amount. The High Court noted that the CESTAT had relied on precedents from the Punjab and Haryana High Court, Allahabad High Court, and Gujarat High Court, which supported the retention of the pre-deposit amount in such circumstances.

3. Legality of the Remand Ordered by CESTAT:
The High Court found that the CESTAT's decision to remand was not justified. The remand was based on insufficient grounds, and the principles of natural justice were not violated as claimed. The court highlighted that the grounds for remand must be precise and demonstrate consequent prejudice, which was not done in this case.

4. Error in Ordering Pre-Deposit Under Section 129E:
The Assessees contended that the CESTAT erred in ordering pre-deposit under Section 129E after setting aside the adjudication orders. The High Court, however, noted that the CESTAT's direction for pre-deposit was supported by legal precedents and was justified to secure government revenue and ensure cooperation for fresh adjudication.

5. Findings on Assessee's Conduct:
The CESTAT had observed that the Assessees were attempting to derail the adjudication proceedings through various tactics. The High Court found no fault with these observations and emphasized the need for fair play and adherence to procedural rules.

Conclusion:
The High Court set aside the CESTAT's judgment and remanded the appeals to the CESTAT for fresh evaluation on their merits. The court directed the CESTAT to dispose of the appeals expeditiously and within six months. The appeals instituted by the Commissioner were allowed, while those by the Assessees were dismissed. There was no order as to costs.