2021 (2) TMI 661 - HC - Central Excise

Maintainability of petition - availability of an equally alternative remedy stipulated under the Statute - violation of principles of natural justice or not - HELD THAT - The petitioners have failed to establish how the order passed is in total violation of the principles of natural justice. What prejudice, much less serious in nature, stands caused on account of non-examination of the witnesses, is also not born out from the material on record or demonstrated. The assessing authority has found the petitioners and concerns associated with them, dealing in the product i.e. production/trade of cigarettes, which are excisable under the Act. On 13th December 2013, a raid was conducted, inter alia, at the petitioner's premises, and got recovered huge stocks of more than two crores of cigarette sticks. The petitioners were arrested, and their statement recorded while in judicial custody. During the search and seizure operations, statements of other witnesses were also recorded and the material, inculpatory in nature, recovered from the conscious possession of the petitioners/associated persons and premises. The search was conducted at different places in the States of Chhatisgarh, Jharkhand and Bihar - With the completion of search and seizure operations, petitioners and associated persons were issued notices for carrying out the adjudicatory proceedings under the Central Excise Act's provisions, 1944 read with Central Excise Rules, 2002. While declining the petitioner's request for cross-examining the witnesses, the adjudicatory authority ultimately passed the impugned order dated 05.10.2018 and corrigendum order dated 22.11.2018. The petition disposed off with the directions that the petitioners have been pursuing the remedy before this Court, hence if petitioners take recourse to remedy provided under the Act, within a period of four weeks, the issue of limitation shall not be allowed to come in the way of it's adjudication on merits and that such proceedings shall expeditiously be decided on merits, per law, preferably within a period of six months from the date of initiation.

Issues Involved:
1. Legality of the Order-In-Original and Corrigendum.
2. Opportunity for cross-examination of witnesses.
3. Supply of documents/evidences relied upon by the respondents.
4. Financial hardship in meeting the prerequisite deposit for an appeal.
5. Violation of principles of natural justice.

Detailed Analysis:

1. Legality of the Order-In-Original and Corrigendum:
The petitioners challenged the Order-In-Original No. 16/MP/Ayukt/2018 dated 05.10.2018 and the Corrigendum dated 22.11.2018, seeking to declare them illegal, invalid, and unsustainable. The court observed that the impugned orders were not ex facie or patently perverse or passed in total violation of the principle of natural justice. The court found that the statutory authority acted in accordance with the provisions of the Central Excise Act, 1944, and did not warrant interference by the court.

2. Opportunity for Cross-Examination of Witnesses:
The petitioners argued that they were denied the opportunity to cross-examine witnesses whose statements were relied upon by the revenue during adjudicatory proceedings. The adjudicatory authority declined the request for cross-examination, stating that the petitioners did not provide a plausible and believable reply as to why cross-examination was necessary. The court noted that the petitioners did not deny the recovery of cigarette sticks from their premises and found no material prejudice caused by the non-examination of witnesses.

3. Supply of Documents/Evidences Relied Upon by the Respondents:
The petitioners requested the supply of all documents and evidence relied upon by the respondents. The court did not specifically address this issue in detail but implied that the adjudicatory authority had considered the necessary documents and evidence during the proceedings.

4. Financial Hardship in Meeting the Prerequisite Deposit for an Appeal:
The petitioners claimed financial hardship in meeting the statutory prerequisite deposit required for preferring an appeal. The court emphasized that financial incapacity cannot be a ground for maintaining the petitions, as the Act itself provides a complete mechanism for deciding all disputes. The court directed that if the petitioners take recourse to the remedy provided under the Act within four weeks, the issue of limitation shall not hinder its adjudication on merits.

5. Violation of Principles of Natural Justice:
The petitioners claimed that the order violated the principles of natural justice, primarily because witnesses supporting the revenue were not allowed to be cross-examined. The court referred to guiding principles for entertaining a petition under Article 226 of the Constitution of India alleging a breach of natural justice, as laid out by the Apex Court in State of U.P. V. Sudhir Kumar Singh. The court found that the petitioners failed to establish how the order was in "total" violation of the principles of natural justice and noted that no serious prejudice was caused by the non-examination of witnesses.

Conclusion:
The court concluded that the petitioners did not make a case for interference and directed them to pursue the statutory remedy provided under the Act. The court disposed of the petitions with specific directions to ensure the expeditious adjudication of the appeal on merits, including considering the petitioners' request for waiver of the pre-deposit amount if admissible under law. The court emphasized that the appeal and application should be considered uninfluenced by the observations made by the court.

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