2023 (2) TMI 776 - HC - Central Excise

Violation of principles of natural justice - non-availment of opportunity of cross-examination of the witnesses - non-grant of personal hearing as provided under the statute (audi alterem partem) - ex-parte order passed without hearing the petitioner or its authorized representative - HELD THAT - This Court at the time of issuance of notice, had referred to the Section 33 of the Central Excise Act where the petitioner has pointed out that the action is violative of Section 33A of the Central Excise Act which otherwise, contemplates an opportunity of hearing to be granted minimum three times. Reference also made to the Circular No.1053/2/2017 dated 10.3.2017 issued by the Central Board of Excise and Customs, Ministry of Finance (Department of Revenue), New Delhi, where subject is Master Circular on Show Cause Notice, Adjudication and Recovery Regarding . It makes it quite clear that the department had, by way of the present circular streamlined and reiterated the requirement of grant of three opportunities of personal hearing with sufficient interval to the noticee who can avail the opportunity of being heard. It also insist on the separate communications to be made to the noticee for each opportunity of personal hearing. In fact, the separate communication for each hearing extension would be issued at sufficient interval - Maintaining of record of personal hearing and written submissions made during the personal hearing is also insisted upon by this very circular. It also follows that the adjudication order should be a speaking order which should stand the test of legality, fairness and reason of the appellate forum. It would be pertinent to note that the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The order impugned passed by the authority concerned deserves to be quashed and set aside remitting the matter to the stage where it was left for the authority concerned to avail an opportunity within two weeks of the date of receipt of copy of this order through e-mail @ [email protected] as also through R.P.A.D. Once this opportunity of personal hearing is granted, without seeking any further adjournment, the petitioner shall cooperate - Petition allowed.

Summary

Issues Involved:
1. Challenge to the ex-parte Order-in-Original.
2. Alleged violation of principles of natural justice.
3. Non-service of show cause notice.
4. Denial of opportunity for cross-examination of witnesses.
5. Non-grant of personal hearing.

Issue-wise Detailed Analysis:

1. Challenge to the Ex-parte Order-in-Original:
The petitioners challenged the ex-parte Order-in-Original dated 12.10.2020, claiming it was passed without hearing them or their authorized representative, allegedly violating the principles of natural justice.

2. Alleged Violation of Principles of Natural Justice:
The petitioners argued that the order was passed without granting them a fair hearing. They asserted that the adjudicating authority did not consider their reply, nor did it allow the examination or cross-examination of the persons whose statements were relied upon. The court acknowledged the necessity of adhering to the principles of natural justice, emphasizing the requirement for a fair opportunity to be heard.

3. Non-service of Show Cause Notice:
The petitioners contended that they did not receive the show cause notice dated 17.12.2018 until much later. Despite their request for a copy, they claimed it was provided only on 02.08.2019. The court noted that the issue of non-service of the show cause notice was not critical for further examination since the petitioner eventually received and responded to it.

4. Denial of Opportunity for Cross-examination of Witnesses:
The petitioners requested cross-examination of witnesses whose statements were relied upon in the show cause notice. The court referred to the Supreme Court's decision in Andaman Timber Industries, emphasizing the significance of allowing cross-examination to ensure adherence to natural justice principles. The court directed the adjudicating authority to decide on the cross-examination request upon remand.

5. Non-grant of Personal Hearing:
The court highlighted that the adjudicating authority failed to provide the mandated three opportunities for a personal hearing as required under Section 33A of the Central Excise Act and Circular No.1053/2/2017. The court noted that the petitioner was given a personal hearing on 13.04.2020 during the peak of the Covid-19 pandemic, making it impractical to attend. The second hearing was scheduled for 09.10.2020, but the notice was received on the same day, making it impossible for the petitioner to attend. The court found this to be a breach of the principles of natural justice and the statutory requirement for personal hearings.

Conclusion:
The court quashed the impugned order and remanded the matter to the adjudicating authority to provide a fresh opportunity for a personal hearing and decide on the cross-examination request. The adjudicating authority was directed to expedite the adjudication process, ensuring compliance with the principles of natural justice and statutory requirements.