1995 (9) TMI 156 - AT - Central Excise

Summary

Issues Involved:
1. Denial of opportunity to cross-examine witnesses.
2. Validity of gate passes and Modvat credit availed.
3. Burden of proof regarding the genuineness of gate passes.

Summary:

1. Denial of Opportunity to Cross-Examine Witnesses:
The appellants contested the denial of the opportunity to cross-examine witnesses whose statements were relied upon by the Department. The Tribunal had previously remanded the case to the adjudicating authority to allow cross-examination. However, the Additional Collector did not ensure the attendance of these witnesses for cross-examination, thus violating the principles of natural justice. The Tribunal emphasized that a person must be given an effective opportunity to challenge the correctness of third-party statements by cross-examination. If witnesses do not appear, the adjudicating authority should proceed without relying on those statements.

2. Validity of Gate Passes and Modvat Credit Availed:
The appellants argued that they correctly availed the credit of duty on inputs received in the factory, evidenced by gate passes bearing the seal and stamp of Central Excise officers. These inputs were duly recorded in the Raw Material Account (Form IV) and RG-23 Part-I and Part-II, used in manufacturing final products, and mentioned in monthly returns (RT-12). The payments were made by crossed Account Payee's cheque, and the consignments crossed sales tax barriers, verified by Sales Tax authorities. The Tribunal found that the Department failed to provide acceptable evidence to prove the gate passes were fictitious, and the burden of proof was on the Revenue.

3. Burden of Proof Regarding the Genuineness of Gate Passes:
The Tribunal held that the Department did not meet its burden of proving the gate passes were fictitious. The statements of witnesses recorded during the investigation, without the opportunity for cross-examination, were insufficient. The appellants provided documentary and circumstantial evidence supporting the genuineness of the gate passes, which the Department did not effectively counter. The Tribunal cited relevant case law, emphasizing the necessity of cross-examination to challenge the credibility of third-party statements.

Conclusion:
The Tribunal set aside the impugned orders, allowing the appeal with consequential relief to the appellants, underscoring the importance of adhering to principles of natural justice and fair play in adjudication processes.