2015 (6) TMI 781 - AT - Central Excise

Duty demand - Clearance of goods without payment of duty - Held that - The case against the appellant is based only on the records recovered from M/s Gopal Steel, a commission agent whose proprietor is Shri Gopal Krishna Aggarwal. The records recovered from M/s Gopal Steel indicate the sale of several consignments of sponge iron manufactured by the appellant to various customers through him for which he had received the commission. However, it is seen that no inquiry has been made with the customers mentioned in the documents recovered from M/s Gopal Steel. Similarly, the factory premises of the appellant had also not been searched and as such there is no allegation of discrepancy in the records of raw material or the finished products. - admittedly, the entire case against the appellant is based on the records recovered from M/s Gopal Steel and the statements of Shri Gopal Krishna Agarwal but the cross-examination of Shri Gopal Krishna Aggarwal, Proprietor of M/s Gopal Steel has not been allowed. In view of this, we hold that the impugned order suffers from the violation of principles of natural justice. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Modification of stay order dated 11/7/14.
2. Denial of cross-examination.
3. Violation of principles of natural justice.
4. Remand for denovo adjudication.

Modification of Stay Order:
The appellant, a manufacturer of Sponge Iron, filed a miscellaneous application seeking modification of a stay order dated 11/7/14. The Tribunal had directed the appellant to deposit a specific amount for compliance with Section 35F. The appellant later filed a modification application, which was dismissed for non-compliance. Subsequently, an appeal was made to the High Court, which remanded the matter back to the Tribunal for consideration of the modification application.

Denial of Cross-Examination:
The appellant argued that the Department's case was solely based on documents recovered from a commission agent, with no incriminating evidence found at the appellant's factory. The appellant requested cross-examination of the commission agent, which was denied by the Commissioner. The Tribunal noted that denial of cross-examination in such circumstances violated principles of natural justice, referencing a Supreme Court case where cross-examination was deemed necessary when evidence was based on records from a third party.

Violation of Principles of Natural Justice:
The Tribunal found that the Department's case against the appellant relied solely on records from the commission agent, without verifying with customers or conducting searches at the appellant's factory. The denial of cross-examination of the commission agent was considered a violation of natural justice. Consequently, the Tribunal set aside the impugned order and remanded the matter to the Commissioner for denovo adjudication, emphasizing the need for cross-examination and consideration of other pleas made by the appellant.

Remand for Denovo Adjudication:
In light of the violation of natural justice due to the denial of cross-examination, the Tribunal remanded the case to the Commissioner for denovo adjudication. The decision to set aside the impugned order and allow cross-examination of the commission agent was based on ensuring fair proceedings and upholding principles of natural justice. The appeal and the miscellaneous application for modification of the stay order were disposed of accordingly.

This detailed analysis of the judgment covers the issues of modification of stay order, denial of cross-examination, violation of natural justice, and remand for denovo adjudication, providing a comprehensive understanding of the legal proceedings and the Tribunal's decision.