2017 (8) TMI 698 - AT - Central Excise

Clandestine removal of goods - Principles of Natural Justice - Held that - the statements of the appellants were recorded, no investigation was conducted at the end of the appellants and the transporters were also not investigated to reveal the truth whether the clandestine removal of goods from M/s IFL and M/s IAPL were transported up to the place of appellants. Moreover, no cross examination of the persons whose statement was relied upon and sought by the appellant was granted - As the cross examination is required for proper adjudication, which was not granted to the appellant, therefore, there is violation of principle of natural justice The matter is remanded back to the adjudicating authority to grant cross examination of the witnesses sought by the appellant as per Section 9D of the Act - appeal allowed by way of remand.

Summary

Issues:
Allegation of clandestine removal of goods based on statements and data retrieved from laptops. Violation of procedural requirements under Section 36B of the Central Excise Act, 1944. Denial of cross-examination of witnesses. Lack of investigation at the appellant's premises.

Analysis:
The appellants contested the demand confirmed against them for clandestine removal of goods, primarily relying on computer printouts and data recovered from individuals associated with other firms. The main appellant was accused of manufacturing packaged drinking water without paying duty and clearing goods clandestinely. The Revenue's case was built on incriminating documents and statements from M/s IFL and M/s IAPL, with no direct investigation at the appellant's premises. The appellants argued that procedural lapses and lack of corroborative evidence rendered the demand unjustified, citing legal precedents to support their contentions.

The appellant's counsel highlighted the absence of procedural compliance under Section 36B of the Central Excise Act, 1944 and raised concerns about the reliability of statements recorded under duress. The denial of cross-examination of witnesses and the lack of on-site investigation at the appellant's premises were also emphasized. The appellant sought to invalidate the impugned order based on these procedural irregularities and the failure to follow established legal procedures.

In response, the Revenue opposed the appellant's contentions, asserting that incriminating documents and admissions from M/s IFL and M/s IAPL formed the basis of the demand against the appellants. The Revenue argued that the documents in question were not disputed by the other firms and that duty had been paid following their admission of wrongdoing. Consequently, the Revenue maintained that the demands should be upheld against the appellants based on the evidence available.

After hearing both sides, the tribunal acknowledged the reliance on documents recovered from third parties and the lack of direct investigation at the appellant's premises. The tribunal noted the failure to allow cross-examination of witnesses and cited a legal precedent emphasizing the importance of adhering to procedural requirements. Consequently, the tribunal set aside the impugned order, remanding the matter for proper cross-examination of witnesses as per Section 9D of the Act to ensure a fair adjudication process.

In conclusion, the appeals were allowed by way of remand, emphasizing the need for procedural fairness and adherence to legal requirements in determining the alleged clandestine removal of goods. The tribunal's decision aimed to uphold principles of natural justice and ensure a thorough examination of evidence before reaching a final judgment.