2018 (1) TMI 632 - AT - Central Excise

Opportunity to cross-examine - Appellant had sought cross-examination of the panch witnesses in order to bring on record that there was some commission and omission while recording of stock found physically in the premises - principles of natural justice - Held that - In the absence of cross-examination of the panch witnesses, the adjudicating authority may not be able to rely upon the Panchnama which is drawn at the factory premises - the adjudicating authority should be given an opportunity to make available the panch witnesses for cross-examination and after doing so should pass an order after following principle of natural justice- appeal allowed by way of remand.

Summary

Issues:
Appeal against Order in-Appeal No.VAP-EXCUS-000-587 to 589/13-14 dated 14.3.2013 passed by the Commissioner (Appeals), Central Excise & Customs, Vapi.

Analysis:
- The main issue in this case revolves around a show cause notice issued to M/s Technovinyl Polymers India Ltd. for shortages in finished goods and raw material inputs, leading to the demand for duty and imposition of penalties. The main Appellant contested the notice, arguing that the stock taking was erroneous as certain goods were not considered, and requested cross-examination of panch witnesses, which was denied. The adjudicating authority rejected the contentions and confirmed the demand and penalties. The first Appellate Authority also upheld the decision, leading to the appeal before the Tribunal.

- The Appellant's counsel argued that the lower authorities wrongly presumed an admission of shortage by the main Appellant, highlighting discrepancies in statements and the lack of cross-examination of panch witnesses. The Appellant also presented evidence of duty paid inputs being stored in a nearby go-down with permission from Revenue authorities, refuting the allegations of clandestine removal of goods. The Revenue, on the other hand, maintained that the panchnama clearly recorded shortages and unauthorized removal of raw materials, supporting the demand for duty.

- Upon careful consideration, the Tribunal noted that the main Appellant had requested cross-examination of panch witnesses to address discrepancies in the stock recording process. The Tribunal emphasized the importance of allowing cross-examination to establish the factual accuracy of the panchnama, as the entire case and demand were based on it. Citing legal precedents, the Tribunal concluded that the adjudicating authority should have made efforts to produce panch witnesses for cross-examination. Therefore, the Tribunal set aside the impugned order and remitted the matter back to the adjudicating authority for reconsideration after granting cross-examination of the panch witnesses to ensure natural justice.

- The Tribunal's decision was based on the principles of natural justice and legal precedents, emphasizing the need for a fair and thorough examination of evidence, particularly regarding the recording of shortages in finished goods and raw material inputs. The case highlights the importance of procedural fairness and the right to cross-examine witnesses in matters involving duty demands and penalties in excise and customs disputes.