2018 (3) TMI 402 - AT - Central Excise

CENVAT credit - it was alleged that appellant had wrongly passed on Cenvat credit to its buyer, without supplying the Cenvatable goods - natural justice - Held that - though, the appellant has specifically requested for cross-examination of Shri E/51089/17-SM Vikas Gupta, whose statement has been relied on by the department for confirmation of the adjudged demand, but no such opportunity has been given to the appellant for such cross examination. Thus, it is a case of violation of the principles of natural justice - the matter should also be remanded to the original authority for affording opportunity of cross-examination of the witness Shri Vikas Gupta, authorised signatory of M/s Vikas Enterprises by the appellant - appeal allowed by way of remand.

Summary

Issues:
1. Denial of cross-examination of a witness leading to violation of principles of natural justice.
2. Imposition of penalty on the appellant under Rule 25 of the Central Excise Rules, 2002 without affording the opportunity for cross-examination.

Analysis:
Issue 1: The appellant contended that the denial of the request for cross-examination of a witness, Shri Vikas Gupta, was a violation of natural justice principles. The appellant argued that without the opportunity for cross-examination, proceedings leading to the imposition of a penalty could not be initiated. The appellant relied on legal precedents, including the judgment of the Hon'ble Supreme Court in Andaman Timber Industries Vs. CCE, Kolkata-II and the judgment of the Delhi High Court in Basudev Garg Vs. CC, to support the necessity of providing the opportunity for cross-examination. The Tribunal agreed with the appellant, noting that the denial of cross-examination amounted to a violation of natural justice. The Tribunal referenced previous decisions where matters were remanded for affording the opportunity for cross-examination. Consequently, the Tribunal remanded the matter to the original authority for the appellant to cross-examine the witness, Shri Vikas Gupta.

Issue 2: The appellant was a dealer of excisable goods accused of wrongly passing on Cenvat credit without supplying the Cenvatable goods. The adjudicating authority imposed a penalty of ?1,06,922 on the appellant under Rule 25 of the Central Excise Rules, 2002. On appeal, the ld. Commissioner (Appeals) upheld the adjudication order. During the Tribunal hearing, both sides presented their arguments, with the ld. DR for Revenue reiterating the findings of the impugned order. After considering the submissions and reviewing the records, the Tribunal found that the denial of cross-examination constituted a violation of natural justice. Consequently, the Tribunal set aside the impugned order and remanded the matter to the original authority for a fresh adjudication order after providing the appellant with the opportunity for cross-examination.

In conclusion, the Tribunal allowed the appeal by remanding the matter for further proceedings, emphasizing the importance of adhering to principles of natural justice, particularly the right to cross-examine witnesses in adjudicatory proceedings.