2018 (11) TMI 568 - HC - Central Excise

Principles of Natural Justice - petitioner s request for cross-examination of the witnesses denied - evasion of duty - Held that - The authority has committed a serious error in not granting cross-examination of witnesses. At an interim stage, when the adjudication is still going on, we would be loth to interfere. However, when fundamental flaw of breach of basic principles of natural justice is cited, we are left with no choice but to examine the issue further. The grounds for refusal of cross-examination of witnesses mainly were that the same is not a matter of right, that the statements were not retracted, that they were voluntarily made and are supported by documentary evidences and were also allowed to be perused by the partner of the firm. The authorities have committed a serious error in not allowing the petitioner s request for cross-examination of the witnesses - impugned order set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to order rejecting cross-examination of witnesses in support of show cause notice dated 1-1-2015.

Analysis:
The petitioner, a partnership firm engaged in manufacturing, challenged an order rejecting their request for cross-examination of witnesses cited in the show cause notice for duty evasion. The Adjudicating Authority based its refusal on the voluntary nature of witness statements, lack of retractions, and support from documentary evidence, allowing the firm's partner to peruse them. The High Court noted the serious error in denying cross-examination, emphasizing the breach of natural justice principles.

The High Court acknowledged that cross-examination is not an absolute right in customs or excise proceedings but highlighted the necessity unless exceptional circumstances exist. Referring to relevant judgments, the Court emphasized the importance of cross-examination for natural justice. In cases like Mulchand M. Zaveri v. Union of India, CCE, Ahmedabad-II v. Gujarat Cypromet Ltd., and others, the courts stressed that witness statements without cross-examination cannot be relied upon, as seen in Chandan Tubes & Metals Pvt. Ltd. case.

Further, the Court cited the significance of cross-examination as part of natural justice principles, citing State of U.P. v. Mohd. Nooh and other cases. It noted exceptions where alternative remedies do not bar writ jurisdiction under Article 226 of the Constitution, especially in cases of fundamental judicial procedure violations.

Based on the precedents and principles discussed, the High Court found a serious error in denying cross-examination and set aside the impugned order. The Court directed the Adjudicating Authority to allow cross-examination of witnesses whose statements are relied upon, ensuring fairness and adherence to natural justice principles. The judgment concluded by disposing of the petition with these observations and directions.