2019 (1) TMI 1427 - AT - Central Excise

Clandestine removal - MS Ingots - retraction of statements - opportunity to cross-examine the witnesses whose statements have been relied upon is denied - non consideration of written submissions - Held that - Commissioner has acknowledged about appellant relying upon some case law along with various relied upon documents by the Department in the adjudication against M/s Kamdhenu based whereupon was initiated the impugned adjudication. However, the Commissioner (Appeals) without giving specific reason has simply mentioned that none of those documents and even the case laws are relevant in the instant case. Order under challenge has denied opportunity to appellants of cross examination by quoting a simple reason that no reason has been mentioned as to why the witnesses need to be cross examined by the appellant and that no evidence has been submitted for the same. But the adjudicating authority has failed to acknowledge that the entire relevant documentary evidence as could be produced by the appellant for any purpose was already taken in Department s possession at the time of the search of premises on 13.02.2009 - Apparently and admittedly these documents were never returned to the appellant after the issuance of the SCN as was otherwise mandatory under Rule 24A of Central Excise Rules. Admittedly none of those documents were found incriminatory - the adjudication based on thirdy party evidence is not sustainable especially when in the adjudication against said third party there documents have already been observed as untrustworthy. Admission in the statement of Mr. Pawan Bansal - Held that - No doubt admission is the best evidence unless and until the same is withdrawn. Admission of Mr. Pawan Bansal was withdrawn very next day with the allegations of coercion being exercised upon him while making him sign on statement of 13.03.2009 - the Commissioner is held to have definitely committed an error while still relying upon the statement of Mr. Pawan Bansal on 17.03.2009. The documents based whereupon the impugned adjudication has initiated are still under adjudication in view of the direction of this Tribunal vide Order dated 02.04.2018 - the present appeals be also remanded for denovo adjudication so that adjudication of present Appeals be taken alongwith the matter of M/s Kamdhenu Ispat Ltd. as has already been remanded so as to avoid any conflict of opinion - appeal allowed by way of remand.

Summary

Issues:
1. Adjudication based on documents recovered from another party.
2. Denial of opportunity for cross-examination and consideration of submissions.
3. Reliance on retracted statement for confirming demand.

Issue 1: Adjudication based on documents recovered from another party:
The judgment pertains to two appeals, one for a company and another for its director, arising from the same adjudication order. The appellant, engaged in manufacturing Ms ingots, faced a demand for Central Excise duty based on incriminating documents recovered from another company, M/s Kamdhenu Ispat Ltd. Despite the appellant's arguments regarding the reliability of the data and the need for a denovo trial, the order confirming the demand was initially upheld. The Tribunal highlighted the need for re-adjudication after examining the concerned officials of GEQD, emphasizing the importance of cross-examination and providing additional evidence. The Tribunal set aside the adjudication order against M/s Kamdhenu Ispat Ltd., directing a denovo decision and affording reasonable opportunities for hearing and evidence production.

Issue 2: Denial of opportunity for cross-examination and consideration of submissions:
The appellants contended that they were denied the opportunity to cross-examine witnesses and present their case adequately. The Commissioner's failure to consider the appellant's written submissions and reliance on documents from the adjudication against M/s Kamdhenu Ispat Ltd. raised concerns. Despite the appellant's requests for cross-examination and access to seized documents, the original adjudicating authority proceeded ex parte. The order under challenge denied the opportunity for cross-examination without sufficient justification, overlooking the appellant's submissions and the unreturned documents seized during the search. The Tribunal emphasized the importance of a fair hearing, cross-examination, and the inadmissibility of adjudication based on third-party evidence without proper verification.

Issue 3: Reliance on retracted statement for confirming demand:
The department justified the demand confirmation based on an alleged admission in the statement of Mr. Pawan Bansal, recorded under questionable circumstances. However, the retraction of the statement the next day raised doubts about its reliability. Despite the admission being withdrawn due to coercion, the Commissioner relied on it, overlooking the retraction and coercion allegations. The Tribunal held that the reliance on the retracted statement was erroneous, emphasizing the need for valid and uncoerced evidence in adjudication. Considering the ongoing re-adjudication of related matters, the Tribunal remanded the appeals for denovo adjudication, ensuring a fair process and cross-examination opportunities for the appellants.

This detailed analysis of the judgment addresses the issues of adjudication based on third-party documents, denial of cross-examination opportunities, and reliance on retracted statements, highlighting the Tribunal's emphasis on fair procedures, evidence reliability, and the need for denovo adjudication to ensure justice and procedural fairness.