2019 (8) TMI 204 - AT - Central Excise

Classification of goods - cigarette of brand Golden Cigar - the goods was proposed to be classified under chapter Sub Heading 24022030 as cigarette against the claim of the appellant that product is cigar and classifiable under chapter Sub Heading 24021010 - request of cross-examination denied for 17 persons, and cross-examination of only one person allowed - Principles of Natural Justice - HELD THAT - The cross examination of witnesses is primary step to complete adjudication process. We completely disagree with the adjudicating authority as provided under Section 9D of the Central Excise Act, it is incumbent on the adjudicating authority to cross examine the persons whose statements were recorded by the investigating agency, only thereafter such statements can be used for adjudication of the SCN. Since admittedly the adjudicating authority has refused cross examination of 17 persons, there is clear violation of principles of natural justice - the appellant should be given opportunity for cross examination of witnesses. The matter remitted to the adjudicating authority for passing a fresh order after observing the principles of natural justice - appeal allowed by way of remand.

Summary

Issues: Classification of goods under Central Excise Tariff Act, cross-examination of witnesses, violation of principles of natural justice.

Classification of Goods:
The appellant, engaged in manufacturing cigarettes, cigars, and cigarillos, received a show cause notice proposing confiscation of goods, differential excise duty recovery, penalties, and interest. The dispute revolved around the classification of the finished goods "Golden Cigar" under chapter Sub Heading 24022030 as cigarettes, while the appellant claimed it should be classified under chapter Sub Heading 24021010 as cigars. The appellant, represented by a CA and an advocate, argued for the correct classification of the goods, submitting detailed written arguments. The Joint Commissioner (AR) representing the Revenue reiterated the findings of the impugned order. The Tribunal, after hearing both sides and examining the records, found a crucial flaw in the adjudication process.

Cross-Examination of Witnesses:
The Tribunal noted that the investigating authority had recorded statements of various persons, which were relied upon in the show cause notice. The appellant requested cross-examination of 18 persons, but only one person was allowed to be cross-examined by the adjudicating authority. The authority refused cross-examination of the other persons, citing that they were employees of the appellant and that there was ample evidence available. The Tribunal disagreed with this approach, emphasizing the importance of cross-examining witnesses as a fundamental aspect of the adjudication process. Citing Section 9D of the Central Excise Act, the Tribunal highlighted that cross-examination of witnesses is essential before relying on their statements for adjudication. As the adjudicating authority had denied cross-examination of 17 persons, the Tribunal found a clear violation of principles of natural justice.

Violation of Principles of Natural Justice:
Based on settled law, the Tribunal emphasized that cross-examination of witnesses is a primary step in ensuring a fair adjudication process. Due to the denial of cross-examination of witnesses in this case, the Tribunal concluded that there was a violation of principles of natural justice. Consequently, the impugned order was set aside, and the matter was remanded to the adjudicating authority for a fresh order, with a directive to observe the principles of natural justice. All issues were kept open for reconsideration. The judgment was pronounced on 02.08.2019 by the Tribunal.