2022 (1) TMI 198 - AT - Central Excise

CENVAT Credit - credit taken on bills of entry of imported goods without receipt of the goods - levy of penalty under Rule 26 of Central Excise Rules, 2002 - documents as requested by the appellant were not produced - violation of principles of natural justice - HELD THAT - There is a force in the argument of the counsels for all the appellants on the ground of principles of natural justice. It is found that all the appellants could not re-present during the personal hearing. Also all the relied upon and none relied upon documents were not supplied to the appellants - It is also observed that the relied upon documents have not been provided to the appellant nor records seized from the appellant have been returned to them despite the request made by the appellant by letter dated 24.01.2011, thereafter, almost after 8 years impugned order was issued. The adjudicating authority has grossly violated the principles of natural justice by not providing the documents as requested by the appellant and also not giving the effective hearing to the appellants - without going into the other details of the adjudication order, it is held that the principles of natural justice which is the foremost requirement for any adjudication, needs to be followed. Matter remanded to the adjudicating authority to comply with the principles of natural justice and to pass a de novo adjudication order after providing all the documents and sufficient opportunity of personal hearing - appeal allowed by way of remand.

Issues: Disallowance of Cenvat Credit, Violation of Principles of Natural Justice

Disallowance of Cenvat Credit:
The judgment pertains to an appeal against the disallowance of Cenvat Credit amounting to ?3,07,50,774 against a company for taking credit on bills of entry of imported goods without actual receipt of the goods. The appellants were also penalized under Rule 26 of Central Excise Rules, 2002. The counsels for the appellants argued on merit and facts of the case, highlighting a violation of principles of natural justice as the order was passed ex-parte without providing an opportunity for cross-examination of witnesses. The Revenue, represented by a Superintendent, supported the findings of the original order. The Tribunal observed that the appellants were not able to attend the personal hearing, and the relied upon documents were not supplied to them. The adjudicating authority passed an ex-parte order without providing further opportunity for representation. The Tribunal found that the principles of natural justice were violated as the appellants were not given a fair hearing and the necessary documents were not provided.

Violation of Principles of Natural Justice:
The Tribunal, after careful consideration of submissions from both sides and perusal of records, concluded that there was merit in the argument regarding the violation of principles of natural justice. It was noted that the appellants were not present during the personal hearing, and essential documents were not supplied to them. Specific instances were highlighted, such as requests for documents made by the appellants and the lack of response from the adjudicating authority. The Tribunal emphasized that the principles of natural justice are fundamental to any adjudication process and must be adhered to. Consequently, the matter was remanded to the adjudicating authority to ensure compliance with the principles of natural justice and to pass a fresh adjudication order after providing all necessary documents and a proper opportunity for a personal hearing. The appeals were disposed of by way of remand to rectify the procedural shortcomings and uphold the principles of natural justice.

This judgment underscores the significance of upholding principles of natural justice in adjudicatory proceedings, emphasizing the right to a fair hearing and access to relevant documents for effective representation. The decision to remand the matter highlights the importance of procedural fairness and the need for adjudicating authorities to ensure due process is followed in all stages of decision-making.

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