2023 (6) TMI 1154 - AT - Central Excise

100% EOU - cross-examination not allowed - violation of principles of natural justice - inflation of weight of the consignments in the export/ deemed export documents with an objective to wrongly claim fulfilment of their export obligation - HELD THAT - The impugned order-in-original has been passed without providing for cross-examination of the witnesses whose statements were recorded and relied upon by the authorities - it is necessary on the part of the Adjudicating Authority to accord opportunity of cross-examination of witnesses whose statements have been used as an evidence in the matter. It is mandatory for Adjudicating Authority to follow the principles of natural justice. The adjudication order passed without allowing cross-examination is an act of gross violation of natural justice. On this issue, this Tribunal in the case of PATIDAR PRODUCTS, MAHASHAKTI SALES AGENCY, TULSIDAS CO, RADHESHYAM TRANSPORT CO, KIRITBHAI BACHUBHAI FINAVA, BINTU STORES, SHIVAM MARKETING, MILAN TRANSPORT AND ASHWINBHAI PRAGJIBHAI AMBALIYA VERSUS C.C.E. S.T. -BHAVNAGAR 2022 (10) TMI 874 - CESTAT AHMEDABAD considering various High Court judgments and the Supreme Court judgment, held that Non-production of witnesses for cross-examination, it was held, is violative of principles of natural justice. All these judgments in the matter of cross-examination are at the stage of adjudication. The law, therefore, at that stage, need not be elaborated, as it is the right of an assessee in the event the Revenue seeks to rely on the statements of witnesses recorded by it and whose statements are sought to be relied upon at the stage of adjudication to make available the said witnesses for cross-examination so that it could be established whether the statements recorded from the said witnesses have been voluntarily given and/or are relevant for the issue or based on personal knowledge or hearsay and the like. Matter remanded back to the original Adjudicating Authority for passing a fresh order after allowing opportunity of cross-examination of the witnesses - appeal allowed by way of remand.

Summary

Issues Involved:

1. Allegation of inflating the weight of consignments to wrongly claim fulfillment of export obligations.
2. Violation of principles of natural justice due to denial of cross-examination of witnesses.

Summary:

1. Allegation of Inflating the Weight of Consignments:
The main appellant, M/s. Indu Overseas Pvt. Limited, a 100% Export Oriented Unit (EOU), was accused of inflating the weight of brass parts and accessories in export documents to falsely claim fulfillment of export obligations. The Directorate of Revenue Intelligence (DRI) conducted an investigation and issued a show cause notice on 17.01.2012. The Adjudicating Authority, through an order dated 30.03.2013, confirmed most of the allegations. The appellants challenged this order before the Tribunal.

2. Violation of Principles of Natural Justice:
The appellants argued that there was a gross violation of principles of natural justice as their request for cross-examination of key witnesses was denied. They contended that the Adjudicating Authority acted arbitrarily and confirmed the customs demand and penalties without corroborating the witnesses' statements with documentary evidence or allowing cross-examination.

The Tribunal found that the impugned order was passed without providing for cross-examination of the witnesses whose statements were relied upon. Citing various judgments, including Patidar Products vs. CCE & ST, Bhavnagar, the Tribunal emphasized the necessity of cross-examination to ensure the statements' relevance and admissibility. The Tribunal highlighted that the adjudication process must follow principles of natural justice, and without cross-examination, the evidence lacks evidentiary value.

The Tribunal referenced several judgments, including those from the Supreme Court and High Courts, which established that denying cross-examination violates natural justice principles. The Tribunal concluded that the denial of cross-examination in this case was unjustified and set aside the impugned orders. The matter was remanded back to the original Adjudicating Authority to pass a fresh order after allowing cross-examination of the witnesses.

Conclusion:
The appeals were allowed by way of remand to the Adjudicating Authority for fresh adjudication, ensuring the opportunity for cross-examination of the witnesses. The judgment underscores the importance of adhering to principles of natural justice in quasi-judicial proceedings.