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2023 (7) TMI 1113 - AT - Central ExciseClandestine Removal - opportunity to cross-examine the witnesses not provided - demand confirmed on the basis of the statements given by the supplier of goods - violation of Section 9D of Central Excise Act, 1944 - HELD THAT - The appellants have made a request to the Adjudicating Authority to give an opportunity to cross-examine particularly, Shri Ram Bilas Bansal, Shri Abhay Gupta and Shri D.K. Gupta, the witnesses. However, the Adjudicating Authority has not accepted the request - the Adjudicating Authority has rejected the request of cross-examination for the reason that though they had requested for cross-examination vide their Letter dated 30.09.2009, they did not stress for cross-examination. We find that this argument is not acceptable as it was incumbent upon the Adjudicating Authority to follow the provisions of Section 9D of Central Excise Act, 1944. Hon ble Punjab Haryana High Court observed in the case of M/S JINDAL DRUGS PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT that (i) after the person whose statement has already been recorded before a Gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination, can arise. Hon ble Supreme Court in the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II 2015 (10) TMI 442 - SUPREME COURT held that it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. With due difference to the Hon ble Supreme Court and Hon ble High Court of (Punjab Haryana), it is found that not allowing the cross-examination of key witnesses vitiates the proceedings even under the quasi-judicial proceedings. Therefore, as requested by the learned Counsel for the appellants, we are inclined to accept the contention and the request of learned Counsel for the appellants that the interest of justice would be properly served if the case goes back to the Adjudicating Authority to adjudicate the case afresh after giving the opportunity to the appellants to cross-examine the key witnesses whose statements have been relied upon by the impugned order. Penalty on Shri Ram Bilas Bansal - HELD THAT - During the impugned period i.e January 2003 to January 2005, there was no provision to impose penalty for issuance of invoices without supplying the goods. The amendment to Rule 26 of Central Excise Act, 2002 came only with effect from 01.03.2007 - It is found that the effect of law cannot be applied retrospectively unless it is specifically intended and clearly said so in the amendment. Before the amendment, the penalty under Rule 26 was only applicable to any person who dealt with the goods in any manner and in the impugned case, the main allegation is that only invoices were exchanged without commensurate transfer of goods - penalty imposed on Shri Ram Bilas Bansal set aside. Appeal allowed by way of remand to the Adjudicating Authority.
Issues Involved:
1. Violation of principles of natural justice due to denial of cross-examination. 2. Erroneous reliance on computer printouts without following Section 36B of Central Excise Act, 1944. 3. Imposition of penalty under Rule 26 of Central Excise Rules, 2002 for the period before its amendment. Summary: 1. Violation of Principles of Natural Justice: The appellants argued that the demand was confirmed based on statements from various individuals, and they were not given an opportunity to cross-examine these witnesses, violating Section 9D of the Central Excise Act, 1944. The Tribunal noted that the appellants had requested cross-examination, but the Adjudicating Authority denied it, stating that the request was not stressed during earlier hearings. The Tribunal found this reasoning unacceptable, emphasizing that the Adjudicating Authority must follow the mandatory provisions of Section 9D, which require either the presence of specific conditions or the examination of the witness before admitting their statement in evidence. The Tribunal cited judgments from the Punjab & Haryana High Court and the Supreme Court, underscoring the necessity of cross-examination to uphold the principles of natural justice. 2. Erroneous Reliance on Computer Printouts: The appellants contended that the Department attempted to corroborate witness statements with computer printouts without adhering to the procedure outlined in Section 36B of the Central Excise Act, 1944. The Tribunal noted that the Adjudicating Authority did not provide findings on this issue, contributing to the deficiencies in the impugned order. The Tribunal agreed with the appellants that the case should be remanded to the Adjudicating Authority to address these procedural lapses and ensure compliance with the principles of natural justice. 3. Imposition of Penalty under Rule 26 of Central Excise Rules, 2002: Regarding the penalty imposed on Shri Ram Bilas Bansal, the appellant argued that during the relevant period (January 2003 to January 2005), Rule 26 did not provide for penalties for issuing invoices without supplying goods. The Tribunal agreed, noting that the amendment to Rule 26, which introduced penalties for such actions, came into effect on 01.03.2007. The Tribunal cited the Punjab & Haryana High Court's judgment in Mini Steel Traders, which held that penalties could not be imposed retroactively unless explicitly stated. Consequently, the Tribunal set aside the penalty imposed on Shri Ram Bilas Bansal. Conclusion: The Tribunal set aside the impugned order and remanded Appeal Nos. E/2372/2011 and E/3405/2011 to the Adjudicating Authority for fresh adjudication, ensuring the appellants are given an opportunity to cross-examine key witnesses. The penalty imposed on Shri Ram Bilas Bansal (Appeal No. E/2405/2011) was set aside. The Tribunal directed the Adjudicating Authority to decide the case within sixteen weeks, with the appellants' cooperation. The Tribunal did not express any opinion on the merits of the case.
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