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2025 (4) TMI 5 - HC - Central ExciseFailure to allow cross-examination of witnesses as directed by the Central Excise Service Tax Appellate Tribunal (CESTAT) - Violation of principles of natural justice - Section 9D of the Central Excise Act 1944 - HELD THAT - This Court has in case of M/s. Atithi Gokul Automobile Works Anr vs. Union of India 2024 (12) TMI 669 - GUJARAT HIGH COURT involving similar facts remanded the matter back and held that The Tribunal has categorically observed that the adjudicating authority is to grant cross-examination of the persons as has been indicated in paragraph No. 4 of the order and subsequently grant four weeks time to the petitioners to file a detailed reply. Both the directions of the Tribunal are not followed by the respondent No. 2 in letter and spirit and as such the impugned order-in-original is liable to be quashed and set aside only on that ground. The impugned order-in original dated 30.10.2023 is hereby quashed and set aside and the matter is remanded back to the respondent No. 2. The respondent No. 2 shall comply with the directions of the order dated 04.04.2022 passed by the Tribunal and as the matter is very old give priority to the same and pass fresh de novo order after giving an opportunity of hearing to the petitioners and compliance of the directions given by the Tribunal within a period of six months from the date of receipt of copy of this order - Petition allowed by way of remand.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court were:
ISSUE-WISE DETAILED ANALYSIS 1. Cross-examination and Principles of Natural Justice The relevant legal framework involves Section 9D of the Central Excise Act, 1944, which mandates the cross-examination of witnesses whose statements are used as evidence. The CESTAT had previously remanded the matter to the adjudicating authority with explicit instructions to allow cross-examination of the witnesses involved. The Court interpreted this requirement as fundamental to ensuring the principles of natural justice, which necessitate that a party must have the opportunity to challenge the evidence against them. The petitioner argued that the denial of cross-examination violated these principles and relied on precedents, including the case of Manek Chemicals Pvt. Ltd. v. Union of India, which emphasized the necessity of cross-examination in similar contexts. Key evidence included the Tribunal's remand order and the adjudicating authority's subsequent failure to comply with it. The adjudicating authority had scheduled hearings for cross-examination but ultimately decided it was unnecessary, citing the non-applicability of Section 9D. The Court found that the adjudicating authority's decision not to allow cross-examination was unjustified and contrary to the Tribunal's clear directions. The Court rejected the argument that Section 9D was inapplicable and concluded that the failure to permit cross-examination amounted to a breach of natural justice. 2. Quashing of the Impugned Order and Remand for Fresh Adjudication The Court considered whether the impugned order should be set aside due to procedural deficiencies. The legal framework involves the Court's power under Article 227 of the Constitution of India to ensure the proper administration of justice by lower courts and tribunals. The Court emphasized that adherence to procedural directions, such as those issued by the CESTAT, is crucial for fair adjudication. The petitioner argued that the adjudicating authority's failure to follow the Tribunal's directions necessitated the quashing of the order. The Court agreed, noting that the adjudicating authority had not complied with the Tribunal's instructions to allow cross-examination and provide the petitioner with an opportunity to file a detailed reply. The Court held that these procedural lapses warranted setting aside the impugned order. In addressing competing arguments, the Court acknowledged the respondent's claim that efforts were made to facilitate cross-examination but found these insufficient. The Court concluded that the impugned order was procedurally flawed and must be quashed. SIGNIFICANT HOLDINGS The Court's significant holdings included:
Verbatim quotes of crucial legal reasoning include the Court's observation: "Both the directions of the Tribunal are not followed by the respondent No. 2 in letter and spirit and as such, the impugned order-in-original is liable to be quashed and set aside only on that ground." The Court established the core principle that compliance with procedural directions, particularly those ensuring the right to cross-examination, is essential for upholding the principles of natural justice.
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