Lauls Limited Vs Commissioner of Central Excise (CESTAT Chandigarh)
CESTAT Chandigarh held that the interest of justice would be properly served if the case goes back to the Adjudicating Authority to adjudicate the case afresh as not allowing the cross-examination of key witnesses vitiates the proceedings.
Facts- M/s Lauls Limited (appellants), are engaged in the manufacture of mild steel and non-alloy steel, ingots and other articles of iron and steel. Officers of the DGCEI conducted a search of the factory of the appellants and other concerned premises.
On the completion of investigation, a show cause notice was issued. The appellants requested the Adjudicating Authority that they have not received certain documents relied upon and non-relied upon documents. Meanwhile, a personal hearing was fixed; the appellants informed that as the relied upon documents were not furnished to them, they are not in a position to submit a written reply or to attend the personal hearing.
Post remand proceedings, the Adjudicating Authority passed the impugned order dated 07.07.2011 confirmed demand of Rs.58,06,307/- along with interest, on M/s Lauls Limited and imposed penalties.
Conclusion- Held 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.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
1. M/s Lauls Limited (appellants in Appeal No. E/2372/2011), are engaged in the manufacture of mild steel and non-alloy steel, ingots and other articles of iron and steel. Officers of the DGCEI conducted a search of the factory of the appellants and other concerned premises. On the completion of investigation, a show cause notice dated 31.01.2008 was issued. The appellants requested the Adjudicating Authority vide Letter dated 12.07.2008 that they have not received certain documents relied upon and non-relied upon documents. Though the appellants were informed by DGCEI vide Letter dated 13.10.2008 to inspect/take the copies of the relied upon documents, the appellants informed, vide Letter dated 14th November, 2008, that the documents being voluminous, copies may be furnished to them and opportunity to inspect the documents would not serve any purpose. Meanwhile, a personal hearing was fixed for November 28, 2008; the appellants informed that as the relied upon documents were not furnished to them, they are not in a position to submit a written reply or to attend the personal hearing. DGCEI again informed the appellants, vide Letter dated November 18, 2008, that records can be inspected; the appellants visited the office of DGCEI and however could not take the copies of the documents. Personal hearing was again fixed on February 4, 2009 or February 11, 2009; the appellants informed, vide Letter dated February 12, 2009, that they require at least one-month time to file reply and to attend personal hearing. The Adjudicating Authority passed an order dated 27.02.2009 which was challenged by the appellants. The CESTAT vide Final Order No.650- 652/2009 dated 04.09.2009 set aside the OIO and remanded the case back to the Original Authority for de novo adjudication following the principles of natural justice and giving an opportunity to all the appellants to be heard. In the remand proceedings, the Adjudicating Authority passed the impugned order dated 07.07.2011 confirmed demand of Rs.58,06,307/- along with interest, on M/s Lauls Limited; imposed equal penalty under Section 11AC of Central Excise Act, 1944; he imposed a penalty of Rs.10 Lakhs each on Shri Abhay Gupta, Director of M/s Lauls Limited and Shri Ram Bilas Bansal, a Broker, under Rule 26 of Central Excise Rules, 2002 and also ordered for appropriation of the amount paid by M/s Lauls Limited towards the duty liability and penalties. Hence, these three appeal Nos. E/2372/2011, E/2398/2011 and E/2405 are filed by M/s Lauls Limited, Shri Abhay Gupta, Director of M/s Lauls Limited and Shri Ram Bilas Bansal, a Broker, respectively.
2. Ms. Shreya Yadav, learned Counsel appearing on behalf of M/s Lauls Limited and Shri Abhay Gupta, Director, submits that the demand against the appellants was confirmed on the basis of the statements given by the supplier of goods, broker Mr. Ram Bilas Bansal and the transporter; it is a trite law that if a demand is confirmed on the basis of the statements, the assessee should be allowed an opportunity to cross examine the person making such statements; learned Adjudicating Authority has violated the provisions of Section 9D of Central Excise Act, 1944 as no opportunity to cross-examine the witnesses was provided. He relies upon the following cases:
