Clandestine removal and unretracted admissions justified duty demand, equal penalty, and partner liability despite no cross-examination.

Unretracted admissions of clandestine removal, supported by records and voluntary duty payment, were treated as sufficient to sustain the duty demand and penal consequences. The plea of breach of natural justice failed because the appellants had received the material relied upon, were given access to records, and had been afforded opportunities for personal hearing which they did not avail; cross-examination was not required as a matter of course on these facts. The conscious, unaccounted removal of processed fabrics with intent to evade duty justified the equal penalty under Section 11AC, and the partner's role in the clandestine removal sustained penalty under Rule 209A.

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Issues: (i) Whether the adjudication and appellate proceedings were vitiated for breach of natural justice on account of denial of cross-examination and personal hearing. (ii) Whether the duty demand and penalties, including equal penalty under Section 11AC and penalty on the partner under Rule 209A, were justified on facts.

Issue (i): Whether the adjudication and appellate proceedings were vitiated for breach of natural justice on account of denial of cross-examination and personal hearing.

Analysis: The record showed that the appellants were supplied with the panchnama, the statements of the partner, and the letter relating to voluntary duty payment, and they were also given access to the relevant records for inspection. The request for cross-examination did not displace the effect of the partner's own un-retracted inculpatory statements admitting clandestine removal. As to personal hearing, opportunities were granted before the original authority and before the appellate authority, but the appellants failed to avail them. The plea that the hearing could not be attended because counsel was out of station or because of alleged closure of the building was unsupported by evidence.

Conclusion: The plea of violation of natural justice was rejected.

Issue (ii): Whether the duty demand and penalties, including equal penalty under Section 11AC and penalty on the partner under Rule 209A, were justified on facts.

Analysis: The partner admitted that the processed fabrics were removed clandestinely without accounting and without payment of duty, and those admissions were never retracted. The assessee had also voluntarily debited the duty amount in PLA. On these facts, the removal was held to be conscious and in contumacious disregard of the law with intent to evade duty. In such circumstances, the equal penalty under Section 11AC was considered warranted, and the partner's role in the clandestine removal justified penalty under Rule 209A.

Conclusion: The duty demand and penalties were upheld.

Final Conclusion: The appeals failed on both the procedural and substantive grounds, and the orders of the lower authorities were sustained in full.

Ratio Decidendi: Unretracted admissions of clandestine removal, together with corroborative records and voluntary duty payment, can sustain duty demand and penal consequences, and do not require cross-examination to be ordered as a matter of course where the facts are otherwise established and the opportunity of hearing has been afforded.

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