Natural justice requires disclosure of relied-on material and cross-examination before civil or penal penalty can stand

A penalty under the Central Excise Rules cannot be sustained where the affected party is not supplied the report relied on and is denied cross-examination of departmental witnesses. The court held that reliance on material collected behind the petitioner's back, without furnishing the adverse report or permitting testing of witness evidence, breached reasonable opportunity and natural justice. The penalty order was therefore quashed, and the authorities were left free to proceed afresh in accordance with law after giving due opportunity.

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Issues: Whether the penalty imposed under the Central Excise Rules could be sustained when the petitioner was not furnished the report relied upon and was denied an opportunity to cross-examine the witnesses examined by the departmental authorities.

Analysis: The impugned penalty was challenged on the ground that the petitioner had not been given a fair opportunity to meet the departmental case. The record showed that the authorities relied on material collected behind the petitioner's back, while the petitioner was not supplied the report used against him and was not permitted to cross-examine the witnesses. In such circumstances, the adjudication was vitiated for breach of reasonable opportunity.

Conclusion: The penalty order was quashed for violation of natural justice and denial of reasonable opportunity. The departmental authorities were left free to proceed afresh in accordance with law after giving the petitioner due opportunity.

Ratio Decidendi: An adjudication imposing civil or penal consequences cannot stand where the affected person is denied the material relied upon and the right to test adverse evidence by cross-examination.

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