2009 (8) TMI 817 - AT - Central Excise

Appeals allowed due to misinterpretation of law, impugned order set aside for new hearing

PRAKASH INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, RAIPUR

The Tribunal allowed the appeals due to the Commissioner's misinterpretation of Section 33-A and premature rejection of the cross-examination request. The ... Cross-examination of the witnesses -misconstruction of provisions of law comprised under Section 33-A - till 26th September, 2008 the appellants had not filed any reply to the show cause notice - the fact remains that on 26th September, 2008, there was no defence of the appellants placed on record and the Commissioner had no opportunity to know the defence of the appellants with reference to the show cause notice issued to them - In such circumstances, it was too pre-mature for the Commissioner to decide about the claim of the appellants for cross-examination of the witnesses - Certainly, the Commissioner could have rejected the application/request for cross-examination being pre-mature as the appellants had not filed their reply to the show cause notice. But in no case he could have arrived at the finding that the appellants are not entitled to cross-examine the witnesses in the matter - Such a finding could have been given only after hearing the appellants and in the absence of defence of the appellants being disclosed on record, it cannot be said that the appellants had fair opportunity of placing on record their case and justification for cross-examination of those deponents - The impugned order is, therefore, set aside. The appellants are permitted to file detailed reply, if any, to the show cause notice on or before 20th October, 2009 and thereafter the Commissioner shall proceed with the matter and dispose of the same as expeditiously as possible, and in any case, before 31st March, 2010. Issues Involved:1. Misconstruction of provisions under Section 33-A of the Central Excise Act, 1944.2. Arbitrary rejection of the request for cross-examination of witnesses.Detailed Analysis:Misconstruction of Provisions Under Section 33-A of the Central Excise Act, 1944:The appellants contended that the Commissioner misconstrued Section 33-A of the Central Excise Act, 1944 by interpreting the provision as limiting the number of hearings to three days, thereby denying the appellants a fair opportunity to contest the proceedings. Section 33-A(1) mandates that the adjudicating authority must provide an opportunity for a hearing if requested by a party. Section 33-A(2) allows for adjournments but restricts them to a maximum of three times at the request of a party.The Tribunal clarified that the provision does not imply that hearings must be concluded within three days. Instead, it restricts the number of adjournments requested by a party. Prolongation of hearings due to time constraints or incomplete testimonies does not count as an adjournment. The Tribunal emphasized that the adjudicating authority could adjourn the matter beyond three times if justified by circumstances, provided reasons are recorded in writing.Arbitrary Rejection of the Request for Cross-Examination:The appellants argued that the Commissioner exhibited bias by pre-judging the issue of cross-examination in a letter dated 26th September 2008, which rejected their request to cross-examine witnesses whose statements were relied upon by the Department. The appellants cited the Supreme Court decision in State of West Bengal & Ors. v. Shivananda Pathak & Ors., emphasizing the necessity for an unbiased adjudicating authority.The Tribunal noted that the Commissioner's letter indicated a pre-judgment by stating that the Department's case was based on documentary evidence rather than witness testimonies. The Tribunal found this to be premature and indicative of legal bias, as the Commissioner had not yet reviewed the appellants' defense.The Tribunal highlighted that the appellants had not filed a detailed reply to the show cause notice by 26th September 2008. The Commissioner should have considered the request for cross-examination after the appellants had submitted their defense. The Tribunal concluded that the Commissioner's pre-judgment and rejection of the cross-examination request without knowing the appellants' defense disclosed bias.Conclusion:The Tribunal allowed the appeals on the limited ground of the Commissioner's misconstruction of Section 33-A and the premature rejection of the cross-examination request. The impugned order was set aside, and the appellants were permitted to file a detailed reply by 20th October 2009. The matter was directed to be disposed of by a different Commissioner, preferably at Indore, by 31st March 2010. The Tribunal emphasized that the appellants should not seek more than three adjournments and must cooperate for the expeditious disposal of the matter.