Cross-examination rights and disclosure of relied-upon documents were essential before sustaining a CENVAT credit reversal demand.

Denial of cross-examination of the transport witness and non-supply of relied-upon transport documents vitiated the adjudication because the demand for CENVAT credit reversal and penalties rested mainly on those materials. Since the assessees could not test the statements and documents used to infer non-receipt of goods, the evidentiary basis was not fairly examined. The matter was therefore remanded for de novo adjudication after supplying the relied-upon records and permitting cross-examination.

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Issues: Whether the demand of CENVAT credit reversal and consequential penalties could be sustained when the assessees were denied cross-examination of the transport witness and were not supplied the relied-upon transport documents.

Analysis: The decision turned on the fairness of the adjudication process. The demand was founded mainly on statements of the transport witness and on daily and monthly lorry reports, but the assessees were not allowed to cross-examine the witness and were also denied the documents relied upon to infer non-receipt of the goods. In these circumstances, the evidentiary basis of the finding was not capable of being fairly tested by the assessees, and the matter required fresh adjudication after supplying the material and permitting cross-examination.

Conclusion: The denial of cross-examination and non-supply of relied-upon documents vitiated the order, so the matter was remanded for de novo adjudication.

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