Natural justice in central excise adjudication requires meaningful hearing and cross-examination before relied-upon statements can be used.

An ex-parte adjudication under the Central Excise Act was held unsustainable where the assessee received only limited and ineffective opportunities of personal hearing contrary to the adjudication circular, because a reasonable hearing is part of fair procedure. The order was also vitiated because witness statements relied upon in the adjudication were used without granting the requested cross-examination, which violated natural justice under Section 9D. The adjudication was quashed and the matter remitted for fresh decision from the appropriate stage, with personal hearing and the cross-examination request to be addressed expeditiously.

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Issues: (i) Whether the ex-parte adjudication order was vitiated for breach of the requirement of personal hearing under Section 33A of the Central Excise Act, 1944 and the departmental circular governing adjudication. (ii) Whether the assessee was entitled to cross-examine the persons whose statements were relied upon under Section 9D of the Central Excise Act, 1944 before those statements could be used against it.

Issue (i): Whether the ex-parte adjudication order was vitiated for breach of the requirement of personal hearing under Section 33A of the Central Excise Act, 1944 and the departmental circular governing adjudication.

Analysis: The record showed that the petitioner was given only limited opportunity of hearing, with one notice during the period of lockdown and another notice received on the very date fixed for hearing. The circular on adjudication required at least three opportunities of personal hearing at sufficient intervals and separate communications for each opportunity. The opportunity granted was found to be inconsistent with that requirement and did not satisfy the standard of fair hearing.

Conclusion: The order was vitiated for breach of the requirement of a reasonable opportunity of hearing and could not be sustained.

Issue (ii): Whether the assessee was entitled to cross-examine the persons whose statements were relied upon under Section 9D of the Central Excise Act, 1944 before those statements could be used against it.

Analysis: The impugned order relied upon statements of witnesses and the petitioner had specifically sought cross-examination. Where relied-upon statements form the basis of adjudication, denial of cross-examination amounts to a serious procedural defect and violates natural justice. The matter therefore required reconsideration from the stage at which such opportunity ought to have been granted.

Conclusion: The petitioner was entitled to cross-examination and the denial of that opportunity warranted setting aside of the adjudication order.

Final Conclusion: The adjudication order was quashed and the matter was remitted for fresh adjudication from the appropriate stage after granting personal hearing and deciding the request for cross-examination expeditiously.

Ratio Decidendi: Where an adjudication under the Central Excise law rests on relied-upon witness statements, denial of cross-examination and failure to afford the prescribed meaningful opportunity of hearing vitiate the order for breach of natural justice, warranting remand for fresh decision.

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