Natural justice violation in central excise proceedings due to denial of hearing and cross-examination, order set aside

Alleged violation of principles of natural justice where adjudication in central excise proceedings rested on witness statements without permitting cross-examination and effective personal hearing; such denial is treated as a fundamental procedural defect rendering the impugned order liable to be quashed. The decision requires the adjudicating authority to allow cross-examination and remedy the absence of effective hearing within a prescribed short period, thereby negating reliance on untested statements and restoring procedural fairness in the assessment process.

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Issues involved:
1. Challenge to ex-parte Order-in-Original for alleged violation of natural justice.
2. Non-availment of opportunity for cross-examination and personal hearing.

Analysis:

Issue 1: Challenge to ex-parte Order-in-Original
The petitioners challenged the ex-parte Order-in-Original passed by the Commissioner Central GST and Central Excise, alleging a violation of natural justice as they were not heard. The petitioners, including a company and individuals, were accused of availing Cenvat Credit without receiving goods mentioned in invoices. The petitioners contended that statements were recorded without cross-examination, and personal hearings were scheduled during a nationwide lockdown, impacting their ability to present their case effectively. The petitioners sought various reliefs, including quashing the impugned order and allowing cross-examination of witnesses.

Issue 2: Non-availment of opportunity for cross-examination and personal hearing
The High Court found a complete denial of natural justice as the petitioners were not granted effective personal hearings and the opportunity for cross-examination of witnesses, as required by law. The Court emphasized the importance of maintaining a record of personal hearings and written submissions. Referring to a Supreme Court judgment, the Court highlighted the necessity of permitting cross-examination of witnesses whose statements are relied upon by authorities. The Court concluded that the impugned order deserved to be quashed and set aside, remitting the matters for the authority to provide an opportunity for personal hearing and decide on cross-examination within a specified timeline.

In conclusion, the High Court allowed all petitions, quashed the impugned order, and directed the authority to expedite the adjudication process while ensuring cooperation from all parties involved.

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