Tribunal reverses order due to procedural errors in steel products case

The Tribunal allowed the appeals of M/s Matsyodhari Steel & Alloy Pvt Ltd and M/s Shiv Shakti Rolling Mills Pvt Ltd, setting aside the impugned order that determined clandestine clearance of steel products and imposed penal consequences. The Tribunal found violations of natural justice principles due to the denial of cross-examination and forensic analysis, reliance on untested statements and informal records, and failure to adhere to Section 9D of the Central Excise Act, 1944. As a result, the impugned order was deemed lacking authority of law, leading to its reversal.

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Issues Involved:
1. Determination of clandestine clearance and penal consequences.
2. Violation of principles of natural justice.
3. Denial of cross-examination and forensic analysis.
4. Reliance on statements and informal records.
5. Adherence to Section 9D of the Central Excise Act, 1944.

Summary:

1. Determination of clandestine clearance and penal consequences:
The appellants, M/s Matsyodhari Steel & Alloy Pvt Ltd and M/s Shiv Shakti Rolling Mills Pvt Ltd, challenged the determination of clandestine clearance of 14192.265 MTs of 'mild steel ingots', 'gully' and 'risers', valued at Rs. 31,71,30,516 with penal consequences over and above duty liability of Rs. 5,15,37,265 and 13864.960 MTs of 'mild steel TMT bars', 'misrolls' and 'melting', valued at Rs. 36,27,92,630 with penal consequences over and above duty liability of Rs. 5,87,54,605 respectively.

2. Violation of principles of natural justice:
The appellants contended that the Order-in-Original No. 05-06/CEX/Comm./2012 dated 26th March 2012, passed by the Commissioner of Central Excise, Customs & Service Tax, Aurangabad, was in contravention of the principles of natural justice. They argued that there was hindrance to effective defense due to the denial of cross-examination of several persons whose testimony was relied upon in the notices.

3. Denial of cross-examination and forensic analysis:
The appellants sought cross-examination of witnesses and forensic analysis of a 'pen drive' alleged to have been seized. The cross-examination of 14 persons was permitted, but the forensic analysis request was denied. The appellants argued that the impugned order was passed ex parte without proper consideration of their requests, thereby violating natural justice principles.

4. Reliance on statements and informal records:
The Tribunal found that the impugned order relied on statements and informal records without proper cross-examination, which is not tenable. The Tribunal referenced several decisions, including Andaman Timber Industries v. Commissioner of Central Excise, Kolkata-II, and Vishnu & Co Pvt Ltd, emphasizing the importance of cross-examination to establish the credibility of statements.

5. Adherence to Section 9D of the Central Excise Act, 1944:
The Tribunal highlighted the importance of Section 9D of the Central Excise Act, 1944, which mandates that statements made during investigations must be tested through cross-examination to be admissible. The impugned order failed to comply with this requirement, leading to the exclusion of untested statements from consideration.

Conclusion:
The Tribunal concluded that the impugned order lacked authority of law due to the denial of cross-examination and forensic analysis, and the reliance on untested statements and informal records. Consequently, the appeals were allowed, and the impugned order was set aside.

(Order pronounced in the open court on 28/09/2023)

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