2025 (1) TMI 1257 - HC - Central Excise

Gujarat HC declines petition on Central Excise Duty recovery, directs petitioner to approach CESTAT under Section 35E within four weeks

M/s. SVM Cera Ltd. & Anr. Versus Union Of India & Anr.

The Gujarat HC declined to entertain a petition challenging recovery of Central Excise Duty proceedings involving clandestine removal allegations. Despite ... Recovery of Central Excise Duty with interest and penalty - Clandestine Removal - opportunity to cross-examine the witnesses was not provided - denial of access to necessary documents - violation of principles of natural justice - HELD THAT:- It is true that the CESTAT has remanded the matter to the respondent No. 2 to supply the documents sought for by the petitioner as well as to provide the opportunity of cross-examination of the witnesses in compliance with the provisions of section 9D of the Central Excise Act,1944. The respondent No. 2, pursuant to the order of remand made by the Tribunal, issued the notice to 10 witnesses to remain present on 21.08.2024, however, on 21.08.2024, none of the ten witnesses remained present nor any request was made for adjournment, or any submissions were made by any of the witnesses. The respondent No. 2 therefore, recording the statement made by learned advocates appearing for the petitioner for hearing, proceeded to adjudicate the show-cause notice. It appears that the respondent No. 2 has taken into consideration all the grievances of the petitioner with regard to the violation of principle of natural justice which are again reiterated in this petition. Be that as it may, it is not required to entertain this petition on the ground of breach of principle of natural justice in view of the above observation made by respondent No. 2 which may be considered by the CESTAT in the appeal which may be filed by the petitioner under section 35E of the Central excise Act,1944. Conclusion - i) The petitioner's grievances regarding natural justice and document access should be addressed by the CESTAT. ii) The petition is not entertained though it may be maintainable under Article 226 of the Constitution of India with liberty to the petitioner to approach CESTAT challenging the impugned Order-in-original. iii) It is also observed that the time spent by the petitioner before this Court to be considered as bona fide by the CESTAT, if the petitioner file appeal before the Tribunal in accordance with law within four weeks from today without raising issue of delay. Petition disposed off. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment are:Whether the principles of natural justice were violated due to the denial of adequate opportunities for cross-examination of witnesses.Whether the petitioner was denied access to necessary documents, contrary to the directions of the CESTAT.Whether the respondent authority failed to consider precedents in similar cases where demands were dropped, thereby unjustly confirming the demand against the petitioner.The availability and appropriateness of alternative remedies, specifically whether the petitioner should be directed to appeal to the CESTAT instead of seeking relief under Article 227 of the Constitution of India.ISSUE-WISE DETAILED ANALYSISViolation of Principles of Natural JusticeRelevant Legal Framework and Precedents: The principles of natural justice, particularly the right to a fair hearing, are fundamental to administrative adjudication. Section 9D of the Central Excise Act, 1944, mandates the opportunity for cross-examination of witnesses whose statements are relied upon.Court's Interpretation and Reasoning: The Court noted that the CESTAT had remanded the matter to ensure compliance with natural justice, directing the respondent to allow cross-examination and provide necessary documents. The Court found that the respondent issued notices for cross-examination, but none of the witnesses appeared, and no adjournment requests were made.Key Evidence and Findings: The respondent recorded that the petitioner's representatives requested a decision based on the Tribunal's judgment in similar cases, as none of the witnesses were present. The respondent proceeded with adjudication based on available records, noting the absence of witnesses.Application of Law to Facts: The Court observed that the respondent attempted to comply with the CESTAT's directions by issuing notices for cross-examination. The failure of witnesses to appear was beyond the respondent's control.Treatment of Competing Arguments: The petitioner argued that the lack of multiple opportunities for cross-examination constituted a breach of natural justice. The respondent contended that they complied with the Tribunal's directions and that the petitioner's request for documents was a delay tactic.Conclusions: The Court concluded that the respondent made reasonable efforts to comply with natural justice principles and that any further issues should be addressed by the CESTAT.Access to DocumentsRelevant Legal Framework and Precedents: The right to access documents relied upon in adjudication is crucial for a fair defense, as emphasized by the CESTAT's remand order.Court's Interpretation and Reasoning: The Court noted the respondent's assertion that all relevant documents had been provided and that the petitioner's request for additional documents was unfounded.Key Evidence and Findings: The respondent stated that the petitioner's document request included items already provided, suggesting a delay tactic.Application of Law to Facts: The Court found no evidence that the respondent withheld necessary documents, aligning with the respondent's position that the petitioner had received all relevant materials.Treatment of Competing Arguments: The petitioner claimed a lack of access to documents, while the respondent maintained that all necessary documents were supplied and that the petitioner's request was unnecessary.Conclusions: The Court did not find a breach of natural justice regarding document access, deferring to the CESTAT for any further examination.Consideration of Precedents in Similar CasesRelevant Legal Framework and Precedents: Consistency in adjudication is essential, particularly when similar cases have been decided differently.Court's Interpretation and Reasoning: The Court acknowledged the petitioner's reference to similar cases where demands were dropped but noted the respondent's position that each case must be evaluated on its unique facts and evidence.Key Evidence and Findings: The respondent argued that the evidence in the petitioner's case differed from those where demands were dropped, and that the matter was pending before the Supreme Court.Application of Law to Facts: The Court recognized the respondent's discretion in weighing evidence and distinguishing the petitioner's case from others.Treatment of Competing Arguments: The petitioner argued for consistency with other cases, while the respondent emphasized the distinct evidence in the current case.Conclusions: The Court deferred to the CESTAT for a detailed examination of the merits and consistency with other cases.Alternative RemediesRelevant Legal Framework and Precedents: The availability of alternative remedies, such as appeals to the CESTAT, often precludes direct intervention under Article 227.Court's Interpretation and Reasoning: The Court emphasized the availability of an appeal to the CESTAT as an appropriate remedy for the petitioner.Key Evidence and Findings: The Court cited previous decisions where similar matters were directed to the CESTAT.Application of Law to Facts: The Court found that the petitioner had an efficacious remedy through an appeal to the CESTAT.Treatment of Competing Arguments: The petitioner sought relief under Article 227, while the respondent argued for the use of the statutory appeal process.Conclusions: The Court directed the petitioner to pursue an appeal with the CESTAT, preserving the petitioner's right to raise all issues there.SIGNIFICANT HOLDINGSCore Principles Established: The judgment reinforces the principles of natural justice, the importance of compliance with procedural directions from appellate bodies, and the appropriateness of pursuing statutory remedies before seeking extraordinary judicial intervention.Final Determinations on Each Issue: The Court determined that the petitioner's grievances regarding natural justice and document access should be addressed by the CESTAT. The petition was not entertained under Article 227, with the petitioner directed to pursue an appeal to the CESTAT.