TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 440
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....ducation Cess, in all totalling to Rs. 5,32,54,022/-, purportedly towards recovery of the CENVAT Credit improperly availed. 2. We have heard Mr. Madhava Sham Murthy, learned counsel appearing for the petitioner and Mr. B.Narayana Reddy, learned Senior Standing Counsel for the respondents. 3. The petitioner is engaged in the manufacture of various stainless steel items, such as S.S. Wire, S.S. Flat, S.S. Wire Rod, S.S. Angle etc., classifiable under Ch.72 of the Schedule to the Central Excise Tariff Act, 1985. Search operations were conducted at the factory premises of the petitioner, the residential premises of its Directors and other related premises, on 24-6-2009, on the ground that the officers of the Directorate of Central Excise Intelligence had specific information that the petitioner was irregularly availing CENVAT Credit of duty paid on certain goods claiming them as inputs without actually using the same in or in relation to the manufacture of their dutiable finished goods. 4. After the search and after recording the statements of a few persons including a consultant of the petitioner, a show cause notice was issued on 01-3-2012, calling upon the petitioner to show caus....
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....petitioner/Company. Paragraph-3 of the order of CESTAT shows that two grounds were urged viz., (a) that the request for cross-examination was denied and (b) that the request for furnishing the documents, properly paginated and indexed was not considered. In paragraph-4 of the order, the Tribunal recorded its displeasure that though the petitioner was responsible for protracting the proceedings by not filing a reply to the show cause notice, there was substantial contribution from the Commissioner, forcing the Tribunal to reluctantly interfere with the order. In paragraph-5, the Tribunal, after recording the contents of the letter of the counsel for the petitioner seeking cross-examination of the persons cited therein, went on to examine how the request for certain documents was not properly considered. Paragraph-5 of the order of the Tribunal reads as follows: "5. In this case on 29-3-2013, the advocate for the appellant submitted a letter to the Commissioner wherein he gave the name of the persons whom he would like to cross-examine and also cited several decisions to support his submissions relating to cross-examination. Further in paragraph 5 of his letter, he submits that doc....
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....s arisen. We hope there will be no such confusions in future. " 12. From a careful look at the order of CESTAT dated 08- 9-2014 in its entirety, it can be easily deduced that the Tribunal set aside the order of adjudication and remanded the matter back, solely on the ground that certain documents were not made available. Even in the operative portion of the order, the Tribunal directed the Adjudicating Authority only to pass a well reasoned order, after furnishing to the petitioner, the documents with a paginated index (whatever it meant). Two things follow from the order of the Tribunal dated 08-9-2014. They are: (a) that though the ground relating to denial of opportunity to cross-examine witnesses was specifically raised, the Tribunal did not record any finding in paragraphs-7 and 8 of its order on this issue and (b) that in any case there was no positive direction by the Tribunal in its order dated 08-9-2014 to give an opportunity to the petitioner to cross-examine the witnesses. Therefore, the first contention of the petitioner that the Adjudicating Authority failed to comply with the directions issued by the CESTAT in the order of remand, is wholly misconceived. Unless the T....
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.... General Manager (Production) of the petitioner/Company He stated before the Investigating Officers that he was not aware of the purpose of receipt of consignments of S.S. Sheets, S.S. Strips and S.S. Flats into the factory. He claimed that there was no use for the same and that he was also not aware as to why those goods were sent outside the factory. The petitioner wanted to cross-examine him on the ground that this person deliberately kept quiet and failed in his duty to portray the correct position in the factory, despite being Production-in- Charge and despite being fully aware of the nature of the activities in the factory 2. Virender Kumar Pandey Proprietor of M/s. Akshat Steel Traders He claimed in his statement to have supplied M.S. Scrap to the company. The petitioner claimed that this person should be called upon to produce all records such as Sale Registers, Sales Invoices, Delivery Challans, Monthly VAT Returns and Income Tax Returns, evidencing the supply of goods to the petitioner. 3. N.M. Bhandari AGM (Accounts) of M/s. Stainless India Ltd. He claimed that his company did not receive any S.S. Coils from the petitioner and that S.S. Coils could not be ....
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.... the said records are extracted in Annexure E-3.1, E-3.3 and E-4 to the show cause notice; " 17. Apart from the above factual grounds of rejection, the Adjudicating Authority also took a legal ground for rejection of the request for cross-examination. The legal ground was that as per the decision of the Supreme Court in Telestar Travels Pvt. Ltd. V. Special Director of Enforcement 2013 (289) E.L.T. 3 (S.C.), the rejection of the request for cross-examination need not always tantamount to violation of the principles of natural justice. The decision of the Supreme Court in Telestar Travels Pvt. Ltd. followed two earlier decisions, one in M/s. Kanungo & Co. v. Collector of Customs, Calcutta [1983 (13) E.L.T. 1486 (S.C.)] and the other in Surjeet Singh Chhabra v. Union of India [1997 (89) E.L.T. 646 (S.C.)]. 18. Assailing the factual as well as the legal grounds on which the Adjudicating Authority denied permission for cross- examination, it was contended by Mr. Madhava Sham Murthy, learned counsel for the petitioner, that in Telestar, the Supreme Court was dealing with proceedings under the Foreign Exchange Regulation Act, 1973. Since Rule 3 of the Adjudication Rules made it clear t....
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....ejected the request for cross-examination, are cogent and convincing. The statements of third party witnesses were in fact shown to one of the Directors of the petitioner/Company by name Babulal Doshi and he is stated to have confirmed those statements. 23. It may be of interest to note that before the Adjudicating Authority, the petitioner/Company as well as the other Director of the Company viz., Sri Pavan Raj Kanugo alone were represented by counsel. It is recorded in paragraph-18.1 of the impugned order that Sri Madhava Sham Murthy, learned counsel, appeared only for M/s. Manidhari Stainless Wire Pvt. Ltd. and its Director Pavan Raj Kanugo and that the advocate was not appearing for Sri Babulal Doshi, the other Director who was also a noticee. In other words, Babulal Doshi, one of the Directors of the petitioner/Company, who confirmed the statements of the third party witnesses, failed even to appear before the Adjudicating Authority despite the fact that the Company as well as the other Director were represented before the Adjudicating Authority. Therefore, the reasons stated by the Adjudicating Authority cannot be found fault with. 24. Coming to the legal grounds, it is see....
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....ion that is not so tested, may therefore amount to using evidence, which the party concerned has had no opportunity to question. Such refusal may in turn amount to violation of the rule of a fair hearing and opportunity implicit in any adjudicatory process, affecting the right of the citizen. The question, however, is whether failure to permit the party to cross- examine has resulted in any prejudice so as to call for reversal of the orders and a de novo enquiry into the matter. The answer to that question would depend upon the facts and circumstances of each case. " 27. In paragraph-19, the Supreme Court extracted paragraph-12 of the decision in Kanugo & Co. Eventually the Court held in paragraph-20 as follows: "20. Coming to the case at hand, the Adjudicating Authority has mainly relied upon the statements of the appellants and the documents seized in the course of the search of their premises. But, there is no dispute that apart from what was seized from the business premises of the appellants the Adjudicating Authority also placed reliance upon documents produced bys Miss Anita Chotrani and Mr. Raut. These documents were, it is admitted disclosed to the appellants who were p....