NGA Steels (P) Ltd. vs CESTAT, Chennai

S. Manikumar, J.—Instant appeal is filed against the order dated 2-11-2015 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai in Appeal No. E/40772/2014-SM, arising out of an Order-in-Appeal No. 91/2014, dated 13-2-2014 passed by the Commissioner of Central Excise (Appeals), Salem between NGA Steels Private Limited and Commissioner of Central Excise, Salem.

Material on record discloses that being aggrieved by the order-in-original dated 18-5-2011, passed by the Additional Commissioner of Central Excise, an appeal has been preferred to the Commissioner of Central Excise (Appeals).

Before the appellate authority inter alia it has been contended that there was a violation of principles of natural justice in not permitting the appellant to cross-examine the persons from whom statements were recorded. By observing that cross-examination is not a matter of right, when burden of proof had been discharged by the department, the Commissioner of Central Excise (Appeals), the appellate authority, vide Order-in-Appeal No. SLM-CEX-000-APP 33/2011, dated 18-5-2011, rejected the same.

Being aggrieved by the order of the appellate authority, appellant has moved CESTAT in Appeal Nos. E/371/2011 and E/413/2011. After considering the submission of the appellant that there was a denial of opportunity to cross-examine and by observing that both sides are aggrieved by the order-in-Appeal No. SLM-CEX-000-APP33/2011, dated 18-5-2011, CESTAT, Chennai, vide order dated 16-12-2011, set aside the order of the appellate authority and remanded the matter to the appellate authority for fresh decision, after giving an opportunity of hearing to both sides.

The aspect of cross-examination of persons from whom statements were recorded/witnessed, was once again considered by the appellate authority. While doing so, at Paragraph No. 8 of the Order-in-Appeal No. 91/2014, dated 13-2-2014, the appellate authority has recorded as hereunder.

"8. The appellant have also argued that cross-examination was not allowed. In this regard, it is observed that right to cross-examination is not an absolute right and the question whether the appellant was entitled to cross-examination is a question which may largely depend on the facts of the case. The Allahabad High Court [1993 (68) E.L.T. 548 (All)] has held that "Moreover, the right to cross-examination is not an absolute right. The question whether the petitioner was entitled to cross-examination is a question which may largely depend on the facts and it is for the Tribunal to adjudicate while deciding the appeal finally. A perusal of the impugned order shows that the Tribunal did notice the petitioners submission about the cross-examination which was allegedly denied to him and it is only after considering the totality of circumstances of the case and the material on record that the Tribunal passed the impugned order directing the petitioner to deposit a sum of Rs. 80,000/- and thus granting the application of the petitioner for stay-cum-waiver in part." Hence, the adjudicator can take a decision on requests for cross-examination which may largely depend on the facts of the case and circumstances of each case and there is no infirmity in the order of the adjudicator in this regard."

Being aggrieved by the Order-in-Appeal No. 91/2014, dated 13-2-2014, passed by the Commissioner of Central Excise (Appeals), Salem, the appellant has moved CESTAT, Chennai in Appeal No. E/40772/2014. One of the grounds urged before CESTAT, Chennai is that when the department has mainly relied on the statement of third parties, i.e., purchasers/buyers of the impugned goods to come to conclusion of clandestine removal of the goods by the appellant, opportunity ought to have been given. Before CESTAT, Chennai, contention has also been made that when there was a categorical denial of the Managing Director of the appellant, the appellate authority ought to have allowed cross-examination to unravel the truth. Reliance has also been placed on the decision reported in 2009 (248) E.L.T. 497 (Tri.-Ahmd.).

After adverting to the grounds of appeal, the CESTAT, Chennai, passed an order dated 2-11-2015 in Appeal No. E/40772/2014 confirming the demand of Rs. 8,80,037/- with the concessional penalty and interest to follow. There is also a limited remand in respect of duty demand of Rs. 4,57,228/-.

Being aggrieved by the order of CESTAT, Chennai made in Appeal No. E/40772/2014, dated 2-11-2015, the instant civil miscellaneous appeal is filed, on the following substantial questions of law.

"A. Whether the Tribunal is justified in holding clandestine removal of final products without any corroborative evidences such as unaccounted purchase of raw materials, transportation of raw materials to the factory and transportation of final products from the factory and suppression of production with electricity consumption?

B. Whether the Tribunal is justified in passing the final order without discussing or without giving a finding on the specific plea raised in the grounds of appeal that cross-examination of persons who gave statements against the appellant and which were relied on by the Dept. is mandatory?

C. Whether the documents maintained by third parties and statements also constitute sufficient evidence to come to the conclusion of clandestine removal of goods without payment of duty without any corresponding documents recovered from the appellant?"

Mr. K. Jayachandran, learned counsel for the appellant submitted that it is suffice that the instant appeal is heard and disposed of on substantial question of law No. B alone. Submission is placed on record.

After going through the impugned order made in appeal No. E/40772/2014, dated 2-11-2015 of the CESTAT, Chennai, we find that the plea regarding violation of principles of natural justice, in not permitting the appellant to cross-examine the persons from whom statements were recorded/witnessed, has not been dealt with and answered, by the Tribunal.

Mr. V. Sundareswaran, learned counsel for the Revenue/2nd respondent, is also not in a position to point out as to whether CESTAT, Chennai, has adverted to the said plea. But, sought to justify the orders passed by the authorities including CESTAT, Chennai, contending that when burden is discharged by the department, there is no need to permit cross-examination. On the facts and circumstances of the case, we are of the view that when a specific plea regarding violation of principles of natural justice is raised, CESTAT, Chennai, is bound to record a specific finding, which is conspicuously absent.

In the light of the above discussion, we are inclined to answer substantial question of law No. B, in favour of the appellant and thus, allow the civil miscellaneous appeal. The matter is remanded to CESTAT, Chennai to consider and to record a finding on the specific plea regarding cross-examination of the persons from whom statements were recorded/witnessed.

Inasmuch as the learned counsel for the appellant himself has confined his submissions only to substantial question of law No. B, we are not inclined to advert to other substantial questions of law.

CESTAT, Chennai, is directed to pass appropriate orders only on the specific aforesaid issue, within two months from the date of receipt of a copy of this order. No Costs.