Denial of cross examination is against the principles of natural justice.

PJ/CASE LAW/2014-15/2426

Case:-M/s UNION QUALITY PLASTIC LTD Vs CCE & ST, VAPI

Citation:-2014-TIOL-2299-CESTAT-AHM

Brief facts:-All these four appeals are disposed of by a common order as they arise out of the very same OIO. The brief facts that arise for consideration in these cases is whether the main appellant M/s Union Quality Plastic Ltdhas engaged himself in clandestine removal of finished goods which hasbeen worked out upon the shortage of raw material / finished goods during the visit of thepreventive officers.

Appellant’s contention:-Ld Counsel at the outset submits that instead of going into merits, the issue needs to be reconsidered by the Adjudicating Authority only on the ground of the denial of the principles of natural justice, in as much as the appellants were not granted cross examination and were not informed about the decision of non-granting of the cross examination before hand and rejection of cross examination is conveyed only through OIO. He would submit that the Hon'ble High Court of Gujarat in the case of Mahek Glazes Pvt. Ltd Vs Union of India – 2014 (300) ELT.25 (Guj)has laid down the law and produces copy of the order.

Respondent’s contention:-Ld DR reiterates the findings of the Adjudicating Authority on the question of cross examination.

Reasoning of judgment:-We have considered the submissions made by both sides and perused the records. We intend to remand back to the Adjudicating Authority only on the question of violation of principles of natural justice hence we are not recording any findings on merits of the case.

On perusal of the impugned order, we find that at Paragraph No.27, Adjudicating Authority on the question of cross examination has recorded as under:

"As regards their claim for cross examination of the investigating officer as well as panch witness, the counsel of the assessee has not given any justification as to why he wants to cross examine them but he merely contents that the physical stock taking of the goods was not conducted by the officers. And for this contention it is already discussed elsewhere in this order that the stock of the goods was in fact taken by the officers in presence of panchas and Shri Rangawala and Shri Kapasdia authorised persons of the assessee. Hence no further discussion on this point. Even, since they have not justified their claim for cross examination, denial thereof does not amount to violation of principles of natural justice. Although during the personal hearing the Ld Counsel Shri Vyas has not claimed for examination of the officers of panchas. I have also given due consideration to the facts and position of present case. Further as regards their contention that the inquiry was not conducted with the buyers, it may be mentioned that when the authorised persons and Director of the assessee themselves admitted the shortages and confirmed the illicit removal of such short found goods, there is no need to make further probe with the buyers since the facts narrated in panchnama an admission given by Director, manager and excise clerk of the assessee are sufficient evidence on records. Hence their such contention is not tenable."

We find strong force in the contentions raised by the Ld Counsel that Hon'ble High Court has settled the law as to the question of denial of cross examination in the case of Mahek Glazes Pvt. Ltd.(Supra). We respectfully reproduce the relevant paragraphs from the said order.

"6. Having heard learned counsel for the parties, we are inclined to interfere on theshort ground of serious breach of principles of natural justice in the process of passing final order of adjudication. We say so because the adjudicating authority, though categorically informed by the representative of the petitioners that the petitioners are serious about exercise of their right to cross-examination and further that any meaningful participation in the adjudicating proceedings can take place only after such cross-examination is granted, the authority proceeded to decide such request only along with the final order of adjudication. Whether the petitioners had a right to seek cross-examination in the facts of the present case, is not our brief at the moment. We, therefore, refuse to comment on the petitioners' insistence for cross-examination or authority's reluctance to grant it. What we, however, find is that the petitioners had atleast a right to be told whether such application is being granted or refused before final order was passed. When the petitioners prayed for cross-examination and reasonably expected that the same would be granted, they cannot be expected to participate in the adjudicating proceedings up to the final stage. In other words, without dealing with and disposing of the petitioners' application for cross-examination, the adjudicating authority could not have finally adjudicated the issues. If he was of the opinion that the request for cross examination was not tenable, by giving reasons, he could have rejected it. We wonder what would have happened, if he was inclined to accept such a request. In such a situation, he himself could not have finally disposed of the show cause notice proceedings. In either case, the petitioners had a right to know the outcome of their application. Merely because the Commissioner was of the opinion that the petitioners had made such a request somewhat belatedly, would not permit him to, in the facts of the present case, deal with such an application only in the final order itself. Sum total of this discussion is that we are inclined to set-aside the impugned order and request the adjudicating authority to pass a separate order on the petitioners' application/request letter for granting cross-examination of the named witnesses.

We are conscious that the Commissioner has already decided such an issue, however, since we are quashing the order, this part of the order would also not survive and hence, the requirement of a fresh order. We are informed that the same officer continues to hold the office of the Commissioner of Customs & Central Excise, Surat-II. It would therefore, be not necessary to separately hear the petition once again before passing any such order. This would, however, not preclude the Commissioner from requiring the petitioners to show relevance for seeking cross examination of the witnesses."

In view of the foregoing, we find that the impugned order is liable to set aside and we do so. The impugned order is set aside and all the appeals are allowed by way of remand to the Adjudicating Authority to reconsider the issue afresh after following the law on cross examination, as settled by the jurisdictional High Court in the case of Mahek Glazes Pvt. Ltd(Supra) and re-adjudicate the matter in denovo proceedings.

The appeals are disposed of as indicated herein above.

Decision:-Appeal allowed by way of remand.

Comment:-The crux of this case is that denial of opportunity to cross examine is against the principles of natural justice. This view is also supported by the decision given by the High Court in the case of Mahek Glazes Pvt. Ltd. and so the appeal was allowed by way of remand with direction to re-adjudicate the case after providing opportunity to cross examine.

Prepared by: Monika Tak

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PJ/CASE LAW/2014-15/2426

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