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Miraj Products Pvt. Ltd. Vs. C.E. & S.T., Udaipur - (Customs, Excise and Service Tax Appellate Tribunal) (13 Sep 2018)

Non grant of an opportunity to cross examine a witness may attract the doctrine of fairness and even held to be violative of principles of natural justice



In facts of present case, the Appellant is engaged in manufacture of chewing tobacco falling under Chapter 24 of Central Excise Tariff Act, 1985. The income tax authorities had conducted an investigation against the Appellant in September 2013 during which the Appellant had surrendered unaccounted income of Rs. 129.41 crores. In pursuance of the said information alongwith the documents received by the Excise Commissionerate, Udaipur from the income tax Department, the Department after necessary investigations, alleged that the Assessee/Appellant has evaded the Central Excise duty amounting to Rs. 1,63,06,00,000.

Resultantly, a Show Cause Notice was served upon the appellant proposing the recovery of the alleged unpaid amount of duty alongwith appropriate interest and the penalties under Central Excise Act, 1944 and also under Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010. After being served with the said Show Cause Notice, the Appellant made the request for cross examination. The said request was declined vide the order under challenge, hence the present Appeal.

The Appellant herein is aggrieved of being denied an opportunity of cross examination. The theory of cross examination has to be examined in the perspective of its purpose. The object of cross examination is twofold - firstly to weaken, qualify or destroy the case of the opponent. To impeach the accuracy, credibility and general value of the evidence given in chief, to shift the facts already stated by the witness, to detect and expose discrepancies or to elicit suppressed facts which will support the case of cross examining party. Secondly, it is to establish the parties own case through his opponents own witnesses. Thus, cross examination is a powerful weapon in hands of advisory. Non grant of an opportunity to cross examine a witness may even attract the doctrine of fairness and may be held to be violative of principles of natural justice as it was held in the case of K. Raghuram Babu Vs. Director General of Railway Protection Force, New Delhi.

The Department has just issued a Show Cause Notice which is based on prima facie material and is nothing more than constituting a prima facie opinion. At the stage of Show Cause Notice, there is no adjudication. It is only a step in process of adjudication because the Show Cause Notice in itself is not an order of assessment. The said order has to be passed post issuance of Show Cause Notice after affording an opportunity of hearing the parties and after considering the evidence and material which is placed before the adjudicating authority, the Central Excise Commissioner in the present case.

After receiving the Show Cause Notice, the only proceeding to respond by the Appellant was the impugned letter praying for cross examination of the witnesses. The findings of the Commissioner "that the persons for whom cross examination was sought have not even tendered any factual statement, the cross examination is not needed and therefore the same is denied" are therefore held to have no infirmity. The appellant is first required to submit his reply to the Show Cause Notice received.

No doubt, the absence of his reply will not debar him from cross examining the witnesses but the stage of cross examination is post the examination in chief of a person who has been summoned by the adjudicating authority, in his discretion after satisfying himself qua his requirement to be examined as a witness to prove the allegations of the Show Cause Notice. Hon'ble Apex Court in the case Modula India Vs. Kamakshya Singh Deo held that, omission on the second party to file the statement of defence will not deprive him an opportunity to participate in the proceedings even if his defence is struck off.

The request of the Appellant in question was a premature request before the Commissionerate hence the order under challenge needs no interference. The adjudicating authority below/Commissioner is required to reconsider the request of the appellant at the appropriate stage. Appeal accordingly stands disposed off.

Relevant : K. Raghuram Babu Vs. Director General of Railway Protection Force, New Delhi MANU/AP/0620/2001, Modula India Vs. Kamakshya Singh Deo MANU/SC/0283/1988


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