1. Dispute over classification of a commodity as waste or good quality fibre for the purpose of levying excise duty. (Para 2 )
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2000 Supreme(SC) 1130
2001(4) Supreme 525.1
SUPREME COURT OF INDIA
B.N. Kirpal & D.P. Mohapatra, JJ.
Swadeshi Polytex Ltd. -Appellant
versus
Collector, Central Excise, Meerut -Respondent
Civil Appeal No. 4728 of 1992
Decided on 20-7-2000
Important Points
The Court held that if a Collector relies on witness statements to justify the levy of excise duty, the principles of natural justice require that the affected party be given an opportunity to cross-examine those witnesses.
Subject
Administrative Law - Natural Justice
Headnote
Central Excise-Tribunal remanded matter to Collector for fresh decision but holding that appellant would not have the right to cross examine witnesses whose statement the Collector had relied upon-Issue in question was whether a commodity categorised as waste by appellant could be regarded as good quality fibre and excise duty leviable thereon-Appellant should have an opportunity to cross examine those witnesses who deposed regarding quality of that commodity. (Paras 2 and 4)
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2. Appellant contends that the right to cross-examine witnesses whose statements are relied upon is necessary to determine the commodity's classification for excise duty. (Para 3 )
3. The court found the appellant's contention well-founded, noting that a fresh decision relying on witness statements requires providing an opportunity for cross-examination. (Para 4 )
4. When an authority relies on witness statements to determine a factual classification for tax levy, the affected party must be granted an opportunity for cross-examination. (Para 4 )
5. Appeal allowed; Collector directed to provide an opportunity for cross-examination if relying on witness statements during the fresh decision. (Para 4 )
6. Is the right to cross-examine witnesses essential when an authority relies on their statements for a tax classification?
Yes. If an authority intends to rely on the statements of persons to determine whether a commodity qualifies for a specific tax levy, the affected party must be given an opportunity to cross-examine those witnesses. (Para 4 )
ORDER
The Tribunal in the present case has remanded the matter to the Collector for a fresh decision after coming to the conclusion that there had been a denial of the principles of natural justice. While remanding the case, the Tribunal however, upheld the finding of the Collector that the appellant herein will have no right to cross-examine the witnesses on whose statement the Collector had relied upon.
2. The point in issue in the present case was whether a commodity, which is categorised as waste by the appellant, can be regarded as good quality fibre by the department and excise duty levied thereon. In order to justify the levy of excise duty, the Collector had referred to and relied upon the statement of some persons who are alleged to have utilised the said waste for the purposes of spinning yarn.
3. The learned counsel for the appellant submits that the appellant should be given an opportunity of cross-examining those witnesses in order to determine whether the waste in question could be categorised as fibre for the purposes of levy of excise duty. He does not wish to cross-examine any other witness on those other statements to which reference may have been made.
4. In the facts and circumstances of the present case, we consider that this contention is well-founded. When the Collector has to decide afresh, he should, if he intends to rely upon the statement of any such person, give an opportunity of cross-examination to the appellant. The appeal is disposed of in the aforesaid terms. No costs.
Appeal allowed.
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