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2017 Supreme(AP) 429
IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
V. RAMASUBRAMANIAN, ABHINAND UMAR SHAVILI, JJ.
M/s Manidhari Stainless Wire Pvt. Ltd. & Anr. - Petitioners
Vs.
Union of India, Through its Secretary, Govt. of India, Ministry of Finance & Anr. - Respondents
Writ Petition No. 5917 of 2017
Decided On : 31-10-2017
Advocate Appeared:
For the Petitioners: Mr. Madhava Sham Murthy, Mr. Srikanth Kaveti
For the Respondents: Mr. B. Narayana Reddy
Headnote:
Central Excise Act, 1944 - Section 11A(4) - CENVAT Credit Rules, 2004 - Rule 14 – Demand of Cenvat – Challenged – Availability of alternative remedy – Right to cross-examine – Demand towards Additional duty of import, of Rs.9,04,283/- towards Education Cess, of Rs.4,21,568/- towards Secondary and Higher Education Cess, in all totalling to Rs.5,32,54,022/-, purportedly towards recovery of the CENVAT Credit improperly availed – 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 – Held, right to cross-examine is not absolute at least insofar as the cases of this nature are concerned. If there are factual grounds to show that the denial of cross-examination was based upon the sound logic, then the order of adjudication cannot be interfered with - Justification for cross-examination of each of these persons is provided by the petitioners. They state that Dinesh Gunjal is an Accountant but he has given the statement as if he is a technical person and without knowing the chemical composition and applications. He has deposited that the products Bio Power and Bio Force are growth stimulants/regulators and that is why his technical capabilities have to be adjudged. His cross- examination, therefore, is crucial. Dilip Sampat Dhikale is an undergraduate, yet, he deposes on identical lines and claims that the above products are not ordinary fertilizers. Therefore, in order to ascertain whether he is technically equipped to differentiate between plant growth regulator and plant growth promoter and also to know the difference between ordinary fertilizer and stimulants/regulators that his cross-examination is necessary – Impugned order could be set aside solely on the ground of denial of permission to cross-examine the witnesses – Writ petition is dismissed
V. Ramasubramanian, J.
The petitioner has come up with the above writ petition challenging an Order-in-Original passed by the Commissioner of Central Excise and Service Tax (the 3rd respondent herein), in terms of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A(4) of the Central Excise Act, 1944, confirming a demand of Rs.4,52,24,794/- towards CENVAT/ CVD, of Rs.67,03,377/- towards Additional duty of import, of Rs.9,04,283/- towards Education Cess, of Rs.4,21,568/- towards Secondary and Higher Education 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 cause as to why CENVAT Credit amounting to Rs.4,50,52,629/-, for the period from 01-02-2007 to 02-10-2011 should not be demanded and recovered under Section 11A(1). This show cause notice resulted in an ex parte Order-in-Original being passed on 20-5-2013.
5. As against the Order-in-Original dated 20-5-2013, the petitioner filed an appeal before the CESTAT. The CESTAT allowed the appeal by an order dated 08-9-2014 and remanded the matter back to the Adjudicating Authority.
6. In the de novo proceedings, held on 20-10-2015, the authorised representative of the petitioner seems to have requested for cross-examination of some persons. The petitioner also requested permission to inspect the documents.
7. But the request was rejected and hence the petitioner filed a reply to the show cause notice. Thereafter, a personal hearing took place on 18-3-2016. It appears that the petitioner reiterated their demand for cross-examination. However, by the order impugned in the writ petition dated 31-3-2016, which was later modified by a corrigendum dated 24-8-2016, the 3rd respondent confirmed the demand. Therefore, aggrieved by the same, the petitioner has come up with the above writ petition.
8. Admittedly, the petitioner has an effective alternative remedy of appeal as against the impugned order. But the petitioner seeks to bypass the alternative remedy on two grounds viz., (a) that there was a violation of the principles of natural justice, inasmuch as the request of the petitioner to cross-examine the witnesses whose statements were relied upon, was turned down arbitrarily and (b) that the rejection of the request for cross-examination was also contrary to the order of remand passed by the CESTAT, on 08-9-2014.
9. For the purpose of convenience, let us take up the second ground for consideration first. It is the contention of the learned counsel for the petitioner that the refusal of the Adjudicating Authority to permit the petitioner to cross- examine those persons whose statements were relied upon, was contrary to the order of remand passed by the CESTAT in the first round. Therefore, it is necessary to look at the order passed by the CESTAT in the first roun
