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IN THE HIGH COURT OF DELHI
D.N. Patel, C. Hari Shankar, JJ.
Commissioner of Central Excise (Now Principal Commissioner of GST Delhi North) - Appellant
Versus
Jindal Nickel and Alloys Ltd. - Respondent
CEAC 50 of 2018
Decided On : 21-10-2019
Manufacturers have the right to cross-examine witnesses when substantive allegations of clandestine production are made; claims must be supported by adequate evidence and technical assessments.
Headnote:(A) Central Excise Act, 1944 - Section 36B - Natural Justice - Condonation of delay of 127 days in filing the appeal allowed - Respondent, a manufacturer of stainless steel ingots, claimed that production capacity was overly assessed by the Revenue based on inflated figures while failing to provide sufficient evidence to support clandestine production claims. The CESTAT ruled the original order lacked adherence to principles of natural justice, necessitating cross-examination of witnesses and expert assessment of production capacity. The High Court upheld these findings, affirming CESTAT's ruling that substantial questions of law were not involved. (Paras 1, 6-17)
Facts of the case:
The Revenue appealed against CESTAT's October 2017 order, which had ruled in favor of the respondent, a manufacturer of stainless steel ingots, after finding the revenue's case for excessive production capacity unsupported by sufficient evidence.
Findings of Court:
CESTAT's order emphasized the need for cross-examination and proper technical assessments before making judgments on production capacity.
Issues: Whether the Revenue had proven claims of clandestine production and whether the evaluations of production capacity were sufficient and justified.
Ratio Decidendi: The court agreed with CESTAT's assertion that the original findings by the Commissioner lacked a proper basis and violated principles of natural justice, thereby necessitating a remand for reconsideration.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. condonation of delay in filing appeal. (Para 1 , 2) |
| 2. analysis of cross-examination rights and production capacity. (Para 3 , 4) |
| 3. discussion on documentary evidence and appeals. (Para 5 , 6 , 7) |
| 4. assessment of evidence standards and remand orders. (Para 8 , 9) |
| 5. findings on the admissibility of evidence. (Para 10 , 11 , 12 , 13 , 14) |
| 6. no substantial question of law found. (Para 15 , 16 , 17) |
JUDGMENT
D.N. Patel, Chief Justice(Oral)
CM APPL. No. 42624/2018
This application has been preferred for condonation of delay of 127 days in filing the appeal.
Having heard the counsel for both sides and looking into the reasons stated in the application, there are reasonable grounds for condonation of delay. We hereby condone the delay of 127 days in filing the Central Excise Appeal.
The application is allowed and disposed of.
CEAC No. 50/2018
1. This appeal has been preferred by the Department - Union of India against the order dated 9th October, 2017 passed by CESTAT, New Delhi.
2. It appears from the facts of the case that the respondent No.1 is a manufacturer of SS Ingots. Thereafter, the goods are given to re-rolling mills and thereafter to the cutters and thereafter it was converted into SS flats. Thus, the final product - SS flats was manufactured by outsourcing to another manufacturer. Moreover, it appears that show cause notice was issued by this appellant to the respondent on 19th August, 2005. Thereafter, the Order-in-Original was passed by the officers of this appellant on 9th December, 2009. The same was decided against the respondent and hence the respondent had preferred an appeal before CESTAT, New Delhi.
3. That the CESTAT allowed the appeal by way of remand, vide final order dated 28th September, 2011, with the directions, to the respondents, to:
i. Allow the cross examination of the witnesses as sought by the respondents,
ii. Ascertain the production capacity of the respondents,
iii. Match the actual production with electricity consumption and fuel consumption and
iv. Seek technical opinion to support its finding that, with one control panel, could both the furnaces simultaneously produce Stainless Steel Ingots.
4. The relevant portion of paras 9 to 11 of the aforesaid final order dated 28th September, 2011, of the CESTAT, may, in this context, be useful to reproduce as under:
"9. We have gone through the detailed submissions from both the sides and perused the records. We are of the view that prima facie the Commissioner did not observe the principles of natural justice and gave certain findings, especially, on the capacity of production, without giving fair opportunity to the parties. We do not agree with the findings of the Commissioner, wherein, he has justified the refusal of grant cross-examination of various co-noticees and others. A Co-noticee has a right to refuse cross-examination. But when no such refusal was made, Commissioner should not have rejected cross-examination on his own. Although, we agree the submissions of the authorized representative that cross-examination is not a matter of right, the same would, however, depend upon the facts of each case. We find that in the present batch of appeals, the whole case of the Revenue is based upon documents seized from the premises of a third party and on statements recorded on the basis of such documents. Hence, in the facts of the present case, cross-examination is absolutely necessary to test the veracity of the various statements. Shri Verma's reliance on the judgment in the case of M/s Kanungo & Co. cited supra is also misplaced. In that case, the Hon'ble Apex Court had held that principles of natural justice are not violate, if the person giving information was not allowed to be cross-examined, whereas the present case M/s. Jindal has not made such type of request. They are requesting cross-examination of only those persons, whose statements were recorded under Section 14 of the Central Excise Act and are being relied upon agai
