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2026 Supreme(Online)(CESTAT) 2498
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL CHENNAI REGIONAL BENCH COURT NO. III
P. Dinesha, J, M. Ajit Kumar, Technical Member
D.S. Bharathi Sureshrajan – Appellant
Versus
TIRUNELVELI – Respondent
Excise Appeal No. 40559 of 2024|Excise Appeal No. 41898 of 2016|Excise Appeal No. 41985 of 2016|Excise Appeal No. 40352 of 2018|Excise Appeal No. 40353 of 2018|Excise Appeal No. 42025 of 2016|Excise Appeal No. 41449 of 2018
For the Appellants/Petitioners: Derrick Sam, Sangeetha M., Ieswarya. N., M. Karthikeyan, S. Rajagopalan, R. Balachandar
For the Respondents: Sanjay Kakkar
Denial of the opportunity for cross-examination and failure to allow a final reply after rejecting an interim request violates the principles of natural justice (Audi Alteram Partem), rendering the adjudication order and subsequent penalties unsustainable.
Headnote:The case involves allegations of clandestine removal of MS ingots, leading to a Show Cause Notice and a subsequent Order in Original confirming duty demands and penalties. The adjudication was based on statements of personnel, and despite the noticees filing an interim reply requesting the cross-examination of witnesses, the Adjudicating Authority rejected the request and decided the case on merits without providing an opportunity for a final reply. The primary issues were whether the charge of clandestine removal was established and whether the individual penalties were justified. The court held that the rejection of the request for cross-examination, coupled with the failure to allow the parties to file a final reply on merits, constituted a serious violation of the principles of Audi Alteram Partem. The court reasoned that seeking cross-examination is a valid method of denying an admission, and the absence of a formal retraction of a statement does not preclude the right to cross-examine. In view of above, both the issues are required to be answered in favour of the Appellants and hence, we set aside the impugned order and allow the Appeals with consequential benefits, if any, as per law.
Per: Shri P. Dinesha
These Appeals arise out of the common impugned Order in Original No. 50/2016 dated 12.07.2016 passed by the Commissioner of Central Excise, Tirunelveli. The Appellant, Smt. D.S. Bharathi Sureshrajan in Appeal No. E/40559/2024 is the Managing Director of M/s. NSR Steels Private Limited, Pazhavoor, Tirunelveli [NSR, for short]. The allegation against this Appellant, as could be seen from the Show Cause Notice as well as the impugned order is that the Assessee viz. NSR had caused clandestine removal of MS ingots to four buyers which, according to the Adjudicating Authority, was accepted by the C.E.O of the said NSR in his statement and thereafter confirmed by the Managing Director of NSR (i.e. Smt. D.S. Bharathi Sureshrajan Appellant in Appeal No. E/40559/2024).
A perusal of SCN dated 26.12.2014 inter alia reveals that there was a search in the premises of the Assessee NSR resulting in the seizure of documents and during the course of further investigation, statements of some of the personnel came to be recorded; above SCN covered the period 04.03.2010 to 25.10.2010. The SCN also directed the noticees to file their reply within 30 days from the date of receipt of the same.
Paragraph 08.01 of the impugned Order in Original reveals that none of the noticees filed any reply to the SCN but however, during personal hearing on 30.03.2016, one of the Advocates appeared and filed an interim reply inter alia requesting for cross examination of some of the persons whose statements were referred to in the SCN. Paragraph 08.02 also reveals that NSR in its reply dt. 30.03.2016 to the SCN also inter alia sought for cross examination of C.E.O, apart from explaining the day to day activities of the firm and the persons whose statements were recorded.
When such a reply was received, the Adjudicating Authority having felt that there was no need to grant an opportunity to cross examine any of the persons, proceeded to decide the case on merits, as can be seen from paragraph 11.01 of the impugned order and, vide impugned Order in Original No. 50/2016 dated 12.07.2016, he has confirmed the duty demand/reversal of cenvat credit with interest as proposed in the SCN and imposed penalty. Seriously aggrieved by the above demand, penalty, etc., the present Appeals have been filed before this forum.
Heard Shri Derrick Sam and Ms. Sangeetha, Ld. Advocate/s for the contesting Appellants in Appeal No. E/40559/2024, Ms. Ieswarya, Ld. Advocate in Appeal No. E/41898/2016, Shri M. Karthikeyan, Ld. Advocate in Appeal Nos. E/41985/2016, E/40352/2018 & E/40353/2018, and Shri S. Rajagopalan & Shri R. Balachandar, Ld. Advocate/s in Appeal Nos. E/42025/2016 & E/41449/2018; Shri Sanjay Kakkar, Ld. Departmental Representative defended the impugned order. We have carefully perused the impugned order, replies filed by some of the parties and written submissions / synopsis filed by the Appellants as well as the Departmental Representative before us.
After hearing both sides, the following issues arise for our consideration :
(i) whether the charge of clandestine removal as alleged by the Revenue stands established ? and
(ii) whether the individual penalties on the contesting Appellants are justified ?
We find that the Adjudicating Authority has not given any satisfactory reasons for rejecting the request for cross examination, rather, he has recorded that the case of clandestine removal was registered during 2010 for which SCN was issued in 2014, after a lapse of 6 years after booking the case of clandestine removal and 2 years after issue of SCN the requests for cross examination are being made of their own employees, it was also contended by the noticees that the statements of C.E.O and M.D were not voluntary, obtained under duress and further has justified the rejection of request also on the ground that the statements were never retracted and no evidence regarding duress, coercion etc. has been placed on record. He has als
