By TIOL News Service

NEW DELHI, SEPT 04, 2014: THE department on receipt of an information that the appellant (M/s PMS) without receiving any inputs are only receiving the invoices from the suppliers and no goods have been sent to any of the job workers as claimed and were actually procuring the cheap diesel engine parts from market for export, while showing their manufactural clearance from their factory on payment of duty by utilizing the fraudulently taken cenvat credit initiated inquiries. The inquiries were conducted with all the 24 job workers including the 9 job workers and all of them, in their respective statements recorded under Section 14 of the Central Excise Act, 1944 admitted that they have not received any raw materials from the appellant for processing and as such, have not sent any processed or finished goods to them and their transactions with the appellant regarding job work are mere paper transactions. In adjudication, the demand of duty was confirmed and penalties imposed.

Aggrieved by the same, the appellants are before the Tribunal.

The appellants contended that the entire case is based on the statements of the job workers stating that no materials have been received by them and that the appellant had sought cross examination of the job workers, whose statement have been used by the department against PMS, that in para 3.1 of the impugned order-in-original, it has been recorded that PMS vide their letter dated 13.09.2011 had sought cross examination of the 21 out of the 24 job workers and seven transporters, that the cross examination of these persons was wrongly disallowed by the Commissioner on the ground that the same would be an exercise in futility and would delay the adjudication endlessly, is totally wrong, that denial of cross examination of the transporters and the job workers has resulted in denial of natural justice which has vitiated these proceedings and that on this ground itself, the impugned order would not be sustainable.

After hearing both sides, the Tribunal held:

Impugned order was passed without providing the opportunity of cross examination. The circumstances in which this examination and cross examination can be waived are specified in Clause (a) of Section 9D (1) of the Central Excise Act, 1944 and these circumstances are that the person who had made the statement is dead, or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable.

In view of the provisions of sub-section 9D (2) of Central Excise Act, 1944, the cross examination of a witness, whose statement has been relied upon by the adjudicating authority is a must. Besides this, when the report of the RTO regarding the registration number of the vehicles mentioned in the invoices being non-transport vehicles was relied upon by the department, the copies of the reports should be supplied to the appellant, which have not been supplied. In view of this, the impugned order is not sustainable. The same is set aside. The matter is remanded to the original adjudicating authority for de novo adjudication after supplying the reports of the RTO relied upon by the department and also examination of the job workers by the Commissioner in terms of the provisions of Section 9D (2) and also permitting their cross examination by the appellant.

(See 2014-TIOL-1669-CESTAT-DEL)