M/S Rajputana Stainless LTD. vs. Union Of INDIA

Facts

The petitioner, M/s. Rajputana Stainless Ltd., engaged in manufacturing stainless steel products, received a show cause notice dated May 8, 2017, from the Central Excise Department alleging clandestine manufacture and clearance of goods between 2012-13 and 2015-16. The petitioner sought to cross-examine individuals whose statements were recorded under Section 14 of the Central Excise Act, 1944. Initially, the adjudicating authority rejected this request ex-parte, but later allowed cross-examination of witnesses whose statements were relied upon in the show cause notice. The petitioner then sought to cross-examine other witnesses as defence witnesses under Section 9D of the Act, which was rejected. Aggrieved, the petitioner filed a Special Civil Application (SCA) No. 20429 of 2019. During the pendency of this SCA, an ex-parte order-in-original was passed on October 29, 2020, confirming the demand. This order was later set aside by the High Court, which remanded the matter back to the adjudicating authority. Subsequently, the petitioner filed a fresh application for summoning defence witnesses, which was rejected, leading to the present petition.

Held

The Court held that while there is a right to examine defence witnesses under the Central Excise Act, the petitioner's request was not for examining them as defence witnesses but for cross-examining them without examining them as defence witnesses, which was considered impermissible. The Court noted that the previous challenge was to the request for simple cross-examination of witnesses dropped by the revenue without seeking to examine them as defence witnesses, and the Court had not interfered with that order. The Court found that the current request was an attempt to initiate a new inning, which was not sustainable. The Court also observed that the previous order setting aside the ex-parte order was based on the fact that it was passed without affording an opportunity to the party. Therefore, no interference was deemed desirable in the present petition. The Court directed the authority to conclude the proceedings within eight weeks from the date of receipt of the judgment.

Key Issues

1. Whether the petitioner has a right to cross-examine witnesses whose statements were not relied upon by the revenue as defence witnesses, under Section 9D of the Central Excise Act, 1944? 2. Whether the adjudicating authority's rejection of the petitioner's application for cross-examination of witnesses not relied upon by the revenue, and its subsequent fixation of a final hearing without considering this request, amounts to a violation of natural justice and the directions of this Court in the previous order? Petitioner's arguments: The petitioner contended that they have a right to cross-examine witnesses whose statements were recorded under Section 14 of the Act, even if these witnesses were not relied upon by the revenue, to bring defence evidence on record under Section 9D of the Act. They argued that the rejection of their application and the fixation of a hearing date without considering their request defied the principles of natural justice and the previous order of this Court, which had set aside an ex-parte order. They relied on the principle that cross-examination is a crucial part of natural justice. Revenue's arguments: The respondent argued that the petitioner's request was for cross-examination of witnesses who were not examined as prosecution witnesses and were not considered relevant by the revenue. The Court had previously held that cross-examining such witnesses without examining them as defence witnesses was impermissible. The respondent also contended that the petitioner's current application was a defiance of the Court's direction.