Full Judgment
3. Shri A.K. Mahajan, learned Advocate, appearing for the appellants submitted that modvat credit was denied on the ground that gate passes were fictitious ones. The Adjudicating Authority has come to the conclusion based upon the statements of various consignors, and in view of this fact that the appellants requested for cross-examination of the persons/consignors mentioned in para 2 of the show cause notice before making detailed submissions in reply to the show cause notice but the request of the party for cross-examination of the persons/consignors was not acceded to and in view of this fact the Advocate of the party again stressed for cross-examination of the concerned parties and requested for adjournment of the personal hearing fixed for 26-4-1991.
He said that the impugned order suffers from denial of principles of natural justice inasmuch as request for cross-examination of the parties was not allowed and request for adjournment of the personal hearing was not granted. He submitted that on similar issue and under similar facts and circumstances of the case, the Tribunal has remanded the matter for re-adjudication as per Order No. A/214/92-NRB dated 11-5-1992 at the time of hearing stay application No. 3158/91-NRB in Appeal No. E/4874/91-NRB and he has filed a copy of the same for our perusal and requested for remand this case also for the same reason.
Apart from this he said that financial position of the applicant concern is very bad as can be seen from the balance-sheet for the year ending 31-3-1991 as they have incurred accumulated losses at Rs. 84,01,518.93 and not loss of Rs. 15,56,192.90 for the year ending 31-3-1991.
4. Shri Bhatia, learned SDR, appearing for the Revenue, fairly conceded that on similar issue the Tribunal has remanded the matter as it was rightly argued by the learned Counsel for the appellants and he has no objection to remand the matter for re-adjudication. He said that if the Tribunal is not inclined to remand the matter or to take a final decision at this stage, he pointed out that the financial position of the applicants is not so bad in view of the fact that current assets exceed current liabilities for the year ending 31-12-1991 as per provisional balance sheet filed by the appellants.
5. We have carefully considered the arguments advanced on both sides and have perused the records. On perusal of the records, we find that there was sufficient lapse on the part of the appellants in not filing the reply to the show cause notice but we feel in the interest of justice ultimately the matter will have to go back for re-consideration as the Adjudicating Authority has not intimated to the appellants about the rejection of the adjournment of the personal hearing before passing the impugned order. In the view we have taken and after taking into consideration of the submissions made by the appellants particularly with reference to the financial position as per audited balance-sheet, we feel that this is a fit case to grant stay. In the view we have taken, the stay application is allowed accordingly.
Sd/-(G.A. Brahma deva) (S.K. Bhatnagar) 6. With due respects to Hon'ble Judicial Member, my views and orders in the matter are as follows : 7. I observe that in this case the inputs were allegedly received on 73 gate passes which were fictitious and on enquiry the firms of M/s. Dee Kay Steel Corporation and M/s. Sonu Iron Store, Mandi Gobindgarh were found to be non-existent and even sales tax numbers mentioned in the invoices were found to be fake as per the Department's case. I also observe that prima facie the appellants have not been able to show at this stage that the above allegations were incorrect. I also observe that the Department's contention that the appellants were adopting delaying tactics has some force.
8. Once on enquiry, the Sales Tax authorities had confirmed the Department's stand that the sales tax numbers were fake and the Department had supplied them all the particulars and the basis for their allegations and it could be only in the appellants' own special knowledge as to who were the persons from whom they had obtained the goods and where they were to be found, it was expected of the appellants to supply that information and show their bona fides. As far as cross-examination is concerned, it is well established that it is not a part of natural justice but only procedural justice and in the case of quasi-judicial adjudication proceedings before Departmental Officers, the discretion rested with the officer. Obviously once the Department found certain parties to be non-existent, it could not have produced them for cross-examination or otherwise.
9. Since sufficient opportunity had been given to the appellants and the case was even adjourned, once at their request, it could not be said prima facie, that as no violation of principles of natural justice was involved. Moreover repeated adjournments could not be claimed as a matter of right.
10. As regards the financial position, I find that only a provisional balance sheet had been filed and even as per this report, the current assets exceed current liabilities for the year ending 31-12-1991.
Further the cases cited prima facie, appear to be distinguishable and the Bench was not inclined to consider the request for remand at this stage.
11. Looking to the totality of the facts and circumstances and noting the above aspects in particular, I find that prima facie case and balance of convenience were in favour of the Department and not in favour of the applicant. I, therefore, reject their request.
In view of the Difference of Opinion between the Hon'ble Member (Judicial) and the Vice President, the matter is submitted to the Hon'ble President for reference to a third Member on the following point: "In view of the facts and circumstances of the case, whether the pre-deposit of the amount in question was required to be waived and stay granted or the application was required to be rejected."(G.A. Brahma deva) (S.K. Bhatnagar) The point of difference is referred to Shri S.L. Peeran, Member Judicial.
Ld. SDR supported the order of the Id. Vice President and argued that the right of cross-examination is only a procedural right and the same cannot be insisted and in that view of the matter, the rejection of stay application is proper.
13. Shri B.N. Kataria, Director appearing for the appellant company pointed out that on the same facts and circumstances of the case, the lower authorities had passed a separate order imposing penalty of Rs. 1.92 lakhs. On appeal before NRB, they had taken up the same defence as raised in this appeal, the Tribunal, at the stay stage itself had remanded the case for de novo consideration. He also stated that there were similar allegations against another assessee and in whose case also the Tribunal remanded the case for de novo consideration. He prayed for similar treatment for this case also. He also submitted that the financial condition of the company is also not good as they had incurred losses of more than Rs. 96 lakhs. Hence, he prayed for grant of stay in this case.
14. On a careful consideration of the case, I agree with the opinion expressed by Member (J) for grant of stay in this case for the following reasons. The appellant filed appeal E/3424/92-NRB and prayed for stay against the imposition of penalty of Rs. 1.92 lakhs. The appellant had taken up the same plea of gross violation of the principle of natural justice inasmuch as that they were not allowed to cross-examine the witnesses. The Tribunal at the stay stage itself allowed the appeal by remand. The order passed in paras 5 & 6 is noted below: "5. We have considered the submissions of the ld. SDR and the written submissions as also the Final Order No. S/335/92-NRB and A/245/92-NRB dated 26-5-1992 in the case of Arsh Castings Pvt. Ltd, v. CCE, Chandigarh submitted by the appellants. We find that for duty and penalty involved in similar issues and facts as in the present case, for subsequent periods, the Tribunal by its Final Order No. A/214/92-NRB dated 15-5-1992 and Order No. A/245/92-NRB dated 26-5-1992, allowed the stay application unconditionally and also remanded the case back to the adjudicating authority for de novo adjudication after according the opportunity of cross-examination to the appellants.
6. Following the ratio of the above orders, we set aside the impugned order and remand the case to the adjudicating authority for de novo adjudication after affording an opportunity of cross-examination to the appellants. The appeal is thus allowed by remand".
15. In another appeal E/5069/91-NRB, on same facts and circumstances, the Tribunal by their Stay Order No. S/335/92-NRB and Final Order No.A/245/92-NRB dated 26-5-1992 has granted stay and allowed the appeal by remand for permitting the appellants to cross-examine the witnesses.
16. In view of these orders passed by the Tribunal, the opinion of Member (J) that ultimately the appeals are to be remanded on final hearing appears to me to be the correct view in the matter. The Tribunal has already set aside penalty proceedings against the appellants and the lower authorities have been directed to grant them opportunity of cross-examination. In view of order of the Tribunal, it is but proper that stay be granted and appeal also taken up for hearing. The papers are to be placed before the Original Bench for passing final order.
In view of the majority opinion, pre-deposit of the amount in question is waived and its recovery stayed during the pendency of the appeal.