Right to Cross-Examine Panchas and Co-Notices Mandatory when their statements relied for Adjudication: Gujarat HC Rejects Excise Appeal
The Court observed the tribunal’s conclusion that these statements needed to be excluded from the evidence, citing the Supreme Court decision in Andaman Timber Industries and other similar cases.
The Gujarat High Court upheld the decision of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) highlighting that the opportunity to cross-examine pancha witnesses and co-notices is mandatory when their statements are relied upon for adjudication. Paraeshbhai Ramabhai Amin (Respondent) for whom the CESTAT allowed the appeal and granted relief. The...
The Gujarat High Court upheld the decision of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) highlighting that the opportunity to cross-examine pancha witnesses and co-notices is mandatory when their statements are relied upon for adjudication.
Paraeshbhai Ramabhai Amin (Respondent) for whom the CESTAT allowed the appeal and granted relief. The appellant, Commissioner challenged the CESTAT's judgment and order dated October 31, 2023.
The original dispute arose from an illegal manufacturing activity involving "Pan masala containing tobacco" known as "Gutkha" and duplicates of leading brands, found at the premises of Laxmi Tobacco Company.
The order pertained to the recovery of Central Excise duty amounting to ₹4.32 Crores and imposed a penalty of ₹2.16 crores each on the respondent, Pareshbhai Ramanbhai Amin, and Ashwin Purshottambhai Patel.
The appellant's counsel argued that the tribunal's order should be set aside because the respondent had given a confessional statement about manufacturing the tobacco. The counsel contended that the respondent's confession made the cross-examination of panch witnesses and co-notices unnecessary.
The division bench of Justice A.S. Supehia and Justice Pranav Trivedi noted that the panch witnesses were not allowed to be cross-examined. The Court noted that despite the authority relying on the statements of the co-notices, no opportunity for cross-examination was extended to the respondent, even upon his request.
The court observed that the commissioner, in the order, had rejected the request for cross-examination, stating that the statements of those persons were "simply corroborative" to the facts already stated by the respondent.
The Court held that the adjudicating authority's approach was "illegal and against the fair adjudication of the dispute". The court stated that "Once the authorities have placed reliance upon the statements of the panchas as well as the co notices, the opportunity to cross-examine is mandatory and failing which the same would be detrimental to the order passed by the adjudicating authorities".
The court observed that the tribunal's finding that the adjudicating authority did not take statements on record in terms of Section 9D of the Central Excise Act 1944. It also observed that the commissioner did not allow cross-examination of Panch Witnesses, Purshottambhai C Patel and Ashwin P Patel, sought by the respondent.
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The Court observed the tribunal’s conclusion that these statements needed to be excluded from the evidence, citing the Supreme Court decision in Andaman Timber Industries and other similar cases.
The Court agreed with the tribunal's findings, noting that there was "no tangible evidence or any corroborative evidence" against the respondent to connect him with the manufacture of gutkha.
Since the important witnesses such as panchas and co-notices were not offered the mandatory opportunity for cross-examination, the court found no illegality or infirmity in the Tribunal's order. The court dismissed the department appeal.
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