1. The petitioners are before this Court challenging the ex-parte Order-in-Original dated 12.10.2020 passed by the Commissioner Central GST and Central Excise, Gandhinagar Commissionerate, Ahmedabad allegedly in gross violation of principles of natural justice without hearing the petitioner or its authorized representative.

2. The brief facts leading to the present petition are as follows:

2.1 The petitioner M/s Rajputana Stainless Limited, is a company incorporated under Companies Act. M/s Suraj Limited, for manufacture their final goods i.e. SS pipes, was purchasing their raw material from the petitioner company and the same are supplied by the petitioner under the cover of central excise invoices on payment of central excise duty. In the process of manufacturing, SS pipes, SS scrap is generated. The same is supplied by M/s Suraj Limited to the petitioner under the cover of central excises invoices on payment of duty.

2.2 It is the say of the petitioner that officers of the preventive wing of Central Excise Department carried out the search in the premises of M/s Suraj Limited and withdrew their record under the panchanama. The suspicion on the part of the preventive team is that the petitioner only issued the central excise invoices without supply of goods. Therefore, M/s Suraj Limited has availed Cenvat Credit of excise duty without receipt of goods mentioned in the invoice and the allegations against the petitioner had been that it abetted with Suraj limited in availing Cenvat Credit based on the invoices issued by the petitioner without receipt of goods.

2.3 It is the say of the petitioner that no investigation at its premise had taken place. However, on the basis of the statements recorded under Section 14 of the Central Excise Act and the ledger maintained by the Suraj Limited, the department issued the show cause notice on 17.12.2018 proposing to recover Cenvat Credit amounting to Rs.3.97 crores (rounded off) from Suraj Limited on the allegation that they availed cenvat of excise duty without receipt of quantity of inputs and proposing penalty under Rule 26(2) of the Central Excise Rules on the petitioner for abetment.

2.4 It is further averred that on 19.7.2019, the respondent no.2 issued a letter to the petitioner directing to file reply to the show cause notice to which the petitioner, on 25.7.2019, replied that they had not received any show cause notice and thereby requested to provide a copy of the same along with the relied upon documents.

2.5 A copy of show cause notice of 17.2.2018 had been provided by the respondent no.2 on 2.8.2019.

2.6 On 23.3.2020, the Government of India announced the nationwide lockdown on account of spread of Covid-19 pandemic and which mandated the citizens to stay at home and resulted into complete lockdown.

2.7 The department had fixed the personal hearing on 13.4.2020. According to the petitioner, it was impractical to have an access to the office of the respondent to attend the hearing. The personal hearing, since was scheduled on 3.4.2020, the petitioner could not attend it.

2.8 The respondent no.2 again, on 21.9.2020, directed the petitioner to file reply to the show cause notice on or before 23.9.2020. Learned advocate for the petitioner, on 22.9.2020, had filed reply to the show cause notice dated 17.2.2018 and rebutted the allegations.

2.9 The persons whose statement had been recorded and relied upon in the show cause notice were needed to be examined under Section 9D of the Central Excise Act for placing reliance on the statements and cross-examination also was sought for by the petitioner by separate application.

2.10 The original adjudicating authority, after having received the reply, had not referred to the reply in the order-in-original nor it granted examination or cross-examination of the persons whose statements had been recorded and relied upon and yet those statements have been relied upon, hence this petition seeking intervention of the Court.

2.11 According to the petitioner, the order is also suffering from vice of contravention of provisions of Section 33A of the Central Excise Act which contemplates the opportunity of hearing go be granted minimum three times, whereas the original adjudicating authority has granted the opportunity of personal hearing only once and passed the order which is ex-parte. Reliance is also placed on the circular no.1053/2/2017 dated 10.3.2017. Moreover, it is also the grievance of the petitioner that the notice for personal hearing was received on the evening of 9.10.2020 and hence hearing could not be attended and fresh notice for personal hearing was requested.

3. In the above premise, the petitioner sought the following prayers:

“10(A) That Your Lordships may be pleased to call for records and proceedings before Respondent No.2, the Commissioner of CGST and Service Tax, Gandhinagar Commissionerate at Ahmedabad to verify the noting of directions on the file;

(B) That Your Lordships may be pleased to issue a writ of mandamus or a writ of certiorari or any other appropriate writ, direction or order, quashing and setting aside the impugned ex-parte order in Original No.AHM- EXCUS-003-COM-031-20-21 dated 12.10.2020 passed by Respondent No.2 (Annexure-”A”), and be further pleased to direct Respondent No.2, to allow the petitioner to cross examine the persons whose statements are relied upon in the show cause notice;

(C) That Your Lordships may be pleased to stay the operation of impugned order dated 12.10.2020 till the hearing and disposal of this Special Civil Application;

(D) Any other further relief as may be deemed fit in the facts and circumstances of the case may also please be granted.”

4. This Court, on issuance of notice on 3.2.2022 (Coram: J.B.Pardiwala,J (as His Lordship then was) and Nisha M Thakore,J) passed the following order, while granting interim protection to the petitioner:

“1. We have heard Mr. Dharmadhikari, the learned Senior Counsel assisted by Mr. Dhaval Shah, the learned counsel appearing for the writ applicant.

2. The subject matter of challenge in the present writ application is the legality, validity and properitory of the order passed by the Commissioner dated 12.10.2020 raising a demand of Rs.3,97,36,988/- towards CENVAT credit under the provisions of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11(A)(4) of the Central Excise Act, 1944. The impugned order originated from a show cause notice issued by the Authority dated 17.04.2018.

3. It appears that the writ applicant filed a detailed reply to the show cause notice. The respondent No.2 vide its letter dated 05.10.2020 issued a Notice of personal hearing scheduled on 09.10.2020. It is the case of the writ applicant that the said letter was dispatched by the respondent No.2 on 06.10.2020 and the same was received at the factory gate of the writ applicant in the evening hours of 09.10.2020 i.e. the day on which the hearing was fixed.

4. The learned counsel further pointed out that the impugned order is also violative of the provisions of Section 33A of the Act, 1944, which inter-alia contemplates that an opportunity of hearing should be granted for a minimum three times. He further pointed out that on 12.10.2020, the lawyer for the writ applicant vide E-mail communicated to the respondent No.2 that his client has received a Notice of personal hearing only in the evening on 09.10.2020 and therefore, the matter may be adjourned to any other date.

5. It appears that the respondent No.2 proceeded to pass the impugned order in original. It is the case of the writ applicant that he was not afforded a reasonable opportunity of hearing in as much as the writ applicant also wanted to cross examined the persons who have been named in the show cause notice like transporters etc.

6. Let Notice be issued to the respondents, returnable on 17.03.2022.

7. Let there be an ad-interim order in terms of paragraph 10(C).

8. Direct service for respondent No.2 and service to respondent No.1 – Union of India through E-mail is permitted.”

5. The affidavit-in-reply is filed by Commissioner, CGST & C.Ex.Gandhinagar Commissionerate, at Ahmedabad denying all allegations. It is reiterated that M/s Suraj Limited has availed Cenvat credit on the strength of invoices issued by petitioner without corresponding delivery of the goods. This has emerged during the investigation as per the invoice wise details called for from the RTO office. Moreover, it is urged that the show cause notice has been issued to the petitioner on 17.12.2018 requiring them to have a written submission within 30 days of issuance of the SCN. However, for more than one year, the petitioner failed to respond and when the department asked it to reply, on 25.7.2019, addressed an e-mail to the department that they have not received a copy of SCN. According to the respondent, show cause notice has already been served on the petitioner through R.P.A.D. which has been dispatched on 19.12.2018. It was only on account of his request that a second time, the SCN had been served upon him where they were asked to furnish the reply.

5.1 The personal hearing was fixed on 13.4.2022 which he failed to respond to and the petitioner asked to submit the final reply on 23.9.2020. Without naming the persons, without providing any justification for cross- examination of witnesses, a request is made for cross- examination of witnesses and since adjudication process was unduly being delayed, virtual hearing of the matter was fixed on 19.10.2020 which was communicated to the petitioner but no one appeared nor the petitioner sent any timely request seeking adjournment. The petitioner since failed to appear for the personal hearing, earlier it was fixed on 13.4.2020 and again on 9.10.2020.

5.2 On merit and on the aspect of rescheduling of personal hearing of the date of 9.10.2020, it is contended that no request for adjournment has been sought. Much has been contended on 33A of the Central Excise Act to urge that it is a discretionary of the adjudicating authority to grant adjournment subject to sufficient cause being shown by the petitions. All other contentions have been denied.

6. The affidavit-in-rejoinder on the part of the petitioner reiterates all those grounds which have been raised before this Court seeking the intervention for breach of principles of natural justice.

7. We have heard extensively the learned advocates on both the sides and the submissions may not be required to be repeated at this stage.

8. On the aspect of non-service of the show cause notice issued on 17.2.2018, not only there is a contention with regard to the service through R.P.A.D. mode on 19.12.2018, it appears that request has been made on the part of the petitioner vide e-mail dated 25.7.2019 that the petitioner had not received the copy of the same and hence the department had already furnished copy of SCN, reply to which has also been given. This issue may not be necessary to be further dialected for the fact that notice on 17.2.2018 has reached quite belatedly in the month of December, 2018 through R.P.A.D. and even otherwise, the request has been already fulfilled by supplying the very show cause notice after having received the petitioner’s e-mail on 27.9.2019 addressed to the department. Hence, this issue raised will not be necessary for the Court to further consider for the purpose of examining whether there was a breach of principles of natural justice.

9. The two issues that require consideration are non-availment of opportunity of cross-examination of the witnesses and also non-grant of personal hearing as provided under the statute and the circular which has been issued by the respondent.

10. This Court also, at the time of issuance of notice, had referred to the Section 33 of the Central Excise Act where the petitioner has pointed out that the action is violative of Section 33A of the Central Excise Act which otherwise, contemplates an opportunity of hearing to be granted minimum three times. We need to also refer to the Circular No.1053/2/2017 dated 10.3.2017 issued by the Central Board of Excise and Customs, Ministry of Finance (Department of Revenue), New Delhi, where subject is `Master Circular on Show Cause Notice, Adjudication and Recovery Regarding’. 14.3 and 14.4 which speaks of the personal hearing shall need to be reproduced.

“14.3 Personal hearing : After hearing given a fair opportunity to the noticee for replying to the show cause notice, the adjudicating authority may proceed to fix a date and time for personal hearing in the case and request the assessee to appear before him for a personal hearing by himself or through an authorised representative. At least three opportunities of personal hearing should be given with sufficient interval of time so that the noticee may avail opportunity of being heard. Separate communications should be made to the noticee for each opportunity of personal hearing. In fact separate letter for each hearing / extension should be issued at sufficient interval. The Adjudicating authority may, if sufficient cause is shown, at any stage of proceeding adjourn the hearing for reasons to be recorded in writing. However, no such adjournment shall be granted more than three times to a noticee.

14.4 Record of personal hearing: The adjudicating authority must maintain a record of personal hearing and written submission made during the personal hearing. Evidence of personal hearing and written submission on record is very important while adjudicating the case.”

11. It makes it quite clear that the department had, by way of the present circular streamlined and reiterated the requirement of grant of three opportunities of personal hearing with sufficient interval to the noticee who can avail the opportunity of being heard. It also insist on the separate communications to be made to the noticee for each opportunity of personal hearing. In fact, the separate communication for each hearing extension would be issued at sufficient interval. The adjudicating authority can also at any stage of proceedings adjourned the hearing for the reasons to be recorded in writing, however, no such adjournment as mentioned in the circular be granted more than three times to a noticee. Maintaining of record of personal hearing and written submissions made during the personal hearing is also insisted upon by this very circular. It also follows that the adjudication order should be a speaking order which should stand the test of legality, fairness and reason of the appellate forum.

12. It is not in dispute that the personal hearing was granted on 13.4.2020 for the first time by the authority concerned. This was communication sent after the lockdown from 23.3.2020. The petitioner had categorically averred that on account of the fact that the pandemic due to covid-19 did not allow the petitioner to represent its case before the authority concerned as the hearing was not virtual hearing. The second time the hearing was granted was 9.10.2020. It is urged that the letter of 5.10.2020 which rescheduled the date of hearing on 9.10.2020 was received by the petitioner on 9.10.2020 itself in the evening. There could not have been possibility of seeking any adjournment although the grievance has been made by the respondent, even without entering into the rival contention as to what point of time this communication for personal hearing was received by the petitioner. The fact is not in challenge that it had been received on 9.10.2020. In that eventuality, to insist on someone to appear on that very day even if it was a virtual hearing would have been an impossibility. We notice that in the affidavit-in-reply, the reference on the part of the petitioner is of the letter dated 5.10.2020 rescheduling the date of personal hearing to 9.10.2020 in absence of any clarity wherefrom the communication dated 5.10.2020 was sent by e-mail, for the present, this aspect remains uncleared. We are in receipt of this communication of 5.10.2020 was on the very day. For present, it appears to have been received on 9.10.2020 as per the version of the petitioner. Be that as it may. Without entering into that aspect, in wake of the breach as noted at the initial stage while issuing the notice and as is also apparent from the circular 1053/3/2017 dated 10.3.2017 where the board itself expects the officer concerned to avail opportunity of personal hearing with sufficient interval of time so that the noticee can avail the opportunity of being heard and the insistence on the part of the board for separate communications to be made to the noticee for each opportunity, there appears to be a clear breach.

13. We also notice that the request on the part of the petitioner tendered at the time of final reply on 23.9.2020 in its letter dated 22.9.2020, the petitioner had made a request for cross-examination of the witnesses on two counts- one that they did not name the persons and two there was no justification for cross-examination of the witnesses, on the ground that the process of adjudication was unduly delayed and therefore the virtual hearing was fixed on 9.10.2020 when nobody appeared on behalf of the petitioner nor he had asked for any adjournment, this order-in-original has been passed.

14. We notice that it was a time when all the activities of the entire nation had come to a grinding hault. The first time when the opportunity of personal hearing was given was on 13.4.2020 when the pandemic was at its peak due to Covid-19 virus. There could have been any possibility of anybody appearing in person, therefore, after a substantial gap when the second opportunity was given receipt of the same on the day on which the personal hearing was fixed since is an issue with absence of the third opportunity, the court needs to be intervened.

15. With regard to the cross-examination of the names of the witnesses which were required to be cross- examination, will need to be dealt with by the officer concerned when the matter is remanded for the purpose of adjudication afresh from the stage where it was left. It is required to be remanded to the officer concerned.

16. The Apex Court in the case of Andaman Timber Industries V/s Commissioner of C.Ex., Kolkata-II, reported in CDJ 2015 SC 1277, was dealing with a case where the assessee had not been allowed cross- examination of the witnesses by the adjudicating authority though the statement of those witnesses were made the basis of the impugned order. This was held “to be a serious flaw which made the order nullity inasmuchas it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross- examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex- factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.” The Apex Court further held in paragraph 7 as under:

“7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers / witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No.2216 of 2000, order dated 17.03.2005 [2005 (187) E.L.T. A33 (S.C.),

Commissioner v. Andaman Timber Industries Pvt. Ltd.] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions.”

17. The authority concerned is seeking to rely upon certain statements following the various decisions of this Court, the dialect of which is not necessary and the decision of the Apex Court is sufficient enough to bring to the fore the requirement of permitting the cross- examination of witnesses whose statements are sought to be relied upon by the authorities.

18. With that, in view of the above discussion, we are of the opinion that the order impugned passed by the authority concerned deserves to be quashed and set aside remitting the matter to the stage where it was left for the authority concerned to avail an opportunity within two weeks of the date of receipt of copy of this order through e-mail @ dharmadhikarihemant@gmail.com as also through R.P.A.D. Once this opportunity of personal hearing is granted, without seeking any further adjournment, the petitioner shall cooperate. Let the adjudicating authority decide the issue of the cross- examination of the witnesses in two weeks thereafter. The entire process of adjudication shall be expedited. All concerned shall cooperate.