Revenue cannot adduce fresh evidence at an appellate stage:

It is a settled law that a Show cause notice is the foundation of a case and it is not available to the Revenue to go beyond the grounds/basis proposed in the notice. However, it is seen that the Department routinely files applications for adducing fresh evidences at an appellate stage. Recently, the Ahmedabad Bench of the CESTAT had an occasion to consider whether the Revenue can be allowed to rely upon such fresh evidences/documents, at an appellate stage. In this regard, the Tribunal opined that additional evidence cannot be brought on record to fill up the lacuna or gap in the investigation or to substantiate the order. Revenue cannot be allowed to carry a piecemeal investigation.

An extract of the relevant paragraphs of the decision is reproduced herein below for ready reference:

9. The Revenue has moved two miscellaneous applications seeking to bring on record some additional evidence in the form of Ullage Report and some other shipment related documents and emails in respect of two consignments of the subject goods imported on the vessel M T Chemrod Wing. According to the revenue these documents prove that the goods imported vide vessel MT Chemrod Wing were not Acid oilas declared by the Appellant but were infact PFAD as claimed by the Revenue.

9.3 Rule 23 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 is the only provision under which such miscellaneous applications for additional evidence can be entertained which reads as under:

RULE 23. Production of additional evidence.

(1) The parties to the appeal shall not be entitled to produce any additional evidence, either oral or documentary, before the Tribunal, but if the Tribunal is of opinion that any documents should be produced or any witness should be examined or any affidavit should be filed to enable it to pass orders or for any sufficient cause, or if adjudicating authority or the appellate or revisional authority has decided the case without giving sufficient opportunity to any party to adduce evidence on the points specified by them or not specified by them, the Tribunal may, for reasons to be recorded, allow such documents to be produced or witnesses to be examined or affidavits to be filed or such evidence to be adduced.

(2) The production of any document or the examination of any witness or the adducing of any evidence under sub-rule (1) may be done either before the Tribunal or before such departmental authority as the Tribunal may direct.

(3) Where any direction has been made by the Tribunal to produce any documents or to examine any witnesses or to adduce any evidence before any departmental authority, the authority shall comply with the directions of the Tribunal and after such compliance send the documents, the record of the deposition of the witnesses or the record of evidence adduced, to the Tribunal.

(4) The Tribunal may, of its own motion, call for any documents or summon any witnesses on points at issue, if it considers necessary to meet the ends of justice.

It can be seen from sub-Rule (1) to Rule 23 that parties to the appeal shall not be entitled to produce any additional evidence before the Tribunal except in the following situations:

(i) if the Tribunal is of the opinion that any documents to be produced or any witness should be examined or any affidavit is to be filed to enable it pass orders or for any sufficient cause;

(ii) if the adjudicating authority or the appellate or revisional authority has decided the case without giving sufficient opportunity to any party to produce evidence on the point specified by them or not specified by them.

It can be seen that additional evidence can be accepted only if either the Tribunal calls for it or where the parties to the appeal were not given sufficient opportunity to produce the said evidence before the lower authorities. In the instant case the additional evidence is not being produced at the instance or directions of the Tribunal. Also, the Revenue has not been able to show that it was not given sufficient opportunities to produce these documents earlier. To permit the Revenue to produce fresh evidence almost five years after the issuance of show cause notice and that too after the adjudication of the matter, while hearing an appeal filed by the Appellant importer will not only be totally unprecedented and unheard of, but will militate against the basic and fundamental principle that an appeal must be decided within the four corners of the case as originally made out in the show cause notice. The said law is laid down by the Supreme Court in a catena of judgments (Ballarpur Industries vs CCE 2007 (215) ELT 489 and Toyo Engineering 2006 (201) ELT 513) that a show cause notice is the foundation of a case and it is not permissible to confirm a liability against the assessee on a ground and basis which is different from the one as proposed in the notice. It is equally well settled position in law that the validity of an order has to be judged solely on the basis of the reasons assigned therein and not on the basis of fresh reasons or evidence produced in an appellate proceedings, as held by the Supreme Court in the case of Mohinder Singh Gill & Anr vs Chief Election Commissioner reported in (1978) 1 SCC 405. It was held by the Apex Court that the validity of an order is not to be judged by supplementing it with fresh reasons as otherwise, an order which is bad in the beginning may, by the time it comes to court on account of a challenge get validated by additional grounds later brought out.

9.4 It is not the Revenues case that they were not given sufficient opportunity at the stage of investigation or adjudication to produce such evidence or that such evidence could not be produced as it was a part of some privileged communication or record which could not have been produced. It is settled law that additional evidence cannot be brought on record to fill up, lacuna or gap, if any, in the investigation as also that the Revenue cannot undertake investigation in a piecemeal manner. The application for additional evidence filed by the Revenue is therefore devoid of any merits and therefore cannot be allowed.

 

This decision of the Tribunal aptly clarifies that the Revenue should not be allowed to make its case at an appellate stage. In an appeal filed by the assesse, the revenue does not have the liberty to supplement the order with fresh evidence.

(link Final order No. A/12211-12212/2014 dated 04.12.2014)