The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench, has set aside the appellate order and remanded the matter back to the adjudicating authority, holding that failure to provide relied upon documents to the assessee amounts to a clear violation of principles of natural justice. 

The bench of Dr. Ajaya Krishna Vishvesha  (Judicial Member) and Satendra Vikram Singh (Technical Member) has observed that the case against the main manufacturer originated from documents seized from the appellant’s premises. The appellant had explained the contents of the seized documents during investigation and had not retracted his statements. The records indicated involvement in arranging transport and maintaining transaction details related to clandestine clearances. 

The case arose from a search conducted by the department at the premises of Shri Himanshubhai Nandlal Jagani in September 2012, during which various incriminating documents and diaries were recovered. These documents allegedly contained details of clandestine transactions involving purchase and sale of iron and steel products, including round bars and CTD bars sourced from re-rolling mills. 

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Based on these records and statements recorded from the appellant and other parties, the department issued a show cause notice to M/s A.I. Industries for clandestine removal of goods without payment of central excise duty. The adjudicating authority confirmed the duty demand of ₹4,00,015 along with interest and penalty, and also imposed a penalty of ₹1,00,000 on the appellant under Rule 26 of the Central Excise Rules, 2002. 

The Commissioner (Appeals) upheld the order, leading to the present appeal before the Tribunal.

The appellant primarily contended that the department failed to supply relied upon documents despite repeated requests, thereby denying a fair opportunity to defend the case. The role attributed to him was merely that of a broker, and he had not directly dealt with the alleged excisable goods. The investigation was incomplete, as no verification was conducted with transporters or vehicle owners despite reliance on vehicle details recorded in the seized documents. 

The appellant also relied on earlier Tribunal decisions in similar matters where penalties imposed on him were set aside.

The department argued that the entire case of duty evasion was built upon documents recovered from the appellant’s premises. It emphasized that the main party, M/s A.I. Industries, had admitted to clandestine clearance of goods and had settled the matter under the SVLDR Scheme, 2019.

It was further contended that the appellant played an active role in maintaining records and facilitating transactions, thereby attracting penalty under Rule 26. 

However, the Tribunal placed decisive reliance on the procedural lapse concerning non-supply of relied upon documents. It observed that the appellant had specifically requested copies of relied upon documents during adjudication. This request was ignored both by the adjudicating authority and the Commissioner (Appeals). Such denial of documents directly impacts the ability to defend and constitutes a violation of natural justice. 

The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority with directions to provide all relied upon documents to the appellant; and re-adjudicate the case afresh after granting a proper opportunity of hearing.

The Tribunal directed that the exercise be completed within four months from receipt of the order.

Case Details

Case Title: Himanshubhai Nandlal Jagani Versus Commissioner of CGST & Central Excise-Bhavnagar

Citation: JURISHOUR-911-CES-2026(AHM) 

Case No.: Excise Appeal No. 12469 of 2018-DB

Date: 22.04.2026

Counsel For  Appellant: Sarju Mehta, Chartered Accountant 

Counsel For Respondent:  Rajesh K Agarwal, Superintendent (AR)

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