JUDGMENT : Biswajit Mohanty, J. 1. The petitioner has filed the present writ application with a prayer to quash the impugned order-in-original dated 29.2.2016 (Annexure-1) passed by the learned Commissioner of Central Excise, Rourkela. 2. The petitioner is an assessee registered as manufacturer with the Central Excise Department and is engaged in manufacture of ‘Pan Masala containing Tobacco’ commonly known as “Gutkha” with retail sale prices of Rs.1, Rs.1.50 and Rs.2/- per pouch with effect from 7.4.2010. The case of the petitioner is that it is clearing the above noted goods under the brand name “Safal”, which is owned by M/s. Kamlakant and Company, Kanpur. The owner has given the right to use the said brand to different companies across the Country as per agreements under which the user companies like the petitioner are required to pay royalty to the above noted brand owner. Such “Gutkha” manufactured with the aid of packing machine and packed in pouches has been notified as goods falling within the purview of Section-3A of the Central Excise Act, 1944, for short, “the Act” for the purpose of levy and collection of excise duty vide notification under Annexure-3. Further, the Central Government in exercise of powers conferred by sub-sections (2) and (3) of Section3A of “the Act” has notified “Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, for short, “the Rules”. The said rule was amended during 2010. As per “the Rules”, the factor relevant to the production of notified goods which is “Gutkha” in the present case shall be the number of packing machines in the factory of manufacturer. According to the petitioner, the said Rules also indicate the number of pouches deemed to be produced per operating/packing machine per month. Further, as per Rule-6 of “the Rules”, a manufacturer is required to declare a number of particulars in the prescribed Form-I, which include inter alia the number of single track packing machine, the number of multiple track packing machine and number of multiple track multiple line packing machines installed in the factory, which the manufacturer intends to operate. Further, as per Rule-6 of “the Rules”, a manufacturer is required to declare a number of particulars in the prescribed Form-I, which include inter alia the number of single track packing machine, the number of multiple track packing machine and number of multiple track multiple line packing machines installed in the factory, which the manufacturer intends to operate. On receipt of such declaration, the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, shall after making such enquiry as required including physical verification, approve the declaration and determine and pass order concerning the annual capacity of production of the factory in accordance with “the Rules”. In case the manufacturer wishes to make subsequent changes, it is required to file fresh declaration at least three working days in advance to the authorities. In tune with the above requirement, the petitioner filed the requisite declaration in Form-I during the relevant period before the Assistant Commissioner of Central Excise, Sambalpur-II, Division clearly indicating the number of single track packing machines available/installed in the factory and the number of such machines, which it intends to operate in its factory for production of notified goods. In the declaration Form, according to the petitioner, it was specifically indicated therein that it would be manufacturing “Gutkha” of retail sale prices Rs.1/-, Rs.1.50, and Rs.2/- per pouch during the relevant period. On receipt of such declaration, after making the required enquiry, the Deputy Commissioner of Central Excise passed orders determining the annual capacity of production of the petitioner’s factory for the relevant period. Further, according to the learned Senior Counsel appearing for the petitioner almost every month during the relevant period a number of Officers from the Central Excise Department visited the factory premises and none found any discrepancy relating to the sale price of “Gutkha”. However, on 10.9.2011 a search was conducted by the Officers of Central Preventive Unit, Bhubaneswar-II acting on some alleged information that the petitioner was also manufacturing and clearing “Gutkha” of MRP Rs.5/- per pouch under the brand name “Safal”. 3. On 10.9.2011, the department also carried out simultaneous searches at the premises of the dealers of the petitioner, namely, Shri Jagabandhu Chell, Proprietor M/s. J.B. Chell, daily market, Rourkela and Shri Babajee Charan Biswal, Shop No.36, Unit-I Market, Bhubaneswar. From these two dealers “Safal” brand “Gutkha” pouches bearing MRP Rs.5/- were seized. Mr. 3. On 10.9.2011, the department also carried out simultaneous searches at the premises of the dealers of the petitioner, namely, Shri Jagabandhu Chell, Proprietor M/s. J.B. Chell, daily market, Rourkela and Shri Babajee Charan Biswal, Shop No.36, Unit-I Market, Bhubaneswar. From these two dealers “Safal” brand “Gutkha” pouches bearing MRP Rs.5/- were seized. Mr. Jagabandhu Chell in his statement recorded under Section-14 of “the Act” stated that he had received the seized pouches from M/s. Jagannath Enterprise of Seeraj Bhawan, Bhati Road, Rourkela. Mr. Tapan Chandra Dey, Proprietor M/s. Jagannath Enterprise in turn stated that he has received these pouches from the petitioner. 4. Shri Babajee Charan Biswal, the other dealer in his statement under Section-14 of “the Act” stated that he procured “Safal” brand “Gutkha” pouch bearing MRP Rs.5/- from Mitu Sahoo @ Soumendra Kumar Sahoo, Kalinga Market, Bhubaneswar. Mr. Soumendra Kumar Sahoo in turn stated that he had procured “Safal” brand “Gutkha” pouches having MRP Rs.5/- manufactured by the petitioner from a person as instructed by Shri Neeraj Sharma, Director of the petitioner by paying cash. 5. During course of investigation, the authorities got hold of some advertisements in print and electronic media relating to advertisement of “Safal “Gutkha” pouch of MRP of Rs.5/-indicating involvement of the petitioner. After the completion of investigation, the department issued a show cause notice dated 18.9.2012 under Annexure-20 series. The petitioner vide letter dated 25.12.2012 (Annexure-21) requested the opposite party for supply of certain documents and more particularly the photo copy of the outer packet which contained “Safal” “Gutkha” pouches of MRP Rs.5/-. The Assistant Commissioner (Preventive), Central Excise, Bhubaneswar vide letter dated 27.2.2013 under Annexure-22 series supplied photo copy of the “Gutkha” pouches of MRP Rs.5/- along with other documents. However, since the photo copy of outer packet in which the pouches were packed was not made available to the petitioner, on 14.3.2013 (Annexure-23), the petitioner again requested the opposite party to supply a copy of the outer packet in which the pouches were packed. When the above noted outer packet was not supplied to the petitioner, the petitioner reiterated its prayer on 3.12.2013 vide Annexure-24. Ultimately, in absence of the photo copy of the outer packet containing pouches, the petitioner submitted its interim reply on 12.12.2013 vide Annexure-25 praying for vacating the show cause notice under Annexure-25 after highlighting the following points. 6. When the above noted outer packet was not supplied to the petitioner, the petitioner reiterated its prayer on 3.12.2013 vide Annexure-24. Ultimately, in absence of the photo copy of the outer packet containing pouches, the petitioner submitted its interim reply on 12.12.2013 vide Annexure-25 praying for vacating the show cause notice under Annexure-25 after highlighting the following points. 6. In the interim reply, the petitioner made it clear that during course of search, there was no seizure of “Safal” pouch containing “Gutkha” showing Rs.5/- as retail price in the factory premises. The authorities have also not found any laminating material of the size used in packing of “Gutkha” of MRP Rs.5/-. The petitioner also took the plea that no pouch making machine for packing of “Gutkha” of MRP Rs.5/- was seized during seach. Further, no Feeding Disk, no Sealing Roller, no Differential Gears and no Electronic speed controller were found as required to alter the packing machine of the petitioner to manufacture “Gutkha” pouches of MRP Rs.5/-. Further no documents, diary, note book, computer print out showing manufacture and clearance of “Safal” brand “Gutkha” of MRP Rs.5/- were seized by the officers of the department. It also took the plea that no employee, factory worker of the petitioner made any statement to the effect that the petitioner was engaged in manufacture of “Gutkha” of MRP Rs.5/-. The petitioner also disputed the statements made by Tapan Chandra Dey, Proprietor of M/s Jagannath Enterprises and Saumendra Kumar Sahoo. There the petitioner made it clear that it reserved the right to file a reply after receipt of the photocopy of the outer packet and after cross-examination of Tapan Chandra Dey and Saumendra Kumar Sahoo as it disputed its version. It further took the stand in Annexure-25 that the brand name “Safal” belongs to M/s. Kamlakant and Company, Kanpur which has assigned the use of said brand name to various companies like the petitioner. Besides the petitioner one such company was/is M/s. Kay Pan Masala Pvt. Ltd., Ghaziabad. It further took the stand in Annexure-25 that the brand name “Safal” belongs to M/s. Kamlakant and Company, Kanpur which has assigned the use of said brand name to various companies like the petitioner. Besides the petitioner one such company was/is M/s. Kay Pan Masala Pvt. Ltd., Ghaziabad. There the petitioner invited the attention of the authorities to a letter dated 12.9.2011 written by M/s. Kay Pan Masala Pvt. Ltd. to the Assistant Commissioner, Division-V, Central Excise, Ghaziabad informing him that M/s. Kanodia Technoplast Ltd., was the manufacturer of laminated products used by it and in the month of April, 2011 it had sent for lamination meant for manufacture of its newly launched products, i.e., “Safal” brand “Gutkha” of MRP Rs.5/-. According to the learned Senior Advocate for the petitioner, the said laminations were wrongly printed with the name of the petitioner on account of inadvertent mistake on the part of the labour supervisor. Since those pouches were released to the market during May, 2011, therefore, those goods could not be recalled. According to learned Senior Counsel for the petitioner, the said letter further made it clear that M/s. Kay Pan Masala Pvt. Ltd., Ghaziabad was still left with 237 Kgs. of said wrongly printed pouches. With regard to print media advertisement, the petitioner took the stand that the said advertisement was never released by the petitioner. With regard to advertisement in electronic media, the petitioner took the stand that since M/s. Kay Pan Masala Pvt. Ltd., Ghaziabad started marketing of “Safal’ brand “Gutkha” of MRP Rs.5/-, the petitioner also thought that it could also manufacture and market “Safal” brand “Gutkha’ of MRP Rs.5/-. Accordingly, it gave advertisement in electronic media in July, 2011. As the response was not encouraging, the petitioner did not proceed further with the idea and dropped the same. In any case, the petitioner took the stand that advertisement ipso facto did not imply manufacture of “Safal” brand “Gutkha” pouch of MRP Rs.5/-. Besides the above stand the petitioner also took a number of alternative pleas. 7. Vide letter dated 13/15.1.2014 the petitioner was supplied with the photo copy of the outer packet. According to it such outer packet contained the name and address of manufacture to be M/s. Kay Pan Masala Pvt. Ltd., Ghaziabad and not that of the petitioner. Besides the above stand the petitioner also took a number of alternative pleas. 7. Vide letter dated 13/15.1.2014 the petitioner was supplied with the photo copy of the outer packet. According to it such outer packet contained the name and address of manufacture to be M/s. Kay Pan Masala Pvt. Ltd., Ghaziabad and not that of the petitioner. Accordingly, on 29.1.2016 the petitioner filed its written submission reiterating his stand that there existed no evidence to establish manufacture of “Safal” brand of “Gutkha” of MRP Rs.5/- by the petitioner as “Safal” brand “Gutkha” pouch of MRP Rs.5/- was never found from the factory premises. Further, no pouch making machine manufacturing “Safal” brand “Gutkha” of MRP of Rs.5/- was found during search of the factory premises. Since the case of the department was mainly based on the statements of Tapan Chandra Dey and Soumendra Kuamr Sahoo, their cross-examination was very vital. It also took the plea that the goods seized from the dealers were manufactured by M/s. Kay Pan Masala Pvt. Ltd., Ghaziabad. It also reiterated the alternative pleas in its written submission dated 29.1.2006 under Annexure-27. 8. However, according to the learned Senior Counsel for the petitioner, without meeting the points raised by the petitioner under Annexures-25 and 27 and without allowing the cross-examination of Tapan Chandra Dey and Soumendra Kumar Sahoo, the impugned order under Annexure-1 has been passed confirming the demand of Central Excise duty of Rs.237,92,85,000/-. Further, the opposite party has directed for recovery of interest at an appropriate rate on the above demanded amount with penalty i.e., equivalent to the demanded amount. The opposite party has further imposed penalty of Rs.5,00,00,000/- each on two directors of the company. Mr. Hidayatullah, learned Senior Advocate submitted that the impugned order under Annexure-1 ought to be quashed as the same has been passed in violation of principles of natural justice as the petitioner has not been allowed to cross-examine Tapan Chandra Dey and Soumendra Kumar Sahoo, whose statements form the backbone of the case of the department/revenue. Mr. Hidayatullah, learned Senior Advocate submitted that the impugned order under Annexure-1 ought to be quashed as the same has been passed in violation of principles of natural justice as the petitioner has not been allowed to cross-examine Tapan Chandra Dey and Soumendra Kumar Sahoo, whose statements form the backbone of the case of the department/revenue. Though, he pointed out very many facts relating to non seizure of “Gutkha” pouch of MRP Rs.5/- from the factory premises, non seizure of machines with capacity to manufacture of “Gutkha” pouch of MRP Rs.5/- from the factory premises and non seizure of any document whatsoever from the factory premises showing manufacture and clearance of “Safal” brand “Gutkha” of MRP Rs.5/- during search and that mere advertisement cannot imply manufacture of the disputed goods; however, he mainly attacked the impugned order under Annexure-1 on the ground of violation of principles of natural justice. According to him the impugned order was/is legally vulnerable as no opportunity was granted to the petitioner to cross-examine the above noted two persons, whose statements on the facts and circumstances constitute the backbone of the case of the revenue. If the version of these two persons are demolished in the cross-examination, then the case of the department would collapse. In such background, he prayed that the impugned order be quashed and the opposite party be directed to give an opportunity to cross-examine the above noted two persons before passing order afresh. In this context, he relied on a decision of the Supreme Court in the case of Andaman Timber Industries vrs. Commissioner of C. Ex., Kolkata-II, reported in 2015 (324) E.L.T. 641 (S.C.). 9. Per contra, Mr. Choudhury Satyajit Misra, learned Senior Standing Counsel appearing on behalf of the department defended the impugned order and submitted that there has been no violation of principles of natural justice in the present case. He relied on a decision of the Supreme Court in the case of Kanungo and Co. – vrs- Collector of Customs, Calcutta and others, reported in 1983 (13) E.L.T.1486 (S.C.). 10. In reply, Mr. A. Hidayatullah, learned Senior Counsel submitted that the facts as indicated in Kanungo and Co. He relied on a decision of the Supreme Court in the case of Kanungo and Co. – vrs- Collector of Customs, Calcutta and others, reported in 1983 (13) E.L.T.1486 (S.C.). 10. In reply, Mr. A. Hidayatullah, learned Senior Counsel submitted that the facts as indicated in Kanungo and Co. (supra) are factually distinguishable as in that case there is nothing to show that the prayer for cross-examination was made by the petitioner therein at the earliest possible instance as has been done in the present case while filing the interim reply under Annexure-25. According to him, in that case such a plea was taken at a much belated stage. Therefore, according to Mr. A. Hidayatullah, learned Senior Counsel that case has no application to the facts of the present case. Secondly, he submitted that though Kanungo and Co. (Supra) has been published in 1983, however, the Supreme Court in that case rendered its decision on 7.2.1972 and after that frontiers of natural justice has been expanded much by the Supreme Court itself. 11. In the present case, it appears that the main edifice of the case of the department rests on the statements of Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo, who state that they got the “Safal” brand “Gutkha” of MRP Rs.5/- from the petitioner. Since the petitioner has taken a stand that during course of investigation neither any pouch of MRP Rs.5/- of “Safal” brand “Gutkha” was seized nor any machinery with capacity to manufacture of “Safal” brand “Gutkha” pouch of MRP Rs.5/- was seized and that there was no seizure of any document/diary/note book/computer printout showing manufacture and clearance of “Safal” brand “Gutkha” of MRP of Rs.5/- from the petitioner Unit, in the fitness of things the authorities should have allowed cross-examination of the above two persons to test the veracity of their statements. By not doing so, in our considered view there has been violation of principles of natural justice. The facts in Kanungo and Co. (Supra) show that there the petitioner was given enough opportunity including personal hearing. Moreover, as rightly contended by Mr. A. Hidayatullah, learned Senior Counsel in that case there is nothing to show that the petitioner therein had demanded to cross-examine the persons, who have made statement against it at the very initial stage like the present case. (Supra) show that there the petitioner was given enough opportunity including personal hearing. Moreover, as rightly contended by Mr. A. Hidayatullah, learned Senior Counsel in that case there is nothing to show that the petitioner therein had demanded to cross-examine the persons, who have made statement against it at the very initial stage like the present case. Therefore, it appears that in the facts and circumstances of the case, there the Supreme Court rejected the plea of the petitioner praying for cross-examination. But here as would appear while filing the interim show cause under Annexure-25, the petitioner has wanted to cross-examine Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo before filing their final reply. Since the same was not acceded to, in our considered view, the entire decision making process has been vitiated. This is because in case during cross-examination the petitioner is able to demolish the statements of Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo then the entire foundation of the case of the department would collapse. In such background, the opposite party ought to have permitted cross-examination of the above noted two witnesses. In this context, we are satisfied that the decision cited by Mr. A. Hidayatullah, learned Senior Counsel in Andaman Timber Industries (supra) applies in all fours to the present case. There also the statement of the witnesses, whom Andaman Timber Industries (supra) wanted to cross-examine, formed the basis of impugned show cause. After discussing the facts of the case, the Supreme Court held as follows:- “xxx xxx xxx 6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as 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 in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. 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 in 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. xxx xxx xxx” 12. In such background, the Supreme Court concluded by saying that if the testimony of those two witnesses is discredited then there would no material for the department on the basis of which they can justify their action and accordingly allowed the appeal. Taking a cue from that, this Court has no hesitation in quashing the impugned order under Annexure-1, which, this Court hereby does. Further, this Court remands the matter back to the opposite party directing him to give opportunity to the petitioner to cross-examine Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo vis-à-vis their statements and conclude the entire proceeding within three months in accordance with law. However, it is made clear that this Court has expressed no opinion on the merits of this case and no observation made herein should in any way influence the opposite party in coming to a conclusion afresh after taking into account the versions of Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo after they are cross-examined. The writ application is allowed. No costs.