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2022 (8) TMI 1251 - AT - Central ExciseClandestine Removal - Re-rolled products - no invoices or sales bills have been issued by the Appellant for the goods mentioned in the most of the entries of the said records and the good have been removed without payment of duty and without issue of invoice - reliability of third party evidences - cross-examination of witnesses - wrongful availment of benefit of N/N. 08/2003 –C.E. dtd. 01.03.2003 - levy of penalty under Rule 26 of Central Excise Rules 2002 on partner of Appellant and broker. HELD THAT:- The entire case was made out on the basis of search conducted with the third party which is the broker and the records recovered from the broker. The Ld. Adjudicating authority for confirmation of demand also relied on the statement of broker and partner of appellant’s firm. However it is on records that in the present matter partner of appellant firm filed affidavit and in his affidavit he had clearly negated the contents of his earlier statements and therefore no reliance can be placed upon his statement. Department had demanded excise duty on finished goods, alleging that the Appellant have clandestinely removed the goods by relying on the broker’s records and oral statements and without any corroborative evidence either from the Appellant’s premises or from the Customers documents etc. Despite the appellant requested for cross-examination of witnesses, the lower adjudicating authority has rejected the request of appellant. As per the provisions of section 9D it is clear that during adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross-examined. It is a settled principle of law that if the authority wants to rely upon the statement of any witness, the opportunity of cross-examination ought to have been given to enable the party to prove its case. Non-providing of the opportunity of cross-examination amounts to violation of the natural justice and in absence of denial of natural justice, such documents/statements cannot be relied upon. It is well settled law that there has to be some concrete evidence in the form of receipt of raw materials, shortage of raw materials, clandestine manufacture including use of electricity, excess or shortage of inputs found in the stock, flow back of funds, purchase of final products by parties alleging receipt and removal of goods and any such evidence which would show clandestine manufacture of goods. It is also an admitted facts that the documents recovered from the premises of Broker are third party documents and same cannot be relied upon without any corroborating evidences. Therefore, the entire case is based on entries found recorded in the record of broker does not have reliability and credibility. There is no sufficient material on record to establish clandestine manufacture and clearance by Appellant. We, accordingly, set aside the confirmation of demand, interest and imposition of penalty. Penalty imposed upon Shri Nagjibhai Dodiya, Partner of Appellant firm is also set aside - As regards penalty imposed upon Shri Himanshu Nandlal Jagani, Broker, having held that there was no clandestine removal, clearance from the factory of Appellant, penalty upon said broker cannot be upheld. Appeal allowed - decided in favor of appellant.
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