TMI Blog2010 (7) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... tablished that the statements of those employees were recorded under duress and coercion and the same was not challenged by the Department, neither there was any cross-examination of the deponents on the said issue nor the officers who had recorded the statement of those employees were examined - order cannot be sustained, to be set aside - E/2170-2173/2005 - 555-558/2010-EX(PB) - Dated:- 14-7-2010 - Justice R.M.S. Khandeparkar, President and Shri Rakesh Kumar, Member (T) REPRESENTED BY : S/Shri Bipin Garg and Amit Awasthi, Advocates, for the Appellant. Shri Amit Khanna, DR, for the Respondent. [Order per : Justice R.M.S. Khandeparkar, President (Oral)]. - Heard at length the learned advocate for the appellants and the learned DR for the respondent. 2. All these appeals arise from order dated 18th March, 2005 passed by the Commissioner, Lucknow. By the impugned order, the Commissioner has confirmed the demand of excise duty amounting to Rs. 2,96,08,491/- along with interest thereon and has imposed penalty of equal amount besides penalty of Rs. 50 lacs on Shri Pawan Kumar Agarwal, Director of M/s. Galaxy Indofab Ltd., and penalty of Rs. 10 lacs each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellants from the resumed grey challans were not at all entered in the Form-IV register, whereas only the grey fabrics received under resumed grey purchase invoices were entered in the statutory records and this fact was admitted by Shri Deepak Srivastava, Excise Assistant, and Shri B.P. Singh, Folding Master, of the appellants. Further, the Commissioner has held that, the statements recorded of the Director of the appellants as well as the employees of the appellants established the clandestine removal of finished fabrics without complying with the statutory provisions and payment of excise duty. 7. The learned advocate appearing for the appellants, taking us through the impugned order and various other materials on record, submitted that the Commissioner has passed the order without any cogent evidence and merely on the basis of assumptions and surmises in spite of the fact that he was fully aware that he was dealing with a matter of alleged clandestine removal of the goods wherein heavy burden lies upon the Department to prove such allegations, and that mere statements of various persons regarding the manner of maintaining internal records disclosing some proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard, the uncorroborated statements of the parties and the total absence of any other evidence, clearly justified dismissal of the demand against the appellants. Without prejudice to these submissions, the learned advocate has also argued that the claim was clearly barred by limitation and there was no justification for invocation of extended period of limitation. In spite of the fact that the appellants had asked for cross-examination of all the deponents, no such opportunity was given to the appellants in respect of some relevant witnesses as also in relation to vital documents. The Department did not bother to ascertain the capacity of the machinery to produce the goods and without ascertaining the same, allegations were levelled against the appellants. Reliance is placed in the decisions in the matter of Commissioner of Central Excise, Mangalore v. Pals Microsystems Ltd., reported in 2009 (234) E.L.T. 428 (Kar.); M/s. Mohan Bakers Pvt. Ltd. v. CCE, Kolkata-IV, reported in 2008 (221) E.L.T. 308 (T); Commissioner of Central Excise, Delhi-IV v. Escorts Limited (Ted), Faridabad, reported in 2009 (235) E.L.T. 55 (P H); ECE Industries Ltd. v. CCE, New Delhi, reported in 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department the total quantity of processed PB fabrics during the period from 1-6-1998 to 16-11-1998 was 7794848 mtrs. against the declared quantity of 1207490 mtrs. in the records maintained by the appellants. Curiously, the competent authority had under its order dated 18th December, 1998, few days after the raid by the Department had fixed the annual capacity of the production by the appellants' unit and had determined their monthly liability to the tune of Rs. 15 lacs and the same was communicated to the appellants under letter dated 18th December, 1998. This point was specifically raised by the appellants but has not at all been considered by the adjudicating authority, though the fact that the said point had been raised in defence was clearly recorded in the order itself. 10. The said point in relation to the total capacity of production in the appellants' unit goes to the root of the matter. If the competent authority after taking into consideration the production capacity of the appellants' unit was convinced in December, 1998 of monthly liability of the appellants to be Rs. 15 lacs, one fails to understand as to how the calculations regarding production of the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thered. No measurements of the space available for stocks or for stocking the raw-materials and the final product was verified. No account books and bank records of the appellants were checked to ascertain about the flow back of money particularly in relation to the alleged clandestinely removed material. The accounts record also could not lend any support to the allegations of any consideration having been received by the appellants from the alleged clandestinely removed goods. In short, no investigation in relation to the relevant aspects of the matter was carried out by the Department either before the issuance of the show cause notice or even thereafter. Entire investigation appears to be lopsided, half-hearted and half-backed. 12. Apparently, the calculations about clandestinely removed goods was made on the basis of charts and those charts were prepared on the basis of some of the documents which were not corroborated by any other reliable or cogent material on record. 13. The allegation of use of coercion and duress in recording the statements stood established in view of the fact that the employees of the appellants in the course of cross-examination clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and coercion and the same was not challenged by the Department, neither there was any cross-examination of the deponents on the said issue nor the officers who had recorded the statement of those employees were examined. 16.The learned advocate for the appellants is also justified in making grievance about non-consideration of absence of any incriminating materials being seized at the office of the transporters of the appellants and failure on the part of the Department to investigate with the transporters whose names were specifically disclosed by the appellants. 17. The learned advocate for the appellants is also justified in making the grievance about inordinate delay in issuing the show cause notice. Apart from preparation of the charts and recording of some statements of the Directors during the said period, there is nothing on record to justify three years' period between the date of the visit by the officers to the factory premises and the date of issuance of show cause notice. Undoubtedly, in case of clandestine removal of the goods extended period of limitation can be invoked. But when the Department fails to establish the clandestine removal of the goods, questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y v. Collector, reported in 2006 (197) E.L.T. 465 (S.C.) = 2008 (9) S.T.R. 314 (S.C.); P and B Pharmaceuticals Pvt. Ltd. v. Collector, reported in 2003 (153) E.L.T. 14 (S.C.); and Pahwa Chemicals Pvt. Ltd. v. Commissioner, reported in 2005 (189) E.L.T. 257 (S.C.), held that, mere failure to declare does not amount to wilful misdeclaration or wilful suppression and there must be some positive act on the part of the party to establish either wilful misdeclaration or wilful suppression and that when all the facts are before the Department and when the assessee does something under the belief that whatever the assessee is doing would make no difference and would not require specific declaration in that regard, then it would not be a case of wilful misdeclaration or wilful suppression. 22. In ECE Industries Ltd.'s case (supra), the Supreme Court held that, the extended period of limitation is not available in case of second show cause notice even though there are allegations of wilful suppression or the mis-statement alleged in the second show cause notice. 23. In Oudh Sugar Mills Ltd.'s case (supra), the Apex Court ruled that in a factory where the operations conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was rightly confirmed. The appeal filed against the same by Ureka Polymers Ltd. was ultimately withdrawn in the course of the hearing. 26. In Surjeet Singh Chhabra's case (supra), the Petitioner had confessed that he had purchased the gold and had brought the same in contravention of the provisions of the Customs Act as well as FERA. In the background of his clear confession of the facts, even otherwise established, the Apex Court held that, mere failure to give opportunity to cross-examine some of the witnesses would not amount to violation of principles of natural justice. 27. In KTMS Mohd.'s case (supra), the Apex Court had held that, any authority or Court intending to act upon inculpatory statement as a voluntary one should apply its mind to the retraction and reject the same. It was further ruled that even in passing a detention order on the basis of an inculpatory statement of a detainu who has violated the provisions of FERA or the Customs Act, the detaining authority should consider the subsequent retraction and record its opinion before accepting the inculpatory statement, lest the order will be vitiated. 28. In P.K. Ravindran's case (supra), th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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