TMI Blog2014 (4) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ross-examination of the panchas. Gas consumption varied from season to season, from one quality of frit to other quality of frit, use of better technology etc. It has also been brought on record that after change in the management in Oct 2007 and installation of new furnaces and new refractories, the gas consumption has reduced. Further appellant has also brought on record that due to expert consultations and use of certain fluxes also the gas consumptions per MT of frit have come down. Evidences were also brought on record during the course of hearing regarding installation of an Electricity Generator and replacement of better quality refractories in the kilns by the main appellant. Under the above factual matrix, the method used by the investigation cannot be a sound method to demand duty on assuming 318 SCM of gas required for manufacturing one MT of any quality of frit. The improper method adopted by the Revenue for calculating duty was agitated by the appellants before the adjudicating authority. During conducting of gas consumption studies on 23/ 24.02.2010 by investigation only frit product code ‘OP 202’ was being manufactured. It has been contested by the appellant th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ball mills. It is the case of the Revenue that manufacturers of ceramic glazed tiles were engaged in evasion of Central Excise duty. On the basis of the investigations done by DGCEI, proceedings were initiated against the present appellants. The DGCEI also conducted parallel investigations against the other frit manufacturers. In one of the search operations conducted by DGCEI on 17.07.2008 on a Ceramic Tile manufacturer, M/s. Sanyo Cera Tiles Private Limited (Sanyo for short), the DGCEI seized incriminating documents along with two computer pen-drives containing incriminating information which according to them contained documentary evidences establishing undervaluation of frit by some frit manufacturers including the present appellants. These pen drives, as per the facts stated in the show cause notice, came to be opened on 30.8.2008, 06.9.2008 and 12.09.2008 in the presence of the Director of Sanyo and accordingly printouts of the same were taken under various Panchnamas. One such print out pertained to a file containing the print out which was marked as Sr. No. A/13 of the Panchnama dated 12.09.2008 and was titled as Ajtak. This Ajtak document contained the accounting detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.03.2010. Appellant Shri B.M. Thakkar was questioned about the Ajtak xyz records as well as method of physical verification of production and corresponding gas consumption. Investigations were also conducted in respect of the supplier of raw materials for manufacture of frit. The items in question were feldspar and quartz from M/s. Kanchan Ceramics. Statement of Shri Ashok C. Jain, Authorized signatory of M/s. Kanchan Ceramics was recorded wherein he has stated, inter-alia, that they have shown lower price than actual value in their invoice in respect of feldspar and quartz supplied to the appellants. Investigations were also extended to the purchasers of frit from the appellant. M/s. Sony Ceramics, Morbi (through their partner, Shri P.N. Patel recorded on 24.3.2010), M/s. Mod Ceramic industries Limited (through their Director Shri M.A. Prajapati, Shri N.M. Prajapati), M/s. Hem Ceramics, Morbi, M/s. Shreeji Gold Ceramics Pvt. Limited and Partner, M/s. Shreeji Ceramics Industries, Morbi, M/s. Evershine Cera Pvt. Limited through its Director, M/s. Silk Ceramics, Morbi etc. all are buyers of frit from the appellant. All these buyers have admitted to have received the frit from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation. There is no proof of any cash payment or illicit receipt of payments when crores worth of cash transactions were alleged to have been made. He relied upon the following decisions to submit that such third party evidences and statements are not enough to substantiate a charge of clandestine removal, more so, when their cross-examination was not given:- (i) Charminar Bottling Company Pvt. Limited vs. CCE - [2005 (192) ELT 1057 (Tri.)] (ii) Rama Shyama Papers Limited vs. CCE - [2004 (168) ELT 494 (Tri.)] (iii) Rutvi Steel and Alloys vs. CCE - [2009 (243) ELT 154 (Tri.)] (iv) Sakeen Alloys Pvt. Limited vs. CCE - [2013 (296) ELT 392 (Tri.)] (v) Basudev Garg vs. Commissioner of Customs - [2013 (294) ELT 353 (Del.)]. 3.1 Learned advocate for the appellants would further state that in this case, they have also produced direct evidence of raw material, its value and the process manufacture of various grades of frit made by them. That the data furnished clearly shows that there could not have been under valuation. In the context of retraction of statements, it was argued that appellants have denied any reference of a wrong doing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and records to show the purchase of new Kiln and generating set. It was due to these efforts that the ratio of gas consumption from 2008-09 onwards went down from 844 SCM/MT to 286 SCM/MT as indicated in Para 13.2 of order-in-original dated 10.05.2011. That before 2008 there was no generator available with appellant and every time there was a power failure, large quantities of gas was used in re-firing the Kiln. He produced documents relating to installation of DG Set. He referred to the purchase bills to show superior quality of refractories replaced in the Kilns after 2008-09. He argued that as per the statement of Shri Balkrishna Thakkar himself, which is recorded by the department, there cannot be any fixed ratio of gas consumption and that after the new management took over, they have improved the efficiency of the Unit and that mere gas consumption cannot be used as a factor for clandestine manufacture and removal. He explained that frit consists of two components i.e. glass and silicone dioxide. That the melting point of glass is very high and other materials called fluxes are added, as per expert consultations, to lower melting point such as borax, boric acid and zinc o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 216 SCMs/ MT and therefore, to even out seasonal variations, an average consumption of 318 SCM/ MT was adopted and clandestine removals were worked out accordingly. Learned AR made detailed submissions as to why the records from the pen drive can be relied upon and that this aspect has been properly dealt with in details in the order by the Adjudicating authority. He also submits that the details from the pen drives were obtained only by using the software CD supplied by the assessee themselves. 5. Heard both sides and perused the case records. In the present proceedings adjudicating authority has decided the case against the appellants on two accounts. One portion of demand is pertaining to undervaluation of Frit manufactured by the main appellant on the basis of a print-out titled Ajtak taken from one of the pen drives seized by the investigation. This pen drive was maintained by an employee of Sanyo who were one of the manufacturers of Ceramic Tiles from the frit purchased from the appellants. In this print out, the rate of one kg. of a particular type of frit (Transparent 2) manufactured by the appellant has been shown to be Rs. 24.00 per kg. as against Rs. 7.00 per k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined by Delhi High Court in the case of Basudev Garg vs. Commissioner of Customs [2013 (294) ELT 353 (Del.)] and following law was laid down after considering the judgments of Apex Court on the issue of cross-examination:- 14. The Division Bench also observed that though it cannot be denied that the right of cross-examination in any quasi judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in Section 9D of the Central Excise Act, 1944. The circumstances referred to in Section 9D, as also in Section 138B, included circumstances where the person who had given a statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay and expense which, under the circumstances of the case, the Court considers unreasonable. It is clear that unless such circumstances exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat due to expert consultations and use of certain fluxes also the gas consumptions per MT of frit have come down. Evidences were also brought on record during the course of hearing regarding installation of an Electricity Generator and replacement of better quality refractories in the kilns by the main appellant. Under the above factual matrix, the method used by the investigation cannot be a sound method to demand duty on assuming 318 SCM of gas required for manufacturing one MT of any quality of frit. The improper method adopted by the Revenue for calculating duty was agitated by the appellants before the adjudicating authority as per Para 4 (xi) to (xxxiii) of the order-in-original dated 10.05.2011. It is observed that during conducting of gas consumption studies on 23/ 24.02.2010 by investigation only frit product code OP 202 was being manufactured. It has been contested by the appellant that different frit product codes may consume different quantities of gas. As the appellant is not undertaking the manufacture of one standard product, in the interest of justice, it will be appropriate to conduct a few more representative studies of different frit product codes in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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