TMI Blog2014 (12) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... r factory, on the raw materials supplied by these persons as job workers. All these departmental witnesses had declined of having sent the core veneer for job work and one of the witness assigning reason stated that if the veneer is transported for around 500 km for job work of drying, then, it would turn black and become waste. Needless to repeat, the case against the Appellant is clandestine manufacture and clearance of 24 mm thickness plywood in the guise of undertaking job work and not for violation of job-work provisions. There is no other substantive evidence adduced by the Department so as to establish the case of clandestine removal by the appellant. In these circumstances, we're of the opinion that unless the circumstances referred to in paragraph 25 of the aforesaid judgement of the Hon'ble Delhi High Court exist, it would be incorrect to accept the statements as relevant evidence. From, the records, we do not find that any attempt has been made by the department to produce these witnesses for cross-examination. - Adjudicating Authority has neither accepted the affidavits of the defence witnesses nor allowed the examination of the said witnesses sought to be produced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. Commissioner, Patna, re-adjudicated the case; confirmed the duty and imposed equivalent penalty under Section 11AC of Central Excise Act, 1944 on the Appellant, M/s Metro (India) Wood Crafts Pvt. Ltd., penalty of ₹ 10.00 lakhs on Shri R. K. Agarwal, Director and penalty of ₹ 5.00 lakhs on Shri Bimal Kumar Chopra, Director of M/s Metro (India) Wood Crafts Pvt. Ltd., under Rule 209A of erstwhile Central Excise Rules, 1944. Hence, the present Appeals. 2.1 On conclusion of the hearing before this Tribunal both sides have been directed to file their written submission within four weeks; the Appellant filed it on 13.03.2014 and the Revenue filed their submission on 01.07.2014. 3. At the outset, assailing the impugned order, the ld. Advocate, Shri K.K. Anand appearing for the Appellants, submits that the order has been passed in gross violation of principle of natural justice, inasmuch as, the ld. Adjudicating Authority has not considered the request for cross-examination of witnesses, whose statements were recorded behind their back and relied upon in the show-cause notice and also in passing the order. He has further submitted that these statements, in the absenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash memos for job work. Further, assailing the computation of demand, the ld. Advocate submitted that a perusal of the same would reveal that the year wise duty liability is calculated on the basis of job work cash memos/Bills; the quantities mentioned therein for the quantum of job work done either towards core veneer drying or face taping, are considered as the quantity of finished goods cleared clandestinely. It is concluded by the Department without any evidence that against the said job work/cash memos, the Appellant had cleared plywood of 24 mm thickness to the parties, whose name appeared in the job work challans. 3.3 Further, he has submitted that there were abut 80 to 100 parties for whom the Appellants had carried out job work and the Department had recorded the statements of five such persons and one person and had sent a letter denying sending of any goods on job work to the Appellants. It is his submission that none of these persons were questioned to ascertain whether they had received the plywood of 24 mm thickness under the guise of the cash memos far carrying the job work for them. He further submits that the Department had not recorded the statements of respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance sheet of the Appellant as in each of the balance sheets for the period 1997-1998 to 2000-2001, the Appellant had against the head 'other income', reflected the amount received from the activity of Job-work.3.6 He has further submitted that demand has been confirmed for the period 1997-98 to 2000-2001, alleging that the Applicant had removed 995664 Sq.Mtr of 24 mm thickness plywood, whereas their per day capacity to manufacture 24 mm plywood was 238.14 Sq. Mtr. It is not clear as to how the Department has assumed the clearances of entire quantity of plywood during this period was of only 24 mm, when the Applicants were manufacturing plywood of thickness, such as, 3 mm, 4 mm, 6 mm, 8 mm, 12 mm, 15 mm, 18 mm 24 mm. He has further submitted that the demand of 24 mm thickness of plywood, was very less against the total production, which was in the range of around 2% as would be evident from the closing stock of the finished goods reflected in the respective balance sheets. In support of his submissions, he has referred to the following judgements : (i) Vinod Solanki Vs. Union of India : 2009 (233) ELT 157 (SC) (ii) Tukaram S. Dighole Vs. Manikrao Shivaji K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have supplied the veneers for core drying were not accepted by the adjudicating authority on the basis of discrepancies noticed in the said Affidavit. He has submitted that since the Appellants did not produce the details of clandestine removal, therefore, the Department has no other option, but to adopt the price and the quantity as shown in the respective cash memo for the determination of value as well as duty. 4.1. The plea of job work by the Appellant is also falsified from the statements of the persons recorded by DGCEI, who has revealed that the transportation of green core veneer, for such a long distance for the purposes of drying, is practically not viable due to the reason that in such condition, veneer may become black and may stick together. 4.2. Answering to the argument of the Appellant that the Department has not recorded the statement of concerned transport companies which have transported the veneer from the premises of the said supplier and also no investigation has been caused as to the detailed procurement of raw material, consumption of electricity, labour employed, capacity of the machine, receipt of payment, receipt of goods which established the ide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of clandestine removal of plywood is established against the job work cash memos. Further, Shri R.K. Agarwal was responsible for the day to day affairs and hence was liable to Penal action as held by the adjudicating authority. 5. Heard both sides and perused the records. The issue for determination is: whether the Appellant during the period April, 1997 to March, 2001, manufactured and cleared clandestinely excisable goods viz. 24mm thickness plywood against cash memos/challans in the guise of job work of Core Veneer drying and tapping of face Veneer . 5.1 The Revenue pursuant to search of various premises including the Appellant's factory, on 15.12.2000, retrieved documents and recorded statements of few persons. On completion of investigation, issued the demand Notice on 20.01.2003. It is not in dispute that during the course of said search, no discrepancy in the stock of finished goods/ raw materials, were noticed and the Appellant had deposited an amount of Rs Ten lakhs during investigation. 5.2 The allegations and confirmation of the demand mainly rests on the premises that the Appellant though claimed to have carried out the job work of 'core veneer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been removed without payment of duty during the relevant period. In support, they have relied upon a Chartered Engineer's Certificate who has certified that the capacity of machines to produce 24 mm of plywood per day is around 238.14 Sq.Mtrs. Accordingly, for the period in dispute, they could not have manufactured the alleged quantity of ten lakh square meter of 24mm thickness plywood. Also, referring to the respective job work challans/cash memos, an attempt was made to establish that if it is accepted that the quantity of veneers mentioned in the challans as 24 mm thickness plywood, instead of core veneers, then total weight of plywood assumed to have been cleared clandestinely works out to approximately, an average of 37.5 MT per challan. It is their contention that the vehicles mentioned in the said job work challan are neither capable nor permitted for transporting the said quantity of goods. In support, necessary certificates collected from the respective Regional Transport authority, in relation to few vehicles, are referred to by the Appellant. It is also the contention of the appellant that their factory was visited by the officers in December 2000, whereas, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... witnesses, who had stated before the Department that they were not sending the materials for job work. It cannot be denied that these statements have been recorded by the Department under section 14 of Central Excise act, 1944 behind the back of the appellant and its veracity is under challenge. The correctness or otherwise of these statements would definitely be decisive factor in arriving at the conclusion that the appellant in the guise of job work manufactured and cleared ply wood from their factory. By referring to circumstantial evidences like lack of capacity to manufacture, vehicles mentioned in the job work challans are incapable in carrying the quantity alleged, etc., the appellant, in our opinion, could able to make out a case for cross-examination of these witnesses. Now, the question needs to be answered is whether the adjudicating authority is right in considering the statements as it is without any cross-examination. We find the relevancy of such statements as evidence could be considered as prescribed at section 9D of Central Excise Act, 1944, which is undoubtedly applicable to the proceeding before Court and also before departmental authority under the Act. The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lished; (iii) such an opinion has to be supported with reasons;(iv) before arriving at this opinion, the authority would give opportunity to the affected party to make submissions on the available material on the basis of which the authority intends to arrive at the said opinion; and (v) it is always open to the affected party to challenge the invocation of provisions of Section 9D of the Act in a particular case by filing statutory appeal, which provides for judicial review. 5.10. On a plain reading of the aforesaid observation of the Hon'ble Delhi High Court, it is clear that before considering the statements as relevant evidences in view of Section 9D of CEA, 1944, it is necessary to examine that the conditions laid down therein, are satisfied. Thus, In the light of the aforesaid guidelines, it is now necessary to be tested whether the Ld. adjudicating authority in the present case, had examined and arrived at a finding on the existence of any of the circumstances mentioned at Sec.9D while accepting the said statements as evidence. 5.11 Undisputedly, the names of these persons are always available on the records seized, i.e. on the job-work cash memos/ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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