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TMI Blog2015 (4) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... same products. 1.2 Om 27.12.2005 during the course of patrolling by the Jurisdictional Central Excise Officers in Narayana Industrial Area, a truck HR-47-5887 was found parked outside the factory premises of the appellant company and the Driver Shri Jitendra informed that the said truck had just been loaded from the appellant company s factory and he also produced documents in support of the transportation. The documents produced by him pertained to one M/s Surya Enterprises R-80, Vani Vihar, Uttam Nagar, New Delhi issued in the name of M/s Bharat Electricals, C/o VIRSA, IT Park, Tower-C, IInd Floor, Chandigarh. But he fail to produce any documents regarding payment of duty on the goods loaded in the truck. The officers visited the factory premises of the appellant company, and inquiry was made with Sh. Suresh Khattar, Managing Director of the appellant company, who was asked about the duty paying documents in respect of the goods loaded in the truck parked outside in the factory, but he could neither produce any invoice showing payment of duty nor he could explain as to why no invoice or bill has been issued. The goods found in the truck and which had been loaded from the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Show Cause Notice the Commissioner of Central Excise Delhi I vide order in original dated 27.01.2009 confirmed the duty demand of Rs. 1,48,60,803/- against the appellant company in respect of clandestine clearances alleged to have been made by them during period from 2002-2003 to 2005-2006 along with interest thereon under section 11AB and beside this, while imposed penalty of same amount was imposed on the appellant company under section 11AC, penalty of Rs. 50 Lakh on Shri Subhash Khattar, Director of the appellant company under Rule 26 of the Central Excise Rule, 2002. An amount of Rs. 28 Lakh deposited by them appellant company during investigation was appropriated towards the duty demand. 1.4 The appellant company and Director, Shri Subhash Khattar filed appeals before the Tribunal along with stay applications. The Tribunal disposed of the appeals as well as the stay applications vide order no. 219-220/2010 Ex-DB dated 30.04.2010 by which both the appeals were dismissed. In course of hearing before the Tribunal, one of the plea of the appellant was that the appellants had sought of the cross examination of certain suppliers whose statements had been used against them in suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon in support of the allegation of duty evasion against the appellants, para 16-21 of the order of the High Court are reproduced below: "16. As noticed above, Section 9D of the Act was not relied upon by the Assessing Officer. He did not examine and go into the aspect as to whether the pre-conditions or the prevailing circumstances justified the invoking of Section 9D. The contention of the appellant is that when the matter was heard by the Tribunal on 19th March, 2010, the Revenue had not relied upon or referred to Section 9D of the Act during the course of arguments. During the course of hearing before us, learned counsel for the Revenue could not controvert or deny the said statement. It may be noted that both the appellant and the Revenue had filed written submissions before the Tribunal after the hearing was held on 19th March, 2010. We have examined the said written submissions and appellant had not referred to Section 9D of the Act in their written submissions. The respondent Revenue in their Written Submissions had also not relied upon Section 9D of the Act. However, as noticed above, the Tribunal, in paragraphs 15 to 19 of the impugned order dated 30th April 2010 has go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not specifically answering the question whether Section 9D can be invoked and relied upon by the Tribunal when the adjudicating authority has not relied upon the said section in its order. This aspect can be examined by the Tribunal while deciding the matter on remand. We may, however, note the contention of the Revenue that Section 9D is a procedural section and when conditions mentioned in the said section are satisfied, it comes into operation and can be applied and it is immaterial whether the Assessing Officer has specifically invoked the said provision or mentioned the same. The contention of the appellant is to the opposite. 19. In view of the aforesaid discussion, question No. 2 raised above is partly answered in favour of the appellant and against the respondent and it is held that this aspect has to be re-examined and reconsidered by the Tribunal. In respect of question No. 1, it is directed that the Tribunal will re-examine the question of application of Section 9D of the Act. 20. The appellant during the pendency of the investigation had deposited a sum of Rs. 28 lakhs on account of excise duty. As per the impugned assessment, total duty evaded by the appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other independent evidence, that no inquiry has been made in respect of the bank accounts of the suppliers, that in view of this, the cross examination of the suppliers whose statements have been used by the Department against the appellant company was necessary and the same had been specifically sought by the appellant but the same was not allowed, that while the Department relies upon the statement of one Sh. Mahesh Kaushik, this person is still doing business with the appellant, that the Hon ble High Court in the case of J&K Cigarettes Ltd.vs. Commissioner of Central Excise reported in 2009 (242) ELT 189 Del, has, after discussing section 9D, has held that the right to cross examination, in quasi judicial proceedings can be taken away only in the circumstances specified in section 9D(1)(a) and for this purpose, the Adjudicating Authority is to form opinion on the basis of material of records that the grounds stipulated in section 9D(1)(a) of the Central Excise Act, 1944 exist, and are established and the opinion must be supported by the reasons and in this regard the decision is to be taken after hearing the affected party, that the implication of this judgement of the Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to manufacture the goods which were being traded from their trading premises, that though the appellant show a purchase of the slotted angles, shelves, cable trays etc., from 23 suppliers who are, either manufacturers or traders, on inquiry most of the suppliers have denied having supplied the goods, that the manufacturer-suppliers manufacture totally different items and similarly the trader suppliers were dealing in totally different items, that when confronted with the statements of suppliers, Sh. Subhash Khattar, Managing Director of the appellant company, could not give any explanation whatsoever, that when the suppliers from whom the purchase of slotted angles, shelves, cable trays etc., is shown, have denied having supply those goods and they were either not manufacturing those items or were not dealing in those items and when the appellant company had all the necessary infrastructure and capacity to manufacture those items, the inescapable conclusion would be that the slotted angles, shelves, cable trays etc., sold from the trading premises had actually been manufactured in the appellant company s factory and had been illicitly cleared without payment of duty, that in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and sales tax, no inquiry has been conducted in respect of the bank accounts of those suppliers to prove that the cheques issued by the appellant company as payment for the goods purchased from them had been deposited in their accounts and immediately, thereafter, the amounts had been withdrawn. Thus, the evidence in support of the allegation of duty evasion against the appellant company is only the statements of suppliers, whose correctness is being disputed by the appellant. Earlier, the Tribunal in its final order dated 30.04.2010, had invoked section 9D of the Central Excise Act, 1944 for relying upon those statement in support of the allegation of duty evasion against the appellant company, but Hon ble High Court vide judgment dated 08.11.2011, has remanded the matter to the Tribunal to re-examine the application of section 9D. In this judgment Hon ble High Court also considered the question as to whether failure on the part of the Central Excise Department to produce the witnesses on whose statement the Department is relying upon and whether the failure of the appellant to press for the production of the witnesses for cross examination would amount to the appellant giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout cross examination is that the person who made the statement is dead, or cannot be found, or is incapable of giving evidence, or is kept out of way by the adverse parties, or whose presence cannot be obtained without any account of delay or expense which the court under the circumstances of the case considers to be unreasonable. 6.1. Sub section (2) of the section 9D states that the provisions of sub section (1), so far as may be, applied in relation to any proceedings under this act other than proceedings before the court, as they applied in relation to a proceeding before the court. The implications of sub section (2) of section 9D, is that the provisions of sub section (1) of Section 9D, as far as possible, would be applicable to the Adjudication Proceedings also. Therefore, for the purpose of adjudication proceedings when the adjudicator relies upon the statement of a person in support of the allegation of duty evasion against an assessee, that statement in terms of clause (b) of the section 9D(1) would be admissible only when the person has been examined as a witness in course of adjudication proceedings, that is, his cross examination has been allowed and after cross e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is kept out of way by the adverse party etc., but when the witness is available, his cross examination has to be permitted before decided to relied upon his statement. Hon ble Allahabad High Court in this judgment, relying upon the Apex Court in case of State of Kerala vs KT Shaduli Grocery Dealer reported in AIR 1977 SC-1627 and KL Tripathy vs SBI reported in 1984 SC (273) has held that the opportunity of being heard also include the right to cross examine the witness. The provisions of section 9D(1) of the Central Excise Act 1944 are in accordance with this general principle. 7. In the present case while the allegation of duty evasion against the appellant is based on the statements of suppliers, admittedly their cross examination has not been allowed. If the adjudicator wants to invoke clause (a) of Section 9D(1), a finding has to be given that the situations mentioned in this clause exist after hearing the appellant. In this case admittedly neither a finding has been given after hearing the appellant that the witness whose statements are sought to be relied upon by the Department in support of the allegation of duty evasion against the assessee are either dead, or cannot be f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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