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2015 (4) TMI 812

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..... ation which, in our view, is necessary. - Impugned order is set aside and the matter is remanded to the Commissioner for De novo adjudication in accordance with our observations in this order. - Decided in favour of assessee. - Excise Misc Application No. E/59894 & 55854/2014, Excise Appeal No. E/1408 & 2182/2009 -Ex[DB] - Final Order No. 50535-50536 /2015-Ex(Br) - Dated:- 4-3-2015 - Hon'ble Mr. Rakesh Kumar, Member (Technical) And Hon'ble Mr. S. K. Mohanty, Member (Judicial),JJ. For the Appellants : Mr. B L Narsimhan, Advocate For the Respondent : Mr. Pramod Kumnar, DR ORDER Per Rakesh Kumar (for the Bench): The facts leading to filing these appeals are, in brief, as under:- 1.1 M/s Slotco Steel Products (P) Ltd. (hereinafter referred to as the appellant company) are manufacturers of slotted angles/ shelves, cable trays etc., chargeable to central excise duty. Shri Saurabh Khattar is their managing director. The period of dispute in these appeals is from 2002-2003 2005-2006 and during this period the appellant company was availing SSI exemption. In addition to manufacturing unit in Narayana Industrial Area, they also have a trading unit fro .....

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..... pati Enterprises; Alpine Industries; Jindal Industrial Corporation; Continental Steel Sales (India); SBJAY Auto Transmission Pvt. Ltd.; Instyle Creations; Marshall Industries; Precision Steel Craft Equipment; Summit Engineering Corporation and Sudarshan Industries. Inquiry were conducted in respect of the suppliers, some of the suppliers were not found at their address. Some suppliers were found to be the residential premises of the individuals. Some of the suppliers were found to be manufacturing units but manufacturing totally different goods and some other suppliers were found to be trading premises, but were dealing with totally different goods. A number of existing suppliers stated that they had not supplied any goods to the appellant company and that the payments received by them from the appellant company had been returned by them in cash after deducting the sales tax and their commission. In view of this, the investigating officers were of the view that the goods sold from the trading premises of the appellant company had actually manufactured by them in their factory at Narayana Industrial Area from where the same had been cleared without payment of duty. It is on this b .....

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..... the part of the Central Excise Department to produce witnesses on whose statements they are relying upon, does not mean that the appellant has given up its right for cross examining the witnesses? 1.6 Hon ble Delhi High Court vide judgment dated 08.11.2011 reported in 2012 (281) ELT 193 Del. has held that in respect of the question no. 1, the Tribunal is to re-examine the question of application of section 9D of the Act. With regard to question no. 2, as to whether, when the Central Excise Department failed to produce the witnesses, on whose statements the Department had relied upon, and when the appellant did not insist on the fresh summons being issued to the witnesses, whether the appellant can be treated as having given up their right of cross examining the witness. Hon ble High Court decided this question in favour of the appellant company, holding that the appellants cannot be treated as having given up their right for cross examining the witness. Accordingly, Hon ble High Court, remanded the matter to the Tribunal for De novo decision. 1.6.1 On the question as to whether section 9D of the central Excise Act 1944 can be invoked for relying upon the statements of the wi .....

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..... ng into the contentions of the appellant on merits that on the facts on the present case, the conditions mentioned in Section 9D including condition No. (e) are not satisfied. We may only record that it is a submission of the appellant that the assessing authority had not given or recorded any finding to the effect that presence of witnesses cannot be obtained without undue delay or expense, which the officer concerned considers to be unreasonable. Appellant, in this connection, has relied upon order dated 7th January 2009 and had urged that summons were issued only once but no opportunity was granted to the appellant to serve the summons on the witnesses. It is stated that the appellant should have been given another opportunity. It is also contended that the question of quantum of demand is also an issue and that the Tribunal has accepted the entire quantum/ addition. It is pointed out that the assessment order confirms the entire demand mentioned in the show cause notice dated 17th October 2007 for a sum of ₹ 1,48,60,803/- and a penalty of equal amount has been imposed along with an interest thereon. A penalty of ₹ 50 Lakhs has been imposed on the Director. 18. As .....

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..... ngly disposed of. No costs. 1.7 Accordingly the matter was heard afresh. 2. Shri B L Narsimhan, Advocate the Ld. Counsel for the appellant pleaded that the main evidence relied upon by the Department against the appellant is the statements if various suppliers whose names are mentioned in para 16 of the order- in-original, coupled with statement of Sh. Subhash Khattar, Managing Director, that the Narayana Industrial Area factory of the appellant company was selling its goods directly to various customers and not through the trading division, that the trading division of the appellant company was procuring the same goods from a number of other suppliers, that the Department s case is mainly based on the statements of some of the suppliers stating that they had issued only bogus invoices without supply of any goods and had returned the sale proceeds in cash after deducting the sales tax and their commission, that the appellant had sought cross examination on those witnesses, but the same was not allowed, that the statements of the suppliers stating that they had not supplied any material and had only issued bogus invoices and the payment received from the appellant company had .....

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..... l. while interpreting the provision of section 138B of Customs Act 1962 which is in parameteria That the section 9D of Central Excise Act, 1944, has held that statement of witness cannot be used against an assessee without giving the assessee an opportunity to cross examine the witness, and that cross examination is valuable right of the noticees in quasi judicial proceedings which can have adverse consequences for them, and that it can be taken away only in the exceptional circumstances stipulated in section 138B of the Customs Act 1962, that in the present case the suppliers, on whose statements reliance is placed by the Department were registered with sales tax/VAT. Department and had paid sales tax on their sales, and in view of this when based on their statement, Department alleges that they had not supplied any material and had issued only bogus invoices, cross examination of those witnesses is a must and their statements cannot be used against the appellants without permitting their cross examination. He, therefore, pleaded that the impugned order is not correct. 3. Shri Pramod Kumar, the Ld. Jt. CDR, defended the impugned order by reiterating the findings of the Commissi .....

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..... t company under section 11AC, penalty of ₹ 50 Lakh had been imposed on Sh. Subhash Khattar, Managing Director of the appellant company. The evidence relied upon by the Department in support of the above allegation is that the suppliers from whom the appellant company claim to have procured the goods for being sold from their trading premises, are either not traceable or they do not have the facility to manufacture those items or they are not trading in those items and in number of cases, the suppliers have denied having supplied the goods and have admitted that the payments received from the appellant company had been returned by them to the appellant company in cash after deducting their commission and the sales tax. The claim of the appellant company is that all the goods manufactured in their factory premises at Narayana Industrial Area were sold directly from the factory and the goods sold from the trading division were procured from the 23 suppliers and though, in some cases, the suppliers have given statements that they had not supplied any goods to the appellant but had only issued bogus invoices, and that the payments received from the appellant company for the goods .....

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..... proving, non-prosecution for an offence made under this act, the truth of the facts which it contains a) When a person who made the statement is dead, or cannot be found, or is capable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtain without an amount of delay or expense, which, under the circumstances of the case, the court considers unreasonable; or b) When the person who made the statement is examined as a witness in the case before the court and the court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. Thus, section 9D(1) of the Central Excise Act, 1944 is applicable to prosecution proceedings before a court and for such prosecution proceedings, any statement given by a person before Gazetted Central Excise Officer under section 14 of the Central Excise Act 1944, would be relevant for proving the truth of the facts which it contains only in two situations. The first situation is that the person who had made the statement is examined as a witness before the court and the court is of the opinion that his statement should b .....

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..... st the assessee does not turn up for cross examination, his statement cannot be relied upon by invoking clause (a) of the Section 9D(1). If the person is available for cross examination and the situation enumerated under section 9D(1)(a) are not there, his statement would be admissible as evidence only when he has been examined as a witness, that is, his cross examination has been allowed and after cross examination of the Adjudication, consider the statement to be true. 9. Cross examination would be an absolute necessity when the statement of a witness is the only or the main evidence in support of allegation of duty evasion against an assessee and as such there is no other independent evidence corroborating statement of the witness. It is seen that Hon ble High Curt in the case of Basudev Garg Vs Commissioner of Customs reported in 2013 (294) ELT 353 Del. with regard to the provision of section 138B of Customs Act 1962, which are in paremeteria with the provisions of section 9D of Central Excise Act 1944 has also taken the same view. Hon ble Allahabad High Court in the case of CCE Allahabad vs Govind Mills Ltd. reported in 2013 (294) ELT 361 All. has also held that section 9D( .....

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