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2015 (4) TMI 894 - CESTAT NEW DELHI

2015 (4) TMI 894 - CESTAT NEW DELHI - TMI - Exemption under notification no. 6/2000-CE dated 01.03.2000, 3/2001-CE dated 01.03.2001, 6/2002-CE dated 01.03.2002 - whether the appellant for availing the exemption under notification no. 6/2000-CE, 3/2001-CE and 6/2002-CE were using fly ash to the extent of 25% or more in the manufacture of ACC pipes/ couplers - Denial of cross examination request - Held that:- Appellant in this regard were maintaining the records as prescribed in the exemption noti .....

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for checking the use of fly ash and at that time no irregularity had been found. In view of these circumstances, we are of the view that the appellants request for cross examination of Shri Darpan Jain of M/s Kaka Roadlines, Sh. Chandmal Kumawat of M/s Kumawat Industris the fly ash supplier and Sh Kailash Sharma of Shubham Fly Ash Products and M/s Nirmala Fly Ash Industries is genuine.

It is also seen that in terms of section 9D(2) of Central Excise Act, 1944, the provision of sub sec .....

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to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. - In terms of sub section (2) of section 9D, the provisions of sub-section (1) have to be applied, as far as possible for adjudication proceedings also. Therefore, when the Department s case against an assessee is mainly based on statements given by some persons and those statements are not corroborated by some other independent evidence, and contradict each other, for using those statemen .....

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h Kumar (for the Bench): The facts leading to filing of these appeals are, in brief, as under: 1.1 M/s Udaipur Pipes (P) Ltd. E/46 Road No. 3, Mewar Industrial Area, Udaipur, Rajasthan (hereinafter referred to as the appellant company) are engaged in manufacture of asbestos cement pressure pipes (ACC Pipes) Asbetos Cement Couplers (AC Couplers), chargeable to central excise duty under heading 6804 of the Central Excise Tariff. Shri Manish Kala is the Director of the appellant company. The tariff .....

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is that the manufacturer maintains proper account in the form as prescribed by the Jurisdictional Commissioner of Central Excise regarding receipt and use of fly ash/phosphogypsum in the manufacture of the goods falling under chapter 68 of the tariff and also file a monthly return in the format as prescribed by the Commissioner with the Jurisdictional Deputy / Assistant Commissioner. There is no dispute that the appellant were maintaining the record regarding receipt and consumption of the fly .....

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and use of the fly ash being maintained by the appellant. At the time of the officers visit to the factory, one Shri Laxman Meghwal, Mixture Master, was present and his statement was recorded under section 14 of the Central Excise Act, 1944, wherein he stated that fly ash was not being used for the last one year and that sometimes fly ash in the ratio of 2 to 3 Kg. per 100 Kg. of cement had been used and that if more than 2 to 3 Kg. of fly ash per 100 kg of cement is used, the pipes will break. .....

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herein, he stated that they were clearing ACC pipes manufactured by them at nil rate of duty under notification no. 6/02-CE but on being asked as to whether in the manufacture of ACC pipes and couplers, the fly ash in the required ratio, as prescribed in the notification was being used, he stated that they had manipulated the records of consumption of fly ash and had used the fly ash received in lavelling of the premises at F-20/21 Road No. 3A MIA, Udaipur, and that in order to avail the excise .....

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Fly Ash Products and M/s Nirmala Fly Ash Industries, Kota, as it is these three parties who had the necessary license to lift fly ash from Kota Thermal Power Station. The fly ash so procured was shown to have been transported to the appellants factory premises through M/s Kaka Roadline whose proprietor is Sh. Darpan Jain. Statements of Shri Darpan Jain were recorded on 07.03.2005 and 24.05.2005 wherein he stated that only those parties who had obtained the permission from Kota Thermal Power Pl .....

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anish Kala, Director of the appellant company, but the fly ash covered under those GRs was not actually being transported. 1.4. Inquiry was also made with Sh. Chandmal Kumawat of M/s Kumawat Industries and Sh. Kailash Sharma of M/s Shubham Fly Ash Products and M/s Nirmala Fly Ash Industries, Kota and both these persons in their statements denied having supplied any fly ash to the appellant company. 1.5 It is in view of the above investigation that a Show Cause Notice dated 4.4.2005 was issued to .....

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ry on the ground that the same has been mis-declared, as being manufactured by using more than 25% fly ash. Beside this, the SCN also sought recovery duty of ₹ 22,030/- in respect of shortage of finished gods found at the time of visit. 1.6 The SCN was adjudicated by the Joint Commissioner vide order-in-original dated 07.10.2005 by which the duty demand of ₹ 4,07,075/- out of total duty demand of ₹ 7,41,941/- and also the duty demand of ₹ 22,030/- in respect of shortage g .....

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onfiscated with option to be redeemed on payment of redemption fine in lieu of confiscation of ₹ 1000. 1.7 On appeals being filed to Commissioner(Appeals) against this order of the Joint Commissioner, the Commissioner (Appeals) vide order-in-appeal dated 16.03.2006 dismissed the appeals. Against this order of the Commissioner (Appeals) these appeals have been filed. 2. Heard both the sides. 3. Sh. Bipin Garg, Advocate the Ld. Counsel for the appellant, pleaded that the appellant were avail .....

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return Annexure-C, regarding the receipt and use of fly ash, along with monthly RT-12 return, that upto 2002 they were also filing the intimation regarding receipt of the consignment of fly ash in D-3 format, that the file containing D-3 intimations given from time to time and also the records being maintained and the returns being files have been resumed by the investigating officers, that in April, 2003 the appellants unit had been visited by the Jurisdictional Central Excise Officers, speci .....

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5% is based only on: (a) Statement of fly ash suppliers Sh. Chandmal Kumawat of M/s Kumawat Industries and Sh. Kailash Sharma of M/s Shubham Industries and M/s Nirmala Fly Ash Industries wherein they have stated that they have not supplied any fly ash to the appellant company; (b) Statement of Sh. Darpan Jain of M/s Kaka Roadlines, wherein he has stated that he has issued only bogus GRs showing transportation of fly ash from the premises of M/s Kumawat Industries, M/s Shubham Fly Ash Products an .....

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and Sh. Girish Panth, he has stated that the fly ash consumption was only 3% to 7% and the rest quantity of the fly ash was being used for lavelling the premises of F-20/21 Road No. 3A MIA, Udaipur. that Shri Manish Kala has retracted the statement given by him at the time of officers visit to the factory stating that the same was on extempore basis without giving any opportunity or without referring to any record maintained by them and was also under pressure, that Sh. Darpan Jain, Proprietor .....

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g supplied, that in view of this only, the appellant had sought cross examination of Sh. Darpan Jain of M/s Kaka Roadlines, Sh. Kailash Sharma of Shubham Fly Ash and Nirmala fly ash industries and Sh. Chandmal Kumawat of M/s Kumawat Industries, that the original adjudicating authority has wrongly disallowed the cross examination which, in the circumstances of the case, was necessary, that the Honble Delhi High Court in the case of Basudev Garg vs Commissioner of Customs reported in 2013 (294) E .....

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ollector reported in 2009 (242) ELT 189 (Del.), with also the Apex Courts Judgment in the case of Laxman Exports Ltd vs Collector reorpted in 2000 (122) ELT 641 SC, that when the appellant as per the condition of the notification were maintaining the record of the receipt and use of the fly ash and were also filing monthly return in this regard along with RT-12 return and when during inspection in April 2003 by the preventive team of the Divisional Office for checking the use of fly ash in the .....

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f those samples, that the statement dated 07.10.2004 of Sh. Laxman Meghwal that fly ash can be used only to the extent of 2% to 3% in the manufacture of ACC pipes and if higher percentage of fly ash is used the pipes will break is factually incorrect as the ISI specifications for ACC pipes permitted the use of fly ash upto 40% and this is also one more reason as to why the statement of Sh. Laxman Meghwal cannot be relied upon without permitting his cross examination, that the appellant has also .....

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and also in the case of Premium Packaging (P) Ltd. vs CCE reported in 2002 (184) ELT 165 (tri. Del) and in case of Vikram Cement (P) Ltd. vs CCE Kanpur, reported n 2012 (286) ELT 615 wherein it has been held that merely on the basis of the statements of some persons and statement of Director, the duty demand cannot be confirmed against an assessee. He also mentioned that the Tribunals Judgment in the case of Vikram Cement (P) Ltd. (Surpa) has been upheld by the Honble Allahabad High Court vide .....

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iven a finding that while the registers maintained by the appellant showed working of the factory in two shifts and the consumption of fly ash has been shown on this basis, Shri Manish Kala and Sh. Girish Panth in their statements have stated that the factory was working in one shift only. He also emphasized that the appellant do not have the licence to lift fly ash from KTPS and the license in this regard had only been issued to M/s Kumawat Industries, M/s Shubham Fly Ash Products and M/s Nirma .....

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of M/s Kaka Roadlines in his statement has stated that he has issued only bogus GRs on insistence of Sh. Manish Kala showing transportation of fly ash from the premises of M/s Kumawat Industries, M/s Shubham Fly Ash Products and M/s Nirmala Fly Ash Industries, Kota to the Appellants factory. He emphasized that the statements of Sh. Chandmal Kumawat and Sh. Kailash Sharma have not retracted and Sh. Darpan Jain of M/s Kaka Roadlines retracted his statement only after 7 months and his retraction c .....

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liers was not necessary and on account of not permitting the cross examination of these persons, the proceedings have not been vitiated. He also pleaded that as pointed out in para 5 of the SCN, the records regarding receipt and use of fly ash were not being properly and fully inasmuch as the entries in some of the columns which related to total quantity of finished products, total quantity of fly ash and percentage of fly ash in the finished products respectively were kept blank. He, therefore, .....

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case is as to whether the appellant for availing the exemption under notification no. 6/2000-CE, 3/2001-CE and 6/2002-CE were using fly ash to the extent of 25% or more in the manufacture of ACC pipes/ couplers. There is no dispute that the appellant in this regard were maintaining the records as prescribed in the exemption notification and were also filing a monthly return along with ER-1 returns. However, on this point the dispute is that these records were not been properly maintained as acc .....

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7 clearly shows the quantity of fly ash utilized. 7. However, the case of the Department against the assessee is based mainly on:- (a) Statement dated 7.10.2004 of Sh. Laxman Meghwal, mixture master and statement of Sh. Girish Panth, Sales Executive of the appellant company wherein they have stated that fly ash was being used only to the extent of 2 to 3% and most of the time no fly ash was being used and the fly ash received was being used for lavelling the premises at F-20/21, MIA, Udaipur; ( .....

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Kaka Roadlines wherein he has stated that he had issued only bogus GRs on the request of Shri Manish Kala, Director of the appellant company showing transportation of the fly ash from the premises of M/s Kumawat Industries, Kota, M/s Shubham Fly Ash Products, Kota and M/s Nirmala Fly Ash Industries, Kota, to the appellant premises without actually transporting any fly ash. 8. It is seen that there is contradiction between the statements of Sh. Laxman Meghwal and Sh. Girish Panth on one hand wher .....

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and M/s Nirmala Fly Ash Industries, Kota, had not supplied any fly ash to the appellant company, and M/s Kaka Roadlines have not transported any fly ash to the appellant company, the appellant company would not be having any fly ash which they could have used for levelling the plot at the F-20/21 Road No. 3A MIA, Udaipur. It is also seen that in April, 2003, the appellant premises had been visited by the Jurisdictional Central Excise Officers for checking the use of fly ash and at that time no i .....

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gh Court in the case of Basudev Garg Vs CCE while interpreting the provisions of section 138B of Customs Act 1962, which are in perimeteria with the provisions of section 9D of Central Excise Act, 1944 has held that statement given by a person cannot be used against an assessee without giving the assessee an opportunity of cross examining the deponent. It is also seen that in terms of section 9D(2) of Central Excise Act, 1944, the provision of sub section(I) shall, so far as may be, apply in rel .....

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