TMI Blog2015 (10) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Excise Act. Thus, the impugned order is set aside and the matter is remanded back to the adjudicating authority with a direction to provide opportunity of hearing to the appellants in accordance with law, more particularly to provide opportunity of cross-examination of persons, the statements to whom have been relied upon by the Revenue and to consider the evidence on record or now produced in the de novo proceedings, more particularly documents like Goods Receipt Note, Material Requisition Note, Sales Tax Register including Way Bill Register, Form-C Register, sales invoice of watch case to the different buyers of the appellant etc. The appellant is also directed to appear before the adjudicating authority with a copy of this order and seek opportunity of hearing. - APPEAL NOS. E/956, 957, 979 TO 983, 987 TO 988 AND 994 TO 1002/2007-MUM. - - - Dated:- 27-7-2015 - M.V. RAVINDRAN, P.R. CHANDRASEKHARAN AND ANIL CHOUDHARY, JJ. For The Appellant : V.M. Doiphode, Stebin Mathew and Devang Parikh, Advocates for the Appellant. For The Respondent : K.M. Mondal, Spl. Counsel ORDER P.R. Chandrasekharan, Technical Member The appeals are directed ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 Shri Narayan Walvalkar, Proprietor of S. No. 15 above 50,00,000/- Aggrieved of the same, the following appellants, namely, M/s. J J Precision Industries, M/s. Annapurna Impex Pvt. Ltd., M/s. Mardia Samyoung Capillary Tubes Co. Ltd., M/s Mardia Tubes Pvt. Ltd., M/s Jay Wire Conductors, M/s. Deepak Glass Plywoods, M/s. Uttam Glass Co., M/s. Lata Steels, Shri Joit Kumar Jain, Shri Navneet Agrawal, Shri Ravindra Mardia, Shri Ramesh Ratilal Chauhan, Shri Ambalal Jain, Shri Bhavarlal Jain, Shri Pawan Lata, Shri Pravin Singh, M/s. Gullchem Industries and Shri Narayan Walvalkar are before us. 2. The case against the main appellant, M/s. J J Precision Industries, is that they availed Cenvat Credit, without receipt of the goods, amounting to - (i) ₹ 3,06,03,937/- on copper/brass ingots/bars/rods, alleged to have been supplied by M/s. Annapurna Impex Pvt. Ltd.; (ii) ₹ 70,48,480/- in respect of supplies made by M/s. Mardia Samyoung Capillary Tubes Co. Ltd.; (iii) ₹ 10,04,622/- in respect of supplies made by M/s. Mardia Tubes Pvt. Ltd.; (iv) ₹ 5,17,445/- in respect of supplies made by M/s. Jay Wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Tubes Ltd. Copper/ Brass ₹ 10,04,622/- 4. M/s. Jay Wire Conductors Copper ₹ 5,17,445/- 5. M/s. Deepak Glass Plywoods Float Glass ₹ 37,38,809/- 6. M/s. Uttam Glass Company Sheet Glass ₹ 9,91,379/- 7. M/s. Lata Steels Stainless Steel ₹ 6,45,875/- Total credit availed Rs.4,45,50,547/- 3.2 The appellant cleared on payment of Central Excise duty Watch Cases and Straps. The appellants also entered details of inputs in the private and statutory records and the materials requisition notes (MRN) when goods are required for production. During the impugned period, audit of the records of the appellant's factory was conducted and also preventive checks but the officers never found that the inputs on which Cenvat credit was availed, were not received. The appellant had also written letters dated 4/8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per which they did not have any facility to manufacture Copper ingots, and no quantity of copper ingots were found during the course of search. (c) Vehicle Verification Report indicating that Vehicle with registration nos. PB 08 AE 6428, PB 08 X 7854 and PB 08 W 3299, used for transportation of the goods supplied were in fact two wheelers. Verification Report from their Kolkata counterpart showed that the vehicle bearing registration No. WB 25 A 3380 allegedly used for transportation was a light motor vehicle. (d) Verification of Bank Account No. CA 042010200007443 of M/s. Annapurna Impex Pvt. Ltd., at UTI Bank Ltd., Ludhiana for the period 12/9/2003 to 19/5/2005 showed that the amounts allegedly paid for the supplies made were withdrawn in cash immediately. (e) The transporters, M/s. Satkar Tempo Transport Union and M/s. New Satkar Tempo Transport Union at Ludhiana whose vehicles were mainly used for transport of the goods from M/s Annapurna Impex as reflected in the transport documents corroborated the fact that transactions were fictitious. (f) M/s. Multi-Arc Ltd., Umargam had not plated wristwatch cases made out of copper on the basis of invoices issued by them to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Basudev Garg Vs. CC [2013 (294) E.L.T. 353 (Del.)]. The Hon'ble High Court while upholding the validity of Section 9D also held that the right of cross examination in any quasi-judicial proceedings is a valid right given to a noticees as these proceedings may have adverse consequences to the accused while at the same time, under certain circumstances this right of cross examination can be taken away. Such circumstances have to be exceptional as stipulated in said Section 9D. It is thus clear that unless such circumstances exist, the noticee has a right of cross examination, even in quasi-judicial proceedings. Therefore, the appellant submits that following these 2 judgements of the Hon'ble Delhi High Court, the Ld. Commissioner rejection of the request for cross examination is contrary to the statutory provisions of Section 9D and the law laid down by the Hon'ble Delhi High Court. Further, the Hon'ble Allahabad High Court in the case of CCE v. Parmarth Iron (P.) Ltd. 2010 (260) ELT 514 held that if the Adjudicating authority relies upon the statements, then he must offer them for cross examination and if they are not offered for cross examination, the Adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Pvt. Ltd., at UTI Bank Ltd., Ludhiana in para 103(v) of the order in respect of cash withdrawals to conclude that no goods were supplied. This cannot be a direct evidence as it is for Annapurna Impex Pvt. Ltd., to explain as to why they have withdrawn the cash and there is neither any evidence from the appellant's proprietor nor from the representative of Annapurna Impex Pvt. Ltd., evidencing that cash was sent back to the appellant. In any case, the cash withdrawn was negligible compared to the total consideration paid by the appellant. 3.10 The Ld. Commissioner has also relied upon the Purchase Tracking Register. However, each and every order in the purchase Register has not been mentioned in Purchase Tracking Register as it was maintained for only casual items requiring emergency supplies. 3.11 The Appellants had submitted Form ST.XXIV-A obtained from the Excise Taxation Dept. of Punjab (as recorded by Commissioner in para 68 (xii) to show the goods were sent through the transporters from Ludhiana. There is no finding given by the Ld. Commissioner regarding this important submission. 3.12 The Ld. Commissioner in para 103(c) has referred to a printed sheet whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Cenvat credit without receipt of materials. The job-work activities undertaken by the appellant has nothing to do with availment of cenvat credit. Even if it is assumed that they showed in the job-work documents of having undertaken gold plating without having actually undertaken the said activity, it would not alter the position. Therefore, the charge against the appellant of having aided/abetted M/s J J Precision Industries Ltd in availing ineligible cenvat credit is bereft of any logic and consequently, imposition of penalties on the two co-appellants are clearly unsustainable in law. 4.2 The ld. Counsel for M/s Lata Steels and its partner Shri Pawan Lata submits that they are a registered dealers for issue of cenvatable invoices and they have supplied stainless steel to M/s J J Precision Industries for which they have received the payments. These transactions are duly reflected in the RG 23 D register maintained by them and also in the form C issued for inter-state sales. The charge that one of the vehicles used for transportation as mentioned in the invoices was a tanker which was incapable of transportation of the goods supplied by them, it is their contention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he main raw-materials used in the manufacture of the said wrist watch cases and straps are brass, stainless steel mineral glass. 5.2 Based on an intelligence that the appellant-firm was availing irregular inadmissible cenvat credit on the basis of invoices without receiving any inputs, the officers of DGCEI, Mumbai caused detailed enquiries at various places. In the course of such enquires, the officers made searches of the premises of the appellant-firm, its purported suppliers of inputs and also of the transporters and resumed various incriminating documents examination of which revealed that during the period April 2003 to April 2005, the appellant-firm had availed irregular and inadmissible Cenvat Credit of ₹ 4,45,50,547/- on the inputs, namely, copper, float glass, sheet glass, etc. based on the invoices supplied by 7 different suppliers, without physical receipt of the goods. In the follow-up action, the officers recorded statements of the employees of the appellant-firm, statements of the purported suppliers of inputs and also the statements of the transporters. 5.3 Statements of employees of the appellant firm: (i) Shri Ratnakar H. Mahale, Accountant Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw materials received in the factory. On being shown the relevant pages of the stock register for receipt of copper rods, she stated that entries in the register had not been made by her. 5.4 Statements of transporters: Scrutiny of central excise invoices issued by M/s. Annapurna Impex and some of the Lorry receipts indicated that the consignments from M/s. Annapurna Impex to the appellants' factory at Goa were transported by two transporters, namely, (i) M/s. Satkar Tempo Transport Union, Ludhiana and (ii) M/s. New Satkar Tempo Transport Union, Ludhiana. Hence statements of the transporters were also recorded. (i) Shri Inderjeet Singh, Proprietor of M/s. Satkar Tempo Transport Union, in his statement recorded on 18/05/2005 had, inter alia, stated that he was operating his transport business in the states of Punjab, Himachal Pradesh, Delhi, Haryana and Uttar Pradesh with vehicles having load bearing capacities of 2 to 4 tons only and hence the said vehicles could not carry the consignments of 10 to 15 tons from Ludhiana to Goa. (ii) Shri Kulwinder Singh, Proprietor of M/s. New Satkar Tempo Transport Union, in his statement recorded on 18/05/2005 had, inter alia, state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghalaya through a broker called Vastimal whose particulars he was unable to recall. 5.8 Shri Anirudha Narayan Walawalkar, the person in-charge of design, development and quality of the appellant-firm, in his statement recorded on 06/07/2005, had, inter alia, stated that the main raw materials used were brass, stainless steel and mineral glass in the thickness range of 0.8 to 1.2 mm in the manufacturing process of Wrist Watch Cases and Straps. He also stated that float glass and sheet glass of higher thickness shown to have been received by the appellant firm from M/s. Deepak Glass Plywoods, Bangalore and M/s. Uttam Glass Company, Hyderabad could not be used in the manufacturing process of wrist watch cases straps. 5.9 Shri Ashok Neelkanthappa, Manager of Unit No. III of the appellant firm, in his statement recorded on 06/07/2005, had, inter alia, stated that they were receiving brass strips from Unit-I for manufacture of wrist watch straps on job-work basis. He also stated that he had never done any job-work on copper items. 5.10 Enquires at the end of Deepak Glass Plywoods, Bangalore revealed that most of the Central Excise invoices issued to the appellant firm bear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow that the material had been unloaded at J J Precisions Industries, Goa. 5.12 Shri Bhavarlal Jain, proprietor of M/s. Uttam Glass Co. in his statement dated 08/11/05 had, inter alia, stated that no material had been dispatched to M/s. J J Precision Industries. Only invoices were given to it to take fraudulent cenvat credit. When he was shown his invoice no. 002 dated 14/07/2004 for sheet glass and the R.T.O, Thane's report dated 24/10/2005 for vehicle no. MHT-5458 which was a Fiat Car, Shri Jain confirmed that he or his son put some number as vehicle no and that glass sheet could not be transported in Fiat Car. 5.13 Shri Ravindra Mardia, Managing Dierctor of M/s. Mardia Samyoung Capillary Tubes Co. Ltd., Silvassa and Director of M/s. Mardia Tubes Ltd., Tarapur, in his statement recorded on 22/09/2005, had, inter alia, stated that no goods had been physically sent to M/s. J J Precision Industries, Goa under 40 invoices. On a query, he stated that he received payments by cheque from M/s. J J Precision Industries which was returned to it by cash and that his profit in the whole transaction was ₹ 2/- per kg. of the material purportedly supplied under bogus invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecords were found in the factory. However, the officers noted the machinery installed in the factory. They found that there was no facility to manufacture copper ingots or copper wire rods nor was there any stock of copper ingot or copper wire rods in the factory. (iii) Purchase order tracking register : The appellant-firm maintains a register called 'Purchase Order Tracking Register' in order to keep track of purchase orders. This register was found to have been maintained from 3/11/2004 onwards. Scrutiny of this register showed that the purchase orders placed on M/s. Annapurna Impex Pvt. Ltd., Ludhiana, M/s. Uttam Glass Company, Hyderabad, M/s. Deepak Glass Plywoods, Bangalore and M/s. Mardia Samyoung Capillary Tubes Co. Ltd., Silvassa were not entered in the said register. Instead, identical/parallel purchase orders with nos. dates in the names of some other parties have been entered in the said register. These are shown below in the tabular form: Sr. No P.O. No. Date Identical/Parallel P.O. No. Date 1. 229/2005-2006 dtd. 11.3.2005 placed on M/s. Annapurna Impex Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er rods were sent to Unit-III. Consequently, no entry was made in the said Annexure-V Register. (v) Seized document no. 63 is a file containing misc. papers. Page no. 105 is a printed sheet giving specifications of various types of watch cases manufactured by the appellant-firm. This document clearly shows that all the wrist watch cases were made from either brass or stainless steel. Hence, it is evident that no watch case was made by the appellant-firm by using copper. (vi) Seized document no. 51 is a file containing invoices of M/s. Multi-Arc India Ltd. All the invoices clearly show decorative coating charges for brass watch cases or brass watch straps only. There was no invoice showing decorative coating charges on copper watch cases/straps. (vii) Application for renewal of factory licence for the year 2005 The appellant had filed an application for renewal of the factory licence for the year 2005 with the Chief Inspector, Inspectorate of Factories Boilers, Government of Goa along with a list of raw materials used. The said list of raw materials did not show use of copper, float glass or sheet glass. From this it is quite evident that the appellant-firm is not usin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Madras High Court has observed that the right to cross-examine is not necessarily a part of reasonable opportunity. Whether in a particular case, a particular party should have the right to cross-examine or not depends upon the facts and circumstances of the case and it very largely depends upon the adjudicating authority who is not guided by the rules of evidence as such . (iii) In the case of Indru Ramchand Bharvani V/s. Union of India - 1988 (38) ELT 459 (Del.) in para 23, the Hon'ble High Court has observed Eventually each case would turn upon its own facts and circumstances and the conduct of the parties. If the facts are so revealing or improbable as in this case, no useful purpose would be served by cross examination. The facts are to be analysed in the light of the totality of circumstances and the conduct of the parties . This judgment has been affirmed by the Hon ble Supreme Court as reported in 1992 (59) ELT 201 (S.C.). (iv) In the case of State of Jammu Kashmir v. Bakshi Gulam Mohammad AIR 1967 (SC) 122, the Hon'ble Supreme Court has also observed that the right to cross-examination must depend upon the circumstances of each case and must also dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26/06/2006 without giving any reason or justification, whatsoever. Therefore, the grievance of the appellant that he has been denied cross-examination in violation of the principles of natural justice is totally unacceptable. (ix) Learned Counsel for the appellant-firm, heavily relied upon the judgment of the Hon'ble Delhi High Court in the case of J K Cigarettes Ltd. (supra) and the judgment of the Allahabad High Court in the case of Parmarth Iron (P.) Ltd. (supra). In the case of J K Cigarettes Ltd. (supra) the Hon'ble High Court has observed that though the right of cross-examination in any quasi-judicial proceeding is a valuable right, it can be taken away under certain circumstances. In other words, it is not necessary in each and every case. In the case of Parmarth Iron Pvt. Ltd. (supra) the Hon'ble High Court has held that cross-examination of witnesses is to be given if their statements are relied upon by the revenue. However, this judgment cannot be said to be an authority to say that cross-examination of witnesses is to be given in each every case. (x) In the present case, the documentary evidences are so overwhelming that even without the statements o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue to prove the charge against the accused. Only in certain situations, namely, when a person who made statement is dead or cannot be found, or 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 or expense, which under the circumstances of the case, the court considers unreasonable, statements can be relied upon without cross examination. In all other situations, the statement against the assessee cannot be used without giving them an opportunity of cross examining the deponents. Cross examination is a valuable right of the accused/noticee in a quasi-judicial proceedings which can have adverse consequences and therefore, as a matter of practice, the right of cross examination has to be granted to the noticee. It is the contention of the appellant that these rights have been denied to them inasmuch as Revenue has heavily relied upon these statements, in support of the charge against the appellants and therefore, the principles of natural justice violated in the present case. It is therefore, pleaded that the matter be remanded back to the adjudicating authority for grant of cross examinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that cross examination of witnesses cannot be claimed as a matter of right. If the reasoning for denial of cross examination is stated clearly before the adjudication process is completed, then it cannot be said that there is any denial of principles of natural justice. 7.5 In the present case, we notice that before the proceeding with the final adjudication, the adjudicating authority had given a hearing on the request of the appellant with regard to cross examination and had rejected the request giving reasons for such denial. The record of personal hearing dated 19/06/2006 30/06/2006 clearly shows the consideration of the request made by the appellant for cross examination and the reasons for rejection. Further, Shri Ravindra Mardia, Managing Director of M/s. Mardia Samyoung Capillary Tubes Co. Ltd. Director of Mardia Tubes Ltd. had submitted before the adjudicating authority that the case should be decided based on the evidence available on records and by taking a lenient view. He also refused to be cross-examined by the main appellant. Similarly, M/s. Deepak Glass Plywoods and M/s. Uttam Glass Co. have also stood by their statements recorded under Section 14 and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed any prejudice to the appellant. When the factory of M/s Annapurna was searched on 18/5/2005 under a panchnama proceeding, it was noticed that the said firm had no facility to manufacture copper ingots or copper wire rods nor was there any stock of copper in the factory. Sri Purushottam Lal, office attendant, who was present at the time of search, also confirmed that the said firm had no melting furnace in their factory and no manufacturing facility for copper rods in their factory. Further in many of the invoices/LRs issued by Annapurna, the names of the transporters were found to be M/s Satkar Tempo Transport Union and M/s New Satkar Tempo Transport Union, Ludhiana. When the proprietors of these firms S/Shri Inderjeet Singh and Kulwinder Singh were examined, they had clearly stated that they had never transported any goods from M/s Annapurna, Ludhiana to M/s J J Precision Ind. at Goa. These statements were never retracted nor the appellant had sought any cross examination of these transporters. Further some of the vehicles, whose registration Nos. figured in the transport documents, were found to be two-wheelers, namely, Hero Honda Splendour, Scooter and Motor cycles. Thus s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorized signatory in his statement dated 25/4/05 has confirmed that copper ingots had never been used in their factory. He had also voluntarily debited sums of ₹ 6,08,057/- and ₹ 6,06,780/- in respect of invoice nos. 306 dated 23/3/05 of M/s Annapurna and invoice nos. 78 dated 11/11/03 and 80 dated 14/11/03 of M/s Matiz Metals on 25/04/05. Similarly Sri Nagaraj, Production in-charge of the appellant firm had also stated that he had never seen copper ingots/rods being received in the factory. He has further confirmed that for manufacture of wrist watch cases and straps, they were using mineral glass and not sheet/float glass. Sri Prashant Naik, in-charge for issue of raw materials for production and Shri Premchand Bafna, Stores in-charge have also confirmed that they have never received copper rods from M/s Annapurna. Smt. Namrata Vaze, Accounts Assistant, responsible for preparing Goods Receipt Note has also confirmed the non-receipt of copper rods. These statements of the people concerned with the production, inventory and accounts of the appellant firm corroborate the non-receipt and non-use of copper rods and sheet/float glass in the manufacture of watch cases/str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Jayashree Horologicals, who had supplied glass materials to the appellant, also confirmed that they had supplied mineral glass of thickness ranging from 0.80 to 1.20 mm. They have further confirmed that float glass/sheet glass are never used in the manufacture of wrist watches as they do not meet the transparency and thickness requirement for wrist watches. M/s Plasma Gold Coatings Pvt. Ltd. who were engaged in ion-plating of wrist watch cases/straps for the appellant have also confirmed that they had never received from the appellant firm any wrist watch cases/straps of copper for plating. 7.11 As regards the purchase of copper/brass bars/rods from M/s Mardia Samyoung Capillary Tubes Co. Ltd. and M/s Mardia Tubes Ltd. under 40 central excise invoices during the period March 2003 to December, 2004 is concerned, Sri Ravindra Mardia has categorically admitted before the investigating officers that they had not supplied any materials under these invoices to the main appellant herein. He has further confirmed that the payments allegedly made by the main appellant were returned in cash and he did this for a consideration of ₹ 2 per kg. The same position has been maintained b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessees were not able to produce the gate registry for entry of the vehicles. In that context it was held by this Tribunal that the assessees are not eligible to avail CENVAT credit covered by those invoices. A similar view was taken by this Tribunal in the case of Ranjeev Alloys (P.) Ltd. v. CCE 2009 (236) ELT 124 (Tri. - Delhi). In that case also this Tribunal held that the assessee is not entitled for CENVAT credit of the duty paid on the inputs covered by the invoices where the transport vehicles were found to be incapable of carrying the goods covered by the invoices. It was further held that once the department establishes that the details given in the transport documents are not genuine, the onus shifted to the appellants to prove that the goods were duly received by them. In the case of A.N.Guha Co. vs. Collector [1996(86) ELT 333], this Tribunal held that it is not necessary for the department to establish a fact with mathematical precision. Once the presumption as to the existence of a fact is raised against the assessee that the input has not been transported in the vehicle mentioned in the invoices, it is reasonable to say that the inputs were not received in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by it, we must pay due regard to other kindred principles, no less fundamental, of universal application. One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree, for, in all human affairs, absolute certainty is a myth, and as Prof. Brett felicitously puts it all exactness is a fake El Dorado of absolute proof being unattainable, the law accepts for it, probability as a working substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus, legal proof is not necessarily perfect proof; often it is nothing more than a prudent man's estimate as to the probabilities of the case. If we apply the ratio of these decisions to the facts of the case before us, there is substantial evidence by way of documentary evidence and by way of confessional statements to establish the fraudulent availment of cenvat credit by the appellant. The main appellant has not been able to produce any evidence in suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit Rules, 2002/2004 read with section 11A(2) and 11AB of the Central Excise Act, 1944. 7.18 As regards the penalty imposed under section 11AC, the penalty is no doubt imposable as the appellant has played a fraud on the exchequer. However, imposition of penalty both on the proprietory firm and the proprietor is not correct in law. Therefore, while upholding the penalty imposed on the proprietory firm M/s J J Precision Industries under section 11AC equivalent to the duty demand confirmed as above, we set aside the penalty imposed on the proprietor Sri Joit Kumar Jain. 7.19 As regards the penalties on Annapurna Impex Pvt. Ltd., Mardia Samyoung Capillary Tubes Co. Ltd., Mardia Tubes Pvt. Ltd., Jay Wire Conductors, Deepak Glass Plywoods, Uttam Glass Company, Lata Steels Shri Navneet Agrawal, Shri Ravindra Mardia, Ramesh Ratilal Chauhan, Shri Ambalal Jain, Shri Bhavarlal Jain, Shri Pawan Lata, Shri Pravin Singh, Gullchem Industries and Shri Narayan Walvalkar, the said penalty has been imposed under Rule 26 of the Central Excise Rules, 2002. This imposition of penalty cannot be sustained as at the relevant time there was no provision for such imposition on the persons issui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs have come to the appellant's factory on the usage of way-bill/road permit, which is statutory requirement under Sales Tax provisions for transportation of goods across the border of the state as well as intra-state. In most of the cases, such way-bills are machine numbered and issued by the concerned Sales Tax authorities and proper register are maintained, wherein details of the company, invoice no the way bill no., lorry no., nature of goods etc. are entered. 10.3 It is further pointed out that at the time of inspection of the factory premises on 25.4.2005, the stock of finished goods and raw material tallied as reflected in the statutory and private records. No evidence of any clandestine receipt of inputs or dispatch of output was found. Further, the appellant have stated in para no. 19 and 34 of their written submission dt. 9.7.2006 that in spite of evidence of purchase and use of inputs, in absence of any direct evidence found, save and except presumptions and the retracted statements, do not lead to conclusion of clandestine activity, which have not been considered. Thus, the impugned order is cryptic and non-speaking and is fit to be set aside. 10.4 So far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adverse report have ever come from the Revenue authority at Ludhiana. 10.7 Further, the Revenue have failed to appreciate the submissions that other than bald allegation of non-use of copper by the appellant, the Revenue have, other than relying on the statements, not brought any clinching evidence to establish that the appellant could not have used copper in manufacturing its output. None of sample of finished goods available have been got tested by the Revenue and thus, there have been miscarriage of justice as the Revenue has relied mainly on evidence being the statements recorded. 10.8 Further, the adjudicating authority has erred in ignoring the fact that the appellant have returned 255 tons of copper rods to M/s Annapurna Impex (being removal of input as such) and had paid duty of ₹ 59,21,157/- by debiting in the PLA. Adverse inference have been drawn without any corroborative evidence and the adjudicating authority have erred in disbelieving the same as per the observation contained in para 15 of the impugned order. 10.9 Further, it is matter of record that the withdrawal from the Bank account of M/s Annapurna Impex is about ₹ 1,58,65,000/- wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents/transport challan, wherein the concerned inputs have been transported by more than 150 vehicles. For such minor error, in less than 3 per cent of total, drawing adverse inference that there is no transportation of inputs is unsustainable and fit to be set aside. 10.14 So far as observation with regard to Bank transaction of M/s Annapurna Impex is concerned, they clearly show that the appellant have paid for inputs through account payee transaction by way of cheque/NEFT transaction. Only for the sake of there being cash withdrawal in a few days of deposit do not by itself stand as a sufficient proof, for being concluded as bogus purchase. No enquiries have been made with respect to the Books of Account maintained by M/s Annapurna Impex nor any Accountant or Director or other responsible persons have been examined by the Revenue in support of its allegation. 10.15 The appellant manufactured about 15 lakhs pieces of straps in the financial year and sent for plating at Multi Arc Ltd., among others. The plating work/processing of about 20,000 pieces by Multi Arc is hardly 1% of the total output and as such adverse finding by the Revenue for the total output based on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sweet wish by the proprietor for the sake of convenience. It is in fact evident on the face of the record that inasmuch as 90% of the transaction for the inputs purchase which have been treated as genuine, is not mentioned in the 'purchase order tracking register'. Thus, the Revenue has blown both hot and cold in drawing inference by reference to a few transactions, not found mentioned in the 'purchase order tracking register'. From the statement of Shri Shimpi of M/s Multi Arc, demonstrated that the appellants manufacture straps of various metals but the same are only mentioned as brass, in the job-work, voucher etc. Further, on the basis of some of the output material, adverse inference drawn is not tenable. 10.18 So far the disclosure made to the Inspector of Boilers, as regards the inputs used in the factory, the same is due to oversight as stated by the appellant. The appellant further reiterates that being the jobbing industry, product mix keep changing, as per the purchase order and accordingly, as per practice on the basis of some earlier declaration lying in file, for subsequent period, declarations are filed by copying from the same and thus adverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Transport Declaration Form No. ST XXIV-A under Rule 14-B of Excise Taxation Dept, Punjab were produced before the adjudicating authority, a few copies are also annexed at pages 347A to 353 of the appeal-book. From a perusal of the Transport declaration form, it shows serial number of the form, date, name of consignor - Annapurna Impex (P) Ltd., Ludhiana, name of consignee - J.J. Precision, Industries, Goa, Transporter name - New Satkar Tempo Transport Union/Bombay, Patiala Transport Co., Trip Sheet No., Bill No. with date, value of goods and their destination. Thus, in view of documentary evidence on record, definitely the transporters - Satkar/New Satkar Temp. Transport Union have lied in their statement(s) for the best reason known to them. This raises ample doubt on the reliability of statement recorded during investigation. 10.22 It is further contended that Section 9D of Central Excise Act provides that statement made by a person on which the Revenue places reliance, such person is to be examined in the course of adjudication proceedings, which includes opportunity to the appellant (affected person) to cross-examine, for establishing the correctness and reliability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise Rules, 2002 as held by the Hon'ble Member (Technical), in view of the detailed findings recorded by him in paras 7.1 to 7.16 of the above order; OR The matter should be remanded back to the adjudicating authority for de novo consideration as held by the Hon'ble Member (Judicial). THIRD MEMBER ORDER M.V. Ravindran, Judicial Member (As a Third Member) - This difference of opinion is listed before me on the direction of the Honourable President to resolve the following difference of opinion. Whether M/s. J J Precision Industries are liable to pay demand of ₹ 3,86,29,390/- along with interest thereon under the provisions of Rule 12/14 of the Cenvat Credit Rules, 2002/2004 read with Section IIA(2) and HAS of the Central Excise Act, 1944 and liable to equivalent amount of penalty under Section IIAC ibid and the co-appellants M/s. Annapurna Impex Pvt. Ltd., Mardia Samyoung Capillary Tubes Co. Ltd., Mardia Tubes Pvt Ltd., Jay Wire Conductors, Deepak Glass Plywoods, Uttam Glass Company, Lata Steels, Shri Navneet Agrawal, Shri Ravindra Mardia, Ramesh Ratilal Chauhan, Shri Pawan Lata, Shri Pravin Singh and Gullchem Industries are liable to penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph number 103 has stated that he is now examining the direct evidences against the appellant appellants, but has not done so, as the said paragraph at bullet point number (v vi) specifically records that the facts of the fictitious transactions were corroborated by the enquiries conducted in respect of various transporters as also the suppliers of various materials like glass etc. He would then take me through the provisions of Section 9D of the Central Excise Act. He would submit that the said section was interpreted by the Honourable High Court of Delhi in the case of Basudev Garg (supra) and the case of J K Cigarettes Ltd. (supra) as also Honourable High Court of Allahabad in the case of Parmarth Iron (P.) Ltd. (supra) held that provisions of section 9D needs to be followed by the adjudicating authority before arriving at the conclusion, it is his submission that this Tribunal in the case of Arya Fibres (P.) Ltd. v. CCE 2014 (311) ELT 529 (Tri. - Ahd.) followed by ratio and held that provisions of section 9D has to be followed. 5. Learned Special Counsel for the revenue, on the other hand, supports the order of Honourable Member (Technical) and submits that no prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I would like to record, that though special Counsel for the revenue in the elaborate submissions made to me through various documents on which reliance was placed for holding against the appellant, in my view, the difference can be decided by reading the provisions of section 9D of the Central Excise Act, 1944. The said section reads as under:- Section 9D - Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a Gazette rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) when the person who made the 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 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 opinion that, having regard to the circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h or without the opportunity for testing the truth of such evidence by cross-examination. For, when a person is dead or incapable of giving evidence or cannot be found, no better evidence can be had in the circumstances than the statement tendered by witnesses before a quasi-judicial authority. The safeguards which are enumerated in the provision under Section 32 of the Evidence Act are essential as the provision provides for an exception to the rule of exclusion of hearsay evidence, while proving for relevancy of even direct oral evidence of the fact under enquiry, which otherwise is not admissible, to ensure that there is no miscarriage of justice. Similarly, provisions under Section 9D provide for relevancy of statements recorded under Section 14 of the Act, under certain circumstances, in criminal as well as quasi judicial proceedings, to meet the ends of justice. 27. We, thus, are intent to agree with the submission of the learned Addl. Solicitor General that if an Act of Parliament uses the same language which was used in a former Act of Parliament referring to the same subject, viz. relevancy of statement of fact by person who is dead or cannot be found under certain c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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