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Om Sairam Steels And Alloys Pvt Ltd, Dinesh S Bharuka, Rajendra S Bharuka Versus Commissioner of Central Excise, Aurangabad

2015 (10) TMI 1102 - CESTAT MUMBAI (LB)

Waiver of pre deposit - Clandestine removal of goods - Violation of principle of natural justice - Opportunity of cross examination not given - Difference of opinion - Majority order - Held that:- first appeal is a matter of right under the Constitution of India and the same has been also provided under the provisions of the Central Excise Act. In Revenue legislations, some minimum pre-deposit is prescribed for admission of the first appeal in most of the Taxation Statutes of the Central Governm .....

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ity may dispense with such deposit, subject to such conditions as may be deemed fit to safe guard the interest of revenue. - no incriminating documents have been recovered from the appellants. Some information from pen drive indicating clandestine purchase of inputs and sale of outputs was recovered from one Rutuja Ispat (P) Ltd. (RIPL). The whole case of the Revenue is prima facie based on the statements of Directors and employees of RIPL. On the basis of statements and recovered data, the Dire .....

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ting authority for re-adjudication afresh after granting opportunity to cross-examine the witnesses whose statements have been relied upon to make out the allegations against the appellants, and to provide reasonable opportunity of hearing - Decided in favour of assessee. - Application Nos. E/S/96338, 96339, 96335/14-Mum, Appeal Nos. E/88375,88376, 88373/14-Mum - Dated:- 13-8-2015 - Ashok Jindal, Member (J) And P K Jain, Member (T) For the Appellant : Shri Kamal Jeet Singh, Adv For the Responden .....

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, which shows that RIPL has clandestinely cleared TMT/MS bars without payment of duty and clandestinely received the raw material, i.e. MS ingots/MS billets, without payment of duty from their manufacturers. One of the suppliers to RIPL is the main appellant, viz. Omsairam Steels & Alloys Pvt. Ltd. In these facts, statements of the directors of the appellant were recorded and thereafter a show cause notice was issued to the appellant to demand duty on the goods supplied to RIPL without cover .....

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this Tribunal to remand the matter back to the adjudicating authority for fresh adjudication. 4. The learned counsel for the appellants submits that as the investigation has been conducted at the premises of RIPL, a show cause notice was issued to them, the said show cause notice is pending for adjudication. Therefore, the impugned order was not required to be passed by the adjudicating authority before adjudication of the case of RIPL. He further submits that at the time of investigation conduc .....

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nded to the adjudicating authority for fresh consideration of the issue after granting cross-examination of the witnesses whose statements have been relied upon by the adjudicating authority. To support this contention, the learned counsel relied on the decision of the Tribunal in the case of PMS International Pvt. Ltd. vs. CCE, Ludhiana reported in 2014 (309) ELT 165 and the decision of the Hon'ble High Court of Delhi in the case of Basudev Garg vs. CC reported in 2013 (294) ELT 353 (Del.). .....

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prays that the amount already deposited by the appellant is sufficient to secure the interest of the Revenue. As earlier prayed that the impugned order lacks principles of natural justice, therefore the matter be remanded back to the adjudicating authority. 5. On the other hand, the learned AR submits that in this case the statements of the appellant's directors were recorded, who have admitted of clandestine removal of goods. Therefore, the adjudicating authority has rightly confirmed the d .....

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waiving the requirement of pre-deposit of duty, interest and penalties, we have taken up the appeals themselves for disposal. 8. In this case, the investigation was conducted at the premises of RIPL and certain documents and pen-drives were recovered in their custody. Thereafter statements of the directors of RIPL and their employees were recorded. On the basis of this investigation, the search was made at the premises of the appellant. Nothing incriminating documents were found but statements o .....

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eover, the cross-examination is sought by the appellants. As the documents recovered in the possession of RIPL and statements of the directors and the employees were relied upon by the adjudicating authority, therefore denial of cross-examination is in violation of the principles of natural justice, as held by this Tribunal in the case of PMS International Put. Ltd. (supra). The impugned order is in violation of th0e principles of natural justice. We have also seen the decision of the Hon'bl .....

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the impugned order is not sustainable in the eyes of law. Accordingly the same is set aside and the matter is remanded back to the adjudicating authority to adjudicate the matter afresh after granting cross-examination of the witnesses whose statements have been relied upon by the adjudicating authority, to make a case against the appellants, and after affording reasonable opportunity to the appellants to defend their case. 9. With these observations, the appeals are disposed of by way of reman .....

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the information was collected in respect of one M/s. Rutuja Ispat Pvt. Ltd. and on the basis of the said information, various premises of the said Rutuja Ispat and one of its director on 3.6.2011 were searched and investigations were primarily conducted towards the said company. Based upon the printouts of the pen-drives seized, it was found that there is duty evasion by the present applicant also. It was thereafter, after more than three months, that the statement of the directors of the prese .....

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irectors were shown the printouts of the pen-drives taken at the time of search as also those received from CFSL, Hyderabad. These printouts indicated precise details about the clearances of the goods which included exact weight, rate prevailing at that date, total amount, vehicle registration number through which the said goods have been transported from the applicant's unit to Rutuja Ispat. These statements were shown to the applicant who, after going through these statements, have identif .....

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he duty liability as also the clandestine clearances. In fact they have agreed to pay the duty liability and a part of the duty liability was paid by them on various dates over a period of more than 16 months. 13. In view of the above mentioned facts, the case of the Revenue stands on the details recovered and admitted by the applicants. In fact there is nothing further that is required to be proved by the Revenue. 14. The Hon'ble Supreme Court in the case of CCE, Madras vs. Systems & Co .....

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d in 1997 (90). ELT 241 (SC), has held that the confessional statement of accused, if found to be voluntary, can form the sole basis for conviction. In the present case, as mentioned earlier, not one but number of statements over a period of time were recorded, which appears to be totally voluntary. Therefore, the said statements can form the sole basis for demand of duty. 16. The Hon'ble Madras High Court in the case of ACC, Madras vs. Govindasamy Ragupathy reported in 1998 (98) ELT 50 (Mad .....

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ns 25 and 26 of the Evidence Act excepting for the specific purposes of Sections 27 and 32 of the Evidence Act. Barring the above circumstances under which a confession statement has been given with the Police Officer or in the presence of the Police Officer in custody, no other confession made before any authority or prosecuting officials could be viewed with suspicion and they have enormous evidentiary value and conviction could be based on the evidence of such confession statement alone as pr .....

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d that the 'confession before the Customs Officer is admission and retraction cannot be accepted.' 'Where there is confession no need to allow cross-examination of Panch witnesses in view of confession.' 20. It is further held in the same judgment that 'the confession statement under Section 108 even though later retracted is a voluntary statement and was not influenced by threat, duress or inducement etc., and is true one' -'Confession when retracted has to be tested .....

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to prove the clandestine clearances and duty evasion. 17. Further, I note that the applicants have asked for the cross-examination of Shri Sushil S. Badjate, Shri Shailesh Badjate and four other ex-employees of Rutuja Ispat Pvt. Ltd. I find that Shri Sushil Badjate and Shri Shailesh Badjate themselves are the accused or noticees in the present proceedings and from the order-in-original, it appears that they have not even replied to the show cause notice or participated in the adjudication proce .....

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l stand. 19. The learned counsel for the applicants has quoted the Hon'ble Delhi High Court's judgment in the case of Basudev Garg vs. CC reported in 2013 (294) ELT 353 (Del.). In the said case the whole case was based upon the statements of more than twenty persons and the facts were totally different. Similarly, in the case of PMS International Pvt Ltd: vs. CCE, Ludhiana reported in 2014 (309) ELT 165 (Tri.-Del.), while the applicant produced certain documents to prove that the goods w .....

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h, admittedly, were owned by the directors of the applicant-company and they have also admitted using those vehicles for the said purpose. 20. The learned counsel for the applicants has made a plea that the case should have been adjudicated after the adjudication of the case against Rutuja Ispat Pvt. Ltd. I do not find any force in the said argument. The two show cause notices are different. There may be certain common documents but that does not imply that the case of the applicants should be d .....

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he above position, in my view, this is not a case where duty evaded should be waived but is a fit case where the entire duty along with interest should be deposited by the applicants before hearing of the appeals. I, therefore, order that the applicants deposit the entire amount of duty and interest within a period of eight weeks from the date of receipt of this order. On deposit of the same, there would be waiver of penalties imposed. 23. The role of the applicants, Dinesh S. Bharuka and Rajend .....

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ifference on the following points:- "Keeping in view the reasons stated by Member (Judicial) in paras 7 & 8 above, whether the appeals should be remanded after waiving the requirement of pre-deposit. OR The main applicant should be asked to deposit the entire amount of duty along with interest for the reasons elaborated in paras 12 to 21 above and applicant No.2 and 3, 50% of the penalty imposed, as held by Member (Technical) and after the compliance of the said stay order, the matter t .....

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in view the reasons stated by Member (Judicial) in paras 7 & 8 above, whether the appeals should be remanded after waiving the requirement of pre-deposit. OR The main applicant should be asked to deposit the entire amount of duty along with interest for the reasons elaborated in paras 12 to 21 above and applicant No. 2 and 3, 50% of the penalty imposed, as held by Member (Technical) and after the compliance of the said stay order, the matter to be heard on merit." 27. I am of the opinio .....

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the control of the Central Excise authorities or any penalty levied under the Act pending the appeal. Further discretion has been provided to the appellate authority including the Tribunal that such deposit of duty demanded or penalty levied, if would cause undue hardship to such person, the appellate authority may dispense with such deposit, subject to such conditions as may be deemed fit to safe guard the interest of revenue. 28. In view of the difficulties faced by the assessees in general a .....

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rks out to 22% of the duty in dispute. In view of the legislative intent, I find that amount of pre-deposit already made is sufficient for the purpose of hearing of the appeals on merits. 30. I further find that no incriminating documents have been recovered from the appellants. Some information from pen drive indicating clandestine purchase of inputs and sale of outputs was recovered from one Rutuja Ispat (P) Ltd. (RIPL). The whole case of the Revenue is prima facie based on the statements of D .....

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