TMI Blog2017 (12) TMI 1092X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Jindal Drugs Pvt. Ltd. Vs. Union of India [2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT] have observed that the deponent of the statement are not only required to be produced for cross examination but examination in chief is also required to be undertaken by the adjudicating authority, in terms of the provisions of Section 9D(a) of the Central Excise Act. In the absence of the same, the statements have to be kept out of consideration and cannot be relied upon as an evidence. If that be so, the said statements cannot be considered to be an evidence and if taken out of the records, nothing survives for the Revenue to rely upon as an evidence - the demand of duty against M/s.Venus Cotton Mills Pvt. Ltd. along with imposition of penalty upon them is required to be set aside. Penalty on Managing Director - Held that: - as we have set aside the penalty on the manufacturing unit, the penalty imposed upon the Managing Director is also set aside. Appeal allowed - decided in favor of appellant. - Appeal Nos.E/457 & 458/2010 - Final Order Nos.43203-43204/2017 - Dated:- 20-12-2017 - Ms. Archana Wadha, Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited by them during the course of investigation. Penalty was also proposed upon Shri Kaliappan, Ex. Managing Director. 4. During the course of adjudication, the request by the appellant for cross-examination of various persons was made which was accepted by the adjudicating authority. However, it is seen that in spite of various dates fixed for cross-examination, some of the deponents of the statements did not appear and as such their cross-examination could not be conducted. The appellant, in their written reply, before the Commissioner contended that they were engaged in the manufacture of cotton yarn classifiable under Chapter 55 of CETA which is of two types, i.e. cotton yarn in cone form and cotton yarn in hank form and to meet the market requirements, they were manufacturing both the types of yarn. However, it is submitted that the processes for manufacture of both the types of yarn are different and unless the manufacturer has the infrastructure, the two types cannot be manufactured by him. They drew the attention of the adjudicating authority to the fact that they had installed 10 numbers of reeling machines during the financial year 1999 2000 and six more machines were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. in June 2003. The said two statements are self-contradictory statements and have to be ignored in the absence of the cross-examination. 7. The adjudicating authority did not find favour with the above contentions of the appellant and held against them by the present impugned order, thus necessitating filing of the present appeal there against. 8. After hearing both sides, duly represented by Shri S. Muthuvenkataramand and Ms. Minchu Mariam Punnose for the appellant and Shri K. Veerabhadra Reddy for the respondent, we note that the main allegation of the Revenue is that the during the period in question, the appellant M/s.Karunya Spinning Mills, which were subsequently sold to M/s. Venus Cotton Mills in June 2003, indulged in clandestine activities of clearance of cone yarn under the guise of hank yarn clearances. The adjudicating authority has split up the demand in three periods i.e. 1999 2000 and 2001 -02; 2001-02 and 2002-03 for separate analysis. For the first period, he has referred to the fact that during the said period, the appellant had mainly cleared their product to M/s. Sona Karuppan Yarn and Shri Mariamman Stores. By referring to the investigations conducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns can have no adverse effect on the assessee's case. It is for the said two buyers to file the income tax returns and the contravention of the income tax law by the said two buyers will not reflect upon the fact that the yarn being cleared by the appellant was not hank yarn or was cone yarn. 10. It is also seen that the appellant placed on record the sales tax assessment order for the relevant years issued by the DCTO in respect of the said two buyers. The adjudicating authority has not accepted the same on the ground that Shri K.S. Natarajan, the buyer's representative, in his statement has not deposed anything about filing of sales tax returns. However, Shri Rajendran and L. Natarajan of the said buyers have disclosed in cross-examination that they were filing the sales tax returns and had disclosed all their purchases in the said sales tax returns. The adjudicating authority has not accepted the same on the ground that it stands deposed after a period of two years from the first statement and as such was an afterthought. Inasmuch as the invoices, sales or accounts relating to the transactions of sales of hank yarn by the appellant, book of accounts, records, audited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises i.e. yarn broker and relates to the entries made by Sh. M. Nachimuthu, Yarn Broker, which cannot be held to be sufficient evidence to establish the clandestine activities of the appellant, similarly, the reliance by the adjudicating authority on the statements of some of the buyers, without producing them either for cross-examination or examination in chief, cannot be made the basis for arriving at a finding of clandestine removal against the appellant. Apart from the said statements, we note that there is no other evidence establishing that the appellant was clearing cone yarn in the guise of hank yarn. It is well settled principle of law that the allegation of clandestine removal are required to be established beyond doubt by production of sufficient and tangible evidences on record. The onus to prove such allegation lies very heavily upon the Revenue and cannot be concluded on the basis of the statements only. The majority decision of the Tribunal in the case of Tejwal Dyestuff Industries Vs. Commissioner of Central Excise, Ahmedabad reported in 2007 (216) ELT 310 (Tri. Ahdm.) as confirmed by Hon ble High Court of Gujarat reported in 2009 (234) ELT 242 (Guj.) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... users and does not contain any details of production. The Commissioner has observed that the appellant has not been able to show that the hank yarn manufactured and removed from their factory was converted into cone yarn through a corn vendor in which case it has to be held that the cone yarn was cleared from the assessee's factory. He has also discarded various returns by the appellant with the Textile Commissioner as not true. We note that the said assessment filed with the Textile Commissioner are documentary evidences supporting the assessee case that what was cleared from their factory was hank yarn and not cone yarn. As such, we find no reasonable and justifiable ground to uphold the said confirmation of demand of duty against the appellant. 13. Similarly, for the period 2001-02, the adjudicating authority has referred to the fact that the small pocket size note book recovered from Venkata Chalapathy Traders show that the cone yarn was cleared by the manufacturer without payment of duty. He has also referred to the Settlement Commission order on an application filed by the noticee, which stands rejected by the Hon ble Settlement Commission on the finding that the discl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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