TMI Blog2017 (12) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... nager of the appellant, it has been inferred that the normal yield of sponge iron in the manufacturing process is in the range of 57% to 61% of the ore fed into the kiln. Taking the yield to be 61%, the Revenue has estimated the production and demanded duty on the same after deducting the quantity already accounted. During the course of search of the factory, the department has recovered several documents such as transporters bills, consignment receipt, weighment slips etc. showing receipt of sponge iron despatched from the appellant”s factory as well as records in loose sheets showing the despatch of the finished product to various customers. In some of these cases Central Excise invoices were found to have been issued but in many other cases no Central Excise invoices have been issued indicating, that a large number of consignments have been cleared without payment of duty. On the basis of these incriminating documents recovered by the Department, it is evident that large scale evasion of duty has been done by the appellant. Opportunity of cross-examination - section 9D of the Central Excise Act, 1944 - Held that: - For satisfying the requirements prescribed in Section 9D i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the kiln, they worked out the approximate quantity of Sponge Iron manufactured which came to 7829 M.T. against which the production recorded in the RG-I Register and books of accounts was 6236.290 MT. It, thus, appeared that production of 2031.421 MT of Sponge Iron valued at ₹ 4,59,10,724/- and involving duty of ₹ 66,20,326/- had not been recorded and the same had been cleared clandestinely without payment of duty. 2.1 The officers in the course of search of the factory also, found some other documents including a file marked File No. 1 and resumed the same for further scrutiny. The File No. 1 contained transporter s bills, consignment receipts and weighment slips issued by the consignees showing receipt of Sponge Iron despatched from the appellant s factory and also some records maintained in loose sheets showing despatch of the Sponge Iron to various customers. In respect of a number of despatches of Sponge Iron to various customers, as evidenced by the transporter s bills or consignment receipts issued by the consignees or weighment slips issued by the consignees, there were no central excise invoices issued by the appellants, indicating that those consignments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.3.2008 period and (b) penalty of equal amount was imposed on the appellant under Section 11AC of the Central Excise Act, 1944. (c) The Commissioner dropped the demand on the remaining quantity of Sponge Iron alleged to have been cleared clandestinely during April, 2008 august, 2008 period, as this quantity was held to be included in 1866.933 MTs of Sponge Iron. 2.4 The present appeal has been filed against the above mentioned order of the Commissioner confirming duty demand of ₹ 62,80,176/- and imposing penalty of the same amount. 3. Heard Ms. Mehak Gupta, ld. Advocate for the appellant submitted written arguments. It is pleaded that at the time of visit of the officers to the factory on 04.09.2008, though the stock of finished goods. i.e. Sponge Iron has been checked, no discrepancy were found; that the Department s case is based mainly on the quantity of Iron Ore fed into the kiln, as determined from the entries in the production log registers and the assumption that the Sponge Iron yield of the plant is uniform @ 61%; it is on this basis only that the production during the period of dispute has been determined and it has been alleged that production of 1866 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 641 (SC) Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II iii 2002 (143) ELT 21 (SC) M/s Laxman Exports Ltd. Vs. CCE iv. 2016 (336) ELT 15 (Del.) HIM Logistics Pvt. Ltd. Vs. Principal Commissioner of Customs v. 2016-TIOL-1238-HC-P H-CX: M/s Ambika International Vs. Union of India. vi. 2015 (315) ELT 145 (Tri. Del) Agrawal Round Rolling Mills Ltd. Vs. CCE ST, Raipur. vii. 2004 (173) ELT 80 (Tri. Del.) M.H. Textiles Ltd. Vs. CCE, Faridabad. The appellant had categorically stated therein that the submissions made by them are interim and sought an opportunity to make final submissions after cross-examination. Thus, the principles of natural justice have been violated by denying cross-examination of- a) Sh. G.C. Giri, Production Manager. b) Sh. Sunil Agarwal, Prop. M/s Sunil Roadlines c) Sh. Arindam Dutta, General Manager- Shri Consultants 5. Sh. S. K. Bansal, ld. AR pleaded that the production of Sponge Iron has been correctly estimated and the same is much higher than the production recorded in the RG-I Register; that for estimating the production of Sponge Iron, the officers had determined the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of Sponge Iron without the issue of invoice has been confirmed by the various customers Sh. Ajay Kumar Gupta, Director of M/s Sairam Steels (Pvt.) Ltd. and Sh. Arindam Dutta, General Manager, M/s Shri Consultants, Raigarh; that though they, while confirming the receipt of consignments of Sponge Iron without invoices, have claimed that consignments were not accepted by them and returned, as the same were not accompanied by invoices, there is no record in the appellant s factory that these consignments had been received back by them and thus, the customers claim that the consignments received without invoices had been returned by them is not acceptable; that no explanation has been given by the appellant regarding the huge difference between the quantity of production of Sponge Iron actually recorded by them in their RG-1 register and the quantity of Sponge Iron expected to the produced on the basis of the quantity of the Iron Ore consumed by them; that this discrepancy coupled with a large number of clearances of consignments without invoices indicate large scale of evasion of duty by under reporting the production and clandestine removal. 6. Heard both sides and perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Section 9D of the Central Excise Act, 1944, before the statements of any persons are used by Revenue to establish a case, these witnesses will have to be examined during the course of the quasi-judicial proceedings and an opportunity for cross-examination is required to be extended to the assessee. Since the adjudicating authority has failed to do so, it has been argued that the impugned order has been passed in violation of the principles of natural justice. 11. The applicability of the provisions of section 9D of the Central Excise Act, 1944 in adjudication proceedings before departmental authority was examined by the Hon ble Punjab and Haryana High Court in the case G Tech Industries [ 2016 339 ELT 209 (P H)] in which the Hon ble High Court observed as under 4. In view of the fact that the case of the petitioner is essentially premised on Section 9D of the Central Excise Act, 1944, it would be appropriate to reproduce the said provision, in extenso, thus : 9D. Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of any inqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before a Gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein. In other words, in the absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a Gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). 9. The consequence would be that, in the absence of the circumstances specified in Section 9D(1), if the adjudicating authority relies on the statement, recorded during investigation in Central Excise, as evidence of the truth of the facts contained in the said statement, it has to be held that the adjudicating authority has relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts. 12. Similar views have also been expressed by the Hon ble Delhi High Court in the following cases: 1. Flevel International Vs. CCE [2016 (332) ELT 416 (Del)] 2. Him Logi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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