TMI Blog2018 (3) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... h, AR. - for the Revenue(s) ORDER Per: Archana Wadhwa Both the appeals, one filed by M/s. Bhupinder Steel Pvt. Ltd. (hereinafter referred to as M/s. BSPL) and the other filed by the Revenue are being disposed of by a common order as they are arising out of the same impugned order passed by the Commissioner, vide which he has confirmed the demand of duty of ₹ 1,35,58,394/- against M/s. BSPL alongwith confirmation of interest and imposed penalty of identical amount under Rule 13 of CCR, 2002 and Rule 15 of CCR, 2004, read with Rule 25 of CER 2002, and section 11AC of Central Excise Act, 1944. Vide the same impugned order, the Commissioner has drooped the demand of ₹ 1,10,87,137 raised against M/s. BSPL on the allegation of non receipt of inputs like Ferro Manganese, Ferro Silicon Lumps, Ferro Chromes, manganese Ingot, Chrome Ingot etc. As the adjudicating authority has also dropped the penal proceedings against the director of M/s. BSPL as also against the dealer M/s. A.G. International (hereinafter referred as M/s. A.G.), Revenue has filed the present appeal. It may be clarified that the Revenue's appeal is not against the dropping of the demand in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealed that the same truck were used by M/s. HSAL for transportation of raw material to M/s. A.G. located at Faridabad as also for transpiration of the consignments to Jodhpur buyers. It was found that in almost 28 cases, the same vehicles were used for transporting the raw materials to M/s. AG as well as for transporting SS flats to jodhpur on the same day. Similarly, in respect of direct receipt of goods by the assessee, four such cases were found, where the vehicles were shown transporting the raw material to the assessee as also to Jodhpur buyers on the same day. In view of the above, the Revenue conducted searched at the premises of Jodhpur buyers i.e. M/s. Manak Overseas ltd. and M/s. Rishab Trading Company, Jodhpur on 06.09.2005 and their records were resumed. It was found that the said buyers had received the goods through the same truck numbers and have entered the same in their records. 4. During the course of investigations conducted from various transport companies, it was found that one transporter M/s. Komai Transport Co. used for transportation of the raw materials to the assessee factory premises was non-existence, inasmuch as a person residing there with the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of Shri. Puneet Singh Dugal, manager of another company M/s. Puneet Roadway, Sanjay Gandhi Transport Nagar, Delhi was recorded which were also to the same effect that his company's vehicles were never used for transportation from the factory of the M/s. HSAL to the assessee's company (M/s. BSPL) or to the dealer (M/s. A.G. Company). Statement of the owner's of the three vehicles, namely Shri. Sushil Kumar, Shri. Rajinder Prasad and Shri. K.C. Sharma were recorded during the course of investigation on 16.08.2007 and 20.08.2007. They denied having transported any goods in their vehicles from M/s. HSAL to the assessee (M/s. BSPL) or M/s. A.G. Faridabad. 5. During the course of further investigations, the assessee was asked to produce the bilties showing transportation of the raw materials from M/s. HSAL to their factory. In their various letters addressed to the DGCEI, the assessee revealed that since they were receiving the raw material on FOR basis, they have no copies of GRs bilties etc. 6. It is seen that the statement of Shri. Ramesh Rawat, Executive Director of M/s. HSAL was recorded on 29.06.2006 wherein, he stated that they were engaged in the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt of the raw materials. The notice also proposed penal action against various other noticees. 10. During the Adjudication proceedings, the assessee denied all the allegations on various grounds and also made a request for cross-examination of the deponents of the various statements, upon which the revenue has strongly relied upon. In their final reply filed on 25.04.2009, they further submitted that the revenue cannot conclude against them on the basis of only the statements of M/s. HSAL representatives and various transporters without offering them for cross-examination so as to test the veracity of the correctness of the said statement. They also referred to various evidences on record to establish that the goods have actually been received by them. It was the assessee's contention that they had reflected the raw material in their records and had duly entered the same in their RG-23A part -I, which stands consumed by them in the manufacture of their final product, which final product was cleared on payment of duty. As per the allegations of the Revenue, if they had not received the raw materials or inputs, it is not possible for them to manufacture the final product. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flats to various Jodhpur Customers. He arrived at the conclusion against the appellant on the ground that the same truck cannot move to Faridabad and Jodhpur on the same day. Reliance was also placed upon the statement of Shri. Ramesh Rawat, Executive Director of M/s. HSAL wherein, he stated that he had issued only cenvatable invoices to the assessee, without corresponding supply of the raw material, so as to cover the clandestine removal of consignments of S.S. Flats. Reliance was also placed upon the statement of various transporters recorded during the investigations. As regards, the assessee's contention about alternative procurement of raw material, if not received from M/s. HSAL, the adjudicating authority observed that there is every possibility of procuring the goods from the grey market or from other alternative sources. He also observed that the assessee's action of deposit of ₹ 1 Crore during the course of investigation establishes that they do not have a case on merits. As regards, dropping a part of the demand in respect of allegation of non receipt of Ferro Manganese, Ferro Manganese Lumps, Ferro Chrome Ingots, the adjudicating authority observed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Vs. Commissioner of Customs - 2006(194) ELT 290 Tri. On the other hand, the assessee's contention is that as the Revenue has only relied upon the statements of the co-noticee etc. without there being any other corroborative evidence, such deponents were required to be offered for cross examination. The reliance by the adjudicating authority on one paragraph of the Hon'ble Supreme Court decision without going to the actual detailed facts of the case available in that decision is not justified especially when the said decision is not under the Central Excise Act. Our attention stands brought to various decisions of the Tribunal laying down that when the revenue solely relies upon the statements of various persons, the same cannot be adopted as an evidence without offering the deponents for cross examination. In fact, Id. Advocate has further submitted that not only cross examination but examination in chief was also required to be done by the adjudicating authority so as to test veracity of truth of the said statements. For the above proposition, he has drawn our attention to the Tribunal's decision in the case of CCE, Delhi-LVs. Kuber Tobacco India ltd. reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statement, in so far as proving the truth of the contents thereof is concerned, therefore, is completely lost, unless and untill the case falls within the parameters of Section 9D(1), Therefore, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1). First, the person who made the statement has to be first examined as a witness in the case before the adjudicating authority, and Second, the adjudicating authority has, thereafter, to form an opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. The same view has been taken by the Hon'ble Allahabad High Court in the case of Parmarth Iron Pvt. Ltd. - 2010 (260) ELT 514 (A.Bad.) The reference is also made to the decision of the Tribunal in the case of Swiber Construction Pvt. Ltd. - 2014 (301) ELT 119 wherein, a part of the Hon'ble Delhi High Court's decision in the case of M/s. J. K. Cigarettes was reproduced as follow: Section 9D of the Act stipulates following five circumstances, already taken note of, under which statement previously recorded can be made relevant. These ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Sukhwant Singh - 1995 (3) SC (367) wherein it was observed as under: 138. Order of examination.- witnesses shall be first examined-in-chief then (if the adverse party so desires) cross-examined, then (if the party calling him so desires) re-examined. The examination and cross examination must relate to relevant facts but the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief. Direction for re-examination. -The re-examination shall be directed to the explanation of matters referred to in cross examination; and if new matter is by permission of the court, introduced in re-examination, the adverse party may further cross examine upon the matter. 9. It would, thus be seen that Section 138 (supra) envisages that a witness would first be examined-in-chief and then subjected to cross-examination and for seeking any clarification, the witness may be re-examined by prosecution. There is in our opinion, no meaning in tendering a witness for cross-examination only. Tendering of a witness for cross examination, as a matter of fact, amounts to giving up of the witness by prosecution as it does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cross examination of the said deponents was also required inasmuch as the assessees have placed on record evidence to show that the said statements were not reflecting the correct position. The evidence produced by the assessee indicate the falsity of the said statement, which evidence shall be discussed by us in the succeeding paragraph. Suffice it to say at this point that the assessees have placed on record the evidence, indicating that the inputs/raw material, atleast in certain cases have travelled up to their premises. In such a scenario, the statements of the transporters deposing that no such transportation was ever made reflects upon the fact of statements not being true. It can also be observed that while dropping a part of the duty, the commissioner has observed that there is no evidence of non receipt of the same. The said crome article, in respect of which the demand has been dropped were also transported to the assessee's factory in the same trucks, along with the AS/MS products. The assessee have placed on record certain invoices indicating that both the types of products travelled in the same vehicle. As such the adjudicating authority was not justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the adjudicating authority has adopted the statement of the transporters without offering them for cross examination on the ground of the statements having been recorded under Section 14, of Central Excise Act, the same reasoning would apply to the statement of the director Shri. Rajan Ghai Shri. Arun Ghai which were also recorded under Section 14 of the Act and the same would also attain the character of admissible evidence. The adjudicating authority has neither examined the said directors nor given a finding that the statements of the directors were incorrect and false. The part of the impugned order dropping the demand has not been challenged by the Revenue and has attained finality. We agree with the Ld. Advocate that the similar findings which stands arrived in respect of crome articles would equally apply to the AS/MS products which were also duly entered in the assessee statutorily records and duly shown to have been utilised in the manufacture of their final goods 16. We further note that the inquiries stands made from only few of the transporters whereas, the trucks of various other owners have also been used for transporting the alleged goods. No inquiry stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spute in the case of M/s. Tejwal Dyestuff Industries case was more or less identical to the dispute in the present case. It is seen that in that case there was a allegation of non-receipt of inputs in the asseesse's factory and non consumption of the same in the manufacture of their finished products and the Revenue sought to dis-allow the credit in respect of such inputs. It was alleged that only cenvatable invoices were received by the assessee, without physical receipt of the inputs. For the above allegation, revenue relied upon the inculpatory statements of the partner of the manufacturing unit as also of their production incharge. In addition statements of the some of the transporters was also relied upon, which were to the effect that they never transported inputs to the assessee's factory. Tribunal, vide majority order came to the conclusion that there was not sufficient evidence to uphold the allegations of the Revenue inasmuch as the confessional statements as also the statements of the transporters cannot be relied upon unless they are corroborated by independent evidences and when the same are contrary to the documentary evidences placed on record. It was also ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the tankers and brought within the municipal limits in which the factory of the assessee was situated. Admittedly, no driver of these tankers was examined by the Revenue authorities. The owner of the transport company has stated that, the delivery of the goods was to be taken at Asiali Naka, but from his statement, it cannot be inferred that the goods were not transported further into the municipal limits in the same tankers. The fact that the goods entered the municipal limits from Asiali Naka in the same tankeRs.is amply borne out from the octroi receipts. If the appellant-assessee had not received the goods sent under these invoices, it would not have been in possession of the octroi receipts, were produced by the assessee. In other words, if the goods were delivered elsewhere within the municipal limits, the octroi receipts would ordinarily be with the person who has taken them from the Octroi naka. Therefore, there was no reason to infer that the goods were delivered outside octroi Naka of Asiali and that they were not delivered to the consignee. 53 The fact that payments in respect of the inputs covered by the invoices were made by cheques, is not at all disputed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stamped by octroi receipts and GRs in the present case are stamped by the check posts of sales tax authorities. Further, similarities are found in the facts that the drivers of the vehicles have not been examined; the payments were of M/s. Tejwal Dyestuff Industries were more damaging than the evidences available in the present case which are only the statements of the drivers and the statements of M/s. HSAL Directors; without their being any confessional statements etc. As such, we are of the view that the ratio of the above decisions of the Tribunal, which is required to be considered as larger bench decision stand fully applicable to the facts of the present case. 18. The assessee has also explained the allegation made by the revenue as regards use of trucks to Faridabad as also to Jodhpur. It stands explained by the Id, Advocate that the allegation is only in respect of 28 cases pertaining in respect of M/s. A.G. International and four cases in relation to the assessee manufacturer. It stand clarified by the assessee that the exact timings of the issuance of the invoices stands neither mentioned in the invoice nor in the show cause notice and a vehicle takes around 2-3 hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflecting the same in their statutory records, they have cleared the same on payment of duty. Admittedly, it is impossible for the assessee to manufacture the final product out of vacuum. The same requires the raw material/inputs. There is no answer by the Revenue to establish as to from the assessee procured the raw material. While dealing with the above plea of the assessee, adjudicating authority has simpliciter observed that it might have been procured from the grey market. Apart from the fact that the said observation of the adjudicating authority is in the realm of assumption and presumption, the revenue was under a legal obligation to establish the alternative sources for procurement of such a huge raw material. Neither was there any investigations nor any evidence to show that in the absence of non receipt of the inputs from M/s. HSAL, how the assessee could have manufactured their final product. 20. At this stage reference can be made to the Hon'ble Punjab and Haryana High Court decision in the case of CCE, Chandigarh Vs. Neepaz steel ltd. - 2008 (230) ELT 218 P H vide which the Tribunal decision, involving an identical dispute, was upheld by rejecting the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority has been side-lined by him and there is no finding on the same. Unimpeachable documentary evidence produced on record by the appellate proves it to the tilt that the goods were being transported and the untested and uncorroborated statements of the transporter cannot be fully relied upon. Further, the assessee have also produced on record the evidence in respect of atleast 20 invoices approximately which are relatable to further sales made by M/s. A.G. to their other buyers located in the state of Rajasthan and Gujarat. The said invoices are with the VAT D-3 form and GRs. The goods stands sold by the M/s. A.G., as a first dealer, to the buyers of Rajasthan and Gujarat and majority of these invoices carry the stamp of the check posts, which indicate movement of goods from one state to another. As such the finding of the Revenue that the goods were actually not received M/s. A.G. registered dealer and were not further sold to the assessee and only invoices were being raised without the actual movement of goods, cannot be upheld. Tribunal in the case of Raj Pertroleum Products Vs. CCE, Mumbai-I reported in 2005 (192) ELT 806 (Tri. Mum.) has held that the findings of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at too a very heavy one, is placed upon the Revenue to establish so. It is a well settled law that the one who makes the allegation of any mala-fide etc. is required to prove the same, by production of tangible, positive corroborative evidence and onus cannot be shifted to the assessee to prove to the contrary. The Hon'ble Supreme Court in the case of Uniworth Textile ltd. Vs. CCE, Raipur - 2013 (288) ELT 161 (SC) has observed as under : 24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that the assessees had not brought anything on record to prove their claim of bona fide conduct, on the assessee. It is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India v. Ashok Kumar ORs. - (2005) 8 SCC 760 that it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... virtually no evidence, worth reliance, to conclude against the assessee as regards the allegation of non-receipt of inputs/raw materials. 24. Apart from the holding that the revenue has failed to miserably produce any evidence to show that the inputs in question were not received by the assesses, we take note of a vital development to reflect upon revenue's stand. It has already been observed by us that the proceedings were initiated against M/s HSAL alleging clandestinely removal of their final product of S.S. flats by issuance of show cause notice. The said M/s HSAL approached the settlement: commissioner. It is seen that the demand of duty raised against M/s HSAL was to the extent of ₹ 24.61 crore approximately. Out of the said duty of the demand M/s HSAL admitted duty liability of ₹ 13.33 crore approximately and requested for adjustment of duty already paid by them on AS/MS products. The said plea of the M/s HSAL stands rejected by the Settlement Commissioner. In their order dated 27.02.2008 para 5.1 of their order dated 27.02.2008, it stands observed by the settlement commission that DGCEI had made the statement that M/s HSAL had actually manufactured AS/MS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppressing the actual value of the products i.e. stainless steel products/flats cleared by them. The bench also notes that in addition to showing manufacture of AS/MS products in their statutory records, the applicant had admitted during the course of hearing that out of their total production of goods. Approximately 7S% was of stainless steel products and the balance was of AS/MS products. The production capacity of the applicant corroborated that the applicant could produce the SS/AS/MS products which were alleged to have been cleared clandestinely. 15. Central Excise Duty: The duty is settled at ₹ 24,45,08,118/-. The entry finally admitted duty of ₹ 24,45,08,118/- has been deposited by the applicant. Therefore, no further duty liability exists. It was observed by the settlement commission that if M/s HSAL wanted the adjustment of the said amount against the demand of central Excise duty in respect of S.S. Flats, it is required to produce evidence to show that such As/MS products were not actually manufactured and cleared by them. As such, it is seen that the Revenue took a contra stand before the settlement commission by submitting that the duty of 13 crore p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PER: DEVENDER SINGH 27. Having gone through the order of my Sister Member (J), I pass a separate order. 28. As the facts and the submissions of both sides have been duly recorded by Member (Judicial) in preceding pages, the same are not being repealed.. 29. Having carefully gone through the records and the submissions made, I find that the appellant had specifically sought cross examination of the witnesses Sh. Ramesh Rawat, ED of M/s HSAL and various transporters, and the same was denied on flimsy considerations by adjudicating authority. Denial of cross examination resulted in gross violation of principles of natural justice. Ld. Advocate also contended that in terms of Section 9D of the Central Excise Act, 1944, the statement of the witnesses cannot be relied upon. In support of these contentions, the Ld. Advocate placed reliance upon the decision of Kuber Tobacco Ltd. - 2016 (338) ELT 113 (Tri.-Del.) and the decision of Hon'ble Punjab Haryana High Court in the case of Ambica International Vs. Union of India and others -2016-TIOL-1238-HC-P H. 30. I find that in the case of Kuber Tobacco India Limited (supra), the issue has been examined by this Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Section 9-D of the Act were invoked by the collector holding that it was not possible to procure the attendance of some of the witnesses without undue delay expense. Whether such a finding was otherwise justified or not can be taken up in the appeal. 9. 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, in so far as proving the truth of the contents thereof is concerned, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). Therefore, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1)(i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and (ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. The same view has been taken by Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of procedure raid down in section 9D of the Central Excise Act, 1944. There has also been gross violation of principles of natural justice. Therefore, the matter needs fresh examination in terms of procedures raid down in section 9D of the Act as well as various judicial pronouncements cited hereinabove. 33. I also find that appellants had submitted before adjudicating authority documentary evidence of certain consignments having passed through the checkpost of Excise and Taxation Department at Sonepat and Faridabad. However, the adjudicating authority has given no findings on his appreciation of the said evidence. For that reason also, the matter requires fresh examination by adjudicating authority, who should record clear findings after examining the said evidence. 34. In view of the above observations, I set aside the impugned order and remand back the matters to the adjudicating authority to first follow the procedure laid down under section 9D of the Act and thereafter consider the other issues raised by the appellants in their defence including the documentary evidence referred in para 33 above and thereafter to pass appropriate orders in accordance with raw. All o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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