TMI Blog2018 (6) TMI 1342X X X X Extracts X X X X X X X X Extracts X X X X ..... e do not find the finding by the Original Authority tenable that cross examination could not be offered because the appellant could not produce the prosecution witnesses - it was obligation on the part of the Revenue to produce its witnesses for cross examination. From the impugned Order-in-Original if the statements recorded in respect of the above stated persons are removed, then there is no evidence left for arriving at the conclusions drawn by the Original Authority. The statements of above stated persons were relied upon for alleging that the Geeta Nagari, Bijnore premises was taken on rent by the appellant, the computer was purchased by the appellant, Shri Bhagirath Roy, Shri Monmohan Gautam were employees of appellant and they were making entries in the computer on behalf of appellant and that the said entries revealed that the extra/unaccounted goods were manufactured by the appellant and clandestinely removed. All these conclusions do not have any other basis, than the statements of above stated persons, and as directed and ruled by Hon‟ble Allahabad High Court, the statements of above stated persons cannot be relied as evidence, since they were not produced for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid documents were supplied on 19/12/2011 whereas the signatures of Shri Atul Kumar Gupta, Liaison Officer appearing on the acknowledgement are 28/09/2011 i.e. before the date on which the said documents were supplied to the appellant. As such, the Revenue's contention that their authorized signatory has given acknowledgement for receipt of all the non-RUDs, cannot be accepted for the obvious reason that the signatures are dated 28 September 2011, whereas the documents were handed over on 19/12/2011. In any case, Ld. Advocate submits that most of the documents stand received by them and it is only balance 63 documents which are yet to be received. To the same effect is the grievances of other appellants who have given the list of RUDs to the Revenue in office of CDR. Copies of the same have been provided to Ld. Advocates appearing for the appellants/parties. Inasmuch as the impugned orderstands passed by the adjudicating authority without supply of RUDs (most of which have been now supplied in terms of the directions of the Bench) and without there being any written detailed defence reply filed by the main appellant M/s. Parmarth Steel And Alloys Pvt. Ltd. and without ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 Shri Raj Kumar Agarwal 1,00,00,000 Priyansh Agarwal Legal heir of Raj Kamal Agarwal 2,00,00,000 Priyansh Agarwal Legal heir of Raj Kamal Agarwal 2,00,00,000 M/s.Kamakhya Steels Pvt.Ltd. 6,76,31,129 6,76,31,129 5. The facts in brief are that are Parmarth Iron Pvt.Ltd., Biznor, U.P. (hereinafter referred to as PIPL) were registered under the Central Excise provisions and were engaged in manufacture of MS Bars, End Cutting, MS Ingots, Runner and Risers etc.. On the basis of intelligence that PIPL were evading Central Excise duty by undervaluation and clandestine removal, a search and seizure was conducted in their premises on 10/07/2007. The search along with the factory premises of PIPL was also conducted at various other places including residential premises of the Directors and also the premises of another company under the same management namely M/s.Parmarth Steel Alloys (P) L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the said period, meaning thereby that they had suppressed the facts from the Department. (2) That they had not reflected the actual production of final products in their production/stock registers during the said period as huge quantities of their final products were cleared by them from their factory clandestinely without recording the same in their production/stock registers thereby suppressing their production. (3) That they had suppressed the production of the finished goods and cleared the same clandestinely without issue of bills and without reflecting the requisite details of the same in their monthly ER-1 returns, thereby making willful mis-statement. (4) That they have contravened the provisions of Central Excise Act and Central Excise Rules read withCenvat Credit Rules with intent to evade payment of duty. And (5) That the fact of non-payment of duty amounting to ₹ 65,47,51,765/- on finished goods cleared clandestinely during the said period by PIPL came to light only when the premises of PIPL and other related concerns/premises was searched on 10/07/2007 and subsequently the case was investigated by the Revenue. 9. Similarly it was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectly in teeth of the judgement of Hon‟ble Allahabad High Court as well as the Final Order in the earlier round of this Tribunal inasmuch as Ld.Commissioner have extensively relied upon the statement of aforesaid five persons without providing opportunity of cross-examination of these persons. Even otherwise as per the Department's own case Shri Manmohan Gautam and Shri Bhagirath Roy were authors of daily sales Registers on the basis of which entries were made by them in computers installed at H-8, Geeta Nagri, Bijnor. Similarly 3 persons at Ghaziabad were authors of the documents resumed from office at Navyug Market, Ghaziabad. Once this is so, then cross-examination of these persons was mandatory as they were the authors of documents relied upon by Revenue. The Ld.Counsel have relied upon the ruling of Hon‟ble Supreme Court in the case of Bareilly Electricity Supply Co. Ltd. Vs. Workmen and Ors - 1971 2 SCC 617 wherein the Hon'ble Supreme Court observed the application of principles of natural Justice does not imply that what is not evidence can be acted upon. On the other hand what it means is that no materials can be relied upon to establish a contested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld.Counsel also relied upon the ruling in the case of CCE Vs. Vishnu Co. Pvt. Ltd [2016(332) ELT 793 (Del.)] wherein the Delhi High Court was considering the issue of clandestine removal and the questions framed by the Hon‟ble High Court was whether statements recorded under provisions of Section 14 of Central Excise Act by the office of the Department can be taken as proof of the statutory violations by the respondent assessee. Further whether the CESTAT was justified in setting aside the case, demand, redemption fine and confiscation of goods by ignoring material facts and further whether the CESTAT was justified in ignoring the entire facts on record and the statements of the witnesses and concerned persons . The Hon'ble High Court held that the contention that it is the responsibility of the noticee/assessee to produce the witnesses for cross-examination is a strange one considering that they are witnesses of the Department and that their statements are being relied upon by the Department in support of the show cause notices. Since it is relying on such statements, it is the responsibility of the Department to ensure the presence for cross-examination. Further t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence is something about which party has given a writing in the form of an affidavit. Further such party is in cross-examined by the opponent orthe adversary against whom the statement or material is sought to be relied upon. If the veracity of these tested in the cross-examination and the party stand the same then alone the version is found in the affidavit or the recorded statement can be termed as evidence and accepted and relied upon by an Adjudicating Authority. (6) So far the alleged confession of suppliers of MS Ingots and buyers of saria/rods is concerned the appellant had sought cross-examination of 68 persons whose statements had been relied upon by the Revenue. These 68 persons include the five aforementioned persons whereas remaining 63 persons were alleged suppliers of MS Ingots and/or buyers of saria/rods. It was the responsibility of Revenue to produce these persons. Revenue could produce only 30 persons, hence the statements of remaining 38 persons cannot be read as evidence against the appellants. The 30 persons produced by Revenue for cross-examination have retracted from the relevant earlier statements, hence their statements recorded during investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... armarth Iron‟ is concerned, the same is baseless. It is a settled law that clandestine removal is a serious charge, which is required to be discharged by production of sufficient and tangible evidence in the nature of purchase of raw material, use of electricity, additional labour, sale of final product, clandestine removal, mode and flow of funds etc. Reliance is placed on the ruling of Hon‟ble Allahabad High Court in the case of Continental Cement Company vs. Union of India reported in 2014 (309) ELT 411(Alld.-HC). The Hon‟ble High Court have observed further, unless there is clinching evidence of the nature of purchase of raw material, use of electricity, sale of final products, clandestine removal, the mode and flow back of funds, demands have been confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. In other words the Revenue is required to find out the details of excess production, whether excess raw material have been purchased, dispatch particulars from the regular transporters, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for use of road permit, the learned counsel states that there are similar provisions for use of road permit in other States also, which provide that the buyer purchasing interstate must use declaration form for import of goods as prescribed in their State. Further in view of State provisions of under Section 8 A read with Section 13 A of the U.P. Trade Tax Act, there is no such incident of seizure found and/or recorded in the assessment order passed under the U.P. Trade Tax Act, 1948. Had the appellant been engaged in clandestine removal at a scale as alleged, there would have been several instances of violations under the State VAT laws. (15) The learned counsel further urges that for the alleged clearance to the tune of ₹ 701 crores, receipt of only ₹ 85 crores is alleged which is also inconsistent. Statement of Shri Pankaj Agarwal, Chartered Accountant also cannot be considered as evidence, as he was not produced for cross-examination. Further the Revenue had not enquired from the bankers of the appellants. Thus when the law provides that charge of clandestine removal must be proved by Revenue, which have not been done in the present case, as such the demand rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance is placed on the ruling in Ballarpur Industries Ltd vs. Union of India 1991 51 ELT 30 (Bombay High Court) wherein the Hon'ble High Court in Para-38 of its judgment have observed it is clear that the said section deals with a presumption in respect of a document tendered in evidence in prosecution. The said section is therefore not applicable in cases of other enquiries. Even in the case of prosecution the presumption raised is not an irrebuttable presumption but is a rebuttable presumption, as it is clear from the phraseology used therein, unless the contrary is proved by such person . It is not, therefore, open to the respondent-Revenue to urge on the basis of Section 36 A that the presumption about the documents raised thereunder is conclusive, much less in the case of enquiry pursuant to the show cause notices issued. (17) As regards confiscation of cash of ₹ 1.78 crores it is urged that the same is wholly without jurisdiction. Section 12 of the Central Excise Act provides that Central Government may by Notification declare that provisions of Customs Act, 1962, related to confiscation etc., be applicable in regard to like matters under the Central Excise A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of this contention, this Tribunal vide Interim Order No. 25/2017 dated 07 November, 2017, directed Revenue to submit a report as to whether said Notification No. 68/63 CE is further amended subsequent to 02 September, 1997, and if so the most recent amended copy of the said notification may be submitted. We also directed Revenue to submit a report on whether said amount of ₹ 1.78 crores was deposited with bank in term deposits and if so Revenue may report total interest earned on the said till date, calling for the report to be submitted on or before 29 November, 2017. In reply the Assistant Commissioner, Central Goods and Service Tax, Meerut by his Letter No. C. No. V (15) REV 1/CESTAT/19/15 dated 29 November, 2017, have replied the Notification No. 68/63 CE dated 04 May, 1963 was last amended vide Notification No. 33/1999 CENT dated 11 May, 1999. Further reporting that the amount of ₹ 1.78 crores which was confiscated in the subject mentioned case by DGCEI, New Delhi, was deposited with the bank in three numbers of term deposit (s). The total interest earned on the said deposits as on date is ₹ 65,53,735/-, as ascertained from the bank. (22) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han Gautam and Shri Bhagirath Roy, Shri Mohan Aggarwal, Cashier, Shri Mukesh Chaudhary, Sales Executive, Shri Pankaj Aggarwal and Shri Rajesh Sharma and Shri Shravan Kumar Singhal partner of S.M. Computers and Shri Ram Mohan Jindal-Landlord of premises at Geeta Nagri, Bijnore. He has further contended that statements of the above stated persons are not admissible in evidence, in view of the ruling of Hon‟ble Allahabad High Court, in the appellants case. Therefore, all the evidence relied upon by relying on the statements recorded in respect of above stated persons, are not the piece of evidence and, therefore, any finding arrived at on the basis of statements of the above persons during investigation, is not sustainable, in view of clear directions of Hon‟ble High Court of Allahabad, in the present case. He has further submitted that statement of Shri Singhal was relied upon by Revenue to make allegation that the personal computer from which hard disk was retrieved or removed at Geeta Nagri, Bijnore was purchased by appellant, and that since Shri Singhal could not be produced for cross examination, it cannot be established that the computer from which hard disk was remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has argued that the entire allegation by Revenue is Pre-planned by Investigating Officers against the appellant (s). 12. As regards Parmarth Steel Alloys (P) Ltd., the learned Counsel states and adopts the arguments made in the matter Parmarth Iron Pvt. Ltd. They further added that admittedly no incriminating documents were found by the Investigating Officers during search in the premises of Parmarth Steel. The demand of duty is confirmed in the impugned Order-in-Original, solely based on the statement of one Shri Sheru Malik, Aas Mohd. Idris, who were not produced by Revenue for examination and cross-examination in the adjudication proceedings. Hence in view of the law discussed hereinabove, the demand of duty based on their statements (of such persons) is not sustainable. 13. So far penalty imposed on the appellant company and the directors are concerned, the whole demand against the company-appellants is not sustainable. Thus there is no question of imposition of penalty on the appellant company and the directors. 14. So far the disallowance of Cenvat Credit for shortage of Sponge Iron, in the case of PIPL is concerned, the learned counsel states that the verific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the course of investigation in the premises of Kamakhya Steel, no incriminating documents were found and/or seized. The whole allegation and confirmation of demand by Revenue is by way of third-party evidence, and the statement of the said Shri Sheru Malik and Idris. As these persons have not been examined in the adjudication proceedings, thus the demand against them is not sustainable and accordingly prays for setting aside the demand and penalty. 16. The Learned A.R. for Revenue has argued as follows:- 16.1 The present appeals have been preferred against OIO No. 23/Commr./M-I/2014 dated 23.06.2014 passed by Commissioner, Customs and Central Excise, Meerut-I, in respect of M/s Parmarth Iron Pvt. Limited, 10th KM Stone, Nagina Road, Bijnore(U.P.) Others in adjudication proceedings, investigated by of DGCEI,New Delhi, SCN No.68/INT/DGCEI/HQ/07 dated 07.07.2008. There were total 108 noticees in the SCN. 16.2 The impugned OIO confirmed (1) demand of central Excise duty amounting to ₹ 65,47,51,765/- against PIPL for the period February 2004 to July 2007 along with interest, (2) demand of cenvat credit of ₹ 10,11,890/-on the quantity of sponge iron found short o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises of buyers of saria‟, records summoned from suppliers of M.S. Ingots and buyers of saria‟, statement of directors of M/s PIPL, suppliers/manufacturers of M.S. Ingots, buyers of saria‟ etc and others supported evidence, as detailed in the SCN and discussed in the OIO. After extensive investigation, the above referred SCN was issued and adjudicated vide impugned OIO. 16.7 Following issues were found to be involved in the case by adjudicating authority- (1)Whether during period from 02/2004 to 07/2007 M/s PIPL and M/s PSAPL were engaged in production and removal of excisable goods without its accountal in statutory records, without issue of invoices and without payment of central excise duty payable thereon? (2) Whether during the period in question, M/s PIPL and other manufacturers of M.S. Ingots including M/s PSAPL who supplied M.S. Ingots to M/s PIPL undervalued their excisable goods on statutory invoices and made removals of the same without payment of appropriate excise duty payable thereon? (3) Whether during the period in question, M/s PIPL and manufacturers of M.S. Ingots including M/s PSAPL recovered cash from their customers directly or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Muzaffarnagar and the premises from where it was recovered was in possession of M/s PIPL. The sale of said CPU is also corroborated by statement dated 20.08.07 of Sh. Shravan Kumar Singhal, partner of M/s S.N. Computer. The statement of the owner of the premises and ownership of the scooter parked at Geeta Nagari also corroborate that the said premises was in possession of M/s PIPL. The premises at Geeta Nagari was used as office premises of M/s PIPL and the hard disc resumed from the said premises containing the relied on data were records pertaining to sale and purchase made by M/s PIPL during the period in question. The computer hard disc bearing No.ST340015A SIN 5LASRI3 resumed during search at the premises at H8, Geeta Nagari, Bijnore was sealed in an envelope bearing signature of panchas and representatives of PIPL and PSAPL available on spot, and it is immaterial if said activity was not covered in Panchanama, since, recovery of the same along with the other items is covered in Annexure A to Panchanama. Regarding Panchas (not independent) it is usual practice by the investigating agencies to accompany independent Panchas with them. The conditions of admissibility of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, initial statements are reliable evidences given under Section 14 of Central Excise Act,1944, and admissible as evidence. (C) Regarding non-admissibility of statements of some vital witnesses including the 08 Panchas for their non-production/non-availability for cross examination The witnessing of the panchanama proceedings at the relevant time by Panch witnesses who could not be found or whose presence could not be obtained for cross examination for want of their present locations, was legally proper in the eyes of law. (D) Regarding allegations of manipulations/tempering by investigating officers and denial of cross examination of departmental officers-. M/s PIPL also sought the cross examination of Departmental officers, which was not allowed as it was considered to be unwarranted, unjustified and uncalled for. The cross examination of the investigating officers cannot be allowed unless there is sufficient evidence to indicate that the investigating officer has predilection of mind and has bias against the person being investigated. There is no such charge leveled against any officer. The Departmental officers did not add anything during search proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the statements of Shri Man Mohan Gautam dated 10.07.2007, Shri Mukesh Chaudhary dated 22.08.2007 and Shri Shamshad Ahmad dated 05.10.2008 and has also deposed that the cash received from the sale of goods without invoice was used for payment of raw materials which they purchased without invoice; that in case of sale to dealers/ market, the rates of saria were more than the rates shown in the invoices and the excess amount was taken in cash, and the difference in such rates was appro.Rs.2000/ per MT When sellers and buyers have admitted the transactions to have taken place between them, nothing remains to be inferred and only plausible explanation that can be given is that clandestine removal of goods, not accounted for in the records of M/s PIPL, have been made to the buyers appearing in sales ledgers and other documents resumed during search proceedings. (G) Contention reg. cash confiscation The cash in hand at M/s PIPL premises on the day of search on 10.07.2007 was ₹ 2,16,30,258/- as per cash book resumed at Sl.no.19 of Panchnama whereas actual recovery of cash from the cashier Mr. Mohan Agarwal was ₹ 1717797/-only. The cashier stated that balance amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich consumption is shown as 88,42,091 litres. The computer hard disc purchase ledger accounts show the purchase of Furnace oil during said period as 95,23,924 litres. Hence, during the period, 3,87,297 ltrs of furnace oil were not accounted for which was purchased clandestinely. The actual receipt and consumption of furnace oil with the average consumption of 34.57 litres per MT would have yielded 2,69,028 MT of Saria which is commensurate with the production of 2,88,218.57 MT appearing in the data from the hard disc of M/s PIPL. On the basis of actual production report for the month of May, 2007 of M/s PIPL and the number of units of electricity consumed as per the electricity bill for the same period, the units of electricity consumed for manufacture of one MT of Saria has been computed as 177 units whereas average per MT consumption of electricity for manufacture of saria when computed on the basis of production recorded in statutory records for the months of Feb06 and May 2007 come to 424 and 422 units respectively. The average per MT consumption of 424 and 422 units on the basis of recorded production and electricity consumption in bills are too high on comparison with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very of Seagate Model contains remark- Hard disc installed in Vintron CPU operated by Shri Bhagirath Rai, A/c Assistant in annexure A to Panchanama dated 10.07.2007. Hence, it is established beyond doubt that hard disc containing data of sale/purchase of PIPL was installed in the Computer/ CPU operated by Mr. Bhagirath Rai, Account assistant and the emphasis of the appellants on frivolous technical points like non-recording of computer Serial Number or non- mentioning of sealing of computer hard disc in the Panchanama are attempts to confuse the Hon‟ble court. These technical points raised by the appellants do not negate the substantial evidence in form of duly drawn recovery Memo (Panchnama) of hard disc and other records/devices. Further, the linkage between computer invoiced by Bill No.056 to the Hard Disc resumed from premises of 1st Floor Geeta Nagari on 10.07.2007 is well established by statements of the concerned persons. (C) The contents of the Hard Disc are material evidence in the instant case and it is immaterial as to from which computer the Hard was retrieved on 10.07.2007. The recovery of Hard Disc on 10.07.2007 from 1st Floor, GeetaNagari, Bijnore is establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta Nagari, Bijnore is established beyond any reasonable doubt. (F) The investigation established beyond any reasonable doubt that the premises 1st floor,H-8, Geeta Nagri, Bijnore was rented to M/s PIPL and was being used by them as a secret place, to account for and keep the records of their duty paid as well as non duty paid clearances . The premises was first searched on 10.07.2007 and was left by DGCEI officers after conclusion of search proceedings on 10.07.2007. Again, on 18.07.2007, it was searched by DGCEI officers and Mr. Man Mohan Gautam was again found in the premises. As Mr. Man Mohan Gautam was employee of PIPL, naturally, the premises was under control of PIPL during the period from 10.07.2007 to 18.07.2007. (G) The conduct of search proceeding in presence of witnesses (Panchas) belonging to the immediate vicinity/locality of searched premises is desirable in view of Hon‟ble Apex Court guidelines. However, Hon‟ble Apex Court has not ruled that if the search proceedings have not been conducted in presence of local witnesses of repute, then, such search proceedings would be void or without authority of law. As lucidly admitted in the adjudication order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of matter. The appellant did not cooperate in securing the presence of the witnesses in spite of the the fact that all these persons were employees of M/s PIPL at the time of the visit of the officers of DGCEI in the factory of M/s PIPL and intimation letters were sent to them at the address of M/s PIPL as well as their residential addresses as per record of the case. However, (i) PIPL refused to receive the said letters and thereafter, all these letters were returned by the postal authorities with the remark- company official told that addressee has left the company (ii) the letters sent to their residential addresses were also returned by the postal authorities with the remarks- Addressee has left/Address not existing/incomplete address etc. Hence, intimation letters for cross examination could not be served for want of their present address and the cross examination could not be undertaken by the counsel of PIPL for want of presence of such witnesses for cross examination in spite of fixing more than 03 dates separately and by issuing letters to them. Hon‟ble High Court had also directed to complete the adjudication expeditiously. Further, the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that if the said persons were forced to give incriminating statements against M/s PIPL, they all should have retracted the same without delay. (L) Following case laws relied upon by the adjudicating authority also support the stand of the Revenue that retraction of statement is not always acceptable. (i) Commissioner Vs. K.Manickam-2001(128)ELTA66(SC) (ii) Ekramuddin V. Collector-2003(155)ELTA244(SC) (iii) Kalema Tumba Versus State of Maharashtra-2000(115) ELT38(SC) (iv) Laxmi Tex. Chem versus Commissioner of Central Excise,Surat I2008ELT677(Tri.-Ahmd) 18. We have carefully gone through the records of the case and heard the submissions made by both sides. 19. After service of SCN, PIPL submitted letter dated 20/01/2009 requesting the Commissioner, Central Excise, Meerut-1 seeking hard copies of the documents relied upon by the department. It also appears from record that Commissioner, Central Excise, Meerut-I vide his order dated 27/10/2009 indicated that a CD containing these documents has already been made available, after which PIPL filed two applications on 23/11/2009, one for supply of photostat copies of relied upon documents and the other se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as the question, whether the non-relied upon documents were actually supplied, failing which the opportunity of cross examination was a futility, can also be looked into by the Appellate Authority. These are questions of facts, which will require findings, after scrutiny of records, to examine the plea of denial of opportunity given to the petitioner in the proceedings of adjudication. 13. The writ petition is dismissed relegating the petitioner to file statutory appeal against the order, in the Customs, Central Excise and Service Tax Appellate Tribunal. As this writ petition was pending since 1.2.2011, in case the petitioner files an appeal along with the application for condonation of delay within a week, the question of delay may be considered by the Tribunal, in accordance with law, taking into account the time spent in pursing the writ petition in the High Court. 24. Thereafter, PIPL and other Appellants challenged the Order in Original dated 8/12/2011 before this Tribunal and by Final Order No.A/55223-55311-EX (DB) dated 31/12/2012, the appeals were allowed by this Tribunal with the following observation:- 13. In as much as the impugned order stands pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which was followed by submissions and additional submissions etc. by PIPL and other co-noticees. 26. During the course of hearing of stay applications, Supplementary Affidavits were filed by PIPL PSAPL bringing on record documents showing financial hardship, copy of order dated 20/07/2013 passed in Criminal Case No. 101/2007 under Section 135 of the Electricity Act and also the copies of assessment orders passed under the U.P Trade Tax Act, 1948. Second Supplementary Affidavit was also filed by PIPL bringing on record the orders by which bail was granted to Sri Lalit Kumar Agarwal and Sri Raj Kamal Agarwal, copy of order dated 23.8.2017 passed by U.P Electricity Commission, copies of registration certificates issued under the U.P Trade Tax Act, 1948, Central Sales Tax Act, 1956 and U.P VAT Act, 2008, copy of Form 6-A under EPF Act, 1952 and retractions dated 12.7.2007 and 25.10.2007 made by Sri Lalit Kumar Agarwal and Sri Raj Kamal Agarwal before the Ld. Magistrate at Patiala House Court, New Delhi including retraction dated 16.7.2007 made to Additional Director, DGCEI, New Delhi. 27. During the course of hearing of appeals, Sri Raj Kamal Agarwal expired on 29/07/2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. We, therefore, have no hesitation in holding, that there is no requirement in the Act or Rules, nor do the principles of natural justice and fair play require that the witnesses whose statements were recorded and relied upon in the show cause notice, are liable to be examined at that stage. If the Revenue chose not to examine any witnesses in adjudication, their statements cannot be considered as evidence. However, if the Revenue chose to rely on the statements, then in that event, the persons whose statements are relied upon have to be made available for cross examination for the evidence or statement to be considered. It has also been informed at Bar that the aforesaid judgment has attained finality, as none of the party challenged the aforesaid judgment before Hon‟ble Supreme Court. Thus, the direction was very clear i.e. if the revenue does not chose to examine any witnesses in adjudication, their statements cannot be considered as evidence and if revenue chose to rely upon statement of any person, than in that event, the person whose statement is relied upon have to be made available for cross-examination, for the evidence or statement to be considered. 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue that these five persons were employees of PIPL cannot be sustained, in absence of any evidence in support of the charge. 34. Further, it was not the responsibility of PIPL to produce these persons but it was the responsibility of revenue to produce these persons for cross-examination, since it was the revenue who was relying on statements given by these persons. As held by Hon‟ble Supreme Court in the case of Union of India v. Sardar Bahadur (1972) 4 SCC 618, where while following the law laid down in the case of Bareilly Electricity Supply Co. Ltd. v. Workman and Ors (1971) 2 SCC 61, it was held:- We do not think that the statements should have been received in evidence as the appellant had taken no step to produce the persons who made the statements, for cross- examination by the respondent. It was the duty of the appellant (revenue) to have produced the persons whose statements were sought to be relied/proved for the cross-examination of the respondent. Hon‟ble Delhi High Court in the case of CCE v. Vishnu Co. Pvt. Ltd .2016 (232) ELT 793 (Del) has rejected similar contention of department in the following words:- 42. The contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om hard disc was feeded in computer by Sri Manmohan Gautam and Sri Bhagirath Roy only and not by any other person. Since the data retrieved from computer hard disc has important bearing on the case, hence it is necessary to refer to the law on the subject. 39. Hon‟ble Supreme Court in the case of Bareilly Electricity Supply Co. Ltd. v. Workman and Ors (1971) 2 SCC 61 has held that if a document is produced to establish some fact than its writer must be produced for giving opportunity to the party who challenges such fact. The relevant part of the judgment is reproduced hereunder:- ......But the application of principle of natural justice does not imply that what is not evidence can be acted upon. On the other hand what it means is that no materials can be relied upon to establish a contested fact which are not spoken to by persons who are competent to speak about them and are subjected to cross-examination by the party against whom they are sought to be used. When a document is produced in a Court or a Tribunal the questions that naturally arise is, is it a genuine document, what are its contents and are the statements contained therein true. When the Appellant produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case (supra). However, inspite of the specific requests made by Appellants for cross-examination of Sri Manmohan Gautam and Sri Bhagirath Roy, none of them were produced for cross-examination. Thus, when the writer of entries made in computer from which hard disc was allegedly retrieved, was not produced by revenue for cross-examination, then the accounts retrieved from hard disc cannot be used as evidence against the Appellants. 41. On the same reasoning, since the three persons viz Sri Shailendra Gupta, Sri Pankaj Agarwal Sri Rajesh Sharma, were the authors of documents resumed from 107, Ist Floor, Navyug Market, Ghaziabad, were also not produced for cross-examination and hence documents resumed from 107, Ist Floor, Navyug Market, Ghaziabad, also cannot be used against the Appellants. 42. Finding recorded by the Ld. Commissioner that the revenue case is not solely based on the statements recorded and there is sufficient material‟ to corroborate the facts stated in the statements, is also incorrect, as the only other material to corroborate the statements is printouts of data, which in absence of cross-examination of writer, cannot be regarded as evidence. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Agarwal again made retractions from his earlier statement on 16/7/2007 before Additional Director, DGCEI, New Delhi. Thus, the retraction of both these persons was at the first available opportunity and therefore cannot be brushed aside in absence of reliable independent material to corroborates the confession, as held in Vishnu Co . (supra). 45. Further, the defence of Sri Lalit Kumar Agarwal that his confession was not voluntary but obtained under duress and coercion cannot be taken lightly. In the case like this, where the statements of alleged employees and data retrieved from hard disc, cannot be read as evidence, and there is no independent reliable material to corroborate the alleged confession, then the burden was clearly on revenue to show that confession was voluntary and not obtained as an outcome of threat etc. Hon‟ble Supreme Court in the case of Vinod Solanki v. Union of India 2009 (233) ELT 157 has considered this aspect of the matter and has held that:- 34. A person accused of commission of an offence is not expected to prove to the hilt that confession had been obtained from him by any inducement, threat or promise by a person in authority. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Collector of Customs v. D. Bhoormull AIR 1974 SC 859, Sujeet Singh Chabbra (supra) K.I Pavunny (supra) has held that :- 40. In fact Ms. Sharma too insisted upon reading from such retracted statements in order to persuade the Court to hold that the impugned order of the CESTAT is perverse. According to her the retraction made more than 20 months after the making of the initial statements would have no effect in the eye of law . She too submitted that the responsibility of ensuring the presence of such persons for cross-examination was of the noticees themselves. 41. What the above submission overlooks is the 'reliability' of such statements. Once it is shown that the maker of such statement has in fact resiled from it, even if it is after a period of time, then it is no longer safe to rely upon it as a substantive piece of evidence. The question is not so much as to admissibility of such statement as much as it is about its 'reliability'. It is the latter requirement that warrants a judicial authority to seek, as a rule of prudence, some corroboration of such retracted statement by some other reliable independent material. This is the approach ado ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down by Hon‟ble Supreme Court in the case of CIT, Calcutta v. T.I M Sales Ltd . (1987) 3 SCC 132. Further, these records contains entries for only three months, which are not corroborated by any other independent material except statements, which are itself not admissible. Thus, Ld. Commissioner erred in not considering the three affidavits. 50. Now coming to the charge of clandestine clearances made by the revenue against PIPL PSAPL. Law is now well settled on the subject and reliance in this regard on the judgment of jurisdictional High Court would suffice. In the case of Continental Cement Company v. Union of India 2014 (309) ELT 411 (All), a division bench of Hon‟ble Allahabad High Court has held that:- 12. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s assumed that enquiry was made from right persons, then also revenue has not collected any evidence from such dealers except their confessional statements. Such confessional statements, are not supported by opportunity of cross-examination and thus cannot be considered as evidence in view of law laid down by Hon‟ble Allahabad High Court in PIPL‟s case or were retracted during cross-examination, and hence not admissible as evidence in absence of any independent reliable material which corroborates such statements. Thus, the enquiry conducted by the revenue does not lead to any credible or tangible evidence regarding extra purchase of raw material or sale of finished goods. 52. Similarly, neither there is any allegation in SCN nor any evidence on record that extra labour was employed by PIPL for clandestine production. Allegation regarding clandestine purchase of furnace oil is not supported by any evidence. Regarding transportation also, there is no enquiry except a statement that vehicle owned by PIPL were used for transporting goods. In respect of cash receipts also, revenue has relied upon statements of alleged employees and CA but have not produced them for cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifications issued under Section 12 of the C.E Act, 1944. Notification No. 68/63 dated 4/5/1963 was last amended by Notification No. 48/97 dated 02/09/1997, which could also not be denied by revenue. When during the period in question i.e. Feb‟2004 to July‟2007, Central Excise Rules, 2002 were in existence and there being no further amendment to Notification No. 68/63 (as amended), power to confiscate cash of ₹ 1,78,07,797.00 on the ground that the same is sale-proceeds of excisable goods clandestinely removed in contravention of Central Excise Rules, 2002, is wholly illegal. Although during the course of hearing, PIPL has produced agreement for sale of immovable property and has contended that the said agreement was produced before Ld. Commissioner but the same was brushed aside, illegally, this question need not required to be answered once the confiscation of the amount is held to be illegal and without authority of law. 56. Once the confiscation of the amount of ₹ 1,78,07,797.00 is held to be illegal, then the same is liable to be immediately returned to PIPL at the earliest. However PIPL has also contended that since department has earned interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no evidence left for arriving at the conclusions drawn by the Original Authority. The statements of above stated persons were relied upon for alleging that the Geeta Nagari, Bijnore premises was taken on rent by the appellant, the computer was purchased by the appellant, Shri Bhagirath Roy, Shri Monmohan Gautam were employees of appellant and they were making entries in the computer on behalf of appellant and that the said entries revealed that the extra/unaccounted goods were manufactured by the appellant and clandestinely removed. All these conclusions do not have any other basis, than the statements of above stated persons, and as directed and ruled by Hon‟ble Allahabad High Court, the statements of above stated persons cannot be relied as evidence, since they were not produced for cross examination. Therefore, we find that the findings by the Original Authority to arrive at a conclusion and passing of the present order has no basis. We, therefore, set aside the impugned Order-in-Original, insofar as it relates to the present appellants. Insofar as the present appeals are concerned, we allow the appeal and also direct the Revenue to refund ₹ 1.78 crores (Rs.1,78, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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