TMI Blog2019 (2) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... blish the evidence as legally sustainable since no other corroborative record have been produced by the department to prove the case of evasion of central excise duty by the appellant by resorting to clandestine manufacture and trading of the same in the garb of trading undertaken by their sister concern. Since, the witnesses have not been cross-examined at the time of adjudication. We feel that the evidentionary value of such statements have been lost and same alone cannot be accepted for proving the case of duty evasion only on the basis of such statements. For proving a case of clandestine manufacture and clearance of dutiable goods, some evidences more concrete and convincing nature need to be adduced. It is a settled law that in cases of alleged clandestine removals and duty evasion the burden lies on the department to prove that activities of manufacturing, its clearance and thus duty evasion have taken place with concrete evidences. We find that the department have not been able to adduce any evidence to show as to from where such a huge quantity of raw materials have been procured by the appellant to manufacture the excisable goods and to whom the same were sold without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r conducting the detailed investigation, the Department reached to the conclusion that the appellant No. I was engaged in manufacture and clearance of excisable goods namely slotted angles, shelves, cable trays etc. it has also been asserted that the appellants are also doing trading of similar goods however allegedly the appellant have been clearing excisable goods in the garb of trading of similar goods. 2. After detailed investigation, the department has reached to the conclusion that the appellants have evaded central excise duty by manufacturing and clearing excisable goods without payment of duty by showing such goods as traded goods which have been manufactured/procured from other firms. A show cause notice dated 17/10/2007 came to be issued demanding central excise duty amounting to ₹ 1,46,07,818/- also invoking the provisions of interest and penalty. The matter was adjudicated on the previous occasion by the Commissioner vide order-in-original dated 27th January, 2009, whereunder all the charges as alleged in the show cause notice were confirmed by the learned Commissioner, Central Excise. The appellant had approached this Tribunal against the order-in-original da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduce them and since the such extra-ordinary circumstances are not present in this case the compliance of Section 9D of Central Excise Act, 1944 have not been made in spite of a specific directions given by this Tribunal. The learned Advocate has also stated that it is a well settled law that the provisions of Section 9D of Central Excise Act need to be followed scrupulously if the statements of certain witnesses are relied upon for establishing an offence in Central Excise Act. The learned Advocate has taken shelter of decision of Punjab Haryana High Court in the case of Jindal Drugs Pvt. Ltd. vs. Union of India 2016 (340) E.L.T. 67 (P H) to emphasize his argument. 5. It has been the contention of the learned Advocate that entire case of the Department is based on the statements which have been recorded by the department during the course of investigation on the basis of which it has been alleged that the assessee have cleared the manufactured excisable goods in the garb of trading of similar goods and since these witnesses have not been produced for cross-examination the reliance of their statements cannot be taken for proving a case of duty evasion against them. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablish and corroborate it with the evidences to prove it beyond doubt that certain additional quantities of goods have actually been manufactured and cleared without recording the same in the statutory books and records and without payment of duty. In this case the department has not proved anything and have only relied upon the statement of certain suppliers of the goods, who has not been produced for cross-examination at the time of adjudication and, therefore, the alleged evasion of duty is not established. The learned Advocate has taken shelter of certain decisions in this regard which are reproduced here below :- CCE vs. Swati Polyester 2015 (321) E.L.T. 423 (Guj.) ; CCE, Ahmedabad I vs. Gopi Synthetics Pvt. Ltd. 2014 (310) E.L.T. 299 (Guj.) ; and Flevel International vs. CCE 2016 (332) E.L.T. 416 (Del.) 7. The department is also in appeal against the order-in-original dated 30/11/2015 primarily on the ground that the Adjudicating Authority has erred in allowing the benefit of Notification No. 6/2002-CE dated 01/03/2002 to the assessee. The only ground of appeal is that as per condition No. 61 of Notification No. 6/2002-CE dated 01/03/2002, a ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f proving, non-prosecution for an offence made under this Act, which it contains :- (a) When a person who made the statement is dead, or cannot be found, or is capable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense, which, under the circumstances of the case, the court considers unreasonable, or; (b) When the person who made the statement is examined as a witness in the case before the court and the court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice . 11. The Adjudicating Authority was required to make available the witnesses for cross-examination to the appellant to establish the evidence as legally sustainable since no other corroborative record have been produced by the department to prove the case of evasion of central excise duty by the appellant by resorting to clandestine manufacture and trading of the same in the garb of trading undertaken by their sister concern. Since, the witnesses have not been cross-examined at the time of adjudication. We feel that the evidentionary va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 [ 2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice . 12. Thus, it was a legally required that Adjudicating Authority should have made available the crucial witnesses and allowed their cross-examination by the appellant before accepting their evidences and confirming the demand of central excise duty. 13. During the course of hearing, the learned Advocate has also taken us through the various books of accounts maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... destine removal and thereby evasion of central excise duty has not been established by the department. Holding the above view, we also take the shelter of Hon ble Allahabad High Court in the case of Continental Cement Company vs. Union of India 2014 (309) E.L.T. 411 (All.) which says that for proving a case of clandestine manufacture and clearance, the department need to prove certain other factors to establish a case of duty evasion. The relevant extract of same of reproduced here below :- 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 examination, it is found that with regard to alleged removals, the department has not investigated the following aspects : (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied to DMRC and thereby they are not entitled for the Notification No. 6/2002-CE dated 01/03/2002. We also feel that since the basic case of clandestine removal and duty evasion is not established against the respondent, therefore, even without extending the benefit of Notification No. 6/2002-CE, the duty liability on the respondent will not arise. It is also a matter of fact that non-production of a certificate from the Chairman or Managing Director of DMRC is only a procedural lapse and a substantial benefit cannot be denied to the respondent only on the procedural lapse. While holding this view, we take the shelter of Mangalore Chemicals Fertilizers Ltd. vs. Deputy Commissioner 1991 (55) E.L.T. 437 (S.C.). As such, it is a settled position of law that the substantial benefit of a notification cannot be denied to the manufacturer only on procedural lapses. At the same time, in this particular case, the Department has not denied that the goods has not been supplied to DMRC and this fact has further been endorsed by a Chartered Accountant certificate and, therefore, we feel that the Commissioner has rightly allowed the benefit of Notification 6/2002-CE to the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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