TMI Blog2019 (8) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... yank Metals, M/s Shivam Metals and M/s Vasudev Udyog did not clear Copper Ingots in clandestine manner to SMS, therefore, receipt of raw materials by SMS is not established. Further, revenue has not brought on record any other source of receipt of non duty paid raw material by SMS - Further, the only evidence against SMS was said 31 small spiral pads and 9 files containing loose papers recovered from the residential premises of Shri Subodh Gupta. Shri Subodh Gupta appeared before the Original Adjudicating Authority on 01.02.2018 and was not offered for cross examination. Appeal allowed - decided in favor of appellant. - Excise Appeal Nos.71118, 71175-71178, 71192 And 71203 of 2018–EX[DB] - Final Order Nos. 71483-71489/2019 - Dated:- 30-7-2019 - SMT. ARCHANA WADHWA, MEMBER (JUDICIAL) And MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL) Shri Rupesh Kumar, Advocate, Shri Jitin Singhal, Advocate And Shri Pravesh Gahuguna, Advocate, Shri Rajesh Chhibber, Advocate Shri Tarun Chawla, Advocate, Shri R.P. Singh, Advocate, Absent on call, for the Appellants Shri Rajeev Ranjan, Addition Commissioner, Shri Sandeep Kumar Singh, Deputy Commissioner, Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued by 12 traders at the shop premises of M/s Sandeep Mettal Supply Chawri Bazar, New Delhi. Further, officers found excess stock of finished goods at the said premises of M/s Sandeep Metal Supply, Chawri Bazar. On the basis of said searches offices recorded various statements. During his statement Shri Shubodh Gupta employee of SMS stated that he used to look after production and dispatch on behalf of SMS. On behalf of M/s Mayank Metal their Proprietor Shri Pawan Kumar Agarwal stated that they supplied copper ingots on cash basis to SMS, without invoices. On behalf of M/s Shivam Metal, Proprietor Shri Sanjeev Agarwal stated that they had supplied Copper Ingots without invoices on cash basis to SMS. On behalf of M/s Vasudev Udyog Shri Jai Bhagwan Authorized Signatory stated that they supplied Copper Ingots without invoices on cash basis to SMS. Shri Anil Kumar, Driver stated that they used to transport Copper Ingots without bills and invoices from various manufacturers to SMS. Shri Muhammad Ishrar, employee of SMS stated that he used to pilot vehicles while carrying Copper Ingots from various manufacturers to SMS at the said premises of M/s Sandeep Metal Supply. Invoices issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said was demanded for the period from 20.09.2008 to 13.07.2010. 3. Appellants filed interim reply dated 20.11.2013 to the above stated show cause notice and prayed for cross examination of various persons. The cross examination of representative of M/s Mayank Metals, M/s Shivam Metals and M/s Vasudev Udyog was permitted. During the cross examination all of them stated that they had never transacted with SMS and they did not know Shri Sandeep Gupta (accepted Shri Jai Bhagwan representative of M/s Vasudev Udyog) and that they were coerced to implicate Shri Sandeep Gupta with the threat of arrest. Without allowing any further cross examination, Order-in-Original dated 30.05.2014 was passed, confirming the demand and imposing penalties. The said order was challenged before this Tribunal and the said appeals were decided through Final Order Nos.70198-70204/2017 dated 30th January, 2017. In para no.6 of the said Final Order this Tribunal has made following observations and issued directions:- In this view of the matter, we are satisfied that there has been violation of the principles of Natural Justice and the provisions of Section 9D of Central Excise Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.5 lakhs Kg of Copper Ingots from M/s Shivam Metal during the period from 20.09.2008 to 13.07.2010 and also received 1.41 lakhs Kg of Copper Ingots from M/s Vasudev Udyog during the period from 19.06.2009 to 26.07.2010. On the basis of said information Central Excise duty demand was raised against M/s Mayank Metals, M/s Shivam Metal and M/s Vasudev Udyog. The said show cause notice was adjudicated through another Order-in-Original bearing No.03/Commissioner/GZB/2018-19 dated 25/05/2018 through which the demands raised were confirmed and penalties were imposed and a personal penalty was imposed on Shri Sandeep Gupta. The said Order-in-Original is also impugned in the present appeals. 6. Heard Shri Rupesh Kumar learned Advocate along with Shri Jatin Singhal and Shri Pravesh Bahuguna learned Advocates on behalf of M/s Sandeep Manufacturing Strips (SMS). They made following submissions:- i) The entire demand is based on 31 Small Spiral Pads recovered from the residential premises of Shri Subodh Gupta who was the employee of SMS. Further, in addition to the said 31 Small Spiral pads the allegations of revenue were also on the basis of statements of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, their earlier cross examination record is sufficient to establish that the allegations of clandestine receipt of Copper Ingots from M/s Mayank Metals, M/s Shivam Metals and M/s Vasudev Udyog are not sustainable. viii) There were no investigations as to whether the alleged clandestinely removed Copper Ingots were at all manufactured by M/s Mayank Metals, M/s Shivam Metals and M/s Vasudev Udyog and/or the said three Ingots manufacturers received raw materials at all and how the goods got manufactured clandestinely and removed clandestinely. ix) In para no.45.4 of the impugned Order-in-Original No.02 learned Original Adjudicating Authority has given his finding that the charge of abatement in clandestine manufacture and removal by SMS in the present show cause notice does not substantiate with the offences specified under Rule 26 (1) of the Rules. x) Regarding excess quantity of raw material and finished goods allegedly found in the factory premises of the appellant, proceedings were initiated and finally this Tribunal has held in separate proceedings that the said goods were not liable for confiscation. The department had accepted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent case no such investigations has been carried out and there is no evidence regarding excess procurement of raw material or excess manufacture or excess transportation of the manufactured goods and realization of sale proceeds etc. even though the allegation is that the appellant had sold Copper Strips and wires to the worth of around ₹ 71 crores. No unaccounted cash was recovered during the course of search from any of the premises. Since the clandestine manufacture is not establish impugned order is not sustainable. 6. Learned Advocates Shri Rupesh Kumar and Shri Jatin Singhal along with Shri Pravesh Bahuguna on behalf of Shri Sandeep Gupta have submitted that their submissions in respect of SMS will hold good against Shri Sandeep Gupta because Shri Sandeep Gupta is proprietor of SMS and that the proprietor and the business organization are not two separate persons. 7. Nobody appeared on behalf of Shri Subodh Gupta. In the grounds of appeal filed by Shri Subodh Gupta, it is interalia stated as follows:- The statements recorded by the Department are all recorded under pressure and were all dictated by the Department. Notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption of electricity. Further, the demand of Central Excise duty of around ₹ 2.1 crores was confirmed on the basis of statement of third party where the prosecution witnesses were not made available for cross examination. Therefore, as held by this Tribunal in the case of M/s Rama Spinners Pvt. Ltd. Vs Commissioner of Central Excise, Hyderabad reported at 2017 (348) ELT 321 (Tri.-Hyd.), the evidence is not sufficient for confirmation of demand. Further, in respect of demand of around 22 lakhs he has submitted that the panchnama drawn in the factory premises on 27.07.2010 is not reliable as revealed during the cross examination of Shri Balaram Shrivastava. Therefore, relying on the decision of this Tribunal in the case of M/s Kuber Tobacco Works Vs Commissioner of Central Excise, Delhi reported as 2013 (290) ELT 545 (Tribunal-Del.) the said confirmation of demand is not sustainable. He has further submitted that the statement of proprietor of the appellant was taken under duress and the same was retracted on the very next day. During the cross examination on 23.04.2014 the proprietor of the appellant stated that he does not know Shri Sandeep Gupta and SMS. He has further subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Sandeep Gupta. Further, in respect of M/s Vasudev Udyog Statement of Shri Jai Bhagwan Authorised Signatory was recorded by Central Excise Officers wherein it was stated that M/s Vasudev Udyog had supplied Copper Ingots on cash basis without invoices to SMS whereas during cross examination Shri Jai Bhagwan stated that M/s Vasudev Udyog had never transacted with SMS and they were coerced to implicate Shri Sandeep Gupta with the threat of arrest. He has further submitted that both of them were not once again cross examined during denovo proceedings. However, their earlier statements are not sustainable in view of their depositions during the course of cross examination, as stated above. Therefore, they were not eligible to imposition of penalty. 10. Heard Shri Tarun Chawla learned Advocate on behalf of Shri Mukesh Chauhan. He has submitted that the appellant was working as employee of SMS and he was maintaining Central Excise records. Appellant was categorically doing account related works and has no role in the clearance of the goods much less clandestine clearance of goods. He has further submitted that in the absence of any specific allegations with corroborativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Shivam Metals and M/s Vasudev Udyog during the cross examination before Original Adjudicating Authority had deposed that they never transacted with SMS and they were coerced to implicate Shri Sandeep Gupta with the threat of arrest. Further, the Order-in-Original dated 30.05.2014 was set aside and matter was remanded through the Final Order dated 30 January, 2017 by this Tribunal with a direction to allow cross examination of all the persons requested by the appellant and to convey the reason to the appellant for refusal of cross examination of the persons if the same is denied. The case of SMS is that though Shri Subodh Gupta appeared before the Original Adjudicating Authority on 01.02.2018 but the Original Adjudicating Authority did not give opportunity of cross examining Shri Subodh Gupta by the other appellants and accordingly, the directions of this Tribunal for allowing cross examination was violated and that all the evidence that were collected by revenue through Shri Subodh Gupta has become inadmissible in view of the ruling by Hon ble Allahabad High Court in the case of Commissioner of Central Excise, Meerut-I Vs M/s Parmarth Iron Pvt. Ltd. (supra). Further, revenue d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to give me an opportunity when I shall be present with my counsel and written/oral submissions. 40.2 In the reply dated 12.02.2018, it was submitted by Advocate Jatin Mahajan on behalf of Sh. Subodh Gupta that the notice was an employee having duties assigned by his superiors in M/s SMS. On the basis of some information received by the DGCEI investigation regarding evasion of Central Excise Duty at SMS manufacturing strips owned by Sh. Sandeep Gupta was initiated. The procurement of raw material and modus operandi adopted by SMS caught the attention of investigating officers. As a follow up action, search was conducted by the department at various places related to SMS however the notice was not present when the search was conducted at the factory of SMS. Statement of the noticee was recorded wherein the noticee stated that he was not concerned with the preparation of sale invoices, purchase invoices, accounts and excise related records. The notice denied any involvement in excise duty evasion activity of SMS. Further he also stated that he had no knowledge of illegalities going on at the end of M/s SMS. The notice was issued SCN proposing penalty under rule 26(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para-16 from the ruling by Hon ble Allahabad High Court in the case of Commissioner of Central Excise, Meerut-I Vs Parmarth Iron Pvt. Ltd.:- 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 to issue the show cause notice, are liable to be examined at that stage. If the Revenue choose not to examine any witnesses in adjudication, their statements cannot be considered as evidence. However, if the Revenue choose 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. 14. Further, we reproduce para no.12 13 from the ruling by Hon ble Allahabad High Court in the case of Continental Cement Vs Union of India:- 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 sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta is not admissible in the present case. For that reason also the clandestine manufacture and clearance by M/s Mayank Metals, M/s Shivam Metals and M/s Vasudev Udyog is not establish. We, therefore, set aside the impugned Order-in-Original No.03 and allow all the appeals filed by M/s Mayank Metals, M/s Shivam Metals, M/s Vasudev Udyog and Shri Subodh Gupta. 16. The case of revenue is that SMS received raw material clandestinely cleared by M/s Mayank Metals, M/s Shivam Metals and M/s Vasudev Udyog and manufactured Copper Wires and Copper Strips and cleared the same without payment of duty. Since it is establish that M/s Mayank Metals, M/s Shivam Metals and M/s Vasudev Udyog did not clear Copper Ingots in clandestine manner to SMS, therefore, receipt of raw materials by SMS is not established. Further, revenue has not brought on record any other source of receipt of non duty paid raw material by SMS. Therefore, by applying the ruling by Hon ble Allahabad High Court in the case of Continental Cement Vs Union of India (supra) clandestine manufacture by SMS is not established. Further, the only evidence against SMS was said 31 small spiral pads and 9 files containing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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