TMI Blog2018 (4) TMI 1788X X X X Extracts X X X X X X X X Extracts X X X X ..... cating authority arrives at a conclusion that the statement deserves to be admitted in evidence then the question of offering the witnesses to the assessee for cross-examination arises, I would have agreed with Ld. Brother Member (Technical) had this procedure been followed by the original authority that the witnesses whose statements were recorded were examined by the adjudicating authority. However the fact is that such examination-in-chief was not conducted by the original authority and therefore, the question of cross-examination does not arise. Therefore, no purpose shall be achieved by remanding the matter back to the original authority for denovo adjudication. I further find that the allegation against M/s.BSPL were that they did not receive inputs but availed the Cenvat Credit only on the strength of invoices without receipt of inputs. The admitted facts are that the appellants, M/s.BSPL had manufactured the goods and paid Central Excise duty on the same and there are no investigations as to from where the inputs were procured by M/s.BSPL for manufacture of goods, if they had received only the invoices and no inputs from M/s.HSAL. The allegations of non-receipt of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lats. The investigations conducted in the premises of M/s HSAL, led the Revenue to belief that they were clearing SS flats manufactured by them, in a clandestine manner to various manufacturers located in Delhi Jodhpur. Scrutiny of the records maintained by M/s HSAL further made the officers belief that they were clearing SS flats clandestinely and to cover the said clearances, they were issuing cenvatable invoices to other manufactures, including the assessee herein, showing clearance of alloy steel and M.S. Ingots, Bars and Rods and Ferro Alloys without dispatching any goods to them so as to enable such recipient to avail cenvat credit on the invoices so issued by them. It is seen that the proceedings were initiated against M/s HSAL alleging clandestine removal of their final product SS flats, by way of issuance of show cause notice. M/s HSAL approached the Settlement Commission and the dispute at their end was settled by the order of the settlement commission dated 27.02.2008. 3. Inasmuch as the investigations conducted at the end of HSAL led to the allegation that they were only issuing the invoices in respect of various raw materials so as to cover the clandestine cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trucks for transportation of their goods to Jodhpur. He also submitted that two person of M/s HSAL, namely Shri. Kuldeep and Shri. Manish Kumar used to order for the trucks on phone specifying the number of vehicles required by them for transportation of goods to Jodhpur and he, after obtaining trucks from M/s Punit Road Ways were supplying the same and was also giving the blank GRs for such consignments; that they had also kept GRs of their company at the factory premises of M/s HSAL and they themselves used to prepare the GRs and dispatch the goods to Jodhpur. He also further submitted that no GRs was ever prepared for transportation of the goods from the factory of the M/s HSAL to the premises of the assessee M/s BSPL or M/s A.G. Similarly, statement of one Shri. Jaspal Singh, partner of another transport company M/s Delhi Calcutta Road Carriers, was recorded on 19.04.2006 vide which he deposed that all the vehicles sent by them to M/s HSAL were only used for transportation of S.S. Flats from the factory of the M/s HSAL to various places in Delhi; that they never transported any goods from the factory of the M/s HSAL to M/s BSPL or M/s A.G. Company. He was also shown a ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procuring raw material from M/s HSAL and during the period 2003-04 to 2005-06 such inputs purchased from M/s HSAL were consumed by them as raw materials. He was confronted with the statement of Shri. Ramesh Rawat, Executive Director of M/s HSAL, when he stated that he was the only technical director of the company and Shri. Arun Ghai another director of the company, who handled all commercial issues, may be in a position to give answers to the questions posed by DGCEI officers. 8. Subsequently, the statement of Shri. Arun Ghai, another director of the assessee s company was recorded on 25.04.2008. On being confronted with the various charts in respect of the consignments of the raw materials purchased by them from M/s HSAL, he deposed that the statement of Shri. Rajan Ghai, another director is the correct statement and they have actually received and utilised the raw material in the manufacture of their final product. On being shown the statement of Shri. Ramesh Rawat and the various transporters, he stated that the statement of all these persons does not reflect the correct position. 9. On the above basis and on the basis of various statements recorded during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll stages, inasmuch as during the course of settlement of M/s HSAL case before the Settlement commission, Revenue took a stand that the invoices issued for transporting raw materials to the assessee cannot be considered to be covering the clandestine removals by M/s HSAL of S.S. Flats manufactured by them and as such duty paid on the said raw material cannot be neutralised against duty liability in respect of clandestinely cleared goods. In the absence of any evidence and in view of the evidence produced by the assessee, the Revenue s case of non receipt of raw materials does not stand. For the above proposition, they relied upon various precedent decisions of the Tribunal as also of the Courts. 11. Vide the present impugned order the Commissioner held against the assessee in respect of non receipt of AS/MS Steels and confirmed the duty on the said part. However, the adjudicating authority observed that there is no evidence in respect of the allegations of non receipt of various crome material and accordingly duty to the extent of 1.10 crore was dropped. While confirming the duty Commissioner observed that there is no requirements to exceed to the assessee s request of cros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Shri. Rajan Ghai cannot be penalised under Rule 26 inasmuch as, as per the revenue s allegations the goods were not physically received by the assessee and as such provision of Rule 26 was not attracted. On the same ground penalty on M/s A.G Faridabad a registered dealer, was also dropped against which the revenue is in appeal. Penalty proposal against M/s HSAL was also dropped as they had gone before the settlement commissioner and got the matters settled. The said order of the Commissioner stands impugned before us by the assessee as also by the Revenue. 12. We have heard Shri. K.K. Anand, Advocate appearing for the assessee and Shri. H. Singh, AR appearing for the Revenue. 13. The assessee s main contention is that the Revenue s case is primarily and mainly based upon the statements recorded during the course of investigations. The adjudicating authority has placed reliance on the statement of Shri. Ramesh Rawat, Executive Director of M/s HSAL as also the various transporters. It is seen that the assessee had asked for cross examination of the said witnesses, which stand strongly relied upon by the revenue. Such cross examination stands rejected by the commissioner on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inquiry or the proceedings under the act, shall be relevant, for the purpose of proving the truth of the facts contained therein. The procedure prescribed in the sub section (1) of Section 9D is required to be scrupulously followed. Therefore, sub section 1 of Section 9D set out the circumstances in which a statement, made and signed by a person before the Central Excise officers shall be relevant, for the purpose of proving the truth of facts contained therein. If the circumstances are absent, therefore, the statements which has been made during the course of inquiry/investigation, before a gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the fact contained therein. For the above purpose, the Tribunal relied upon the Hon ble Delhi Court decision in the case of J.K Cigarettes-2009 (242) ELT 189 (Delhi) wherein it was observed that in the absence of circumstances stipulated in Section 9D of the Central Excise Act, the adjudicating authority was bound to follow the binding precedent and erred in rejecting the request of the appellant to examine the witnesses and to offer them for croos-examination. Accordingly, the Hon ble High Court held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine the witnesses and to offer them for cross examination. 8. The assessee has also relied on the judgment of Hon ble Apex Court in Sukhwant Singh. Vs. State of Punjab, (1995) 3 SCC 367 to give emphasis on his submission that examination of witness is mandatory unless specified exceptional circumstances mentioned in clause (a) of the Section 138B(1) exist. The Hon ble Apex Court was pleased to hold that 8. It will be pertinent at this stage to refer to section 138 of the Indian Evidence Act which provides: 138 Order of examination.:- Witnesses shall be first examined in chief then (if the adverse party so desires) corss-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 cofined to the facts to which the witness testified on his examination-in-chief. Directions 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 that matter. 10. We therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 14 of the Act, whose maker are not examined-inchief before the adjudicating authority i.e before respondent CCE, would have to be eschewed from evidence, and it would not be permissible for respondent CCE to rely on the said evidence while adjudicating the case. In view of the said decision of the Hon ble High Court, not only the cross examination of the statement makers under Section 14 of the Central Excise Act is required but examination-in-chief is also required to be done, in case, the revenue intends to rely upon the said statements. As such, reasoning of the adjudicating authority that the cross examination is not required as the statements were recorded under section 14 of the Central Excise Act cannot be appreciated. It may not been out of place to mention that all the statements recorded during the investigation by the Revenue s officers, are recorded under section 14 of the central Excise Act and if the reasoning of the adjudicating authority is appreciated, no cross examination would ever be available to the assessee. Commissioner is forgetting that the statements of the Directors of the appellant were also recorded under Section 14, but the same are being s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A part-I along with credit entries in RG-23A, Part-II in the ordinary course of their business. The Revenue has not contended that the said entries made in raw materials register are not correct entries inasmuch as no evidence to that effect has been produced by them. While dropping the demand, the adjudicating authority has observed that where the inputs are duly entered in the statutory records and are used in the manufacture of final products cleared on payment duty, cenvat credit cannot be dis-allowed. The same reasoning would apply to the RG-23A entries of AS/MS products. Otherwise, also we note that the revenue s case is solely based upon the statements of the transporters wherein they have denied having transported any consignments to the assessee s premises or to premises of M/s A.G. international. As per the statements of the directors of the assessee, they had received the inputs form M/s HSAL and have entered the same in their statutory records and have utilised the same. The said statements of the directors are based upon the entries made in their records and are contra to the statements of the transporters. It is observed that if one of the two deponent s statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovement of the goods to Jodhpur, cannot be held to be reflecting the correct position, inasmuch as in one part of the statement, the deponent had stated that the blank GRs were being given to M/s HSAL , who were preparing the same and in other part of the same statement, he stated that the GRs were being issued by them for jodhpur. 17. The statement of Shri. Ramesh Rawat recorded on 29.06.2006 revealed that he had given the details of flow back of cash in respect of sales of S.S. Flats made to other units but there is no averment in the said statement as regards the flow back of money either to the assessee or to M/s A.G. Faridabad. In fact, it is seen that the consideration for the disputed raw material was made by the assessee to M/s HSAL by way of cheques, issued through banking channels. It is neither the revenue s case nor any evidence stands produced to that effect that any money flowed back to the assessee. If the revenue s allegation of nor receipt of inputs is accepted, there is no explanation as to why the payments were being made through cheques by the assessee in respect of goods not received by them. Reference is made to Tribunal majority decision in the case of Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Though admissions will bind the maker of the confessional statements and in the absence of any other out weighing evidence, the facts admitted will be taken to have been established, in cases where the confessional statement is retracted and/or other evidence is available to create a doubt over the making of such confession, the Court will be required to weigh such other evidence and find out whether the confessional statement should be implicitly relied upon. Any proposition which gives irrebutable sanctity to a confessional statement, will tend to shut out consideration of other relevant material which might out-weigh the evidentiary value of the confessional statement. The proposition that in view of the confessional statement all other evidence should be discounted, cannot, therefore, be accepted. 52. In the present case, on the one hand, we have the statements of Naresh, Hitesh and Iesh, fully incriminating the assessee by stating that, the inputs were not received in the factory nor were they used in the final products manufactured by the assessee; on the other hand, we have an established fact of the payments having been made by cheques in respect of the inputs covered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009(234) ELT (242) Guj. Further, according to the latest decision, the majority decision passed by the Tribunal are required to be equated with the larger bench decision and are required to be followed by the other Division Bench. In this case, we note that the facts as available in the case of M/s Tejwal Dyestuff Industries are identical to the facts of the present case. In fact, in the case of Tejwal Dyestuff Industries, there were confessional statements of authorised representative of the appellant as also of their production manager. The said statements were inculpatory confessional statements, even then the majority decision held that such statements cannot be made the basis for arriving at adverse finding and the same are required to be corroborated by independent evidences, especially when such oral evidences are against the documentary evidences. In the present case directors of the appellant s company have clearly deposed that they were receiving the inputs and were using the same in the manufacture of final product. Such statements recorded under Section 14 of the Central Excise Act, have not been held to be false by the adjudicating authority. In the absence of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the invoices for Faridabad or for Jodhpur. A truck can be utilised twice i.e. first for transportation of the goods to Faridabad and then the same truck can be used for onward journey to Jodhpur. The said fact, by itself, cannot be adopted as an evidence to sustain the revenue s allegation of non receipt of inputs by the assessee. Though the said clarifications were placed and contentions were raised to that effect before the adjudicating authority, the same has not been adverted to and there is no discussion or findings on the same. The assessee, during the said period, had received 107 numbers of consignments directly from M/s HSAL and the discrepancies stands pointed out by the revenue only in four case. In respect of the raw material/inputs received from M/s A.G Faridabad, under the cover of 182 number of consignments, revenue has nowhere referred to the fact that the material supplied to M/s A.G., Faridabad by M/s HSAL, where the discrepancies about use of trucks was alleged, is the same material which stand further, sold by M.s A.G. international to the assessee. Admittedly, M/s A.G. was selling the raw material received from M/s HSAL to the other manufacturing units als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue involved in the present case is identical and the ratio of above decision of Hon ble Punjab and Haryana would apply. Further, the appeal filed by the Revneue before the Hon ble Supreme Court also stands dismissed reported as CCE, Chandigarh Vs. Neepaz -2016 (339)ELT A219 (SC). The same facts are available in the present case also wherein the consideration of the purchased inputs have been made through cheque, the inputs have been reflected in the statutory records and shown to have been used in the manufacture of final product, cleared on payment of duty and there is no evidence of alternative sources of procurement of raw material. As such, we are of the view that the declaration of law by the Hon ble Punjab Haryana High Court in above decision squarely applies to the facts of the present case. 21. We also take into consideration evidence produced by the assessee to establish that goods have actually been transported. Out of total 49 invoices 22 invoices pertain to the purchases made by the assessee directly from M/s HSAL and 27 invoices pertain to the purchase made by M/s A.G. Faridabad from M/s HSAL. The said consignments passed through the check-post of Excise and Taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evail. In that case also we find that the revenue s allegations were primarily based upon the records and returns of the transporters which were not accepted as evidences by observing that in the absences of any material to the contrary, such transporters records cannot be adopted as admissible and reliable evidences. Similarly, the Hon ble High Court of Gujarat in the case of Commissioner Vs. Dhanlaxmi Tubes Metal Industries- 2012 (282) ELT 206 (Guj.), upheld the Tribunal decision by holding that the revenues allegation of avialment of credit on the basis of only invoices without actual receipt of the inputs cannot be upheld on the ground that the recipient of the goods have stated that the goods were duly brought to their factory and entered in the RG-23 A records and the check post records maintained indicate receipt of the said goods, the register of the transporters cannot be held to be sufficient for arriving at conclusion that inputs were never transported to the assessee s factory. As such we find that both the above decisions support the contention of the ld. Advocate that the transporters statements, which are in the nature of oral evidence cannot be appreciated for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by production of positive and tangible evidence. Having discussed the evidence, in the preceding paragraphs, it is seen that the same is in the nature of the statement of the executive director of the M/s HSAL and the transporters. It is observed that such oral evidence produced by the Revenue and relied upon during the adjudication are contrary to the documentary evidence produced by the assessee. In fact, the assessee has been able to successively make holes in the said evidence of various transporters by produced documentary evidence to show that the statements are not correct. Once a part of the statement has been proved to be wrong, being against the documentary evidence, the various statements have to be excluded as evidence. If the statements are taken out of consideration, there is no evidence left in the present case to sustain the findings of the adjudicating authority. Admittedly, the documentary evidence have to be given preference over the oral evidence and it is the documentary evidence which shall prevail over the oral evidence. Reliance can be made to the Tribunal decision in the case of Raj Petroleum Products Vs. CCE, Mumbai- 2005 (192) ELT 806 (Tri.), who stands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t amount payable as ₹ 3,40,14,122/-. Since ₹ 3,00,00,000/- were paid already, the applicant had, after filing the settlement applications, deposited the balance amount of ₹ 40,15,002/- vide Challan dated 28.06.2007. Subsequently, main applicants revised the admission of their duty liability to ₹ 24,61,65,937/- but prayed for adjustment of an amount of ₹ 9,92,87,991/- which had statedly been paid by them on AS MS products without removing the said quantity of those products. 5.1 The contention of the applicants was refuted by the representatives of the Revenue and they stated that the applicant had actually manufactured AS and MS products and their statutory records showed this. Applicant, therefore, cannot now take the plea that said goods were riot manufactured. In any case, it is not for Revenue to prove that such goods were sold in the open market, but for the applicant to prove that the said AS/MS products were not actually manufactured and not cleared and sold in the open market if the main applicant wanted the adjustment of said amount against the demand of the Central Excise duty amount in the SCN. Revenue further stated that the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea made by the DGCI before them. The contrary stand has been taken by the Revenue in the present case. It is contended in the present case that no AS/MS products were manufactured by M/s HSAL and the only invoices were being raised so as to cover the clandestine removal of SS flats from the factory of the M/s HSAL; whereas an absolute contrary stand was taken by same DGCEI before Settlement Commission. Time was given to the Ld. DR to enquire about the said fact from the concerned officers but no satisfactorily answer stands placed on records. We fail to understand that how can Revenue, after taking a stand the AS/MS products were actually manufactured by M/s HSAL and duty was rightly paid on the same, take an all together contra stand in the present proceedings and contend that no AS/MS products were being manufactured by M/s HSAL and no duty was paid on the same and it was only a paper transaction. It may not be out of place to mention here that it is not the Revenue s case that AS/MS products were manufactured and diverted by HSAL to others and invoices were being issued in the name of the present appellant or their dealers. Such taking of different stands by the Revenue does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear that clauses (a) and (b) of the said sub-section set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. Therefore, there is no doubt about the legal position that the procedure prescribed in subsection (1) of Section 9D is required to be scrupulously followed, inasmuch as in adjudication proceedings as in criminal proceedings relating to prosecution. Therefore, subsection (1) of Section 9D set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer shall be relevant, for the purpose of proving the truth of the facts contained therein. If the circumstances are absent, therefore, the statement, which has been made during the course of inquiry/investigation, before a gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the fact contained therein as observed by Hon ble Delhi High Court in the case of J.K. Cigarettes (supra) wherein Hon ble High Court has observed as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied 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. 31. Further, we find that the issue again came up before Hon ble High Court of Punjab Haryana in the case of Ambika International (supra) wherein the Hon ble High Court has observed as under: 25. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to stra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the matter to the third member to resolve the following issues:- POINTS OF DIFFERENCE Whether in the facts and circumstance of the case, the appeal filed by the assessee be allowed and the appeal filed by the CCE, Delhi-IV may be dismissed, as held by Member (J) OR Whether in view of the gross violation of principles of natural justice and lack of adherence to the procedure under Section 9D, the matter be remanded back to the adjudicating authority for de novo adjudication, as held by Member (Technical). (DEVENDER SINGH) (ASHOK JINDAL) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Per: Anil G. Shakkarwar: 36 Heard on the difference of opinion. 37. Heard both sides and perused the records. 38. I find that in para 31, Ld. Brother Member (Technical) has relied on para 25 of ruling by the Hon ble High Court of Punjab Haryana in the case of Ambika International (supra). I have further perused the said ruling contained in para 26, 27 28, which is reproduced below for the sake of appreciation: 26. In fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strength of invoices without receipt of inputs. The admitted facts are that the appellants, M/s.BSPL had manufactured the goods and paid Central Excise duty on the same and there are no investigations as to from where the inputs were procured by M/s.BSPL for manufacture of goods, if they had received only the invoices and no inputs from M/s.HSAL. Therefore, I do not find the allegations of non-receipt of inputs by M/s.BSPL is established in the proceedings. The revenue appeal in respect of M/s.AG is for non-imposition of penalty. The same also does not survive because the fact remains on the records that M/s.BSPL manufactured the goods and paid duty on the same. In view of the above, I agree with the opinion of the Ld. Member (Judicial). 39. With the above opinion, I send the file back to the Division Bench. (Anil G. Shakkarwar) Member (Technical) Final Order In view of the majority order, the appeal filed by M/s Bhupendra Steel Pvt. Ltd. is allowed and the appeal filed by the Revenue is rejected. (Devender Singh) (Archana Wadhwa) Member (Technical) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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