TMI Blog2021 (11) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... complete trail of evidence for the investigating authorities to detect and discover the said activities - If on the basis of the evidences adduced which would be of the nature as enumerated at (ii) of para 40 of the said decision, the conclusions in relation to act of clandestine manufacture and clearance should be arrived at. In the instance case, there are sufficient evidences as enumerated therein have been put forth to establish the case against the appellant within pre-ponderence of probability. Nothing has been brought on record to show that the demand made in present case based on the evidences and admissions/ confessions by the Director of Appellant 1, was covered under the earlier show cause notice. The earlier demand was based on certain studies conducted, and on the basis of electricity consumption was made. The demand was in nature of presumptive demand, and as per the submissions made by the appellant the appeal against the said order was dismissed not after consideration on merits but for the reason of non compliance with provisions of Section 35 F of the Central Excise Act, 1944. Appellants have also not placed on records any document evidencing such dismissal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin 30 days. 5. I impose a penalty of ₹ 5,00,000/- (Rupees Five Lakhs only) each on Shri Suresh Mittal Shri Satyanarayan R. Agarwal, both directors of M/s. ISSPL, and ₹ 2,00,000/- (Rupees Two Lakhs Only) each on Shri Vijay Kumar Jindal, Shri Vijay Kumar Mahavir Prasad Mittal and Shri Ajay Kumar Baheti, all three Ingot brokers, and M/s. SSIPL, for their alleged involvement, under Rule 26 of the Central Excise Rules, 2002 [para 5.19 refers). 2.1 M/s. Ishu Super Steel Pvt. Ltd. (Appellant 1), is engaged in the manufacture of M. S. Ingots falling under the chapter 72 of the First Schedule to the Central Excise Tariff Act (CETA), 1985. M/s Salasar Ispat Pvt Ltd (Appellant 2) is the purchaser of goods from Appellant 1, Shri Suresh Mittal (Appellant 3) Shri Satyanarayan R. Agarwal (Appellant 4), both are directors of Appellant 1, Shri Vijay Kumar Jindal (Appellant 5), Shri Vijay Kumar Mahavir Prasad Mittal (Appellant 6) and Shri Ajay Kumar Baheti (Appellant 7), all three Ingot brokers. 2.2 On the basis of an intelligence gathered, the officers of the Directorate General of Central Excise Intelligence (DGCEI), Zonal Unit, Mumbai that some manufacturers of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire activities were kept concealed and surreptitious with an intent to evade the payment of substantial amount of duty. appropriation of ₹ 8,25,000/- deposited during investigation by the Appellant 1, towards demand of Central Excise duty. for charging the interest under Section 11AB of the Central Excise Act, 1944 was made. to impose penalty under Section 11AC ibid read with Rule 25 of the Central Excise Rules, 2002 was made for contraventions of Rule 4, 6, 8, 10(1), 11 12 ibid. 2.6 Show cause notice also proposed for imposition of personal penalty on Appellant 2 to 7, in terms of Rule 26 of the Central Excise Rules, 2002, for their alleged involvement in abetting / planning such surreptitious illegal activity. 2.7 The show cause notice was contested by all the Appellants except for Appellant 5, and Commissioner has after consideration of submissions made adjudicated the show cause notice as per the impugned order referred to in para 1, supra. 2.8 Aggrieved by the impugned order, the Appellants have filed these appeals. 3.1 We have heard Shri Ashok Kumar Singh, Advocate, for the Appellant 1, 3 4 and Shri N N Prabhudesai, Superintendent, Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamination of the said brokers in their reply dated 04.08.2009 to the Show Cause Notice. Out of three brokers only Mr. Ajay Kumar Baheti appeared fro cross examination who has categorically stated in his statement dated 03.07.2008 that he was not aware about the transaction. He has duly deposed in his cross examination on 04.08.2009 that he cannot comment whether the consignment were cleared with bill or without bill. The Appellant submits that Mr. Ajay Kumar Baheti did not support the case of the department as his deposition was not precise and pin pointing. The other two brokers Mr. Vijay Kumar Mahavir Prasad Mittal and Mr. Vijay Kumar Jindal did not appear for cross examination and therefore there statement remained uncorroborated and unsubstantiated and therefore, no reliance should be placed on their statement. There is no recovery of any finished product from the factory of the Appellant or anywhere outside the factory of the Appellant. There is no evidence of any physical recovery of the goods. As per the allegation of the department various trucks of raw materials and finished goods would have come and gone out to the factory of the Appellant. All the trucks were r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade. S No Judgment Proposition Para No . 1 Andaman Timber Industries [2015 (324) ELT 641 (SC)] Reliance on the statement of witnesses who did not appear for cross examination is a serious flaw which makes the order nullity in as much as it amounts to violation of principle of natural justice. 6 7 2 Arya Fibres Pvt . Ltd [2014 (311) ELT 529 (T- Ahm)] There should be tangible evidence of clandestine clearance and not merely inference on unwarranted assumption. The evidence in support thereof should be of excess raw material, unaccounted finished goods, discovery of finished goods outside factory, proof of actual transportation etc. 40 3 Brims Products [2011 (2 71) ELT 184 (Pat)] The charge of clandestine removal is required to be proof beyond doubt by Revenue . Presumption cannot take place of positive legal evidence . 9 10 4 Galaxy Indo Fab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of account of the said concern. (para 3.3.1 of Annexure of the SCN) On 2/1/2007 - He admitted that the purchases from Silvar Ispat, Bhavaskti and Appellant 2 were through brokers as well as directly. He had gone through record no 23 and he admitted the entries therein. He requested that his statement may be recorded on the next date (para 3 3 2 of Annexure I of the SCN) On 5/1/2007 he had gone through the above said record no.23 and 24 and stated that some of the consignments appearing in the record were received with Central Excise invoice and that the same were recorded in their books of accounts. He informed that around 1864.496 Mts quantity received with Central Excise invoice and 7426.530 MT was received without invoices, while 47.7751 MT of ingots were traded. He informed that Ishu supper is used as short form for Appellant 2. He stated that freights for ingots transport were paid by ingot manufacturers. Separate Annexures (to the statement) were prepared showing the entries in seized records no.23 and 24 where ingots were cleared with Central Excise Invoices and without Central Excise Invoices. Shri Paresh Gautam has signed on these annexures. (pages 844 to 868 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCN. Appellant 6, on 10/1/2007 (page 933-936 of Appellants' compilation) gave his statement in Hindi and admitted that 8 consignments of MS Ingots from Appellant 1 without C.Ex. invoices sold by him to Appellant 2. (para 5.5 of Annexure I to SCN) The chart annexed to his statement giving details of such consignments (page 936 of Appellants' compilation) is as below. (These are reflected in Annexure Il to SCN) Sr. No. in Ann. Il to SCN Date Quantity Seized record no./page Page no. of Appellants' Compilation 63 10.07.06 16.08 23/16 574 64 11.07.06 15.835 23/16 574 65 11.07.06 15.86 23/16 574 66 15.08.06 9.74 23/48 591 67 15.08.06 9.78 23/48 591 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20.11.06 15,450 23/163 650 22.11.06 13,875 23/170 654 22.11.06 9,780 23/170 654 24.11.06 9,130 23/170 654 30.11.06 14,720 24/21 665 30.11.06 9,650 24/21 665 03.12.06 9,275 24/21 665 06.12.06 12,030 24/25 667 06.12.06 15,065 24/25 667 15.12.06 12,970 24/25 667 15.12.06 12,535 24/25 667 15.12.06 9,640 24/25 667 15.12.06 9,870 24/25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) Vinod Solanki [(2008 (228) E.L.T. 17 (Bom.)] (para 7) SRG International [2011 (269) E.L.T. 497 (Tri. Del.)] (para 4.1) Zaki Ishrati [(2013 (291) E.L.T. 161 (All.)] (para 23,36) Sidharth Shankar Roy [2013 (291) E.L.T. 244 (Tri. Mumbai)] (para 17.2) Vaibhav Exports [2009 (244) E.L.T. 527 (Bom.)] (para 12) Sanjay Shah [2011 (254) ELT 211 (Mad)] (para 8- 11) Jai Hind Oil Mills Co. [(1987 (28) E.L.T. 507 (Tribunal)] (para 13) Indian Strips [2004 (173) E.L.T. 265 (Tri. Mumbai)] (para 24) Anjani Kumar Shah [(2002 (147) E.L.T. 890 (Tri. Del.)] (para 8.1) Debes Industries [(1994 (71) E.L.T. 943 (Tribunal)] (para 8) Somani Ferro Alloys Ltd. [(1990 (47) E.L.T. 445 (Tribunal)] (para 5) Harssha Tea (India) Ltd. [2006 (204) E.L.T. 622 (Tri. Chennai)] (para 2) Saraf Silicates [1999 (112) E.L.T. 674 (Tribunal)] (para 4,5) Phoenix Mills Ltd. [ 2004 (168) E.L.T. 310 (Bom.)] (para 16) Hon'ble Supreme Court Judgment in the case of State Of Tamil Nadu vs Kutty @ Lakshmi Narasimhan on 10 August, 2001 in Appeal (crl.) 453 of 1991 (Last para on page 3) On the issue that the demand is covered by earlier sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be written in the judgment/order, which may not be germane to the facts of the case; It should have a co-relation with the applicable law and facts. The ratio decidendi should be clearly spelt out from the judgment/order. (b) After preparing the draft, it is necessary to go through the same to find out, if anything, essential to be mentioned, has escaped discussion. (c) The ultimate finished judgment/order should have sustained chronology, regard being had to the concept that it has readable, continued interest and one does not feel like parting or leaving it in the midway. To elaborate, it should have flow and perfect sequence of events, which would continue to generate interest in the reader. (d) Appropriate care should be taken not to load it with all legal knowledge on the subject as citation of too many judgments creates more confusion rather than clarity. The foremost requirement is that leading judgments should be mentioned and the evolution that has taken place ever since the same were pronounced and thereafter, latest judgment, in which all previous judgments have been considered, should be mentioned. While writing judgment, psychology of the reader ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted statements of the Directors in company. c. The cross examination of two of the broker s was not undertaken and hence their statements cannot be relied upon, the broker who has been cross examined was unable to stand by his version in the statement. d. Some portion of demand overlaps with proceedings initiated against them by the earlier show cause notice issued to them relying on the electricity consumption report prepared by Dr N K Batra. 4.4 Commissioner has in the impugned order discussed the facts and evidences I relating to the case as follows: 5.2. Issue engulfed relates to clandestine manufacture clearance of M. S. Ingots during the period July 2006 to Dec 2006 as alleged in the notice. To decide the case of clandestine manufacture and clearance, following vital ingredients / parameters require its proper examination and establishing the facts: 1) evidence relating to clandestine procurement of raw materials for manufacture of Ingots. ii) evidence relating to clandestine manufacture and clearance of finished goods i.e. M. S. Ingots; iii) financial arrangement i.e. flow back of money to M/s. ISSPL. 5.3. The case is built up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice premises of M/s. SSIPL at Mumbai. Shri Satyanarayan Agarwal, another Director (M/S. ISSPL), in his statement dated 31.05.2007, also ratified the deposition of Shri Suresh Mittal, discussed earlier, relating to unaccounted procurement of M. S. Scrap. Since, both directors of the company had themselves confessed their offence, no question of existence of doubt arises here. 5.5.1. As regards to second point i.e. clandestine removal of M.S. Ingots manufactured by M/s. ISSPL through brokers namely Shri Vijay Kumar Jindal, Shri Vijay Kumar Mahavir Prasad Mittal and Shri Arun Kumar Baheti, I find that the Note Books containing entries of transactions and Note (Cash) Book comprising information relating to receipts payments against transactions (seized record nos. 23, 24 26) were recovered from the office premises of M/s. SSIPL at Mumbai and the said private note books cash book contained the entries specifying name of supplier, date of removal, quantity of goods, rate value thereof and the payments received. The entries relating to M. S. Ingots cleared without bills' to M/s. SSIPL are reflected on the page nos. 7, 16, 21, 34, 44, 48, 54, 59, 64, 65, 74, 87, 97, 103, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se invoice and weighment slips and after its safe reach to the destination point, the said person brought back the same Central Excise invoice / weighment slips to the parent factory where the bills were destroyed. This methodology was meticulously postulated and adopted to get the hassle free and safe transit of the goods and to circumvent the departmental officers in transit, if consignments were intercepted in between 5.6. Relating to third point i.e. realization of the sale proceeds, all Ingot brokers named above and Shri Suresh Mittal and Shri Satyanarayan Agarwal, both directors of M/s. ISSPL and Shri Pravesh Gautam, Director - M/s. SSIPL, had confessed in their respective statements that the payments were made in cash as soon as the transactions were over. Also, the seized record no. 26 recovered from Mumbai office premises and the seized record no. 1 2 retrieved from the possession of Shri Faruk Shaikh, Broker, had evidenced the same. It is trite that the accounts covering the cash transactions (without bills) are never accounted for and also no trace out is left for the detective agencies to get its clue, when transactions are effected with ulterior motives and mal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bile: 9371340418, Office: 02551-240418 19, Fax- 02551-240377, I am Director in M/s. Ishu Super Steel Pvt. Ltd. located at: D-5/D-6, STICE, Musalgaon, Shirdi Road, Sinnar, Nashik, having its registered office located at same address. The name of the other Directors are Shri Suresh Agarwal, Shri Suresh Mitttal and Shri Mohit Sarlia. This company is engaged in the manufacturing of Iron and Steel articles namely M.S. Ingots. The raw material used for the manufacture of M.S: Ingots is M.S. Scrap and Sponge Iron. We procure M.S.Scrap form local scrap merchant and Sponge Iron is procured mainly from Raipur and Bellari. I have now been shown the statement dated 23.01.2007, of Shri Suresh Mittal, one of the Directors of M/s. Ishu Super Steel Pvt. Ltd. recorded by the officers of the DGCEI. I have put my dated signature on the aforesaid statement in token of having seen and read the same. In this regard I state that all the depositions made by Shri Suresh Mittal in the said statement are fully correct. I agree and confirm all his depositions as true and correct. Now I have been shown the statement dated 31.05.07 of said Shri Suresh Mittal, I have put my dated signature on the aforesaid st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. I have been explained the provisions of Section 14 of the Central Excise Act, 1944 whereby the above inquiry is deemed to be a judicial proceeding' within the meaning of section 193 and 228 Indian Penal Code, according to which intentionally giving false evidence or fabricating false evidence, for the purpose of being used in these proceedings, is an offence punishable under Section 193 of the Indian Penal Code, and intentionally offering. insult, or causing any interruption to the Officer sitting in these proceedings, is an offence punishable under Section 228 of the Indian Penal Code. Having understood my responsibility hereunder I give my true correct statement. My name, age and residential address are correctly stated above. My telephone numbers are, Mobile: 9324232100, Res: 32568499. I am director of M/s. Ishu Super Steel Pvt. Ltd., located at: Plot No. D-5, Stice, Musalgaon, Tal, Sinnar, Dist. Nashik, Bhagwati Steel Gast Ltet., located at: Plot No. D-101, MIDC, Tal, Sinnar, since its incorporation on 20.01.2005. We have our head office located at 49A, 3rd Floor, Latif House, Carnac Bunder, Masjid(East), Mumbai - 400 009 where all the work relating to sale, purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are not recorded in our books of accounts. Neither the corresponding quantity of raw material is recorded in the books of accounts, nor, the production, intended to be cleared without payment of Central Excise Duty is recorded. On being asked about the rates quoted for with bill consignments and without bill' consignments, I state that with bill! rates are quoted as basic rate plus Excise duty plus Sales Tax and without bill' rates are quoted as around ₹ 1500 to ₹ 2000 more than the basic rate. Thus, in without bill' sale, the Central Excise Duty and sales tax quantum is shared by us and the rolling mill. On being asked to produce the details of such without bill clearances from your factory, I state that the details are kept on a piece of paper which is torn off after the deal is complete and the payment is received in cash from the rolling mill or the broker. I do not have any detail of such clearances. I further state that such without bill' clearances, from our factory, was done to M/s Shri Salasar Ispat Pvt. Ltd., Nasik. I further state that I and Shri Satbir Sarlia used to deal with Shri Pravesh Gautam for such without bill clearances. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully agree with all the facts stated therein with regard to M/S Ishu Super Pvt. Ltd., Nasik. Now, I have been shown the statement of Shri Jaiprakash Mittal, recorded by the officers of DGCEI, Zonal Unit, Mumbai on 16.01.2007. After carefully going through the statement, I have put my dated signature on the same in token of having seen and read the same. In this regard, I state that Shri Jaiprakash Mittal is the nephew of Shri Satbir Sarlia who had also dealt in with the rolling mills for sale of M.S. Ingots of M/s Ishu Super Pvt. Ltd., Nasik. I fully agree with all the facts stated therein with regard to M/s Ishu Super Pvt. Ltd., Nasik. Now, I have been shown the page nos. 07, 16, 21, 34, 44, 48, 54, 59, 64, 65, 74, 87, 96, 97, 103, 114, 121, 142, 153, 163, 167, 170, and 172 of record no. 23 and the page nos. 21, 25, and 38 of record no. 24 seized from the office premises of M/s Shri Salasar Ispat Pvt. Ltd., on 18.12.2006. I have carefully gone through all the transactions entered on these pages under my company's name and I have put my dated signature alongside these entries. I have also been shown two charts marked as annexure 1 and annexure II prepared on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, the broker is responsible for collecting the cash from Shri Pravesh Gautam, Director of M/s Shri Salasar Ispat Pvt. Ltd. and remitting to us or our nominated person. The brokerage is deducted from the cash payments accruing to us by the brokers themselves. I confirm that in all the transactions depicted in Annexure-I, cash payments have been collected by the brokers concerned from M/s Shri Salasar Ispat Pvt. Ltd. for payment to us. On having been pointed out by your office, I undertake to pay the Central Excise Duty against the above mentioned consignments of M.S. Ingots cleared by M/s Ishu Super Pvt. Ltd. without payment of Central Excise Duty due thereon shortly. I have nothing more to say at present. The above statement has been typed as dictated by me. After having gone through the above statement I confirm that the same has been typed correctly. The above statement is given by me voluntarily without any threat or pressure and the same is fully correct. 4.5.3 Statement of Shri Suresh Mittal, Aged: 36 yen, Occupation : Business, Director of M/s Ishu Super Steel Pvt. Ltd, located at Plot No. D-5, STICE, Masalgaon, Shirdi Road, Sinner, Nashik 422 112, residin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawal. Now, I have been shown record no. 26 seized from the premises of M/s Shri Salasar ispat Pvt. Ltd. on 18.12.2006 under panchanama. After carefully going through all the entries in the said record, I have put my dated signature on the first and last page of the same in token of having seen the same. In this connection I wish to state that payments against without bill supplies of M. S. Ingots made by us to M/s Shri Salasar Ispat Pvt. Ltd. were received in cash by either our broker or by us. I confirm that the entries in the said record pertaining to payments made in cash to us or our brokers are correct and we have indeed received the payments on the given date in cash against our without bill supplies from Shri Pravesh Gautam or through our brokers. On being asked to explain the reasons for appearing our company's name on the receipts side of this seized record which a cash book, I state that we have not made any payment in cash to M/s Shri Salasar Ispat Pvt. Ltd. However, we have purchased scrap from M/s Shri Salasar Ispat Pvt. Ltd. without any bill in cash and the payment for this scrap was deducted by M/s Shri Salasar Ispat Pvt. Ltd., from our cash receipts. I ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice was not made by them. The correctness of the entries made in these private records is established by the fact that these diaries also record the entries where the goods were received by M/s Salasar Ispat on payment of duty. When these diaries have been so meticulously maintained recording the details of the all the goods whether with invoice or without invoice, they cannot be discarded easily, more so ever when these diaries were shown by the investigating officers to Shri Suresh Mittal who admits and sign the same, and also signs the Annexures drawn from these diaries which related to clearances made by the appellants. 4.5.7 On the issue of retraction of statement Commissioner has observed as follows: 5.8. Now coming to the point of retraction to the statements recorded, I find that mere retraction of confession is not sufficient to make confessional statement irrelevant, as is held by the Hon'ble Supreme Court in the case of Vinod Solanki Vs.U.O.I. [2009 (13) S.T.R. 337 (S.C.). The apex court further held that the court must bear in mind the attending circumstances, time of retraction, nature and manner of retraction and other relevant factors to arrive at a find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession if found true on examination is a corroborative piece of evidence and that can be relied upon. Hon'ble Supreme Court in the case of CCE, Madras Vs. Systems Components Pvt. Ltd. [2004 (165) E.L.T. 136 (S.C.)] held that what is admitted need not be proved . I see here no reason for interference. 4.5.8 In case of Naresh J Sukhwani [1996 (83) ELT 258 (SC)] Hon ble Supreme Court has held as follows: 4 . It must be remembered that the statement made before the Customs officials is not a statement recorded under Section 161 of the Criminal Procedure Code, 1973. Therefore it is a material piece of evidence collected by Customs officials under Section 108 of the Customs Act. That material incriminates the petitioner inculpating him in the contravention of the provisions of the Customs Act. The material can certainly be used to connect the petitioner in the contravention inasmuch as Mr. Dudani s statement clearly inculpates not only himself but also the petitioner. It can, therefore, be used as substantive evidence connecting the petitioner with the contravention by exporting foreign currency out of India. Therefore we do not think that there is any illegality in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecution to find out whether there are any other facts and circumstances to corroborate the retracted confession. It is not necessary that there should be corroboration from independent evidence adduced by the prosecution to corroborate each detail contained in the confessional statement. The Court is required to examine whether the confessional statement is voluntary; in other words, whether it was not obtained by threat, duress or promise. If the Court is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true. If the Court on examination of the evidence finds that the retracted confession is true, that part of the inculpatory portion could be relied upon to base conviction. However, the prudence and practice require that Court would seek assurance getting corroboration from other evidence adduced by the prosecution. 26. In Naresh J. Sukhawani v. Union of India - 1996 (83) E.L.T. 258 (S.C.) = 1995 Supp. 4 SCC 663 a two-Judge Bench [to which one of us, K. Ramaswamy, J., was a member] had held in para 4 that the statement recorded under Section 108 of the Act forms a substantive evidence inculpating the petitioner therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a (mediator s report) and the oral evidence of the witnesses in proof of recovery and in connection therewith. This Court, therefore, in evaluating the evidence for proof of the offences committed under the Act has consistently been adopting the consideration in the light of the object which the Act seeks to achieve. 4.5.11 In view of the fact that the retraction has been made by simple letters posted under certificate of posting to an authority, who is not stationed at the place of investigation/ recording of statement we are not inclined to agree with the appellants plea on retraction. Further it is interesting to note that when so ever the Appellant 3 4 visited the post office for posting their letter retracting their statement, they used the same postal stamps bearing the picture of Dr B R Ambedkar for posting these letters. Further no proof has been shown in respect of the delivery of such retraction letters to the addressee. In case the Appellant 3 4 were serious about retracting their statements they would have posted these letters by Registered Post with Acknowledgement Due so that the proof of delivery of the said letters to the addressee was available for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case as is evident from the impugned order, opportunities were extended by the adjudicating authority to call the brokers for cross examination. Only one of the broker whose statement has been relied upon turned up for cross examination. Commissioner has in impugned order dealt with the issue stating as follows: 3. Records of Cross-examination: Cross-examination as sought for by Shri Ashok Kumar Singh, Advocate of M/s. ISSPL SSIPL, of Shri Vijay Kumar Jindal, Shri Vijay Kumar Mahavir Prasad Mittal and Shri Ajay Kumar Baheti, all Ingot brokers, were allowed, but Shri Ajay Kumar Baheti, the lone witness, came forward for the proceedings, details of which are narrated below: Cross-examination of Shri Ajay Kumar Baheti, Ingot Broker, on 04.08.2009: On being questioned, Shri Ajay Kumar Baheti stated that he had transacted around 500 M.T. of M. S. Ingots for M/s. ISSPL; that he never raised any bill for payment; that no bills for payment were routed through him; that he didn't collect payments in all cases; that the payment routed through him was in cash; that no excise invoices carrying the consignments were routed through him; that no discussion relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailability of witnesses for cross-examination is not a fatal flaw when the findings are based on documents. Viewed from the above perspectives, I don't find any legal hurdle to rely upon the statements of both brokers, named above. 4.6.3 From the above facts we find that the decision of Hon ble Apex Court in the case of Andaman Timbers, is distinguishable, as in the present case the opportunity to cross examine was not denied but extended to the appellant. In fact one of the broker appeared for cross examination and was cross examined. It is also seen that during the cross examination, he specifically stated that what has been said by him earlier in his statement is correct. 4.6.4 It is also worth pointing, that the persons sought to be cross examined were the co-noticee in the proceedings before the Commissioner, and are now co-appellant s as Appellant 5, Appellant 6 Appellant 7 in the appellate proceedings before us. 4.6.5 Delhi bench of CESTAT, has in case of Jagdish Shanker Trivedi [2006 () ELT 290 (T-Del)] has held as under, in case where the co-noticee were called for cross examination but they did not turn up held the same not to be violation of principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fusal has resulted in failure of proper hearing. Therefore, principles of natural justice do not require that in matters like this, persons who had given information should be allowed to be cross-examined by the co-noticees on the statements made before the customs authorities. If cross- examination is to be allowed as a matter of right then in all cases of conspiracy and joint dealings between the co-noticees in the commission of the offences in connection with the contraband goods, they can bring about a situation of failure of natural justice by a joint strategic effort such co-noticees by each one refusing to be cross-examined by resorting to Article 20(3) of the Constitution and simultaneously claiming cross- examination of the other co-noticees. We, therefore, hold that the appellants, including the appellant Ashish Kumar Chaurasia were not entitled to claim cross-examination as a matter of right. The appellant Ashish Kumar Chaurasia had, in fact, cross- examined two official witnesses and at the end, he had only sought for time for further hearing. The cross-examination made by the appellant, Ashish Kumar Chaurasia of two officers, A.K. Chaturvedi and Simon has been set out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 . We have considered these submissions and it is apparent from the observations made by the adjudicating authority that Shashikant was a co-noticee and he did not agree to being cross-examined by the appellants Popular Carpet Inds, and it was because of this that he could not be cross-examined by the party. The allegation of the ld. advocate that adjudicating authority had already decided for not offering Shashikant for cross-examination does not appeal to us. If that was so, he would not have inquired from Shashikant who was present and who was required to remain present because of his matter being taken up on the very same day and undertaken an empty formality of getting a denial from Shri Shashikant. Non- permitting of cross-examination of Shashikant by the adjudicating authority clearly appears to be on account of refusal of Shashikant for being cross-examined by anybody. The adjudicating authority under these circumstances could not have compelled him to come as witness for purpose of cross- examination. The observations of the said adjudicating authority are in confirmation to the provisions of law. 4.6.9 Tribunal has in case of Mayamahal Industries [1995 (80) EL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and from the Company s Articles of Association. As such, Director of a Company is none but the Company s agent who can bind the Company for any Act of his conduct. Keeping in view the same, the statement of Shri Vineet Saluja, Shri Pradeep Sharma is opined to not to be a statement simplicitor but a statement as that of the appellant Company and as such these statements are actually the confessions on behalf of the appellant Company. Since these statements were made to the Customs officers, the statements are out of the ambit of Section 24 of Indian Evidence Act and are readily admissible into evidence. As it was held by three judge Bench of Hon ble Apex Court in the case of State of Punjab v. Barkat Ram reported in 1962 (3) SCR 338 where Court has gone to the extent of holding that the confessions made to the Customs officers if voluntarily made, can be the sole basis of the conviction. 8. Though the appellant have taken the plea that both the witnesses were compelled to give the initial statement of acknowledging the guilt but they had subsequently retracted. This controversy was cleared by Supreme Court Bhagwan Singh v. State of Punjab reported in AIR 1952 (S.C.) 214 holdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the co-noticee in a position where he might have to incriminate himself by giving evidence. 12. Coming to the aspect of violation of natural justice, it has way back been listed by Supreme Court in Kanungo Co. v. Collector of Customs, Calcutta and others reported in 1983 (13) E.L.T. 1486 (S.C.) wherein it was held that principles of natural justice do not require that where the show cause notice set out of the material on which the Customs Authorities had relied and it was for the appellant to give a suitable explanation, persons who had given information should be examined in presence of the appellants or should be allowed to be cross-examined by them on the statements made before the Customs Authorities. It was clarified that formal cross-examination was procedural justice and principles of natural justice did not require that there should be a kind of formal cross-examination. It was held that natural justice certainly includes that any statement of person before it is accepted against somebody else that the person should have an opportunity of meeting it whether by way of interrogation or by way of comments and assailing as the party charged as a firm and reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumption of electricity, non-verification of stock position of raw materials as well as finished goods in their factory, non recording of the statements of production staffs and transporters and other similar factors, I feel that it is well established prevalent practice that clandestine activity, whatever adopted, is always kept concealed / secreted in a planned way and every possible efforts are taken (by accused) not to leave any evidence open to get its clue. Since activity is surreptitious itself, every chain of the link is not expected / desirable to be unfolded / proved. In such case, pre-ponderance of probability mechanism would come into play. Hon'ble Apex Court in the case of Bhanabhai Khalpabhai Vs. Collector of Customs (1994 (71) E.L.T. 3 (S.C.)] had held so. Further, in an identical case in respect of Lucky Dyeing Mills P. Ltd. Vs. CCE C, Surat [2008 (222) E.L.T. 543 (TYI-Ahmd.), the Hon'ble Tribunal also held that the contention of corroborative evidence in the nature of procurement of raw material, electricity consumed etc. does not stand, inasmuch as the goods were sent without challan or documentary proof, payments were made in cash and delivery ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed in view of Hon'ble CESTAT'S judgments, quoted hereinabove (Para 2.2.14. refers). I see that there is no proposal for confiscation of the excisable goods in the impugned notice, hence to discuss this point is of no avail. 5.15. Further, strenuous argument was placed that the seized record no. 23, 24 26 (Two Note Books containing entries of transactions and One Note Book containing details of receipts payments, recovered during the search of the office premises of M/s. SSIPL, located at New Darukhana, Mumbai on 18.12.2006), were not recovered from the office premises of M/s. SSIPL at Mumbai; on the contrary the said office premises belonged to M/s. Gautam Enterprises, whose proprietor is Shri Roshanlal Gautam (father of Shri Pravesh R. Gautam). This is absolutely an application of afterthought, as during the search of the said premises on 18.12.2006, Shri Pravesh R. Gautam was present there and has put his dated signature on the Search Warrant and panchnama, wherein, he categorically explained to the panchas (witnessing the panchnama proceedings) that the said premises is used as the office premises for M/s. SSIPL, M/s. Gautam Enterprises (his father Shri Rosh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence. In view of the secrecy associated in such activities Hon ble Apex Court has time and again emphasized the need to prove such cases within pre-ponderence of probability and not with the mathematical accuracy. In case of Arya Fibres referred to by the counsel for appellant, tribunal has in para 40 observed as follows: 40. After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well-settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenue which mainly are the following : (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions; (ii) Evidence in support thereof should be of : (a) raw materials, in excess of that contained as per the statutory records; (b) instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty; (c) discovery of such finished goods outside the factory; (d) instances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the entire case-law on the subject [Hindustan Machines v. CCE [2013 (294) E.L.T. 43]. Members of Bench having hearing initially differed, the matter was referred to a third Member, who held that clandestine manufacture and clearances were not established by the Revenue. We are not going into it in detail, since the learned Counsels on either side may not have had the opportunity of examining the decision in the light of the facts of the present case. Suffice it to say that the said decision has also tabulated the entire case-law, including most of the decisions cited before us now, considered them, and come to the above conclusion. In yet another decision of a co-ordinate Bench of the Tribunal [Pan Parag India v. CCE, 2013 (291) E.L.T. 81], it has been held that the theory of preponderance of probability would be applicable only when there are strong evidences heading only to one and only one conclusion of clandestine activities. The said theory, cannot be adopted in cases of weak evidences of a doubtful nature. Where to manufacture huge quantities of final products the assessee require all the raw materials, there should be some evidence of huge quantities of raw materials be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the evidence is to be considered to use the words of Lord Mansfield in Blatch v. Archar (1774) 1 Cowp. 63 at p. 65 According to the Proof which it was in the power of one side to prove and in the power of the other to have contradicted . Since it is exceedingly difficult, if not absolutely impossible for the prosecution to prove facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden. 32 . Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on the person concerned : and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial facts being exclusively or especially within the knowledge of the accused, is that it may, proportionately with the gravity or the relative triviality of the issues at stake, in some special type of case, lighten the burden of proof resting on the prosecution. For instance, once it is shown that the accused was travelling without a ticket; a prima facie case against him is proved. If he once had such a ticket and lost it, it will be for him to prove this fact within his special knowledge. Similarly, if a person is proved to be in recent possession of stolen goods, the prosecution will be deemed to have established the charge that he was either the thief or had received those stolen goods knowing them to be stolen. If his possession was innocent and lacked the requisite incriminating knowledge, then it will be for him to explain or establish those facts within his peculiar knowledge, failing which the prosecution will be entitled to take advantage of the presumption of fact arising against him, in discharging its burden of proof. 44 . These fundamental principles, shorn of technicalities, as we have discussed earlier, apply only in a broad and pragmatic way to proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities. Accordingly we hold that there is no force in the third contention of the appellant. 13 . There is also no force in the second point because we do not read the impugned order as having wrongly placed the burden on the appellant. What the impugned order does is that it refers to the evidence on the record which militates against the version of the appellant and then states that the appellant had not been able to meet the inferences arising therefrom. In our opinion, the High Court was right in holding that the burden of proof had shifted on to the appellant after the Customs Authorities had informed appellant of the results of the enquiries and investigations. 14 . This also disposes of the first point, as we have said, the burden was on the Customs Authorities which they discharged by falsifying in many particulars the story put forward by the appellant. 15 . Coming to the fourth point, we are of the opinion that, except for certain items there is evidence in favour of the conclusion of the High Court. It cannot be dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (IIT), Kanpur. Besides that, specific instances encompassing cogent clinching evidences of clandestine manufacture and clearance of M. S. Ingots have been found in the present case and therefore, the further duty demand of ₹ 56,68,565/- stands for and holds good in the eye of law. 4.8.2 Nothing has been brought on record to show that the demand made in present case based on the evidences and admissions/ confessions by the Director of Appellant 1, was covered under the earlier show cause notice. The earlier demand was based on certain studies conducted, and on the basis of electricity consumption was made. The demand was in nature of presumptive demand, and as per the submissions made by the appellant the appeal against the said order was dismissed not after consideration on merits but for the reason of non compliance with provisions of Section 35 F of the Central Excise Act, 1944. Appellants have also not placed on records any document evidencing such dismissal of the appeal filed by them. As far as we are aware tribunal has been deciding the appeals setting aside the demands made against the ingot manufacturers on the basis Shri N K Batra, report on electricity cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL, Shri Vijay Kumar Jindal, Shri Vijay Kumar Mahavir Prasad Mittal and Shri Ajay Kumar Baheti, all brokers, with association of M/s. SSIPL, I find that they are the key persons who have abetted such planned activity of clandestine removal of M. S. Ingots manufactured at M/s. ISSPL Shri Satyanarayan Agarwal had himself deposed that he had managed the transportation for delivery of Ingots without bills' in cash to M/s. SSIPL. Clearing the consignments without bills' and realizing the sale proceeds in cash by not accounting for the transactions in the books of accounts, is an economic offence, and for this act here, no person is standalone in the corrupt business and all they have their own prefixed specified role in a consolidated manner. They are the main protagonist of the entire exercise and stage managed the show, with an intention to evade the payment of duty and are the beneficiary of extraneous pecuniary gains. Without their consent, knowledge direction, such unscrupulous activities would not take place. To conclude, said persons named above are equally responsible and were proactively indulged in managing the illegal show and thus rendered themselves liable for pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
