TMI Blog2022 (10) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of justice. The legislative scheme, therefore, is to ensure that the statement of any person which has been recorded during search and seizure operations would become relevant only when such person is examined by the adjudicating authority followed by the opinion of the adjudicating authority then the statement should be admitted. Even mere recording of statement is not enough but it has to be with full conscious application of mind by the adjudicating authority that the statement is required to be admitted in the interest of justice. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored - there are no hesitation to view that in the present matter Ld. Pr. Commissioner committed illegality in placing reliance upon the statements of persons which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al No. 11835-11839 of 2017, Excise Appeal No. 11843 of 2017, Excise Appeal No. 11889 of 2017 and Excise Appeal No. 10230 of 2018 - Final Order No. A/11216-11224/2022 - Dated:- 18-10-2022 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL Shri Sarju Mehta, Chartered Accountant for the Appellant Shri Jeetesh Nagori, Commissioner (AR) Shri Prabhat Rameshwaram, Additional Commissioner (AR) for the Respondent ORDER The following Appeals are arising out of Order-In-Original No. BVR-EXCUS-000-PR.COM-002 003-17-18 dated 08.05.2017 wherein, common investigation/ evidences were relied upon therefore, they are taken up together for disposal. A chart showing the details of Appeals and demand therein are as under: Sr. No. Appeal No. Name of Appellant Demand 1. E/11756/2017 Patidar Products Confiscation of Seized Cash and goods, total amount of Rs. 18,43,000/- fine imposed, Duty demand of Rs. 9,68,12,975, penalty of Rs. 9,68,12,975/- 2. E/11835/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow up searches were also conducted at M/s Khodiyar Co., Amreli and M/s. Micro Seal Packaging, Rakanpur, and further at the premises of M/s Yesh Lamiprint Pvt. Ltd., Ahmedabad and M/s. Rototon Polypack Pvt. Ltd., Rajkot, at the premises of M/s. Shivam Marketing, Surat and M/s Shah Agency Ahmedabad and recovered seized various documents/ records 1.3 During the search proceeding at factory premises of M/s Patidar it was observed that one Mini Truck was lying loaded with finished goods. No documents/ records of the above said finished goods were found in the said factory premises or were produced by Shri Rajubhai Panchambhai Vikali , Supervisor-cum-watchmen of M/s Patidar. Hence, the said finished goods as well as the said Mini Truck were placed under seizure. During the search operation on 13.07.2011 at the residential premises of Shri Anil Govindbhai Metaliya, Proprietor of M/s Patidar, Cash amounting to Rs. 17,50,000/- was recovered. On being asked, Smt. Gitaben Anil Metaliya could not give any satisfactory reply in all the matters. Accordingly the said cash was placed under seizure under panchanama dated 13.07.2011 1.4 During the scrutiny of the 64 Kaccha Chits (Bill Book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. 1.5 Investigation in this case revealed that M/s Patidar had Manufactured and cleared Patidar brand Gutka during the period September 2008 to April 2011, which is evident from the record of the said period i.e Bill Books (Kaccha Chits). Shri Anil Govindbhai Metaliya, Proprietor of M/s Patidar, in his statement dated 02.08.2011 stated that they had manufactured Patidar brand Gutka for the period from July 2010 to December 2010, but the evidences, gathered from the suppliers/ manufactures of packing materials viz., M/s Yesh Lamiprint Pvt. Ltd., M/s Micro Seal Packaging and M/s Rototon Poly Pack Pvt. Ltd., indicates that M/s Patidar have manufactured and cleared to the goods i.e. Gutka even before July 2010. 1.6 The chewing Tobacco are classifiable under Chapter 24 of the Central Excise Tariff Act, 1985 and are assessed to Central Excise Duty on the basis of MRP in terms of the provisions of Section 4A of the Central Excise Act, 1944. It was alleged that during the period 2008-09 to 2011-12 M/s Patidar have cleared Flavoured Tobacco valued at Rs. 13,61,46,017 to its various dealers without payment of Central Excise Duty of Rs. 5,68,12,975/- (including BCD, NCCD, Addl. Duty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant. Consequently, their statements have no evidentiary value for establishing the alleged clandestine removal. The approach of the adjudicating authority in denying the cross examination is very contrary to the law laid down by the courts and tribunal in various Judgments. He placed reliance on the following judgments:- J K CIGARETTES LTD. VS. CCE -2009 (242) ELT 189 (DEL) BASUDEV GARG VS. CC -2013(294) ELT 353 ANDAMAN TIMBER INDUSTRIES VS. CCE., KOLKATA -2015(324) ELT 641 (SC) ATUAL BANSAL VS. CCE ORDER NO. A/11554-11556/2019 DATED 21.08.2019 BHARAT SHETH AND OTHERS VS. CCE BHAVNAGAR ORDER NO. A/10428-10506/2022 DATED 11.05.2022 2.1 He also submits that the seized Indian Currency cannot be confiscated under the Central Excise Law. The condition of Section 121 of Customs Act, 1962 read with Section 12 of the Act for confiscation of cash were not fulfilled. Hence the confiscation of cash is illegal. The burden of showing the cash recovered is the sale proceeds of the goods cleared without payment of duty is on the department. The department has not discharged this burden and therefore the amount seized cannot be considered as sale proceeds. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 (168) ELT 494 (TRI. DEL.) 03. Shri Jeetesh Nagori, learned Commissioner (AR) Shri Prabhat Rameshwaram, learned Additional Commissioner (AR) appearing on behalf of the revenue reiterates the finding of the impugned order and post-hearing he also submitted the copy of following decision in support of finding of impugned order and his arguments. 2009(233) ELT 157(SC) Vinod Solanki Vs. Union of India 2016(340) ELT 521 (Tri. Del.) CCE, Chandigarh Vs. Vinay Traders. 2013(295) ELT 116 (Tri. Bang) Ramchandra Rexins Pvt. Ltd. Vs. CCE, Bangalore -I, 2017(355) ELT 451(Tri. Del)- Haryana Steel Alloys Ltd. Vs. CCE, New Delhi 2013(297)ELT 561 (Tri. Chennai) Lawn Textiles Mills Pvt. Ltd. Vs. CCE, Salem 2011(270) ELT 643(SC)- CCE, Mumbai Vs. Kalvert Foods India Pvt. Ltd. 2013(289)ELT 3 (SC) Telestar Travels Pvt. Ltd. Vs. Special Director of Enforcement. 2015(318)ELT 437 (Tri. Mum)- PB Nair C F P Ltd. Vs. CC(General), Mumbai 2016(333) ELT 256 (Del) Rajesh Kumar Vs. CESTAT 2007(208) ELT 536 (Tri. Ahmd)- Montex Dyg Ptg Works Vs. CCE, Surat -I 2009(248)ELT 242 (Tri. Mum)- Agarwal Overseas Corporation Vs. CC (EP), Mumbai 1983(13)ELT 1486 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) When the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by 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. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before the Court. 4.2 On perusal of the said provision, we find that the statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of inquiry or proceeding under the Act shall be relevant for the purposes of proving truth of the facts which it co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement is treated relevant and admissible under the law, the person is not only required to be present in the proceedings before the adjudicating authority but the adjudicating authority is obliged under the law to examine him and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. Therefore, we would say that even mere recording of statement is not enough but it has to be with full conscious application of mind by the adjudicating authority that the statement is required to be admitted in the interest of justice. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to view that in the present matter Ld. Pr. Commissioner committed illegality in placing reliance upon the statements of persons which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority not having considered the request for grant of cross-examination of the prosecution witness, the impugned order stands vitiated by breach of the principles of natural justice. The impugned order is quashed. This order will not prevent the adjudicating authority to proceed afresh from the stage reached on April 25, 2018 or from such stage it deems appropriate. It is expected that, the adjudicating authority will keep the request of the petitioner to cross-examine the witnesses noted in its written notes of defence, in accordance with law. In Swadeshi Polytex Ltd. v. CCE, Meerut [2000 (122) E.L.T. 641 (S.C.)], it was held that if the Adjudicating Authority intends to rely upon the statement of any such persons, the Adjudicating Authority should give an opportunity of cross examination to the appellant . A similar view has been taken by the Hon ble High Court of Delhi in the case of Basudev Garg2013 (294) E.L.T. 353 (Del) (supra). The relevant portion of the order is reproduced below :- 14. The Division Bench also observed that though it cannot be denied that the right of cross-examination in any quasi-judicial proceeding is a valuable right given to the accuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the value of cross-examination, the Apex Court in Ayaaubkhan Noorkhan Pathan s case (cited supra) held thus : Cross-examination is one part of the principles of natural justice : 23. A Constitution Bench of this Court in State of M.P. v. Chintaman Sadashiva Vaishampayan, AIR 1961 SC 1623, held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given an opportunity of cross-examining the witnesses examined by that party. Not providing the said opportunity to cross-examine witnesses, would violate the principles of natural justice. A mere reading of the above said proposition clearly shows that the rules of natural justice require that a party must be given an opportunity to adduce all relevant evidence upon which he relies and further that the evidence of the opposite party should be taken in his presence by giving an opportunity of cross-examining the witnesses examined by that party. In the present case, neither any speaking order has been passed nor the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence before it. The issue also is no longer res integra in view of the large number of judgements of the Supreme Court. 4.7 We further find that the judgment relied upon by the Ld. AR is also not applicable in the facts of the present case, as the said judgment does not consider the provisions of Section 9D(2) read with Section 9D(1) of the Act. 4.8 We also find that the instant demand has been confirmed by the Ld. Commissioner on the basis of the statements of the persons whose cross-examination have not been allowed to test the correctness and authenticity of the allegations and hence the same will prejudice the interest of the appellants. It is settled position that statements made by the persons cannot be entered into evidence where the cross-examination of the statements of said persons are sought to be relied against the assessee :- CCE v. Parmarth Iron Pvt. Ltd. - 2010 (260) E.L.T. 514 (Allahabad) G-Tech Industries v. UOI - 2016 (339) E.L.T. 209 (P H) Nidhi Auto Pvt. Ltd. v. CCE - 2020 (33) G.S.T.L. 419 (Tri. - All.) 4.9 It is well settled law that clandestine removals cannot be arrived at based upon the confessional statement of persons only. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Shri Kirti Finava, Supervisor of M/s Patidar Product and 01 Kaccha Chit seized from the residential premises of Shri Anil Metaliya, Proprietor of M/s Patidar Products. On the basis of said Kaccha Chits the duty demand has been confirmed against the appellant. It is seen that the entry mentioned in said Kaccha chits were presumed to have been cleared clandestinely without any supportive evidences. In the present matter department has not produced any details as how the good mentioned in the said Kaccha Chits cleared clandestinely by the Appellant. The Ld. Adjudicating authority for confirmation of demand rely on the confessional statements of the persons including the Anil Govindbhai Metaliya, proprietor of Appellant firm, supplier of packing materials, transporter and some buyers. However, the contents of the statements were objected by the appellants and the persons, who gave statements were not put to cross-examination. Hence, the question of using inadmissible statements to confirm the duty demand is itself not sustainable. There is no details of procurement of raw materials (except statement of the suppliers of packing materials) or details of clearance to various buyers ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the receipt by the consignees; (v) Amount received from the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal. Whereas, in the instant case, no such clinching or corroborative evidences to the above effect have been brought on record. 4.12 In the instant case, the entire case of the Revenue is based on the Kaccha Chits seized from the residential premises of Shri Kirti Finava and Shri Anil Metaliya. There is considerable force in the contention of the Appellant that the Kacha Chits relied upon by the Revenue cannot be a basis to uphold the serious charge of clandestine clearance. It is settled legal position that charge of clandestine clearance is a serious charge and the onus to prove the same is on the Revenue by adducing concrete and cogent evidence. In the absence of corroborative evidence, the issue of fact i.e. in the present case the charge of clandestine clearance cannot be levelled against the assessee. We find that in the entire proceedings, no evidence, much less corroborative evidence, has been adduced to show that input goods have been procured to manufacture goods for clandestine clearance. No efforts have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the charge of clandestine removal has to be established by the revenue by adducing tangible, convincing and cogent evidences, CESTAT in the case of Esvee Polymers (P) Ltd. v. CCE [2004 (165) E.L.T. 291 (Tri.)] dealt with a case of alleged clandestine production and clandestine removal. The case was based on some private slips. The CESTAT observed that the mere slips or statement are not sufficient for confirmation of demand and allegation of clandestine removal. Evidence in the form of receipt of raw material, shortages thereof excess use of electricity excess/shortage of inputs in stock, flow back of funds, purchase of final products by parties alleging receipt and removal of goods etc. is necessary. CESTAT in the case of CCE v. Supreme Fire Works factory [2004 (163) E.L.T. 510 (Tri.) dealt with the allegation of clandestine manufacture and removal and observed that mere suspicion cannot take place of proof. Proof and evidences of purchase of raw materials, sale of final goods clandestinely is necessary. The allegations are not sustainable in absence of evidences. CESTAT in case of CCE v. Shree Narottam Udyog (P) Ltd. [2004 (158) E.L.T. 40 (Tri.)] has dealt with the allegation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the place of proof. Even though there may be certain element of truth in the prosecution story, but between may be true and must be true , there is a long distance to travel and the whole of the distance must be covered by a legal and unimpeachable evidence before a person can be convicted. Similarly, we find that in the case of Biria Tyres reported in 2000 (126) E.L.T. 1079 (Tri.) = 1999 (33) RLT 52, demands of duties raised solely on the entries made in the Curing Register, were held not to be sustainable in the absence of independent evidence corroborating the same. Further, in the case of C.C. Ex. v. Mira Steel Mills reported in 1999 (112) E.L.T. 934, it was observed that some entries made in the private note-book seized from the factory premises tallying with the entries in RG-I, may raise suspicion that those entries in the note-book relate to the goods clandestinely removed in the past without payment of duty, but the charge of clandestine removal cannot be sustained on such suspicion. 4.15 Without prejudice, as regard the duty confirmed on Pan Masala Containing Tobacco, commonly known as Gutkha , we find that during the search and panchnama proceeding there is no wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved goods. The Adjudicating Authority has also failed to prove that the cash recovered is the sale proceeds of clandestine removed goods. It is well established that the onus to show that the Indian currency was the sale proceeds of the clandestinely removed goods is upon the Revenue, which is required to be discharged by production of affirmative evidences. It has been the subject matter of various decisions laying down that onus to prove so is upon the Revenue and is required to be discharged by production of affirmative, tangible and positive evidences. One such reference can be made to the decision of the Tribunal in the case of Pandit D.P. Sharma v. CCE, Calcutta-II [2001 (137) E.L.T. 692 (Tri.-Kolkata)], wherein after taking note of various decisions, the seized currency was released in the absence of any evidence to the contrary. The said decision of the Tribunal was affirmed by the Hon ble Supreme Court when the appeal filed by the Revenue was rejected in the case of Commissioner v. Pandit D.P. Sharma [2003 (157) E.L.T. A201 (S.C.)]. To the same effect is another decision of the Tribunal in the case of S. Kotteswaran v. Collector of CE (Customs), Madras [1997 (91) E.L.T. 43 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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