TMI Blog2022 (11) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... uring investigation, with the categorical statements that their previous statements were recorded by the officers of the Central Excise Department under duress - The findings returned by the Adjudicating Authority that Sri Rajesh Agarwal in his various voluntary statements and acceptance had confirmed his active involvement in the tax evasion by management of raw materials and managing removal of clandestinely manufactured Sir Brand Gutkha/ Pan Masala to various destinations, thus, suffers from apparent perversity. On the basis of the said findings and in view of the statement of Sri Rajesh Agarwal, the Authorized Signatory of three manufactures in his cross-examination, it cannot be accepted that his statement recorded by the Central Excise Officers was voluntary. The question is not of admissibility of the statement recorded under Section 14. The admissibility of the evidence recorded by the investigating authority, when the persons making statements were examined as a witness before the Adjudicating Authority is not under question. The issue is about the weight of the evidence appreciated by the Adjudicating Authority - No presumption or assumption can be drawn to record an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r provisions of Section 14 of CE Act by the officers of the Department can be taken as proof of the statutory violations by the respondents? 4. Placing the order passed by the Tribunal, it is argued by Sri Parv Agarwal learned counsel for the Revenue that on the searches conducted on 1.12.2007 and 9.5.2008 at various premises related to the business of three manufacturers namely M/s Raghunath International Limited, M/s Seema Enterprises and M/s Shanker Enterprises of Sir Brand Gutkha and Pan Masala, incriminating documents/unaccounted raw material/finished goods were seized and detained. The searches were also conducted at the premises of transporters, dealers and railway stations from where clandestinely cleared Sir Brand Gutkha and Pan Masala were seized. The material brought on record, seized from different premises was sufficient to arrive at the conclusion of the guilt of the manufacturers that they had cleared the goods without issuance of invoice and without payment of excise duty for Sir Brand Gutkha/Pan Masala. The statements of various persons including Sri Rajesh Agarwal, Authorized Signatory of manufacturers namely M/s Seema Enterprises and M/s Shanker Enterp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole dealer of Sir brand of Gutkha / Pan Masala for the state. 6. The entire modus operandi adopted by the manufacturers in clandestine transportation of goods in his various statements was extracted/noted in paragraph 65 of the order in original passed by the Adjudicating Authority. 7. It is argued that all other persons whose statements were recorded during the course of investigation had retracted from their previous statements before the Adjudicating Authority but there was no retraction by Sri Rajesh Agarwal, the Authorized Signatory of M/s Seema and M/s Shanker. It is further argued by Sri Parv Agarwal learned Advocate for the Revenue that the Adjudicating Authority cannot be said to have erred in law in relying upon the retracted statements of the persons who had been examined during the course of investigation. It is argued that the finding returned by the Adjudicating Authority of clandestine removal of finished goods with an intention to evade excise duty is substantiated from the statements of Sri Rajesh Agarwal recorded on 9.5.2008, 23.6.2008 and 30.6.2008. Paragraph 267(b) of the order in original has been placed before us by Sri Parv Agarwal learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements have been relied upon have either retracted their previous statements which were recorded during investigation and/or the veracity of their statements did not stand the test of cross-examination during the adjudication proceedings. The finding in this regard returned by the CESTAT had been placed before us to assert that the CESTAT had found serious anomaly in the allegations of clandestine removal through railways. A big part of copies of records supplied by railways was held to be unreliable by the Adjudicating Authority and the demand with respect to the alleged transport through railways has been confirmed by the Adjudicating Authority on the basis of retracted statements or the statements which did not stand the test in cross-examination. The Tribunal has, thus, held that such statements at best can be said to be hearsay evidence. The Tribunal (CESTAT) has, thus, concluded in paragraph 54.26 as under:- 54.26 Thus, from the aforementioned facts and circumstances emerging in the cross examination of the various key persons, whose statements have been relied upon, we are satisfied that in view of the facts emerging in the cross examination, the statements recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized Signatory of three manufacturers, did not retract from his statement during his cross-examination before the Adjudicating Authority. Paragraph 52.17 of the findings returned by the CESTAT based on the cross-examination of Sri Rajesh Agarwal, the Authorized Signatory of three manufacturers recorded on 7.2.2017 before the Adjudicating Authority, has been placed before us, which is to be noted as under:- 52.17 Shri Rajesh Agarwal, Authorised Signatory of the three appellant manufacturers in his cross examination on 07.02.2017 stated that the three appellant manufacturers were selling their finished goods at ex factory gate at ex factory price. The manufacturers of Sir Brand Gutka were not undertaking or arranging any transport of the finished goods. He also asserted that in spite of repeated visits of thee Investigating officers, no incriminating documents or unexplained cash was found. He further stated that his earlier statement recorded during investigation were involuntary as the same was recorded under pressure and as per dictates of the officers. He refuted the charge that the appellant- manufacturers were removing their finished goods clandestinely and for such cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he observation made by the Punjab and Haryana High Court behind the rationale of the precautions contained in clause (b) of Section 9D(1) has been placed before us in paragraph 19 of the decision as under:- 19. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the gazetted Central Excise officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 13. The submission, thus, is that the statement of a person recorded during the course of investigation before it is admitted in evidence has to be tested on the touchstone of scrutiny in accordance with the provisions of Section 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii). To find out the dispatch particulars from the regular transporters. (iv). To find out the realization of sale proceeds. (v). To find out finished product receipt details from regular dealers/buyers. (vi). To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. 14. In the instant case, no investigation was made by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties. The statement of so called buyers, namely M/s Singhal Cement Agency, M/s Praveen Cement Agency; and M/s Taj Traders are based on memory alone and their statements were not supported by any documentary evidence/proof. The mischievous role of Shri Anil Kumar erstwhile Director with the assistance of Accountant Sri Vasts cannot be ruled out. 15. Sri Parv Agarwal learned Advocate for the Revenue, in rejoinder, further relied on the decision of the Apex Court in Commissioner of C. Ex., Mumbai vs. Kalvert Foods Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 14. The admissibility of the evidence recorded by the investigating authority, when the persons making statements were examined as a witness before the Adjudicating Authority is not under question. The issue is about the weight of the evidence appreciated by the Adjudicating Authority. 19. Clandestine removal is a serious charge as held by the Division Bench in Continental Cement Company (supra). Clinching evidence are required to be produced by the Revenue to discharge its obligation of establishment of the said charge against the manufacturer. In the instant case, it could not be brought by the counsel for the Revenue that apart from the evidence of the persons examined during the course of investigation, there was other material in the nature of incriminating documents confiscated from the premises of three manufacturers which would establish the allegation of clandestine removal against the manufacturer. No other incriminating material such as discrepancy in the accounting of raw material/finished goods could be placed before us so as to substantiate his stand by the counsel for the Revenue that the retracted statements of Authorized Signatory of the appellant/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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