TMI Blog2022 (11) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... case the entire case is based on the private records seized from the residence of the employee Shri Anirudha Sutar and office of the Appellant. There is considerable force in the contention of the Appellant that the private records 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 in the instant case i.e. the charge of clandestine clearance cannot be labeled against the assessee. The allegation of clandestine manufacture and removal of finished goods by the Appellant made in the Show Cause Notice, is merely on assumption and presumption, without sufficient material evidence corroborating the said allegations - impugned order is set aside - penalty imposed under Rule 26 of the Central Excise Rules, 2002 on Shri Pitabhas Chhotray, Director of the Appellant Company is also set aside - appeal allowed. - Excise Appeal No.75571 of 2018 Excise Appeal No.75572 of 2018 - - - Dated:- 16-11-2022 - HON BLE SHRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search on 23.03.2011 in the residential premises of Anirudha Sutar, Accountant of M/s.Maa Foundry (P) Ltd., he was available and the search was conducted in his presence and in presence of the independent witnesses called by the DGCEI Officers. During the search,several incriminating documents were recovered by the said Officers and for the purpose of identification marked as document No.01/DGCEI/PRU/MAPL/AS(R)/11 to 14/DGCEI/PRU/MAPL/AS(R)/11. During the search of the residential premises of Ajay Kumar Das, Office Assistant was present and one incriminating document was recovered and for the purpose of identification marked as document No.01/DGCEI/PRU/MAPL/AKD-Resi/11 and seized. 3. Show Cause Notice dated 24-12-2012 was issued on the basis of the said two private records i.e. (i) Note Book (Document No.01/DGCEI/RRU/MFPL/F/11) and (ii) Ledger (Document No.08/DGCEI/RRU/MFPL/AS (R)/11) purportedly seized on 23-03-2011 in the course of search and (iii) purported shortages of 20.770 MT of C.I. Moulds. On comparison of entries in the said private records with the Excise Invoice, it was purportedly noticed that some of the entries for the period from 17-10-2009 to 31-03-2010 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant piece of material due to non-compliance with Section 9D of the Central Excise Act, 1944 and therefore have to be eschewed from evidence. 5. The Ld. Additional Commissioner vide Order-in-Original dated 22-01-2016 confirmed the duty demand of Rs.38,06,364/- for purported clandestine removal of 1746.200 MT of C.I. Moulds and further imposed penalty of Rs.38,06,364/- under Section 11AC of the Act. However, the Ld. Additional Commissioner dropped duty demand of Rs.6,17,661/- on the ground that some of the entries were not related to the Appellant. The Ld.Additional Commissioner further imposed penalty of Rs.1.00 Lakh under Rule 26 of the Central Excise Rules, 2002 upon Sri Pitabass Chhotray, Director of the Appellant Company for his purported abetment in the alleged offence committed by the company. 6. The Appellant being aggrieved by the said order, preferred an appeal before Ld.Commissioner (Appeal), Bhubaneswar on 15.04.2016. The Ld. Commissioner (Appeal) vide the impugned Orderin- Appeal dated 20-11-2017 upheld the adjudication order dated 22- 01-2016. Hence the present Appeal before this Tribunal. 7. Ld.Advocate, appearing on behalf of the Appellant submitted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. (v) there is no evidence of extra use of labour for production of goods. (vi) there is no evidence of consumption of any extra electricity required for manufacture of the impugned goods. (vii) there is no evidence of clearance or transportation/clearance of the impugned goods from the Appellant s factory. (viii) the buyer have specifically denied to have purchased impugned goods from the Appellant. (ix) that the differential entries relates to repair of C.I. Moulds and not clearance of finished goods. (x) there is no evidence of flow back of funds. (xi) there is no confession of guilt. 8. The Ld.Authorized Representative for the Respondent justifies the impugned order and prays that the Appeal may be dismissed, being devoid of merits. 9. Heard both sides and perused the Appeal records. 10. I find that in the course of the search operation, no parallel invoices or challans were found. All the invoice books found in the search operation were found to be unused. It is held in the impugned Order that the said invoices were intended to be used. In the impugned order, Section 36A of the Central Excise Act, 1944 has been invoked unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, Adjudicating Authority) and the court (Adjudicating Authority) forms an opinion that having regard to the circumstances of the case, the statement should be admitted in the evidence, in the interest of justice. 9.4 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. The said provision in the statute book seems to have been made to serve the statutory purpose of ensuring that the assessee are not subjected to demand, penalty interest on the basis of certain admissions recorded during investigation which may have been obtained under the police power of the Investigating authorities by coercion or undue influence. 9.5 Undoubtedly, the proceedings are quasi criminal in nature because it results in imposition of not only of duty but also of penalty and in many cases, it may also lead to prosecution. The provisions contained in Section 9D, therefore, has to be construed strictly and held as mandato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n para 19 of the judgment, it was concluded as below : 19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of their own volition and there is no allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corroborated each other. Besides the Managing director of the Company of his own volition deposition the amount of Rs. 11 lakhs towards excise duty and therefore in the facts and circumstances of the present case, the aforesaid statement of the Counsel for the Respondents cannot be accepted. This fact clearly proves the conclusion that the statements of the concerned persons were of their volition and not outcome of any duress. Accordingly, on the first and second question of law, we hold that the statement of the Director could not be treated as relevant piece of evidence nor could be relied upon without compliance of Section 9D of the Act. The two questions of law accordingly, stand answered in that manner. . 12.2 We have gone through the detailed order passed by the adjudicating authority and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eged removals, the department has not investigated the following aspects : (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) 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. (vii) Several decisions have been given by the Tribunals which have been confirmed by the High Courts that electricity consumption alone if adopted as a basis of the demand, the same is not tenable. The respondents can take the electricity consumption pattern as a corroborative piece of evidence, but, in absence of substantive proofs like - (a) Details about the purchase of the raw material within the manufacturing units and no entries are made in the books of account or in the statutory records. (b) Manufacturing of finished product with the help of the aforesaid raw material, which is not mentioned in the statutory records. (c) Quantity of the manufacturing with reference to the capaci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Haryana High Court in the case of Ambika International Vs. Union of India [2018 (361) E.L.T. 90 (P H)] has observed that :- 14. In view of the fact that the case of the petitioners is essentially premised on Section 9D of the Central Excise Act, 1944, it would be appropriate to reproduce the said provision, inextenso, thus: 9D. Relevancy of statements under certain circumstances. - (1)A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of an 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 the adverse party, or whose presence cannot be obtained without an 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 opinion that, having regard to the circumstances of the case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the statement, recorded during investigation in Central Excise, as evidence of the truth of the facts contained in the said statement, it has to be held that the adjudicating authority has relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts. 23. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the gazetted Central Excise Officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word shall in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 24. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. 15. In the case of Ambica Iron Steel Pvt.Ltd. (supra), the Tribunal observed :- 14. The clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidences relating to (i) Receipt of raw material inside the factory premises, and non-accounted thereof in the statutory records; (ii) Utilization of such raw material for clandestine manufacture of finished goods; (iii) Manufacture of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, packing material used, records of security officers, discrepancy in the stock of raw materials and final products; (iv) Clandestine removal of goods with reference to entry of vehicle/truck in the factory premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured finished products by the Appellant which is patently perverse. In the Show Cause Notice Page 57 58 the statement of Sri Pitabas Chhotray, Sri Anirudha Sutar and Sri Ajay Kumar Das are treated as false, afterthought, misstatement, hence, even as per department there is no confession of guilt. 18. The maker of Document No.01/DGCEI/RRU/MFPL/F/2011 (Duplicate Note Book), Sri A. Panda, was never examined to ascertain the purpose for which and at whose instruction the said document is maintained. Hence, nothing could be speculated in the vacuum. The Appellant relies on the following judgments- (i) CCE Vs. Vishnu Co. P. Ltd. reported in 2016 (332) E.L.T 793 (Del.); (ii) Hi-Tech Abrasives Ltd. Vs. CCE, Raipur, reported in 2018 (362) E.L.T 961 (Chhattisgarh); 19. The confirmation of demand of Rs.59,901/- on the basis of purported shortage of 20.770 MT of C.I. Mould purportedly detected in physical actual weighing of the entire stock is not proper. 20. In the impugned Order, the Ld. Addl. Commissioner has accepted that the stock taking was not done by actual weighment but on visual inspection. In the impugned Order-in-Appeal and Order-in- Original it is hel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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