TMI Blog2023 (7) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... any; on this basis, it was alleged that the appellant No.1 has diverted the prime purchase from M/s GAIL and purchased seconds material from open market and availed CENVAT credit fraudulently on the strength of invoices issued by M/s GAIL; however, the Department has not bothered to compare the Batch/ Lot numbers of the raw materials; the Batch/ Lot numbers of the materials seized from M/s/ R.K. Trading do not match with that of the material purchased from M/s GAIL and therefore, the entire argument of the Department falls flat. The appellants also contend that a show cause notice has been issued to M/s R.K. Trading (Appeal No. E/1159/2008) on the same set of investigation and has been dropped by the Adjudicating Authority and the Department has accepted the said order by not preferring to make any further appeal. Under the circumstances, it is not open for the Department to substantiate a case against the appellants on the same set of evidence. The Department has also not considered the fact that the appellant No.1 have been supplying the material to telecom companies which have high quality standards; Department has also ignored the fact that a representative of the telecom c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating Authority for a fresh re-consideration of the issue involved after duly allowing, the appellant No.1, to cross-examine key witnesses Shri Parmeshwar Lal Sharma, Munim of M/s R.K Trading and Shri Ajay Kumar, operator of M/s Ajay Plastics India - appeal allowed by way of remand. - Excise Appeal No. 908 Of 2008, Excise Appeal No. 909 Of 2008 and Excise Appeal No. 1159 Of 2008 - FINAL ORDER Nos.60195-60197/2023 - Dated:- 19-7-2023 - Mr. S. S. GARG, MEMBER (JUDICIAL) AND Mr. P. ANJANI KUMAR, MEMBER (TECHNICAL) Shri Naveen Bindal, Advocate for the Appellant Shri Aneesh Dewan, Authorised Representative for the Respondent ORDER These appeals are filed against OIO No.09- 10/Commr./SU/08/CE dated 29.02.2008 (impugned order), passed by the Commissioner of Central Excise, Rohtak, in remand proceedings consequent to the Final Order No.391-393/07-EX dated 04.07.2007 of CESTAT. 2. Brief facts of the case are that M/s Tibrewala Industries Pvt. Ltd. (Appellant No. 1, Appeal No. E/908/2008-Ex-DB) are engaged in the manufacture of sheathing compound; they obtain their main raw material i.e. plastic granules from M/s Gas Authority of India Limited (GAIL). On an inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed a penalty of Rs.10 Lakhs on Shri Anil Kumar Tibrewala, Director of appellant No.1. (v) Imposed a penalty of Rs. 10 Lakhs on R.K. Trading Company. 4. Accordingly, this set of three appeals, No. E/908/2008-EX (DB) by appellant No.1; appeal No. E/909/2008-EX (DB) by Shri Anil Kumar Tibrewala, Director and appeal No. E/1159/2008-EX (DB), have been filed. 5. Shri R.K.Hasija assisted by Shri Shivang Puri, learned Counsels, appearing for the appellant No.1 and its Director, submits that the entire case of the Department is based on statements of different persons and non-corelated documents and that the Department has initiated proceedings against R.K. Trading Company, on the same set of evidence, vide show cause notice dated 05.04.2002; the said show cause notice was dropped vide Order-in-Original dated 30.01.2004, holding that Department has not investigated the matter properly; the said order has been accepted by the Department and no appeal has been preferred. He submits that, therefore, the present proceedings also are liable to be set aside. 6. Learned Counsel for the appellants submits, as far as the first show cause notice involving confiscation, that it is incorre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were diverted after availing CENVAT credit; the Department has grossly failed to make a note of the fact that Lot/ Batch numbers of seized goods do not tally with those issued by M/s GAIL to the appellant No.1; M/s R.K. Trading have accepted that they have purchased the same in the open market; Department, on the one hand, alleges that the granules seized at M/s R.K. Trading belong to the appellant No.1 and on the other hand, the proceedings initiated against M/s R.K. Trading have been dropped and very same material has been handed over to M/s R.K. Trading; as the goods were returned to M/s R.K. Trading, they become the owners of the goods rather than appellant No.1 as alleged. 7.1. Regarding the findings on cash seized from the office of M/s R.K. Trading, learned Counsel submits that the Department alleges that the amount is sale proceeds for the goods diverted by appellant No.1 to M/s R.K Trading; M/s R.K. Trading are consignment agents of M/s GAIL and at times, payments to M/s GAIL were diverted through M/s R.K. Trading; when funds were short, cash dealings were made and this is a common practice in the trade; the appellant No.1 has received only four consignments from M/s R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or trading purposes; M/s P.G. Enterprises have, in fact, submitted in Affidavit that they have not supplied any material to the appellant No.1. 7.5. Regarding the allegation that goods were removed from the appellant No.1 on job-work challans and sold in the open market as is evidenced by the words Sanjay written on the challans would indicate sale to M/s P.G. Enterprises, learned Counsel submits that the allegation is false as the goods were sent to the job worker M/s Rajat Industrial Corporation, whose employee s name incidentally happens to be Sanjay and therefore, his name was written on the challan. 7.6. Adverting to the allegation that goods purchased by the appellant No. 1 from M/s Shri Balaji Polymers were not received in the factory but were diverted into the open market, learned Counsel submits that the statement of persons of M/s Shri Balaji Polymers and the transporters to the effect that the material was delivered at the premises of the appellant No.1 have not been relied upon. 7.7. On the allegation that the appellant No.1 has removed virgin plastic granules under the guise of job-work to M/s RIC, learned Counsel submits that the Department contends that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw: (i) Third party documents not sufficient evidence. V.P.D. Industries Pvt. Ltd.- 2016 (340) ELT 249 (Tri. Del.) Rajratan Synthetics Ltd.- 2013 (297) ELT 63 (Tri. Del.) Jai Mata Industries Ltd.- 2013 (293) ELT 539 (Tri. Del.) Manmeet Ispat Pvt. Ltd.- 2019 (368) ELT 1101 (Tri.Del.) (ii) Documentary proof of correctness of quantification. Poonam Tex. Chem- 2010 (251) ELT 405 (Tri. Ahmd.) Mittal Pigment Pvt. Ltd.- 2018 (360) ELT 157 (Tri. Del.) CCE Vs Mittal Pigment Pvt. Ltd.- 2018 (15) GSTL (Raj.) (iii) Charge cannot be made on assumptions and presumptions. Oudh Sugar Mills- 1978 (2) ELT (J 172) (SC) Alps Container Pvt. Ltd.- 2018 (364) ELT 103 Kirloskar Oil Engines Ltd.- 2017 (364) ELT 103 (iv) Apprehension however grave cannot take place of evidence. Dakeshwari Cotton Mills Ltd.- [1954] 26 ITR 775 (SC). Lal Chand Bhagat Ambika Ram-CIT [1959] 37 ITR 28 (SC) Omar Salay Mohd. Seth- [1959] 37 ITR 151 (SC) (v) Not allowing cross examination is against principles of natural justice. CCE Vs New Kishan Cement Pvt. Ltd.- Appeal No. 1226 of 2014 (Guj.-HC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operly and as such, there were un-accounted material in the factory. Similarly, semi-processed and un-finished goods were also not accounted for; this non-accountal is an offence which renders the goods liable for confiscation and mens rea is not required to be shown; the voluminous evidence put forth by the Department is enough to prove fraudulent availment of CENVAT credit by the appellants; therefore, the appeals are liable to be dismissed. 10. Heard both sides and perused the records of the case. The main contention of the appellants is that the allegations in the show cause notice are mainly based upon statements of the persons, stray and partial un-official records. Learned Counsel for appellant No.1 submits that the Department has built up the case on the basis of the raw material, purchased by the appellant No.1 from M/s GAIL, which was found in the premises of R.K. Trading Company; on this basis, it was alleged that the appellant No.1 has diverted the prime purchase from M/s GAIL and purchased seconds material from open market and availed CENVAT credit fraudulently on the strength of invoices issued by M/s GAIL; however, the Department has not bothered to compare the Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operator of M/s Ajay Plastics India, dated 10.01.2002 was relied upon and requests for cross-examination of Shri Ajay Kumar was not granted; this is in clear violation of the provisions of Section 9D of Central Excise Act, 1944. However, we find that there is no finding given in the impugned order regarding the request for cross-examination and as to why, the same has been denied. We find that provisions of Section 9D of Central Excise Act, 1944 are as follows: Section 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 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 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 stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustification 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 subsection are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 18. 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 auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their exfactory prices r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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