TMI Blog2023 (7) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... R [ 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT] that (i) after the person whose statement has already been recorded before a Gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination, can arise. Hon ble Supreme Court in the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2015 (10) TMI 442 - SUPREME COURT] held that it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. With due difference to the Hon ble Supreme Court and Hon ble High Court of (Punjab Haryana), it is found that not allowing the cross-examination of key witnesses vitiates the proceedings even under the quasi-judicial proceedings. Therefore, as requested by the learned Counsel for the appellants, we are inclined to accept the contention and the request of learned Counsel for the appellants tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants informed that as the relied upon documents were not furnished to them, they are not in a position to submit a written reply or to attend the personal hearing. DGCEI again informed the appellants, vide Letter dated November 18, 2008, that records can be inspected; the appellants visited the office of DGCEI and however could not take the copies of the documents. Personal hearing was again fixed on February 4, 2009 or February 11, 2009; the appellants informed, vide Letter dated February 12, 2009, that they require at least one-month time to file reply and to attend personal hearing. The Adjudicating Authority passed an order dated 27.02.2009 which was challenged by the appellants. The CESTAT vide Final Order No.650- 652/2009 dated 04.09.2009 set aside the OIO and remanded the case back to the Original Authority for de novo adjudication following the principles of natural justice and giving an opportunity to all the appellants to be heard. In the remand proceedings, the Adjudicating Authority passed the impugned order dated 07.07.2011 confirmed demand of Rs.58,06,307/- along with interest, on M/s Lauls Limited; imposed equal penalty under Section 11AC of Central Excise Act, 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the goods; during the relevant time, existing Rule 26, Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty . 5. He further submits that the entire case of the Department is that only invoices were exchanged and there was no supply of goods; under the circumstances, the appellant cannot be alleged to have dealt with goods which are rendered for confiscation and consequentially rendering the appellant liable for penalty. He submits that it is common knowledge that the provision of law can be invoked as existing in the relevant time and not as amended at a later date. Rule 26 has been amended with effect from 01.03.2007, providing imposition of penalty on issuance of invoices without supplying goods. During the impugned period i.e. January 2003 to January 2005, there was no such provision and hence, no penalty can be imposed on the appellant. He also submits that the penalty cannot be sustained on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s incumbent upon the Adjudicating Authority to conduct or to allow cross-examination of the witnesses in terms of Section 9D of Central Excise Act, 1944. Learned Counsel submits that this has vitiated the proceedings and as such is fatal to the impugned order as principles of natural justice have not been adhered to. Learned Counsel relies on the judgments of Hon ble jurisdictional High Court in the cases of Jindal Drugs Pvt. Limited and G. Tech Industries (both supra). We also find from the argument of learned Authorized Representative that the case has been made on the basis of number of statements, some of which are cited above. 8. We find that the appellants have made a request to the Adjudicating Authority to give an opportunity to cross-examine particularly, Shri Ram Bilas Bansal, Shri Abhay Gupta and Shri D.K. Gupta, the witnesses. However, the Adjudicating Authority has not accepted the request. Adjudicating Authority finds that: M/s Lauls Ltd, Faridabad (Noticee No. 1) in their reply dated 30.9.2009 had asked for cross-examination of the witnesses whose statements had been relied upon in the show cause notice, but thereafter they did not stress for cross-examination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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, the statement should be admitted in evidence in the interests 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 a Court. 10. We find that Hon ble Punjab Haryana High Court observed in the case of Jindal Drugs Pvt. Limited (supra) held that: 15 . Once discretion, to be judicially exercised is, thus conferred, by Section 9D, on the adjudicating authority, it is self-evident inference that the decision flowing from the exercise of such discretion, i.e., the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of sub-section (1) thereof, would be pregnable to challenge. While the judgment of the Delhi High Court in J K Cigarettes Ltd. (supra) holds that the said challenge cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement 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. 19 . Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght out any material which would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7 . As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 25(1)(b) of the Rules was not attracted to the facts of the present case, the aforesaid judgment does not advance the case of the revenue. However, the Commissioner (Appeals) and the Tribunal on facts deleted the penalty. The findings of the Commissioner (Appeals) while deleting the penalty read thus : 14. I have gone through the relevant provisions of the law. The fact is that exisable goods were never manufactured. Rule 25(1)(b) of the Cenvat Credit Rules, 2002 provides penalty for non-accountal of excisable goods, liable to confiscation, produced or manufactured or stored by any producer, manufacturer, registered person of a warehouse or registered dealer. Under Rule 13(2) of the Cenvat Credit Rules, 2002 penalty is imposable for fraudulent taking/utilization of Cenvat credit with intention to evade payment of duty. In the present case no excisable goods, liable for confiscation, have been manufactured or produced. Provisions of Rule 13(2) and Rule 25(1)(b) of Central Excise Rules, 2002 are not attracted. 15. I also find that penal provisions for facilitating others in taking credit or issuance of invoices without actual supply of material has been inserted w.e.f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law : (i) When it has been proved in the investigations that a person has facilitated the other parties in evading Central Excise Duty, by fraudulently facilitating Modvat credit by supplying/endorsing gate passes without actual supply of impugned duty paid goods, whether penalty is imposable on such person under Rule 209A of Central Excise Rules, 1944 or not? The decision of the Hon ble High Court also took note of the fact that the revenue has filed appeals where no penalty was imposed on persons who issued invoices without delivery of the goods prior to amendment of sub-rule (2) of Rule 26 of the Central Excise Rules, 2002. After considering the above question of law, it has been held that where a person merely arranges Modvatable document to the manufacturer without actual delivery of goods, penalty could not be imposed under Rule 209A. Rule 26(2) of Central Excise Rules, 2002 prior to amendment on 1-3-2007 is akin to Rule 209A. Therefore, the decision of the Hon ble High Court will apply to the facts of the present case. 14. In the result, the impugned order is set aside; Appeal Nos. E/2372/2011 and E/3405/2011 are allowed by way of remand to the Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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