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TMI Blog2023 (10) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... is stated in brief as follows. Based on intelligence of clandestine removal of steel bars, the officers of DGCEI conducted searches at various places including the premises of manufacturers of Steel Bars, its Traders, transporters of M.S. Bars, buyers of steel bars etc. and during the search on 24.2.2006 at the premises of a trader/broker viz. M/s. Dhanshree Laxmi Steels, Jalna (hereinafter referred to as "DLS") five (5) hand written diaries were recovered which contained details of purchase & sale transactions of M.S.Bars. On the basis of these diaries, investigation was initiated. During investigation statements of various persons were recorded and various evidences were collected in order to establish the clandestine removal. After conclusion of investigation, the department came to the conclusion that during the period from 28.5.2004 to 4.4.2006 M/s. Parvati Steel Rolling Mills Pvt. Ltd. clandestinely manufactured and cleared 3635.715 MT of MS bars of various sizes and accordingly a show cause cum demand notice dated 27.11.2007 was issued to M/s. Parvati Steel Rolling Mills Pvt. Ltd. & its Manager Mr.Ravi S. Gupta alongwith 9 others, after invoking extended period, as to why:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Pvt. Ltd. and its Director Mr. Pawankumar Fakirchand Gupta, for clandestine manufacturing & clearing of 1170.970 MTs of finished goods viz. M.S. TMT bars during the period 1.2.2008 to 9.3.2008, as to why:- i) Central Excise duty amounting to Rs.66,21,435/- (Rupees Sixty-six lakhs twenty-one thousand four hundred and thirty-five only) (Basic Rs.64,28,578/-, Education Cess Rs.1,28,572/- and Secondary and Higher Edu. Cess Rs.64,286/-), leviable and not paid by them, on 1170.970 MTs of the finished goods viz. MS TMT bars, valued at Rs.4,16,37,347/- removed without payment of duty (as detailed in the Annexure II to this Notice) should not be demanded and recovered from them, under the proviso to sub-section (1) of section 11A of the Central Excise Act, 1944; ii) Rs. 20,00,000/- (Rupees twenty lakhs only) paid vide TR-6 challan no.12/2007-08, dated 12.03.2008 during the course of the case investigations, towards their formally admitted consequential Central Excise duty liability, should not be appropriated against the Central Excise duty that would be determined under provisions of Section 11A(2) of the Central Excise Act, 1944, as payable by them; iii) A penalty should not be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of other witnesses have not been allowed, their statements cannot be relied upon. He also submits that there is no compliance of Section 9D of Central Excise Act, 1944. APPEAL Nos. E/1169/2010 & E/1171/2010 7. While making submissions in the matter of M/s. Parvati Steel Re-Rolling Mills Pvt. Ltd., learned counsel submits that the entire case of the department is based on the pen drive allegedly recovered from Mr. Pradeep Bora -accountant of broker Mr.Anil Dattabhau Lingade & few statements and that no incriminating document has been recovered from the premises of the appellants herein. According to learned counsel, the pen drive has allegedly been recovered from a third party and the purported contents of the said pen drive have been recorded on paper as statements. He further submits that the said pen drive, from where the statements have been recorded and relied upon while confirming the demand, has not been shown to them. Therefore, the entire case is based upon the documents retrieved from the pen drive recovered from the third party. During adjudication proceedings the appellant had asked for the cross-examination of Mr. Pradeep Bora, Mr. Anil D. Lingade, Mr. Sunil Lingade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are valid even if retracted later on and that denial of cross-examination does not affect the principle of natural justice. For some persons whose cross-examinations were permitted and were retracted, learned Authorised Representative submits that the depositions made in the cross-examination are nothing but an afterthought which cannot affect the evidentiary value of original statements. He also filed compilation of cases and drew our attention towards the decision of the Hon'ble Supreme Court in the matter of Muddasani Venkata Narsaiah (Dead) through L.Rs. vs. Muddasani Sarojana; (2016) 12 SCC 288 for justifying the rejection of the request of cross-examination by the adjudicating authority. 9. We have heard learned counsel for the appellants and learned Authorised Representative on behalf of revenue and perused the case records including the written submissions/synopsis and case laws placed on record. The entire case of the department, so far as M/s. Parvati Steel Rolling Mills is concerned, is mainly based upon the diaries allegedly seized from the possession of Mr. Suresh Agarwal and the statements of Mr. Suresh Agarwal and Mr. Suresh Mohta who, as per the department, purport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation as well as u/s. 14 ibid. Admittedly the cross-examination was not granted to the appellants as according to the adjudicating authority that was not relevant despite the fact that the charges in the show cause notice are based on the evidence emanating from the seized documents and statements recorded during the course of investigation. 11. In our view, not allowing cross-examination is violative of the principle of natural justice. In catena of decisions it has been held that such statements cannot be relied upon. Denial of cross-examination by the adjudicating authority is a clear violation of the mandate of Section 9D ibid. In the matter of Hi- Tech Abrasives Ltd. (supra) Hon'ble Chhattisgarh High Court has held that statements recorded u/s. 14 of the Act cannot be relied upon as evidence without following the rigour of Section 9D of the Act since the provisions of Section 9D are mandatory in nature. Mere recovery of private records, that too from the third party, is not sufficient to prove clandestine removal and a concrete and clinching evidence is required to prove such allegations and it is for the department to discharge the burden and prove the charges of clandestine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 64 (Tri.- Ahmd.) it has been held by a co-ordinate Bench of the Tribunal that "statements recorded during investigation, whose makers are not examination-in-chief before the adjudicating authority, would have to be eschewed from evidence, and it will not be permissible for Ld. Adjudicating Authority to rely on the said evidences. Therefore, we hold that none of the said statements were admissible evidence in the present case". On similar lines, another co-ordinate Bench of the Tribunal in the matter of Gaurav Mungad vs. CCGST, Ex.&Cus., Bhopal; 2021 (376) E.L.T. 69 (Tri. - Del.) allowed the appeal filed by the assessee therein with consequential relief since the statement recorded by the prosecution were not permitted to be cross-examined. Hon'ble Supreme Court also in the matter of Andaman Timber Industries (supra) while allowing the appeal filed by the assessee therein has laid down that not allowing the assessee to cross-examine the witnesses 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 amounts to violation of principle of nature justice because ..... X X X X Extracts X X X X X X X X Extracts X X X X
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