TMI Blog2023 (11) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... the vendor as well as by the receiver. Such huge quantity of coal could not have been bought by way of cash. There is also no evidence towards deployment and movement of hundreds of vehicles to transport such huge quantity of coal and dolomite. Further, it is seen that no investigation has been taken up towards alleged sale of the huge quantity of Sponge Iron. No statements have recorded from any of the alleged purchasers of the finished goods. There is no allegation about recovery of any private records towards cash receipt/cash payment for the alleged clandestine transactions. In case of allegations of clandestine manufacture/sales, it is essential for the Department to bring in as much corroborative evidence as possible. Sub-section (1) of Section 9D sets out the circumstances in which a statement, made and signed before a Gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a Gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein - the evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced sponge iron to the extent of 11089.730 MT, during the period July 2006 to November 2009. The Department alleged that this undeclared manufactured sponge iron has been clandestinely cleared without payment of Excise Duty to the extent of Rs.2,59,58,417/-. The Adjudicating Authority, after the due process has confirmed the demand. Being aggrieved, the Appellant has filed the present Appeal before the Tribunal. 2. The Learned Counsel appearing on behalf of the Appellant challenged the impugned order on the following grounds:- (i) No duty can be demanded on Estimated Production but can be made only on Actual production . Charge of clandestine production and removal cannot be sustained on the basis of theoretical calculation. (ii) Without consumption of other major Raw Material i.e. Coal and Dolomite Production of Sponge Iron is technologically impossible. (iii) There is no tangible, cogent, corroborative evidence in support of charge of clandestine production/removal of finished goods. Charge of clandestine removal cannot be sustained on the basis of private records, loose sheets. (iv) The statement recorded from different persons which are relied on have bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were used either for procuring the input clandestinely or for clearance of the finished goods clandestinely. It is also assumed that iron ore is directly fed into the Kiln through the weigh feeder whereas the Iron Ore is fed to the Conveyor Belt through the weigh feeder which carries the Iron Ore to Iron Ore storage hooper from where Iron Ore is charged into the Kiln through another weigh feeder and therefore set point/flow rate of the weigh feeder fitted with the conveyor is irrelevant for determining consumption of Iron Ore. So far as the extra electricity consumed is concerned, the Appellant has set up of 350 TPD Kiln capacity. They have also used the electricity for the Captive Power Plant and lighting different areas of the factory premises. These important consumptions have not been considered by the Department and the entire electricity consumption has been attributed to manufacture of sponge iron alone, which is grossly erroneous. 6. The Learned Counsel also submits that there is no evidence brought in towards the alleged excess purchase and payment of the raw materials like Iron ore, Coal and Dolomite. Similarly even in this case of alleged sale of the finished goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise officials to the factory premises of the Appellant and on account of seizure of various documents from their premises. If they had not undertaken such detailed investigation, the clandestine manufacture and clearance could not have come into light. Therefore, he justifies the confirmed demand in respect of the extended period. He prays that the present Appeal may be dismissed. 9. Heard both sides and perused the Appeal papers and documentary evidence placed along with the case law cited. 10. From the Show Cause Notice and the OIO passed, it gets clarified that the demand has been made towards excess production of 11089.730 MT of Sponge Iron during the period July 2006 to November 2009 solely based on the formula adopted by the Department to arrive at the estimated production of iron ore to this extent. While the purchase quantity of iron ore has been taken into account and the electricity consumption has been considered, as pointed out by the Appellant, the manufacture of sponge iron also requires two other important raw materials/consumable viz., Coal dolomite. In the entire investigation, the Department has not brought out any evidence towards excess pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, the statement should be admitted in evidence in the interests of justice. (2) The provision 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. 5. A plain reading of sub-section (1) of Section 9D of the Act makes it clear that clauses (a) and (b) of the said sub-section set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. 6. Section 9D of the Act came in from detailed consideration and examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 15. 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. .[Emphasis supplied] 13. In the case of Mittal Pigment Pvt. Ltd. Vs. CCE [2018 (360) ELT 157 (Tr.-Del.)], the Tribunal has held as under:- 6.1 Further the department has not gone beyond the approximation of yield which they have shown as 70 to 84% in col. 3 of Annexure-A attached to the show cause notice and average yield ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. In spite of specific directions of this Tribunal, to establish clear evidences on the receipt of LAB by the appellants, no evidence has been brought out in the de novo order except relying the statements of persons of SWC. The period involved in the present case relates to April, 89 to February, 95. It is pertinent to see that the appellants are registered with central excise and being a chemical industry the adjudicating authority ought to give a clear cut findings on the manufacture of final products and clandestine clearance. Further it is vital that both the inputs LAB and sulphuric Acid and the final product that is Acid slurry are highly corrosive chemical requires safety for transportation and storage and use. The Revenue tried to make out the entire case based on the SWC records for supply of LAB, various fictitious firms etc. The onus is on the department to establish the supply of LAB by SWC in various fictitious names pertaining to the appellants. Further, we find that mere single seizure of 449 kgs. of acid slurry valued Rs. 16000/- during the transit cannot be a proof for the Revenue to arrive conclusion that the huge quantity of Acid slurry was manufactured and cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. The scribe of the said diary has not been identified by the Revenue for ascertaining the ground realities. Only one trader - Chandan Prints, who is one of the 47 traders mentioned in the said diary, initially admitted to have received 24,555 L. Meters of processed man-made fabrics, involving excise duty of Rs. 33,957/- from Mahesh Silk Mills against 24,555 L. Meters of grey Man-Made Fabrics sent to Mahesh Silk Mills on 29-3-1994 and 5-8-1993. However, M/s. Chandan Prints had retracted its statement during the course of adjudication. The statements of the remaining 46 traders have not been placed on record by the Revenue to prove that the remaining entries recorded in the diary also related to clandestine manufacture and removal of processed man-made fabric. There is no corroborative evidence of excess consumption of electricity, colours, dyes, chemicals, etc., by the appellant. There is also no evidence of transportation of processed man-made fabrics from the appellant s factory or any instance where clandestinely removed goods were seized by the revenue. Cross-examination of the third party witness was also not provided to the appellants. 8. Similarly, in the matter of N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the foregoing discussions, we are of the considered view that the entire demand of clandestine removal of acid slurry has been made based on assumption and theoretical calculations by arriving taking notional quantity of LAB. Accordingly, we hold that the demand is not sustainable and entire demand is liable to be set aside. The confiscation of the seized goods of 449 kgs of Acid slurry and imposition of fine ordered by the adjudicating authority is upheld. The excise duty demanded in the impugned order is set aside and the appeal is allowed to that extent.[Emphasis supplied] 16. In the case of CCE Vs. R. A. Casting Pvt. Ltd. [2011 (269) ELT 337 (All.), the Tribunal has held as under:- 2. The Respondent Nos. 1 and 2 were involved in the manufacturing of MS ingots and in respect thereof had maintained the books of account as provided under the Central Excise Rules and were furnishing the returns and paying the central excise duties. The Superintendent issued the show cause notices dated 1-12-2006 asking the respondent to show cause why the demand towards central excise duty may not be confirmed for the period from 2001-02 to 2004-05 by invoking the proviso to Sectio ..... 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