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TMI Blog2018 (3) TMI 2016X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of law and facts are involved hence they are decided by this common judgment. For the convenience of the court the facts are taken from Excise Appeal No.58/2015. 2. By way of these appeals being no.(58/2015, 59/2015, 60/2015, 62/2015, 64/2015, 65/2015, 66/2015), the appellantdepartment have assailed the judgment and order of the tribunal whereby tribunal has dismissed the appeals of the department in appeal no.45/2016 the assessee has challenged the order of the tribunal vide which the tribunal has confirmed the demand partially. 3. This court while admitting the appeals framed following substantial questions of law:- (1) D.B. Central/Excixe Appeal No.58/2015 "(1) Whether it is necessary to give an opportunity of the cross examination to the assessee in absence of any such prayer made in this regard by him and also in view of settled law that the cross examination cannot be claimed by the parties as their legal right in the circumstances where the documentary evidence in itself is available"? (2) Whether the Tribunal is justified in interfering with the finding of facts of Order in Original while making observations contrary to the record regarding power consumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder in Original while making observations contrary to the record regarding power consumption, clandestine removal and procurement of raw-material"? (6) D.B. Central/Excise Appeal No. 65/2015 "(1) Whether it is necessary to give an opportunity of the cross examination to the assessee in absence of any such prayer made in this regard by him and also in view of settled law that the cross examination cannot be claimed by the parties as their legal right in the circumstances where the documentary evidence in itself is available"? (2) Whether the Tribunal is justified in interfering with the finding of facts of Order in Original while making observations contrary to the record regarding power consumption, clandestine removal and procurement of raw-material"? (7) D.B. Central/Excise Appeal No. 66/2015 "(1) Whether it is necessary to give an opportunity of the cross examination to the assessee in absence of any such prayer made in this regard by him and also in view of settled law that the cross examination cannot be claimed by the parties as their legal right in the circumstances where the documentary evidence in itself is available"? (2) Whether the Tribunal is justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Resumption Memo containing documents/records from S.No.1 to 21. Sh. Murari Lal Sharma, General Manager of the Unit put his signatures on the above recovered records and the Resumption Memo prepared on the spot on 10.9.2005 in his presence. 5. Counsel for the department has relied on the following decisions:- 5.1 In Continental Cement Company vs. Union of India 2014 (309) ELT 411 (All.), it has been held as under:- 11. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the crushing season which began on November 4, 1956 upto May 7, 1957 when the test was conducted. 11. If any one of these assumptions breaks down, then the ultimate conclusion will have to be rejected as incorrect. It has to be borne in mind that human element is involved at certain stages of the operations such as time of commencement of the day's working, the rapidity or slowness in feeding cut sugarcane into the crusher and mills, accurately adding the same quantity of water in the crusher and mills, stopping the inflow of mixed juice into the tanks at a uniformly higher level than that indicated by the mixed mark, allowing a uniform time lag between the emptying of the tanks and starting inflow into them again and so on. It is also unsafe to rely on the average of 10.11% of sugar recovery for the entire periods because it involves the assumption that even during the periods when the gross weight of the tanks was 7.5 tons or less than sugar content of the sugarcane crushed in the factory was such as could not have been yielded anything less than 10.11%. For, it is well known that the sugar content of sugarcane even grown in the same area is not constant but is variable accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retary of the Appellant and Shri, J.M. Shah, Superintendent Technologist employed by the Appellant had conceded that there had been "Some erroneous accounting on their part in showing the weight of mixed juice on an average of 7.5 tons and that their only plea was that this was not intentional or deliberate nor did it signify any mala fides on their part. No reliance has, however, been placed upon this confession in the Respondents statement of the case. We may however point out that the gross annual turnover of sugar manufactured in the factory is in the neighbourhood of 12 lakhs of maunds and the amount of excise duty the appellant pays to government runs into about a crore of rupees per annum. It would therefore be a little far-fetched to infer that what happened at the time of the inspection was something more than an error occasioned perhaps by carelessness nor could it be said that this shows that there was a deliberate attempt on their part to evade payment of duty on a mere 11,606 maunds and amounting to less than a lakh of rupees. We are saying this not because an error due to carelessness in maintaining the registers properly as required by Rule 83 does not amount to a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been relied upon for making the allegations that there was higher electricity consumption. It appears that Dr. Batra in his report has observed that for the production of 1 MT of steel ingots, 1046 units electricity required. 4. So far as the various after allegations relating to the fictitious firms and the income from the share trading, the Tribunal recorded the finding that since the incriminating statements of share brokers etc. have been relied upon in the proceedings, it was incumbent upon the Revenue to produce them as well as the investigating officer for crossexamination by the appellants, as was repeatedly requested by them. In the absence of the same, the statements of the share brokers etc. cannot be relied upon. The Tribunal further observed that even if, for the sake of argument, it is accepted that the income shown in the balance sheets is not the income derived form the sources declared by the appellants, there is nothing on record to link it with the so called clandestine removal of the goods. 5. On consideration of the aforesaid findings, we are of the view that the findings of the Tribunal are based on the material on record and they cannot be said to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination in any quasi-judicial proceeding is a valuable right given to the accused/noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in section 9D of the Central Excise Act, 1944. The circumstances referred to in section 9D, as also in section 138B, included circumstances where the person who had given a 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 and expense which, under the circumstances of the case, the court considers unreasonable. It is clear that unless such circumstances exist, the noticee would have a right to cross-examine the persons whose statements are being relied upon even in quasi judicial proceedings. The Division Bench also observed as under (page 498 of 1 GSTR): Thus, when we examine the provision as to whether this provision confers unguided powers or not, the conclusion is irresi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the order passes by the Customs Excise and Service Tax Appellate Tribunal dated 3.8.2005 allowing the appeal of the respondent No. 1 by setting aside the demand of Rs. 72,707/- as the duty adjudicated on alleged removal of the fabric from the factory and like amount of the penalty levied by the Adjudicating Officer. 4. The manufacturer's case from the beginning was that the register found during the visit of Excise Authorities in question was not a register maintained for recording production but was a document maintained for the purpose of keeping supervision over the factory workers and on their daily production was entered on estimate basis only. Before entries were made in RG-1 the product was actually weighed and actual weight was entered in RG-1. In support of this contention, the manufacturer had also produced a chart of procuring raw material and its corresponding production. This explanation had not been accepted by the Adjudicating Officer. 5. However, the Tribunal found the explanation to be plausible and considering the fact that no attempt was made by Adjudicating Officer to verify the correctness of explanation put forward by the manufacturer in light of corro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are identical and in respect of identical charges and the Criminal Court has categorically opinion that the petitioner could not be found guilty of the charges. In D'Silva v. Regional Transport Authority 65 LW 73 , a bench of this Court observed as follows : "We have no hesitation in making it clear that a quasi-judicial Tribunal like the Regional Transport Authority or the Appellate Tribunal therefrom cannot ignore the findings and Orders of competent Criminal Courts in respect of an offence, when the Tribunal proceeds to take any action on the basis of the commission of that offence. Let us take the instance before us. The offence consist in smuggling foodgrains. For that same offence, the petitioner was criminal prosecuted. He has also been punished by his permit being suspended for a period of three months. If the criminal case against him ends in discharge of acquittal, it means that the petitioner, is not guilty of the offence and therefore did not merit any punishment. It would indeed be a strange predicament when in respect of the same offence, he should be punished, by one Tribunal on the footing that he was guilty of the offence and that he should be honourably a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted an affidavit wherein it was clearly mentioned that the stock verification was not conducted physically and was not compared with the recorded balance thereof. It was contended that the statements and panchnama were both recorded forcibly and the factual position of stock was not ascertained. He had, therefore, by affidavit dated 20-7-2003 retracted the facts mentioned in the panchnama and the statements. 9. Thus, all the authorities below viz., the adjudicating authority, Commissioner (Appeals) as well as the Tribunal have concurrently found that except for the statement of the Director of the Assessee Company, Shri Rajnikant Agarwal recorded on 10-7-2003, there was no other evidence in support of the charge of clandestine removal of goods. The statement recorded on 10-7-2003 had subsequently been retracted by Shri Rajnikant Agarwal. Thus, it is apparent that the only evidence in respect of clandestine removal against the Assessee was in the nature of the statement recorded under Section 14 of the Act, which had been subsequently retracted. Before the adjudicating authority, the Respondent Assessee had led evidence to establish that the charge of clandestine removal is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties. The statement of so called buyers, namely M/s. Singhal Cement Agency, M/s. Praveen Cement Agency; and M/s. Taj Traders are based on memory alone and their statements were not supported by any documentary evidence/proof. The mischievous role of Shri Anil Kumar erstwhile Director with the assistance of Accountant Sri Vasts cannot be ruled out. 5. Commissioner of Central Excise, Ludhiana vs. Nexo Products (India), 2015 (325) E.L.T. 106 (P&H), wherein it has been observed:- 8. The said submission is without any merit. Specific defence had been taken by the manufacturer that no effort had been made to segregate the nuts and bolts into various sizes and to find the shortage by comparing the same with the recorded balance and there was huge stock of 91 lacs pieces of various sizes of nuts and bolts and it was impossible for the Department to come to a conclusive factual finding that there was shortage of 14,25,900 pieces of particular size and if they were all mixed together. The onus would lie upon the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under:- "9. Before proceeding with the matter, it will not be out of place to mention that on the cross examination, it is right of the assessee and such request should be made at the very first opportunity when it is available i.e. before adjudicating authority and not after adjudicating authority accepts the report and decides the matter against the assessee. 10. In that view of the matter, three judgments of the Gujarat High Court which have been relied by the counsel for the appellant will not apply in the facts of present case, as the appellant sought cross examination for the first time at the appellate stage. 11. We make it clear that the cross examination or request for referring the matter to the expert laboratory should be made at the very first time and if such request is made then only the laboratory should decide thickness, quality after physical verification of the product. However, such request cannot be made the appellate stage. In the present case, if the appellant would have made such request at the first stage then it could have been open for the authority to send the product for further examination at the cost of the appellant. However, in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.01.1999. After receiving the first show cause notice dated 15.01.1999, during the pendency of earlier petition itself the petitioner had moved applications dated 18.02.1999, 25.02.1999, 08.03.1999, 12.03.1999, 27.03.1999, 03.04.1999 and 16.04.1999 for obtaining copies of the documents mentioned in Annex. 2 of the show cause notice dated 15.01.1999 as those documents were being relied upon by the department for taking the action proposed in the said show cause notice. The respondents did not allow the request of supply of copies but instead were prepared to give an opportunity to examine the records and obtain photo copies of the same. After some correspondence and after receiving some of the copies required but not all, the petitioner filed this petition praying for quashing of the show cause notice dated 15.01.1999 and 31.05.1999, restraining the respondent No. 1 from proceeding further with the show cause notice dated 15.01.1999 and 31.05.1999, for a declaration that the Registration Certificate issued to the petitioner is not liable to be revoked and/or suspended and for a declaration that the petitioner company was an independent processor within the meaning of notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d violation of law, it is the duty cast upon the department to serve legible copies on which reliance is being made by the department for initiating action. In this case, of course the opportunity to inspect the document and take photocopies was not considered to be a proper substitute for supply of legible copies of the relied upon documents. However, since the documents, though illegible, were supplied along with the show cause notice, it was clear that the department also was initially of the opinion that it was necessary to supply copies of those documents. 15. In the light of the aforesaid discussion, we allow this petition and direct the respondent No. 1 to furnish authentic copies of the documents relied upon in the show cause notices dated 15.01.1999 and 31.05.1999, as enumerated in the petitioner's letter dated 19.06.1999 addressed to the respondent No. 1 and proceed to adjudicate on the show cause notice only after supply of such copies." 12. In that view of the matter, we remit back the matter to the first authority. The petitioner will appear before the first authority on 06.11.2017 and authority will settle the matter within a period of four weeks and reply a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they will be allowed to cross examine the same. The principles of natural justice will be strictly followed and thereafter, the authority will pass a reasoned order and if any cross examination is not allowed, the authority will pass a reasoned order for not granting cross examination. iii. The parties will appear before the original authority/ Commissioner on 16.4.2018. The Authority will try to complete proceedings within four months. iv. If any amount which has been paid by the assessee, the same will be kept in Suspense Account. In case the appeal is not heard within four months from 2.4.2018, the amount will be refunded on 1.9.2018. However, it is made clear that if any adjournment is taken by the assessee, that period will not be counted in the period of four months. v. If the authority is not in a position to complete the proceedings within 120 days then he will be required to refund the amount deposited. 12. With the above observations, the appeals stand partly allowed to the aforesaid extent for the period specified above. 13. The order of the tribunal and order in original are quashed and set aside. Dismissal of appeal filed by department will not affect the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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