TMI Blog2024 (2) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... pendent sources - It is well settled that the charges of clandestine removal are required to be made on the basis of positive and tangible evidence, the same being quasi-criminal in nature. The Revenue has miserably failed to produce corroborative evidence on records so as to substantiate the charges of clandestine removal. In the absence of corroborative evidence, in the present case the charge of clandestine clearance cannot be levelled against the appellant. The adjudicating authority has not followed the procedure as prescribed under Section 9D of the Central Excise Act for placing reliance on the statements of said witnesses - The provisions of Section 9D of the Central Excise Act, 1944 is very clear and by now, it is well-settled legal position that the Adjudicating Authority, if he intends to rely on the contents of any statement recorded under the Central Excise Act, 1944, then the procedure, as prescribed under Section 9D, has to be followed scrupulously. In the present case, it is found that the statements were relied upon as corroborative evidences and the cross-examination of witnesses who made such statements was denied without valid ground. It is found that, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch was also conducted at the residential premises of the Shri Anand Rameshbhai Vashadia, Director and two note books having date-wise entries and file containing Estimates were resumed for further investigation. During the investigation statements of director were recorded. Subsequently, a show cause notice dated 17.09.2014 was issued by the Deputy Commissioner, Division-II, Rajkot proposing confiscation of seized goods valued at Rs 25,00,000/- and imposition of penalty. 1.2. During further investigations, statements of various buyers were also recorded. Accordingly, show cause notice dated 10.03.2016 was issued to M/s. P.P, calling upon them to show cause as to why Central Excise duty of Rs. 3,21,68,909/- should not be demanded from them under proviso to sub-section (4) of Section 11A of Central Excise Act, 1944. There were proposals for interest and penalty and for personal penalty on other co-noticees. In Adjudication vide order dated 29.12.2016 demand of central excise duty was confirmed along with interest and penalty and a penalty under Rule 26 of Central Excise Rules, 2002 was also imposed on the Director of the M/s P.P. and other co-noticee. Similarly, show cause not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 209(P H) 2.2 He further submits that in the present case, admittedly, none of the persons whose statements were recorded during the investigation were examined as witness and there is nothing on record to show that the Adjudicating authority formed the opinion that, having regard to the circumstances of the case, these statements should be admitted in evidence in the interest of justice. The Adjudicating authority has not made any attempt to comply with the conditions and requirement of Section 9D of the Central Excise Act before admitting the statements as evidence. Therefore all the statements, which are not proved not admitted as evidence in terms of Sections 9D of the Act, are inadmissible and unreliable against the appellant. When these statements are discarded, there is no case against the appellant about recovering cash from clients, and the demand of excise duty therefore falls. 2.3 He also submits that the Note Books is not reliable. As perusal of the Note Books shows that no clear facts or details about any illicit activities are recorded therein. No reference to a particular equipment or machine is recorded; no details of quantity of equipment/machine are recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Electronics Ltd. Vs. Commissioner, Vadodara 2015(328)ELT 443(Tri. Ahmd) Mahesh Silk Mills Vs. Commissioner of Central Excise -2014(304)ELT 703 (Tri. Ahmd) Commissioner Vs. Mahesh Silks Mills -2015(319)ELT (A52)- Gujarat High Court J.P. Iscon Pvt. Ltd. -2022(63)GSTL 64 (Tri. Ahmd) Arya Fibers Pvt. Ltd. Vs. Commissioner, Ahmedabad -2014(311)ELT 529 (Tri. Ahmd) 2.5 He also submits that the figures and details of the Note Books were actually the details of estimates given to the clients. The appellant has explained in the adjudication that the Note Books were kept for recording rough details, and not for orders or actual transactions for selling any equipment/machine. Some of the details were in respect of estimates given to the prospective customers; but the Note books were not maintained for recording the actual purchase orders or transactions for selling equipment/machine. 2.6 He further submits that the limited production capacity of the appellant company is not considered by the Ld. Commissioner. The case against the appellant is for manufacturing about 176 Tar Catchers during a period of about 21 months, in addition to the machine sold under bills/in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the buyer s place; it is also incumbent upon the revenue to establish with evidence that the manufacturer had made payment for raw materials used in manufacture of the goods and that the buyers had made payment to the manufacturer in cash or unaccounted manner for purchasing the goods in clandestine manner; and the revenue was also under obligation to establish all such factors not only on the basis of statements recorded by the investigating officers but by virtue of independent corroborative evidence in form of documents. 2.8. As regard the appeals related to seizure and confiscation of the two Tar Catchers valued at Rs, 20 Lakhs found lying at premise of the appellant, on the ground that statutory records were not maintained and these goods were not entered in RG-1, he submits that these two tar catches were not entered in the statutory records like RG-, but that was for the reason that the appellant company was availing SSI exemption at that time and therefore the appellant company was also exempted from licensing Control and from maintaining any statutory records like RG-1 because the goods were fully exempt from payment of excise duty. He placed reliance on the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he concerned persons clarified that they had not purchased or received any Tar Catchers from the appellant. We also observed that revenue itself excluded the 15 entries of 15 parties of the said Note Books while issuing show cause notice. Thus, the authenticity of said Note Books is not reliable. It is not open to drop the evidence in favour of the assessee and to pick up the partial evidence which may be against the assessee. It is the appreciation of entire evidence which needs to be done for arriving at the final conclusion, which cannot be arrived on the basis of pick and choose method. We find that only on the basis of said disputed entries of the Note Books charges of clandestine manufacture of Tar Catchers and clandestine clearances of the said goods from appellant s factory is not sustainable. The investigation in the present case has been very sketchy and will not support the findings in the impugned order. 4.2 The allegation of clandestine production and removal are required to be arrived at on the basis of positive and tangible evidences including the evidences relating to procurement of raw-materials, conversion of the same to final products, clearances of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Central Excise Act, 1944, then the procedure, as prescribed under Section 9D, has to be followed scrupulously. In fact, in a decision, the Hon ble Punjab Haryana High Court in the case of Jindal Drugs Pvt. Ltd. - 2016 (340) E.L.T. 67 (P H) held that Adjudicating Authority cannot straightaway rely upon the statement recorded during the investigation before the central excise officer, unless and until, he can legitimately invoke clause (a) of Section 9D(1). The statements given under Section 14 are to be examined before the Adjudicating Authority and if the same is not done, it cannot be taken as reliable evidence. If the maker of the statement is examined by the Department, cross-examination of the said person must be allowed, if sought for by the assessee. We find legal ratio regarding cross-examination of the person, whose statement has been relied upon by the Department, has been laid down by the Hon ble Delhi High Court in Basudev Garg - 2013 (294) E.L.T. 353 (Delhi) = 2017 (48) S.T.R. 427 (Del.) and Hon ble Allahabad High Court in Parmarth Iron Pvt. Ltd. - 2010 (260) E.L.T. 514 (All.). Further, reference can be made to the decision of Hon ble Delhi High Court in J.K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contrary. The Tribunal has found that the explanation tendered is reasonable and does not warrant any confiscation of goods. 4. It is an accepted position that the liability to pay duty arises at the point of time when the goods are to be removed from the factory premises. Admittedly, the goods were found lying in the factory premises. Therefore the occasion to pay duty had not arisen. In other words, the liability to pay duty had not accrued in law. In the circumstances, it is not possible to accept the contention of the appellant that an inference should be drawn that the goods were to be clandestinely removed and hence confiscation was permissible. Such an inference should be possible if there are other surrounding or attendant circumstances. In the present case, no such evidence exists on record. The Tribunal was, therefore, justified in coming to the conclusion that the confiscation of goods was not justified. 4.6 Further, in the case of Commissioner of Central Excise, Chandigarh v. Sadashiv Ispat Ltd. [2010 (255) E.L.T. 349 (P H)], the Hon ble High Court of Punjab and Haryana held as under :- 8. A perusal of the impugned order shows that no evidence has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear the same without payment of excise duty, is not supported by any evidence. Further, it is also seen that as regards the allegation of the clandestine removal in respect of other show cause notice, which also was issued based upon the very same investigations and visit by the officers, the respondent had settled the issue before the Settlement Commission. The proceedings which were settled by the respondent before the Settlement Commission cannot be brought into play for holding against the respondent in another show cause notice. 6. Be that as it may, I find that the goods once they are in the factory premises, no penalty can be imposed on the respondent under the provisions of Rule 173Q, as has been held by the majority decision of the Tribunal in the case of Bhillai Conductors (P) Ltd. (supra). In view of this, I hold that the goods which were found in excess in the factory premises are not liable for confiscation and the adjudicating authority s order of dropping the issue under the show cause notice is correct and does not require any interference on this count. 4.8 In the light of the above settled law on the issue it is observed that in the present case also th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
