TMI Blog2005 (11) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... of justice could be met, if the same is limited to 50% of the duty liability. The appellants had pleaded before the adjudicating authority that the Modvat credit benefit should be given to them, as several inputs have suffered duty. The adjudicating authority has denied the same on the ground that the appellants had to fulfill certain statutory requirements before availing Modvat credit. We feel that when the Revenue is demanding duty on the final products, the Modvat benefit should be given provided there is sufficient evidence for the payment of duty on the inputs. Therefore the duty liability has to be recalculated on the basis of the documentary evidence available with the factory during the relevant time for payment of duty on the inputs. The Adjudicating Authority's denial of SSI benefit to the appellants is upheld. Interest u/s 11AB is also upheld. The case is remanded to the original authority to compute the duty liability in terms of the above observations. The confiscation of goods and imposition of redemption fines and adjustment of liability towards currencies seized are upheld. The appeals are disposed of in the above terms. - HON'BLE S.L. PEERAN, MEMBER (J) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vijayawada, the officers recovered certain records. Statements were also recorded of V. Radha Krishna, Proprietor of ARA, Shri Boppana Rajendra Prasad of M/s. Sree Sree Kaleswar Lorry Service and Shri Srinivas, Director of SPCPL. On the basis of the investigation, it was revealed that the appellants indulged in clandestine production of excisable goods and their removal without payment of Central Excise duty. Show cause notices were issued to them. On conclusion of the adjudication proceedings, the adjudicating authority passed the impugned order. 3. The details of the impugned order are as follows : (a) Denial of SSI Benefit for the period from 1999 to September, 2003. (b) Duty Rs. 2,83,04,863/- for the period 1-4-1999 to 4-10-2002 Rs. 6,39,955/- for the period April, 2003 to September, 2003. (c) Penalty Rs. 2,83,04,863/- under Section 11AC (i) Rs. 15,00,000 on M/s. SPCPL under Rules 173Q and 210 of CER, 1944/New Rule 25 27 of CE 2001, Rule 25 27 CE Rule, 2002. (ii) Rs. 20,00,000/- on Shri Rudhra Shankar, Managing Director, SPCPL under Rule 209A of CER, 1944/ Rule 26 CER, 2001 and Rule 26 of CER, 2002. (iii) Rs. 5,00,000/- on Shri Rudra Sridhar, Director, SPCPL under Rule 209A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at such statements were not made voluntarily as has been held by many courts. (vi) The appellant was manufacturing paints varnishes and oil bound distempers in the brand name of '3 Apples' and 'Nikhita' and there was no reference to such branded products in any of the documents seized, during the search. (vii) The cash collections were in relation to goods covered by the Kutcha Bills and the Kutcha Bills did not relate to the finished products and therefore no inference could be drawn about the alleged illicit manufacture of the products or clandestine removal of such products. (viii) The Adjudicating Authority should have seen that to find out whether there was any possibility of extra manufacture other than the products cleared after payment of duty, as contained under Rule 173, necessary enquiries could have been made as to what is the normal capacity of the plant and how much electricity was consumed, how many labourers employed and that no such enquiries were made and therefore, in the absence of the same no importance could be given to the alleged admission of the witnesses. (ix) The Adjudicating Authority having not disbelieved the Certificate issued by a Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC reported in 1991 (56) E.L.T. 220 (Tribunal) - Natural Justice - Cross-examination - Denial of cross-examination of witnesses whose evidence is relied upon results in violation of principles of natural justice. 7. The learned SDR contended that the Adjudicating Authority has given detailed findings on clandestine manufacture and removal of excisable goods without payment of duty. He brought to our notice the following decisions. (a) M/s. Suman Silk Mills Pvt. Ltd. v. CCE, Baroda reported in 2002 (142) E.L.T. 640 (Tri.-Mumbai) - Natural Justice - Cross-examination -Confessional statements - No infraction of principles of natural justice where witnesses not cross-examined when statements admitting evasion were confessional. (b) Anil Das v. CC, New Delhi reported in 2002 (141) E.L.T. 135 (Tri.-Del.) - Natural Justice - Cross-examination - Non-allowance of cross-examination of appellants when confessional statement made by themselves does not amount to violation of rule of natural justice. (c) M/s. Beauty Dyers v. CCE, Chennai reported in 2001 (136) E.L.T. 339 (Tri.-Chennai) - Evidence - Statements - Cross-examination - Non-availability of witnesses for cross-examination not a fatal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of excisable goods without payment of duty has taken place. The Adjudicating Authority has also taken into account the capacity of the factory as per the statement of Shri R. Sridhar, Director, SPCPL. Shri Sridhar is set to have admitted that the production capacity of SPCPL per shift is 5000 to 6000 litres and they operated only one shift. The Adjudicating Authority has stated that the estimate of illegal clearances has been made only on the basis of the documents seized. If no documents cover a period, no duty has been demanded. This has been stated in Para 82.2 of the Order-in-Original. Shri Sridhar has stated that after completion of a month/certain period, they normally take stock of the raw materials vis-a-vis cleared goods on payment of duty and also clandestinely. Accordingly, they prepare the accounts and then update the statutory records. This is evident from the computerized statements recovered from the residence of R. Shankar. Further, Shri R. Shankar has stated that they purchased raw materials mostly without documents and whatever documents they maintained were destroyed periodically. The amounts are always paid in cash and hence there is no account available anywh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the statements have been corroborated by the records seized. Even unaccounted raw materials and finished goods have been seized. There is no infirmity in the Adjudication Order. A modus oprendus has been deviced to evade Central Excise duty systematically. Hence, invocation of longer period is sustainable. The levy of penalties on the appellants is justified. The seized goods are liable for confiscation. Hence, the Order of confiscation of the seized finished goods and raw materials is upheld. As per the mandatory penalty under Section 11AC is concerned, we feel that the ends of justice could be met, if the same is limited to 50% of the duty liability. The appellants had pleaded before the adjudicating authority that the Modvat credit benefit should be given to them, as several inputs have suffered duty. The adjudicating authority has denied the same on the ground that the appellants had to fulfill certain statutory requirements before availing Modvat credit. We feel that when the Revenue is demanding duty on the final products, the Modvat benefit should be given provided there is sufficient evidence for the payment of duty on the inputs. Therefore the duty liability has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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