1998 (9) TMI 595 - AT - Central Excise

Issues Involved:

1. Confirmation of duty demand based on alleged excesses/shortages and clandestine removal.
2. Right to cross-examine witnesses.
3. Validity and relevance of packing slips as evidence.
4. Compliance with procedural requirements for searches under the Central Excise Act.
5. Admissibility and reliability of statements given by witnesses.

Issue-wise Detailed Analysis:

1. Confirmation of Duty Demand Based on Alleged Excesses/Shortages and Clandestine Removal:
The Commissioner of Central Excise, Chandigarh, confirmed a duty demand of Rs. 7,86,266.11 against the appellants, asserting that the charges of excesses/shortages and clandestine removal were established based on a visit by Anti-Evasion Department officers on 1-8-87. This was initially confirmed by an order dated 6-11-89, which also imposed a penalty of Rs. 2 lakhs. The Tribunal had remanded the case for de novo adjudication, emphasizing the need for cross-examination of witnesses.

2. Right to Cross-Examine Witnesses:
The appellants argued that the de novo proceedings were flawed as the key witness, Shri Ashok Kumar, was not produced for cross-examination. The Tribunal had previously remanded the matter to allow for this cross-examination. The appellants contended that without cross-examination, the statement of Shri Ashok Kumar should not be considered as evidence. The Commissioner, however, noted that efforts to locate Shri Ashok Kumar were unsuccessful due to an incorrect address.

3. Validity and Relevance of Packing Slips as Evidence:
The appellants challenged the validity of the packing slips, arguing discrepancies and contradictions in the findings. They claimed that the packing slips were not recorded in the recovery memo or Panchnama and that the signatures on the slips were obtained under duress. The Department, however, maintained that the slips were part of the records resumed from the appellants' premises and were corroborated by the statements of witnesses and the Director's signatures on the slips.

4. Compliance with Procedural Requirements for Searches under the Central Excise Act:
The appellants argued that the searches were not conducted in accordance with the Code of Criminal Procedure as required by Section 18 of the Central Excise Act. The Department countered this argument by citing the Karnataka High Court judgment in Victory Glass & Industries Ltd. v. CCE, which held that strict compliance with Cr. P.C. provisions was not necessary for searches under the Central Excise Act.

5. Admissibility and Reliability of Statements Given by Witnesses:
The Department relied on the statement of Shri Ashok Kumar, who admitted that the packing slips were in his handwriting and related to processed fabrics. The appellants contended that Shri Ashok Kumar's statement was untrue and uncorroborated, and that he was not an employee at the relevant time. The Tribunal noted that the main documentary evidence relied upon by the Department were the packing slips, which were said to relate only to May 1987 and not to the disputed period of June and July 1987.

Conclusion:
The Tribunal found that the Department's allegation of clandestine removal for the period under dispute was unsubstantiated by any corroborative evidence other than the statement of Shri Ashok Kumar. Given that the packing slips did not relate to the period in question and considering the discrepancies highlighted by the appellants, the Tribunal decided to give the benefit of the doubt to the appellants. Consequently, the appeal was allowed, and the impugned order was set aside.

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