2011 (10) TMI 362 - AT - Central Excise

Dutiability - Cotton yarn for use in handloom are exempted but in other forms like Corn, Cheese excise duty is payable - Investigation reveled assessee has cleared such goods as corn, chease - Show cause issued demanding duty, interest & mandatory penalty imposed - Appellant argued that Commissioner relied on statement of third party namely buyer - Held That - When appellant has failed to furnish any evidence no merit in filing appeal before first and second appellate authority. - If the uncontroverted statement of the purchaser of the goods is taken to be correct, the case against the appellants stands proved

Summary

Issues:
1. Duty liability on cotton yarn in cone, cheese form.
2. Reliance on statements of third-party buyers.
3. Cross-examination of third-party witnesses.
4. Violation of principles of natural justice.

Analysis:

Issue 1: Duty liability on cotton yarn in cone, cheese form
The appellants, manufacturers of cotton yarn, were found to be clearing cotton yarn in cone, cheese forms without paying excise duty, misdeclaring the goods as cotton yarn in plain reel hanks. Investigation by the Directorate of Central Excise Intelligence revealed evidence through statements of buyers and invoices showing the discrepancy in the description of goods. A show cause notice was issued demanding excise duty, interest, and penalty under Section 11AC. The adjudication confirmed the duty liability, interest, and penalty, which was upheld by the Commissioner (Appeals).

Issue 2: Reliance on statements of third-party buyers
The main ground of appeal before the Tribunal was the reliance on statements of third-party buyers to establish duty liability. The appellants argued that the Commissioner (Appeals) went beyond the original order by relying on such statements and a diary not considered by the lower adjudicating authority. They also contended that the principles of natural justice were violated as cross-examination of the third-party witnesses was not allowed. However, the Tribunal found no merit in these arguments as there was no request for cross-examination during the adjudication stage, and the appellants failed to provide evidence of such a request.

Issue 3: Cross-examination of third-party witnesses
The appellants raised concerns about the denial of cross-examination of third-party witnesses before the Commissioner (Appeals), alleging a violation of natural justice. The Tribunal noted that the request for cross-examination was made for the first time at the appeal stage and deemed it an afterthought. As there was no evidence of a cross-examination request during adjudication, the Tribunal dismissed this argument, emphasizing that uncontroverted statements of the buyers were sufficient to establish the case against the appellants.

Issue 4: Violation of principles of natural justice
The appellants contended that the denial of cross-examination violated principles of natural justice. The Tribunal, however, held that without any evidence of a cross-examination request during the adjudication stage, raising the objection at the appeal stage was not valid. The Tribunal concluded that the case against the appellants was proven based on the uncontroverted statements of the buyers, leading to the dismissal of the appeals.

In conclusion, the Tribunal dismissed the appeals, upholding the duty liability on cotton yarn in cone, cheese forms and rejecting the arguments related to the reliance on third-party statements and the alleged violation of principles of natural justice.