2013 (2) TMI 338 - HC - Central Excise

Demand against appellant on the basis of record of the 3rd party, when the writer of 3rd party was not allowed to be cross-examined - Held that - 3rd party is the Weigh Bridge. The appellant is Noticee No.1 before the Deputy Commissioner, Central Excise, whereas the Mill is Noticee No.2. The Deputy Commissioner has taken note of the statement of Shri Sandeep Jain, Director of the Appellant admitting that vehicle Nos. PJL - 3686 and PBL 2541 are owned by them and are used for transportation of steel ingots to their buyers. It has been recorded that he was evasive to the question as to how their vehicle was weighed at Weigh Bridge and tried to mislead the Department that slag/waste must have been weighed. The Deputy Commissioner returned a finding that slag/waste carries no commercial value, therefore, he concluded that entries of weighment recorded in Weigh Bridge are of transaction between the Mill and the appellant. After recording such finding, the Deputy Commissioner dealt with the plea of Mill in respect of cross-examination of employee of Weigh Bridge. The appellant has not sought the cross-examination of the employee of Weigh Bridge, as the appellant has never disputed the correctness of the record of Weigh Bridge, which is apparent from the findings recorded by the Deputy Commissioner based upon the statement of Shri Sandeep Jain. Therefore, question No.(b) does not arise for consideration. Entitlement to benefit of cum-duty - Held that - The entitlement to the benefit of cum-duty is dependent upon the bona fide payment of duty. Since such fact has not been asserted or discussed either before the Deputy Commissioner or before the Tribunal, the appellant cannot be permitted to raise a question of law, which is based upon a fact. Entitlement to reduced amount of penalty as per sec 11AC - Held that - As Tribunal has not ordered payment of penalty within a period of 30 days. The appellant has not deposited penalty within 30 days from the date of order of the Adjudicating Authority. Consequently, the appellant is not entitled to reduced amount of penalty. Contention against penalty - no specific role was attributed to the appellant in respect of clandestine removal of excisable goods in the SCN - Held that - The appellant was associated during the course of investigation and made a statement on 24.01.2002, wherein he has admitted that truck No.PB 10 U 9913 is owned by him and has been weighed at the Weigh Bridge. It is not the stand of the appellant that he is not connected with the affairs of the firm or was not actively working for the firm. The finding recorded shows that in fact the appellant was in the know of the entire things and was actively associated with the working of the firm. He was served with the show cause notice. Though the reply of the appellant was not on record, but the orders passed by the Deputy Commissioner and the Tribunal leave no manner of active role of the appellant in clandestine removal of excisable goods. Thus, he has been rightly made liable for payment of penalty.

Summary

Issues Involved:
1. Non-joinder of necessary parties.
2. Reliability of third-party rough notebooks or weighing slips as evidence.
3. Right to cross-examine witnesses.
4. Entitlement to benefit of cum-duty.
5. Entitlement to reduced amount of penalty.
6. Liability of individuals for clandestine removal of excisable goods.

Detailed Analysis:

1. Non-joinder of Necessary Parties:
The appellant argued that the Tribunal's decision was flawed due to the non-joinder of necessary parties. However, the court found no merit in this argument, stating that the liability of the Mill was established independently of the involvement of other manufacturers. The Tribunal's finding that the Mill utilized unaccounted raw material and produced unaccounted finished goods was sufficient to justify the imposition of levy.

2. Reliability of Third-Party Rough Notebooks or Weighing Slips as Evidence:
The appellant contended that the third-party rough notebooks or weighing slips could not form reliable evidence against them. The court, however, upheld the Tribunal's decision, noting that the entries in the weighment slips and notebooks from the Weigh Bridge matched the records of the Mill. The Tribunal's assessment was based on these corroborated records, which were found to be reliable.

3. Right to Cross-Examine Witnesses:
The appellant argued that they were denied the right to cross-examine witnesses, specifically the employees of the Weigh Bridge. The court noted that the appellant did not seek cross-examination of the Weigh Bridge employees, as they did not dispute the correctness of the weighment records. The Deputy Commissioner's findings, based on the statement of the appellant's director, supported this conclusion. Therefore, the issue of cross-examination did not arise.

4. Entitlement to Benefit of Cum-Duty:
The appellant claimed entitlement to the benefit of cum-duty. The court dismissed this claim, stating that no such plea was raised before the Deputy Commissioner or the Tribunal. The entitlement to cum-duty depends on the bona fide payment of duty, which was not asserted or discussed in the appellant's case.

5. Entitlement to Reduced Amount of Penalty:
The appellant argued for a reduced penalty under Section 11AC of the Central Excise Act, citing compliance with the Tribunal's order. The court clarified that the reduced penalty is applicable only if the duty is paid in terms of the order of the Central Excise Officer (Adjudicating Authority) and not in terms of an appellate order. Since the appellant did not deposit the duty within 30 days of the Deputy Commissioner's order, they were not entitled to the reduced penalty.

6. Liability of Individuals for Clandestine Removal of Excisable Goods:
The appellant contended that no specific role was attributed to them in the show cause notice for clandestine removal of excisable goods. The court found that the appellant was actively involved in the firm's operations and was aware of the clandestine activities. The appellant's involvement was established through their own statements and the evidence collected during the investigation. Therefore, the imposition of penalty on the appellant was justified.

Conclusion:
The court dismissed all appeals, finding no substantial questions of law. The Tribunal's findings regarding the Mill's liability for unaccounted raw materials and finished goods, the reliability of third-party records, and the denial of cross-examination rights were upheld. The claims for cum-duty benefits and reduced penalties were also rejected, affirming the penalties imposed on the appellants for their involvement in clandestine removal of excisable goods.