2013 (8) TMI 649 - HC - Central Excise

Production capacity based duty - Power to Review the Order - Whether after the Commissioner had determined the annual capacity of production the Commissioner could review his order when he was informed that fake certificates were issued and as such the earlier determination was based on false and fabricated invoice/certificates regarding the annual capacity of production - Held that - The question was answered in negative - Assesse was available and has also filed his reply to the notice issued by the Excise Commissioner in which he had stated that his statement was recorded under duress thus his statement could not have been relied without his cross examination - apart from the statement there was no material before the Excise Commissioner to hold that the respondent has produced fake invoices - Statement was not recorded in the proceeding as such it could not be read as an evidence and there was no material for exercising the powers under Proviso to Section 11-A of the Act. Material to Prove the Fraud - Whether there was any material before the Excise Commissioner to hold that earlier order was obtained by committing fraud - Held that - Statement had not been recorded as a witness in the proceeding as such there was no admissible evidence on record to hold that fraud has been committed by the respondent - The Excise Commissioner had illegally treated the statement as an admission - According to the Excise Commissioner as Excise Officer was not a police officer as such the voluntary statement made before him was admissible and Section 25 of the Evidence Act will not apply. CCE Versus Versus M/s Bajaj Auto Ltd. 2010 (11) TMI 7 - Supreme Court India - Initial burden lies upon the Department to prove that fraud had been committed for invoking provision of Section 11-A Proviso, of the Central Excise Act, 1944 - Excise Commissioner had relied upon the statement recorded by Excise Officer during investigation held against his firm and found that as Deepak Gupta had admitted that he had issued invoices giving incorrect Annual Capacity of Production as such the respondent has secured the previous order by producing forged document as he found that statement of Deepak Gupta was admissible under Section 25 of the Evidence Act - Decided against Department.

Summary

Issues:
1. Review of an order based on fraudulent documents.
2. Admissibility of confessional statement in evidence.
3. Right to cross-examine witnesses.
4. Relevance of evidence for invoking jurisdiction under Section 11-A of the Act.

Issue 1: Review of an order based on fraudulent documents
The case involved a dispute regarding the determination of the Annual Capacity of Production (ACP) and Monthly Duty Liability (MDL) of a company manufacturing non-alloy steel ingots. The Commissioner of Central Excise had initially determined the ACP based on certain invoices and certificates provided by the manufacturer. However, subsequent investigations revealed that the invoices were fake, leading to a reevaluation of the ACP and MDL. The Commissioner reopened the proceedings and issued a show cause notice for revoking the earlier order and recovering the differential short duty, along with interest and penalties, on the grounds of fraud. The Tribunal held that there was no provision for review under the Central Excise Act, rendering the subsequent order null and void.

Issue 2: Admissibility of confessional statement in evidence
The Commissioner relied on a confessional statement made by a partner of the manufacturer, admitting to issuing incorrect invoices without knowledge of their central excise implications. The respondent argued that the statement was not voluntary and requested cross-examination of the partner, which was denied by the Commissioner. The respondent contended that the statement could not be relied upon as evidence since the partner was not examined as a witness in the case. The Commissioner held the statement admissible under Section 25 of the Evidence Act, but the respondent challenged this decision.

Issue 3: Right to cross-examine witnesses
The respondent sought the right to cross-examine the partner and the Excise Officer who conducted the investigation, but the Commissioner did not permit it. The respondent argued that the denial of cross-examination violated their right to be heard and undermined the reliability of the evidence presented against them. The Commissioner's reliance on the investigation report and the partner's statement without allowing cross-examination was contested by the respondent.

Issue 4: Relevance of evidence for invoking jurisdiction under Section 11-A of the Act
The Commissioner invoked Section 11-A of the Act based on the alleged fraud committed by the respondent in securing the earlier order. The respondent challenged this invocation, arguing that there was insufficient admissible evidence to prove the fraud. The Commissioner's decision to recall the earlier order and impose penalties was questioned, emphasizing the need for valid and admissible evidence to support such actions.

In conclusion, the High Court ruled against the Department, finding that the evidence presented was insufficient to support the Commissioner's decision to revoke the earlier order and impose penalties. The Court emphasized the importance of proper evidence, the right to cross-examine witnesses, and the need for due process in such proceedings.