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2018 (6) TMI 873 - AT - Central ExciseClandestine removal - validity of RUD (relied upon documents) - The whole case of the department is based upon statement of Sh. Shivji Gupta dated 26.03.2008 - Cross-examination of witesses - uncorroborated statements - necessary infrastructure to manufacture copper ingots or rods from copper cathode - diversion of goods - burning loss - CENVAT credit on copper cathode denied - benefit of N/N. 56/2002-CE dated 14.11.2002 - Penalty - Difference of opinion - majority order. As held by Learned Member (Technical), the re-appraisal of evidence, i.e., the statement of Shri Shivji Gupta is required with regard to other corroborative evidences and as such the matter needs to be remanded? - Held that - Ld. Member (J) has observed that only the statement dated 30/08/2010, which was in compliance with the provisions of Section 9D can be considered, but Ld. Member (T) has observed that the matter may be remanded for examination of the statement viz-a-viz corroborative evidences - In the facts and circumstances of the case the statement dated 26/03/2008, which has been alleged to have been obtained under duress, cannot be relied to support the allegations against JVIPL as well as GRPL. I agree with the findings of Ld. Member (J) in this regard. Whether as held by learned Member (Technical) the statement of Shri V. K. Mittal is admissible as evidance by way of corroborative evidence, even in absence of cross examination? - Held that - hri V.K. Mittal, partner of M/s Veekay General Industries, happens to be a competitor of JVIPL, and in his statement dated 08/09/2010, has stated that copper cathods could be cut into pieces using hand cutter. But Shri Mittal did not turn up for cross examination. M/s JVIPL have countered such statement by means of Chartered Engineers Certificate who has opined otherwise - Shri Mittal s statement cannot be admitted as evidence at face value since he is a partner of a competitor. The statement does not appear to have been admitted by the adjudicating authority as per the provisions of Section 9D and since the appellants were not extended the opportunity of cross examining him - the statement is not admissible as held by Member (Judicial). As held by learned Member (Technical) that the issue of burning loss in support of the allegation of diversion of copper cathode, needs reappraisal? - Held that - Burning loss in the case of an induction furnace arises for a variety of reasons and differences in burning loss cannot ipto facto support the allegation of diversion of copper cathode. The argument advanced that the burning loss is more in respect of JVIPL since they have an open furnace appears to be reasonable - no adverse inference can be drawn due to difference in burning loss in the two factories. Whether as held by Member (Judicial), in view of undisputed report of Commissioner, Jammu dated 25.05.2010, bassed on Plant Based Checks , JMWIPL, Jammu have also used copper scrap in addition to copper cathode, hence allegation of Revenue as to diversion of cathode by JVIPL & GRPL does not stand, and appeals are rightly allowed? - Held that - The Commissioner (Jammu) who is the Jurisdictional Commissioner in respect of JMWIPL who has sent his report 25/05/2010 in which, after investigating into the affair of JMWIPL, has recorded the fact that JMWIPL have used both copper scrap as well as copper cathode. He has based the report on the observations recorded in the records of JMWIPL by Jurisdictional Central Excise Officers as well as the officers of District Industries Centre who have attested the receipt of various raw materials in the said unit - thus, the undisputed report of Commissioner (Jammu) dated 25/05/2010 where the above observations are found, negates the allegations of Revenue about the diversion of cathode by JVIPL and GRPL. Majority order - In view of agreement with the decision of Ld. Judicial Member by the third Member, the impugned orders are set aside and appeals are allowed.
Issues Involved:
1. Admissibility and reliability of statements by Shri Shivji Gupta. 2. Admissibility of the statement of Shri V.K. Mittal. 3. Inference from the difference in burning loss percentages. 4. Relevance of the report by the Commissioner (Jammu) regarding the use of copper scrap and copper cathodes by JMWIPL. 5. Alleged diversion of copper cathodes by JVIPL and GRPL to JMWIPL. 6. Jurisdiction and procedural correctness of the demand and penalties imposed. 7. Applicability of Notification No. 56/2002-CE and its conditions. 8. Limitation period for issuing the show cause notice. Detailed Analysis: 1. Admissibility and Reliability of Statements by Shri Shivji Gupta: - Judicial Member's View: The statement dated 26/03/2008 by Shri Shivji Gupta, which alleged non-use of copper cathodes, was retracted and claimed to be taken under duress. The subsequent statement dated 30/08/2010, which stated that JVIPL used copper cathodes, stood the test of cross-examination and complied with Section 9D of the Central Excise Act. Hence, the latter statement is reliable. - Technical Member's View: The matter requires re-appraisal of the statements and corroborative evidence to arrive at a proper conclusion. The initial statement should not be disregarded solely based on retraction. 2. Admissibility of the Statement of Shri V.K. Mittal: - Judicial Member's View: The statement of Shri V.K. Mittal, which claimed that copper cathodes could not be cut using hand cutters, is inadmissible as he was not produced for cross-examination, violating Section 9D and principles of natural justice. - Technical Member's View: The statement of Shri V.K. Mittal should be considered as corroborative evidence even without cross-examination. 3. Inference from the Difference in Burning Loss Percentages: - Judicial Member's View: No adverse inference should be drawn from the difference in burning loss percentages (0.2% for JMWIPL and 1% for JVIPL) as the difference is attributable to the type of furnace used (open vs. closed). - Technical Member's View: The issue of burning loss requires re-appraisal to determine if it supports the allegation of diversion of copper cathodes. 4. Relevance of the Report by the Commissioner (Jammu): - Judicial Member's View: The report by the Commissioner (Jammu) dated 25/05/2010, which confirmed that JMWIPL used both copper scrap and copper cathodes, negates the allegations of diversion. This report is comprehensive and should be relied upon. - Technical Member's View: The matter requires remand for a comprehensive and detailed finding. 5. Alleged Diversion of Copper Cathodes by JVIPL and GRPL to JMWIPL: - Judicial Member's View: There is no credible evidence to prove that JVIPL and GRPL diverted copper cathodes to JMWIPL. The statutory records and payments made through banking channels support the appellants' case. - Technical Member's View: The case requires re-adjudication to consider all evidences and submissions comprehensively. 6. Jurisdiction and Procedural Correctness of the Demand and Penalties Imposed: - Judicial Member's View: The demands and penalties imposed are set aside due to lack of credible evidence and procedural lapses. - Technical Member's View: The matter should be remanded for a fresh decision considering all evidences. 7. Applicability of Notification No. 56/2002-CE and its Conditions: - Judicial Member's View: JMWIPL did not violate the conditions of Notification No. 56/2002-CE as they used non-duty paid copper scrap, on which no Cenvat credit was available. - Technical Member's View: The findings on the applicability of the notification require detailed re-examination. 8. Limitation Period for Issuing the Show Cause Notice: - Judicial Member's View: The issue of limitation is left open as the appeals are allowed on merits. - Technical Member's View: The matter should be remanded for a comprehensive decision, including the issue of limitation. Conclusion: The majority decision, aligning with the Judicial Member, set aside the impugned orders and allowed the appeals with consequential benefits, leaving the issue of limitation open. The detailed findings and comprehensive analysis by the Judicial Member prevailed over the prima facie view of the Technical Member, leading to the conclusion that the demands and penalties were not sustainable.
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