2019 (3) TMI 1497 - AT - Central Excise

Clandestine removal - Chewing Tobacco - Section 9D of the Central Excise Act - Held that - In the present case, mandate of Section 9D of the Central Excise Act has not been followed by the learned Commissioner - The H n ble High Court of Punjab and Haryana in the case of Jindal Drugs vs. Union of India 2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT has held that if the provisions of Section 9D is not followed, then the statement recorded under Section 14, cannot be relied upon In the present case, the learned Commissioner has not followed the mandate of section 9D, which requires the witness to be examined in Adjudication proceedings, which includes cross examination, therefore, the statements recorded under Section 14 have to be eschewed from evidence. Also, the department is relying upon the records recovered from the premises of M/s. Rudraksha Marketing, Delhi. However, it is found that appellants were having a family dispute with them, which is evident from the pleadings and various documents annexed with the appeal. Therefore, the recovered documents (from Rudraksha) cannot be relied upon in isolation. In the present case, there is no credible evidence which shows that the appellant is involved in clandestine removal of goods - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenging order-in-original regarding clandestine removal of goods, reliance on statements under Section 14 of Central Excise Act, retraction of statements by accused, family dispute affecting business, reliance on recovered documents, proving clandestine removal.

Analysis:
The appellants challenged the order-in-original regarding alleged clandestine removal of goods, which was confirmed by the learned Commissioner. The case involved statements recorded under Section 14 of the Central Excise Act, which the appellants argued could not be relied upon without following Section 9D provisions. They cited legal precedents to support their argument, emphasizing the lack of cross-examination of witnesses. The accused, Shri Purshottam Kumar Arya and Shri K.N. Mehrotra, retracted their statements, further questioning their reliability based on legal judgments. The family dispute over business and pending litigations among relatives were highlighted as factors influencing the situation. The appellants contended that no incriminating documents were found at their premises, and no positive evidence existed to prove clandestine removal.

The Authorised Representative for Revenue supported the findings of the impugned order, emphasizing the appellants' admission of manufacturing and clearing goods without paying duty. He argued that there was sufficient evidence indicating clandestine removal of goods, contrary to the appellants' claims.

The Tribunal noted that the learned Commissioner failed to follow the mandate of Section 9D of the Central Excise Act, as highlighted in a judgment by the Hon'ble High Court of Punjab and Haryana. This failure to examine witnesses in adjudication proceedings, including cross-examination, rendered the statements recorded under Section 14 inadmissible as evidence. The retraction of statements by the accused after obtaining bail was considered, following legal precedents that such statements could not be relied upon. The Tribunal also observed the family dispute affecting the business and the unreliability of recovered documents from Rudraksha Marketing due to the ongoing conflict. Emphasizing the seriousness of the charge of clandestine removal, the Tribunal ruled in favor of the appellants, stating that the department failed to provide credible evidence proving their involvement in clandestine activities.

In conclusion, the appeals filed by the appellants were allowed, setting aside the impugned order, with consequential relief as per law. The judgment highlighted the importance of following legal procedures, examining witnesses, and presenting corroborative evidence in cases involving allegations of clandestine activities.

*(Pronounced on 26.03.2019).*