2019 (5) TMI 505 - AT - Central Excise

Clandestine removal - the allegation is that the appellant have cleared the coated calcium carbonate in the garb of uncoated calcium carbonate - reliance placed on the cross-examination - HELD THAT - In view of hard evidence like test report, the statement and cross examination become secondary evidence. It is seen that the appellant have described each product by difference name. The material cleared to M/s Hexon, where the sample was tested, also would have contained specific name of the product which were cleared to them. The said test report can only be applied to the items described identically or cleared under the same description to all other buyers. The test report does not show the exact description under which such goods were cleared. The evidence in the shape of test report can be applied only to the specific grade on which the testing was done. In respect of such product, the statements contradictory to the test report do not have any value. In respect of other item which were not tested, the statements becomes sole evidence. In such case the cross examination need to be granted before the same are relied in terms of Section 9D of the Central Excise Act, 1944. Ld. Counsel has further argued that the goods which the original adjudicating authority held to be traded goods on the basis of CA Certificate have been treated as manufactured goods without examination of full facts. He argued that even if any processes were carried out by the appellant, the Commissioner (Appeals) should have remanded the matter back to the original adjudicating authority for determination if the said processes amount to manufacture - the matter needs to be examined afresh. Appeal allowed by way of remand.

Summary

Issues:
Confirmation of demand of duty, interest, and penalty based on the alleged misclassification of goods as "coated Calcium Carbonate" instead of "uncoated Calcium Carbonate." Exclusion of certain clearances from total assessable value based on evidence and cross-examination. Treatment of traded goods as manufactured goods without proper examination of facts.

Analysis:
The appeal involved a dispute regarding the classification of goods by M/s Gayatri Fillers Pvt. Ltd and Sh. Rashmin M Patel, who were engaged in the manufacture and trading of Calcium Carbonate. The appellant argued that the goods cleared as "uncoated Calcium Carbonate" were misclassified as "coated Calcium Carbonate" based on a sample test at a buyer's premises. The appellant sought to cross-examine witnesses to challenge the evidence presented by the revenue.

The original adjudicating authority excluded certain clearances made to M/s Alok Industries from the total value based on evidence and cross-examination, resulting in a re-qualification of the demand. However, the Commissioner (Appeals) disagreed, stating that the nature of activities on the traded goods was unclear and should not be excluded from the assessable value without proper examination. The Commissioner's decision raised doubts about the manufacturing process based on discrepancies in documents.

During the proceedings, it was noted that the sample test report could only be applied to goods with identical descriptions. The Tribunal emphasized the importance of hard evidence like test reports over statements and cross-examinations. Additionally, the Tribunal highlighted the necessity of granting cross-examination rights before relying on statements as evidence under Section 9D of the Central Excise Act, 1944.

The Tribunal concluded that a fresh examination of the matter was required due to discrepancies in the evidence and the lack of clarity regarding the manufacturing processes. The impugned order was set aside, and the case was remanded to the original adjudicating authority for a fresh adjudication. The decision was pronounced in the open court on 06.05.2019.