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2019 (5) TMI 508 - HC - Central ExciseClandestine removal - reliability of retraction of statements - Section 14 of the Act of CEA - Whether the Tribunal has committed error in holding that there was no material for making the order and whether the Tribunal has committed error in not considering the relevant material, which was produced before the adjudicating authority? HELD THAT - The circumstance that the proceeding which was started against Jhunjhunwala was dropped could not have made much difference as Jhunjhunwala was examined before the adjudicating authority and there was material like record of M/s. Orian Laminators Limited showing supply of laminated film, which was not accounted by the assessee. There is huge material in support of the statements given, which is already quoted and that record is not at all touched and appreciated by the Appellate Authority. While deciding the appeal, the Tribunal ought to have touched that material and ought to have given reasons for setting aside the findings of the adjudicating authority but that is not done. In such a case, when the material of aforesaid nature is available, the burden or proof also shifts and assessee is required to explain the things made out by the material. For that, the provisions of Sections 106 and 114 of the Evidence Act can be used. This Court holds that the statements recorded under Section 14 of the Act of the witnesses, who were examined before the adjudicating authority can be used as admissions though they are retracted and they can be used in relation to the material, private documents recovered from the premises of the assessee and the premises of the suppliers, who had supplied raw material like laminated films - This Court further holds that the decision of the Appellate Tribunal is bad in law as the relevant material is not considered by the Appellate Tribunal - the decision of the Appellate Tribunal needs to be set aside. The matter needs to be remanded back - appeal allowed by way of remand.
Issues Involved:
1. Whether retracted statements recorded under Section 14 of the Central Excise Act, 1994 could have been used as admissions. 2. Whether the Tribunal committed an error in holding that there was no material for making the order and not considering the relevant material produced before the adjudicating authority. Issue-Wise Detailed Analysis: Issue 1: Use of Retracted Statements as Admissions The court examined whether retracted statements recorded under Section 14 of the Central Excise Act, 1994, could be used as admissions. The Tribunal had set aside the Commissioner’s order, which had confirmed the duty and penalties based on these statements. The Commissioner had considered the retracted statements along with corroborating material. The court noted that the retraction of statements by the respondents was not immediate, except for one individual, and many statements were consistent with the evidence found during the searches. The court cited precedents, including the case of K.I. Pavunny Vs. Asstt. Collr. (HQ.), C. EX. Collectorate, Cochin, which established that retracted statements could be used if there was material for general corroboration. The court concluded that the statements could be used as admissions in relation to the material and private documents recovered. Issue 2: Error by Tribunal in Considering Material Evidence The court scrutinized whether the Tribunal erred in its judgment by not considering relevant material evidence. The Commissioner had based his findings on extensive evidence, including private documents, statements of witnesses, and records from suppliers. The court listed detailed circumstances and evidence, such as the recovery of unaccounted cash, discrepancies in stock records, and the use of unaccounted raw materials. The Tribunal had failed to appreciate this material evidence, which corroborated the retracted statements. The court emphasized that the Tribunal should have considered the corroborative evidence and given reasons for setting aside the Commissioner’s findings. The court held that the Tribunal’s decision was flawed as it did not consider the substantial material evidence presented. Conclusion and Order The court concluded that the statements recorded under Section 14 of the Act could be used as admissions despite retraction, supported by corroborative material. It found that the Tribunal’s decision was legally unsound due to its failure to consider relevant evidence. Consequently, the court set aside the Tribunal’s decision and remanded the matter back to the Customs, Excise, and Service Tax Appellate Tribunal for fresh consideration. The Tribunal was directed to decide the appeal within four months from the receipt of the judgment. Pending civil applications were disposed of.
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