2015 (10) TMI 2354 - AT - Central Excise

Duty demand - Clandestine removal and manufacture of goods - Allegation based predominantly on the basis of 62 reconstructed copies of delivery challans-cum-proforma invoices - held that - Reconstructed challans were not recovered from the premises of any of the appellants. First Appellate authority in his order has also observed that nearly 20 of these reconstructed documents are fake or incorrect and accordingly dropped demand of ₹ 10,69,486/- out of total demand. Further, first Appellate Authority carried out detailed inspection during the proceedings before him and observed in Para 5.4.2 of the OIA dt 29.7.2011 that standing alone these documents have no evidentiary value as these are not found at the factory or recovered during the search. Regarding admissibility of documents whose origin is not disclosed it has been held by CESTAT, Delhi, in the case of Pan Parag India Ltd vs CCE 2012 (6) TMI 100 - CESTAT, NEW DELHI that documents whose origin is not known cannot be relied upon for establishing a case. Once the author of the documents is uncertain or documents are unsigned then the same cannot be put to test and scrutiny of an aggrieved person. Cross examination of the person who created these documents cannot be allowed to the appellants, as the source has no been identified. It has also not been brought on record as to from where main appellant procured the raw-material for manufacture of clandestinely cleared goods as held by Allahabad High Court in the case of Continental Cement Co Vs UOI 2014 (9) TMI 243 - ALLAHABAD HIGH COURT . No Confirmatory statements of the buyers are available to corroborate the authenticity of 62 reconstructed documents and the supply of finished goods contained therein. All such persons have stated that they have not received any goods against the reconstructed invoices. - 62 reconstructed challans-cum-proforma invoices cannot be relied upon for fixing the case of clandestine manufacture and clearance of finished goods against the appellants. No variation in the stock of raw-materials/finished goods was noticed in the factory of the main appellant during the search. No finished goods and cash have been seized anywhere in transit or in the premises of the buyers who disowned having received any such goods. No investigation has been done in order to refute the claim of the main appellant, by recording the statement of transporter or the supplier of trader from whom the goods have been claimed to be purchased from JBMC. It is a well established law that documentary evidence will prevail over an oral evidence especially in these proceedings where cross examination of such witness is not provided. - documentary evidence of DXN having emphatically held out through their marketing agency (Daehsan) and the latter s stockists/distributors before the general public that their products viz. RG & GL capsules were strictly herbal food supplements and recommended as drugs stands unrebutted and overrides an oral evidence to the contra given by any Daehsan functionary or stockist/distributor in cross-examination. It is trite law that documentary evidence would prevail over oral evidence. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reconstructed delivery challans-cum-proforma invoices.
2. Admissibility of statements recorded during the investigation.
3. Demand of Rs. 3,48,740/- based on specific delivery challans.
4. Cross-examination of witnesses and evidentiary value of documents.

Issue-Wise Detailed Analysis:

1. Validity of Reconstructed Delivery Challans-Cum-Proforma Invoices:
The case against the main appellant was based on 62 reconstructed copies of delivery challans-cum-proforma invoices. The appellant argued that these documents were neither original nor properly authenticated, and their source was unknown. The first appellate authority partially agreed, noting that nearly 20 of these documents were fake or incorrect and dropped a portion of the demand. The tribunal supported this view, citing the lack of evidentiary value of documents whose origin is not disclosed, as established in cases like *Pan Parag India Ltd vs CCE* and *CCE Jaipur vs Welcure Drugs & Pharmaceuticals Ltd*. The tribunal concluded that these reconstructed documents could not be relied upon for establishing clandestine manufacture and clearance.

2. Admissibility of Statements Recorded During the Investigation:
The appellant contended that statements recorded during the investigation could not be used against them as cross-examination of the witnesses was not allowed, violating Sec. 9D of the Central Excise Act 1944. The tribunal upheld this argument, referencing case laws such as *J&K Cigarettes Ltd vs CCE* and *Basudev Garg vs CC*, which emphasize the necessity of cross-examination for the admissibility of such statements. The tribunal noted that the confessional statements alone, especially when retracted, could not form the basis for the demand without corroborative evidence.

3. Demand of Rs. 3,48,740/- Based on Specific Delivery Challans:
The demand was based on two delivery challans dated 23/4/2007. The appellant claimed these goods were purchased by their trading company and temporarily stored in their factory due to renovation. The tribunal found documentary evidence supporting this claim, including purchase records from M/s Mahalaxmi Metals and transportation details. The tribunal emphasized that documentary evidence should prevail over oral statements, especially when cross-examination is not provided, as supported by the case law *DXN Herbal Mfg (I) Pvt Ltd vs CCE*. The tribunal concluded that the demand based on these challans was not sustainable.

4. Cross-Examination of Witnesses and Evidentiary Value of Documents:
The tribunal highlighted the importance of cross-examination for the admissibility of statements as per Sec. 9D of the Central Excise Act 1944. It noted that without the opportunity for cross-examination, the statements recorded during the investigation lose their evidentiary value. The tribunal also pointed out that no corroborative evidence, such as statements from transporters or buyers, was provided to support the reconstructed challans. The tribunal referenced multiple case laws, including *CCE vs Saakeen Alloys Pvt Ltd*, to support the view that documentary evidence must be clear and reliable, and unsupported statements cannot establish a case of clandestine removal.

Conclusion:
The tribunal allowed the appeals filed by the appellants and rejected the appeal filed by the Revenue. It concluded that the reconstructed challans-cum-proforma invoices and the statements recorded during the investigation could not be relied upon without proper cross-examination and corroborative evidence. The tribunal emphasized the precedence of documentary evidence over oral statements and the necessity of clear, authenticated documents to establish a case of clandestine manufacture and clearance.