2015 (11) TMI 214 - AT - Central Excise

Clandestine manufacture and removal of goods - Retraction of confession statements - Violation of principle of natural justice - Denial of cross examination - Held that - contents of the statements provides lot of details and such details can be known only to the person who is involved in day to day activities of organisation and not to officers. Further in the retraction letter it is not specified what portion of a statement was incorrect. We also note that the so called retraction letter were posted to DGCEI Delhi and not to any officer in Mumbai. This itself shows that appellant No.2 did not want any enquiry on the duress, etc. Further during second statement, the appellant No.2 did not speak of any retraction and also confirmed the contents of first statement. Under the circumstances, we are of the view that these retractions are of no consequence. Even if relied upon the statements of the appellant No.3, 4 & 5 are ignored, case against appellant No.1 & 2 will stand based upon documents and statement of appellant No.2. Similarly, documents recovered from appellant No.3 s office is sufficient to impose penalty on appellant No.3. Statements of appellant No.4 & 5 along with documents recovered are sufficient for imposition of penalty on them. - denial of cross examination of co-noticees/accused does not result in violation of natural justice and cannot be insisted on as a matter of right by them. Otherwise each of accused can claim right against testimonial compulsion under Article 20 (3) of Constitution of India and thereby by their joint effort bring about failure of natural justice. - However, imposed penalty is reduced - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Legitimacy of the demand based on documents recovered from appellant No.3's office.
2. Validity of retracted statements by appellant No.2.
3. Denial of cross-examination of witnesses.
4. Investigation at appellant No.1's factory.
5. Imposition of penalties on appellants No.4 & 5.

Detailed Analysis:

1. Legitimacy of the demand based on documents recovered from appellant No.3's office:
The case was primarily based on documents (diaries No. 23, 24, and 26) recovered from appellant No.3's office in Mumbai, which detailed the purchase of MS ingots, both with and without payment of duty. Despite the appellant's argument that the office was shared by three firms, the tribunal found that the Director of appellant No.3, Shri Pravesh Gautam, had explained the contents of the diaries and confirmed the details during the investigation. The tribunal rejected the plea that the entries pertained to other firms, noting that the appellant did not specify any such entries during the investigation.

2. Validity of retracted statements by appellant No.2:
The tribunal examined the retraction letters and found them to be of no consequence. The retraction letters lacked specifics on what portions of the statements were incorrect or recorded under duress. Additionally, the retractions were sent to DGCEI Delhi instead of the investigating officers in Mumbai, indicating no intent for an inquiry into the duress claim. The tribunal held that the statements of appellant No.2 and Shri Pravesh Gautam were true and correct, and could be used as evidence.

3. Denial of cross-examination of witnesses:
The tribunal observed that the request for cross-examination of co-noticees (appellants No.3, 4, and 5) was not a matter of right. Citing precedents, it was noted that allowing cross-examination of co-noticees could lead to a situation where each accused could refuse cross-examination under Article 20(3) of the Constitution, thereby obstructing justice. The tribunal concluded that denial of cross-examination did not prejudice the appellants' case, as the evidence against them was sufficient without the need for cross-examination.

4. Investigation at appellant No.1's factory:
The tribunal dismissed the argument that no investigation was conducted at appellant No.1's factory. It was noted that appellant No.2, the director of appellant No.1, had admitted to the offence, and it is a settled principle that what is admitted need not be proved. The tribunal referenced the Supreme Court's decision in CCE, Madras Vs. System & Components Pvt. Ltd., to support this view.

5. Imposition of penalties on appellants No.4 & 5:
Appellants No.4 and 5, who acted as brokers, were penalized for their role in the clandestine clearance of goods. The tribunal found that the penalties imposed were on the higher side and reduced the penalty amount from Rs. 1 lakh to Rs. 50,000 for each appellant. The tribunal rejected the argument that the case against them was invalid due to the retraction of statements by appellants No.2 and 3.

Conclusion:
The appeals by appellants No.1, 2, and 3 were dismissed, affirming the duty, interest, and penalties imposed. The appeals by appellants No.4 and 5 were also dismissed, except for a reduction in the penalty amount.