2017 (8) TMI 1104 - AT - Central Excise

Clandestine removal of the goods - it was alleged that the appellant has exceeded the SSI exemption limit and therefore on the excess amount of clearances after exhausting the SSI limits demand of duty was confirmed and penalty was imposed - whether the statement of appellant is admissible as an evidence in terms of provisions of Section 9D of the Act or not? - Held that - Admittedly in the case in hand examination in chief has not been conducted therefore the statements of the appellant during the course of investigation is not admissible evidence - reliance placed in the case of Commissioner of Central Excise Delhi-I M/s Kuber Tobacco India Ltd Shri Dhanpat Singhee Director Shri Chatar Singh Baid Shri Vikas Malu Versus M/s Kuber Tobacco India Ltd Commissioner of Central Excise Delhi-I 2016 (4) TMI 622 - CESTAT NEW DELHI where it was held that there is no requirement in the Act or Rules nor do the principles of natural justice and fair play require that the witnesses whose statements were recorded and relied upon to issue the show cause notice are liable to be examined at that stage. Whether the charge of clandestine removal can be proved on the basis of statements of appellant or not? - Held that - none of the procedure has been followed to allege clandestine removal of the goods against the appellant. Moreover the 7 Kucha Slips which were recovered during the investigation are the part of the invoices issued by the appellant for clearances of the goods. Admittedly all the clearances made by the appellant falls within the threshold limit of SSI exemption N/N. 8/2003-CE dated 01.03.2003. Therefore in the absence of any corroborative evidence the Revenue has failed to prove the charge of clandestine removal. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Admissibility of appellant's statement as evidence under Section 9D of the Act.
2. Proof of clandestine removal based on appellant's statements.

Analysis:

Issue 1:
The appellant contested the admissibility of their statement as evidence, citing the provisions of Section 9D of the Act. The appellant argued that the statements were retracted and not supported by examination-in-chief, as required by law. Referring to precedents like the case of Kuber Tobacco India Limited, the appellant emphasized the necessity of following procedural requirements for statement admissibility. The Tribunal concurred, highlighting that examination-in-chief was not conducted, rendering the statements inadmissible based on legal precedents. The appellant's argument was supported by judicial pronouncements from the Hon'ble Punjab & Haryana High Court, further reinforcing the inadmissibility of the statements.

Issue 2:
Regarding the charge of clandestine removal, the Revenue relied on 7 Kucha Slips and a recovered paper as evidence. However, the Tribunal found the evidence insufficient to prove clandestine removal. Citing guidelines from the case of Arya Fibers Limited, the Tribunal outlined the fundamental criteria for establishing clandestine manufacture and clearance. Since the Revenue failed to follow the prescribed procedure and lacked corroborative evidence, the charge of clandestine removal against the appellant was deemed unproven. Consequently, the impugned order confirming the demand was set aside, and the appeal was allowed with consequential relief.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT CHANDIGARH highlights the legal arguments presented by both parties, the application of relevant legal provisions, and the Tribunal's findings on each issue raised in the case.