2018 (10) TMI 266 - HC - Central Excise

Clandestine removal - Remand of the case - power of Tribunal to remand the case - evasion of duty - evidence available on record not discussed with - admissibility of statements available on record as evidence. Whether the Tribunal has committed an error of law by remitting the matter back to the Commissioner for de novo inquiry on the issue concerning evasion of duty amounting to ₹ 9,94,65,997/- without discussion of evidence available on record which prevailed upon the Commissioner to drop this part of the demand? - Held that - The Tribunal having broadly considered the nature of evidence brought before the Adjudicating authority, decided to remand the case. There is nothing in those finding that any of the parties were not afforded opportunity of proper hearing to lead oral or documentary evidence. The Tribunal also directed towards necessity of collection of new evidence by granting opportunity to the parties before the Adjudicating authority. We also do not find that an occasion for remand arose because before CESTAT, either the assessee or the Revenue came out with some new relevance in the form of oral and documentary evidence necessitating, in the interest of justice, a de novo inquiry - What, in fact, the Tribunal has done is to remand the case with the direction to the Adjudicating authority to review its own order and nothing else. In our considered opinion, this course of action, in the facts and circumstances of the present case, was not available under the law, even assuming that in view of provision contained in Section 35-C of the Act of 1944, the Tribunal has implicit power and jurisdiction to remand the case for afresh adjudication. The Tribunal while hearing an appeal against an order of Adjudicating authority, no doubt is empowered to confirm, modify or annul the decision or order appealed against. It is also empowered to refer the case back to the authority which passed order with such directions as the Tribunal may think fit - However, such power has to be exercised on satisfaction that a case of remand is made out. The power of remand cannot be taken recourse to only for the purposes of directing the Adjudicating authority to review its own order by entering into re-appreciation of oral and documentary evidence which was already appreciated by it, followed by findings thereon. The Tribunal, no doubt, is not circumscribed by the rules relating to remand in civil cases which are governed by the provision contained under Order XLI Rule 23-A, 24 & 25 CPC. - Nevertheless, remand would be permissible only when it has become necessary to do so. There may be cases where the parties had complained of violation of principle of natural justice or that it was not allowed to lead any oral and documentary evidence which, in the opinion of the Tribunal, was relevant. There may be other cases where the Tribunal forms an opinion that the matter required further enquiry by the Adjudicating authority. These, instances are not exhaustive but only indicative as regards the circumstances when an order of remand may become necessary. Tribunal had power to remand the case, in the circumstances, exercise of power was not justified in law as the Adjudicating authority had elaborately examined the issue by taking into consideration the entire material on record. It was for the Tribunal to examine the legality and validity of such finding on the grounds raised by the Revenue and arrive at its own finding as to whether the Adjudicating authority was correct in law and on fact in reaching upon the conclusion that demand of duty of ₹ 9,94,65,997/- was liable to be dropped - the part of the order of the Tribunal to the extent it directs remand of the case in the matter of consideration of leviability of demand of ₹ 9,94,65,997/- is set aside - substantial question of law decided against the Revenue and in favour of the Assessee. Admissibility of a statement recorded during investigation - Whether the Tribunal is justified in relying upon the admission made by the AGM of the assessee company to sustain the order of imposition of duty to the tune of ₹ 1,51,44,426/- more so when this part of the demand was also based on the same set of evidence on which the demand of ₹ 9,94,65,997/- was dropped by the Commissioner? - Held that - In the present case, however, the admitted facts are that the statements of two Assistant General Managers of the Assessee company namely Shri R.K. Bhadoria, AGM (Logistics) and Shri S.N. Jha, AGM (Excise) which were recorded during investigation and which the investigator used as their admission of clandestine removal, had retracted their statement by filing their respective affidavit also. The order passed by the Adjudicating authority shows that both of them were cross-examined also. However, we do not find any satisfaction recorded by the Adjudicating authority in terms of statutory requirement of Section 9-D (1)(b) of the Act of 1944. Therefore, the twin requirement before the statement become admissible as relevant pieces of evidence where they are used as corroborative piece of evidence or as admission, are that the person who made the statement is examined as witness before the Adjudicating authority and secondly, that the Adjudicating authority forms an opinion that having regard to the circumstances of the case, the statement should be admitted in the evidence, in the interest of justice - the statement of two Assistant General Managers namely Shri R.K. Bhadoria and Shri S.N. Jha could not be treated as admission of clandestine removal. However, we find that the finding recorded by the Adjudicating authority and confirmed by the Tribunal is not solely based on the so called admission but based on other evidence on record which we were taken through during the course of argument, as contained in paras 5.4, 5.5, 5.6, 5.7 & 5.8. Though, it was strenuously urged before us that once statements recorded during investigation are excluded from consideration as admission of clandestine removal, the matter would further require a relook as to whether on the basis of the remaining evidence, the finding could be sustained in law, after giving our anxious consideration, we are unable to accept the submission - apart from the statement recorded during investigation, there were other incriminating evidence and circumstances relied upon by the Adjudicating authority as well as the Tribunal to confirm demand of duty of ₹ 1,51,44,426/- and it is not a case that once the statement is excluded from consideration as admission of clandestine removal, the conclusion of clandestine removal, would fall to the ground - substantial question of law decided against the assessee and in favour of the Revenue. Appeal disposed off.

Summary

Issues Involved:
1. Legality of the Tribunal's remand order without proper discussion of evidence.
2. Justification of the Tribunal's reliance on the AGM's admission to sustain a duty demand.
3. Legality of the penalty imposed on the Vice President of the Assessee company.

Issue-wise Detailed Analysis:

1. Legality of the Tribunal's Remand Order:

The Tribunal remanded the case to the Adjudicating authority for a fresh examination of the evidence regarding the evasion of duty amounting to ?9,94,65,997/-. The Tribunal justified the remand by stating that the Bilty Nakal Register and related statements required proper examination. The High Court found that the Adjudicating authority had already conducted a detailed scrutiny of oral and documentary evidence, including the Bilty Nakal Registers and statements from the Assessee's officers. The Adjudicating authority concluded that there was no corroborative evidence to support the allegations of clandestine removal. The High Court held that the Tribunal's remand order was not justified as it essentially directed the Adjudicating authority to review its own findings without new evidence or a violation of natural justice. The Tribunal should have examined the legality and validity of the Adjudicating authority's findings rather than remanding the case. The High Court set aside the Tribunal's remand order and restored the Revenue's appeal for a decision on merits.

2. Justification of the Tribunal's Reliance on the AGM's Admission:

The Tribunal upheld the duty demand of ?1,51,44,426/- based on the statements of the Assessee's Assistant General Managers (AGMs), which were recorded during the investigation and later retracted. The High Court examined the admissibility of these statements under Section 9-D of the Central Excise Act, 1944. The Court noted that for such statements to be admissible, the person who made the statement must be examined as a witness before the Adjudicating authority, and the authority must form an opinion that the statement should be admitted in the interest of justice. In this case, although the AGMs were cross-examined, the Adjudicating authority did not record any satisfaction as required under Section 9-D(1)(b). Therefore, the statements could not be treated as admissions of clandestine removal. However, the High Court found that the duty demand was also supported by other incriminating evidence and circumstances, not solely based on the statements. Consequently, the High Court upheld the Tribunal's decision to sustain the duty demand.

3. Legality of the Penalty Imposed on the Vice President:

The Vice President of the Assessee company challenged the penalty imposed on him. The High Court noted that no substantial question of law was framed regarding the penalty. The penalty was linked to the confirmation of the duty demand. Since the High Court did not interfere with the confirmation of the duty demand of ?1,51,44,426/-, the appeal regarding the penalty also failed. The High Court dismissed the appeal of the Vice President.

Conclusion:

The High Court allowed the Assessee's appeal (TAXC No.164 of 2017) in part, setting aside the Tribunal's remand order and restoring the Revenue's appeal for a decision on merits. The High Court upheld the Tribunal's decision to sustain the duty demand of ?1,51,44,426/-. The appeals regarding the penalty (TAXC No.165 of 2017 and TAXC No.167 of 2017) were dismissed.