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TMI Blog2014 (4) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant M/s. Wellsuit Glass & Ceramic Pvt. Limited are engaged in the manufacture of Ceramic Glazed Mixture known as Frit, falling under Chapter 32 of the Central Excise Tariff Act, 1985. The frit manufactured by the appellant is used as a major raw material for manufacturing Ceramic Glazed Tiles. Glazing involves applying one or more coats of glaze liquid on the tiles and such glazing is done on tiles by a continuous process either by high pressure spray or by directly pouring the glaze liquid. The glaze liquid is prepared from a glass derivative called frit and coloured dyes and additives by grinding in alumina ball mills. It is the case of the Revenue that manufacturers of ceramic glazed tiles were engaged in evasion of Central Excise duty. On the basis of the investigations done by DGCEI, proceedings were initiated against the present appellants. The DGCEI also conducted parallel investigations against the other frit manufacturers. In one of the search operations conducted by DGCEI on 17.07.2008 on a Ceramic Tile manufacturer, M/s. Sanyo Cera Tiles Private Limited (Sanyo for short), the DGCEI seized incriminating documents along with two computer pen-drives containing incrimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant to Sanyo. This aspect was also confirmed by the Director of Sanyo in his statement dated 25.02.2010. 2.1. On the basis of the inferences drawn in the Ajtak xyz records, the DGCEI conducted search and seizure operations on the factory of the main appellant on 26.8.2008 and documents/ records were resumed under Panchnama. Also, physical verification regarding gas consumption of the appellant was also carried out in the factory on 23/24.02.2010 under a Panchnama. Further, statements of the employees and the co-appellant, Shri B.M. Thakkar were recorded on the same day as well as on 10.03.2010 and 29.03.2010. Appellant Shri B.M. Thakkar was questioned about the Ajtak xyz records as well as method of physical verification of production and corresponding gas consumption. Investigations were also conducted in respect of the supplier of raw materials for manufacture of frit. The items in question were feldspar and quartz from M/s. Kanchan Ceramics. Statement of Shri Ashok C. Jain, Authorized signatory of M/s. Kanchan Ceramics was recorded wherein he has stated, inter-alia, that they have shown lower price than actual value in their invoice in respect of feldspar and quar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Even the statements of production supervisor and Managing Director are exculpatory. That these persons also denied and not admitted that the documents recovered from the premises of Sanyo indicate any undervaluation. That these persons have also not been confronted with the statements of any of the purchasers of frit. That the statements of purchasers have been retracted. In any view of the matter, it was argued by him that no evidence is found from their premises and there is nothing to substantiate Revenues case. That there is no independent corroboration of their statements that there is any under valuation. There is no proof of any cash payment or illicit receipt of payments when crores worth of cash transactions were alleged to have been made. He relied upon the following decisions to submit that such third party evidences and statements are not enough to substantiate a charge of clandestine removal, more so, when their cross-examination was not given:- (i) Charminar Bottling Company Pvt. Limited vs. CCE - [2005 (192) ELT 1057 (Tri.)] (ii) Rama Shyama Papers Limited vs. CCE - [200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f gas would vary on the quality of frit, raw material used, condition of Kiln, gas pressure, fluxes used etc. It was thus argued that there are various factors which affect the consumption of gas and there cannot be a fixed ratio of consumption of gas for a specific frit output. He also argued that in October 2007, there was a change in the management and the new management took a series of steps to improve quality of frit and made the gas consumption efficient. They also installed three new Refractory Kiln with greater production capacity and used superior refractories which were better maintained from time to time. He drew attention of the Bench to the fact that services of a Ceramic consultant was engaged to get better yield. He relied upon the submissions and records to show the purchase of new Kiln and generating set. It was due to these efforts that the ratio of gas consumption from 2008-09 onwards went down from 844 SCM/MT to 286 SCM/MT as indicated in Para 13.2 of order-in-original dated 10.05.2011. That before 2008 there was no generator available with appellant and every time there was a power failure, large quantities of gas was used in re-firing the Kiln. He produced do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 7.00 per kg. whereas the unofficial ledger for this transaction shows the value of the same as Rs. 24.00. He argued that main appellant kept on changing the production codes and that the raw materials used by the appellant was controlled by the commission agents whose addresses and contacts kept on changing and so the DGCEI could not investigate at their end. That one such raw-material supplier Kanchan Ceramics admitted to the undervaluation. In the context of clandestine removal, he argued that gas consumption was recorded by ONGC staff and, therefore, the same could not be manipulated by the appellant. According to him, there was no material change in the technology adopted to increase the yield. He relied upon the unofficial ledgers of Sanyo again to show unaccounted purchases. He submitted that though the study by DGCEI showed 389 SCMs of gas used per MT of frit, actual gas consumption per Ton came down to 216 SCMs/ MT and therefore, to even out seasonal variations, an average consumption of 318 SCM/ MT was adopted and clandestine removals were worked out accordingly. Learned AR made detailed submissions as to why the records from the pen drive can be relied upon and that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of providing, in any prosecution for an offence under this Act, the truth of the facts which it contains:- (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without any amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceedings before a Court, as they apply in relation to a proceeding before a Court. 5.1. The above provisions of Section 9D were examined by Delhi High Court in the case of Basudev Garg vs. Commissioner of Customs [2013 (294) ELT 353 (Del.)] and following law was laid down after considering the judgments of Apex Court on the issue of cross-examination:- 14. The Division Bench also obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not warranted. 5.2. In view of the above legal position and the facts of this case Adjudicating authority was not correct in disallowing the cross-examination of persons listed in Para 10.1 of OIO dated 10.05.2011, except cases covered by Section 9D of the Central Excise Act, 1944. 6. On the issue of clandestine removal of frit, based on the gas consumption of the main appellant, it is observed from Para -13.2 of the order-in-original dated 10.05.2011 that records maintained by main appellant show the gas consumption for making 1 MT of frit from 844 SCM to 286 SCM. It has been contested by the appellant that gas consumption varied from season to season, from one quality of frit to other quality of frit, use of better technology etc. It has also been brought on record that after change in the management in Oct 2007 and installation of new furnaces and new refractories, the gas consumption has reduced. Further appellant has also brought on record that due to expert consultations and use of certain fluxes also the gas consumptions per MT of frit have come down. Evidences were also brought on record during the course of hearing regarding installation of an Electricity Generator ..... X X X X Extracts X X X X X X X X Extracts X X X X
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