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TMI Blog2017 (4) TMI 1288X X X X Extracts X X X X X X X X Extracts X X X X ..... s factory at GT Road, Shahdara, New Delhi and holds a Central Excise Registration. It is engaged in the manufacture of 'Maruti', 'Ajeet' and 'Kaveri' branded Gutkha, falling under Chapter Sub Heading 2404.49 of Central Excise Tariff Act, 1985 ("CETA"). It is stated that the commodity was covered under the products to be assessed based on Maximum Retail Price ("MRP"), in terms of Notification No.13/2002 CE (NT) dated 1st March, 2002 as amended. The subject product i.e. Pan Masala contain Tobacco (Gutkha) was entitled for 50% abatement on the MRP. The MRP of 'Maruti' and 'Ajeet' branded Gutkha was Rs. 0.50 per pouch and 'Kaveri' branded Gutkha was Rs. 1/- per Pouch. The Respondent was a partnership firm. Its partners are Mr Varun Gupta and Smt. Deepa Gupta. 5. On the basis of the intelligence gathered to the effect that the Respondent was manufacturing and clearing excisable goods clandestinely without payment of Central Excise duty by suppressing the production, simultaneous searches were undertaken by the Directorate General Central Excise Intelligence ("DGCEI") on 7th October, 2004 at several premises including some in Karnataka. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the proviso to the Section 11A (1) of the CE Act for the extended period inasmuch as they had "deliberately suppressed the fact of their activities from the department with an intention to evade payment of Central Excise duty and contravened the provisions of the act as well as the rules made thereunder". It was further concluded that they had also rendered themselves liable to mandatory penalty under Section 11 AC of the CE Act, 1944 and interest under the provisions of Section 11 AB thereof. They had also contravened the provisions of Rule 4, 6, 8 10, 11 and 12 of the CE Rules 2001 as well as 25 thereof. 10 A further SCN was accordingly issued on 26th October, 2006 by the Additional Director, DGCEI, Bangalore. An SCN was also issued to Mr Varun Gupta, Mr Pawan M Prabhu, Mr Avinash Baliga and Mr Suresh Rao. 11. Inter alia, before the Adjudicating Authority i.e., the Commissioner of Central Excise (CCE) it was pointed out on behalf of the Respondent that the record/documents recovered from the third parties could not be relied upon for substantiating the allegations against the Respondent of clandestine removal. Likewise, the said finding could not be sustained only on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas the original statement was recorded on 30th January, 2006. Three others retracted their statements by filing affidavits. The Commissioner rejected all these affidavits on the ground that the statements made in the first instance were voluntary, while the affidavits appeared to have been given be under compulsion. Thereafter, the material documents seized were analyzed including the statements made (which were subsequently retracted) and on merits the allegations in the SCN were held to be proved. As a result, the CCE confirmed the demand of Rs. 3,73,39,131/- and penalty of an equal amount apart from personal penalty of Rs. 5 lakhs each on Mr Pavan M Prabhu, Mr Avinash Baliga and Mr Suresh Rao. 15. Against the above order, appeals were filed before the CESTAT by the Respondent and the aforementioned persons. The said appeal were allowed by the CESTAT by the common impugned order dated 15th January, 2016. 16. In the impugned order, the CESTAT noted that the case of the Department against the Respondent hinged on (a) Railway receipts (b) diaries recovered from the premises of dealers /distributors; and c) on the basis of statements of Varun Gupta, Pawan M Prabhu, Avinash M Bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h statements. That could be done only by way of cross-examination. The view taken by the CESTAT could not be said to be contrary to law. He submitted that in any event, the impugned order does not give rise to any substantial question of law. 21. The Court has considered the above submissions. The Court is unable to find any justifiable reason for the Department to deny the Respondent the opportunity of cross-examining the persons who made statements against the Respondent during the course of the investigation. This was all the more necessary since the statements made by Mr Varun Gupta and other noticees during investigation stood retracted by their subsequent affidavits. Unless the makers of the statements were not available for some reason, there was no justification to simply deny the right of cross-examination. 22. In this connection, it is necessary to refer to Section 9D (1) (a) of the CE, 1944 which incorporates the rule of natural justice. The relevant portion of the said provision reads thus: "(1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As regards the request for cross-examination of the other witnesses, the adjudication order again dealt with this perfunctorily. It simply stated in para 36 that if the request made by the Appellant in the letter dated 31st January 1985 for cross-examination of "such a large number of persons was granted it would have take the case to a non-ending process." This cannot be a justified reason within the meaning of Section 9D of the Act to deny that opportunity to the Appellant. ..... 46. The CCE also wrongly proceeded on the basis that there was no right of cross-examination overlooking the fact that Section 9D of the Act restricts the grounds on which the cross examination can be denied. It also overlooks the decision of the Supreme Court in Swadeshi Polytex Ltd. v. Collector of Central Excise (2000) 122 ELT 641 (SC) and Laxman Exports Ltd. v. Collector of Central Excise (2002) 143 ELT 21 (SC) to the effect that when a statement is used against an Assessee an opportunity of cross-examining the persons who made those statements ought to be given to the Assessee. 47. In GTC Industries Limited v. Collector of Central Excise, New Delhi 1997 (94) ELT 9 (SC), the Supreme Court has f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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