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TMI Blog2018 (3) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... f doubt goes in favour of the appellants. As the Revenue has not shown any positive evidence to corroborate the statements of the buyers/suppliers to show that the appellants were clearing stearic acid in the guise of HRBO flakes. In that circumstance, the allegations made against the appellants are not sustainable. Appeal allowed - decided in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... , he relied on the following decisions: (i) Hindustan Petroleum Corporation Ltd. vs. CCE-2015 (328) ELT 684 (Tri.-Mum.) (ii) Densons Pultretaknik vs. CCE-2003 (155) ELT 211 (SC) (iii) Ram Remedies Ltd. vs. CCE-2010 (254) ELT 170 (Tri.-Mum.). 4. It is his further submission that the samples were drawn in the month of July, 2002, no test report was supplied to the appellants and no evidence was on record to show that the department made any conclusive effort for the same. In the impugned order, the Commissioner himself has observed that It is also a fact that the true nature of product manufactured by the noticee could not be seen by naked eye. There is no evidence to show that the department has made any conclusive effort for the same. I am, therefore, of the opinion that manufacturer has also not made true and full declaration of the product being manufactured by them. 5. It is his further submission that the adjudicating authority has given finding that no efforts were made by the department to know correct classification, therefore, the allegation of suppression is not sustainable and consequently the extended period cannot be invoked in this case. To support his contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing HRBO flakes. He submits that during the course of investigation, it was found that the appellants have manipulated the invoices issued by the suppliers of the goods showing rice bran oil there was intention appellant to mis-declare the goods as HRBO flakes instead of stearic acid. 9. Heard both sides and considered the submissions. 10. On careful consideration of the submissions made by both sides, the case of the Revenue is that the appellant is clearing stearic acid in the guise of HRBP flakes and not paying duty. For that, the Revenue has relied upon the evidences namely, (a) the invoices issued by the suppliers of the goods, (b) the statements of the buyers and (c) test reports and alleged that as these facts suppressed from the department. 11. We have seen all the papers placed before us. The contention of the appellant is that the fact of manufacturing of HRBO flakes and stearic acid were in the knowledge of the department as the appellant has been filing the classification declaration of their products and also regularly filing ER-1 returns showing the clearances of HRBO under chapter heading 15.04 and stearic acid under heading 38.23 separately. In July, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case. Therefore, in the absence of necessary ingredients of Section 11AC of the Central Excise Act, 1944, penalty is not imposable on the appellants." 12. Further, in the case of Ram Remedies Limited (supra), this again has observed as under: "3. In this case, by the time the officers visited the unit, there was no manufacturing operation going on and the existing stock was said to be contaminated and, therefore, no samples could be drawn. Further, during the period when the appellant company was manufacturing the product, the departmental offices had never drawn the samples for testing even though the appellant filed classification declaration from time to time and had claimed classification under CETH 2710.90 in such declaration. The first major weakness in the department s case is non-testing of samples. Boiling point range and flash point of the products have been accepted by the appellants. There is no evidence forthcoming from the records of the case about the suitability of the products for use in spark ignition engine. The only evidence available is the statement of Shri A.K. Jain, the production-in-charge, who had admitted that the product had the boiling point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of three years when the appellant had filed classification declaration periodically, show cause notice invoking extended period cannot be issued after five years." 13. Further in the case of Densons Pultretaknik, the Hon'ble Apex Court has observed as under:- "7. Next question is - whether the Tribunal was justified in invoking first proviso to sub-section (1) of Section 11A. Prima facie, it is apparent that there was no justifiable reason for invoking larger period of limitation. There is no suppression on the part of the appellant-firm in mentioning the goods manufactured by it. The appellant claimed it on the ground that the goods manufactured by it were other articles of plastic. For the insulating fittings manufactured by it, the tariff entry was correctly stated. The concerned officers of the Department, as noted above, after verification approved the said classification list. This Court has repeatedly held that for invoking extended period of limitation under the said provision duty should not have been paid, short-levied or short-paid by suppression of fact or in contravention of any provision or rules but there should be wilful suppression. [Re : M/s. Easland Combines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iately detected as, as observed by the Commissioner in para 4.5 of the impugned order, even the registration certificate of the appellant mentioned them as a unit of Accurate Transformers Ltd., and in all the documents of the appellant, the transfer of goods from the appellant to Accurate Transformer Ltd. had been reflected as inter unit transfer. Neither there is any allegation nor evidence to prove that there was some collusion between the appellant and the Jurisdictional Central Excise officers. The short payment was detected when during visit by the audit team, the records maintained by the appellant and made available by them to the audit officers were examined by them, - something which should have been done by the Jurisdictional Range Officers and Divisional Assistant Commissioner/Deputy Commissioner much earlier. The assessee cannot be penalized by invoking extended period under proviso to Section 11A(1) for demand of duty and penal provisions of Section 11AC for indolence on the part of the jurisdictional Central Excise officers. Moreover Apex Court in a series of judgments - CCE v. Champher Drugs & Liniments reported in 1989 (40) E.L.T. 276 (S.C.); Padmini Products v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Despite that the merits of the case also seen by us, it is the case of the classification of goods sought on by the appellants. The classification cannot be decided by naked eye, therefore, the test report is relevant to decide the classification. The samples were drawn and tested at the time of investigation and report of CRCL is as under: The sample is in the form of pale yellow flakes having following characteristics Free fatty acid as Oleic acid - 58.57% by weight Acid Value 116.5% -116/52 Saponification value -189.88 Iodine value -7.17 Ash -0-10% Titre -60 deg C Test for Nickel in Ash -positive On the basis of findings as above, it may be seen that the sample characteristics of hydrogenated material. Note : However, other criterion i.e. nature and process of refining and actual usages may, therefore be ascertained before final assessment." 17. The said report is not conclusive to show that the goods in question are HRBO flakes or stearic acid. Further, the test reports of SASMIRA Institute have not given any finding only have given test report and composition thereof, therefore, it cannot be said that the samples drawn of HRBO flakes or stearic a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 9D (1), viz. i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. 14. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the gazetted Central Excise officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D (1), makes it clear that, the provisions contemplated in the sub-Section are 5 of 10 CWP No.12747 of 2016 mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 15. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the gazetted Central Excise officer, has every chance of having been rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offering the witness to the assessee, for cross- examination, can arise. 19. Clearly, if this procedure, which is statutorily prescribed by plenary Parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. 20. Reliance may also usefully be placed on para 16 of the judgment of the Allahabad High Court in C.C.E. V Parmarth Iron Pvt Ltd, 2010 (250) ELT 514 (All), which, too, unequivocally expound the law thus: "If the Revenue choose (sic chose ) not to examine any witnesses in adjudication, their statements cannot be considered 7 of 10 CWP No.12747 of 2016 as evidence." 21. That adjudicating authorities are bound by the general principles of evidence, stands affirmed in the judgement of the Supreme Court in C.C. V Bussa Overseas Properties Ltd, 2007(216) ELT 659 (SC), which upheld the decision of the Tribunal in Bussa Overseas Properties Ltd v C.C., 2001 (137) ELT 637 (T). 22. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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