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TMI Blog2018 (5) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement were recorded were not examined by the adjudicating authority - such examination-in chief was not conducted by the original authority and therefore, the question of cross-examination does not arise. Therefore, no purpose shall be achieved by remanding the matter back to the original authority for denovo adjudicating. Further, the allegation against M/s.BSPL were that they did not receive inputs but availed the cenvat credit only on the strength of invoices without receipt of inputs. The admitted facts are that the appellant, M/s. BSPL had manufactured the goods and paid Central Excise duty on the same and there are no investigation as to from where the inputs were procured by M/s. BSPL for manufactured of goods, if they had received only the invoices and no inputs from M/s.BSPL is established in proceedings - The appeal filed by the assessee is to be allowed. In view of the majority order, the appeal filed by M/s Bhupendra Steel Pvt. Ltd. is allowed and the appeal filed by the Revenue is rejected. - Appeal No. E/2328/2009, E/2617/2009 -DB - A/62244-62245/2018-EX[DB] - Dated:- 5-9-2017 - Mrs. Archana Wadhwa, Member (Judicial) And Mr. Devender Singh, Member (Tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dispatching any goods to them so as to enable such recipient to avail cenvat credit on the invoices so issued by them. It is seen that the proceedings were initiated against M/s. HSAL alleging clandestine removal of their final product SS flats, by way of issuance of show cause notice. M/s. HSAL approached the Settlement Commission and the dispute at their end was settled by the order of the settlement commission dated 27.02.2008. 3. Inasmuch as the investigations conducted at the end of HSAL led to the allegation that they were only issuing the invoices in respect of various raw materials so as to cover the clandestine clearance of SS flats manufactured by them, further enquiries were conducted at the recipient end i.e. against the assessee. During the course of investigations, the DGCEI recorded the statements of various transporters which were to the effect that no material stands transported by them from M/s. HSAL either to the assessee factory or to M/s. A.G. As the assessee was receiving various raw materials from M/s HSAL, either directly or through a registered dealer M/s. A.G. investigations were also conducted at the end of M/s. A.G. The scrutiny of the documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the goods to Jodhpur. He also further submitted that no GRs was ever prepared for transportation of the goods from the factory of the M/s. HSAL to the premises of the assessee M/s. BSPL or M/s. A.G. Similarly, statement of one Shri. Jaspal Singh, partner of another transport company M/s. Delhi Calcutta Road Carriers was recorded on 19.04.2006 vide which he deposed that all the vehicles sent by them to M/s. HSAL were only used for transportation of S.S. Flats from the factory of the M/s. HSAL to various places in Delhi; that they never transported any goods from the factory of the M/s. HSAL to M/s. BSPL or M/s. A.G. Company. He was also shown a chart of various vehicles shown as being used for transportation of various consignments dispatched by M/s. HSAL to the assessee (BSPL) or to M/s. A.G. Company. It was stated by him, after going through the chart that he finds that his services were never used for transporting these consignments. Further statement of Shri. Jaspal Singh were recorded on 25.07.2007 wherein, he took the same stand that his vehicles were never used for transporting the consignments from the factory of M/s. HSAL to the assessee's company (M/s. BSPL) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of Shri. Arun Ghai, another director of the assessee's company was recorded on 25.04.2008. On being confronted with the various charts in respect of the consignments of the raw materials purchased by them from M/s. HSAL, he deposed that the statement of Shri. Rajan Ghai, another director is the correct statement and they have actually received and utilised the raw material in the manufacture of their final product. On being shown the statement of Shri. Ramesh Rawat and the various transporters, he stated that the statement of all these persons does not reflect the correct position. 9. On the above basis and on the basis of various statements recorded during the course of investigation and scrutiny of the records seized from various premises, Revenue entertained a view that the assessee had availed the cenvat credit of duty paid on various raw materials received from M/S. HSAL on the basis of the invoices only, without actually receiving the inputs. Accordingly, show cause notice was issued against the assessee as also against other co-noticees proposing to deny the cenvat credit of ₹ 2,46,45,831/- and recovery of the same on the allegations of the credit havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence produced by the assessee, the Revenue's case of non receipt of raw materials does not stand. For the above proposition, they relied upon various precedent decisions of the Tribunal as also of the Courts. 11. Vide the present impugned order the Commissioner held against the assessee in respect of non receipt of AS/MS Steels and confirmed the duty on the said part. However, the adjudicating authority observed that there is no evidence in respect of the allegations of non receipt of various crome material and accordingly duty to the extent of 1.10 crore was dropped. While confirming the duty Commissioner observed that there is no requirements to exceed to the assessee's request of cross examination of various witnesses inasmuch as the said statements were recorded under Section 14 of the Central Excise Act and were never retracted. As such, the same are admissible as evidence, without allowing cross examination. For above proposition, reliance was placed on some decisions of the Hon'ble Supreme Court as also of the Tribunal. It was also observed that in most of the cases same vehicles were used for transportation of the raw material to Faridabad, where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The said order of the Commissioner stands impugned before us by the assessee as also by the Revenue. 12. We have heard Shri. K.K. Anand, Advocate appearing for the assessee and Shri. H. Singh, AR appearing for the Revenue. 13. The assessee's main contention is that the Revenue's case is primarily and mainly based upon the statements recorded during the course of investigations. The adjudicating authority has placed reliance on the statement of Shri. Ramesh Rawat, Executive Director of M/s. HSAL as also the various transporters. It is seen that the assessee had asked for cross examination of the said witnesses, which stand strongly relied upon by the revenue. Such cross examination stands rejected by the commissioner on the ground that inasmuch as the statements have been recorded under Section 14 of the Central Excise Act and every enquiry conducted under Section 14 of the Central Excise Act shall be deemed to be a judicial proceedings within the meaning of Section 193 and section 228 of penal code, 1860. For the above proposition, he has relied upon the decision of the Hon'ble Supreme Court in the case of Kanugo Vs. CCE, Calcutta reported in 1983 (13) ELT 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the truth of facts contained therein. If the circumstances are absent, therefore, the statements which has been made during the course of inquiry/investigation, before a gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the fact contained therein. For the above purpose, the Tribunal relied upon the Hon'ble Delhi Court decision in the case of J.K Cigarettes-2009 (242) ELT 189 (Delhi) wherein it was observed that in the absence of circumstances stipulated in Section 9D of the Central Excise Act, the adjudicating authority was bound to follow the binding precedent and erred in rejecting the request of the appellant to examine the witnesses and to offer them for croos-examination. Accordingly, the Hon'ble High Court held that there was no reason to justify the rejection of request made by the appellant to the adjudicating authority to summon witnesses for examination and to offer them for cross-examination, if these statements were to be considered as relevant and admissible, in the interest of justice. As such it was held that the truth of facts contained in any statement, recorded before the gazetted officers has to be proved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was pleased to hold that: 8. It will be pertinent at this stage to refer to section 138 of the Indian Evidence Act which provides: 138 Order of examination.:- Witnesses shall be first examined in chief then (if the adverse party so desires) corss-examined, then (if the party calling him so desires) re-examined. The examination and cross examination must relate to relevant facts but the cross-examination need not be cofined to the facts to which the witness testified on his examination-in-chief. Directions for re-examination.- The re-examination shall be directed to the explanation of matters referred to in cross-examination; and if new matter is, by permission of the court, introduced in re-examination, the adverse party may further cross-examine upon that matter. 10. We therefore find force in the submission of the ld. Counsel for the assessee. We find no reason to justify rejection of request made by the assessee to the adjudicating authority in light of section 138B of the Act, to summon witnesses for examination and to offer them for cross-examination if their statements were to be considered as relevant and admitted in evidence in the interest of j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross examination of the statement makers under Section 14 of the Central Excise Act is required but examination-in-chief is also required to be done, in case, the revenue intends to rely upon the said statements. As such, reasoning of the adjudicating authority that the cross examination is not required as the statements were recorded under section 14 of the Central Excise Act cannot be appreciated. It may not been out of place to mention that all the statements recorded during the investigation by the Revenue's officers are recorded under section 14 of the central Excise Act and if the reasoning of the adjudicating authority is appreciated, no cross examination would ever be available to the assessee. Commissioner is forgetting that the statements of the Directors of the appellant were also recorded under Section 14, but the same are being sidelined by him. In any case, the issue having been decided by the Hon'ble High Court, the adjudicating authority, was under legal obligation to conduct examination-in-chief and to provide the said deponents for cross examination before he could legally rely upon the said statements. By not doing so the adjudicating authority has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that where the inputs are duly entered in the statutory records and are used in the manufacture of final products cleared on payment duty, cenvat credit cannot be dis-allowed. The same reasoning would apply to the RG-23A entries of AS/MS products. Otherwise, also we note that the revenue's case is solely based upon the statements of the transporters wherein they have denied having transported any consignments to the assessee's premises or to premises of M/s. A.G. international. As per the statements of the directors of the assessee, they had received the inputs form M/s. HSAL and have entered the same in their statutory records and have utilised the same. The said statements of the directors are based upon the entries made in their records and are contra to the statements of the transporters. It is observed that if one of the two deponent's statements, which are contrary to each other, have to be held as reflecting the correct position, the detailed examination of the same was required to be done by adjudicating authority. However, he has chosen to rely upon statement of the transporter rather than to rely on the statement of the directors which were also rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them for jodhpur. 17. The statement of Shri. Ramesh Rawat recorded on 29.06.2006 revealed that he had given the details of flow back of cash in respect of sales of S.S. Flats made to other units but there is no averment in the said statement as regards the flow back of money either to the assessee or to M/s. A.G. Faridabad. In fact, it is seen that the consideration for the disputed raw material was made by the assessee to M/s. HSAL by way of cheques, issued through banking channels. It is neither the revenue's case nor any evidence stands produced to that effect that any money flowed back to the assessee. If the revenue's allegation of nor receipt of inputs is accepted, there is no explanation as to why the payments were being made through cheques by the assessee in respect of goods not received by them. Reference is made to Tribunal majority decision in the case of Tejwal Dyestuff Industries Vs. Commissioner of C.EX Ahemdabad reported in 2007 (216) ELT 310 (Tri. Ahmd), which has been upheld by the Hon'ble High Court of Guajart reported in 2009 (234) ELT 244 (Guj.). It is seen that there was originally difference of opinion between two members which was resolved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubt over the making of such confession, the Court will be required to weigh such other evidence and find out whether the confessional statement should be implicitly relied upon. Any proposition which gives irrebutable sanctity to a confessional statement, will tend to shut out consideration of other relevant material which might out-weigh the evidentiary value of the confessional statement. The proposition that in view of the confessional statement all other evidence should be discounted, cannot, therefore, be accepted. 52 . In the present case, on the one hand, we have the statements of Naresh, Hitesh and Iesh, fully incriminating the assessee by stating that, the inputs were not received in the factory nor were they used in the final products manufactured by the assessee; on the other hand, we have an established fact of the payments having been made by cheques in respect of the inputs covered by the invoices which are on record along with the other evidence in the nature of octroi receipts relatable to such goods. The octroi receipts constitute a very important and independent documentary evidence in support of the fact that, the inputs covered by the invoices drawn in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in the case of M/s. Tejwal Dyestuff Industries are identical to the facts of the present case. In fact, in the case of Tejwal Dyestuff Industries, there were confessional statements of authorised representative of the appellant as also of their production manager. The said statements were inculpatory confessional statements, even then the majority decision held that such statements cannot be made the basis for arriving at adverse finding and the same are required to be corroborated by independent evidences, especially when such oral evidences are against the documentary evidences. In the present case directors of the appellant's company have clearly deposed that they were receiving the inputs and were using the same in the manufacture of final product. Such statements recorded under Section 14 of the Central Excise Act, have not been held to be false by the adjudicating authority. In the absence of any confessional statements of the appellant's authorised representative, the reliance on the statements of the transporters cannot be placed. We also note similarity in the facts of present case with the facts available in the case of M/s. Tejwal Dyestuff Industries, inasmu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In respect of the raw material/inputs received from M/s. A.G Faridabad, under the caver of 182 number of consignments, revenue has nowhere referred to the fact that the material supplied to M/s. A.G., Faridabad by M/s. HSAL, where the discrepancies about use of trucks was alleged, is the same material which stand further, sold by M.S A.G. international to the assessee. Admittedly, M/s. A.G. was selling the raw material received from M/s. HSAL to the other manufacturing units also located at various places. There is nothing on record to show that the raw material received by M/s. A.G from M/s. HSAL on the trucks which have loaded the goods on the same day, is the material which M/s. A.G. had further sold to the assessee. In the absence, of any such establishment of relationship between two consignments i.e. one received by A.G and one further sold by A.G. to the assessee, the revenue's allegation of non receipt of the goods by the assessee cannot be held to be sustainable. 19. The assessees has also taken a plea that in case they have not received the raw materials as alleged, they were not in a position to manufacture their final product. The fact is that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaration of law by the Hon'ble Punjab Haryana High Court in above decision squarely applies to the facts of the present case. 21. We also take into consideration evidence produced by the assessee to establish that goods have actually been transported. Out of total 49 invoices 22 invoices pertain to the purchases made by the assessee directly from M/s. HSAL and 27 invoices pertain to the purchase made by M/s. A.G. Faridabad from M/s. HSAL. The said consignments passed through the check-post of Excise and Taxation department at Sonipat and Faridabad and after checking the consignments, the said officers had put their stamps on the said invoices. The fact of the invoices being scrutinised being stamped by the Excise and Taxation OfficeRs.is evident of the fact of the consignment having been checked by the said officers in the absence of any evidence to the contrary. We fully agree with the Id. Advocate that said stamped/endorsed invoices by the officers of other department shall prove beyond doubt that the goods were moving through the trucks to the assessee's factory and no reliance can be made on the depositions of transporters. The said stand of the assessee, vehem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the recipient of the goods have stated that the goods were duly brought to their factory and entered in the RG-23 A records and the check post records maintained indicate receipt of the said goods, the register of the transporters cannot be held to be sufficient for arriving at conclusion that inputs were never transported to the assessee's factory. As such we find that both the above decisions support the contention of the Id. Advocate that the transporters statements, which are in the nature of oral evidence cannot be appreciated for holding against the appellant, when there are other documentary evidence to hold to the contrary. 22. The adjudicating authority has also observed that the assessee did not bring any evidence on record to show that they have actually received the goods. We are afraid, we do not agree with the above observation of the adjudicating authority. By entering the goods in their statutory records and by producing the invoices and by making payments to the sender of the goods by way of cheque, it stands proved by the assessee that they had actually received the goods. It is the revenue who is making the allegation of non receipt of the material by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be wrong, being against the documentary evidence, the various statements have to be excluded as evidence, If the statements are taken out of consideration, there is no evidence left in the present case to sustain the findings of the adjudicating authority. Admittedly, the documentary evidence have to be given preference over the oral evidence and it is the documentary evidence which shall prevail over the oral evidence. Reliance can be made to the Tribunal decision in the case of Rai Petroleum Products Vs. CCE, Mumbai- 2005 (192) ELT 806 (Tri.), who stands confirmed by the Han ble Supreme Court reported as 2075 (320) ELT 20 (SC), The reference can also to made to another decision of the Tribunal in the case Al-Futtaim Engineering Vs, CC, Chennai reported in 2007 (219) ELT 490 (Tri.Bang.). The un-corroborated statements of the transporters, without any other independent evidence cannot be solely relied upon to come to an adverse finding against the appellant, especially when the same have already been found to be reflecting in-correct facts. In the absence of any other evidence from an independent source, we agree with the Ld. Advocate that reliance on the said statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant had actually manufactured AS and MS products and their statutory records showed this. Applicant, therefore, cannot now take the plea that said goods were riot manufactured. In any case, it is not for Revenue to prove that such goods were sold in the open market, but for the applicant to prove that the said AS/MS products were not actually manufactured and not cleared and sold in the open market if the main applicant wanted the adjustment of said amount against the demand of the Central Excise duty amount in the SCN. Revenue further stated that the contention of the main applicant that these AS/MS products were actually not manufactured by him and were not removed and sold in the open market is not correct. 14. The bench has considered the records, the contents and the pleas made in the applications including those of the co-applicants and also during the hearing. The applicant was evading Central Excise Duty by way of mis-declaration, suppression of production, clandestine removal of the finished products and fraudulent passing on the cenvat credit to various manufacturers. Also by showing excess production and clearance of Mild Steel and Alloy Steel Billets on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /MS products were actually manufactured by M/s HSAL and duty was rightly paid on the same, take an all together contra stand in the present proceedings and contend that no AS/MS products were being manufactured by M/s HSAL and no duty was paid on the same and it was only a paper transaction. It may not be out of place to mention here that it is not the Revenue's case that AS/MS products were manufactured and diverted by HSAL to others and invoices were being issued in the name of the present appellant or their dealers. Such taking of different stands by the Revenue does not inspire confidence in the their case. 25. For the reasons recording above, we are of the view that the impugned order passed by the commissioner confirming the demand against the appellant and imposing penalty upon them is un-sustainable. The same is accordingly set aside and the appear is allowed with consequential relief to the appellant. 26. Inasmuch as the assessee appeal stands allowed, the Revenue's appeal which is only against non imposition of penalty of M/s. A.G. International, is required to be rejected. We order accordingly. Both the appeals are disposed off in above manner. (Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absent, therefore, the statement, which has been made during the course of inquiry/investigation, before a gazetted Central Excise officer, cannot be treated as relevant for the purpose of proving the fact contained therein as observed by Hon ble Delhi High Court in the case of J.K. Cigarettes (supra) wherein Hon ble High court has observed as under :- 12. Bare reading of the above section monifests that under certain circumstances, as stipulated therein, statement made and signed by those persons before any Central Excise Officers of a gazetted rank during the course of inquiry or proceedings under this Act can be treated as relevant and taken into consideration if under the given circumstances such a person cannot be produced for cross-examination. Thus, this provision makes such statements relevant for the purposes of proving the truth of the facts which it contains, in any prosecution for an offence under the Act in certain situations. Sub-section (2) extends the provision of sub-section (1) to any proceedings under the Act other than a proceeding before the court. In this manner, Section 9D can be utilized in adjudication proceedings before the Collector as well. I the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted in evidence in accordance with the procedure prescribed in clause (b) of section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if Section he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, the has to summon the person who had made the statement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 32. Relying on the above decisions of this Tribunal and Hon ble High court of Punjab Haryana, I hold that the adjudication order has been passed in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a). I have further perused the said ruling contained in para 26, 27 28, which is re-produced below for the sake of appreciation: 26. In fact, Section 138 of the Indian Evidence Act, 1872 clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination and cross-examination has to precede re-examination. 27. It is only, therefore; (i) after the person whose statement has already been recorded before a gazette Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination can arise. 28. Clearly, if his procedure, which is statutorily prescribed by plenary parliamentary legislation is not followed, it has to be regarded, that he Revenue has given up the said witness, so that the reliance by the CCE, on the said statement, has to be regarded as misguided and the said statement have to be eschewed from consideration, as they would not be relevant for providing the truth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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