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TMI Blog2018 (10) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation with the persons who were named in the said documents - the investigation is also totally silent on this aspect and not even a single person whose name was found mentioned in the said private records, to whom ASPL has been alleged to have supplied TMT bars or the name of the transporters whose details were found mentioned in the said private records were issued summons for the purpose of recording their statement, so as to use it as corroboration. Reliance placed upon the statements of various persons including employees - Held that:- Commissioner has committed an error in rejecting the request of ASPL for cross-examination, by concluding that the same was an attempt to delay the adjudication proceedings. We have come to this conclusion by noting the fact that ASPL has prayed for cross-examination on 21.03.2016 i.e. during the pendency of adjudication proceedings whereas, the adjudication order came to be passed only on 26.08.2016 i.e. after five months of the request. Further, it is now settled law that in case the adjudicating authority wants to rely upon the statements recorded during investigation, such witnesses have to be examined in adjudication proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he private records was inquired or investigated to confirm the authenticity of the entries recorded in the said documents The allegation of clandestine manufacture and removal of TMT bars, made in the SCN, on ASPL is merely on assumption and presumption without any material evidence corroborating the said allegation. The demand of duty on ASPL, therefore, is not sustainable - As demand of duty itself is not sustainable, no interest or penalty could be imposed on ASPL as well as on other appellants on whom penalties were imposed under Rule 26 of the Central Excise Rules, 2002. Appeal allowed - decided in favor of appellant. - Ex. A. Nos. 52974, 53011, 53022, 53025, 53056, 53058 & 53103 of 2016 - 53042 -53048/2018 - Dated:- 27-9-2018 - Mr. Anil Choudhary, Member (Judicial) And Mr. Bijay Kumar, Member (Technical) For the Appellants : Sh. Rupesh Kumar, Sh. Jitin Singhal Sh. D. R. Godekar, Advocates For the Respondent : Sh. R. K. Mishra, DR ORDER PER: ANIL CHOUDHARY : The appellants have challenged the Order-in-Original No. 42/Pr.Commr/Ind/CEX/2016 dated 26.09.2016 passed by the Principal Commissioner, Central Excise, Customs Service Tax, Indore, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 7,68,37,421/-. As per the SCN, this demand was inclusive of central excise duty of ₹ 73,19,311/- on the quantity of 2158.990 MTs of TMT bars/Mis-Rolls cleared during the month of February 2011 to November 2011 under 139 parallel sales invoices and central excise duty of ₹ 49,66,727/- involved in 1227.110 MTs of TMT bars found short in physical stock on 05.01.2012 as well as central excise duty of ₹ 2,76,51,589/- on 7143.037 MTs of TMT bars cleared without payment of duty during the period 01.10.2011 to 03.01.2012. 2.4 ASPL had cleared 39 consignments of TMT Bars/Mis-Rolls quantified at 1391.165 MTs under 39 parallel sales invoices during the month of December 2010 and January 2011 without payment of central excise duty of ₹ 42,00,203/-. 2.5 ASPL had manufactured and cleared 827.715 MTs of TMT bars without payment of duty of ₹ 17,41,470/- which were manufactured out of 880.75 MTs of MS Scrap procured clandestinely during the month of July 2009. The duty was calculated in the SCN by taking average rate per MT assessable value of TMT bars cleared by ASPL during the month of July 2009 as ascertained from the sales invoices of July 2009. 2.6 ASP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hreyash Enterprises, to pass on fraudulent cenvat credit to M/s Rajuri, Shri Dinesh Rathi who in connivance of ASPL had hatched a ploy to create M/s Shreyash to avail bogus cenvat credit on excisable goods, without physical receipt of excisable goods. 3. Accordingly, all the appellants were called upon to show cause as to why: 3.1 The central excise duty of ₹ 9,72,00,165/- payable on TMT Bars cleared by ASPL without payment of duty should not be demanded and recovered from it in terms of section 11A(4) [erstwhile proviso to section 11A] of the Central Excise Act, 1944 by invoking the extended period of 5 years along with interest under the relevant provisions of the said Act. 3.2 The mandatory penalty equal to the central excise duty in respect of duty demanded, should not be imposed on ASPL under section 11AC(1)(a) of the Central Excise Act 1944 read with Rule 25 of the Central Excise Rules, 2002. 3.3 32976.375 MT TMT Bars valued ₹ 94,79,17,806/- clandestinely cleared by ASPL should not be confiscated under Rule 25 of the Central Excise Rules 2002 and as the said goods are not available for confiscation why a redemption fine should not be imposed in lieu of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal 178 parallel invoices, 174 were issued upto the financial year ending March 2011 and out of the said 174, 134 pertained to February 2011. ASPL had also brought on record the evidence in the form of confirmation from the persons whose names were stated in the said parallel invoices and who had categorically denied of having received any goods under the said parallel invoices and the said persons having informed the said fact to the department, during the course of investigation. (d) Even though allegation had been made against ASPL regarding clandestine manufacture and clearance of huge quantities of TMT bars but the SCN did not indicate any investigation from the alleged purchaser of such clandestinely manufactured TMT bars, how the said quantity was transported and, through which transporter. (e) The statements of the following persons recorded during the course of investigation and referred to and relied upon in the SCN were not voluntary in view of submissions made by ASPL in its WS and, therefore, could not be relied upon. It was submitted by ASPL that in case the adjudicating authority wish to rely upon the statements then a reasonable opportunity should be afforded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. The entire central excise duty demand, which has been confirmed by the Commissioner, can be segregated in the following manner: (a) CED of ₹ 7,68,37,422/- on 21049.224 MTs of TMT Bars and 1371.185 MTs of Mis-Rolls, allegedly manufactured out of: (i) 13728.170 MTs of MS Ingots, as revealed from private record [Weighment Register] which contain details of suppressed production of Ingot for the period 01.02.11 to 05.01.12; (ii) 9872.260 MTs of MS Billets/MS Ingots procured clandestinely from various suppliers of Indore, Bhopal and Aurangabad Commissionerate, for period 05.02.11 to 05.01.12. (b) CED of ₹ 42,00,203/- on 1391.165 MTs of TMT Bars/Mis-Rolls clandestinely cleared under 39 parallel sales invoices during Dec. 10 and Jan. 11. (c) CED of ₹ 17,41,470/- on 827.715 MTs of TMT bars manufactured out of 880.75 MTs of MS Scrap, procured clandestinely during the month of July 2009 as reflected in private record i.e. Material Received Slips. (d) CED of ₹ 1,08,92,504/- on 3603.871 MTs of TMT bars/Miss-Rolls cleared clandestinely as reflected in private record i.e. Executive Diary during the period of 29.04.10 to 12.07.10. (e) CED of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices were terminated due to gross mis-conduct had connived with other employees and fabricated documents so as to enable the department to make out a case against ASPL. In support, ASPL had also placed on record before the Commissioner call detail records of some of the ex-employees which showed that they were in constant touch with departmental officers, immediately after termination of their services. The Commissioner is incorrect in observing that if the records could not be found on earlier search, but found at later search the same would not make the recovered records untrue and fake. But, these facts, in our view, create reasonable doubt regarding the authenticity of the seized private records, as they relate to period prior to Oct 2011. Therefore, Commissioner could not have solely relied upon these documents without testing the genuineness of the details stated therein by conducting investigation with the persons who were named in the said documents. We further observe that the investigation is also totally silent on this aspect and not even a single person whose name was found mentioned in the said private records, to whom ASPL has been alleged to have supplied TMT bar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating authority wants to rely upon the statements recorded during investigation, such witnesses have to be examined in adjudication proceedings and an opportunity of cross-examination has to be granted. In the absence of cross-examination, no reliance could have been placed on such statements. In this regard, we are guided by the judgment of the Hon ble Allahabad High Court in the case of CCE v Kurele Pan Products Pvt. Ltd. 2014 (307) ELT 42 (All) wherein it has been held as under: - 6. It is settled principles of law that if the authority wants to rely upon the statement of any witness, the opportunity of cross-examination ought to have been given to enable the party to prove its case and non-providing of the opportunity of cross-examination amounts to violation of the natural justice and in the absence of denial of natural justice, such statements cannot be relied upon. In the case of Basudev Garg v CC [2013 (294) ELT 353 (Del.)], the Division Bench of the Delhi High Court has held that the statement against the assessee cannot be used without giving them opportunity of cross-examination. Cross-examination is a valuable right of the accused/noticee in quasi-judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f establishes the stand of ASPL that the said private record is a forged fabricated document prepared by Shri Mithilesh Singh on the instructions and under influence of ex-employees, whose services were terminated in ASPL by the management due to their gross misconduct. The learned Advocate has also drawn our attention to certain pages of the said weighment register to show that on various occasions, the per day production in the said weighment register was shown as high as 248MTs which is not possible even as per the findings recorded by the Commissioner in para 96(ii) of the OiO wherein he had observed that ..ASPL were in a position to take a yield of 112 MTs per day from these furnace which was very close to their average daily production of 113.15 MTs ascertained from the seized weighment register of ingots . It was further submitted that Shri Mithilesh Singh whose statement has been relied upon heavily in the SCN, had already been retracted by him. Next day by filing affidavit before the Commissioner, declaring therein that he had deliberately prepared forged weighment register by making random false entries regarding the quantity of production and clearance of MS Ingots, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh ASPL had produced chartered engineer s certificate certifying the capacity of production along with manufacturer s invoice and Pollution Control Board Certificate, which clearly corroborates the stand of ASPL, that it did have even the capacity to manufacture the quantities of Ingots recorded in the weighment register. The department has not brought on record any evidence to show that the said documents were not genuine. Even the Commissioner has chosen to totally overlook the said evidence and relied upon the said weighment register even though Shri Mithilesh Singh who was author of the said weighment register had stated on affidavit that he had prepared the said weighment register by recording random entries to implicate ASPL, for which he was paid money. For a moment, we are not concluding that the facts stated in retraction made by Shri Mithilesh Singh in the form of affidavit are true and correct. But the same raises serious doubts about the evidentiary value of entries made in the said weighment register and, therefore, the Commissioner ought to have taken into consideration documents placed on record regarding the capacity of production of the two furnaces in question, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We further find that the department had not verified the capacity of production of ASPL during the course of investigation. On the other hand, ASPL has produced before adjudicating authority the chartered engineer s certificate and manufacturer s invoices. In case the adjudicating authority had doubts in disbelieving the chartered engineer s certificate or the manufacturer invoices, the said persons could have been called for examination/cross-examination under section 14 of the Central Excise Act, 1944, to ascertain the genuity of the said two documentary evidence. However, the said evidences remained unrebutted during the adjudicating proceedings and, therefore, could not have been ignored by the Commissioner while dealing with the said issue as held by the Tribunal in the case of Synthetics Chemicals Ltd. v CCE, Kanpur 1997 (89) ELT 793 (T) and in the case of CCE, Mumbai v Air Carrying Corp (I) Pvt. Ltd. 2009 (248) ELT 175 (Bom). 13. We are surprised to find that the Commissioner in the adjudication order, instead of dealing with the contentions and evidence led by ASPL, has tried to justify the entries recorded in weighment register, by merely relying upon the retrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties reflected in the said File No.09. He submitted that the said File No. 09 did not belong to ASPL, nor any of the entries recorded therein relates to their business. It was further submitted that seizure of the said File No. 09 could at the most raise suspicion. Further, suspicion, howsoever strong, cannot take the place of proof of clandestine removal, as held the Hon ble Supreme Court in the case of Oudh Sugar Mills Ltd v UOI 1978 (2) ELT J172 (SC). 15. We further find that there is no corroborative evidence on record in the form of capacity determination, electricity consumption, receipt of raw material, etc. to establish manufacture of any clandestine quantity. Therefore, duty is levied only on presumption and assumption, as such, is fit to be set aside. We have also perused the said File No. 09 and appreciated the entries made therein. We find that on each page of File No. 09, the names of various persons/firms have been stated viz., Girish Chaudhary, Mandsaur, Kamal Rathi, Abhay Agarwal, Mandideep, Suchita Rathi, Bharti Rathi, Vinod Nirmanyia, Shorya Steel, Kaushik Dewas, Sardar Ispat, Mantri, have been mentioned. However, none of the said named persons/firms have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. It was further submitted that ASPL had shown production of 2289.555 MTs of MS Ingots in its statutory records which would mean that the suppressed quantity of MS Ingots would be 1218.280 MTs. It was also pointed out that as per the SCN, ASPL had purchased 896.790 MTs of Ingot from other manufacturers out of which around 294.945 MTs were accounted for in its statutory records which would mean that ASPL had suppressed the quantity of 601.845 MTs of purchased MS Ingots. In this manner, the total suppressed quantity of ingots available with ASPL was 1820.125 (1218.280 + 601.845) MTs and, if the allegations made in the SCN were correct it would mean that ASPL had utilized the said suppressed quantity of MS Ingots in the manufacture of 2083.425 MTs of TMT bars which were clandestinely cleared under 134 parallel invoices which is not possible. We find merits in the said submission of ASPL as it cannot be possible for anyone to manufacture and clear 2083.425 MTs of TMT out of 1820.125 MTs of clandestinely manufactured/procured MS Ingots. Further, most of the parallel invoices seized from the factory premises were found in original which also supports the stand of ASPL that no clearan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation v CCE, Hyderabad 2002 (140) ELT 187 (T); Opel Alloys (P) Ltd. v CCE, Ghaziabad 2005 (182) ELT 64 (T); CCE, Ludhiana v Rakesh Nayyar 2010 (255) ELT 234 (P H); Gupta Synthetics Ltd. v CCE, Ahd. 2014 (312) ELT 225 (T); Rajasthan Foils Pvt. LTd. v CCE, Jaipur 2005 (183) ELT 101 (T); Suzuki Synthetics Pvt. Ltd. v CCE 2015 (318) ELT 487 (T); Gupta Synthetics Ltd. v CCE 2014 (312) ELT 225 (T)]. 18. The learned DR has also placed reliance on the two statements dated 26.04.2012 and 20.07.2012 of Shri Rampal Sharma (employee) recorded during investigation, who had explained the entries made in File No. 09. The learned counsel for ASPL, while referring to the reply and written submission filed before the Commissioner in the adjudication proceedings, has submitted that ASPL has disputed the contents of the statements of Shri Rampal Sharma and totally disowned the entries reflected in the said File No. 09 and, submitted that no reliance could be placed by the Commissioner on the statements of Shri Rampal Sharma, as the opportunity to cross-examine Shri Rampal Sharma was not afforded to ASPL. We find merits in the said submissions of the learned counsel for ASPL and ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parallel invoices. The same is fit to be set aside. 20. The Commissioner has further confirmed a duty demand of ₹ 17,41,470/- against ASPL on the TMT bars and the basis of the Material Receipt Slips which were also recovered from the seized File No. 09, showing procurement of scrap from various scrap dealers. We find that the said material receipt slips only shows procurement of scraps with the name of the scrap dealers. It nowhere shows that the said scrap was used by ASPL to manufacture Ingots, wherefrom ASPL had manufactured and clandestinely cleared TMT bars. Mere recovery of material receipt slips of the year 2009 without any investigation or affirmation from any independent source cannot be the basis to confirm the allegation of clandestine removal, which is a serious charge. We have already held that ASPL did not even have the capacity to manufacture the quantity of TMT bars as alleged, other than what was shown by it in the statutory records which were cleared upon payment of duty. In the absence of any evidence of manufacture of ingots and any further evidence of manufacture of TMT bars out of the said ingots, demand of duty of ₹ 17,41,470/- is not justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for opportunity to cross-examine Shri Manoj Huddar. However, the Commissioner, on one had had denied the opportunity to ASPL to cross examine Shri Huddar and, on the other hand, has relied upon the contents of the said diary to confirm the huge demand against ASPL which, we hold, is not permissible as per settled law. 22. This brings us to the last issue relating to demand of duty of ₹ 35,28,567/- on TMT bars alleged to be manufactured and cleared by ASPL during the period 09.10.2010 to 08.06.2011 without payment of duty. The Commissioner has held that ASPL had merely issued invoices (without goods) by showing clearance of 6106.4 MTs of MS Ingots but, in actual, had utilized the said quantity of ingots to manufacture and clear TMT bars without payment of duty. We find that the facts and evidence available on record shows that the invoices were issued by ASPL in the name of M/s Shreyash Enterprises, a proprietorship firm, whose proprietor Shri Vinayaka Kangaonkar had admitted in his statement dated 16.10.12 of having received ingots along with the said invoices which he had further sold to M/s Rajuri Steel Pvt. Ltd., whose Manager Shri Dinesh Rathi had also admitted in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the above factors have been brought on record by the department. There is no evidence regarding the capacity of ASPL to manufacture the quantities as alleged. Further, no inquiries have been conducted from raw material suppliers, transporter or the buyers to establish clandestine manufacture and sale by ASPL. Even though the allegation is that ASPL had, in such manner, sold TMT bars worth ₹ 94,79,17,806/-, no unaccounted money was recovered during the course of search from any of the premises. It has been consistent view of the Tribunal that allegation of clandestine removal cannot sustain merely on the basis of uncorroborated entries in the private record as held in Kashmir Vanaspati (P) Ltd. v CCE 1989 (39) ELT 655 (T), Raza Textiles Ltd. v CCE 1989 (44) ELT 233 (T), Hindustan Lever Ltd. v CCE, Raipur 1996 (87) ELT 385 (T), Krishna Co. v CCE, Jaipur 1998 (97) ELT 74 (T), Kothari Pouches Ltd. Anr v CCE, New Delhi 2000 (41) RLT 209 (T), Hindustan Coca Cola Beverages Pvt. Ltd. v CCE, Thane 2006 (205) ELT 700 (T), Rina Dyeing Printing Works v CCE, Surat 2007 (209) ELT 190 (T) and Kuber Tobacco Products Ltd. v CCE, Delhi 2013 (290) ELT 137 (T)]. 25. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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