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TMI Blog2019 (4) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured or from where the other raw materials were procured and how clandestine manufacture goods were transported and how the payment on the said goods have been received. In the absence of any corroborative evidence, except the statement of the transporter whose cross examination has not been granted, therefore, denial of cross examination is in the gross violation of the principles of natural justice, the allegation of clandestine removal of the goods is not sustainable - the demand on account of clandestine removal of the goods is not sustainable. This was a majority decision and in view of majority decision, it is held that the credit cannot be denied to the appellant and no demand can be confirmed against the appellant on account of clandestine removal of the goods. Appeal allowed - decided in favor of appellant. - Appeal No. E/2745-2746/2005-Ex(DB) - INTERIM ORDER NO.39-49/2018, FINAL ORDER NO.60359-60360/2019 - Dated:- 4-4-2019 - Mr. Ashok Jindal, Member (Judicial) And Mr. Devender Singh, Member (Technical) Shri B.L. Narsimhan, Advocate for the appellant Shri G.M. Sharma, AR for the respondent ORDER PER: ASHOK JINDAL The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PVC resin was not received by the appellants in their factory. The adjudicating authority has held that the transporters have shown the lorry receipt are fictitious and the appellants fabricated the transport documents and wrongly availed credit on 13 invoices. He submits that the appellants were purchasing PVC resin from Chemplast Sanmar and for this purpose one of the their employees were deputed and the said person after purchase of the PVC resin arranged for transportation from the nearby tempo stand and accompanied the goods. The goods were physically accompanied by their employee, therefore, they did not indicate in the lorry receipt. He submits that the said goods were physically received in their factory and duly entered in their records like gate register, bill for payment of freight, RG 23A Part I register and the payments were made through account payee cheque proves physical receipt of the goods. He submits that the fact of delivery of inputs was also admitted by the transporter Shri Vinod Gupta in his cross examination. He further submits that in one of the case of such transaction, the Commissioner has himself dropped the demand which proves that the reliance placed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Chemplast Sanmar and the inputs were physically received in the factory as is evident from the gate register, bill for payment of freight, RG 23A Part I register, and payment to Chemplast Sanmar, therefore, the credit cannot be denied. (d) Demand of duty of ₹ 33,69,797 on the basis of alleged clandestine removal of final products. 6. This demand has been confirmed against the appellant on the allegation of clandestine removal of the goods. The allegation of the Revenue is that the appellant received unaccounted knitted fabrics from M/s.Roongta Textiles, Ankleshwar and relied on the statement of Mr.Rajeev Porwal, a transporter. It was also alleged that the appellants neither received unaccounted PVC resin from M/s.B B Trading and M/s.Poonam Plastics nor these inputs were used for removal of finished goods clandestinely. This allegation is based on the documents like loading slips and freight bills maintained by the transporter. He submits that the adjudicating authority has denied the cross examination of Shri Rajeev Porwal, therefore, his statement cannot be taken as evidence and denial of cross examination is the gross violation of the principles of natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the demand is rightly made. With regard to the demand on the basis of clandestine removal of the goods, the appellant has received knitted fabric from M/s.Roongta Textiles which was not accounted for in the statutory records. His contention is that the owner of Singhal Express Carriers has specifically mentioned the goods cleared from M/s.Roongta Textile in the name of various parties M/s.Madhu Textiles, etc. to the factory of the appellants. His submission is that the GRs having the same number and name of the consignor but vehicle numbers were different in each case. He also submits that weighment slips on record to establish that the inputs have been received by the appellants. He submits that the finished goods have been cleared by the transporter and his statement is placed on record. Therefore, the impugned order is to be upheld. 8. Heard both sides. 9. On careful consideration of the submissions made by both sides, we find that the demand has been confirmed on two counts: (i) non receipt of the inputs by the appellants and (ii) receipt of the inputs without cover of the invoices and non-accountal of the goods in the statutory records and the same were used i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout following the mandatory procedure contemplated by clause (b) of the said sub-section. The Orders-in-Original, dated 19/05/2016 and 01/06/2016, having been passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, it has to be held that said Orders-in- Original stand vitiated thereby. 32. The said orders-in-Original, dated 19/05/2016 and 01/06/2016, passed by Respondent No.2 are, therefore, clearly liable to be set aside. 11. Therefore, we hold that apart from the statement of transporter, no corroborative evidence has been produced by the Revenue. The said statement has not been examined in chief, therefore, in view of the decision of the Hon ble Punjab and Haryana High Court in the case of Ambika International, the statement of the transporter cannot be relied without examination in chief of the same by the appellants. 12. We further take note of the fact that the investigation and the matter was started in the year 1999 and thereafter the show cause was notice issued in 2002. After lapse of 17 years, if the matter is remanded to the adjudicating authority that will not serve the purpose as held by the Hon ble Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering that they are witnesses of the Department and that their statements are being relied upon by the Department in support of the SCNs. Since it is relying on such statements, it is the responsibility of the Department to ensure their presence for cross-examination. As already mentioned, whenever such witnesses (i.e. six of them) were produced for cross-examination they resiled from their earlier statements. 43. It is not a matter of mere coincidence that none of the witnesses who were cross-examined stood by their earlier statements. It is one thing to overlook this feature on the premise that all of them were under the pressure and control of the noticees. The other approach is to view this with some caution and ask what might be the case if the remaining witnesses were also produced for cross-examination? Importantly, what would be the prejudice caused to the noticees, in such circumstances, by their non-production for cross-examination? Thus a doubt is created in favour of the noticees when such witnesses do not turn up for cross-examination. It is the latter approach that has weighed with the CESTAT. That, in view of this Court, was a possible approach and does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. In view of the above analysis, it is clear that during adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross-examined. In the absence of examination-in-chief, allowing the cross-examination, is a futile exercise. We further find that the appellant have challenged the impugned order on the ground that the evidence in the form of statements gathered have no link of the appellant to the activities took at Sandeep Poultry Farm which is required to be examined on the basis of records available during the course of adjudication and the same has not been considered judicially. 17. We also take note of that in the case of Kuber Tobacco India Ltd.(supra) in a similar set of facts, this Tribunal has observed hereinabove. Similar view was taken by this Tribunal in the case of Alliance Alloys Pvt.Ltd. (supra). 18. In view of the above observation, we hold that the credit cannot be denied to the appellant and no demand can be confirmed against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing issue :- POINTS OF DIFFERENCE (a) Whether, Member (Judicial) is correct in holding that in light of the decision of Hon ble Delhi High Court in the case of Flever International (supra), no purpose will be served to remand the matter and the appeal be allowed. Or (b) Whether the Member (Technical) is correct in holding that the matter is required to remanded back to the adjudicating by following the provisions of Section 9D and thereafter pass appropriate orders. (Pronounced in the court) Devender Singh Member (Technical) Ashok Jindal Member (Judicial) Per Bijay Kumar: Heard the Ld. Advocate, Mr. B.L. Narsimhan, on behalf of the appellants and the Ld. A.R., Mr. G.M. Sharma, on behalf of the Revenue. 2. The following points of difference have been placed for consideration before me: (a) Whether the Member (Judicial) is correct in holding that in light of the decision of Hon ble Delhi High Court in the case of Flevel International (supra), no purpose will be served to remand the matter and the appeals be allowed. Or, (b) Whether the Member (Technical) is correct in holding that the matter is required to remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 an 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 interests of justice. (2) The provisions of sub- section (1) shall, so far as may be, apply in relation to- any proceedings under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. 8. The issue regarding compliance of mandatory provisions of Section 9D have been discussed by various Courts/Tribunals in many cases where it is held that the compliance to the provisions of Section 9D is mandatory and non-negotiable and the adjudicating authority has no option but to follow the same, some of which are as under:- (i) G-Tech Industries vs. UOI 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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