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TMI Blog2019 (5) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... s not done. In such a case, when the material of aforesaid nature is available, the burden or proof also shifts and assessee is required to explain the things made out by the material. For that, the provisions of Sections 106 and 114 of the Evidence Act can be used. This Court holds that the statements recorded under Section 14 of the Act of the witnesses, who were examined before the adjudicating authority can be used as admissions though they are retracted and they can be used in relation to the material, private documents recovered from the premises of the assessee and the premises of the suppliers, who had supplied raw material like laminated films - This Court further holds that the decision of the Appellate Tribunal is bad in law as the relevant material is not considered by the Appellate Tribunal - the decision of the Appellate Tribunal needs to be set aside. The matter needs to be remanded back - appeal allowed by way of remand. - FIRST APPEAL NO. 1003 OF 2007 - - - Dated:- 29-3-2019 - T. V. NALAWADE SUNIL K. KOTWAL, JJ. Mr. D. S. Ladda, Advocate for Appellant. Mr. Makrand Joshi h/f. Mr. R. R. Chandak, Advocate for Respondents. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the reasoning given by the CESTAT that the retracted statements of the Respondents and others cannot be used against the Respondents and further observations that there was no material to prove clandestine removal of excisable goods, this Court holds that following substantial questions of law needs to be decided in the present matter. During arguments this Court had expressed that the following two points will be decided by this Court in the appeal. i) Whether retracted statements recorded under Section 14 of the Act could have been used as admissions; and ii) Whether the Tribunal has committed error in holding that there was no material for making the order and whether the Tribunal has committed error in not considering the relevant material, which was produced before the adjudicating authority. 5. The submissions made before this Court and record, which was produced before the learned Commissioner show that many relevant circumstances were made out by the Department. This Court is now quoting those circumstances and the record and on that basis it can become possible as to whether inference can be drawn as against the assessee for fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y revealed that the assessee was getting PLRs from M/s. Orian Laminators Limited situated at Aurangabad. The officers visited the premises of M/s. Orian Laminators Limited and its stock was inspected alognwith the record. In the premises of M/s. Orian Laminators Limited, excess stock of 10000 pouches, which could have been used for Gutka and PLRs bearing printed name of Goa-1000 brand totally weighing 1723.65 kilograms was found. The management of M/s. Orian Laminators Limited could not give satisfactory explanation about this excess stock. Separate show cause notice was given to M/s. Orian Laminators Limited. The inquiry revealed that only the present assessee was purchaser of such PLRs from M/s. Orian Laminators Limited. xi. Various brands of Gutka were manufactured at both the units of assessee at Jalna and the product was sold from the office of M/s. Sanket Products mentioned above, which was also situated at Additional MIDC, Jalna. Search of this premises was taken. The record of stock transferred from both the units was collected showing that all the goods were being transferred to this depot. The stock shown to the transferred was recorded at these places. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statutory and private record. On this point, a statement of Ketan Shah was recorded on 9th March, 2002. The information supplied revealed that many sales, which were effected from this office were not recorded and that is why unaccounted cash amount was with them. The staff of the assessee also revealed the same thing. xiv. On 8th March, 2002, residential place of Soni, person involved in the management was searched. Cash amount of ₹ 2,00,000/was recovered from him. Some documents in respect of manufacture and sale activity of the assessee were also recovered from him and they were seized. These documents also revealed that the actual quantity of manufacture, actual clearance and sale was not mentioned in the statutory record. His statement revealed that to avoid the making of payment of duty, such separate private record was created. He could not give satisfactory account in respect of ₹ 2,00,000/and he tried to say that this amount was given to him as bonus by Ketan Shah. There was no mention about this amount also in the statutory record of the assessee. xv. Statement of Soni recorded on 8th March, 2002 revealed that he was a proprietor of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They were Goa1000 Gutka bags. In the statement dated 11th July, 2002, Ketan Shah also gave similar admission. This way the quantity manufactured every day, which was mentioned in private record was compared with the statutory record and those entries, which were inconsistent were confronted to these persons and their statements were recorded. xvii. The inquiry made by the officers revealed that all the raw material was procured for assessee at unit No.1 in centralized manner. As already mentioned, raw material like Supari, perfume, lime, catecho, cardamon do not attract central excise duty. In view of these circumstances, no further inquiry was possible with the shop keepers from whom this material was procured. No correct stock of this material was kept in the record of the units. As already observed, scented tobacco was procured from M/s. Sharda Associates of Soni. Only remaining material like Plastic Laminated Rolls is subject to central excise duty and the assessee was availing CENVAT credit on the duty. Examination of book stock, physical stock and inquiry with the management in respect of PLRs was possible. On the basis of record recovered, investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The record of work done by these two sister concerns for each other was collected. The work of printing and lamination of plain film was given by M/s. Akar Laminators Limited of 6275.68 kilograms to M/s. Vishnu Vijay Packaging and M/s. Akar Laminators Limited got similar quantify of printed film. However, M/s. Akar Laminators Limited sold 23722.25 kilograms of printed film to M/s. Vishnu Vijay Packaging Limited. This material was sold to M/s. Sanket Industries. As already observed, the material ultimately was reached to M/s. Sanket Food Products Limited, assessee. Thus, the investigation revealed that the official sale of only 100.25 kilograms was shown to be made to M/s. Sanket Food Products Limited, assessee and other record was made in the name of M/s. Sanket Industries of aforesaid two Shah brothers. The film supplied by the aforesaid concerns was reached to M/s. Sanket Food Products Limited as only M/s. Sanket Food Products Limited, assessee was manufacturing the Gutka of Goa brand. Thus, the work of quantity of more than 24.04 tons was actually done for the assessee and that was of preparation of pouches for Goa Gutka. This record of manufacturing of the film wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee. The account in respect of most of this quantity was with the aforesaid two sister concerns. The information revealed that by using aforesaid quantity of film 7.43 crore pouches could have been produced. The officers have considered all these material for calculation of the duty evaded by the assessee. Thus, unrecorded printed laminated film was used by the assessee for unrecorded manufacture of Gutka. xx. The private record of M/s. Sharda Associates also showed that it was engaged in manufacturing of preformulated Gutka. It was supplying such loose Gutka to unit No.2 of the assessee. It was not maintaining any record or account in respect of this supply also. As Soni was working for the assessee, this circumstance again shows another mode of evasion of excise duty. xxi. The officers had recorded statements of transporters showing that they had transported loose Gutka from the premises of assessee to Gujarat. No account of such Gutka was maintained by the assessee. It needs to be mentioned here that no calculation of evasion of excise duty is made and the calculation is only in respect of finished goods. xxii. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Express train and by railway 3158 boras of Gutka were reached to Delhi. In respect of Gutka sent to Delhi, there was evasion of duty of ₹ 1,75,94,010/and thus total recovery of excise duty, which needs to be made was calculated as ₹ 5,67,86,460/. 6. Before the adjudicating authority, Commissioner, aforesaid record was produced and the statements of 12 witnesses recorded under Section 14 of the Act were produced. The learned Commissioner allowed the present Respondents to crossexamine witnesses though statements of 12 witnesses were produced. The witnesses like Sanjay Shah, Ketan Shah (two Directors of the assessee), Animesh Gupta (employee of the assessee from Delhi), Soni (employee of the assessee), Joshi (employee of assessee) and Sudhir Khanna (employee of assessee appointed at Delhi) admitted every suggestion given to them during cross-examination as they wanted to retract the statements. Jhunjhunwala, Managing Director of M/s. Orian Laminators Limited also turned hostile and he retracted the statement. Two Panch witnesses on the incident of recovery of documents and seizure like Diama and Harun Khan turned hostile, but they admitted their presence on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom different places and different persons and all that record was considered by the learned Commissioner. The circumstance like excess quantity of raw material, film found in the factory of the assessee and found in the factory of supplier, was relevant circumstance and it was considered as such by the learned Commissioner. There was circumstance of recovery of huge amount of unaccounted cash from the place where the sale proceeds were collected and this circumstance also relevant. The circumstance that some record was found with Soni, employee of the assessee was also relevant and the circumstance that Soni had not kept any record about supply of scented tobacco was also considered by the learned Commissioner. 8 The learned counsel for Appellant placed reliance on the observations made in some reported cases and submitted that the statements recorded under Section 14 of the Act can be used against the maker even after retraction. He submitted that in the present matter, only Khanna had retracted the statement immediately, but the Directors of the assessee had not retracted the statements till they were examined before the Commissioner when many statements were given by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) (2006) 204 ELT 293, (Commissioner of Central Excise, Ahmedabad-I Vs. Metal Tubes (India)). In the first case, the Apex Court has laid down that if there is material for general corroboration to the contents of statement given under Section 14 of the Act, the retracted statement also can be used against the Accused in criminal case. In view of the nature of proceeding of adjudication and nature of burden of proof, such material can be definitely used against the maker. 10. The learned counsel for Respondents placed reliance on some observations made in some reported case as under: a) 2018 (361) E.L.T. 167 (Mad.), (The Commissioner of Central Excise, Madurai Vs. Vasu Chemicals), Madras High Court; b) 2017 (345) E.L.T. 629 (Guj.), (Commr. of C. EX., CUS., S.T., Bharuch Vs. Shree Krishna Industries), Gujarat High Court; c) 2016 (338) E.L.T. 203 (Guj.), (Commissioner of C. EX. CUS., SuratI Vs. Jai Bhawani Metal Industries), Gujarat High Court; d) 2016 (344) E.L.T. 111 (Guj.), (Commissioner of C. EX., Customs Service Tax Vs. Krishna Sales), Gujarat High Court; e) 2015 (322) E.L.T. 283 (Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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