9911796707
TMI Blog2019 (7) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... ny corroborative evidence for the purpose of confirmation of balance amount of duty. Reliability on third party transactions - HELD THAT:- It is well settled law that the third party documents cannot be relied upon for concluding against the assessee unless the same are fully corroborated by sufficient positive and legal evidence. The entries made in the third party records are not conclusive and are primarily based upon the understanding of the person who has made those records. The same stands relatable to M/s.Sugandhi based upon the statements of owners of those records without even identifying and examining the scribe of those entries - Having held that statements are not admissible, the entries are also required to be ignored - in the absence of any evidence of actual manufacture of the goods or clearance of the same, the confirmation of demand based upon third parties documents cannot be upheld. In the absence of any direct corroborative evidence of clearance of Jagat brand chewing tobacco to M/s.Om Prakash Zardawale it cannot be said that the same was cleared clandestinely. The requisite evidence to uphold the findings of clandestine removal has also been the subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RWAR, MEMBER (TECHNICAL) Shri Nishant Mishra (Advocate), Abhinav Mehrotra (Advocate) Ankur Agarwal (Advocate) for the Appellant (s) Shri Mohd. Altaf (Asstt.Commr.) (A.R.) for the Revenue ORDER All the appeals are being disposed of by a common order as they arise out of the same impugned order passed by Commissioner vide which duty of Central Excise to the tune of ₹ 3,67,10,247/- stands confirmed against M/s.Sugandhi Snuff King along with confirmation of interest. In addition penalty of identical amount stands imposed upon the said appellant in terms of the provisions of section 11AC of Central Excise Act, 1944 read with Rule 26 of Central Excise Rules, 2002. Further, penalty of ₹ 5.00 Lakhs each stand imposed on Shri Jagat Kishore and Shri Sandeep Kumar Chaurasia, partners of M/s.Sugandhi Snuff King. Further penalty of ₹ 2.00 Lakhs and of ₹ 1.00 Lakh stand imposed upon Shri Brijesh Kr. Chaubey, Manager of M/s.Purwanchal Transport Co. and Shri Manoj Kr.Gupta, Prop. of M/s.Radhey Agency respectively in terms of Rule 26 of the Central Excise Rules, 2002. 2. After hearing both sides, duly represented by Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated. The officers noted that the said goods found at the railway station were not covered by any proper central excise invoices though the appellant had issued a central excise invoice on 20 September 2011 for 660 packets. 5. Further enquiries were made by the officers from Banwari Chaurasia and Shri Brinda, the railway agents.Shri Banwari in his statement recorded on 21 September 2011 deposed that he was engaged in booking of goods manufactured by M/s.Sugandhi, that Shri Munna used to bring the goods from the factory of M/s.Sugandhi to the platform which were being booked by them without any Bills. Shri Brinder Kr. Chaurasia, another railway booking agent in his statement dated 17 May 2012 stated that he was working with his elder brother Banwari and both of them were doing the work of booking the goods with the railways. He deposed that one person by the name of Khan sent the Jagat brand Zarda manufactured by M/s.Sugandhi and sometimes they used to receive the Bills for the same. 6. The officers also visited the premises of the transporters M/s.Purwanchal Transport and M/s.Ganga Parcel Courier Services and resumed certain records from their premises. Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brands that they have not directly issued any invoice in the name of M/s.Sugandhi and the packaging materials were being sold by them to M/s.Mohit Traders, Varanasi, who were further supplying the same to M/s.Sugandhi. 11. As a result of above revelation the premises of M/s.Mohit Traders were put to search on 17 May 2012. Shri Vikram Sharma, Partner of M/s.Mohit Traders in his on the spot statement stated that they were engaged in the trading of printed corrugated boxes which are being purchased by them from M/s.Senior Box Factory, Ramji Press and were being sold to M/s.Sugandhi. He also produced the sale book showing sale of printed corrugated boxes. He deposed that all the boxes are sold to M/s.Sugandhi though there are on invoices which show the different names of the buyers. 12. Similarly the premises of various traders and dealers of Jagat Zarda manufactured by M/s.Sugandhi were put to search on various dates. The premises of M/s.S.R.Patel Co. was searched on 5 October 2011, of Shri Shiv Shakti Carrier Gulati was searched on 21 September 2011, of Shri P.S. General Store, Guwahati was searched on 21 September 2011 and the goods found therein were seized o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compounds in question were Light Liquid Paraffin i.e. LLP and the stock of the same was not checked by the visiting officers. In any case without going into the detailed aspect of the said issue we find that the Hon ble Allahabad High Court in the case of Meenakshi Casting (P) Ltd. v. UOI [2015 (322) E.L.T. 206 (All.)] has observed that mere shortages in the stock cannot lead to the conclusion of clandestine activities. In any case, the demand on the said count having been dropped by the Commissioner we are of the view that the fact of shortages of perfumery compounds would not lead to any corroborative evidence for the purpose of confirmation of balance amount of duty. 16. As regards the duty confirmation, we find that the same is primarily based upon the records maintained by the third parties like railway booking agents or the traders of the appellant s product and the manufacturer of the corrugated boxes etc. and the statements recorded by the officers during the course of investigations. The appellants made a categorical request to the adjudicating authority to allow the cross-examination of the deponents of the said statements, in accordance with the provisions of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 (CEGAT)] Jagatpal Prem Chand Ltd. v. CCE, Delhi-I [2004 (178) ELT 792(Tri.-Del.)] Shyam Traders v. CCE, Lucknow [2012 (278) ELT 468 (Tri.-Del.)] Arya Abhushan Bhandar v. UOI [2002 (143) ELT 25 (SC)] CCE, Allahabad v. Govind Mills Ltd. [2013 (294) ELT 361 (HC-All.)] 17. While dealing with the said contention of the appellant, the Commissioner rejected their request by observing as under:- 42. Notwithstanding the ample case law cited by the party in support of its demand that it be allowed cross-examination of ten witnesses (besides all Panchas), the settled law in this regard is that cross-examination can be allowed after considering the circumstantial evidence, but the adjudicating authority is not bound to allow cross-examination in each and every case. It is true that cross-examination is a useful procedural mechanism to arrive at the truth, but at the same time, cross examination before a quasi judicial authority is fraught with the very real possibility of its misuse. Moreover, it is a reasonable expectation that when cross examination takes place after a long passage of time, the chances are bright that the person con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot guided by the rules of evidence as such. (Emphasis supplied) The cited rulings make it clear that whether cross-examination is to be allowed or not in a particular case, depends upon the assessment of the adjudicating authority, basing upon the facts and circumstances of the case. The adjudicating authority has also relied upon the Hon ble Supreme Court s decision in the case of Kerala v. Shadals [AIR 1987 SC(62)] as also to the decision of the Hon ble Madras High Court in the case of K. Balan v. Govt. of India [1982 (10) ELT 386, which lay down that though the cross-examination is one of the most efficacious method of establishing the truth and exposing falsehood, but right to cross-examination depends upon the facts and circumstances of the case. As such the adjudicating authority observed that though it is largely settled that cross-examination should generally be allowed when the department s case is based on statements and statement alone and there is total absence of supporting corroborative evidence. He has however, observed that in the present case though undeniably the department s case is built on the statement of 14 witnesses, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g paragraphs. In fact we note that not only cross-examination, but the examination in chief is also required to be done by the adjudicating authority as held by the Hon ble Punjab Haryana High Court in the case of Jindal Drugs Pvt.Ltd. v. UOI [2016 (340) E.L.T. 67 (P H)] and Ambica International v. UOI [2016-TIOL-1238-H.C.-P H-CX.] Having not done that the provisions of section 9D do not stand followed resulting in unsustainability of the adjudication order. Surprisingly the adjudicating authority has distinguished the decision of Hon ble Allahabad High Court in the case of Parmarth Iron Pvt.OLtd. by observing that in that case the cross-examination was sought before show cause notice was issued whereas in the present case the appellant have sought the cross-examination of witnesses after the show cause notice stand issued and as such the ratio of the Hon ble High Court decision is not applicable. Similarly he has referred to each and every decision relied upon by the appellant and have distinguished the same on the filmsy grounds that the facts in those cases were different than the facts in the present case, inasmuch as, in the present case, the statements were rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investigation has brought-forth only one unaccounted manufacture and i.e. manufacture out of short perfumery compound. Resultantly, Zarda manufactured out of short found perfumery compound is liable to be treated as the same Zarda that was clandestinely cleared by the diverse ways mentioned and established in the show cause notice.s As such it is seen that though in the earlier part of his earlier order, he concluded that the perfumery compound short found in the assessee s factory has been used in the manufacture of the final product, but the duty demand on the same stands ultimately dropped by him and only the demand based upon the other evidences stands upheld. As such we are not going into detailed arguments raised by the appellant as regards the shortages being pseudo as there are no inventories prepared by the Revenue showing the stock-taking of the said perfumery compounds and not taking into consideration the stock of the Liquid Paraffin Oil. Otherwise also we take note of the Hon ble Allahabad High Court s decisionin the case of Meenakshi Castings (P) Ltd. v. Union of India reported as 2015 (322) E.L.T. 206 (All.) as also Hon ble Punjab Haryana High Court s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or other places was not justified as the entire case of the Revenue was based upon retracted statements and the Revenue has not been able to refer to any evidence to show that such goods were cleared from the appellants factory in a clandestine manner. He also observed that during the visit of DGCEI at the factory of the appellant, the stock of finished goods were found tallied, nothing incriminating was recovered so as to lead to the conclusion that the appellants were engaged in clandestine clearance of the factory. He further observed that the show cause notice was unspecific, insufficient and not disclosing any evidence regarding procurement of unaccounted raw material, suppression of production and clandestine clearance. In the absence of any direct corroborative evidence of clearance of Jagat brand chewing tobacco to M/s.Om Prakash Zardawale it cannot be said that the same was cleared clandestinely. By referring to various decisions he observed that charges of clandestine removal have not been proved beyond doubt against M/s.Sugandhi. Accordingly he allowed the appeal. The said order of Commissioner(Appeals) is in respect of the same visit of the DGCEI officers, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ron Pvt.Ltd. reported as MANU/UP/2113/2010 by referring to various precedent decisions held that if the Revenue chooses not to examine any witness in adjudication, their statements cannot be considered as evidence. If the Revenue chooses to rely on the statements, then in that event the persons, whose statements are relied upon have to be made available for cross-examination for the evidence or statements to be considered. 23. In fact it is not only the cross-examination of the witnesses which is required in terms of the provisions of section 9D of the Central Excise Act, but the examination-in-chief of the witnesses is also required ot be done as held by the Hon ble Punjab Haryana High Court in the case of Ambica International v. Union of India. The Hon ble High Court held that the provisions of section 9D of the Central Excise Act are required to be scrupulously followed in adjudication proceedings as the same is done in proceedings relating to prosecution. The evidentiary value of the statement, in so far as proving the truth contents thereof is concerned, is completely lost unless and until the case falls within the parameters of section 9D and otherwise it has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are number of decisions laying down the legal principle of the evidences required to be adduced by the Revenue, to be beyond doubt, reference can be made to the Tribunal s decision in the case of Chandan Tobacco v. Commissioner of Central Excise, Vapi [2014 (311) ELT 593 (Tri.-Ahmd.)] as also in the case of Aum Aluminium Pvt.Ltd. v. Commissioner of Central Excise, Vadodara [2014 (311) ELT 354 (Tri.-Ahmd.)], laying down that the legally recognized evidences for establishing the case of clandestine clearance are as under:- (i) Clandestine manufacturer; (ii) Clandestine/disproportionate/unaccounted purchase, receipt and consumption of raw material and packing material required for manufacturing the alleged quantity of final product clandestinely removed form factory; (iii) freight payment for any such movement; (iv) unauthorized payment for procuring unaccounted raw material and packing material ; (v) disproportionate power consumption, capacity utilization and labour employment; and (vi) recovery of unaccounted sales proceeds in substantial cash from factory or office premises or anywhere else in direct control o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tobacco. We really fail to understand as to how the appellant could have manufactured such huge quantity of Zarda without procurement of the main raw material as also the other raw materials. Further, no investigations stand made from the persons associated with the actual manufacture or the labourers appointed by the appellant so as to establish that such excess Zarda was manufactured by them. Further no incriminating documents stand recovered from the appellants factory or possession. Not only that the Revenue has not made any efforts during the course of investigations to identify the buyers to whom the said goods have been sold. To raise such a huge demand of duty, based solely on the statements, explaining the records maintained by such third parties, without identifying the buyers to whom the goods have been sold and without producing any evidence as regards the mode of realization of the consideration of such clandestinely removed goods, we are of the view that the allegations and findings of clandestine removal cannot be upheld against the assessee. 28. In view of the foregoing we find that the impugned orders are unsustainable in so far the same relates ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
