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TMI Blog2019 (9) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant has not cleared Polyester Fabrics to M/s Sunshine Overseas. The statements of Shri Sanjay Aggarwal CEO of the Appellant firm are contradictory. Whereas in his statement dt 25.6.2003 he stated about removal of manufactured goods i.e Polyester Grey Fabrics but after 2 years he changed his version in statement dated 12.3.2005 that the raw material was cleared by the Appellant. Similarly statement dt 12.7.2003 of Tempo Driver Shri Saiyad and statement dtd 19.8.2003 of Shri Akbar Sahid Umar, tempo owner, they did not say anything about transportation of raw material. Opportunity of cross-examination of statements not provided - HELD THAT:- Once the statements has been made basis for alleging clandestine clearance, the adjudicating should have granted cross examination. The Appellant during the adjudication proceedings, had sought cross examination of the persons, whose statements were relied upon in the show cause notice. The same was necessary in terms of Section 9D of the Central Excise Act which was not allowed - when the demands and the allegation of removal of Polyester Yarn was based upon the statements of the persons in that case, it was mandatory for the adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers at Bhiwandi on the Central Excise DTA invoices as no goods were delivered. He also stated that Shri Haroon Chhaya, owner of M/s Al Amin Exports and Shri Irfan Bhai are looking after all monetary dealings of M/s Sunshine Overseas. Statements of Shri Irfan and Shri Haroon were recorded wherein they stated that the entire operations of M/s Sunshine were looked after by them. That they were not holding any position in firm but were looking after entire work. No material was received by them against CT-3 issued in favour of M/s Sunshine. They were making exports out of raw material received from M/s Bilal Latif Memon. Investigation at Appellant firm M/s Vandevi Texturizers was carried out wherein their Manager, Shri Hariram Chaudhary was recorded wherein he stated that the goods were cleared on paper and were not physically delivered to M/s Sunshine and the goods were sold in the open market. The Chief Executive Officer Shri Sanjay R.P. Agarwal of M/s Vandevi Texturizers in his statement also stated that they prepared the documents reflecting clearances of goods from the factory but the same were sold in the open market and proceeds were returned in cash. He was not able to iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt factory and preparation of panchnama, no discrepancy was found in stock of raw material, finished goods and inventory record. There is no dispute about the fact that the Appellant had maintained properly all the statutory records. They also followed the procedures of Removal of Finished Goods to Other 100% EOUs in terms of Rule 20 of Central Excise Rules, 2002 and CBE C Circular No. 579/16/2001-CX dated 26.06.2001, which prescribes the removal of finished goods under the prescribed AR-3 Form - in quadruplicate, distribution of copies of AR-3s, accountal of goods in warehouse, responsibility of the consignor and the consignee and in particular the requirement that the consignor should receive the duplicate copy of the warehouse certificate, duly endorsed by the consignee, within 90 days of the removal of the goods and that if such warehouse certificate is not received within 90 days, the consignor shall pay appropriate duty leviable on such goods. They also filed monthly returns prescribed under Rule 17 (3) of the Central Excise Rules 2002 showing manufacture and clearance of finished goods and also filed quarterly and half yearly returns with the offices of the Development Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s case is that there was no manufacture and removal of finished goods, but no evidence has been brought on record, but say that there was No Manufacture or disapproved documents available on record showing the effect of manufacture and clearance of finished goods. He also relies upon the judgments in case of SUNSHINE OVERSEAS vs CCE - 2011 (268) ELT 374 (Tri), and NITIN TEXTILES 2010 (261) ELT 181 (Tri). He submits that in view of above facts, the impugned order is not sustainable and is required to be set aside. 3. On the other hand Shri L. Patra, Ld Assistant Commissioner (AR) appearing for the Revenue submits that from the statements of partners of M/s Sunshine Overseas and the statement of Shri Sanjay Ratan Aggarwal, it is apparently clear that no manufacturing activity took place in the factory of the Appellants and the Polyester Yarn was cleared in the open market by the appellant firm. That the partners of Sunshine Overseas in their statements have stated that they were receiving amount on account of showing supply of Polyester Fabrics in their factory whereas they were purchasing cheap quality raw material from the market and after manufacturing of goods, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis for making allegation to clandestine diversion of raw material by the Appellant. It is also a fact on record that though 46 consignments of finished goods were transported through different vehicles, but only one statement dated 11.3.2005 of Shri Vijay Purohit has been relied upon to allege removal of Polyester Yarn in clandestine manner. We also find that Shri Sanjay Aggarwal vide affidavit dt 1.7.2003 and 4.3.2005 had retracted the statements made by him before the investigating officers. Once the statements has been made basis for alleging clandestine clearance, the adjudicating should have granted cross examination. The Appellant during the adjudication proceedings, had sought cross examination of the persons, whose statements were relied upon in the show cause notice. The same was necessary in terms of Section 9D of the Central Excise Act which was not allowed. In our view when the demands and the allegation of removal of Polyester Yarn was based upon the statements of the persons in that case, it was mandatory for the adjudicating authority to grant the cross examination of such persons whose statements are sole evidence to make allegations against the Appellant. In abs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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