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TMI Blog2019 (1) TMI 1823X X X X Extracts X X X X X X X X Extracts X X X X ..... no opportunity to question. Denial of cross-examination results in gross violation of principles of natural justice and not allowing fair hearing to the Noticee. Further, the provisions of Section 9D of the Central Excise Act are very specific which have not been complied with in the present matter. Section 9D clearly mandates that a statement shall be relevant only if the person concerned is examined as a witness and the Adjudicating Authority is of the opinion that the statement should be admitted in evidence. No doubt there are certain exceptions. But it is not the case of the Revenue that any of those exception is applicable in the present matter. The Revenue has not adduced on record any independent evidence to corroborate the contents of those documents. Without any independent corroboration it cannot be presumed that the entries contained in those documents pertain to the Appellant No.1. The tallying of some entries in those documents with the records of the Appellant may raise suspicion but cannot be used to establish malafide. The onus to prove clandestine manufacture and clearance of excisable goods is on the Revenue by adducing cogent and tangible evidence which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found negligible shortage in the stock of finished goods and some excess in the stock of Melting Scrap. Some documents were recovered from the possession of the labours engaged by the Contractor and living within the premises of Appellant No. 1. A pocket diary was also recovered from the room of a labour in the factory premises of JCWPL. The statements of one of the partner of Appellant No. 1, Binod Kumar Jaiswal, Brajesh Chandra Asthana and some labours were recorded by the DGCEI Officers. Thereafter, a show cause notice dated 01.10.2007 has been issued to all the three Appellants, which was adjudicated by the learned Commissioner, wherein he has confirmed the demand of Central Excise duty and imposed penalties on all the three Appellants on the grounds that the Appellant No.1 was indulged in evasion of Central Excise duty by way of willful suppression and mis-statement as excess stock of raw material was found in the factory premises; a few entries in the documents resumed from the workers matched with the entries in the records of the Appellant No. 1; no documentary evidence has been produced by the Appellant No.1 to show that the entries in the resumed documents were not meant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those persons. Therefore, no case of clandestine removal of excisable goods can be made against the Appellants on the basis of uncrossed statements of the witness and un-verified documents. 4.4 The learned Advocate has also placed reliance on the judgment in Jindal Drugs Pvt. Ltd. Vs U.O.I. 2016 (340) ELT 67 (P H) wherein the Punjab and Haryana High Court has held that the procedure prescribed in Section 9D(1) of the Central Excise Act has to be scrupulously followed and if makers of statement is not examined in chief before the adjudicating authority, such statement has to be eschewed from evidence and should not be relied on as evidence in adjudication. The learned Advocate contended that in the present matter, provisions of Rule 9D were not complied with and therefore none of the statements recorded during investigation under Section 14 of the Act can be relied on as evidence. 5.1 The learned Advocate submitted that duty amounting to ₹ 25,01,876/- has been confirmed on the basis of one pocket diary recovered from the room of one Ranjeet Singh working as labour in JCWPL. The said diary has not been recovered from the factory premises of the Appellant as it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to come to the conclusion that these documents belonged to Appellant No. 1. From the mere fact that some documents tallied with the purchases made by Appellant No.1, it cannot be concluded that all entries in documents pertained to the Appellant No.1. It is settled law that, the charge of clandestine removal is a very serious one and is required to be proved by bringing tangible and cogent evidence on record. 6.2 The learned Advocate submitted that only on the basis of such documents, charge of clandestine removal is not sustainable in law. 7. A demand of ₹ 15,62,833/- has been confirmed on the basis of loose sheets resumed from the room of one Sushant Bera, labour. No enquiry from said Sushant Bera about the document has been made as there is no statement on record. It has been presumed by the Department without any basis that Pages 6 9 were sale data of Appellant No.1 merely because some entries tallied with their records. It is settled law that the show cause notice cannot be issued on assumptions and presumptions. No reliance can be placed on such loose sheets without bringing on record the tangible evidence. 8. A demand of ₹ 1,31,556/- has been confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... setting aside of the impugned Order. 11. The learned A.R. for the Department reiterated the findings contained in the impugned Order and emphasized the facts that the Appellant No.1 has admitted the clearance of steel ingots clandestinely as they had given three cheques for ₹ 20 Lakhs under their letter dated 18.07.2006; there was excess stock of melting scrap and some of the entries in the documents so recovered tallied with the records maintained by the Appellant No.1 which clearly goes to show that the documents contained transaction undertaken by the Appellant No.1. 12. Heard both sides and perused the appeal records. 13. We find that the entire case has been made against the Appellants on the basis of documents and statement of witnesses. Though the Appellants had requested for the cross examination of the witnesses whose statements have been relied upon, the learned Commissioner has declined the same without assigning any reason. It has been held by Supreme Court, High Courts and this Tribunal in a number of cases that when Revenue places heavy reliance on certain statements of the witnesses recorded during the course of investigation the Noticees are well wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The tallying of some entries in those documents with the records of the Appellant may raise suspicion but cannot be used to establish malafide. The onus to prove clandestine manufacture and clearance of excisable goods is on the Revenue by adducing cogent and tangible evidence which is lacking in the present matter. Clandestine removal of goods is a serious charge and cannot be leveled on the basis of presumption, assumptions and surmises. The Hon ble Calcutta High Court has dismissed the appeal filed by Revenue in Lords Chemicals Ltd., (supra), holding that the presumption that the entries in the private note book maintained by the labour contractor should be taken as the clearance figures of the finished products is not permissible and show cause notice cannot be issued on the basis of such presumption in the absence of any corroborating, reliable and independent evidence. 16. It is settled law by the decision of the Courts and this Tribunal that the charge of clandestine manufacture and removal cannot be leveled on the basis of documents recovered from the premises of a third party. The Appellants have placed reliance on a number of decisions in this regard such as Rhino Rubb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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