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TMI Blog2021 (10) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... luded the vital documents i.e. diaries marked as A/2, and A/3, appellant have strongly submitted that it is not shown from where these diaries were recovered and from whose possession. Therefore, to this extent even the recovery of diaries marked A/2 A/3 is under suspicion. The Director has appeared before the investigation agency and given his statement. There are certain documents recovered from transporter and dealer and their statements were recorded. Since the appellant Director has categorically denied about the diaries A/2 A/3, the Adjudicating Authority was supposed to cross examine the witness such as transporters and dealers. They being a third party witness and records recovered from a third party evidence however, the Adjudicating Authority has denied the cross examination. Once the Director of the appellant company has clearly disowned the diary and contents therein, it is incumbent of the Adjudicating Authority to cross examine third party witness to bring the truth of the diary on record. However, by not allowing the cross examination, the Adjudicating Authority has violated the basic requirement of cross examination for admitting any evidence such as statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company or any employee. Penalty - HELD THAT:- Since the charge of clandestine removal against the main appellant M/s. Meera Pipes P. Ltd. are not established, the consequential penalties imposed against various persons will also not sustain. Appeal allowed - decided in favor of appellant. - E/10217, 10221, 10224-10226, 10228, 10229, 10275- 10277/2019 - A/12428-12437/2021 - Dated:- 11-10-2021 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Vijay B. Joshi, Advocate for the Appellant Shri S.N.Gohil, Superintendent (Authorised Representative) Shri Ghanshyam Soni, Joint Commissioner (Authorised Representative) for the Respondent ORDER The brief facts of the case are that the appellant M/s. Meera Pipes Pvt. Ltd. is engaged in the manufacture of SS Pipes falling under Chapter 73 of Central Excise Tariff Act, 1985. They are availing the benefit to SSI Exemption from duty and also from obtaining Central Excise Registration as they claimed that the clearance value not exceed the threshold limit under the exemption notification. On 27.11.2013, the officers of the DGCEI visited and searched the factory of the appellant and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of finished goods and raw materials lying in the factory and noted as per Annexure B C to the panchnama, he said no variation was found in the stock. He submits that suddenly the officers explained that as per the records found during the search M/s. Meera Pipes Pvt. Ltd. have manufactured and cleared finished goods more than 900 MT. during April-2013 to 27.11.2013 as against sales of approximate 70MT. shown in the invoice and accordingly finished goods placed under seizure stating that SSI exemption from duty and registration not available to the unit assuming the clearance value exceeded the SSI limit. 2.1 He submits that the entire process of panchnama shown to be completed at 22.10 hrs on same day i.e.27.11.2013. In the above backdrop it is his submission that it is not possible to do entire process, formalities, search, stocktaking, segregation of records, alleged calculation of clearance, etc., shown in the panchnama, even the time shown in the panchnama which seems the search was predetermined. He further submits that no statement of any person of the factory of the appellant was recorded. Shri Ashuram Vishnoi, Director of the appellant company shown to be presented du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s never disputed procurement of raw material and sales of finished goods through official invoices which are also shown in diaries accordingly, the commissioner has given his finding that is established that the procurement of raw material and clearance of finished goods shown in two diaries hence, it was held that the diaries belong to M/s. Meera Pipes Pvt. Ltd. He submits that since the director categorically denied the ownership or authorship of these two diaries thereafter, the contents of diaries is immaterial. He submits that there is a serious lacuna and doubt in the entire proceedings of panchnama. Since the panchnama itself is not proper and is fabricated one, all the records seized under panchnama particularly the diaries A/2 A/3 are also under serious doubt. Accordingly, on this basis case of clandestine removal cannot be established. He also pointed out that while drawing the so called panchnama, no statement or admission of director recorded about these two diaries which were heavily relied upon. Even on 13.12.2013 while recording the director s first statement, the director categorically denied about ownership and the facts of the diaries except the doubtful recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of two diaries and the statement of transporter and admission taken about its correctness but nowhere any specific admission recorded about purchase from M/s.MEERA PIPES P. LTD. without invoice. He submits that all the statements of suppliers as well as buyers relied upon by the Commissioner against the appellant is not correct and not admissible as the same have been retracted through their reply to the notice and also to their cross examination denied by the Commissioner. 2.6 As regard the document recovered from M/s. JBFC he submits that even from the scanned copy of the documents procured from M/s. JBFC as well as some other transporter reproduced in the impugned Order-In-Original does not contain any name of the appellant or its persons. The commissioner while observing that as per statement of Manager of M/s.JBFC, C-Ahmedabad denotes the loading from chhatral where the factory of M/s. Meera Pipes P. Ltd. is located, is also not correct and all the documents as well as statements of M/s. JBFC produced by the Investigation against the appellant are totally baseless and just to prove the production of the appellant. He submits that it is fact that there are so many manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the panchnama while taking physical stock of raw material and finished goods regarding illicit quantity of raw material purchased or excess production of goods other than quantity recorded in the private record. 2.10 He submits that whatever documents brought/reproduced at Para 71 of the Order, the said documents have not been referred in the Show Cause Notice. The Commissioner has calculated the huge quantity of 56447.580 Kgs. as illicit clearance of finished goods to Mumbai based buyer during September-2013. In this regard there is no admission by the appellant regarding diaries relied upon as well as any other documents as referred by the Commissioner. There is no single statement recorded from the parties mentioned in the record relied upon by the Commissioner in para 71. 2.11 He submits that in absence of any admission regarding the receipt of material by the so called buyer the said documents are not admissible as evidence against the appellant. He further submits that the Commissioner has wrongly relied upon the statements of various persons of transporters without granting any cross examination of the said persons. Being a third party documents, without cross examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S LTD. VS. C.C.E. S.T. DURGAPUR -2020 (371) E.L.T. 751. 03. Shri. S.N. Gohil, Learned Superintendent (Authorized Representative) appearing on behalf of the revenue reiterates the finding of the impugned order he also filed a written submission dated 15.12.2020 which is taken on record. In his written submission he placed reliance on the following judgments:- 2010 (261) ELT (MAD)- A L JALALUDEEN VS. DY. DIR. OF ENFORCEMENT DIRECTORATE, CHENNAI 2006 (194) ELT 290 (TRI-DEL) JAGDISH SHANKER TRIVEDI VS. CC, KANPUR 2002 (142) ELT 224 (G.O.I) G SUBRAMANIAN 2014 (307) ELT 862 (BOM) PATEL ENGINEERING LTD VS. UNION OF INDIA 1993 (68) ELT 548 (ALL.) SHYAM LAL BIRI MERCHANT VS. UNION OF INDIA 2014 (300) ELT 119 (TRI-MUM) AHMEDNAGAR ROLLING MILLS P LTD VS. CCE, AURANGABAD 2018 (360) ELT 255 (AP)- MANIDHARI STAINLESS WIRE P LTD VS. UNION OF INDIA 2019 (365) ELT 42 (GUJ) POOJA TEX PRINTS P LTD VS. CCE, SURAT-I 2017 (355) ELT 451 (TRI-DEL) HARYANA STEEL ALLOYS LTD VS. CCE, NEW DELHI 2007 (215) ELT 46 (TRI-AHMD) MOONTEX DYEING PRINTING WORKS VS. CCE, SURAT 2008 (225) ELT 57 (ALL)- GLOBAL SPIN WEAVE LTD VS. CESTAT 2006 (193) ELT 478 (TRI-DEL)- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded this admitted fact that the Director has denied the ownership and authorship of the diary whereby, he has not cooperated with the investigation agency. We do not endorse this contention of the learned Adjudicating Authority for the reason that denial of the diary and the information record therein cannot be said to be a non-cooperation with investigation agency. We find that the Director has appeared before the investigation agency and given his statement. There are certain documents recovered from transporter and dealer and their statements were recorded. Since the appellant Director has categorically denied about the diaries A/2 A/3, the Adjudicating Authority was supposed to cross examine the witness such as transporters and dealers. They being a third party witness and records recovered from a third party evidence however, the Adjudicating Authority has denied the cross examination. Once the Director of the appellant company has clearly disowned the diary and contents therein, it is incumbent of the Adjudicating Authority to cross examine third party witness to bring the truth of the diary on record. However, by not allowing the cross examination, the Adjudicating Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating authority that the statement is required to be admitted in the interest of justice. The rigor of this provision, therefore, could not be done away with by the adjudicating authority, if at all, it was inclined to take into consideration the statement recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer as well as Customs, Excise and Service Tax Appellate Tribunal committed illegality in placing reliance upon the statement of Director Narayan Prasad Tekriwal which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the interest of justice. In taking this view, we find support from the decision in the case of Ambica International v. UOI rendered by the High Court of Punjab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) E.L.T. 149 (Tri.Del) the fact was that demand was confirmed on the basis of recovery of challan books from the assessee s premises and notebook from job workers premises, no investigation conducted as to author of notebook, the demand was set aside. In the present case also first of all it was not established that who is the author of the diaries particularly, when the appellant s director disowned the diaries. Therefore, those diaries cannot be relied upon as evidence to establish the clandestine removal. 4.3 In the case of NABHA STEELS LTD. VS. COMMR. OF C.EX.CHANDIGARH-2016 (344) E.L.T. 561, the demand was confirmed on the basis of kachchi slips found on premises of the assessee however, demand was not sustained by the tribunal on the ground that witnesses were not cross examined during the investigation. 4.4 In the case of FACT PAPER MILLS LTD. VS. COMMR. OF C.EX. BHAVNAGAR 2014 (314) E.L.T. 449, the charge of clandestine removal was made on the basis of Director s statements which was subsequently retracted in cross examination of buyers and suppliers of raw material, the tribunal set aside the demand and allowed the appeal. Applying the ratio of the above judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4.8 In the case of SYNERGY STEELS LTD. VS. C.C.E. ALWAR-2020 (372) E.L.T. 129 (TRI. DEL), same view was expressed by the hon ble Tribunal therefore, statements of consignment agent also not reliable evidence in absence of his cross examination in terms of Section 9D of Central Excise Act. 4.9 In the case of SUPER SMELTERS LTD. VS. C.C.E. S.T. DURGAPUR -2020 (371) E.L.T. 751, the tribunal observed that statement relied upon by the department without following mandate of Section 9D of Central Excise Act, 1944 charge of clandestine removal cannot be established. As per the above all judgments, it is settled that statements of dealers and transporters and the documents recovered from them cannot be relied upon as evidence since, no cross examination have been carried out by the adjudicating authority from the dealers and transporters as mandated under Section 9 of the Central Excise Act therefore, without cross examination neither the statements nor the documents recovered from transporter and dealers can be relied upon. The learned counsel also taken us to some sample documents which are heavily relied upon by the adjudicating authority for confirmation of demand. Some of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant has a capacity to manufacture the quantity which was alleged to have been cleared clandestinely. For this reason also, clandestine removal is not established. 4.13 Summarizing the above discussion, we find that the entire demand was made on the basis of documents recovered from appellant s premises, statement of director of the appellant company, document from weighbridge and documents from transport and dealers and their statements recorded under Section 14 of the Central Excise Act, 1944. As we discussed above, the documents recovered from the appellant s premises i.e. Diaries in A/2 A/3 were not accepted by the appellant s director. The department also could not establish who is the author of that diary and no contents of the documents was revealed either by the Director of the company or any employee. As regard the documents recovered from the dealers/weighbridge, and transporters, firstly, no name of the appellant is appearing in the documents, secondly, the statements given with regard to those documents by dealers/transporters cannot be admitted as evidence for the reason that the person, witnesses who had given the statements were not examined under Section 9D th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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