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TMI Blog2022 (11) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... Maa Alloys (P) Ltd., Chikatmati, Kalunga, Dist. Sundergarh, Odisha, (2) Factory-cum-office premises of Maa Foundry (P) Ltd., Chikatmati, Kalunga, Dist.Sundergarh, Odisha, (3) residential premises of Pitabass Chhotray, Director situated at Deogan, Fertilizer Township, Rourkela, (4) Residential premises of Anirudha Sutar, Accountant situated at Plot No.M/32, Chhend Colony (Ground floor), Rourkela and (5) residential premises of Ajay Kumar Das, Office Assistant situated at Kansbahal Jhopri Patti, Kansbahal Chowk, Dist.Sundergarh, Odisha. During the search conducted in the factory-cum-office premises of M/s. Maa Foundry (P) Ltd., several documents were seized with marking for identification of document No.1/DGCEI/RRU/MFPL/F/11 to 20/DGCEI/RRU/MFPL/F/11. Further, joint physical stock verification of finished product was also done and 71.140 MT of C.I. Ingot Mould was physically found. In the residential premises of Pitabass Chhotray, Director, situated at Deogan, Fertilizer Township, Rourkela, he was not present. Search was conducted in presence of Smt. Nirmala Chhotray, wife of Shri Pitabass Chhotray. During the search, 2 unused Invoice books in quadruplicate of M/s.Maa Foundry (P) Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ECORDS) A.K. Panda, Employee (See Page 46 first Para of impugned OIA) M aker not examined) Office of the Appellant 660.230 24-01- 2011 to 19-03- 2011 Rs.1,79,46,722/- Rs.18,48,512/- 3. Joint Verification report (Annexure- 5) 20.770 19-03- 2011 to 23-03- 2011 Rs.5,81,560/- Rs.59,901/- TOTAL 1964.970 Rs.4,75,05,618/- Rs.44,24,025/- 4. The Appellant vide their reply dated 20.08.2013 and Additional Written submissions vide letter dated 17.12.2015, inter alia contended that the allegations in the instant case were entirely based on unauthenticated private records and there was no tangible, cogent and affirmative evidence to support the allegation of clandestine removal of such huge quantity of 1964.970 MT of C.I. Mould and the statements recorded under Section 14 of the Central Excise Act, 1944 are irrelevant piece of material due to non-compliance with Section 9D of the Central Excise Act, 1944 and therefore have to be eschewed from evidence. 5. The Ld. Additional Commissioner vide Order-in-Original dated 22-01-2016 confirmed the duty demand of Rs.38,06,364/- for purported clandestine removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntries of private records with Central Excise Invoices and unmatched entries were presumed to be related to clandestine removal. The allegations/findings is thus based on suspicion. 7.7 In the case of Sharma Chemicals Vs. CCE reported in (2001) 130 ELT 271 (Tri-Kol), it was held that mere tallying some of the entries of the private record with statutory records may give rise to suspicion but merely on suspicion, serious charge of clandestine removal cannot be sustained. 7.8 Further, it was submitted that : (i) there was no excess/shortage of raw material detected in the physical stock taking. (ii) there is no evidence of receipt of unaccounted raw materials for the manufacture of impugned goods. (iii) there is no evidence of transportation of raw material. (iv) there is no evidence of production of impugned goods by the Appellant. (v) there is no evidence of extra use of labour for production of goods. (vi) there is no evidence of consumption of any extra electricity required for manufacture of the impugned goods. (vii) there is no evidence of clearance or transportation/clearance of the impugned goods from the Appellant's factory. (viii) the buyer have spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the proceedings under the Act, other than the proceeding before the court, as they apply in relation to proceeding before the Court. This provision when read in juxtaposition, the small clauses (a) and (b) under sub-section (1), requirement of law of recording of examination as witness would be in relation to the proceedings before the adjudicating authority. 9.3 A conjoint reading of the provisions therefore reveals that a statement made and signed by a person before the Investigation Officer during the course of any inquiry or proceedings under the Act shall be relevant for the purposes of proving the truth of the facts which it contains in case other than those covered in clause (a), only when the person who made the statement is examined as witness in the case before the court (in the present case, Adjudicating Authority) and the court (Adjudicating Authority) forms an opinion that having regard to the circumstances of the case, the statement should be admitted in the evidence, in the interest of justice. 9.4 The legislative scheme, therefore, is to ensure that the statement of any person which has been recorded during search and seizure operations would become relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms, 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 and Haryana. Reliance has been placed by the Counsel for the Revenue on the decision in the matter of Commissioner of Central Excise v. Kalvert Foods India Private Limited (Laws (SC) 2011 838) = 2011 (270) E.L.T. 643 (S.C.). That decision turned on its own facts. In para 19 of the judgment, it was concluded as below : "19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of their own volition and there is no allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corroborated each other. Besides the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant material as noticed in the decisions reported in 2014 (309) E.L.T. 411 and 2017 (345) E.L.T. 187 rendered by the High Court of Allahabad and High Court of Jharkhand, respectively. What, amongst other things, could be relevant consideration of clandestine removal, was discussed as below : "12. Further, unless there is clinchingevidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects : (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out finished product receipt details from regular dealers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turning deaf-ear to their own circular dated 26-6-2014 (Annexure-3 to the memo of this writ). In this case, the respondents are relying upon Dr. N.K. Batra's report, also upon the allegation that much less salary has been paid to the employee and the unit is running in losses. All these are nothing but the possibilities, for clandestine removal, but, for proving the clandestine removal, the substantive piece of evidence is must. Few such evidences have been referred by this Court. The list of these evidences is not exhaustive. (I) The department should have collected the proof of amount received from the consignees, statement of consignees, receipts of sale proceeds by the consignor and its disposal." 14. The Hon'ble Punjab & Haryana High Court in the case of Ambika International Vs. Union of India [2018 (361) E.L.T. 90 (P & H)] has observed that :- "14. In view of the fact that the case of the petitioners is essentially premised on Section 9D of the Central Excise Act, 1944, it would be appropriate to reproduce the said provision, inextenso, thus: "9D. Relevancy of statements under certain circumstances. - (1)A statement made and signed by a person before any Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein. In other words, in the absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). 18. The consequence would be that, in the absence of the circumstances specified in Section 9D(1), if the adjudicating authority relies on the statement, recorded during investigation in Central Excise, as evidence of the truth of the facts contained in the said statement, it has to be held that the adjudicating authority has relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts. 23. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the gazetted C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede reexamination. 27. It is only, therefore, - (i) after the person whose statement has already been recorded before a gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for crossexamination, can arise. 28. Clearly, if this procedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof." 15. In the case of Ambica Iron & Steel Pvt.Ltd. (supra), the Tribunal observed :- "14. The clandestine man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so called 'Ledger' in his statement dated 19-09-2011 in reply to Q.No. 24 stated that said ledger relates to sale and also repairs of C.I. Moulds by the Appellant. Sri Ajay Kumar Das the author of the Ledger (Document No. 08/DGCEI/RRU/MFPL/AS (R)/11) on the basis of which duty of Rs.25,15,612/- is demanded, never stated that unmatched entries are unaccounted clearances by the Appellant. 17. Further, I find that the Ld. Commissioner (Appeal) in the impugned Order has held that Sri Anirudha Sutar, Sri Ajay Kumar Das and Sri Pitbass Chhotray have 'accepted and agreed' that the entries in the said 'Ledger' (Document No. 08/DGCEI/RRU/MFPL/AS(R)/11) relate to sale of manufactured finished products by the Appellant which is patently perverse. In the Show Cause Notice Page 57 & 58 the statement of Sri Pitabas Chhotray, Sri Anirudha Sutar and Sri Ajay Kumar Das are treated as false, afterthought, misstatement, hence, even as per department there is no confession of guilt. 18. The maker of Document No.01/DGCEI/RRU/MFPL/F/2011 (Duplicate Note Book), Sri A. Panda, was never examined to ascertain the purpose for which and at whose instruction the said document is maintained. Hence, nothing co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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