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TMI Blog2023 (12) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that they have sold the goods imported by them on high sea sales basis to the registered dealers or manufacturers of aluminium ingots and similar other products of aluminium. The goods on importation were however diverted by the original importers to certain other actual users i.e. manufacturers of aluminium ingots, profiles etc. whereas the CENVAT credit of CVD paid on those goods were availed by the said purchasers of such goods on high sea sales basis as reflected in the Bills of Entry. The actual users of the goods then clandestinely cleared the finished goods manufactured from the imported scrap without accounting for the same in their books and thereby suppressed the actual production. The manufacturers who purchased the imported goods on high sea sales basis for availing the CENVAT credit actually bought locally available scrap (at lower value) to account for the production of the finished goods in their factory. The department was of the opinion that central excise duty was being evaded by way of illegal availment of CENVAT credit of CVD paid on the imported goods by the manufacturers of aluminium products without physically receiving the goods i.e. imported alum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellants sold aluminium scrap on 'high sea sales' basis to M/s Vignesh Alloys (P) Ltd. who filed the Bill of Entry. Both, the appellants and M/s Vignesh Alloys (P) Ltd have abetted in diverting the imported goods to other manufacturers who took CENVAT credit without receipt of goods and the appellants were hence liable for a penalty. The main noticee involved in the case i.e. M/s Vignesh Alloys (P) Ltd. has not pursued his appeal before this Tribunal or availed any other alternative remedy and the matter has reached a finality on the main charge. The penalty imposed on those who collaborated and benefitted from the illegal action hence needs to be upheld. Rule 9D is applicable in the case of prosecution and not in departmental proceedings. Moreover in this case cross examination of persons who gave the statements as sought by the appellant was allowed but not availed. Investigation had shown that the appellants had prior knowledge of the clandestine activity and hence the penalty was rightly imposed. They prayed that the Appeals may be rejected. 4. I have carefully gone through the facts of the case and have heard the rival parties. I find that this is a case of misuse of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court by a majority decision in Thomas Dana vs The State Of Punjab, [1959 AIR 375] held that there is no escape from the conclusion that the proceedings before the Sea Customs Authorities under s. 167(8) (which was a pre-cursor to the Customs Act, 1962, a sister Act to the FA 1994 and CEA, 1944), were not "prosecution" within the meaning of Art. 20 (2) of the Constitution. 6.2 The matter was examined again recently in February 2019 by the Apex Court in its judgment in Department Of Customs vs Sharad Gandhi Proprietor [LAWS(SC)-2019-2-277 / CRIMINAL APPEAL NO(S).174 OF 2019 Arising out of SLP (Crl.) No.9159 of 2015). The Hon'ble Court held: '63. In fact, we find that this Court in the Assistant Collector of Customs, Calcutta vs. Sitaram Agarwala and Another AIR 1966 SC 955 considered the scheme of Sea Customs Act, 1878 as contained in Section 167. . . . This is what the Court had to declare in regard to the aforesaid penalties : "Then comes Ch. XVI dealing with offenses and penalties. Offence enumerated in Ch. XVI are of two kinds; first there are contraventions of the Act and rules thereunder which are dealt with by Customs officers and the penalty for which is imposed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Supreme Court in the case of K.T.M.S. Mohd. & Anr. Vs. Union of India ((1992) 3 SCC 178): "34. We think it is not necessary to recapitulate and recite all the decisions on this legal aspect. But suffice to say that the core of all the decisions of this Court is to the effect that the voluntary nature of any statement made either before the Custom Authorities or the officers of Enforcement under the relevant provisions of the respective Acts is a sine quo non to act on it for any purpose and if the statement appears to have been obtained by any inducement, threat, coercion or by any improper means that statement must be rejected brevi manu. At the same time, it is to be noted that merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obtained. It is only for the maker of the statement who alleges inducement, threat, promise etc. to establish that such improper means has been adopted. However, even if the maker of the statement fails to establish his allegations of inducement, threat etc. against the officer who recorded the statement, the authority while acting on the inculpatory statement of the maker is not completely relieved of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross examination which was not availed, correctly relied upon the statements and cannot be faulted. This Tribunal cannot go into the merits of the AA's satisfaction, if it is reasonable. As held by the Hon'ble Apex Court in Gazi Saduddin v. State of Maharashtra and Another [(2003) 7 SCC 330]; "Primarily, the satisfaction has to be of the authority passing the order. If the satisfaction recorded by the authority is objective and is based on the material on record then the courts would not interfere with the order passed by the authority only because another view possibly can be taken. Such satisfaction of the authority can be interfered with only if the satisfaction recorded is either demonstratively perverse based on no evidence, misreading of evidence or which a reasonable person could not form or that the person concerned was not given due opportunity resulting in prejudicing his rights under the Act." 6.6 It is not the case that all the appellants have stated that the statements were taken under duress. Only one of the Appellant Shri Manoj Champalal Jain of M/s Padmavathi Metals, had stated that the statements were taken from him under duress, after a lapse of more than one y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volved in these activities is effectively brought to life through the statements of those who are in the know of things. Voluntary statements, if clearly proved and found acceptable, are the most effective proof of law and can't be ignored. The legal issue of the admissibility of the statements in evidence in the impugned case is hence found valid. 6.8 The counsel for the appellant has referred to the judgment of the Hon'ble High Court of Punjab and Haryana in the case of Jindal Drugs (P) Ltd Vs UOI [2016 (340) ELT 67 (P&H)]. The said judgment states that two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D (1), viz. i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. 6.9 The examination of witnesses is an integral part of a criminal trial. Section 135-165 of the Evidence Act, 1872 deals with examination and cross-examination of witnesses. There are three parts to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the clandestine activity 7.1 I find that the charges against the appellants have been made after a very detailed investigation of clandestine activity by a group of people who have abetted to evade payment of duty by misusing high-sea sales and CENVAT schemes. It is difficult to find direct evidence in such cases and they are mostly proved by a mix of direct and indirect evidence, as duty evasion is seldom an open affair. The blame worthy act has hence to be inferred from the circumstances and the conduct of the people involved. Although relating to a criminal case in Shivnarayan Laxminarayan Joshi & Ors. vs. State of Maharashtra [(1980) 2 SCC 465], it was observed by the Apex Court: "It is manifest that a conspiracy is always hatched in secrecy, and it is impossible to adduce direct evidence of the same. The offence can be only proved largely from the inferences drawn from acts or illegal omission committed by the conspirators in pursuance of a common design . . . ." 7.2 The main noticee has not taken forward his appeal and the legal position has crystalised in terms of the impugned order, bringing finality to the issue of establishing duty evasion. The circumstances as br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontainer of aluminum to VAPL on high seas sale basis. When confronted with documents he agreed that the imported goods had been diverted from their actual destination. Hence M/s. Yash Industries were fully aware of the clandestine activity and its consequences. 7.7 From the impugned order it is seen that Shri Manoj Champalal Jain was the proprietor M/s Shri Padmavathi Metals. The Co was trading in scrap purchased locally and imported. He had sold three consignments of aluminum scrap to VAPL. He had engaged the CHA and the transporter for the goods. On being confronted with documents showing that the vehicle shown to have transported the goods did not have a permit and the check post report that scrap had not been transported to the premises of VAPL, he agreed that the goods had been diverted. Hence they were aware that the impugned goods were liable for confiscation and they were liable for penal action under Rule 25 of the Central Excise Rules 2002. 7.8 From the impugned order it is seen that Shri Vinod Babulaiji Mandot is the partner of M/s Shrinivas Impex. The Co was engaged in the trading of scrap of aluminum, copper, brass, zinc etc. They had sold aluminum scrap to VAPL on h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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