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TMI Blog2024 (8) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... n be admitted as evidence to use against the appellant for adjudication of the show cause notice. It is not the choice of the Adjudicating Authority to grant or to deny the cross-examination of the witnesses. Since admittedly the adjudicating authority has rejected the request for cross- examination of the witness, then the statements of the witnesses cannot be relied upon as admissible evidence. In the case of Motabhai Iron Steel Industries [ 2014 (10) TMI 723 - GUJARAT HIGH COURT ] it was held that 'no reliance can be placed on the statement of such witness who has not subjected himself to cross-examination by the affected party. Under the circumstances, the statement made by Shri Arjandas lost its efficacy and therefore, could not have been used against the assessee. Besides, the Tribunal has also found that M/s. Star Associates was regularly supplying goods to the assessee in the past and on no occasion, it was found that they had issued invoice without actually supplying the goods. It is in the light of the aforesaid facts that the Tribunal has deleted the disallowances of credit of Rs. 14,42,177/-. Under the circumstances, it cannot be said that there is any infirmity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR The brief facts of the case are that appellant is engaged in the manufacture of ceramic floor tiles and wall tiles falling under chapter 69 of the first schedule to Central Excise Tariff Act, 1985 and is registered with the Central Excise department. The goods manufactured by them are assessed to central excise duty under Section 4A of the Central Excise Act, 1994. On the basis of intelligence that the appellant firm was indulging in the evasion of excise duty by way of clandestinely clearing their finished goods, the preventive officers conducted a search of the factory premises of the appellant firm. During the search the officers have recovered some loose papers/dispatch chits. Thereafter, the statements of various persons such as partners of the firm, employees and statements of some buyers were recorded. On the basis of loose paper/dispatch chits comparing with the statutory record of the appellant it was observed that the difference quantity between both the documents were cleared clandestinely without payment of duty and without issuing invoices. In support of such allegation, the statements were relied upon wherein it was admitted that the goods were cleared clandestine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2015 were written by the previous kiln operator and he was not aware of the name of such kiln operator. Therefore, in the show cause notice there is a clear contradiction as on one hand it is stated that the sheets/papers were prepared by Shri Bipin Bihari Dutta, Kiln Operator and other kiln operator working in another shift and on the other hand the show cause notice alleges that Shri Bipin Bihari Dutta had prepared the sheet only for the period from 01.12.2015 to 21.12.2015 and previous entries on the sheets/papers were made by different kiln operators who were working previously with the appellant firm. He submits that likewise there are many discrepancies in the loose papers/sheets recovered from the factory, therefore on that basis charge of clandestine removal cannot be established. 2.3 He further submits that the Learned Commissioner (Appeals) has committed an error in placing reliance upon dispatch chits, he submits that it was alleged that the appellant used to have a separate software namely Stock Software which is used for preparation of dispatch chits for every dispatch. It is alleged that after the clandestine goods were delivered by the appellant to the buyers, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed on the partner of the partnqership firm. He placed reliance on the following judgments:- Parot Power Ltd. Others V/s. CCE ST, Rajkot 2024(2) 431- CESTAT Ahmedabad Forward Resources Pvt.Ltd. V/s. CCE ST, Surat-1 2023(69) GSTL 76 (Tri.-Ahmd.)/(2022) 1 Centax 54 (Tri.- Ahmd) Reynolds Petro Chem Ltd. V/s. CCE ST, Surat-1 2023(68) GSTL 292 (Tri.-Ahmd.)/ (2022) 1 Centax 58 (Tri.-Ahmd) Shri Hari Steel Industries Other V/s. CCE ST, Rajkot 2022(8) 1251-CESTAT Ahmedabad J.P. Iscon Pvt.Ltd. V/s. CCE, Ahd-I 2022(63) GSTL 64 (Tri.-Ahmd.) G-Tech Industries V/s. U.O.I 2016(339) ELT 209 (P H) Belgum Glass Ceramics P.Ltd. Ors. V/s. CCE ST, Ahd 2015(5) TMI 528-CESTAT Ahmedabad Shri Krishna Industries V/s. CCE ST, Vadodara-II 2020(372) ELT 121 (Tri.-Ahmd.) Sohni Ceramics Ors. V/s. Ahd-III 2022(5) TMI 7-CESTAT Ahmedabad Gold Metal Extrusion Ors. V/s. CCE ST, Rajkot 2019(8) TMI 958-CESTAT Ahmedabad Continental Cement Company V/s. Union of India 2014 (309) ELT 411 (All.) Commissioner of C. Ex. ST., Udaipur V/s. Mittal Pigment Pvt. Ltd. 2018(16) GSTL 41 (Raj.) Commr. of Cus., C.E. S.T., Ghaziabad V/s. Auto Gollon Industries P. Ltd. 2018 (360) ELT 29 (All.) Parot Power Pvt. Ltd. V/s. CCE ST, Rajko ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e admitted as evidence to use against the appellant for adjudication of the show cause notice. It is not the choice of the Adjudicating Authority to grant or to deny the cross-examination of the witnesses. Since admittedly the adjudicating authority has rejected the request for cross- examination of the witness, then the statements of the witnesses cannot be relied upon as admissible evidence. This legal issue has been considered in various judgments which are cited below:- Motabhai Iron Steel Industries [2015 (316) ELT (Guj.)] 9. From the findings recorded by the Tribunal, it is apparent that the sole basis of the demand was the statement of Shri Arjandas who did not appear pursuant to the summons issued to him. The assessee was, therefore, deprived of an opportunity to cross-examine the witness in respect of the statements made against him. In these circumstances, no reliance can be placed on the statement of such witness who has not subjected himself to cross-examination by the affected party. Under the circumstances, the statement made by Shri Arjandas lost its efficacy and therefore, could not have been used against the assessee. Besides, the Tribunal has also found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nova had raised the issue of need and relevance of cross examination in cases like the present at the initial stage and cited several judgments in support thereof, starting with State of Kerala v. K.T Shaduli Yusuff Grocery Dealer (AIR 1977 SC 1627). The names of the witnesses, whose statements had been relied upon and whose cross examination was requested for, was also indicated therein. At a personal hearing given to Nova on 15-9-2008, Nova was called upon to make elaborate submissions regarding the request made in the earlier letter in the matter of cross examination of witnesses and about the witnesses who had been named in the earlier letter. Accordingly, by its letter dated 19-9-2008, Nova classified the witnesses in six different categories for their cross-examination. The learned Senior Advocate appearing for Nova has taken us through these letters. We find, however, that by the order dated 10-10-2008 issued from the office of Adjudicating Authority, the request made in the aforesaid communication of Nova was rejected, holding that cross examination of the concerned persons did not appear to be justifiable and proper for reasons stated in the said letter. We have also been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D. Bhoormul [1983 (13) E.L.T. 1546], K. Balan v. GOI [1982 (10) E.L.T. 386 (Mad.)], UOI v. GTC Industries Ltd. [2003 (153) E.L.T. 244 (S.C.)] and Shivom Ply-N-Wood Pvt. Ltd. v CCE [2004 (177) E.L.T. 1150], and Liyakat Shah v. CCE [2000 (120) E.L.T. 556], the last 2 decisions being those of this Tribunal. The order also relies upon judicial decisions in the matter of confessions made in statement by persons who have been examined during the investigation, as being a ground for rejecting the cross examination. In Paras 56.5 to 57.27 of the impugned order, the Adjudicating Authority has reproduced the details contained in the earlier order dated 10-10-2008 by which cross examination of the witnesses had been denied. 31. The ld. Senior Advocate submits that the law on the issue of cross examination of witnesses whose statements have been relied upon either in the show cause notice or in the Adjudication Order is quite well-settled. As could be seen from the facts stated hereinabove, the show cause notice proceeded on the basis of documents seized from different persons and from different premises, and statements thereon made by the persons concerned with the documents. It cannot be a g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e persons who made those statements ought to be given to the assessee. Reliance is placed on the decisions of the Hon ble Supreme Court in Swadeshi Polytex (supra) and Lakshman Exports Ltd. (supra) and to the earlier decisions of the Hon ble Delhi High Court in J K Cigarettes case as clinching the issue in favour of the assessee. Reference is made in the said decision to the importance of Section 9D of the Act, the validity of which was also upheld in the said decision. 32. In the above connection, the ld. Senior Advocate has also submitted that, in the light of the decisions cited above, reliance in the cases referred to by the department and relied upon in the letter of 10-10-2008, (and recounted in the impugned order) is not appropriate. In D. Bhoormal s case (supra) what was being considered by the Hon ble Supreme Court was the applicability of the provisions of the Evidence Act and the Code of Criminal Procedure to adjudication proceedings. In fact, this aspect has also specifically been adverted to by the Hon ble Supreme Court in the Bareilly Electricity Supply case (supra), referred to by the learned Senior Advocate, particularly, the issue of applicability of Evidence Act t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Special Director Enforcement [2013 (289) E.L.T. 3 (S.C.)], as supporting the order rejecting cross-examination. In the said case, the Adjudicating Authority had relied upon the statements of two persons and communication received from Indian High Commission in London. These statements under reference were challenged as being inadmissible in evidence as the appellant s request for an opportunity to cross examine these witnesses had been unfairly declined thereby violating the principles of natural justice. On the other hand, it was argued by the department that right of cross examination was available to a party under the Evidence Act which has no application to adjudication proceedings under the FERA and Adjudicating Rules framed thereunder. We have perused the said judgment of the Hon ble Supreme Court and also heard the submissions of the ld. Senior Advocate. The Hon ble Supreme Court held that it is evident from Rule 3 of the Adjudicating Rules framed under Section 79 of the FERA that Rules of Procedure do not apply to adjudication proceedings. At the same time, as pointed out by the ld. Senior Advocate, the Hon ble Supreme Court proceeded to say as under : That does not, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere asked to produce documents under Section 139 of the Evidence Act. Their statements were recorded as witnesses. This decision, therefore, does not help the contention put forward by the learned Special Counsel. For the above reasons, we hold that there has been a denial of natural justice in the facts of the present case. The impugned order, as is evident, solely, relies on the statements of V.N. Parab, Mohanlal Gupta, Ashok Chiripal, and the transporters, and on the documents seized from GSL and Nova premises and explained by the witnesses whose statements were recorded. Nova had sought permission to cross examine 63 persons for reasons which had been broadly stated by them. One could not have expected Nova to outline the scope of the questions to be put to the witnesses, when their cross examination was sought. In the present case, as we would be dealing with later, de hors the documents and the statements, there was no material to establish the case made out against Nova, GSL or the EOUs. The decisions cited by the ld. Senior Advocate categorically reject the proposition that cross examination can be refused in cases like the present. We also agree with the ld. Senior Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inely removed goods and also there is no evidence about manufacture of such goods. The investigating officers have not verified the capacity of production, power consumption, manpower etc. to reinforce the case of alleged clandestine removal. Therefore, there is no cogent and tangible evidence on the basis of which clandestine removal can be established. 4.4 In view of the above judgments, the loose papers/sheets/chits cannot be accepted as conclusive evidence to establish the clandestine removal. Therefore, on both the counts i.e. statements without carrying out any cross-examination and loose papers/sheets/dispatch chits without having its' authenticity cannot be used as evidence for clandestine removal. Accordingly, we are of the view that the revenue could not prove beyond doubt their case of clandestine removal of excisable goods, hence the impugned order is not sustainable. Hence, the same is set aside. 4.5 Since the demand itself is not sustainable, penalty imposed on various persons will also not survive. Without prejudice, as regard the penalty imposed on the partners of the appellant firm, it is settled legal position by the Hon ble Gujarat High Court in the case of P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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