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TMI Blog2024 (10) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of various persons involved in one way or other with Yogesh, and Commissioner has given cross-examination of only 9 persons out of about 25 persons whose cross-examination was sought by Yogesh and out of 9 persons, cross-examination of only 2 deponents was conducted. HELD THAT:- It is noticed that the goods by all these appellants are admittedly cleared on payment of duty. Non-mentioning name of buyers in the invoice is at best a procedural lapse in respect of the duty paid goods. In our view the goods which are alleged to have been removed by Yogesh without payment of duty can only be held liable for confiscation if it is established so, and not the goods in respect of which applicable duties are paid by these units as duty paid goods cannot be held liable to confiscation under Rule 25 of the Rules. It can be seen that Rule 25 is subject to non-payment of duty which is recoverable and subject to the provisions of section 11AC which is neither invoked or applicable in respect of goods cleared by the these units. It has been held in the following judgements that Rule 25 is subject to section 11AC and ingredients of Section 11AC have to be established first. In the case of COMM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer of Gutka under the brand name GOA 1000 during the period 2004 to August 2007 upon whom duty demand has been confirmed under section 11A(1) of the Central Excise Act, 1944 ( Act in short) for removal of said goods without payment of duty. M/s. Montage Global Pvt Ltd (herein after referred to as Montage ) and M/s. Balaji Flexi pack (herein after referred to as Balaji ) were inter-alia engaged during the relevant period in manufacturing of Laminate Packings which are used for packing Gutka of Brand name GOA 1000 . M/s. Sachin Perfumery Cosmetics (herein after referred to as Sachin ) were engaged in manufacturing perfumery compounds used in chewing tobacco, mouth fresheners, agarbatti etc and M/s. Arihant Poly sacks ( Arihant herein after) were engaged in manufacturing HDPE woven sacks. These are the appellants who have paid duty on the goods manufactured by them however penalty is imposed upon them under Rule 25(1) of the Central Excise Rules, 2002 ( Rules herein after) mainly on the ground that they have not /incorrectly mentioned names of buyer in the invoices and hence contravened Rule 11(2) of the Rules. Further Rule 26(1) penalty has been imposed on various other pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of other raw materials required for manufacture of the final product and other evidence of consumption of excess electricity and transport of the final products and evidence of buyers of the final products and receipt of payment for the same. He further submitted that most of the persons whose statements have been relied upon have not been examined under Section 9D of the Central Excise Act 1944 and not produced for cross examination and they did not appear for cross examination. The Commissioner has denied cross examination of 10 persons out of 25 persons requested on entirely incorrect grounds,it is vehemently argued that it is not for the Commissioner to choose the witnesses who need to be cross- examined or to decide on the need felt to cross-examine witnesses. 3. On the other hand, Shri Deepak Kumar, learned special counsel, appearing for the revenue relied upon statements of various persons in support of the case of revenue that total quantity of laminate packing of 1944 MT by Balaji and Montage to various parties were non-existent and the same were made to Yogesh only. 3.1 Countering the same, learned counsel for Yogesh has mainly pointed out that, despite evidence surfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in Section 9D of the Central Excise Act, 1944. The circumstances referred to in Section 9D, as also in Section 138B, included circumstances where the person who had given a statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay and expense which, under the circumstances of the case, the Court considers unreasonable. It is clear that unless such circumstances exist, the Noticee would have a right to cross-examine the persons whose statements are being relied upon even in quasi judicial proceedings. The Division Bench also observed as under :- 29. Thus, when we examine the provision as to whether the provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other franchisee holders, the demand of duty based on two laminate packing suppliers namely Balaji and Montage on the premise that the same has been procured by Yogesh only requires to be dealt with considering the submissions advanced in this respect by Yogesh, which are absent in the impugned order. In view of above, matter is required to be remitted to adjudicating authority for fresh decision after considering the above judgements and various submissions advanced by Yogesh. 4.2 At this juncture, it is observed that, the appeals of other appellants namely, Balaji, Montage, Arihant and Sachin who have cleared goods on payment of duty and on whom penalty under Rule 25(1) of Rules is imposed, can be taken up as it appears that the same can be decided irrespective of alleged clandestine removal of goods by Yogesh is established. In respect of these appellants, it has been held by the Commissioner that although investigation has not alleged offence of any clandestine removals against the said packing and raw material suppliers of Yogesh but as these units had supplied their finished goods without showing the name(s) of actual recipient of their materials i.e. M/s. Yogesh on their in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined. For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short-levied or short-paid or the refund is erroneously granted by reasons of fraud, collusion or any willful misstatement or suppression of facts. If these ingredients are not present, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to the provisions of Section 11AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules. 4.4 The said judgement of Saurashtra Cement was considered and followed by Hon ble Delhi High Court in the case of Commissioner of Central Excise Delhi-II Vs. GanpatiRollings 2016 (338) ELT 587 (Del.) the relevant paras are as under : 9. The opening words of Rule 25 is Subject to the provisions of Section 11AC of the CE Act and not an non obstante clause which would have begun with the words Notwithstanding the provisions of Section 11AC of the CE Act . It is plain that the CE Rules are subordinate legislation and have to abide the discipline of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering Rule173Q of the Central Excise Rules, 1944 (CE Rules, 1944) which begins with the expression subject to the provisions contained in Section 11AC of the Act and sub-rule (4) of Rule 57-I and sub-rule (6) of Rule 57-U . After referring to the judgment of the Supreme Court in S.N. Chandrashekhar v. State of Karnataka, (2006) 3 SCC 208 and Ashok Leyland v. State of Tamil Nadu, (2004) 3 SCC 1, the Gujarat High Court interpreted Rule 173Q as under : 20. Thus as laid down by the Supreme Court the use of the words subject to has reference to effectuating the intention of the law and the correct meaning, is conditional upon . Rule 173Q opens with the words subject to the provisions contained in Section 11AC of the Act and sub-rule (4) of Rule 57-I and sub-rule (6) of Rule 57- U . Thus, confiscation of goods and levy of penalty under Rule 173Q of the Rules is conditional upon the requirements of Section 11AC and sub-rule (4) of Rule 57-I and sub-rule (6) of Rule 57-U being satisfied. Thus, the words subject to used in the said rule express a limitation on the power to confiscate goods and levy of penalty under the said rule. 4.5 Respectfully following the aforesaid judgments, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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