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TMI Blog2024 (10) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. Excise Appeal No. 2580 of 2010 has been filed by Sanjay Singhal, Managing Director of the appellant, to assail that part of the order dated 17.05.2010 passed by the Commissioner that imposes a penalty of Rs. 50,00,000/- lacs upon him. 3. The appellant is engaged inter-alia in the manufacture and export of Menthol Crystal and Essential Oils (Pharmaceutical grade) falling under Chapter 30 and Chapter 33 of Central Excise Tariff Act, 1985 the Tariff Act. The said Menthol Crystal and Essential Oils are substantially exported by the appellant on payment of duty, under a claim for rebate. 4. For manufacturing the above products, the appellant procures raw material namely, Menthols and its derivatives, De-terpenated / fractioned Mentha Oil, DFSO & DFPO from manufacturers in Jammu, including Amarnath Industries who were operating under a Notification No. 52/2008-CE dated 14.11.2002 the Notification dated 14.11.2002. The dispute in the present appeal pertains only to the raw materials received from Amarnath Industries. 5. In terms of the Notification dated 14.11.2002, the duty paid by the said manufacturers in cash on the raw materials cleared to the appellant was refunded/ granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f crude oils. (ii) Crude Mentha Oils contains terpenes varying from 6% to 14%. In test reports attached along with the 3 invoices viz. Invoice No. 71 dated 02.08.2005; Invoice no. 32 dated 26.06.2005 and Invoice no. 48 dated 10.07.2005 the terpene content was found to be in excess of 6%. (iii) There is no reason as to why incorrect test reports will be kept along with the invoices. However, even otherwise, the appellant has not produced the test report for other invoices for supply of raw materials. (iv) Failure of the appellant in producing documentary evidences strengths the belief that the appellant had not received the so called goods manufactured by Amarnath Industries. (v) During the search of the factory premises of the appellant, Purchase Order for purchase of Mentha Peperita Oil was placed without further processing. CENVAT credit cannot be denied to recipient once duty is paid by the manufacturer. (i) The goods which had been received by the appellant were not the goods which were mentioned in the invoices issued by Amarnath Industries. (ii) Amarnath Industries had not manufactured the goods but supplied the raw material as it is on which no duty was leviabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was procuring the same goods from various farmers and was engaged in manufacturing of various processed products stated to be procured from Amarnath Industries. (ii) The difference was only that instead of procuring the crude mint oils directly from farmers, the appellant made arrangements to receive the said goods through Amarnath Industries as manufactured products so as to enable it to claim CENVAT credit under the 2004 Credit Rules of the duty paid by Amarnath Industries and Amarnath Industries was also the beneficiary, as the duty paid from current account was refunded to Amarnath Industries under the Notification dated 14.11.2002. Extended period of limitation (i) The entire activity of such fraudulent transaction i.e. supply of non-manufactured products under the guise of manufactured products, were made in the complete knowledge and connivance of the appellant and its Director. (ii) Had the officers of the Revenue not visited the premises of Amarnath Industries and the appellant, the said modus-operandi would never have been exposed and the malpractice would have continued unabated. Hence, the extended period under proviso to section 11A(1) of the Central Excise Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H); (d) Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd. 2021 (375) E.L.T. 545 (Del.); (e) Swiber Offshore Construction Pvt. Ltd. vs. Commr. of Cus., Kandla 2014 (301) E.L.T. 119 (Tri. - Ahmd.); and (f) Gaurav Mungad vs. Commissioner of CGST, Ex. & CUS., Bhopal 2021 (376) E.L.T. 69 (Tri. - Del.). (vii) The extended period of limitation could not have been invoked in the facts and circumstances of the case; (viii) Interest and penalty under section 11AC of the Central Excise Act could not have been levied; and (ix) The imposition of penalty under rule 26 of the Central Excise Rules 2002 the 2002 Rules on the Director of the appellant is bad in law. 12. Shri Mihir Ranjan Kumar, learned special counsel appearing for the department, however, supported the impugned order and made the following submissions : (i) The request for cross examination was denied for good and valid reason. The departmental officers merely verified the facts that had been declared by the appellant in the statutory records submitted from time to time. As there was no reason to doubt the genuineness of test reports/analysis reports, the request of cross-examination is devoid of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y resorting to the enabling power under Section 11A of the Act. 15. Consequently, we are of the opinion that : (i) Section 11A of the Act is not applicable to the facts of the case since the issue raised did not concern any approval, acceptance or assessment relating to the rate of duty on or valuation of any excisable goods. The issue raised by the assessee related to its entitlement to the benefit of Notification No. 33/99-C.E., dated 8-7-99, (ii) Even otherwise, the Revenue could not take recourse to Section 11A of the Act when it had a statutory remedy available to it to challenge the order dated 29-4-2002 passed by the Assistant Commissioner of Central Excise, Silchar by resorting to the revisional power available under Section 35-E of the Act." 17. Learned counsel for the appellant also submitted that once duty paid by Amarnath Industries was accepted by the department, the CENVAT credit of the same could not have been denied to the appellant who is the recipient. 18. The payment of duty at the time of clearance of goods to Amarnath Industries is not in dispute. The credit of the duty paid, therefore, could not have been denied to the appellant. This issue was examined b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Ashok Enterprises - 2008 (221) E.L.T. 586 (T), Super Forgings - 2007 (217) E.L.T. 559 (T), S.A.I.L. - 2007 (220) E.L.T. 520 (T) = 2009 (15) S.T.R. 640 (Tribunal), M.P. Telelinks Limited - 2004 (178) E.L.T. 167 (T) and a decision of the Gujarat High Court in the case of CCE v. Creative Enterprises reported in 2009 (235) E.L.T. 785 (Guj.) has held that once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity does not amount to manufacture. Admittedly, similar view taken by the Gujarat High Court in the case of Creative Enterprises has been upheld by the Apex Court [see 2009 (243) E.L.T. A121] by dismissing the SLP filed by the Revenue." (emphasis supplied) 20. In view of the aforesaid decisions, it has to be held that CENVAT credit of the duty paid by Amarnath Industries could not have been denied to the appellant. 21. Learned counsel for the appellant also submitted that the statement of various persons like Employees/Directors of Amarnath Industries and the appellant were relied upon though they were inadmissible since they failed to comply with the provisions of section 9D of the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing inquiry/investigation, before 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). 12. 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. xxxxxxxxxxx 19. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise Officer dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary to the principles enunciated by the Allahabad High Court in Parmarth Iron and the Punjab and Haryana High Court in Jindal Drugs. In the first instance, under section 9D of the Central Excise Act it is clear that a statement made during investigation/enquiry before a central excise officer cannot be relied upon unless it is first admitted and for this the person who made the statement has to be summoned and examined as a witness in adjudication proceedings. Failure to do so would mean that the adjudicating authority has relied upon an irrelevant material and, therefore, the order would be vitiated. The question of cross examination would arise only after examination of the person who makes statement before the central excise officer. 27. The Commissioner has placed reliance upon the statements without following the procedure prescribed under section 9D of the Central Excise Act. The order passed by the Commissioner deserves to be set aside for this reason also. 28. The penalties imposed upon the Managing Director of the appellant cannot also, for the same reasons, be sustained. 29. The impugned order dated 17.05.2010 passed by the Commissioner so far as it concerns the two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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