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TMI Blog2024 (10) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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. 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 - The penalties imposed upon the Managing Director of the appellant cannot also, for the same reasons, be sustained. The impugned order dated 17.05.2010 passed by the Commissioner so far as it concerns the appellant deserves to be set aside and is set aside - Appeal allowed. - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Rajesh Kumar Yadav, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended below:- Sl. No. Name of the consignee No. Date of invoice Name of the goods Qty. received 1. Siva Export Corporation, Baddi 03/04.05.05 DFPO (Shivalik) 3600 2. Neeru Enterprices, Rampur 09/14.05.06 Menthol 5400 3. Shri Ashok Kumar Gangyal, Jammu 61/22.07.05 Terpenes 2160 4. Diamond Paint and Chemicals, Kathua 179/08.02.06 Terpenes 700 5. Diamond Paint and Chemicals, Kathus 183/11.02.06 Terpenes 720 The investigation conducted against M/s. AI and the facts emerged out thereof as discussed in the forgoing paras, warrants further investigation at the recipients end. 88. M/s. Siva Export Corporation and M/s. Neeru Enterprises: It has been observed from the table at para 87 above that M/s. AI had supplied one consignment of goods said to be DFMO (Shivalik) to M/s. Shiva Export Corporation Baddi (herein after referred to as SEC) and another consignment said to be Menthol to M/s. Neeru Enterprises (herein after referred to as NE), Rampur. Investigations as discussed in paras Supra have proved conclusively that the consignment supplied to the abovesaid concern were only Crude Oil. Investigations was also extended to the said purchasers end under summons proceedings (RUD-33). In respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 6. The appellant filed a detailed reply to the show cause notice and denied the allegations. The appellant also submitted documentary evidences to show actual receipt of the goods. 7. The Commissioner, however, by order dated 17.05.2010 disallowed the CENVAT credit availed by the appellant. 8. Shri Rajesh Kumar Yadav, learned counsel for the appellant, made the following submissions: (i) Amarnath Industries had a manufacturing facility and they were undertaking manufacturing of goods. It is evident that they had manufactured at least certain quantity of goods. As the appellant had received only single consignment, the burden was on the revenue to adduce direct evidence to show that the consignment of the said goods sent to the appellant was not the manufactured goods. The show cause notice does not indicate anything to show that the consignment received by the appellant was from the batch of unprocessed goods, if any; (ii) The Commissioner has not discussed cogent evidence adduced by the appellant in the form of the test report; (iii) The demand against the appellant has been confirmed on the basis of allegations made against the supplier. The Commissioner failed to appreciate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant. 9. 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 merits. (ii) The appellant is not justified in asserting that the show cause notice has been adjudicated only on the basis of assumptions and presumptions. The Commissioner had examined all the evidence on record to arrive at the findings; (iii) The records indicate that no manufacturing activity in relation to the goods supplied to the appellant was carried out in the factory premises of Amarnath Industries; (iv) The benefit of the Notification dated 14.11.2002 has been wrongly availed; (v) The availment of CENVAT credit has been correctly denied to the appellant; and (vi) The extended period of limitation was correctly invoked and the penalty was also correctly imposed. 10. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orting to the revisional power available under Section 35-E of the Act. 14. 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. 15. 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 by the Bombay High Court in Nestle India . The issue that arose was that if excise duty is levied on an assessee at place A and Modvat credit is sought to be availed at place B , is it open to the Authorities at place B to deny credit on the ground that no duty was payable at place A . This issue was answered by the Bombay High Court in the following manner: 5. Mr. Ferreira, learned Assistant Solicitor General for the appellant, submitted that the scheme of law is that if, excise duty is collected, a person at subsequent place is entitled to claim Modvat credit. According to Mr. Ferreira, learned Assistant Solicitor General, this can be so if, duty is validly collected at an earlier sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P filed by the Revenue. (emphasis supplied) 17. 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. 18. 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 Excise Act and denial of cross examination of the said persons has also vitiated the order. 19. This submission advanced by learned counsel for the appellant also deserves to be accepted. 20. The Allahabad High Court in Parmarth Iron examined this issue in detail and on a perusal of section 9D of the Central Excise Act observed: 16. We, therefore, have no hesitation in holding, that there is no requirement in the Act or Rules, nor do the principles of natural justice and fair play require that the witnesses whose statements were recorded and relied upon to issue the show cause notice, are liable to be examined at that stage. If the Revenue choose not to examine any witnesses in adjudication, their statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/ inquiry before the Gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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