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TMI Blog2024 (12) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... cross examination to the appellants are not sustainable. Therefore, on the basis of the statements, which have been relied upon by the authorities below, the demand cannot be raised. Whether the documents recovered from the possession of the third party and without any corroboration thereof, can the demand be raised against the appellants? - HELD THAT:- Whole of the demand raised against the appellant is without proper investigation and without any corroborative evidence/documents or otherwise, the allegation against the appellants on the clandestine manufacture and clearance of the goods, is not sustainable. Whether the investigation done is not proper and having lacuna and as any suppliers/buyers/transporters or any documents, which could have been visited easily from the name and address and available on record, the demand can be raised against the appellants or not? - HELD THAT:- Although the Revenue was having every documents which were recovered from the possession of Shri Sati Ram to allege clandestine manufacture and removal of goods, but the investigation did not bother to corroborate the evidence by way of verifying the veracity of the documents from supplier of the raw m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espatches shown in the statutory records of the appellant tallied with that in the seized note books/registers/ documents. The co-appellant and all concerned persons were summoned on several occasions to explain the discrepancies which all of them avoided on one pretext or the other. The documents as asked were also not submitted by the appellant or any of its Directors/ employees. Therefore, it was concluded that the appellant did not co- operate with the investigation and deliberately tried to delay the process. 2.1 On the basis of the said investigation, the show-cause notice alleges that the appellant was engaged in the activity of clandestine manufacture and removal of goods without keeping record with them and evaded payment of excise duty. Consequently, they are liable to pay duty along with interest and to impose penalties thereon. 2.2 Aggrieved from the said order, the appellants are before us. 3. The ld.Counsel for the appellants submits that the whole case has been made out against them on the basis of certain documents recovered from the possession of Shri Sati Ram who claims to be accountant at the residence of the co-appellant. No discrepancies were found at the facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rroborative evidence. To support his contention, he relies on the following decisions : (i) Nabha Steels Ltd. Vs. Commissioner of Central Excise Chandigarh-2016 (344) ELT 561 (Tri-Chandigarh); (ii) Ambica Iron Steel Pvt. Ltd. Vs. Commissioner of C.Ex. Kolkata-2022 (380) ELT 351(Tri-Kolkata); (iii) Arya Fibre Pvt. Ltd. Vs. Commissioner of C.Ex., Ahmedabad- 11-2014(311) ELT 529 (Tri-Ahmedabad); (iv) AUM Aluminum Pvt. Ltd. Vs Commissioner of C.Ex. Vadodra- 2014 (311) 354 (Tri-Ahmedabad); (v) Hingora Industries Pvt. Ltd. Vs. Comm. of C.Ex. Daman - 2015 (325) ELT 116 (Tri-Ahmedabad); (vi) J.P.Iscon Pvt. Ltd. Vs. Commissioner of Central Excise, Ahmedabad 2022 (63) GSTL 64 (Tri.-Ahmedabad) (vii) Prempreet Textile Industries Limited Vs. Commissioner of Central Excise, Surat I-2001 (134) ELT 691 (Tri.-Mumbai) ; (viii) Kisco Castings India Limited Vs. Commissioner of CentralExcise Service Tax, Chandigarh-I : 2017 (347) ELT 346 (Tri.- Del.) (ix) Sharma Chemicals Vs. Commissioner of Central Excise, Calcutta II : 2001 (130) ELT 271 (Tri.Kolkata). 3.4 He further submits that the private writing pads or the loose sheets referred to in the show cause notice did not belong to the Appellant Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Whether in the absence of giving cross-examination to the witnesses, whose statements have been relied upon to implicate the appellants in the proceedings, is admissible or not ? (b) Whether the documents recovered from the possession of the third party and without any corroboration thereof, can the demand be raised against the appellants ? (c) Whether the investigation done is not proper and having lacuna and as any suppliers/buyers/transporters or any documents, which could have been visited easily from the name and address and available on record, the demand can be raised against the appellants or not ? Issue No.(a) Whether in the absence of giving cross-examination to the witnesses, whose statements have been relied upon to implicate the appellants in the proceedings, is admissible or not ? 7. We find that in this case, the Revenue has relied upon on the statements of Shri Sati Ram, Shri Jitendra Singh, Shri Radhey Shyam. All the statements made were relied upon to be tested in terms of Section 9D of the Central Excise Act, 1944, which stipulates that any statement recorded during the course of investigation under Section 14 of the Act, is required to be first examined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice. Further, the Hon ble Delhi High Court in the case of Flevel International (supra) has held as under : 42. It is settled law that the denial of an opportunity of cross-examination of a witness whose statements have been relied upon in the adjudication order would vitiate the order of adjudication. In Basudev Garg v. Commissioner of Customs - 2013 (294) E.L.T. 353 (Del.), this Court referred to Section 9D of the CE Act and noted that even while upholding its constitutional validity in J K Cigarettes Ltd. v. Collector of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply stated in para 36 that if the request made by the appellant in the letter dated 31st January, 1985 for cross- examination of such a large number of persons was granted it would have taken the case to a non-ending process. This cannot be a justified reason within the meaning of Section 9D of the Act to deny that opportunity to the appellant. Further the CCE proceeds to observe that in their reply dated 3rd February, 2002 the appellant had somehow shortened the list of persons it wanted to cross-examine. This is not borne out from the reading of the reply dated 3rd February, 2002. 46. The CCE also wrongly proceeded on the basis that there was no right of cross-examination overlooking the fact that Section 9D of the Act restricts the grounds on which the cross-examination can be denied. It also overlooks the decision of the Supreme Court in Swadeshi Polytex Ltd. v. Collector of Central Excise - 2000 (122) E.L.T. 641 (S.C.) and Laxman Exports Ltd. v. Collector of Central Excise - 2002 (143) E.L.T. 21 (S.C.) to the effect that when a statement is used against an assessee an opportunity of cross-examining the persons who made those statements ought to be given to the assessee. We hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the factory of production; etc. As none of the said criteria has been followed by the investigating team, in the absence thereof, it cannot be alleged that the appellant engaged in the activity of clandestine manufacture and clearance of the goods. The same view has been taken by this Tribunal in the case of Ambica Iron Steel Private Limited (supra) wherein this Tribunal has observed as under : 15. In the instant case, the entire case of the Revenue is based on the Kaccha Chithas seized from the residence of the Director. The manner in which the said Kaccha Chithas is seized has been strongly agitated by the Appellant. We find that the said Kaccha Chithas/documents should have been seized in the presence of the Director. There is considerable force in the contention of the Appellant that the Kacha Chithas relied upon by the Revenue cannot be a basis to uphold the serious charge of clandestine clearance. It is settled legal position that charge of clandestine clearance is a serious charge and the onus to prove the same is on the Revenue by adducing concrete and cogent evidence. In the absence of corroborative evidence, the issue of fact i.e. in the present case the charge of cland ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /transporters or any documents, which could have been visited easily from the name and address and available on record, the demand can be raised against the appellants or not ? 10. We further take note of the fact that in this case, although the Revenue was having every documents which were recovered from the possession of Shri Sati Ram to allege clandestine manufacture and removal of goods, but the investigation did not bother to corroborate the evidence by way of verifying the veracity of the documents from supplier of the raw materials, buyer of the finished goods, transporter or commission agent etc. or other, whose details were available in those documents. 11. In that circumstances, we hold that whole of the investigation is faulty and on the basis of the faulty investigation, it cannot be alleged that the appellants were engaged in the activities of clandestine manufacture and clearance of excisable goods. 12. In view of the above, we do not find any merit in the impugned order, therefore, the proceedings against the appellants are not sustainable and no demand can be raised against the appellants. Consequently, no penalties are imposable on the appellants. 13. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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