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TMI Blog2024 (12) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to Rs. 15,62,92,335/- was paid to the Authorized person of Appellant, the same is completely unbelievable. It is also found that in present matter to find out the truth, appellant requested the cross-examination of Shri Jayesh Mohanlal Solanki, Proprietor of M/s. K.N. Brothers, Rajkot, Shri Suresh Girdharbhai Gangwani, Proprietor of M/s. Shree Siddhnath Agency, Rajkot, Shri Lalit Ansumal Gangwani, actual owner of M/s KN Brother and also other persons. However despite such request, cross-examination was not afforded by the Ld. Lower Adjudicating Authority. When statement of a third party is relied upon against an assessee, the assessee has a right to cross-examine such witness otherwise, statement of the concerned person, and in any case, statement of a said persons, could not have been relied upon for holding anything against the appellant. In the circumstances, it was incumbent upon adjudicating authority to follow the mandate of section 9D of the Act by way of examining the witness and thereafter giving opportunity to the appellant to cross-examine them. Having disregarded this mandate of section 9D, results is to giving up on the said statements for proving the truth containe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e officers of DGCEI collected an intelligence which indicated that various Tile manufactures of Morbi are indulging in malpractices in connivance with Shroffs/Brokers and thus are engaged in large-scale evasion of Central Excise Duty. This intelligence was gathered during the course of an investigation in the case against a local Tile manufacturer when they came across some suspicious bank accounts. On gathering further information about these accounts and their analysis, it was observed that these accounts pertained to certain Shroffs (Cash Handlers) and cash transactions worth several crores has been made through these accounts which seemed to be related to various manufacturers of Tiles located at Morbi. Discreet inquiry was conducted to ascertain the source and destination of such transactions alognwith purpose thereof. On the basis of such inquiry, simultaneous searches were carried out on 22.12.2015 by the officers of DGGI and four Shroff s premises and some of the connected people to find out the details of these transactions. During the search operations, various incriminating documents were recovered under Panchnama. A cash amount was also seized, during the investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edi, Learned Counsel appearing on behalf of the Appellants submits that during the investigation, no statements of any of the alleged buyers of clandestinely cleared tiles by the appellant herein are recorded. The alleged these Shroffs are supposed to be main links for depositing cash. It is pertinent to note that in any of the statements said shroffs do not even mentioned the name of the Appellant. They have no concern with the Appellant. They have only named various brokers who are supposed to have withdrawn cash deposited by the Shroffs. The Shroff M/s K.N. Brothers/ Ambaji Enterprises, Rajkot, in their statement, states that one such broker was Pravinbhai Patel. 2.1 He further submits that private records were resumed from the premises of Shroffs. Bank Statements of the Shroff M/s. K.N. Brothers/ Ambaji Enterprises were seized under the Panchanama dated 22.12.2015. Scanned image of the said Bank Statements are reproduced on internal page Nos. 8 to 15 of the show cause notice. It would be found that as far as Pravin Shirvi (Broker) is concerned, against 21 entries of cash deposit, his name is mentioned by the DGCEI in the show cause notice, although it was not there in the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant. The Billing clerk is shown one WhatsApp Printout, he clarifies that he is doing a side business. The WhatsApp chat was a conversation between himself and one of his clients. He has saved the name of said client Mr. Amit Limbasiya as Amit (Ramco). He clarifies that said person works in M/s. Luton Ceramics Pvt. Ltd. He explains the contents of the WhatsApp chat message. The Director, Shri Rajeshbhai R. Kundariya, states in his statement that they sell their goods only under invoice and payments are received through cheque, NEFT, etc. He clarifies that as the Appellant is having a retail outlet also, if a customer purchase tiles in retail and pays in cash, the said cash is also accounted in the books. On showing an image retrieved on 22.01.2019 from his cell-phones, the said Director explains that there is one Dealer M/s. K.K. Enterprises, one Mr. Yadgiri is his customer. On being referred by M/s K.K. Enterprises, Mr. Yadgiri used to directly purchase ceramic tiles from the appellant. For that, Mr. Yadgiri used to credit payment amount in the bank account of M/s. K.K. Enterprise. The WhatsApp Chat shows that Mr. Yadgiri has credited Rs. 1,13,700/- in the bank account of M/s. K.K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant were having, i.e. what kind of machines were installed in appellant s factory and what kind of kiln were appellant having at appellant s factory? (o) Whether appellant have used any excess electricity in order to manufacture alleged clandestine quantity? (p) Whether appellant had any excess labour employed in appellant s factory who could be capable to manufacture said clandestinely cleared quantity over and above the quantity cleared under invoice ? (q) How was alleged clandestinely cleared ceramic titles transported by appellant? No statement of any transporter is recorded. Any such transporter is not even identified. 2.7 He argued that it is settled law that unless investigation is not carried out in regards to all the aforesaid, no case of clandestine clearance of excisable goods could sustain. He placed reliance on various decisions out of some are following:- Vishwa Traders Pvt. Ltd. Vs. Commissioner of C.Ex. Vadodara -2012(278) ELT 362 (Tri. Ahd,) Premium Packaging Pvt. Ltd. Vs. Commissioner of C.Ex., Raipur -2005(184) ELT A24 (SC) K.Harinath Gupta Vs. CCE, Hyderabad -1994 (71) ELT 980 (Tribunal) M. Industries Vs. Collector of Central Excise -1993(68) ELT 807 (Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on transaction value basis, considering duty @ of 12.36 % Adv. In other words, whatever amount is found to be deposited in the Bank Account of the Shroff, duty @ of 12.36% is calculated on the same. Section 4 of Central Excise Act, 1945 is applied instead of Section 4A. It is settled law the same cannot be done. 2.10 He also submits that there is absolutely no investigation conducted by the DGGI in the direction of ascertainment the MRP declared by the Appellant on the package of Ceramic Tiles cleared by them. The investigation agency was duty bound to check from the package as to what MRP was declared. They were supposed to follow the Rules viz. Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 introduced vide Notification No. 13/2008-CE (N.T.) dated 01.03.2008, as the same is not done, even otherwise, the demand is unsustainable. 2.11 He argued that in the impugned order, Ld. Commissioner (Appeals) travels beyond the scope of show cause notice as well as beyond the scope of Order-In-Original and observes that the duty was not required to be calculated under Section 4A (supra) and that the same is rightly calculated under Section 4 (supra), becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Bhai Patel Vs. CC, Bulsar-1997 (96) ELT 211(SC) Rajesh Kumar Vs. CESTAT-2016 (333) ELT 256 (Del) Haryana Steel Alloys Ltd. Vs. CCE, New Delhi -2017 (355) ELT 451 (Tri,-Del) Somesh Paper Tubes P Ltd. Vs. CCE, Daman -2014 (313) ELT 669 (Tri. Ahmd) 4. We have considered the submissions made at length by both sides and perused the records. 4.1 After appreciating the submissions made by both sides and after going through the impugned order, we find that the appellant are manufacturing Tiles. The allegations of clandestine removal of goods are primarily based upon the private documents/records recovered from the premises of M/s K.N. Brothers/ Shree Ambaji Enterprises, Shroff and office premises of Shri Pravin Shirvi, Morbi, Broker/middlemen. The revenue also relied upon the statements of said persons. On the basis of said records and statement of said persons the revenue alleged that various buyers had deposited cash in account of M/s. K.N. Brother/Ambaji Enterprises (Shroff) and subsequently after deducting their commission said Shroff had given said amount of cash to Shri Pravinbhai R. Shirvi who is claimed to be middleman (Broker) and who had in turn after deducting his commission, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated grounds is proved. (iii) That, the opinion or order of the quasi judicial authority is subject to judicial review by the Appellate Authority. 4.2 It is well settled law that though the statements carry good persuasive value but such untested statements of third parties cannot be made stand-alone basis for arriving at an adverse conclusion against the assessee. Though an admission or a statement is extremely important piece of evidence but the same has to bear the test of veracity through the tool of cross examination. In the case of NU Trend Business Machine Pvt Ltd v. Commissioner of Central Excise, Chennai, 2002 (141) E.L.T. 119 (Tri. - Chennai), it was held that the demand based on the statements of persons who have not turned up for cross-examination, is unsustainable. Such inculpatory statements lose their evidentiary value when the same are not corroborated by Revenue. To the same effect is another decision of the Tribunal in the case of Rawalwasia Ispat Udyog Ltd. - 2005 (186) E.L.T. 465 (Tri. - Del.), laying down that allegations of clandestine removal based upon the statement as also the invoices issued by the informer, cannot be upheld in the absence of cross exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of procurement of raw material and clearance of tiles, buyers of alleged clandestine cleared tiles have not been identified; that the excess consumption of electricity is neither alleged nor proved on record; that excess labour utilization has not been examined; and above all, the transporter of the allegedly removed Tiles have not been identified and their statements recorded. Thus the Revenue s case which is based mainly on the third party records and statements cannot be sustained. The Tribunal in the case of Charminar Bottling Co. Pvt Ltd v. Commissioner of Central Excise, Hyderabad, 2005 (192) E.L.T. 1057 (Tri. - Del.) held that the charges of clandestine removal based upon the evidences accounts and records of third party cannot be sustained when there is no evidence on record as regards extra procurement of raw materials, clandestine manufacture of the goods as also the movement of the Final Products and the absence of identification of the buyers. It may be mentioned here in the instant case, the conditions for sustaining the addition laid down in the case of M/s. Continental Cement Company v. Union of India and Others [Central Excise Appeal No. 228/2010 = 2014 (309) E. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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