2019 (4) TMI 891 - AT - Central Excise

Tribunal: Appellants cleared of misuse, penalties. Statements ruled inadmissible. Brand name use legal.

The Tribunal held that the appellants did not misuse the SSI exemption and were not liable for penalties. It ruled that the statements recorded during the ... Clandestine manufacture and removal - SSI Exemption - entire case is based on the statements recorded during the investigations - cross-examination denied - penalty under Section 26(2) of the Central Excise Rules, 2002 - Held that:- In the absence of circumstances as specified in Section 9D(1)(a) of the Excise Act, the truth of the fact contained in any statement, recorded before a gazetted Central Excise Officer has to be taken as evidences as per Section 9 D(1)(b). The evidentiary value of the statement, is therefore, completely lost in this case as the parameter of Section 9D has not been complied with - The burden of proof lies on the Revenue and required to discharge effectively, however, the same has not been done in this case. As far as the use of the common brand name is concerned, it is on record that the same has been assigned by the assignment deed is dated 1/04/2012 on other applicants. No error is committed by the appellant in using the common brand name ‘AKS’ by the other appellants as well. In any case, the AKS is brand fixed were ‘AKS Gold’ and ‘AKS Silver’ appears to be a different brand name than ‘AKS’ - In this case the statement of Shri Bharat Bhushan which was relied upon by the Department have not been examined by the Adjudicating Authority before accepting their statement and also the cross examination of these persons were permitted even after categorical submissions made by the appellants before the Adjudicating Authority. Appeal allowed - decided in favor of appellant. Issues Involved:1. Whether the SSI exemption was availed by the appellants in contravention of Notification No. 8/2003-CE.2. Whether the appellant, Shri Naveen Jain, is liable to penalty under Section 26(2) of the Central Excise Rules, 2002.3. The admissibility and relevance of statements recorded during the investigation under Section 9D of the Central Excise Act, 1944.4. The validity of the demand confirmation based on the statements of the Director, Shri Naveen Jain.5. The legality of using the common brand name 'AKS' by the appellants.Detailed Analysis:1. SSI Exemption Contravention:The primary issue is whether the appellants availed the SSI exemption in violation of Notification No. 8/2003-CE. The investigation revealed that M/s Steel Paradise (India) Private Limited, along with other firms created by the family members of Shri Naveen Jain, continued to avail the exemption beyond the permissible limit by using the brand name 'AKS'. The Commissioner (Appeals) upheld the lower Adjudicating Authority’s decision that the appellants misused the SSI benefit and confirmed the demands.2. Penalty on Shri Naveen Jain:The issue also revolves around whether Shri Naveen Jain is liable for a penalty under Section 26(2) of the Central Excise Rules, 2002. The investigation found that the 'AKS' brand was registered under M/s Steel Paradise and was used by entities owned by Shri Naveen Jain’s family members. The Commissioner (Appeals) imposed penalties on various appellants, including Shri Naveen Jain.3. Admissibility of Statements Under Section 9D:A significant issue was the admissibility of statements recorded during the investigation. The appellants argued that the cross-examination of Shri Naveen Jain and others was not permitted, violating Section 9D of the Central Excise Act, 1944. The Tribunal noted that the Adjudicating Authority failed to comply with Section 9D, which mandates that statements made before a gazetted Central Excise Officer can only be considered relevant if the witness is unavailable or if the witness is examined in court. The Tribunal cited several judgments, including J.K. Cigarettes Ltd. vs. CCE and M/s Ambika International vs. Union of India, to assert that the evidentiary value of the statements is lost without compliance with Section 9D.4. Demand Confirmation Based on Director's Statement:The Tribunal found that the entire confirmation of demand was based on the statement of the Director, Shri Naveen Jain. It was held in Vikram Cement Pvt. Ltd. vs. Commissioner of Central Excise Kanpur that the sole statement of a Director cannot establish guilt. The burden of proof lies on the Revenue, which was not effectively discharged in this case.5. Legality of Using the Common Brand Name 'AKS':The Tribunal examined whether the use of the common brand name 'AKS' by the appellants was legal. It was found that the brand name 'AKS' had been assigned by an assignment deed dated 1/04/2012 to other appellants. The Tribunal referenced the case of Kali Aerated Waters Works vs. Commissioner of C. Ex., Madurai, which supported the appellants' right to use the brand name within their marketing area. Additionally, the Tribunal noted that 'AKS Gold' and 'AKS Silver' appeared to be different brand names than 'AKS'.Conclusion:The Tribunal concluded that the appellants did not commit any error in using the common brand name 'AKS'. The cross-examination of persons whose statements were recorded was mandatory, as held in Kuber Tobacco and G Tech Industries. The orders were set aside, and the appeals were allowed with consequential benefits.Order Pronounced:(Order pronounced on 10.04.2019)