2019 (9) TMI 703 - AT - Central Excise

Tribunal overturns decision citing delay, lack of evidence, and unjustified limitation period

The Tribunal allowed the appeal, highlighting that the delay, lack of cross-examination, and absence of corroborative evidence significantly undermined ... SSI Exemption - clubbing of clearances - request for cross-examination denied - section 9D of the Central Excise Act - HELD THAT:- A perusal of the SCN shows that reliance have been placed on the statements of these persons. These statements were recorded in the year 1988/1989. In absence of examination/cross examination no reliance can be placed on these statements. It is seen that case of the Revenue on account of clandestine clearance on the basis of documents which show difference between bank statements and RG-I register is also subject to interpretation given by Shri H.R. Patel in his statements. Shri H.R. Patel was also not examined/ cross examined. In the above facts and circumstances, the assertion of the appellant that long delay of 13-14 years and failure to conduct cross examination of various persons on whose statements Revenue has relied, has severely compromised their defense. In the instant case, we find that no evidence from the buyer of transport of alleged clandestine clearance have been produced. In these circumstances, we find that no case of clandestine clearance can be made against the appellant. Extended period of limitation - HELD THAT:- Regarding clubbing of two out of 3 units namely M/s. Bakul Chemicals Pvt. Ltd. and M/s. Pocono Chemicals was examined by Revenue in different set of proceedings and it was held that the two are distinct and different separate units - thus, it is apparent that the Revenue was fairly aware of the status of the two units and in these circumstances invocation of extended period of limitation is totally out of place and without merit. Appeal allowed - decided in favor of appellant. Issues Involved:1. Delay in adjudication and its impact on the appellant's defense.2. Clubbing of clearances of different entities and denial of SSI exemption.3. Invocation of the extended period of limitation.4. Reliance on statements without cross-examination.5. Allegations of clandestine removal based on discrepancies in bank statements and RG-1 register.Detailed Analysis:1. Delay in Adjudication and Its Impact on the Appellant's Defense:The appellant argued that the long lapse of time (13-14 years) impeded their capacity to defend the case as they had to reconstruct their files. They relied on the Gujarat High Court decision in Siddhi Vinayak Syntex Pvt. Ltd., which held that such delays cause unjust prejudice to the assessee and vitiate the adjudication process. The Tribunal acknowledged this argument, noting that the delay and failure to conduct cross-examination severely compromised the appellant's defense.2. Clubbing of Clearances of Different Entities and Denial of SSI Exemption:The appellant contended that earlier proceedings involving the same parties had concluded in their favor, establishing that M/s Bakul Chemicals Pvt. Ltd., M/s Pocono Chemicals, and M/s Shonar Enterprise were distinct entities. They pointed out that the same Commissioner had previously held these entities as distinct but contradicted himself in the current proceedings. The Tribunal found merit in this argument, noting that the Revenue had previously examined the status of these entities and determined them to be separate, thus invalidating the current attempt to club their clearances.3. Invocation of the Extended Period of Limitation:The appellant argued that the extended period of limitation was inapplicable since the issue of commonness between the entities had been previously examined and resolved in their favor. The Tribunal agreed, stating that the Revenue was already aware of the status of the entities, making the invocation of the extended period of limitation without merit.4. Reliance on Statements Without Cross-Examination:The Tribunal noted that the Revenue failed to produce Shri J.P. Shah for cross-examination despite specific directions in the remand order. Additionally, other statements relied upon by the Revenue were recorded in 1988/1989 and were not examined or cross-examined as required under section 9D of the Central Excise Act. Consequently, the Tribunal held that no reliance could be placed on these statements.5. Allegations of Clandestine Removal Based on Discrepancies in Bank Statements and RG-1 Register:The Tribunal found that the allegations of clandestine removal were based solely on discrepancies between bank statements and the RG-1 register, without any corroborative evidence such as buyer records or transport details. Citing previous decisions, the Tribunal held that such discrepancies alone were insufficient to substantiate claims of clandestine removal.Conclusion:The Tribunal allowed the appeal, emphasizing that the long delay, failure to conduct cross-examination, and lack of corroborative evidence severely compromised the appellant's defense. The invocation of the extended period of limitation was deemed without merit, and the attempt to club clearances of distinct entities was invalidated. The appeal was consequently allowed, and the adjudication proceedings were quashed.