https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=756816 https://www.taxtmi.com/caselaws?id=756816 Clandestine removal of excisable goods - Allegation on the basis of various statements recorded from partners of the appellant firm, its employees and some buyers of the goods etc. - Section 9D of the Central Excise Act, 1944 - HELD THAT:- From the reading of the Section 9D it is seen that it is mandatory to provide the cross-examination of the witnesses to the appellant against whom the case of clandestine removal was proposed. Section 9D provides that the cross-examination is mandatory and only after cross-examination of witnesses, the statements can be admitted as evidence to use against the appellant for adjudication of the show cause notice. It is not the choice of the Adjudicating Authority to grant or to deny the cross-examination of the witnesses. Since admittedly the adjudicating authority has rejected the request for cross- examination of the witness, then the statements of the witnesses cannot be relied upon as admissible evidence. In the case of Motabhai Iron Steel Industries [ 2014 (10) TMI 723 - GUJARAT HIGH COURT ] it was held that no reliance can be placed on the statement of such witness who has not subjected himself to cross-examination by the affected party. Under the circumstances, the statement made by Shri Arjandas lost its efficacy and therefore, could not have been used against the assessee. Besides, the Tribunal has also found that M/s. Star Associates was regularly supplying goods to the assessee in the past and on no occasion, it was found that they had issued invoice without actually supplying the goods. It is in the light of the aforesaid facts that the Tribunal has deleted the disallowances of credit of Rs. 14,42,177/-. Under the circumstances, it cannot be said that there is any infirmity in the view taken by the Tribunal while deleting the disallowance of credit of Rs. 14,42,177/-. Thus, it is settled that without cross-examination of the witness their statements recorded under Section 14 of the Central Excise Act, 1944 cannot be accepted and the demand on that basis cannot be confirmed on the charge of clandestine removal. It is found that the case is merely based on the statements and when as per our observation the said statement cannot be used as evidence then only evidence left is loose paper/sheets/dispatch chits. On perusal of those documents, we find that appellant has pointed out many discrepancies and there is a clear contradiction in the show cause notice itself about the statement of kiln operator. These documents in isolation cannot be considered as sole evidence to conclude the clandestine removal for the reason that the veracity of these loose papers/sheets/chits is also based on the statements - It is settled position in various judgments that only on the basis of loose paper/diaries, charge of clandestine removal cannot be established. The loose papers/sheets/chits cannot be accepted as conclusive evidence to establish the clandestine removal. Therefore, on both the counts i.e. statements without carrying out any cross-examination and loose papers/sheets/dispatch chits without having its authenticity cannot be used as evidence for clandestine removal. Accordingly, the revenue could not prove beyond doubt their case of clandestine removal of excisable goods, hence the impugned order is not sustainable. Hence, the same is set aside. Since the demand itself is not sustainable, penalty imposed on various persons will also not survive - as regard the penalty imposed on the partners of the appellant firm, it is settled legal position by the Hon ble Gujarat High Court in the case of PRAVIN N. SHAH VERSUS CESTAT [ 2 012 (7) TMI 850 - GUJARAT HIGH COURT ] and COMMISSIONER OF CENTRAL EXCISE VERSUS JAI PRAKASH MOTWANI [ 2 009 (1) TMI 501 - GUJARAT HIGH COURT ] that the separate penalty on the partner of the partnership firm cannot be imposed. The impugned order is set aside - appeal allowed. Case-Laws Central Excise Tue, 06 Aug 2024 00:00:00 +0530