AI Drafter 
TaxTMI 
TaxTMI 
2016 (8) TMI 116
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.... central excise duty under the above notifications. On the basis of investigation and statement of suppliers of knitted fabric, it is alleged that the main respondent has cleared knitted fabrics of polyester not of cotton. In these set of facts, the show cause notices were issued to the respondents to deny the exemption as claimed by them consequently to demand of duty alongwith the interest and for imposition of penalty. The matter was adjudicating and exemption was denied consequently, the demand of duty was confirmed alongwith interest and penalty and various penalties were imposed. Aggrieved with the said order, the respondents have challenged before the Commissioner (Appeals) who dropped the charge against the respondents on the basis of available records. Aggrieved with the said order, the Revenue is in appeal before us. 3. Learned AR appeared on behalf of the Revenue and submitted that the Commissioner (Appeals) fell in error who has not given any credence to the confessional statement made by the suppliers. In fact, the department investigated on a specific information that the main respondent is misdeclaring the goods as cotton dominated fabrics whereas the goods ....
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....statement of witness has not been controverted by the Revenue with cogent evidence. Moreover, during the course of investigation, no samples were drawn and in the absence of test report, it cannot be said that the goods cleared by the respondents were polyester dominated fabrics. The Commissioner (Appeals) has rightly appreciated the facts and cross examination done by the respondents. The Commissioner (Appeals) has also examined the records placed before him i.e. challan/invoices, ledger which clearly show the activity of respondents and after examining the said documents, he has rightly arrived at a decision that the goods cleared by the respondent were cotton dominated fabrics and not polyester dominated fabrics. Therefore, the impugned order is to be upheld. 5. Heard the parties and considered the submissions and examined the records placed before us. 6. The contention of the learned AR that retraction made by the respondents is not acceptable. In fact, there was no retraction and it was during the cross examination, the facts came to knowledge of the adjudicating authority. The Revenue fell in error to conclude that the statement made in the cross examination....
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....ded by the investigating officers. The adjudicating authority vide the impugned order dated 10.11.2006 confirmed the demand of duty and imposed penalties on the basis of the said statements on record with the reason that the retraction from the statements after as sufficient time has no value and such denial cannot be accepted. It has been pleaded by the appellants no. 1 that no question was asked by the adjudicating authority to the appellants no. 4 when he denied his statement during cross examination and thus, the said statement has not been rightly relied upon for confirmation of the demand in the instant case. They have also contended in the instant proceedings that they have paid dying charges of cotton which are always very high as compared to charges of polyester and that it is evident from their ledgers and ledgers of the suppliers that higher charges were paid. It is observed that during cross examinations, the appellants no. 4 has stated that they sent fabric for dyeing against the challans which are prepared by themselves; that they were never instructed by dyers and that in case of cotton dominated fabrics 'cotton dyeing' was mentioned and in case of p....
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....ring the instant proceedings, photocopies of the records such as challans issued by the appellants no. 1 and ledgers of the appellants were produced by the appellants to support their contention the charges of cotton dyeing were higher as compared to the chares of polyester dyeing and that they charged higher charges pertaining to cotton dyeing in respect of fabrics removed to the appellants no. 3 & 4 after dyeing. It was also shown by the appellants no, 1 that they issued separate invoices for dutiable and non-dutiable goods and correlated the non-dutiable invoices issued by them for cotton dyeing to the suppliers with the respective challans of the suppliers and the entries in the ledgers showing that they have charged for cotton dyeing from the suppliers. As recorded in the impugned order, the original copies of purchase invoices of the appellants no. 4 were also produced during the adjudicating proceedings in addition other documents but the same has not been disputed and there also no adverse findings on the same. Further, no evidence has been produced by the investigators that the records resumed from the appellants had any incriminating documents to prove that the appellants....
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....he co-accused there is no other evidence to support the department's case. Also, the documents produced by the appellants no. 4 in the course of investigation and adjudicating proceedings were not taken into consideration and, the same were not also disputed. Therefore, it has been rightly contended by the appellants the same cannot be ignored and that preference cannot be attached to alleged confessional statements which have disowned by the statement makers themselves. It is well settled the mere statements which have later on disowned could not be mad basis of confirming the demand without seeking corroboration from any other reliable evidence. In view of this, I find that the instant departmental case is not sustainable for want of corroborative evidence. As the department's case does not survive, there is no case of contravention of statutory provisions and accordingly penal action is not warranted and also demand of interest does not sustain. 9. On perusal of the observations made by the Commissioner (Appeals) in the impugned order and the evidence placed before us, we find that in this case the original invoice is the main evidence to reveal the truth but th....