TaxTMI 
TaxTMI 
2016 (11) TMI 53
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....ures molasses produced in Khandsari factory, whether directly from such factory or otherwise, for use in the manufacture of any commodity, whether or not chargeable to Central Excise Duty, shall pay the duties leviable on such molasses, as if such molasses had been manufactured by the procurer on the date of receipt of such molasses in his factory. On 10.1.01 the office, residential and factory premises of the appellants were raided by the Income Tax Officers, in the course of which, some documents were recovered by them. The photocopies of the documents which showed the procurement of molasses by the appellants were handed over to the Jurisdictional Central Excise Officers. In the course of investigation, the details of the Khandsari molasses supplied by Khandsari Units in Bhopal and Raisen region of MP were obtained and it was found that M/s. Priyatam Khandsari, Seoni Road, Chhindwara, Shri Kabra Khandsari Sugar Mills Pvt. Ltd., Gadarwara, M/s. Krishi Sagar Udyog, Theni, Bankhedi, M/s. Narmada Sugar Mills, (Pondar) Salichouka, Distt. Narsinghpur and M/s. Venkat Khandsari Factory, Panjara, Chourai, Chhindwara were supplying Khandsari molas....
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....as recorded on 21.01.2002 under Section 14 of the Central Excise Act, 1944 wherein he stated that he was working for M/s. Som Distilleries till the end of 1995, that he was participating in the auctions of molasses on the directions of Shri Ajay Arora, Managing Director of M/s. Som Distilleries and that sometimes he attended to the auctions but he took part only in the sales of molasses by sugar mills and he never attended any tender of Khandsari mills. Shri Ravi Dang also denied having any knowledge of Shri N.L. Sharma, authorised signatory of M/s.Narmada Sugar Mills and about the fake firms M/s. Molasses Traders, M/s. Indian Trading Corporation, Bhopal, M/s. Indian sales Corporation etc. Statement of Shri Jagannath Chatterji, Commercial Manager, M/s. Som Distilleries was also recorded on 22.1.2002, wherein he stated that Shri Ravi Dang was working for the appellant company. It, thus, appeared that Shri Ravi Dang had assisted the appellant company and Shri Ajay Arora in illegal procurement of Khandsari molasses without payment of duty. In view of the above facts, a show cause notice dated 1.4.2002 was issued to the appellant company, Shri Ravi Dang, S....
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..... 917 (Tribunal), Nageswari Match Works vs. CCE, Madurai reported in 2014 (302) E.L.T. 450 (Tri. - Chennai). (ii) The major portion of the demand to the extent of about Rs. 38 lakhs has been made on the basis of certain details recovered during the investigation by Income Tax Department. These details cover quantities of molasses supplied by 5 Khandsari units to various recipients other than the appellant. Allegations have been made in the show cause notice that these quantities of molasses have been supplied to the appellant on the basis of statement of Shri N.L. Sharma given before the Income Tax officers on 29/10/01 to the effect that this quantity of molasses were actually supplied to the appellant's unit even though names appearing in the documents are different. The appellants have assailed this piece of evidence. Their submission is that Shri N.L. Sharma retracted his statement given on 29/10/01 they have attached affidavits executed by Shri N.L. Sharma to this effect. It is their submission that retracted statement cannot be relied upon by Revenue to make a demand of the excise duty as per the settled law on subject. They have further submitted that durin....
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....ed in Khandsari factory for use in the manufacture of any commodity shall pay the duties leviable on such molasses as if such molasses had been manufactured by the procurer on the date of receipt of such molasses in his factory. The entire present proceedings have been initiated on the basis of the raids conducted by the Income Tax Department. A register called "BS-26" has been recovered by the Income Tax Authorities which contained the details of molasses purported to have been received by the appellant. This document also contains the tanker numbers on which the goods are said to have been received. Revenue raised duty demand on this quantity of molasses. However, the appellant has challenged the same. They have submitted that molasses was not received by means of the tanker numbers found in the document. They have claimed that some quantity of molasses might have been received in pouches for purposes of testing the quality. It stands further argued that the appellant's unit is under the physical control of the said excise officials. It has been held time and again that when a unit is under physical control, no allegations of suppression can be made against them and no demand can....
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....s. Further, I find that Shri N.L. Sharma has retracted this statement and an affidavit to this effect has been submitted and is part of the appeal documents. To examine the veracity of the statement made by Shri N.L. Sharma, his cross examination was requested by the appellants at the time of adjudication by the Commissioner. However, this was turned down by him. Under the circumstances, such statement loses its evidentionary value. It has been held time and again by the higher judiciary that cross-examination of the persons giving statements if asked for has to be necessarily given. In the absence of such cross-examination the statement cannot be relied upon by Revenue to demand excise duty. In the recent decision of the Hon'ble Punjab & Haryana High Court in the case of G. Tech Industries the Hon'ble Court has held as follows :- "16. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D (1). The rigour of this procedure is....