TaxTMI 
TaxTMI 
2017 (1) TMI 652
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....any during the period of dispute. On 08/11/1997, the factory premises of the Appellant company were visited by the jurisdictional Central Excise Officers who resumed several documents. Subsequently, the residential premises of Shri M.L. Agarwal, Dy. General Manager of the Appellant company was searched on 05/03/1998 and from the residential premises, several documents including the documents called the incentive sheets were recovered. Scrutiny of the documents resumed revealed that during 1995-1996, 1996-1997 & 1997-1998 period, the Appellant company was maintaining records called incentive Sheets in respect of the quantity of production of EDNs and R-Cords/Detonator fuses and the entries in the incentive sheets in respect of EDNs were made on the basis of the daily production by each regular worker and entries in respect of R-Cords were made on the basis of actual consolidated monthly production. On the basis of the figures of production in the incentive sheets, payments were being made to the workers. The incentive sheets were being prepared by the plant in-charge with the assistance of the supervisor. Shri M.L. Agarwal, Dy. General Manager, from whose residence the incentive she....
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....ccounted EDNs/R-Cords, for : (a) recovery of Central Excise Duty amounting to Rs. 51,51,960/- from the Appellant company under Rule 9(2) of Central Excise Rules,1944 read with proviso to Section 11A(1) of Central Excise Act, 1944 in respect of clandestine clearances of EDNs, R-cords/Detonator Fuses, Slurry explosives etc. during period from 1995-1996 to 1997-1998 alongwith interest on this duty at the applicable rate as per the provisions of Section 11AB of Central Excise Act,1944; (b) imposition of penalty on the Appellant company under Section 11AC of Central Excise Act, 1944 and also under the provisions of Rule 9(2), 52-A(8), 173Q(1) and 226 of Central Excise Rules, 1944; (c) imposition of penalty on Shri Rajesh Jain, Shri B.D. Agarwal and Shri A.K. Jain under Rule 209A of Central Excise Rules, 1944; and (d) imposition of penalty on Shri Ganesh Mathur, MD of HNEPL under Rule 209A ibid. 1.1 The show cause notice was adjudicated by the Commissioner of Central Excise, Jaipur vide order-in-original No.2/99 dt.8.3.99 by which - (a) the duty demand alongwith interest was confirmed against the Appellant company and besides this, penalty of equal amount was imposed on the Ap....
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....(a) confirmed the duty demand of Rs. 51,51,960/- against the Appellant alongwith interest on it at the applicable rate as per the provisions of Section 11AB; (b) imposed penalty of equal amount on the Appellant company under Section 11AC; (c) imposed penalty of Rs. 25 lakhs on Shri Rajesh Jain, MD of the Appellant company and penalty of Rs. 5 lakhs on Shri G.M. Mathur and (d) dropped the penal proceedings against Shri B.D. Agarwal and Shri A.K. Jain. 2. Heard both the sides. 2.1 Shri Abhinav Srivastava, Advocate, learned Counsel representing the Appellant company and its Managing Director Shri Rajesh Jain, pleaded that the Departments case against the Appellant is based mainly on the incentive sheets recovered from the residence of the Dy. General Manager Shri M.L. Agarwal on 05/03/1998; that the details regarding production of EDNs and R-cords/Detonator Fuses, as mentioned in those incentive sheets do not reflect the actual production which was much less, as there used to be considerable rejection at the stage of quality control; that in the incentive sheets, the gross production used to be recorded, as payment of incentive amount to the workers was based on to the gross p....
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....ds without payment of duty under parallel invoices; that there is concrete evidence on record indicating that this is a case of deliberate and well planned duty evasion, which was taking place with instructions and within full knowledge of Shri Rajesh Jain, MD and other senior officials of the company, that just because the company is under rehabilitation package under BIFR, they do not get exempted from the payment. 3. We have carefully considered the submissions from both the sides and perused the records. The allegation of duty evasion against the Appellant company and duty demand against them is based on the documents called incentive sheets from 1995-96 to 1997-98 period, recovered from the residential premises of Shri M.L. Agarwal, Dy. General Manager. The submission of the appellant is that the quantity reflected in incentive sheets are further subjected to quantity controls in terms of the ISI specifications and as much as 35% of the quantities reflected in incentive sheets get rejected in quality control. Subsequent to quality control the goods are packed and it is at this stage that the quantum of production is entered in RG-1. We find a lot of merit in the arguments ad....
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....ve also raised serious breach of principals of natural justice. They have claimed that the cross-examination of Shri Ganesh Mathur, MD of HNEPL was sought by them but the Adjudicating Authority did not make him available. Accordingly, their submission is that his statement cannot be used as evidence against them. It is well settled law that cross-examination has to be allowed normally before using such statements for confirmation of demand. If the witnesses do not turn up for cross-examination it is open to the Adjudicating Authority to proceed with the adjudication without relying on those statements. 7. The allegations made against the appellant are of serious nature. They are engaged in the manufacture of explosives which are strictly controlled. Even the factory of manufacture of such goods are under the strict supervision of the Chief Controller of Explosives. We also find that the appellant is a joint sector company between RIICO and M/s Ideal Chemicals Ltd. it is on record that almost 90% of the production of explosives is supplied to the Government and Government Undertakings to whom goods cannot be supplied clandestinely and without records. As discussed in the above para....