TaxTMI 
TaxTMI 
2017 (12) TMI 1092
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rules, 1944 r/w Rule 25 of Central Excise Rules, 2001. Further, penalty of Rs. One lakh stands imposed on Shri K.A. Kaliappan, the second appellant under Rule 209 of erstwhile Central Excise Rules, 1944 r/w Rule 26 of Central Excise Rules, 2001. 2. After hearing both sides, we find that the said manufacturing unit was engaged in the manufacture of cotton yarn on cones as also cotton yarn in plane real hanks. It is seen that whereas cotton yarn on cones was dutiable, the cotton yarn in plane real hank was exempted. 3. The appellant's factory as also their branch office located at Tiruppur as also their brokers premises and traders premises were put to search by the Central Excise officers on 11.12.2002 and the relevant documents / records were seized for further scrutiny. During post-seizure, investigations were made, which according to the Revenue, led them to believe that the said appellant was manufacturing cotton yarn on cones but was clearing the same by raising invoices as plane reel banks and thereby evading duty during the period 1999 2000 to 2002 03 by availing the exemption in terms of Notification No.. 5/99-CE dated 28.2.1999; 6/2000-CE dated 1.3.2000 and 3/200....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erving that he should have given the assessee a reasonable opportunity of cross-examination of the remaining 10 witnesses whose statements were relied upon by the department. 6. The present impugned order stands passed by the Commissioner in denovo proceedings in terms of the directions of the Tribunal. The various persons whose statements etc. stand relied upon by the Revenue were called for examination. But, it seems that neither of them turned up. In this scenario, the appellant requested the adjudicating authority not to rely upon the statements of the said witnesses. It is further seen that the appellant relied upon the returns submitted by them to the Income Tax authorities as also to textile authorities etc. in support of their contention that what was cleared by them was hank yarn only and not cone yarn. It was specifically contended by them that in the said sales tax assessments, the hank yarn sales match with the returns filed by the appellant and the cone yarn sales match with the cone yarn clearances reflected by the appellant in their returns. Similarly, the returns filed by them before the Textile authorities DCTO were also filed. It was further argued by the ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent and they were only name lenders to the noticee company. He observed that if the sales turnover of an unit exceeds Rs. 40 lakhs in the financial year, they are bound to file the income tax returns whereas the fact is that the said two buyers in spite of having entered into the sales over Rs. One crore, did not reflect the same in the income tax returns duly audited by Chartered Accountant. He also observed that the investigations revealed that the said two buyers were having two bank accounts which seems to have been opened by the appellant themselves and the money deposited were being withdrawn subsequently. There was a fact of the buyers having given signed blank cheques to the assessee. 9. By appreciating the above reasoning of the Commissioner, we note that he has concluded that the said two buyers of the appellants were not genuine and in fact were non-existent buyers. Without going into the said dispute, we note that even as per the Revenue's contention, the said buyers were non-existent or were only name lenders. Even if that be so, we really fail to understand as to how the said fact is relevant to the issue that what was being cleared by the assessee was cone yar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the case of Jindal Drugs Pvt. Ltd. Vs. Union of India - 2016 (340) ELT 67 (P&H) has observed that not only the cross-examination but examination-in-chief is also required to be undertaken by the adjudicating authority and in the absence of the same, the statements of the deponents cannot be given much importance. The buyers have categorically stated during cross-examination that they were sales tax assessees and that entire turnover was reflected in their books of accounts. They also stated that they undertook conversion of hank yarn into cone yarn, through their vendors and further sold cone yarn to various parties. Merely because the said buyers had not maintained any records for the activities undertaken by them and have not reflected the transactions or the profits earned by them in their income tax returns (may be for the purpose of evading income tax), the same cannot be adopted for arriving at a finding that the hank yarn sold by the appellant was actually cone yarn. Apart from the above, the adjudicating authority has referred to the sales made by the appellant to other parties, which is primarily based upon the entries made in a small pocket note book of M. Nachimuth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....overed from the assessee's factory. From the various entries recorded in the said register, he has taken out the entries in respect of which the invoices were issued by the appellant and have held the other entries as relatable to clandestine removal. We are afraid that such entries read with the statement of the buyers and also the bank account figures where the payments made by the buyers were encashed, cannot be adopted for arriving at a finding of serious charge of clandestine activities. Neither the said entries made in the record and private sheets can lend support to the Revenue's allegations that the hank yarn shown to have been cleared by the appellant were in fact cone yarn. There is no evidence produced by the Revenue to reflect upon the procurement of the raw materials, the manufacture of the cone yarn, the clearance of the same through transporters etc. so as to establish the clandestine manufacture and clearances. The adjudicating authority has also gone by the fact that inasmuch as the entries in the said register refer to bags, the same must be relatable to the clearance of cone yarn inasmuch as only cone yarn is cleared in bags of 50 kgs., as per the practi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppellants have not shown any evidence to reflect upon the fact that the said statements were obtained under duress or threat. We, on going through the impugned order, find that the entire case of the Revenue was based upon the oral evidences in the form of statement of the buyers. He has observed that in as much as there is consistency in the said statements with regard to authenticity of the private records seized under mahazar on different date and details available therein, the same has to be given the status of evidence. It is well settled law that the statements can act as a corroborative evidence to the other independent evidences available on record and cannot by itself, be adopted as the sole evidence for holding against the assessee. In the present case, apart from the said evidences, the Revenue has failed to produce any other evidence to show that the appellant was clearing cone yarn under the guise of hank yarn and was indulging in any clandestine activities. The Hon'ble Punjab & Haryana High Court in the case of Jindal Drugs Pvt. Ltd. Vs. Union of India (referred supra) have observed that the deponent of the statement are not only required to be produced for cross e....