TaxTMI 
TaxTMI 
2019 (7) TMI 324
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....4 read with Rule 26 of Central Excise Rules, 2002. Further, penalty of Rs. 5.00 Lakhs each stand imposed on Shri Jagat Kishore and Shri Sandeep Kumar Chaurasia, partners of M/s.Sugandhi Snuff King. Further penalty of Rs. 2.00 Lakhs and of Rs. 1.00 Lakh stand imposed upon Shri Brijesh Kr. Chaubey, Manager of M/s.Purwanchal Transport Co. and Shri Manoj Kr.Gupta, Prop. of M/s.Radhey Agency respectively in terms of Rule 26 of the Central Excise Rules, 2002. 2. After hearing both sides, duly represented by Shri Nishant Mishra, learned Advocate along with Shri Abhinav Mehrotra and Shri Ankur Agarwal, learned Advocates on behalf of the appellants and Shri Mohd. Altaf, learned Asstt.Commr. (A.R.) on behalf of the Revenue, we find that M/s.Sugandhi Snuff King, Varanasi (hereinafter referred to as Sugandhi) was engaged in the manufacture of flavoured/branded chewing tobacco/Zarda classifiable under chapter 24 of the Central Excise Tariff Act, 1985. On a belief that the said unit was engaged in clandestine manufacture and clearance of excisable goods without payment of duty, the officers of DGCEI conducted searches at their factory premises as well as at various other locations on 21 Septe....
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....012 stated that he was working with his elder brother Banwari and both of them were doing the work of booking the goods with the railways. He deposed that one person by the name of Khan sent the 'Jagat' brand Zarda manufactured by M/s.Sugandhi and sometimes they used to receive the Bills for the same. 6. The officers also visited the premises of the transporters M/s.Purwanchal Transport and M/s.Ganga Parcel & Courier Services and resumed certain records from their premises. Shri Brijesh Kr. Choubey, Manager of M/s.Purwanchal Transport Co. in his statement recorded that they used to transport Zarda of M/s.Sugandhi and in all the records maintained by them, the name of the said manufacturer is written as SSK. He further deposed that when the goods were received by them from M/s.Sugandhi without bills, the driver of M/s.Sugandhi used to come to their office and would inform them as to whether the goods are covered by the bill or not. He further stated that most of the goods sent outside Uttar Pradesh were without any bill. 7. The premises of one M/s.Om Prakash Zardawale, Mukherjee Nagar, Faizabad were also put to search on 21 September 2011 and stock of 'jagat' brand Zarda value....
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....es which show the different names of the buyers. 12. Similarly the premises of various traders and dealers of 'Jagat' Zarda manufactured by M/s.Sugandhi were put to search on various dates. The premises of M/s.S.R.Patel & Co. was searched on 5 October 2011, of Shri Shiv Shakti Carrier Gulati was searched on 21 September 2011, of Shri P.S. General Store, Guwahati was searched on 21 September 2011 and the goods found therein were seized on the reasonable belief that the same have been cleared from the factory of M/s.Sugandhi without payment of duty. 13. During further investigations statements of Shir Jagat Kishore, partner of M/s.Sugandhi as also various other persons were recorded. 14. Based upon the above searches and the statements of various persons, the Revenue entertained a view that M/s.Sugandhi was engaged in clandestine manufacture and removal of Zarda. Accordingly proceedings were initiated against them by way of issuance of a show cause notice dated 13 September 2013. The notice initially proposed confirmation of demand to the extent of Rs. 5,72,06,790/-. A part of the demand was proposed to confirm on the ground of shortages of perfumery compound detected in the....
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....he third parties like railway booking agents or the traders of the appellant's product and the manufacturer of the corrugated boxes etc. and the statements recorded by the officers during the course of investigations. The appellants made a categorical request to the adjudicating authority to allow the cross-examination of the deponents of the said statements, in accordance with the provisions of Section 9D(b) of the Central Excise Act. They made a request for cross-examination of Shri Banwari Chaurasia, railway agent upon whose diary the findings of clandestine removal stand upheld against the appellant. Similarly cross-examination of Shri Birender Kr. Chaurasia, railway agent, Shri Manoj Kumar, Prop. of M/s.Radhey Agency and Shri Ramnath Mehrotra, partner of M/s.Senior Box Factory, Ramji Press manufacturer of corrugated boxes was sought along with cross-examination of the various proprietors of the shop premises who were dealing with the product of the appellant. It was specifically submitted that sub-section (b) of section 9D provides that when the person whose statement was earlier recorded is cross-examined as an witness by the court, then the court will decide about the admiss....
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....ntial evidence, but the adjudicating authority is not bound to allow cross-examination in each and every case. It is true that cross-examination is a useful procedural mechanism to arrive at the truth, but at the same time, cross examination before a quasi judicial authority is fraught with the very real possibility of its misuse. Moreover, it is a reasonable expectation that when cross examination takes place after a long passage of time, the chances are bright that the person concerned has been persuaded to change his mind and statement. This is not mere conjecture, but a fact since it is true that while the departmental officers have access to the said person for limited time, proximate to the cause of action, those in the trade are in regular touch with the said person and develop both personal and business affinity. Hence, for these reasons, even the Apex Court has observed that cross examination is not to be allowed in every situation. Therefore, the relevance of the cross examination sought has to be carefully examined in context of the case and importantly in the background of the legally acceptable records such as panchnama, statements etc, that are created proximate to th....
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....ion depends upon the facts and circumstances of the case. As such the adjudicating authority observed that though it is largely settled that cross-examination should generally be allowed when the department's case is based on statements and statement alone and there is total absence of supporting corroborative evidence. He has however, observed that in the present case though undeniably the department's case is built on the statement of 14 witnesses, but at the same time the Revenue has unearthed number of documents, which are indicative of the fact that the party was indulging in unaccounted production and clandestine clearance. He has referred to the incriminating documents being diary maintained by Shri Banwari, railway agent, bilty entry register of the transporter, consignment notes of M/s.Shiv Shakti Carriers and tax invoices/bills recovered from M/s.Radhey Agencies and has accordingly held that these documentary evidences corroborates the confessions made in the statements. 18. We really fail to understand the above reasoning of the adjudicating authority. On one hand, learned Commissioner is accepting that the Revenue's case is based upon the statements of the witness....
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....t have sought the cross-examination of witnesses after the show cause notice stand issued and as such the ratio of the Hon'ble High Court decision is not applicable. Similarly he has referred to each and every decision relied upon by the appellant and have distinguished the same on the filmsy grounds that the facts in those cases were different than the facts in the present case, inasmuch as, in the present case, the statements were recorded under section 14 and are very celar and unambiguous statements. It may be noted that all the statements are always recorded under section 14 of the Central Excise Act and it is for the assessee to request or not to request the cross-examination so as to test the veracity of the said statements. The adjudicating authority cannot accept the statements on the ground that the same are clear statements and no purpose would be served by allowing the cross-examination. Surprisingly the adjudicating authority has also referred to the jurisdictional Allahabad High Court decision in the case of Govind Mills Ltd. [2013 (294) ELT 369(HC-All.)] and has observed that since in that case there was only one statement relied upon by the Revenue, the Hon'ble High....
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....tages being pseudo as there are no inventories prepared by the Revenue showing the stock-taking of the said perfumery compounds and not taking into consideration the stock of the Liquid Paraffin Oil. Otherwise also we take note of the Hon'ble Allahabad High Court's decisionin the case of Meenakshi Castings (P) Ltd. v. Union of India reported as 2015 (322) E.L.T. 206 (All.) as also Hon'ble Punjab & Haryana High Court's decision laying down that the shortages cannot lead to evasion of duty. 20. As regards the demand confirmed by the lower authorities, we note that the same is primarily based upon the documents recovered from third parties read with the statements of the representatives of said third parties. Revenue has referred to the documents recovered from M/s.Radhey Agency, M/s.Senior Box Factory, M/s.Mohit Traders, M/s.Poorwanchal Transport Company and railway parcel booking authorities, Varanasi as also on the various railway booking agents and all the shop owners who were dealing with Gutkha and Zarda manufactured by the Appellant. It is the Revenue's case that the entries made in their books of accounts relate to the clandestine clearances of Zarda from the factory of M/s....
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....rance of 'Jagat' brand chewing tobacco to M/s.Om Prakash Zardawale it cannot be said that the same was cleared clandestinely. By referring to various decisions he observed that charges of clandestine removal have not been proved beyond doubt against M/s.Sugandhi. Accordingly he allowed the appeal. The said order of Commissioner(Appeals) is in respect of the same visit of the DGCEI officers, which is a part of the present proceedings. The Commissioner(Appeals)'s order relates to the seizure portion of various goods at various places and as such is relevant for the purposes of present appeal. The said order of Commissioner(Appeals) does not stand appealed against by the Revenue and has attained finality. 22. At this stage we may refer to certain precedent decisions on the issue of the findings of the clandestine removal based upon the statements of various deponents, who have not been allowed cross-examination read with the entries made in the third party documents recovered from the premises of the said third parties. The Hon'ble Supreme Court in the case of Andaman Timber Industries v. Commissioner of C.Ex., Kolkata-II reported as MANU/SC/1250/2015, while dealing with the cro....
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.... 9D of the Central Excise Act are required to be scrupulously followed in adjudication proceedings as the same is done in proceedings relating to prosecution. The evidentiary value of the statement, in so far as proving the truth contents thereof is concerned, is completely lost unless and until the case falls within the parameters of section 9D and otherwise it has to be held that adjudicating authority has relied on irrelevant material. If the procedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded that the Revenue has given up the said witnesses so that the reliance by the Commissioner on said statement has to be regarded as mis-guided and the statements have to be eschewed from consideration as they would not be relevant for providing the truth of the content thereof. To the same effect is the decision of the Hon'ble Punjab & Haryana High Court in the case of Jindal Drugs Pvt.Ltd. [2016(340) E.L.T. 67 (P & H)]. 24. As we have already observed that the Revenue's case is entirely based upon the statements of various persons recorded during the course of investigations, which in turn are relatable to the entries ma....
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....movement; (iv) unauthorized payment for procuring unaccounted raw material and packing material ; (v) disproportionate power consumption, capacity utilization and labour employment; and (vi) recovery of unaccounted sales proceeds in substantial cash from factory or office premises or anywhere else in direct control of assessee, backed by any confirmation, oral or written, from a person giving such cash against goods removed in clandestine manner without payment of duty from the factory." 26. The said principles stand followed by the Tribunal in number of cases. Reference can be made to M/s.S.R. Ingots Pvt.Ltd. v. Commissioner of Central Excise (CESTAT), New Delhi - Final Order No.50750-50751/2018 dated 23 February 2018, Commissioner vs. Kurle Pan Products Pvt.Ltd., Final Order dated 17 January 2019 reported as MANU/CM/0013/2019. In fact, the list is unending and suffice it to say that it is well settled that onus to prove clandestine removal lies heavily on the Revenue and is required to be discharged by sufficient evidences. Further the Hon'ble Allahabad High Court in the case of Commissioner of Customs and Central Excise v. Auto Gollon Industries Pvt....