TaxTMI 
TaxTMI 
2019 (7) TMI 1406
X X X X Extracts X X X X
X X X X Extracts X X X X
....s a quantity of 1932.015 M.T. was found short when compared to the stocks of finished goods shown in the statutory books, such as, RG - I register; (ii) reversal of Cenvat credit amounting to Rs. 24,72,672/- in respect of the inputs namely MS Ingots on which Cenvat credit had been availed by the appellant and on physical verification under Panchnama the quantity of raw material namely, MS ingots weighing 714.480 M.T. was found short as recorded under RG-23 registered by the appellant ; (iii) central excise duty amounting to Rs. 4,24,70,378/- under Section 11A on the ground that the appellant suppressed the actual production by 10259.730 M.T. of finished goods namely, M.S. bars/TMT saria by showing excess burning loss of 12767.493 M.T. instead of 2507.760 M.T. It has further been alleged that by showing the excess burning losses, the appellant had clandestinely cleared the finished goods between July 2006 to March 2009 and thereby evaded central excise duty amounting to Rs. 4,24,70,378/- ; (iv) a demand of Rs. 35,72,980/- on the ground that the finished goods were cleared/sold by appellant by resorting to under valuation of the finished goods by declaring the same as old rejec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellant vide their letter dated 6 October 2017 has sought cross-examination of certain persons of the company who had shown lower burning losses in their factories and also the cross-examination of the Panch witnesses. It has been mentioned by the learned Advocate that the date of cross-examination was fixed for 18 October 2017 when Shri V.K. Aggarwal, the Advocate of the appellant cross-examined Shri Kewal Krishan, the driver who had stated that they were engaged in transportation of billets from Bihar and they were not engaged in transportation of TMT bars/saria. The other persons namely, M/s Rathi Bars, Khuskhera and Rathi Special Steel Ltd., Khuskhera did not provide any information and declined to appear for cross-examination. Shri V.K. Aggarwal, the learned Advocate for the appellant did attend the personal hearing on 28 November 2017 and cross examined Shri Bhim Singh - Driver, Shri A.K. Malhotra - Director of M/s Rathi Dakshin Steel Ltd., Khuskhera. Shri B.K. Meena, Superintendent and Shri K.C. Meena, Superintendent were also cross-examined on 22 January 2018. The learned Advocate has contested that the material witnesses in respect of burning losses have not been produced f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he statement, which has been made during the course of inquiry/investigation, before a gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein as observed by the Hon'ble Delhi High Court in the case of J.K. Cigarettes, 2009 (242) E.L.T. 189(Del). (d) In other words, in the absence of the circumstances specified in Section 9D (1), the truth of the facts contained in any statement, recorded before a gazette Central Excise Officers, has to be proved by evidence other than the statement itself. (e) Therefore, two steps were required to be followed by the Adjudicating Authority under Clause (b) of Section 9D (1):- (i) The person who made the statement has to be first examined as a witness in the case before the adjudicating authority, and (ii) The adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. The Hon'ble Tribunal has referred to the judgment in Parmarth Iron Pvt. Ltd., 2006 (260) E.L.T. 514 (ALL) wherein the Hon'ble Allahabad High Court has held that "If the Revenue Choose no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the higher side in the factory of the appellant due to defects in the heating furnace of the factory and for the reason that re-heating furnaces had some defects. According to the learned Advocate these factors resulted in excessive burning losses. The learned Advocate submitted that though the Department produced Shri A.K. Malhotra, Director of M/s Rathi Dakshin Steel Ltd. for cross-examination who submitted that the burning losses were about 2% to 4% and the appellants claimed burning losses of 10 to 12% on higher side but Shri Malhotra was not a competent technical person to give any opinion about burning losses and, that too about the factory of some other person. As such, his evidence could not have been considered for proving excessive burning losses. 10. The learned Advocate also submitted that :- (i) It is submitted by the appellant, that the burning loss of about 10% to 12% is based upon the actual percentage of the burning loss caused during the manufacturing of the final products. It is submitted that their re-heating furnace is not working properly resulting in low production of finished goods due to heavy burning loss. On 18 October 2008, Govind Engineering, Far....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmitted that the appellant had followed the instructions and suggestions made by the NISST and as a result the burning losses has come down to the level of 2%. (vi) It has further been emphasized that all these steps had been initiated by the appellant before the search of the factory on 11 December 2008 as they were losing their production. That is why, the Hon'ble Tribunal has observed in its Final Order dated 08 February 2017 that "the Appellant was vigilant during the period with regard to the burning loss occurring during the period and chartered engineer report certifying that there was burning loss on higher side." The Hon'ble Tribunal has also observed that the Reports produced by the appellants have not been considered by the Department in positive perspective. It is, therefore, requested that the Reports, already submitted by the appellant may please be considered in the positive perspective, as directed by the Hon'ble Tribunal. 11. It has also been submitted by the learned Advocate that no verification was conducted by the central excise officers to examine adjudge the claim of the appellant regarding higher burning losses occurring due to technical problems in the f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Opel Alloys (P) Ltd vs. Commissioner of Central Excise, Ghaziabad 2005 (182) E.L.T. 64 (Tri-Del)". 12. Regarding the allegation in the show cause notice that the appellant cleared fresh goods by mis-declaring the same as old and rejected instead pitted steel on which a demand of central excise duty amounting to Rs. 35,72,980/- has been confirmed, the learned Advocate submitted that due to stiff competition in the steel market and due to the fact that the finished goods remained lying in the open stock yard for long period and as a result same got rusted and became inferior and, therefore, they had no option but to clear the same on reduced value as rusted and inferior goods cannot be sold in the open market at the prevailing prices of fresh finished goods. The learned Advocate contended that the Department has failed to produce any of the buyers for cross-examination to prove the allegation of under valuation of the finished goods at the time of the sale of same. 13. In the end the learned Advocate contended that there is no case for imposition of penalty under Section 11AC of the Central Excise Act, 1944 on the appellants as they have not indulged in any of the activity like f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ilities were not in the good condition and, therefore, the burning losses in the manufacture of MS bars were on the higher side than the normal burning losses. 16. We find that the Department does not have any evidence to support its claim that the appellant claimed excess burning losses in the manufacture of MS bars and thereby clandestinely manufactured and cleared certain quantities of finished goods without payment of central excise duty which resulted in duty evasion amounting to Rs. 4,24,70,378/-. We take note of fact that except the statement of three persons who are also in the manufacture of MS bars whereunder they have stated that the normal burning losses during manufacture of MS bars may vary between 2% to 4%, no other evidence has been produced to support the claim of the Department. The department failed to discharge its responsibility to substantiate that the appellant had claimed excessive burning losses. The Department could have undertaken the exercise of actually establishing the actual burning losses by organizing manufacture of a particular lot of MS bars under Panchnama from the stage of feeding of raw materials to emergence of finished product to establish o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and never below that level or at that level. 9. The third assumption is that the average of 10.11% of sugar recovery from the mixed juice is a safe basis for calculating the quantity of sugar not accounted for. 10. The fourth is that the milling performance of the factory has been uniformly efficient throughout the entire period from November 4, 1956 to May 7, 1957. 11. If any one of these assumptions breaks down, then the ultimate conclusion will have to be rejected as incorrect. It has to be borne in mind that human element is involved at certain stages of the operation such as time of commencement of the day's working, the rapidity or slowness in feeding cut sugarcane into the crusher and mills, accurately adding the same quantity of water in the crusher and mills, stopping the inflow of mixed juice into the tanks at a uniformly higher level than that indicated by the mixed mark, allowing a uniform time lag between the emptying of the tanks and starting inflow into them again and so on. It is also unsafe to rely on the average of 10.11% of sugar recovery for the entire period because it involves the assumption that even during the periods when the gross weight of the ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the consignees; (v) Amount received from the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal. In the instant case, no such evidences to the above effect have been brought on record". 21. It can be seen that in the present case except the statements of certain persons, no other evidence regarding manufacture, clearance, transportation, purchases etc. have been produced to establish the case of evasion of central excise duty and, as such, the demand, as mentioned above, is legally not sustainable. 22. Coming to the demand of central excise duty amounting to Rs. 83,57,897/- on account of shortage of the finished goods namely MS bars and shortage of raw material namely MS Ingots at the time of the visit of the factory on which the Cenvat credit amounting to Rs. 24,72,672/- has been availed by the appellant, it needs to be noticed that the Panchnama was drawn at the appellant's premises by the visiting officers whereunder the employees and responsible persons of the appellant have also participated alongwith Panch witnesses. It is a matter of record that at the time of drawing of the Panchnama, the methodology adopted by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ngots. We find that weight of one bundle of each size of MS bars have been taken from the weigh bridge installed in the factory premises of the appellant and the print out of the weighment slip has also been taken and the quantity of the bundles of each size of MS bar was counted in the presence of Panchas as well as authorized representative of the appellant and thereafter the stock of available finished goods namely MS bars and raw material namely MS Ingots was arrived at by the officers as well as Panchas and the authorized representative of the appellant. The veracity of the Panchnama and the availability of the finished goods as well as the raw material on the date of visit cannot be challenged as an afterthought by the appellant only because each and every MS bar and each and every ingots of raw material was not individually weighed by the visiting officers. The entire proceedings were conducted in a mutually agreed way which was the best possible practical and logical way of weighment. The appellant has failed to contradict the findings of the Panchnama except advancing an argument that since each and every MS bar or each and every MS ingots was not been weighed the shortage....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fully contradicted pleading of appellants. Involvement of appellant in evasion of duty adopting premeditated design realizing higher sale price than the price embossed on the cigarette packets was established. In extricable links of versions in the recorded statement failed to dissociate the appellants from the grave of offence. Accordingly the materials recovered in the course of search and statements recorded by Revenue lead to irresistible conclusion that unfair practice was adopted by the appellants for their unjust enrichment at the cost of Revenue. The concepts of probability, and the degrees of it, cannot obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt. There is an unmistakable subjective element in the evaluation of the degrees of probability and the quantum of proof. In view of the above the statements used in adjudication does not appear to have made the same arbitrary or capricious nor vitiates the same. Cross-examination : 21. No doubt reliance and testimony of a witness calls for cross-examination. The evidence in adjudication proceeding need not be like the one in crimi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on their specialized or local knowledge of the type of, issue before them in order to supplement as well as evaluate evidence to find facts by inquisitorial methods, and inspections and to obtain information from other persons; but it will generally be a denial of justice to fail to disclose to a party specific material relevant to the decision if he is thereby deprived of any opportunity of comment on it." [Emphasis supplied] The Hon'ble High Court observed thus :- "In other words, it seems to be a fairly settled position in law that it is not necessary that persons whose statements have been previously recorded must be examined in the presence of the party against whom such previous statements are intended to be used. The rules of natural justice do require that their previous statements must be made available to the party against whom they were intended to be used and such party must be given a fair opportunity to explain the same or comment on them. What would amount to fair opportunity would depend upon the facts and circumstances of each case...." [Emphasis supplied] 21.2 The Apex Court in Surjeet Singh Chhabra v. UOI, reported in 1997 (89) E.L.T. 646 (S.C.) held....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ive of the matter, unless successfully withdrawn or proved erroneous. This is so because an admission by a party is substantive evidence of the fact admitted, and admissions duly proved are admissible evidence irrespective whether the party making them appeared in the witness box or not and whether that party when appearing as witness was confronted with those statements in case it made a statement contrary to those admissions. An admission, if clearly and unequivocally made, is the best evidence against the party making it and though not conclusive, shifts the onus on to the maker on the principle that "what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted the fact admitted must be taken to be established. ........ 26.2 Materials on record showed that there was no breach of natural justice. The SCN clearly depicted all the materials on which Excise authorities had relied to call for reply of appellants. When opportunity was given to reply on the specific charges levelled by the SCN, without filing a reply to that, the appellants have no right to insist for cross-examination since the adjudicating authority was all al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave taken place. Further the appellant did not advance any explanation for clearance of old, rejected and pitted steel at the time of adjudication. The appellants claim that due to closure of the factory certain goods got deteriorated and they have to be cleared on lower price is without any evidence and the claim made by the appellant is devoid of any merit. The statement recorded of the concerned employees of the appellant also endorse the findings and the stand taken by the Department that fresh finished goods were cleared by the appellant by declaring the same as old, reject and pitted steel. The appellants have not produced any cogent explanation to contradict the findings given in the impugned order whereunder the Adjudicating Authority has confirmed the duty of central excise amounting to Rs. 35,72,980/- on this count. 28. While taking this view, are supported by the decision of Hon'ble Supreme Court in GTC Industries Ltd. vs. Commissioner of Customs, New Delhi reported in 2011 (264) E.L.T. 433 (Tri. - Del.). 29. The demand of Rs. 5,92,419/- confirmed by the impugned order has been confirmed by this Tribunal's in the previous final order No. 50784-50785 of 2017 dated 08 ....