2022 (3) TMI 694

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.... appellant-company recorded under Section 14 of the Central Excise Act, 1944 could be treated as a relevant piece of material without complying with the provisions of Section 9D of Central Excise Act, 1944? ii. Whether the finding of learned Tribunal that the duty demand was never contested by the appellant before the authorities is perverse? iii. Whether suo-moto deposit of differential duty liability, whose details have been mentioned in para 5.0 of the notice to show cause issued to the appellant as well as to its Managing Director can be said to be an admission on the part of the appellant regarding clandestine removal of goods? iv. Whether the fact that the penalty imposed by the adjudicating authority upon the Managing Director of the Company, having attained finality, can itself be used against the appellant? v. Whether the impugned order was passed solely on the statement of the Managing Director of the Company recorded under Section 14 of the Central Excise Act, 1944 or there was further material to confirm the demand against the appellant? vi. Whether the entries made in private diary of the Managing Director of the Company cou....

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....atement of Mr. Budhia is not disputed by the Respondent in their counter affidavit. On the same date, Shri Budhia also deposed that he is a heart patient. Mr. Budhia fell seriously ill and was immediately rushed to Apollo Hospital, Chennai on the next day i.e.16.11.2001 and he underwent by-pass surgery on 03.12.2001. He was discharged on 10.12.2001. The aforesaid fact has not been disputed by the Respondent in their counter affidavit. 24.11.2001: According to the appellant, the Central Excise Officials exerted pressure tactic upon the appellant's employee to deposit the duty and an amount of Rs. 10,68,298/- was accordingly deposited vide TR-6 Challan dated 24.11.2001i.e. much before issuance of show cause notice on 22.02.2002. Investigations were also carried out against all three buyers of the appellant i.e. M/s Jharkhand Steels, Ranchi, M/s Kavita Steels, Ranchi and M/s Ashish Steel, Ranchi on 09.10.2001. Searches revealed that these buyers had purchased excisable goods from the appellant under the cover of proper excise invoice only, as per para 3.0 of the show-cause notice. This itself proved that the entries in the private diary were not related for clandestine removal. On ....

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....on in ambassador diary. 07.03.2005: The appellant vide his reply dated 07.03.2005 denied the allegation in the show cause notice which is not disputed by the Respondent in their counter affidavit dated 10.05.2019. 13.04.2005: The Joint Commissioner, Central Excise, Headquarters, Patna vide his Order-in-Original dated 13.04.2005 confirmed the duty demand along with interest and imposed a penalty of Rs. 20,000/- under Rule 173Q of the C.E.R., 1944 read with Rule 25 of C.E.R., 2001 and further imposed penalty of Rs. 10,77,678/- under section 11AC. Further penalty of Rs. 10,77,678/- under section 11AC and penalty of Rs. 20,000/- under the erstwhile Rule 209A of the C.E.R., 1944 read with Rule 26 of the C.E.R. 2001 were also imposed upon Shri Hari Krishna Budhia, Managing Director. 5. The Appellant being aggrieved, went in appeal before the Commissioner (Appeals), Central Excise, Patna under section 35 of the Act and reiterated their contentions. 29.09.2005: Learned Commissioner (Appeals) in purported exercise of powers conferred under section 35A (3) of the Act issued a show-cause notice on 29.09.2005 proposing enhancement of penalty under erstwhile Rule 209A of the C.E.R, ....

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....ritten notes of argument on 30.08.2017. 21.09.2017: The learned Tribunal by the impugned order dated 21.09.2017 (Annexure-9) rejected the appeal filed by the appellant inter-alia solely relying upon the statement dated 15.11.2001 of Shri Hari Krishna Budhia, Managing Director and the private diary seized from the office. Submission of the Appellant on the substantial question of law: 7. The first substantial question of law framed for consideration in this appeal is "whether, the statement of Mr. H.K Budhia, Managing Director of the Appellant-Company recorded under Section 14 of the Central Excise Act, 1944 could be treated as a relevant piece of material without complying with the provisions of Section 9D of Central Excise Act, 1944?" Learned counsel for the appellant has answered this question in the following manner: According to him, learned Tribunal failed to appreciate that the statement of Shri Budhia was irrelevant piece of material due to non- compliance of the mandatory conditions of section 9D of the Act. According to him, under section 9D(1)(b) read with section 9D(2) of the Act, statement made before the Central Excise Officer during the course of any inqui....

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.... also and is protected as a constitutional right under Article 20 (3) of Constitution of India. Learned counsel for the appellant has submitted that interpretation of statute involves giving content to the meaning of expression used and also what is not said. In support of the submissions, learned counsel for the appellant has placed reliance upon the following decisions: i. (1995) 3 SCC 367: Sukhwant Singh Vs. State of Punjab ii. 2007 (220) E.L.T 3 (SC): Mohtesham Mohd. Ismail Vs. Spl. Director, Enforcement Directorate iii. 2016 (340) E.L.T 67 (P&H): Jindal Drugs Pvt. Ltd Vs. Union of India iv. 2016 (332) E.L.T 416 (Del.): Flevel International Vs. Commissioner of Central Excise v. 2018 (361) E.L.T 90 (P&H): Ambika International Vs. Union of India vi. 2018 (362) E.L.T 961 (Chhatisgarh): Hi Tech Abrasives Ltd. vs. Commissioner of C. Ex. & Cus., Raipur 8. Based on these decisions, it is submitted that the consistent line of interpretation of section 9D is that the protection of section 9D is mandatory in nature. Learned counsel for the appellant submits that the decision in the case of 2019 (368) E.L.T 710 (Tri-Del) wherein it ....

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....ted material. Even non- filing of any reply, in the worst case scenario, is not admission of the charges. The appellant has disputed the entire demand at every stage of the proceedings right from the Adjudicating Authority till the learned Tribunal. Since section 11A (2) mandates determination of duty of excise in accordance with law even where no replies were filed, it was the duty of the Adjudicating Authority to determine it in accordance with law. In any case, defence reply cannot be treated as evidence in support of the charge in the show-cause notice. The Apex Court in the case of (2004) 9 SCC 703 para 14 has held that statement in reply to the show-cause notice is not evidence. The Tribunal erred in treating it as evidence in support of the case. Even if it is accepted assumingly before the Adjudicating Authority that quantification of demand was only challenged, then also nothing would turn out of it inasmuch as there is no estoppel against challenging the taxability before the Commissioner (Appeals) who is also an Assessing Authority. 10. In the instant case, the taxability has undisputedly been challenged before the Commissioner (Appeals) which is evident from the repl....

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....that the person chargeable with duty may pay the duty before service of show cause notice on him under Section 11A(1) and inform the Central Excise Officer of such payment in writing. In such cases, the Central Excise Official 'shall not' serve any show-cause notice under section 11A (1) in respect of duty so paid. As per explanation 1 to section 11A (2) (B), it shall not apply to the cases where duty was not levied / paid by reason of fraud or collusion or wilful mis-statement or suppression of facts. Since in the instant case, suppression of facts etc. were alleged in the show cause notice, hence the adjudication had to be done under section 11A (1) and 11A(2). In such a case, there is no scope to pay duty and settle the case before issue of show-cause notice. Further, there is no other provision for collection of duty before issuance of show-cause notice and passing of adjudication order. Any collection of amount at the investigation stage is without authority of law and is merely a deposit made under protest and such collection is without authority of law. In the aforesaid background, mere deposit of any amount during the investigation before issuance of show cause notice, an a....

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....he learned Tribunal. It is submitted that doubts and suspicion cannot act as a substitute for legal proof. Charges of clandestine removal being a serious charge cannot be upheld on mere doubts. The prayer and issues raised by the Appellant Company before the learned Tribunal was in relation to dutiability of the demand under section 11A and imposition of penalty under section 11AC of the Act on charges of purported clandestine removal of excisable goods and for setting aside of the same. Whereas, the issues and relief (s) claimed by Shri H.K. Budhia, Managing Director before the learned Tribunal was with respect to imposition of personal penalty under Rule 209A of the C.E.R., 1944 read with Rule 26 of C.E.R., 2001 for dealing with buyers / suppliers and writing of diary in his own handwriting for purported accounted and unaccounted sales, the charge against the Appellant Company in the show-cause notice was of purported clandestine removal and in the case of Shri Budhia was of purported maintenance of records. The Department itself has treated them to be two separate entities and not one being the agent of the other by initiating separate proceedings. Therefore, when the parties ar....

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....orroborated as none of the buyers accepted any unaccounted purchase. There is no evidence i.e. challan, parallel invoices, etc. for removal of impugned goods, nor is there any evidence of flow back of funds. No unaccounted cash was found during search. Therefore, the entire findings are based upon the statement of Mr. H.K. Budhia, Managing Director of the Company without any compliance of section 9D of the Act or any corroboration by independent legal evidence. Learned counsel for the appellant has placed reliance upon the case of Continental Cement Company Vs. Union of India [2014 (309) E.L.T 411 (All.)]; Triveni Engineering & Industries Ltd. Versus Commr. of C.Ex. Allahabad [2016 (334) E.L.T 595 (All.); Balashri Metals Pvt. Ltd. Vs. Union of India [2017 (345) E.L.T 187 (Jhar.)]; Hi Tech Abrasives Ltd. Vs. Commissioner of C. Ex. & Cus., Raipur [2018 (362) E.L.T 961 (Chhatisgarh) and in the case of Sakeen Alloys Pvt. Ltd. Vs. Commissioner of C. Ex., Ahmedabad [2013 (296) E.L.T 392 (Tri- Ahmd.)] which stood affirmed up to the Supreme Court as reported in Micro Inks Ltd. Vs. Commissioner of Central Excise, Daman [2015 (319) E.L.T 117 (SC)]. 14. The last and sixth substantial quest....

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....es, sales of goods by the Assessee for the period 12.01.2001 to 05.09.2001. It also contained the details of quantities of sale / dispatch of finished goods, rate charged from the buyers. A detailed entry wise examination of the diary was carried out which revealed that entries on top of each page as 'Tata', 'Bihar', 'Kusum', etc pertains to the purchase of raw materials namely Sponge Iron from (i) M/s Tata Sponge Iron, Orissa, Bihar Sponge Iron Ltd., Chandil, M/s Kusum Powernet (P) Ltd., Kelajhad, Orissa, etc.. (ii) Entries as 'Punjab' and quantity mentioned against it appear to be the total dispatches / sales of ingots through its consignment agent M/s Bihari Lal & Company, Mandi, Govindgarh, Punjab, (iii) Entries in the said diary such as of Jharkhand, Kavita, Ashish, Prasad, Pravin, Arshad and quantities as well as rates thereon pertains to dispatch / sale of CTD bars and rods through different buyers. The measurement of CTD bars and rods such as 8 mm, 12 mm, 16 mm and 20 mm mentioned randomly showed that it related to CTD bars and rods. Prima facie, it appears that majority of such dispatches were clandestine in nature as figures did not match in the books of accounts. (iv) On....

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....spatches in cover under invoice specifically his rolling mill division product CTD bars and rods and as such, no duty of central excise having been paid thereon, Mr. Budhia replied that he had no idea but added that if at all that show entry, it must have occurred inadvertently. He undertook to examine the issue and if dispatches were not covered under the invoices and duty was quantified, he would bear the duty. He also agreed to pay duty difference in case of rates being on the higher side in his diary. During investigation of detailed entry-wise examination of the diary in the handwriting of the Managing Director Mr. Budhia, it was revealed between the period 12.01.2001 to 31.03.2001, out of altogether 23 dispatches shown in the diary, 21 dispatches were shown without payment of central excise duty amount assessed to Rs. 3,86,733/-, whereas two dispatches were found showing short paid duty amount assessed to Rs. 70,963/-. Total short payment amounted to Rs. 3,94,696/- during the period 2000-01. 18. Further, from the notings in the said diary, it revealed that during the period 01.04.2001 to 05.09.2001, out of altogether 55 dispatches shown in the diary, 50 were shown being ma....

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.... value. It also submitted that in this case, they could not issue the invoices inadvertently and therefore, immediately deposited the duty for CTD bars and rods for the period January 2001 to September 05, 2001, totalling Rs. 10,68,298/- on 24.11.2001, much before issuance of show-cause notice on 22.02.2002. 22. It is submitted that the Joint Commissioner, Central Excise, Headquarters upon consideration of the materials collected during search, inquiry / investigation, passed the Order-in-Original dated 13.04.2005 confirming the duty demand of Rs. 10,77,678/- along with interest under section 11AB with a penalty of Rs. 20,000/- under Rule 173Q of C.E.R, 1944 read with Rule 25 of C.E.R, 2001 and further penalty of Rs. 10,77,678/- under section 11AC of the Act. A penalty of Rs. 20,000/- under the erstwhile Rule 209A of the C.E.R., 1944 read with Rule 26 of C.E.R., 2001 was also imposed upon Shri Hari Krishna Budhia, Managing Director of the Appellant Company. The Assessee / Appellant went in appeal before the Commissioner (Appeals) under section 35 of the Act, reiterating his contentions being aggrieved by the Order-in-Original. Learned Commissioner (Appeals) in exercise of the po....

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....estine clearances without payment / short payment of duty. 25. Learned counsel for the Respondent has further made categorical submission that the duty demand was never contested by the appellant before the Adjudicating Authority, as would appear from the Order-in-Original since they only contested that the correct demand has been re-calculated by them based on lawful deduction of duty @16% which comes to Rs. 10,68,298/-. This amounted to admission of non-issuance of 71 invoices mentioned in the diary. In respect of seven invoices found to be undervalued, duty was calculated on the basis of a higher rate quoted in the diary compared to what was mentioned in the invoices. Since the Assessee had accepted the rate quoted in his diary for the remaining 71 dispatches, there is no reason why the rate quoted for remaining seven invoices should not be taken as authentic. 26. Learned counsel for the Respondent submits that contention of the appellant that the order is based only on the basis of the entry in the private diary, is not correct. In fact, a detailed entry-wise examination was done during the course of investigation and the entries made in the diary was also corroborated by....

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....ement alone before the Custom Officer. Learned counsel for the Respondent has, in support of the aforesaid submissions, also placed reliance upon the following decisions: i. (1997) 1 SCC 508: Surjeet Singh Chhabra Vs. Union of India & Ors ii. (2003) 5 SCC 106: Union of India and another vs. GTC Industries Ltd., Bombay iii. (2011) 12 SCC 243: Commissioner of Central Excise, Mumbai vs. Kalvert Foods India Private Limited and others 27. Based on the aforesaid submissions and the decisions, learned counsel for the Respondent Mr. Amit Kumar submits that the appellant has failed to make out any case for interference in the order of the learned Tribunal. The substantial questions of law involved in this appeal are fit to be answered in favour of the Revenue and against the appellant. The appeal may therefore, be dismissed. Discussion & Analysis: 28. The conspectus of facts borne from the records and as pleaded by the parties show that the present appeal by the Appellant Company arose from a proceeding initiated against the Appellant-Assesse engaged in the manufacture of ingots as well as non-alloy steel falling under Chapter-72 of the Central Excise Act....

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....mises of M/s Jharkhand Steels, M/s Kavita Steels and M/s Ashish Steels were searched on 09.10.2001 by the Officers of Central Excise Headquarters (Preventive), Jamshedpur. Searches revealed that the Assesse was transacting business with these buyers, whereupon the buyers entered only those dispatches in their books of accounts which were covered under the central excise invoices and no other dispatches, as it was revealed from the notings in the diary of BFCL, could be found in their stock accounts. Statements of the proprietor / authorized persons of the aforesaid three parties were recorded under section 14 of the C.E.A., 1944 on 09.10.2001. During the course of investigations, statements of the officer / staff of the Assesse were recorded under section 14 of the C.E.R., 1944 and documents such as Purchase Register, PLA, Master File of correspondences, RG-1 Register, Raw Material Register, Invoice Books, etc. were called for examination. Shri Prem Shankar Mishra, Administrative Officer of the Assesse, Shri S.K. Jaiswal, Sr. Accounts Officer, BFCL, Shri A.D. Singh, Assistant, Excise and Dispatch Section of the Assesse and Abdul Kalam, Production Manager of the BFCL recorded their ....

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....mounting to Rs. 8,39,962/-. Out of 55 such dispatches, 05 dispatches under central excise invoices were found to have been undervalued, as compared to the notings in the said diary resulting in not paid / short paid duty to the tune of Rs. 3,944/-, Rs. 2,016/-, Rs. 2,336/-, 3,569/- and Rs. 3,584/- respectively totalling Rs. 15,449/-. Thus, Assesse was found to have not paid / short paid duty to the Central Excise Department amounting to Rs. 8,55,411/- on clearances of their goods during the period 2001-2002. The Assesse meanwhile on 24.11.2001 had deposited differential duty on CTD bars in the State Bank of India, Main Branch, Ranchi in favour of Central Excise Department for the period 2000-2001 totalling Rs. 3,36,023/- and for the period 2001-2002 totalling Rs. 7,32,275/- respectively. The Additional Commissioner, Central Excise, Jamshedpur thereafter issued show-cause notice upon the Assesse, alleging evasion of central excise duty and undervaluation of central excise duty amounting to Rs. 12,50,107/-. It was also indicated that after deposit of central excise duty totalling Rs. 10,68,298/-, the balance to be paid was Rs. 1,81,809/-. The Adjudicating Officer observed that making....

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....of C.E.R, 1944; iv. penalty equal to the duty determined under section 11A(2) of C.E.R, 1944 be not imposed and recovered from them under section 11AC of C.E.R, 1944; v. a separate penalty be not imposed under the provisions of rule 173Q of the erstwhile C.E.R, 1944 read with rule 25 of C.E.R, 2001; vi. interest @ 20% per annum from the first day of the month succeeding the month on which duty ought to have been paid (but for the provisions contained in section 11A(2) of C.E.R, 1944) till the date of payment of such duty, be not recovered from them under section 11AB of C.E.R, 1944; and vii. a personal penalty be not imposed upon Shri Hari Krishna Budhia, Managing Director, M/s BFCL under rule 209A of erstwhile C.E.R, 1944 read with rule 26 of C.E.R, 2001. 30. The Appellant Assesse submitted its show-cause and personal hearing was also accorded through learned Advocate appearing for the appellant. The Adjudicating Officer after consideration of the reply to the SCN and submission of the Assesse, held that in respect of 71 invoices, the Assesse had submitted that they did not issue central excise invoices inadvertently and that the sale price b....

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....f duty before issuance of SCN without interest / penalty. If it was not detected by the Department, he would have evaded payment of duty. Accordingly, the Adjudicating Officer ordered confirmation of demand of Rs. 9,380/- taking into account the deposit of Rs. 10,68,298/- on 24.11.2001 under section 11A(2) of C.E.R, 1944 read with section 2B of the same section; recovery of interest under section 11AB of C.E.A, 1944 @ 20% per annum from the first day of the month succeeding the month on which duty ought to have been paid till the payment of such duty; penalty of Rs. 10,77,678/- under section 11AC of C.E.A, 1944 was imposed on the Assesse; and penalty of Rs. 10,77,678/- was imposed on Shri Hari Krishna Budhia under section 11AC of C.E.A, 1944. Since mandatory penalty had been imposed, penalty of Rs. 20,000/- was imposed under rule 173Q of the erstwhile C.E.R, 1944 read with rule 25 of C.E.R, 2001 on the Assesse by taking a lenient view. Similarly, Rs. 20,000/- was imposed as penalty on Shri Hari Krishna Budhia, M.D under rule 209A of erstwhile C.E.R, 1944 read with rule 26 of C.E.R, 2001 by the Adjudicating Officer vide order dated 13.04.2005. 31. The appellant and Shri Hari Kris....

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....s made in the recovered diary for which neither central excise invoices were issued, nor any central excise duty was paid by M/s BFCL. In respect of the remaining 07 entries relating to undervaluation, as compared to the rate mentioned in the recovered diary, the Commissioner (Appeals) held that since the transaction value has to be taken from the entries made by Shri H.K. Budhia, Managing Director of the Appellant No. 1 Company, the invoice value which were in the lower side in all the 07 cases, were required to be out rightly rejected. Once the Department had taken such entries as the basis i.e. cum duty price for arriving at an assessable value under section 4 of the Act, the onus was on the Appellant No. 1 Company to prove that the entries in the diary do not represent clear picture. Since no submissions were made by the Appellant No. 2 Shri Hari Krishna Budhia at any stage, Department had no other alternative than to accept the entries in the diary in respect of 07 consignments as the basis for arriving at the assessable value. In respect of 71 consignments, the plea of the Appellant Company that it had neither issued invoices nor paid central excise duty inadvertently, was no....

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....ty demand had already been paid and the same had never been contested before the authorities, that the duty demand was confirmed on the basis of the diary seized from the Appellant-Assesse factory during search proceeding, which the Managing Director in his statement admitted to have been maintained by him in his own handwriting, recording the details of accounted and as well as unaccounted clearances made from the factory, therefore, there was no reason to interfere with the duty demand which is sustainable along with the liability to pay interest under section 11AB of Central Excise Act. However, the Tribunal did not find any justification for stiff increase in the penalty upon the Managing Director by the Commissioner (Appeals). Accordingly, the enhanced penalty upon the Managing Director was set aside and the penalty of Rs. 20,000/- as imposed by the Original Authority was restored. The impugned order was upheld in all other aspects. 33. From the aforesaid conspectus of facts, it is evident that the search and seizure proceedings in the factory premises as well as at the office premises of the Appellant Company and the investigation by the Central Excise Authorities, found t....

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....e possession or under the control of the person summoned. (2) All persons so summoned shall be bound to attend, either in person or by an authorised agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required: Provided that the exemptions under Sections 132 and 133 of the Code of Civil Procedure (5 of 1908) shall be applicable to requisitions for attendance under this section. (3) Every such inquiry as aforesaid shall be deemed to be a "judicial proceeding" within the meaning of Section 193 and Section 228 of the Indian Penal Code (45 of 1860)." "Section 9D. Relevancy of statements under certain circumstances- (1) A statement made and signed by a person before any Central Excise Officer of a Gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) when the person who made the statement is dead or ....

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....the statement recorded before a Gazetted Central Excise officer during inquiry or investigation, would be relevant only after the statement is admitted in evidence in accordance with the procedure prescribed under Clause (b) of Section 9D(1). The rationale behind the precaution contained in Section 9D (1) (b) is obvious as the statement recorded during inquiry / investigation by the Gazetted Central Excise Officer has every chance of having been recorded under coercion or compulsion. Therefore, the provisions contained in Section 9D have to be construed strictly and held as mandatory and, non-compliance would result in rendering the statement as irrelevant piece of evidence that cannot be used by the Adjudicating Authority to arrive at its finding. (See: Flevel International Vs. Commissioner of Central Excise [2016 (332) E.L.T 416 (Del.) Para 40- 46); Jindal Drugs Pvt. Ltd. Vs. Union of India [2016 (340) E.L.T 67 (P & H), para 9 to 25]; High Tech Abrasives Ltd. Vs. Commissioner of C.Ex. & Cus, Raipur [2018 (362) E.LT 961 (Chhattisgarh) Para 9.3 -9.5 and Ambika International Vs. Union of India [2018 (361) E.L.T 90 (P & H) Para 17 to 28]. Para 23, 24, 25 and 27 thereof are quoted her....

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....tement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 27. It is only, therefore,- i. after the person whose statement has already been recorded before a gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and ii. the adjudicating authority arrives at a conclusion, for the reasons to be recorded in writing, that the statement deserves to be admitted in evidence. that the question of offering the witness to the assessee, for- examination, can arise." In the case of High Tech Abrasives Ltd. (Supra), it was held that if the procedure under section 9D has not been strictly followed, statement of the Director recorded during investigation under Section 14 of the Act could not be treated as a relevant piece of evidence. No distinction has been made with regard to the statement of a Director of the Company or any other person under Section 9D of C.E.A, 1944. Division Bench of Chhattisgarh High Court has held as under: "9.5 Undoubtedly, the....

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....red by the High Court of Punjab and Haryana. Reliance has been placed by the Counsel for the Revenue on the decision in the matter of Commissioner of Central Excise vs. Kalvert Foods India Private Limited (Laws (SC) 2011 838) = 2011 (270) E.L.T. 643 (S.C.). That decision turned on its own facts. In para 19 of the judgment, it was concluded as below: "19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of their own volition and there is no allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corroborated each other. Besides the Managing director of the Company of his own volition deposition the amount of Rs. 11 lakhs towards excise duty and therefore in the facts and circumstances of the present case, the aforesaid statement of the Counsel for the Respondents cannot be accepted. This fact clearly proves the conclusion that the statements of the concerned persons were of their volition and not outcome of any duress." Accordingly, on the first and second question of law, we hold that the statement of the Dir....

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....t be conclusively said that the statements attributed to Mr. Budhia were a direct unambiguous and unequivocal acknowledgement of his guilt or substantially all the facts which constitute the offence. Apparently, it doesn't seem so. For it to be treated as an 'Admission' for being proved by or on behalf of the person making it under Section 21 of the Evidence Act, it should consist of a statement of the existence of any state of mind or body, relevant or an issue accompanied by conduct rendering the falsehood improbable. The statement of Mr. Budhia neither point to any specific instance or facts in issue nor were unequivocal in acknowledgement of guilt. They were rather coupled with 'ifs' and in the realm of uncertainty. The question of retraction would arise for the first time when such statement was being admitted by the Adjudicating Officer as per Section 9D. The Adjudicating Officer never followed this procedure. Even if his statement under Section 14 of the C.E.A. 1944 is taken on its face value, they were never admitted in evidence by the Adjudicating Authority in compliance of the provisions of Section 9D of the Central Excise Act 1944. The question of cross examination of....

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....lowed in courts." 39. It would not be out of place to refer to the recommendation of the Law Commission of India contained under Chapter 14 of the 47th report on the "Trial and Punishment of Social and Economic Offences" dated 28th February 1972, whereafter the Customs, Gold (Control) And Central Excise and Salt (Amendment) Bill No. 119 of 1972 was placed before the Parliament and Section 9D came to be inserted into the C.E.A, 1944. Para- 14.1, 14.2, 14.3 and 14.4 of CHAPTER 14 "Administrative Adjudications" are quoted hereunder for better appreciation: "14.1. Many of the Acts dealing with economic offences empower the enforcement officers to summon and examine witnesses. The statements made by these witnesses before such officers are not, however, admissible in evidence in the subsequent criminal prosecutions. We are of the view that these statements, if recorded by officers of sufficiently high status, to be determined by the Government should be admissible in such prosecutions, since they are very often the earliest officially recorded version of the facts. 14.2 Certain conditions and safeguards will, no doubt, be necessary. Reference in this connection may ....

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.... "A statement made and signed by a person in a proceeding under this Act before any officer authorised by law to record it, being an officer of a rank notified by the Central Government in this behalf, shall be relevant, for the purpose of proving, in a prosecution for an offence under this Act, the truth of the facts which it states.- (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or kept out of the way by the adverse party, or if his presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case, and the Court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice." The relevant extract of the objects and reasons of the Bill No. 119 of 1972 is also reproduced for better appreciation. "Bill No. 119 of 1972 The Customs, Gold (Control) and Central Excise and Salt (Amendment) Bill, 1972 Bill further to amend the Customs Act, 1962, the Gold ....

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....re the Adjudicating Authority or in subsequent appeal and hence, could not be sustained. In this connection, he has relied upon the case of Modern Insulators Ltd. Vs. Oriental Insurance Company Ltd. reported in [(2000) 2 SCC 734 para-10], wherein the Apex court has laid down that in an appeal, parties cannot urge a new fact. On the contrary, it is well settled that a legal plea which can be substantiated from the pleadings on record without any additional facts being brought on record can always be raised in appeal [See: K. Lubna and others versus Beevi and others (2020) 2 SCC 524]. Para-10 thereof is quoted hereunder: "10. On the legal principle, it is trite to say that a pure question of law can be examined at any stage, including before this Court. If the factual foundation for a case has been laid and the legal consequences of the same have not been examined, the examination of such legal consequences would be a pure question of law." In the instant case, the appellant has not urged any new facts but raised a legal plea relating to non-compliance of Section 9D of the C.E.A by the Adjudicating Authority. The fact that the Adjudicating Authority did not scrutinize the....

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....two Judges' Bench of the Apex Court had set aside the said decision on the premise that the challenge made before the High Court in that case was not sustainable in a writ petition. However, the Court did not express any opinion on the merits of the case and the question of law was left open. Therefore, in the instant appeal, the Apex Court considered the desirability to examine the sustainability of the legal position adumbrated by the decision in N.S.R. Krishna Prasad (Supra). In this context, the issue which fell for consideration has been coined at para-2 of the judgment, quoted as under: "2. Is it necessary to comply with the precautions envisaged in Section 164 of the Code of Criminal Procedure (for short "the Code") when Customs Officers record statement under section 108 of the Customs Act? " The Apex Court upon consideration of the relevant provisions of Section 108 of the Customs Act, 1962 and Section 171 of Sea Customs Act, 1878 (which was repealed by the Customs Act, 1962 and corresponded to Section 108 of the Customs Act), and after observing and pointing that Section 14 of the Central Excise Act is the same as Section 108 of the Customs Act, dealt with the....

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....tion 9D (1) (b) of the C.E.A to ascertain whether the inculpatory portions of the statement of Mr. Budhia recorded under section 14 of the C.E.A, 1944 were voluntary or under compulsion or coercion, were not followed. It is only upon following the procedure prescribed under section 9D(1)(b) of C.E.A that such statement acquire relevancy for the purpose of proving the truth of the facts which it contains in any prosecution for an offence under this Act or in an adjudicating proceedings also. Sub-section (2) of Section 9D(1)(b) of C.E.A mandates that the provisions of sub-section (1) shall, so far as may be, apply in relation to any proceedings under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. 43. The meaning of the expression 'so far as may be' has been explained by the Supreme Court in the case of DR Partap Singh and Another versus Director of Enforcement, Foreign Exchange Regulation Act and Others [(1985) 3 SCC 72] in the following manner: "12. ...... The expression "so far as may be" has always been construed to mean that those provisions may be generally followed to the extent possible. In order to give ....

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....eiving a statement made under section 40 of the FERA, held as under: "24. It is pertinent to note in this connection that in the manner of recording a statement under Section 40 of FERA there are no safeguards as in the case of recording a statement of an accused under Section 164 of the Criminal Procedure Code by a Magistrate. Nevertheless, before receiving that statement in evidence and making use of the same against the maker, it must be scrutinised to find out whether that statement was made or obtained under inducement, coercion, threat, promise or by any other improper means or whether it was voluntarily made. There are a catena of decisions of this Court that the statements obtained from persons under the provisions of FERA or the Customs Act, should not be tainted with any illegality and they must be free from any vice " Further at para-34, it was held as under:- "34. We think it is not necessary to recapitulate and recite all the decisions on this legal aspect. But suffice to say that the core of all the decisions of this Court is to the effect that the voluntary nature of any statement made either before the Custom authorities or the officers of Enfor....

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....and 26 of the Evidence Act excepting the purposes of section 27 and 32 of the Evidence Act. No confessional statement made before any authority or prosecuting official barring the above circumstances could be viewed with suspicion and have enormous evidentiary value and conviction could be based on such confessional statement alone. The burden is upon the accused to prove that it was not voluntary and then the onus shifts on to the prosecution to prove that it was made voluntarily. It is true that the statement made before a Central Excise Officer under section 14 of the C.E.A, 1944 is not a statement made before the police or in the custody of the police, but such statement attains evidentiary value only if it is subjected to scrutiny under section 9D (1)(b) of the C.E.A for being relevant for the purposes of proving the truth of the facts. The Adjudicating Authority has to arrive at an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence. This safeguard has been incorporated by an amendment in the Central Excise Act, 1944 in the year 1973 with the only purpose that statements made before the Central Excise Officer under sect....

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....ra versus Union of India and others [(1997) 1 SCC 508, para-3] to submit that in view of the confession made by the Managing Director Mr. Budhia in the facts and circumstances of the case, failure to give the appellant an opportunity to cross-examine the witnesses, is not violative of principles of natural justice. The facts of the instant case show that the dispute concerns the confiscation of the jewellery, whether at conveyor belt or at the green channel and the petitioner had confessed that he had purchased the gold and brought it and converted it into a kara which was in contravention of the Customs Duty Act and also FERA as it was bought without permission of the authority. The petitioner had retracted from the confession after six days and sought cross-examination of the panch witnesses before the authority took a decision on the proof of the offence. The Apex Court found no force in this contention holding that the Custom Officials are not police officers. In the facts of the present case, Appellant is a Company upon whom duty liability has been saddled on the basis of the statement of the Managing Director of the Company recorded under section 14 of the Act without any cor....

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....d. and others Versus Union of India and others[ (1997) 5 SCC 536] at Para 92, 93 and 94, which is quoted hereunder. 92. It is then pointed out by the learned counsel for the petitioners-appellants that if the above interpretation is placed upon amended Section 11-B, a curious consequence will follow. It is submitted that a claim for refund has to be filed within six months from the relevant date according to Section 11-B and the expression "relevant date" has been defined in clause (B) of the Explanation appended to sub-section (1) of Section 11-B to mean the date of payment of duty in cases other than those falling under clauses (a), (b), (c), (d) and (e) of the said Explanation. It is submitted that clauses (a) to (e) deal with certain specific situations whereas the one applicable in most cases is the date of payment. It is submitted that the appellate/revision proceedings, or for that matter proceedings in High Court/Supreme Court, take a number of years and by the time the claimant succeeds and asks for refund, his claim will be barred; it will be thrown out on the ground that it has not been filed within six months from the date of payment of duty. We think that the ....

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.... acknowledgement shall be the proof that the duty has been paid under protest. A reading of the rule shows that the procedure prescribed therein is evolved only with a view to keep a record of the payment of duty under protest. It is meant to obviate any dispute whether the payment is made under protest or not. Any person paying the duty under protest has to follow the procedure prescribed by the rule and once he does so, it shall be taken that he has paid the duty under protest. The period of limitation of six months will then have no application to him." (Underline supplied) 50. The appellant has further relied upon the decision of Delhi High Court where it has been held that there is no provision in the C.E.A that allows for the collection of duty prior to issuance of SCN / adjudication demand and that any amount collected during the investigation is wholly illegal. (See: Digipro Import & Export Pvt. Ltd. Vs. Union of India [2017 (350) E.L.T 145 (Del) Para 13 to 16, 18, 19)]). Under the scheme of the Act, till the demand is adjudicated by a reasoned order, the amount paid by the Assesse before issuance of SCN could at best be a deposit. In the case of Collector of Ce....

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....investigation, which corroborate the allegations of clandestine removal of manufactured goods without cover of central excise invoices. As such, both these questions are answered in favour of the appellant. 53. The fourth substantial question of law which arises for adjudication is, whether the fact that the penalty imposed by the Adjudicating Authority upon the Managing Director of the Company having attained finality, can itself be used against the appellant? In Corporate Laws, the criminal intent of person (s) controlling Company can be imputed to Company based on the principles of alter ego - when the Company is an accused, its Directors can be roped in only if (a) there is sufficient incriminating evidence against them coupled with criminal intent or, (b) the statutory regime attracts the doctrine of vicarious liability. [See: (2015) 4 SCC 609, Sunil Bharti Mittal versus Central Bureau of Investigation; (2011) 1 SCC 74, Iridium India Telecom Limited versus Motorola Incorporated and others]. Section 9A creates vicarious liability on the Company's officers in case of offences. In the instant proceedings, Appellant-Company was served with a sho....

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....anaging Director of the company had attained finality, it cannot be used against the appellant. This answers the substantial question of law no. IV also in favour of the appellant. 54. The fifth substantial question of law which has arisen for adjudication in this appeal is, whether the impugned order was passed solely on the statement of the Managing Director of the Company recorded under Section 14 of the C.E.A, 1944 or there was further material to confirm the demand against the appellant? The conspectus of the facts of the case noted above shows that the SCN was issued upon the Appellant-Company on the basis of two incriminating materials i.e. the statement of the Managing Director of the Company recorded under Section 14 of the Central Excise Act, 1944 and notings in the private diary i.e. Ambassador diary. Apart from that, the Adjudicating Officer relied upon the suo motu deposit made by the appellant on 29.11.2001 of an amount of Rs. 10,68,282/- before issuance of SCN on 21.02.2002. It is not in dispute that no other corroborative and tangible evidence such as (i) unaccounted purchase of raw materials (ii) consumption of raw materials (iii) m....

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..../s. Jharkhand Steels, M/s Kavita Steels and M/s. Ashish Steels, but nothing incriminating was found, neither the statements of the proprietor of the aforesaid three parties revealed anything. The SCN records at para 3.0 that these Assesses were meticulously transacting business with these buyers whereupon buyers entered in their books of account only those dispatches covered under Central Excise Invoices and no other dispatches as revealed from the notings in the diary of M/s BFCL could be found entered in their stock accounts. Apparently, the Central Excise officials did not find any evidence of production of the impugned goods, nor any evidence of transportation of raw materials or the impugned goods, no evidence of acceptance of the buyers of any unaccounted purchase or any Challans, parallel invoices etc. for removal of impugned goods, neither any evidence of flow back of funds from dispatch of such impugned goods to these buyers. The notings in the private diary, which is not a substantive piece of evidence, therefore remained uncorroborated by any tangible evidence collected during inquiry or investigation to establish the charge of clandestine removal against the appellant. ....

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....mes within the meaning of the first part of Section 34, though all the ingredients were required to be established, alone would not be sufficient evidence to charge any person with liability. Otherwise even a third party could also be liable for prosecution on the basis of entries in a private diary, though uncorroborated by any cogent tangible evidence. Section 9 (1) (bbb), 9(1)(c) and 9(1) (d) of the C.E.A which creates offences upon other persons, is being extracted hereunder for appreciation: "Section 9. Offences and penalties. -(1)] Whoever commits any of the following offences, namely: - (bbb) acquires possession of, or in any way concerns himself in transporting, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with any excisable goods which he knows or has reason to believe are liable to confiscation under this Act or any rule made thereunder; (c) fails to supply any information which he is required by rules made under this Act to supply, or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; (d) attem....

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....reveal any incriminating evidence of clandestine removal of manufactured goods. It was the notings in the private diary alone which formed the foundational basis for comparison with the documents such as, Purchase Register, PLA, Master file of correspondence, RG-I Register, Raw Material Register, Invoice book etc. by the investigating team. The comparison was made from a private diary of the Managing Director without any such tangible corroborative evidence which could form the basis for passing the impugned order. As such, the entries made in the private diary of the Managing Director of the Company being not a substantive piece of evidence, could not alone be made the basis for passing the impugned order against the appellant. 59. In answer to the substantial question nos. II and III in the above paragraphs, it has been held that suo motu deposit of the amount of differential duty liability before issuance of show cause notice without any adjudication of the duty liability, could not be treated as evidence of clandestine removal of goods since the Adjudicating Officer was duty bound to determine the duty liability in accordance with law on the basis of tangible material eviden....

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....id selling agents without payment of duty, but had shown those clearances as that of the sugar in the invoices and had also cleared the branded goods to the dealers /traders. Thereafter, a show-cause notice was issued to the Company and its Director and also to the proprietor of R.T.C, its partner and M/s Sai Krupa Corporation, proposing imposition of duty demand and penalty. Statement of the Managing Director of the Company and other persons were recorded during the course of proceedings but the same were retracted. It was contended by the Respondent Assesse that such statement could not be relied upon. The Apex Court refused to accept the contention as it was established from the record that these persons had given the aforesaid statements out of their own volition and there was no allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corroborated each other. The Managing Director of the Company had, on his own, deposited an amount of Rs. 11.00 lakhs towards excise duty which proved the conclusion that the statement of the persons concerned were of their own volition and not the outcome of duress. Para-19 of the R....

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....ned Tribunal simply on the basis of deposit of certain amount by the Assessee even before issuance of the show-cause notice in a situation where the Assessee has contested the findings of the Adjudicating Authority up to the learned CESTAT and has questioned the decision of the learned Tribunal in the instant appeal preferred under section 35-G of C.E.A, 1944. In the present case, no such tangible corroborative evidence of clandestine removal of excisable goods as non-excisable goods were seized and recovered except the statement of the Managing Director of the Company made under section 14 of the Act and certain notings in the private diary. Such statement of the Managing Director of the Company for being used against the Appellant Company, had not been subjected to scrutiny under section 9D(1)(b) of the Act either. Therefore, the facts of the present case portray a totally different picture, where the Respondent Department has not been able to produce any tangible corroborative evidence of such clandestine removal of goods even after inquiry / investigation and search on the premises of the buyers of the Appellant Company. 62. Learned counsel for the Respondent has also relied....

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.... relates to Excise Appeal No. EDM-173 of 2006. 67. The present appeal has been admitted on following substantial questions of law:- vii. "Whether, the statement of Mr. H.K Budhia, Managing Director of the appellant-company recorded under Section 14 of the Central Excise Act, 1944 could be treated as a relevant piece of material without complying with the provisions of Section 9D of Central Excise Act, 1944? viii. Whether the finding of learned Tribunal that the duty demand was never contested by the appellant before the authorities is perverse? ix. Whether suo-moto deposit of differential duty liability, whose details have been mentioned in para 5.0 of the notice to show cause issued to the appellant as well as to its Managing Director can be said to be an admission on the part of the appellant regarding clandestine removal of goods? x. Whether the fact that the penalty imposed by the adjudicating authority upon the Managing Director of the Company, having attained finality, can itself be used against the appellant? xi. Whether the impugned order was passed solely on the statement of the Managing Director of the Company recorded under....

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.... not a Court or Adjudicating Authority. Hence, such statement cannot be said to be examination-in- chief. g. Learned Tribunal failed to appreciate that Shri Budhia was never examined by the Adjudicating Authority, nor his statement was admitted into evidence by the Adjudicating Authority in accordance with Section 9D(1), hence, it was irrelevant piece of material. The purpose behind inserting Section 9D is to ensure that only true evidence forms the basis of charge in an adjudication proceeding as the Central Excise Officers often record statement under coercion or compulsion. h. It is further submitted that Section 9D is a general provision and applies to all persons whose statements are recorded under the Act irrespective of the fact whether he is a Director or Managing Director or an employee or a third person. Therefore, the statement of Mr. Budhia could not have been excluded from the purview of Section 9D. i. Section 9D acts as a safeguard against self-incrimination and is also a protection as a constitutional right under Article 20 (3) of Constitution of India. Learned counsel for the appellant has submitted that interpretation of statute involves ....

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....ions dated 30.08.2017 filed before the appellate Tribunal that the demand was disputed before the lower authorities and also before the learned Tribunal. Therefore, the Managing Director of the appellant company in his reply dated 07.12.2005 to show cause issued by the appellate authority explained that the entries in his diary were related to offers and negotiations, some of which did not materialize. Since diary was written by the Managing Director of the appellant company, hence he could only explain as to what the diary contains and the Appellant Company could not have explained the content of the diary. The Managing Director of the appellant company was, therefore, joined as a co-noticee. c. The Appellant in his defence reply had disputed the entire demand of Rs. 12,50,107/- in the show-cause notice and also prayed for dropping the entire demand. The appellant alternatively disputed the quantification of demand. The Adjudicating Authority in his Order- in-Original dated 13.04.2005 arbitrarily held that the appellant had challenged only the quantification of duty. d. It is well settled that the charges in the show-cause notice are prima- facie in nature based ....

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.... of purported clandestine removal. Hence, correctness of the entries in the private diary did not stand proved. Mere assertion in defence reply cannot be made the basis for confirmation of demand. The demand has to be adjudicated and duty had to be determined under Section 11A (1) and 11A (2) following the settled principles of law. In the instant case, there were only two evidences, (i) statement of Shri H.K. Budhia dated 15.01.2001 and (ii) private diary, on the basis of which only demand was to be adjudicated. The buyers did not accept the correctness of 71 entries of purported clandestine removal, as alleged in the show- cause notice. III. On the third substantial question of law a. Learned Tribunal failed to appreciate that the amount of Rs. 10,68,298/- paid during investigation was only 'deposit' and not 'payment' of duty. The proceedings in the instant case were initiated under Section 11A (1) /11A(2) and not under Section 11A(2)(B) of the Act. Hence, no question of accepting any duty liability before the show-cause notice arose. Section 11A (2)(B) envisages that the person chargeable with duty may pay the duty before service of show cause notice on him und....

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....ant Company were different from that of the Managing Director of the Company. Therefore, finality in one case would not affect the other. d. Referring to the Order-in-Appeal dated 29.12.2005, it is submitted that the Commissioner (Appeals) has held in respect of the Managing Director of the appellant company that existence of mens rea on his part was of doubt and still he was held liable for heavy deterrent penalties under Rule 209A of the C.E.R., 1944 read with Rule 26 of the C.E.R., 2001. Learned Tribunal, though it reduced the penalty on the Managing Director of the appellant company to Rs. 20,000/-, but upheld the adjudication order and Order-in-Appeal on all other aspects. Thereby, the finding of the learned Commissioner (Appeals) regarding mens rea on the part of the Managing Director of the appellant company stood upheld by the learned Tribunal. It is submitted that doubts and suspicion cannot act as a substitute for legal proof. Charges of clandestine removal being a serious charge cannot be upheld on mere doubts. e. The prayer made and issues raised by the Appellant Company before the learned Tribunal were in relation to dutiability of the demand under Se....

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.... the charge. By referring to the statements of the Managing Director of the appellant company in relation to his private diary, it is submitted that for recording such a finding, there is no unequivocal admission on the part of the Managing Director of the appellant company, amounting to a confession, that too without any corroborative evidence. Therefore, findings of the learned Tribunal are perverse and contrary to the undisputed facts of the case. Even during inquiry with the buyers, entries in the private diary could not be corroborated as none of the buyers accepted any unaccounted purchase. There is no evidence i.e. challan, parallel invoices, etc. for removal of impugned goods, nor is there any evidence of flow back of funds. No unaccounted cash was found during search. b. Therefore, the entire findings are based upon the statement of the Managing Director of the Company without any compliance of Section 9D of the Act or any corroboration by independent legal evidence. c. Learned counsel for the appellant has placed reliance upon following judgements: - i. Balashri Metals Pvt. Ltd. Vs. Union of India [2017 (345) E.L.T 187 (Jhar.)]; ii. Hi ....

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.... well as office premises at Ranchi in which certain incriminating documents were recovered from the office premises and were resumed under panchnama for further investigation. A maroon colour Ambassador diary for the year 2001 of M/s B.F.C.L was recovered from the office premises of the Assessee at Ranchi which on preliminary examination revealed that it belonged to Shri Hari Krishna Budhia, Managing Director of the Company. It contained the entries of purchases, sales of goods by the Assessee for the period 12.01.2001 to 05.09.2001. It also contained the details of quantities of sale / dispatch of finished goods, rate charged from the buyers. A detailed entry wise examination of the diary was carried out which revealed that entries on top of each page as 'Tata', 'Bihar', 'Kusum', etc. pertain to the purchase of raw materials namely Sponge Iron from (i) M/s Tata Sponge Iron, Orissa, Bihar Sponge Iron Ltd., Chandil, M/s Kusum Powernet (P) Ltd., Kelajhad, Orissa, etc. (ii) Entries as 'Punjab' and quantity mentioned against it appear to be the total dispatches / sales of ingots through its consignment agent M/s Bihari Lal & Company, Mandi, Govindgarh, Punjab, (iii) Entries in the said....

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.... not sure. He said that the entries are giving quantitative details as well as value of certain items, to be exactly explained by the writer (the Managing Director). d. Statement of Mr. Budhia was thereafter recorded upon summon on 15.11.2001. Mr. Budhia stated that said diary is of M/s B.F.C.L and notings are in his handwriting. He accepted that he looked after the work relating to the dispatch and purchase, finalization of rates and party, quantity as also of payment. When asked about the dispatches not covered under invoices, specifically his Rolling Mill Division products viz. CTD bars and rods and as such no duty of central excise having been paid thereon, Mr. Budhia replied that he had no idea but added that, if at all that showed entry, it must have occurred inadvertently. He undertook to examine the issue and if dispatches were not covered under the invoices and duty is quantified, he would bear the duty. He also agreed to pay duty difference in case of rates being on the higher side in his diary. During investigation of detailed entry-wise examination of the diary in the handwriting of the Managing Director Mr. Budhia, it revealed that between the period 12.01.2001 to 3....

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....o why penalty under Rule 209A of 1944 Rules read with Rule 26 of 2001 Rules should not be imposed upon him for his purported abetment in the offences of the Appellant Company. i. The Assessee submitted its defence reply on 07.03.2005. It submitted that the duty alleged to be short paid as per show cause notice, has not been properly calculated, since the amount indicated in the show- cause notice should be treated as cum-duty price. Therefore, to arrive at a correct assessable value, it was proper in law to deduct the duty amount from the cum-duty value. It also submitted that in this case, they could not issue the invoices inadvertently and therefore, immediately deposited the duty for CTD bars and rods for the period January 2001 to September 05, 2001, totaling Rs. 10,68,298/- on 24.11.2001, much before issuance of show-cause notice on 22.02.2002. j. It is submitted that the Joint Commissioner, Central Excise, Headquarters , Ranchi , upon consideration of the materials collected during search, inquiry / investigation, passed the Order-in-Original dated 13.04.2005 confirming the duty demand of Rs. 10,77,678/- along with interest under Section 11AB with a penalty of Rs. 20,00....

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....y seem to be that of the Managing Director. Mr. Budhia, during his examination, admitted that dispatches have been made without issuance of central excise invoice in respect of 71 transactions and stated that it must have occurred inadvertently. He undertook to examine the issue and deposit the duty quantified. He also agreed to pay the duty difference in case the rates were on the higher side in his diary. The deposit of Rs. 10,68,298/- as differential duty liability by the appellant before issuance of the show-cause notice clearly shows that they admitted the allegation of clandestine clearances without payment / short payment of duty. (B) The duty demand was never contested by the appellant before the Adjudicating Authority, as would appear from the Order- in-Original since they only contested that the correct demand has been re-calculated by them based on lawful deduction of duty @16% which comes to Rs. 10,68,298/-. This amounted to admission of non-issuance of 71 invoices mentioned in the diary. In respect of seven invoices found to be undervalued, duty was calculated on the basis of a higher rate quoted in the diary compared to what was mentioned in the invoices. Sin....

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....T 50 (Mad)] wherein it has been held that confessions made before the police or in custody in presence of the police cannot be relied upon within the meaning of Sections 25 and 26 of the Evidence Act, 1872, except as provided under Sections 27 and 32 of the Evidence Act. Therefore, the confession made by the person before the proper Central Excise Officer is to be viewed with enormous evidentiary value. Findings can therefore be recorded on the basis of such confessional statement alone, made before the Customs Officer. Learned counsel for the Respondent has, in support of the aforesaid submissions, also placed reliance upon the following decisions: i. (1997) 1 SCC 508: Surjeet Singh Chhabra Versus Union of India & others ii. (2011) 12 SCC 243: Commissioner of Central Excise, Mumbai Versus Kalvert Foods India Private Limited and others iii. (2003) 5 SCC 106: Union of India and another versus GTC Industries Ltd., Bombay m. Based on the aforesaid submissions and the decisions cited on behalf of the Respondent, learned counsel for the Respondent Mr. Amit Kumar submits that the appellant has failed to make out any case for interference in the order of the ....

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....t and at this point also no protest regarding deposit was made. g. A show-cause notice dated 22.02.2002 was issued to the appellant company as well as its Managing Director. In the show-cause notice itself it was recorded in para 5.1 that the assessee making suo-moto payment of the differential duty provides clinching and conclusive evidence of evasion of duty by them during the aforesaid period. It was further recorded in para 5.2 that notwithstanding the assessee paying the duty, there were still balance amount to be paid and a chart was prepared which is as under. Sl. No. Period Duty liability ascertained Duty deposited Suo-Moto Balance to be paid 1. 2000-2001 Rs. 3,94,696/- Rs. 3,36,023/- Rs. 58,673/- 2. 2001-2002 Rs. 8,55,411/- Rs. 7,32,275/- Rs. 1,23,136/- Total :-   Rs. 12,50,107/- Rs. 10,68,298/- Rs. 1,81,809/- h. The show cause notice extensively referred to the statements of various officers of the appellant company as well as the statements of the Managing Director (co-noticee), all recorded under Section 14 of the Act of 1944. It included explanation given by the Managing Director with regards to the....

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....2001) should not be demanded from them under Section 11A (1) of the CEA'44. (ii) Central Excise duty aforesaid amounting to Rs. 12,50,107/- may not be determined under the provisions of Section 11A (2) of CEA'44. (iii) With reference to para (i) above and not in addition to the amount of duty specified thereon, amount of duty already paid by assessee amounting to Rs. 10,68,298/- may not be confirmed and why the balance amount of duty at Rs. 1,81,809/- (Rupees one lakh eighty- one thousand eight hundred and nine) only may not be recovered from them under the provisions of Section 11A of CEA'44. (iv) Penalty equal to the duty as determined under Section 11A (2) of the CEA'44 may not be imposed and recovered from them under Section 11AC of the CEA'44. (v) A separate penalty should not be imposed under the provisions of Rule 173Q of erstwhile CER'44 read with Rule 25 of the CER'2001. (vi) Interest @ 20% per annum from the first day of the month succeeding the month on which duty ought to have been paid [but for the provisions contained in Sec. 11A(2) of CEA'44] till the date of payment of such duty be not recovered from them under Section 11....

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....fence reply to the Show Cause Notice and Records of P.H. During the P.H. held on 7.3.05, Shri K. P. Chaudhary, Advocate appeared. He Submitted defence reply to the Show Cause Notice also. The assessee has submitted that duty alleged to be short paid as per annexure AI & AII of the SCN has not been properly calculated. As the amount indicated in the SCN should be treated as cum-duty price. Therefore, to arrive at correct assessable value it was proper in law to deduct duty amount from the cum-duty value as per the following Tribunal decisions: - (i) Dugar Tetenal India Ltd. [2002 (147 ) ELT 578 (Tri.- Del.)] (ii) Srichakra Tyres Ltd. [1999 (108) ELT 361 (Tribunal)] (iii) Plasopan Engineers (India) Pvt. Ltd. [2003 (156) ELT 540 (Tri.- Del.)] (iv) Maruti Udyog Limited [2002 (141) ELT 3(SC)] They have submitted that in this case, they could not issue the invoices inadvertently. They immediately deposited the duty for CTD Bars and rods for the period January 2001 to September 5, 2001. Accordingly, a total amount of Rs. 10,68,298/- was deposited on 24.11.2001, much before issuance of the SCN on 22.02.2002. The correct amount of demand has b....

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....ng been made in view of payment of Rs. 10,68,298/- prior to issuance of show cause notice. They specifically denied allegation of short payment of duty on account of under valuation by taking a clear stand that the sale price was cum-duty price and asserted that the onus of proving short payment was on the department. However, there was no denial of clandestine removal of goods, rather there was clear admission as is apparent from the aforesaid contents of the show cause reply as quoted in the order- in-original and by reiterating that the invoices could not be issued by them inadvertently. n. The adjudicating authority accepted the stand of the noticees with regards to the duty liability of 71 dispatches, for which invoices were not issued, as Rs. 10,57,495.68, by treating the sale price as cum-duty price, and fully accepted the specific stand and calculation made by the appellant in this regard. For remaining 7 invoices, pertaining to under-valuation, the duty liability was found to Rs. 20,182/- again by treating the sale price as cum-duty price. Thus, the total liability was calculated as Rs. 10,77,678/- and Rs. 10,68,298/- having been deposited on 24.11.2001 (prior to iss....

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....nd assumption which is contrary to the decision of Hon'ble Tribunal in the case of Purolator India Ltd, reported in 2005 (182) ELT 385. In this case, clearances of goods pertaining to seven invoices were also based on transaction value in which the price actually paid at the time of sale of goods were mentioned in the invoices. Thus, this is not a case of under valuation; (ii) Since, duty has been paid before issue of Show Cause Notice, penalty cannot be imposed under Section 11AC of the Act and interest also cannot be levied. In this connection, they have referred the following decisions of Hon'ble Tribunal: - (a) CCE Vs. Machino Montell (I) Ltd.; 2002 (168) ELT 466 (T-LB) (b) Rashtriya Ispat Niam Ltd. Vs. CCE - 2003 (161) ELT 285 (T) (c) CCE Vs. Shri Krishna Pipe Industries - 2005 (165) ELT 208 (kar) (d) Sanjay Insecticides Vs. CCE, Aurangabad - 2005 (68) RLT 110 (T) (e) CCE Vs. Rastriya Ispat Nigam Ltd. - 2004 (163) ELT A53 (SC) (iii) Imposition of penalty of Rs. 20,000/- each on the appellant No.1 under Rule 173Q of erstwhile Central Excise Rules, 1944 and on appellant No.2 under Rule 209A of erstwhile Central Excis....

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....y, it was stated as under:- "In the diary, there was absolutely nothing to show or indicate any clandestine clearance. The entries in the diary have been read by the Department in a totally distorted manner and wholly unwanted presumptions and assumptions have been sought to be drawn therefrom. Many a times different offers received from the buyers and/or prospective buyers were also noted in the diary. These offers ultimately did not materialize and no despatches were made. In some cases, the diary also contained entries of the quantities and the rates of the offers, although ultimately after negotiations the rates were reduced and the goods were sold only at the reduced rates. Actual quantities of the goods cleared from the factory and actual prices charged from the buyers were always clearly entered in the statutory records and registers. All goods from the factory were cleared under cover of proper Central Excise Invoices wherein the prices charged from the buyers were clearly mentioned. It is only these prices which were received by our company. There is absolutely no evidence whatsoever to the contrary." u. The Managing Director of the appellant company, for the first t....

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....tatutory records and the plea of the Managing Director as taken in his show cause reply to enhancement of personal penalty that he has been correctly reflecting production/clearances, was rejected, being of no substance. w. Findings of the learned Commissioner (Appeals), Patna "I find that there is no dispute about the duty demanded for the goods cleared against seventy-one entries made in the recovered diary for which neither any Central Excise Invoices were issued nor Central Excise duty at all was paid by the BFCL. In respect of remaining seven entries, proper Central Excise invoices were issued but the assessable values shown in the invoices were lower than the rate mentioned in the recovered diary. Since, all the entries in the diary regarding rates, name of customer, quantity etc. were made by the appellant No.2 i.e. Managing Director of BFCL himself and price quoted against seventy one entries were admitted by himself and he also agreed to pay duty difference in case of the rates being on higher side in the diary. The price shown against the corresponding entries in the diary also would obviously be the basis of assessable value of the goods, so cleared. Hence, their plea....

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....ce of the appellants on various judgments mentioned above is misplaced because in none of the judgement, the facts were such that no duty has been paid even invoices not issued, even though entries were made in the private records. For clarity I discuss all the five judgement relied upon by them as below:- (a) CCE Vs. Machino Montell (I) Ltd. - 2004 (168) ELT 466 (T- LB) In this case even though the duty has been deposited by the assessee before issue of show cause notice yet this case does not involve non-issuance of invoice which is primary requirement for clearance of goods from the factory premises. It was also not the case that the duty has been deposited after search and detection of private record from the asessees or its directories/employees' premises. Further from para 4 of this judgement in the case of Shri Krishna Pipes Industries has been quoted, this para is reproduced below for reference:- In so far as question 1 & 2 are concerned, questions are framed on the assumption that the tribunal has granted relief without any justifiable reason. We find that Tribunal has in fact given a reason i.e. the disputed duty has been paid by the party even ....

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....of the Act is set aside. But considering that he is center of all activities and there is existence of mens rea on his part of doubt, he is liable for heavy deterrent penalty under Rule 209A of Central Excise Rules 1944 read within Rule 26 of Central Excise Rules 2001." Proceedings before the appellate tribunal x. The Appellant Company as well as its Managing Director preferred separate appeals before the learned CESTAT against the appellate order dated 29.12.2005. The appeal of the appellant company was numbered as E-173 of 2006 and that of its Managing Director was numbered as E-174 of 2006 which were heard on 30.08.2017 and disposed of vide common judgement dated 21.09.2017. y. The learned Tribunal dismissed the appeal of the appellant company and also recorded a finding with regards to the company that the entire duty demanded has already been paid and the same has never been contested before the authorities. However, the appeal filed by the Managing Director was partly allowed by deleting the enhancement of personal penalty from Rs. 20,000/- to 20,00,000/- by the first appellate authority and personal penalty imposed upon the managing director to the extent of Rs. 20,....

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....AC was already imposed. No interference in Appellate order. A personal penalty upon the managing director of the appellant company under Rule 209A or erstwhile rule read with rule 26 of the rule of 2001 be not imposed. Since Mandatory penalty was imposed, a separate personal    penalty only of Rs. 20,000/- was imposed. Personal penalty upon the managing director Enhanced to Rs. 20 lakhs after issuing show cause notice regarding proposed enhancement Enhancement of personal penalty deleted and penalty imposed by the Order-in- Original to the extent of Rs. 20,000/- restored. The nature of allegations against the Managing Director and the penalty which attained finality against him. 72. It was alleged against the managing director of the appellant company that he directly dealt with the affairs of the appellant company with regards to purchase, sales, supplier, buyer, rate finalization and himself maintained the records of clandestine clearances and additional consideration in ambassador diary. However, it is not in dispute that the entire purchase, sales, supplier, buyer, rate finalization of the appellant company was dealt with by the Managing Dire....

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....s relating to the period 12.01.2001 to 05.09.2001 written by the Managing Director of the appellant was recovered from the office premises. Four officers of the appellant company - Administrative Officer; Senior Accounts Officer; Assistant, Excise and Dispatch and Production Manager of the appellant were examined under Section 14 of the Central Excise Act. It revealed to the authorities that procurement of raw materials, sales of finished goods and rates as well as selection of buyers etc. were all done by the Managing Director of the appellant and the recordings in the diary relating to sale purchase of the goods of the appellant company could be well explained by the Managing Director who had made the entries in the diary. Consequently, the Managing Director of the appellant was also examined under Section 14 of the Central Excise Act. During his examination he explained the entries made in the diary and as per the notings in the said diary it revealed that - Period 2000-01 From 12.01.2001 to 31.03.2001 there were 23 dispatches and upon examination it was found that 21 out of 23 dispatches were made without cover of central excise. Alleged non payment was Rs. 3,....

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....officials and who was the signatory of the cheques. Further, the amount having been deposited through cheques issued by the appellant company, it cannot be said that the deposit was made by a person not so authorized by the appellant company. 82. Show-cause notice dated 22.02.2002 was issued by the adjudicating authority to the appellant as well as the Managing Director. It was alleged in para 5.1 that suo-moto deposit of the amount provided clinching and conclusive evidence of evasion of duty and that the Managing Director had stated on 15.11.2001(during his examination under section 14 of the Central Excise Act) that he would examine the issue regarding alleged short payment / non- payment, and if found that the dispatches were not covered under invoice, they shall bear the duty upon examination. In para 5.2 it was alleged that differential duty was still short by Rs. 58,673/- for the period 2000-01 and by Rs. 1,23,136/- for the period 2001-02. Both the noticees were inter-alia directed to show-cause as to why the duty already paid be not confirmed and differential amount of Rs. 1,81,809/- be not demanded. A personal penalty was also sought to be imposed upon the co- noticee i....

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....rity accepted the duty liability of 71 dispatches for which invoices were not issued, as Rs. 10,57,495.68, by treating the sale price as cum-duty price, and fully accepted the specific stand and calculation made by the appellant company in this regard. For remaining 7 invoices pertaining to under-valuation, the duty liability was found to be Rs. 20,182/- by treating the sale price as cum- duty price. Thus, the total liability was calculated as Rs. 10,77,678/-, and Rs. 10,68,298/- having been deposited on 24.11.2001(prior to issuance of show cause), the balance was calculated and demanded only to the extent of Rs. 9,380/-. 86. The memorandum of appeal filed before the appellate authority has neither been filed by the appellant in the paper book nor it has been found in the records received from the respondent and the learned counsel for the appellant has stated that the grounds of appeal have to be gathered from the order passed by the appellate authority. 87. Even at the appellate stage, as is apparent from the appellate order itself, the appellant company did not challenge the imposition of differential duty on account of clandestine removal, but challenged the valuation wit....

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.... of personal penalty by the appellate authority, was ultimately never accepted and the penalty imposed by the Order-in-Original was sustained even by the Learned Tribunal. The fact that the appellant company claimed refund of Rs. 10,802.32 only out of the entire payment even till the appellate stage clearly shows that the remaining amount, Rs. 10,57,495.68 (Rs. 10,68,298/- minus Rs. 10,802.32) was admitted liability and as per the calculation of the appellant company, this related to removed goods without cover of excise invoice i.e., clandestine removal of 71 transactions as they had contested only allegation of short payment relating to undervaluation concerning 7 invoices. 88. In view of the aforesaid materials on record and upon reading of the Order-in-Original passed by the adjudicating authority as well as appellate order, I have no doubt that the appellant company never contested the duty demanded in connection with 71 transactions relating to removal of goods without cover of excise invoice i.e. clandestine removal and only contended that the sale price should be treated as cum duty price and offered its calculation as Rs. 10,57,495.68 which was duly accepted by the depa....

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....y the managing director that too at a much belated stage i.e at the time of responding to the notice issued by the appellate authority for enhancement of personal penalty upon the managing director. 91. So far as the judgement passed by the Hon'ble Allahabad High Court reported in 2016 (334) E.L.T 595 (All.) (Triveni Engineering & Industries Ltd. Vs. Commr. of C.Ex. Allahabad) is concerned, the same does not apply to the facts of the present case as in the said case the allegation of clandestine removal was based on assumption and on surmises and conjectures and demand of duty was contested by the noticee, which is not the case here. 92. So far as the judgement reported in 2017 (345) E.L.T 187 (Jhar.) (Balashri Metals Pvt. Ltd. Vs. Union of India) is concerned, the same does not apply to the facts and circumstances of this case as in the present case, on the one hand, the appellant did not dispute the allegation of clandestine removal of goods and on the other hand, the relied upon documents and evidences were duly forwarded to the appellant along with the show-cause notice to which the appellant as well as the co-noticee - Managing Director had responded and accordingly ther....

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....recorded in the statement of the managing director in his statement under section 14 of the Central Excise Act formed part of the relied upon evidences and enclosed with the show cause notice itself. The appellant has not even filed the statement of the Managing Director recorded under Section 14 of the Act of 1944, although admittedly, it formed part of the enclosures/relied upon evidences of the show- cause notice issued by the adjudicating authority. 96. The learned counsel for the appellant company has also submitted that defence reply cannot be treated as evidence. In the instance case the defence reply has not been treated as evidence. In fact the following were the basis of passing the order in original by the adjudicating authority:- a. the evidences of the various officers of the appellant company, including that of the Managing Director recorded under Section 14 of the Act of 1944, were on record; b. The Managing Director during his examination under Section 14 of the Act of 1944 stated that he would get the matter examined and differential, if any, would be paid; c. The appellant company had taken a specific stand that the invoices in connec....

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....ther appeal has now been preferred by the Managing Director. So far as the judgement in the case of MIL India Ltd. (supra) is concerned, the same does not help the appellant company in any manner whatsoever. In the said case, the Hon'ble Supreme court held that an order of assessment under taxing law does not become final before the adjudicating authority in every matter, it is subject to appeal and the appellate authority can even add or subtract certain items from the order of assessment and such order of appellate authority could be treated as an order of assessment. In the said case of MIL India Ltd. (supra), it was also held that power of remand by the appellate authority was taken away with effect from 11.05.2001 by amending Section 35- A, therefore the appellate authority continues to exercise the powers of adjudicating authority in the matter of assessment, and under Section 35B, any person aggrieved by the order of the commissioner as an adjudicating authority could move the tribunal and the order passed by the appellate authority is to be treated as an order of the adjudicating authority. The aforesaid principle of law has no application in the present case as the appe....

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.... is concerned, the clearance of 71 transactions without invoice was never disputed. The entries made in the diary were corroborated by other materials on record including the fact that the same remained undisputed by the appellant company throughout and the fact that the entries in the diary which were in short forms were explained by the managing director during his statement recorded under section 14 of the Central Excise Act. The reply to the show cause notice issued by the adjudicating authority has not at all been treated as evidence. 100. As a cumulative effect of the aforesaid discussions, the finding of the learned tribunal that the duty demand was never contested by the appellant company before the authorities is not perverse, rather the same is based on materials, including the aforesaid specific stand of admission by the appellant company of clandestine removal of goods with regards to 71 transactions and claiming non issuance of corresponding invoices to be on account of inadvertence, before the adjudicating as well as appellate authority; coupled with the fact that refund of Rs. 10,802.32 only was claimed and the remaining deposit of Rs. 10,57,495.68 stood as admitt....

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....fying the duty liability under 71 transactions to the extent of Rs. 10,57,495.68 as calculated by the appellant. Thus, suo-moto deposit of the amount prior to issuance of show cause, when seen in the light of the aforesaid circumstances certainly amounts to admission on the part of the appellant regarding clandestine removal of goods relating to 71 transactions. So far as the judgement reported in (1997) 5 SCC 536, Mafatlal Industries Ltd. And others Vs. Union of India & others, para 92, which has been heavily relied upon by the learned counsel for the appellant is concerned, the same is quoted as under along with para 93 and 94 to complete the narration: - "92. It is then pointed out by the learned counsel for the petitioners- appellants that if the above interpretation is placed upon amended Section 11-B, a curious consequence will follow. It is submitted that a claim for refund has to be filed within six months from the relevant date according to Section 11-B and the expression "relevant date" has been defined in clause (B) of the Explanation appended to sub-section (1) of Section 11-B to mean the date of payment of duty in cases other than those falling under clauses (....

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....protest was delivered to the proper officer." 94. The rule no doubt requires the assessee to mention the "grounds for payment of the duty under protest" but it does not empower the proper officer, to whom the letter of protest is given, to sit in judgment over the grounds. The assessee need not particularise the grounds of protest. It is open to him to say that according to him, the duty is not exigible according to law. All that the proper officer is empowered to do is to acknowledge the letter of protest when delivered to him - and that acknowledgement shall be the proof that the duty has been paid under protest. A reading of the rule shows that the procedure prescribed therein is evolved only with a view to keep a record of the payment of duty under protest. It is meant to obviate any dispute whether the payment is made under protest or not. Any person paying the duty under protest has to follow the procedure prescribed by the rule and once he does so, it shall be taken that he has paid the duty under protest. The period of limitation of six months will then have no application to him." Upon perusal of the para 92 of the judgement, I find that it simply lays down that when....

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....amount was deposited while goods were detained in transit and under the pressure from the Directorate of Revenue Intelligence officials to avoid delay in clearance. Accordingly, the aforesaid judgements do not apply to the facts and circumstances of this case. 104. In view of the aforesaid findings, the issue no. (iii) is also decided against the appellant and in favour of the respondent. Issue no. iv. 105. The Managing Director of the assessee -appellant company was, inter alia, directed to show cause as to why penalty under Rule 209A of 1944 Rules read with Rule 26 of the 2001 Rules, be not imposed upon him. It was alleged that (i) the clandestine clearances resulting in non-payment of excise duty and undervalued clearances resulting in short payment of excise duty were carried out at the behest of the Managing Director (ii) he himself was maintaining the private diary and receipt of additional consideration (iii) he was consciously and with full knowledge concerned with selling, dispatching and/or otherwise dealing with excisable goods which he had reason to believe are liable to confiscation. 106. Rule 209A of Central Excise Rules, 1944 and Rule 26 of Central Excise....

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....Director that the production/clearances were correctly reflected. However, the appellate court in the last paragraph of its judgement, while deleting the penalty upon the Managing Director under Section 11AC of the Act of 1944 on the ground that penalty under the said section cannot be imposed upon a person other than the manufacturer has also recorded -"but considering that he is center of all the activities and "there is existence of mens rea on his part of doubt , he is liable for heavy deterrent penalty under rule 209A of central excise rules 1944 read with rule 26 of Central excise Rules, 2001." The aforesaid sentence in italics is self-contradictory and the words "there is existence of mensrea on his part of doubt, he is liable for heavy deterrent penalty" are incomprehensible and meaningless. Otherwise also, orders and judgements are required to be read as a whole and upon perusal of the findings recorded in the earlier portions of the appellate judgement, it is clear that the appellate authority has recorded a well-reasoned finding of mens-rea against the Managing Director. 108. Penalties imposed upon Managing Director of the company The following penalties were impos....

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....e person responsible for clandestine removal of goods of the appellant company has attained finality. 112. It is not in dispute that the appellant company was under direct control of the Managing Director and because of his controlling position he was directing the company and the order of penalty passed against the Managing Director of the company has attained finality. It is not in dispute that the foundational facts for passing the order of penalty against the company and its Managing Director are identical. Rather, the appellant company, though a juristic person cannot distance itself from the act of clandestine removal/under valuation of its goods due to the acts and omissions of its Managing Director who was admittedly responsible for sales and purchases of the goods of the appellant company and was also a co-noticee in the adjudication proceedings. Further, the quantum of penalty upon the Managing Director is irrelevant and what is relevant is the provision under which the penalty has been imposed. Merely because a small amount of penalty has been imposed upon the Managing Director, the same does not erase the proved allegations resulting in imposition of penalty prescrib....

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....robative value. It was held at para-6 as under: "... These statements are not confessions recorded by a Magistrate under Section 164 of the Code of Criminal Procedure, but are statements made in answer to a notice under Section 171-A of the Sea Customs Act. As they are not made subject to the safeguards under which confessions are recorded by Magistrates they must be specially scrutinised to finding out if they were made under threat or promise from someone in authority. If after such scrutiny they are considered to be voluntary, they may be received against the maker and in the same way as confessions are received, also against a co-accused jointly tried with him. Section 30 of the Evidence Act does not limit itself to confessions made to Magistrates, nor do the earlier sections do so, and hence there is no bar to its proper application to the statements such as we have here." 115. So far as the judgement passed in the case of "Sarva Shramik Sangh Versus Indian Oil Corporation Limited and others" reported in (2009) 11 SCC 609 is concerned, it has been argued by the learned counsel for the appellant that when the parties are different, issues are different, reliefs are ....

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....nt company, whose goods were clandestinely removed coupled with the fact that the company never disputed the allegation of clandestine removal of goods, cannot deny its liability under the Act of 1944. 117. In the present case, the statements of the co-noticee-Managing Director has, inter alia, been rightly used against the appellant company as they were proceeded together in the adjudication proceedings. Additionally, there were other materials on record including admission of the appellant company regarding 71 transactions without cover of excise invoice claimed to be due to inadvertence. 118. It is true that the assessee company and its Managing Director are two distinct persons in the eyes of law but it is equally true that in the instant case the alleged acts and omissions are attributable to the company as a juristic person represented by its managing director as well as attributable to its Managing Director on the same foundational facts, against whom the order of penalty for the very same acts and omissions has become final. 119. The order of differential duty and penalty against the appellant company is directly and inseparably linked with imposition of penalty up....

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....also irrespective of the fact that he was a co-noticee. 123. In support of the submissions, certain judgements mentioned above have been relied upon. 124. The learned counsel has also submitted that the judgement reported in 2019 (368) E.L.T. 710 (Tri-Del) [Silicone Concepts International Pvt. Ltd. Vs. Pr. Commr. of Cus., ICD, TKD (Import), New Delhi] holding that statement recorded under Section 14 of the 1944 Act is a substitute of examination-in- chief and the witness has to be offered for cross-examination, is per incuriam, being passed in ignorance of the relevant statute or judicial precedent. It has been argued that if a witness is examined in chief while making a statement under Section 14 but not allowed to be cross-examined, it will amount to giving up the witness, the converse is also true, i.e. a witness who is not examined in chief, but offered for cross-examination, would amount to giving up the witness. For this argument, specific reference is made to the judgement reported in (1995) 3 SCC 367. 125. The respondent, on the other hand, has opposed the submissions and has submitted that the statements recorded under Section 14 of the Act of 1944 are per-se admi....

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....d Act of 1944, it is clear that the person summoned is bound to attend, either in person or by his authorized agent, as the officer may direct and all persons summoned are bound to state the truth and to produce such documents or things as may be required. Similar provision exists under Section 108 of the Customs Act as held in the case reported in (2000) 7 SCC 53 (Assistant Collector of Central Excise, Rajamundry Vs. Duncan Agro Industries Ltd. and Others), relied upon by the respondent. It has been held in para 9 of the aforesaid judgement that Section 14 of the Central Excise Act, 1944 is practically the same as Section 108 of the Customs Act. The Sea Customs Act was repealed vide The Customs Act, 1962 and Section 108 of the Customs Act, 1962 is pari materia to Section 171A of Sea Customs Act. 129. The judgements passed under the Customs Act dealing with Section 108 were considered in the case of Duncan Agro (supra) while dealing with the issue, as to whether, it is necessary to comply with the precautions envisaged in Section 164 of Code of Criminal Procedure i.e. recording of confessions and for the statements, when Customs Officers record statement under Section 108 of the....

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....had considered the scope of the statement made under Section 171-A of the Sea Customs Act in Haroom Haji Abdulla v. State of Maharashtra. Hidayatullah, J. (as he then was) made the following observations: "These statements are not confessions recorded by a Magistrate under Section 164 of the Code of Criminal Procedure but are statements made in answer to a notice under Section 171-A of the Sea Customs Act. As they are not made subject to the safeguards under which confessions are recorded by Magistrates they must be specially scrutinised to finding out if they were made under threat or promise from someone in authority. If after such scrutiny they are considered to be voluntary, they may be received against the maker and in the same way as confessions are received, also against a co-accused jointly tried with him." 14. In Ramesh Chandra Mehta v. State of W.B. it was held that "when an inquiry is being conducted under Section 108 of the Customs Act, and a statement is given by a person against whom the inquiry is being held it is not a statement made by a person accused of an offence and the person who gives the statement does not stand in the character of an accus....

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....way admissible in evidence without its formal proof. Further the adjudicating authority or court has to test whether the inculpating portions were made voluntarily or whether it was vitiated on account of any of the premises envisaged in Section 24 of the Evidence Act as held in the case of Duncan Agro Industries Ltd. (Supra). Thus, this court is of the considered view that the maker of the statement under Section 14 of the Act of 1944 need not be summoned again and depose again before the adjudicating officer, by way of examination in chief, to prove the statement or reiterate the same statement. This is more so, when the statement under Section 14 is made by the co-noticee of the show cause in the adjudication procedure as in the present case. In case the statement recorded under section 14 of the Central Excise Act (wherein the person concerned is already under legal obligation to state the truth) is relied upon by the adjudicating authority in the show cause notice and the statement is an enclosure to the show cause notice , it is enough to indicate that prima-facie scrutiny has been done by the adjudicating authority and it is for the noticee to either accept or deny such stat....

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.... that time and hence, any statement made by such a person to the customs officer is not hit by Article 20(3) of the Constitution of India or by section 24 of the Evidence Act. 133. In another case decided by the Hon'ble Supreme Court reported in (2015) 13 SCC 198 (IVRCL Infrastructure and Projects Limited Vs. Commissioner of Customs, Chennai), it was held that the statements made to an officer of customs under Section 108 of the Customs Act, 1962 are admissible in evidence and the court has merely to scrutinize whether the admissions were made voluntarily or otherwise. In paragraph 8 of the aforesaid judgment, it was held as under: "8. It is settled law that statements made to an officer of Customs are admissible in evidence under Section 108 of the Customs Act, 1962. This Court has held in Gulam Hussain Shaikh Chougule v. Supt. of Customs, after quoting from several other judgments, that such statements are admissible in evidence. The Court has merely to scrutinise whether the admissions made were voluntary or otherwise. In the present case, it is clear that unretracted statements made by none other than the Vice-President of the appellant Company, representatives of M....

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.... assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the adjudicating authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority. .......................................................... 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. ................................ 8. In view of the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show-cause notice. 9. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal. No ....

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....ss- examine Managing Director to discredit his statement recorded under Section 14 of the Excise Act. Ultimately, the enhanced personal penalty upon the managing director by the appellate authority was deleted by the Tribunal and the Tribunal sustained the personal penalty of Rs. 20,000/- imposed by the adjudicating authority without disturbing the finding of adjudicating authority. The penalty imposed upon the Managing Director has attained finality. 136. Thus, the statements recorded under Section 14 of the Act of 1944, when seen in the light of aforesaid judicial pronouncements, are per-se admissible in evidence and can be relied upon by the adjudicating authority in the show cause upon being satisfied that the statements were voluntary in nature and not hit by Section 24 of the Evidence Act. For this purpose, there is no requirement for the maker of the statement to be summoned again and examined in chief by the adjudicating authority, as such person has already been summoned and examined by an authorized Central Excise Officer before whom the person was already under a legal obligation to state the truth followed by penal consequences for making false statement. Accordingly....

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....ated to the Central Excise officer. The cheques must have been signed by an authorized representative of the Company. The appellant company has neither disclosed the name of the signatory of the cheque nor disclosed the name of the person who was alleged to have been pressurized by the department in absence of the Managing Director, to deposit the amount. Further, such allegation of pressure from the side of the department was made by the Managing Director for the first time after expiry of more than 4 years from the date of recording of his statement that too at appellate stage when a show cause was issued to him for enhancement of personal penalty. The aforesaid plea of deposit under pressure is further negated and is apparently an afterthought, as during the adjudication proceedings as well as appellate proceedings, it was the specific case of the appellant company that they have paid Rs. 10,802.32 in excess and only the excess amount was to be refunded to them. This specific stand was stressed upon to avoid penalty and interest by stating that the duty amount was deposited prior to show cause notice as the 71 transactions were cleared without invoices due to inadvertence. Thus,....

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....corded under different circumstances under the Act of 1944. 140. The learned counsel appearing on behalf of the appellant has placed before this Court the Customs, Gold (Control) and Central Excises and Salt (Amendment) Bill, 1972. This Amendment, inter alia, introduced Section 9A to Section 9D in the Act of 1944 vide amendment Act of 1973. Section 9D is quoted hereunder for ready reference: "Section 9D. Relevancy of statements under certain circumstances. (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse partly, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before t....

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....ceedings before the adjudicating authority by issuance of show cause. 144. Section 9D covers all the statements recorded by any Central Excise officer of a Gazetted rank but its applicability in relation to any proceedings under the Act of 1944, other than a criminal proceeding before the court, is neither absolute nor universal and is circumscribed by the words so far as may be. The import of the words so far as may be is required to be considered and given due weightage keeping in view the law already summarized above regarding admissibility and evidentiary value of the statements recorded under section 14 of the Excise Act in the light of judicial pronouncements. 145. The statements referred to in Section 9D are neither required to be recorded under an oath nor under any statutory legal obligation to speak the truth. The only requirement is that it should have been recorded by a gazetted central excise officer under the Act of 1944 and should have been made and signed by the person concerned. 146. There are different provisions under the Act of 1944 for recording and collecting evidences/ recording of statement of witnesses which include Sections 14 and 21. There is wid....

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....g authority. In case the relied upon statement is of the noticee himself, he can challenge the same in the show cause reply on the grounds mentioned under Section 24 of the Evidence Act. However, when the person making the statement under Section 14 is dead etc., the role of Section 9D(1)(a) read with Section 9D (2) will come into play and such statement will be relevant in terms of Section 9D(1)(a) read with Section 9D(2) if Section 9D is invoked by the adjudicating authority. Invocation of Section 9D(1)(a) read with Section 9D (2) will be subject to any objection or contest by the noticee, for which the adjudicating authority has to pass a reasoned order which can also be challenged in an appropriate proceeding. Relevance of such statement of the category of persons mentioned under Section 9D(1)(a) is otherwise also referrable to section 32 and 33 of the Evidence Act. 151. Again the condition precedent for invoking Section 9D is that the statement must be made and signed by a person before any Central Excise officer of a Gazetted rank during course of any inquiry or proceeding under the Act of 1944 and it is important to note that Section 14 of the Act of 1944 requires the sta....

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....te order is to be passed by the adjudicating authority which may be subject to challenge. 154. It is relevant to note that as per Section 33A of the Act of 1944, which deals with adjudication procedure, even an opportunity of being heard is to be given to the noticee, only if he so desires. Meaning thereby, if a request for hearing is not made by the noticee, the authority may even proceed to decide the matter on the basis of materials relied upon in the show cause notice including the statement of the persons recorded by issuing summons under Section 14. This course of action can be permissible only if the statements recorded under Section 14 are per-se admissible in evidence without calling upon the person concerned to reiterate or exhibit his statement before the adjudicating authority again in order to get his statement admitted. In the instant case also, the show-cause notice was in accordance with Section 33A of the Act of 1944, to which the noticees responded and at their request an opportunity of hearing was given and they were represented by their advocate before the adjudicating authority who also filed the show cause replies on 07.03.2005. However, the statement recor....

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....amination in session trials was frequently resorted to since the enactment of Code of Criminal Procedure, 1898 which though was inconsistent with Section 138 of the Evidence Act but was permissible under Section 288 of Code of Criminal Procedure, 1898 as the evidence of witnesses recorded by the committing magistrate could be treated, at the discretion of the sessions judge, as substantive evidence during trial, however, by its amendment vide Act 26 of 1955 some restrictions were made. Section 288 of Code of Criminal Procedure, 1898 was subject matter of consideration by various High Courts as recorded in the judgement itself and it has been observed in para 18 that the various high courts, notwithstanding Section 288 of Code of Criminal Procedure, 1898, have consistently taken a view that there is no procedure whereby the prosecution is permitted to tender a witness for cross-examination only, without there being any examination in chief in relation to which the witness can be cross- examined. It has been held that the practice of tendering the witness for cross examination has been rightly condemned by the various high courts. The Hon'ble Supreme Court at para-20 of the afores....

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....s under the Act of 1944 involved in the present case. B. In the judgment passed by the Hon'ble Delhi High Court reported in 2009 (242) E.L.T. 189 (Del.), (J & K Cigarettes Ltd. v. Collector of Central Excise), the validity of Section 9D of Central Excise Act, 1944 was under challenge and the Hon'ble Delhi High Court upheld the validity of the said Section. The Hon'ble Delhi High Court has taken a view that Section 9D comes into play under following five circumstances: - (a) When the witness is dead. (b) When he cannot be found. (c) When he is incapable of giving evidence. (d) When he is kept out of the way by the adverse party. (e) When his presence cannot be obtained without an amount of delay or expense which the Court considers unreasonable. It has also been held at para-26 of the aforesaid judgement that the provisions of Section 9D of the Act are necessary to ensure that under certain circumstances, as enumerated therein, decision making in a case cannot be allowed to continue in perpetuity. The Hon'ble High Court also held that these provisions are based on the Doctrine of Necessity. It provides for relevancy of statements re....

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....either invoked Section 9D of the Act of 1944 nor there was any occasion to invoke the said section as the condition precedent for invoking Section 9D was not at all satisfied in view of the fact that the Managing Director was himself a co-noticee. In view of the aforesaid discussions, the aforesaid judgment passed by the Hon'ble Delhi High Court does not apply to the facts and circumstances of this case. C. The appellant has relied upon judgement reported in 2007 (220) E.L.T. 3 (S.C.) (Mohtesham Mohd. Ismail Vs. Spl. Director, Enforcement Directorate) (Supra), para 16, which reads as follows: "16. We may, however, notice that recently in Francis Stanly @ Stalin v. Intelligence Officer, Narcotic Control Bureau, Thiruvanthapuram [2006 (13) SCALE 386], this Court has emphasized that confession only if found to be voluntary and free from pressure, can be accepted. A confession purported to have been made before an authority would require a closure scrutiny. It is furthermore now well-settled that the court must seek corroboration of the purported confession from independent sources." The para 17 of the judgement refers to following passage of the judgement of Assistant C....

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.....) . In the aforesaid judgement reported in 2016 (332) E.L.T. 416 (Delhi) (Flevel International Vs. Commissioner of Central Excise), statements of two persons were relied upon by adjudicating authority and a specific request for cross-examination was denied on the ground that it would delay the adjudication process on an incorrect understanding that it was not the requirement of law. The law settled in this regard has been mentioned in para 42 as under: "42. It is settled law that the denial of an opportunity of cross- examination of a witness whose statements have been relied upon in the adjudication order would vitiate the order of adjudication. In Basudev Garg v. Commissioner of Customs - 2013 (294) E.L.T. 353 (Del.), this Court referred to Section 9D of the CE Act and noted that even while upholding its constitutional validity in J & K Cigarettes Ltd. v. Collector of Central Excise - 2011 (22) S.T.R. 225 (Del.) = 2009 (242) E.L.T. 189 (Del.), a Division Bench of this Court had observed that the circumstances under which the right of cross-examination can be taken away would have to be 'exceptional'. This would include circumstances where the person who had given the....

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....udgement of the Hon'ble Punjab and Haryana High Court in the case reported in 2016 (340) ELT 67 (P & H) (Jindal Drugs Pvt. Ltd. Vs. Union of India) as well as the judgement in the case of "Ambika International Vs. Union of India" reported in 2018 (361) E.L.T. 90 (P & H) has been decided on 21.06.2016 and on 17.06.2016 respectively and the Hon'ble High Court relied upon the judgement passed by Hon'ble Delhi High Court in the case of "J & K Cigarettes Ltd. v. Collector of Central Excise" reported in 2011 (22) S.T.R. 225 (Del.)(supra). The Hon'ble Chhattisgarh High Court in judgement passed in the case of "Hi Tech Abrasives Ltd. Vs. Commissioner of Central Excise and Customs, Raipur" reported in 2018 (362) E.L.T. 961 (Chhattisgarh) has further relied upon the aforesaid judgement passed in the case of "Ambika International Vs. Union of India" [2018 (361) E.L.T. 90 (P & H)]. In the aforesaid judgements passed by Hon'ble Punjab and Haryana High Court followed by Hon'ble Chhattisgarh High Court, in sum and substance, it has been held that the statement recorded under Section 14 of the Act of 1944 is irrelevant material unless the same is brought on record by examination of the maker of th....

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....4 of the Indian Evidence Act. ii. Such scrutiny is required to be done by the adjudicating authority on the basis of materials available before him including the evidences collected and statements recorded under Section 14, before relying upon such statements and treating them as relied upon evidence while issuing show-cause notice. iii. Upon scrutiny under Section 24 of the Evidence Act, such statement recorded under Section 14 of the Act of 1944 can be relied upon by the adjudicating authority while issuing show-cause notice without calling upon the person to depose as a witness in terms of Section 9D (1) (b) read with Section 9D (2) of the Act of 1944. The moment the adjudicating authority relies upon the statement recorded under section 14 of the Central Excise Act, it is indicative of the fact that necessary scrutiny in terms of Section 24 of the Evidence Act has been done and no separate order is required to be passed to this effect and this is also subject to any objection to be raised by the noticee/ person whose statement has been recorded. This is because the recording of evidence is permissible under Section 14 of the Act of 1944 by issuing summons by a....