TaxTMI 
TaxTMI 
2022 (3) TMI 694
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....he 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 could have been a basis for passing the impugned order against the appellant? Case of....
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....te, 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 the contrary, statements of Shri Budhia before the Commissioner (Appeals) and learned Tribunal that ....
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....isputed 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, 1944 and Rule 26 of the C.E.R., 2001. 07.12.2005: The appellant made his submission dated 07.12.2005 vehemently disputing and denying each and all alle....
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....ellant 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 inquiry or proceeding under section 14 the Act shall be relevant for the purpose of proving the truth of the facts only when the person who made the statement is examined as a....
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....tute 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 has been held that the statement recorded under section 14 of the Act is a substitute of examination- in-chief and therefore, without further examination-in-chief, witness can be offered for cross-examination, is p....
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....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 reply dated 07.12.2005. In this regard, reliance is placed upon the provisions of section 35 and 35B of the Act and the decision of the Apex Court in the case of MIL India Ltd. Versus Commissioner of Central Excise, Noida [(2007)....
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....on 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 adjudication order, cannot be treated as admission of the charge. The liability to duty had to be determined in accordance with section 11A (1) and 11A 2) of the Act by following the due process of law. No duty or tax can be collected save by authority of law, as per Article 265....
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....ility 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 are different, issues are different and reliefs claimed are different, no question of any finality would arise. Learned counsel for the appellant has relied upon the decision of the Apex Court in the case of Sarva Shramik Sangh Versus Indian Oil Corporation Limited and others [(2009) 11 SCC 609, para-2....
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.... 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 question of law is "whether the entries made in private diary of the Managing Director of the Company could have been a basis for passing the impugned order against the appellant?" It is the categorical submission of learned counsel for the appellant that the findings of the learned Tribunal is entirely based on the p....
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....w 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 scrutiny of the notings of the diary with the corroborative records of dispatch / sales, it revealed that the Assessee had made dispatch of CTD bars and rods to the buyers during the period 12.01.2001 to 05.09.2001, wherein in majority of the cases, same were not issued under the cover of Central Excise Invoice. Where invoices were found to have been issued, ....
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....he 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 made without payment of central excise duty amount assessed to Rs. 8,39,962/-, whereas five dispatches were shown as short paid duty amount assessed to Rs. 15,449/-, total amounting to Rs. 8,55,411/- during the period 01.04.2001 to 05.09.2001 corresponding to the period 2001-02. 19. The Assesse meanwhile deposited the differential duty of CTD bars to the tune of Rs. 36,023/- and differential duty on CTD bars....
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....aterials 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 power conferred under section 35A (3) of the Act issued show-cause notice dated 29.09.2005 upon Shri Budhia proposing enhancement of penalty under Rule 209A of C.E.R, 1944 read with Rule 26 of C.E.R, 2001. Upon consideration of the submissions and the grounds taken by the appellant in the Memo of Appeal and the materials on record, the Commissioner (Appeals) vide Order-in-Appeal dated 29.12.2005 upheld the Order-in-O....
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....is 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 the admission of the Managing Director in his statement recorded under section 14 of the Act that the same must have occurred inadvertently. On the specific plea raised by the appellant regarding compliance of the provisions of section 9D of the Central Excise Act, 1944, it is submitted that at no point, such a plea was raised by the appellant either before the Adjudicating Authority or in the subsequent appeals. This ground has....
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....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, 1985, on the basis of a search operation in the factory of the Appellant and other connected premises. In course of search on 07.09.2001 by the officers of Central Excise, Headquarters (Preventive), Jamshedpur, some incriminating documents were recovered which created an impression that the Assesse had indulged in clandestine removal of goods namely CTD bars and rods of both non-alloy steel and alloy steel falling under Chapter sub-heading 7214.90 and 72....
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....FCL, 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 statement under section 14 of C.E.A., 1944 which revealed that procurement of raw materials and sale of finished goods and rates thereon as well as selection of buyers were all done by the Managing Director Shri Hari Krishna Budhia. Shri H.K. Budhia was summoned during the course of investigation and his statement was recorded on 15.11.2001 under section 14 of C.E.A., 1944. Shri Budhia stated that he looked after the work related to dispatches and purchase....
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....arances 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 suo-motu payments of differential duty was conclusive evidence of evasion of duty by the Assesse and acceptance of clandestine clearance without payment of duty / short payment of duty which amounted to violation of the relevant provisions of Central Excise Act and Central Excise Rules, 1944 as also Central Excise Rules, 2001 i.e. Rules 9, 52, 52A and 173(c) (ii) and 173Q of Central Excise Rules, 1944 as also Rules 7, 11, 25(1) (a) of C.E.R, 2001 which was ....
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....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 be taken as cum duty price and duty demand should be reworked accordingly. For the remaining 07 invoices, the Assesse had submitted that the Department is required to prove that there is undervaluation. The A.O found that the allegations of undervaluation in respect of 07 invoices is on the basis of the rates quoted in the diary which are on the higher side as compared to what has been mentioned in the body of many invoices. The A.O also found that the Assesse had accepted the rates quoted in the diary for t....
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....ve 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 Krishna Budhia, Managing Director both went in appeal against the adjudication order before the Commissioner (Appeals), Central Excise. Before the Commissioner (Appeals), the Managing Director Shri Hari Krishna Budhia submitted his response to the show-cause notice issued by the Commissioner (Appeals) for enhancement of penalty under rule 209A of C.E.R, 1944 read with rule 26 of C.E.R, 2001 taking the following grounds (Annexure-5):- Managing Director Mr. Budhia took the plea that the adjudication order dated 13.04....
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.... 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 not acceptable. The Commissioner (Appeals) held that the Managing Director himself had maintained the diary, as per his own statement and the statement of various employees of the Company M/s BFCL during the stage of the investigation that the Managing Director was responsible for negotiation with the customers, payment of duty, etc., non-issue of invoices / non- payment of duty even after maintaining detailed accounts confirm mens rea on his part. Since Shri Budhia had not denied recovery of the diary and accepted....
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....g 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 the following incriminating materials against the Assesse as is also apparent from the show cause notice: i. The statement of Sri Hari Krishna Budhia, Managing Director recorded under Section 14 of C.E.A. 1944; ii. The Private Ambassador diary seized from the office; iii. The statement of the staff and officers recorded under Section 14 of the C.E.A. 1944 namely Sri Prem Shankar Mishra, Administrative Officer, Sri S.K. Jaiswal, Sr. Accounts Officer, Sri A.D. Singh, Assistant Excise & Dispatch of the Assesse an....
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....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 cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, 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 the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any p....
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....sult 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 hereunder: "23. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the gazetted Central Excise Officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 24. The rationale behind the ....
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....mination, 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 proceedings are quasi criminal in nature because it results in imposition of not only of duty but also of penalty and in many cases, it may also lead to prosecution. The provisions contained in Section 9D, therefore, has to be construed strictly and held as mandatory and not mere directory. Therefore, unless the substantive provisions contained in Section 9D are complied with, the statement recorded during search and seizure operation by the Investigation Officers cannot be treated to be relevant piece of evidence on which a finding could be based by the adjudicating authority. A rational, logical and fair interpretation of procedure clearly spells out that before the stat....
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....r. 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 Director could not be treated as relevant piece of evidence nor could be relied upon without compliance of Section 9D of the Act. The two questions of law accordingly, stand answered in that manner." 36. It has also been well settled that in respect of an inculpatory statement or confession made before an authority, a close scrutiny is required as the Court has to see whether the confession is voluntary or free from pressure for it to be accepted. (See Mohtesam Mohd. Ismail Vrs. Enforcement Directorate and others [2007 (220) E.L.T 3 (SC) para 16]. Mr. Budhia, Managing Director of the Appellant Company, as a matter of fact, was never examined by the Adjudicating Authority pursuant to his st....
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....nty. 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 Sri Budhia, Managing Director during the adjudication proceeding on the part of the appellant could come when the Adjudicating Authority formed an opinion that the statement of Mr. Budhia under Section 14 of the Act is to be admitted in evidence as a relevant piece of material evidence upon compliance of the rigors of clause (b) of section 9D (1) by recording a satisfaction that it was made voluntarily and without any compulsion or coercion and the Assessee was confronted with such statement to be used against him. In this regard appellants have relied upon a decision in the case of Sukhwant Singh Vs. State of Punjab [1995) 3 SCC 367], which postulates that under Section 138 of the Evidence Act, 1872 a witness could ....
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....re 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 be made to the Evidence Act, which has a provision relating to the admissibility of a statement made in a previous judicial proceeding. The relevant provision in the Evidence Act, is as follows: "33. Evidence given by a witness in a judicial proceeding, or before any person authorised by law to take it, is relevant for the purpose of proving, in a subsequent judicial proceeding, or in a later stage of the same judicial proceeding, the truth of the facts which it states, when the witness is dead or cannot be found, or is incapable of giving evidence, or is 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:....
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....d 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 (Control) Act, 1968 and the Central Excises and Salt Act, 1944. Be it enacted by Parliament in the Twenty-third Year of the Republic of India as follows:- CHAPTER I PRELIMINARY 1. This Act may be called the Customs, Gold (Control) and Central Excises and Salt (Amendment) Act, 1972. CHAPTER II AMENDMENTS TO THE CUSTOMS ACT, 1962 2. In section 111 of the Customs Act, 1962 (hereafter in this Chapter referred to as the Customs Act), in clause (m), for the words "any dutiable or prohibited goods which do not correspond in any material particular", the words "any goods which do not correspond in respect of value or in any other particular" shall be substituted. 3. In section 112 of the Customs Act, after clause (ii), the following clauses shall be inserted namely:- (iii) in the case of goods in respect of which the value stated in the entry made ....
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....ould 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 statement of the Managing Director made under section 14 of the Act in terms of section 9D (1) (b) is not in dispute. The Adjudicating Authority was duty bound to do so. As such, the instant legal plea cannot be rejected on the ground that it is a new fact which is not open to the appellant to urge in the instant appeal. 41. Learned counsel for the Respondent has submitted that Mr. Budhia or the Appellant Company had never rebutted the entries in the diary having been made in the hands of the Managing Director or his statement recorded under section 14 of the Act were never retracted before the Adjudicating Authority any time later. Therefore, it was not open for the appellant to take such a point. He has relied upon a decision in the case of Assistant Collector of Central Excise, Rajamundry versus Duncan Agro Industries Ltd. and others [(2000) 7 SCC 53], para-9, 12 & 17]. A perusal of the decision in the case of Du....
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....f 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 earlier decision of the Apex Court to discern how the scope of the provisions have been understood earlier and held as under: "12. In this context we bear in mind that a confession made to a police officer can be recorded by him without any of the constraints incorporated under Section 164 of the Code. But the safety of the confessor who makes such confession to the police officer is that the same is forbidden from use in evidence. The ban contained in Section 25 of the Evidence Act is an absolute ban. But it must be remembered that there is no ban in regard to the confession made to any person other than a police officer, except when such confession was made while he is in police custody. The inculpatory statement made by any person under Section 108 is to non-police personnel and hence it has no tinge of inadmissibility in evidence if it was made when the person concerned was not then in police custody. Nonetheless the c....
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....t 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 full meaning to the expression "so far as may be", sub-section (2) of Section 37 should be interpreted to mean that broadly the procedure relating to search as enacted in Section 165 shall be followed. But if a deviation becomes necessary to carry out the purposes of the Act in which Section 37(1) is incorporated, it would be permissible except that when challenged before a court of law, justification will have to be offered for the deviation. This view will give full play to the expression "so far as may be." In the present case, the Adjudicating Officer has not shown any justification for departing from the specific procedure prescribed under Section 9D(1)(b) of the C.E.A Since neither such scrutiny have been conducted by the Adjudicating Officer, as held in the case of Duncan Agro Industries Ltd. (Supra), nor such procedure have been followed, as contemplated under Section 9D(1)(b) of the C.E.A, Respondent cannot seek the aid of the said decision. It is t....
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....egal 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 Enforcement under the relevant provisions of the respective Acts is a sine qua non to act on it for any purpose and if the statement appears to have been obtained by any inducement, threat, coercion or by any improper means that statement must be rejected brevi manu. At the same time, it is to be noted that merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obtained. It is only for the maker of the statement who alleges inducement, threat, promise etc. to establish that such improper means has been adopted. However, even if the maker of the statement fails to establish his allegations of inducement, threat etc. against the officer who recorded the statement, the authority while acting on the inculpatory statement of the maker is not completely relieved of his obligations in at least subjectively applying its mind to the subsequent retraction to hold that the inculpatory statement was not extorted. It thus boils down that the authority or any c....
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.... 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 section 14 of the Act during inquiry / investigation are treated as relevant evidence on the satisfaction of the Adjudicating Authority as having been made voluntarily without any coercion or compulsion for the purposes of proving the truth of the facts. Otherwise, the Legislature had no reason to incorporate the provisions of section 9D by way of an amendment in the year 1973. Moreover, the series of decisions referred to above also reiterate that in adjudication proceedings, only true evidence forms the basis of the findings of the Adjudicating Authority. Similar view has been taken by other High Courts such as in the case of Ciabro Alemao versus The Commr. of Customs, Goa [(2018) (362) Excise Law Times 465 (Bom)]; Kallatra Abbas Haji versus Government of India [1985 (5) ECR 1746 Kerala: 1994 (69) E.L.T 212 (Ker);]. In Kallatra Abbas Haji (Supra), Kerala High Court while dealing with the application of section 138B of the Customs Act, has also taken the same view as early as in 1985 a....
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....e, 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 corroborative tangible evidence. Such statement of the Managing Director was not subjected to scrutiny under section 9D (1) (b) of the C.E.A., 1944 and treated as relevant material admissible for evidence for the purposes of proving the truth in casting the liability upon the Appellant Company. Therefore, the purported confession of the Managing Director could not bind the Appellant Company as such statement was not subjected to scrutiny in terms of section 9D(1)(b) of the C.E.A, 1944. 47. In the light of the well settled principles governing the operation of Section 9D of the Act, the statement of Mr. Budhia recorded under Section 14 of the Act of 1944 could not be treated as relevant piece of material for the purpose of proving the truth of facts which it contains in a proceeding under the C.E.A without complying with the provisions of Section 9D of the Act. The first substantial of law question is answered in favour of the Assessee- appellant. 48. The second substantial question of law which h....
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.... 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 entire edifice of this argument is erected upon an incomplete reading of Section 11-B. The second proviso to Section 11-B (as amended in 1991) expressly provides that "the limitation of six months shall not apply where any duty has been paid under protest". Now, where a person proposes to contest his liability by way of appeal, revision or in the higher courts, he would naturally pay the duty, whenever he does, under protest. It is difficult to imagine that a manufacturer would pay the duty without protest even when he contests the levy of duty, its rate, classification or any other aspect. If one reads the second proviso to sub-section (1) of Section 11- B along with the definition of "relevant date", there is no room for any apprehension of the kind expressed by the learned counsel. 93. It was then submitted that Rule 233-B which prescribes the procedure to be followed in cases where duty is paid under protest requires the assessee to state the grounds for payment of duty under protest and that it may we....
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....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 Central Excise, Baroda Versus L.M.P Precision Engg. Co. Ltd. reported in [(2004) 9 SCC 703], the Apex Court has at para 14 of the judgement held that the statement in reply to the show cause notice is not an evidence and cannot be treated as such without the support of any evidence on record. The appellant has relied upon the case of MIL India Ltd. Vs. Commissioner of Central Excise Noida reported in [(2007) 3 SCC 533] in support of the proposition that the order of Commissioner (Appeals) could also be treated as order of assessment, since he has the power to add or subtract certain items in the order of assessment made by the Adjudicating Authority. Section 35-B indicates that the decision of order passed by the Commissioner (A) shall be treated as an order of an adjudicating authority. In the circumstances, the Apex Court held that the High Court had erred in holding that the Assessee was not entitled to agitate the question of dutiability in appeal before the Tribunal. 51. The conspectus of facts in the instant case do not leave any room of doubt th....
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....y's officers in case of offences. In the instant proceedings, Appellant-Company was served with a show-cause notice for charges of clandestine removal of excisable goods and not for any criminal offences. The reliefs prayed for, by the Appellant- Assesse was for setting aside the duty demand under Section 11A and penalty imposed under Section 11AC of C.E.A. Shri H.K. Budhia, Managing Director was imposed with a personal penalty under Rule 209A of C.E.R, 1944 read with Rule 26 of C.ER, 2004 for dealing with buyers /suppliers and for purported accounted or unaccounted sale by making entries in his own private diary i.e. the irregular maintenance of records. The Appellant- Company is a legal entity on its own, capable to sue and being sued. Therefore, finality of the adjudication proceedings against the Managing Director of the Company on non-filing of any further appeal against the order of learned CESTAT, cannot be said to operate as res judicata binding the Appellant-Company. Moreover, on a factual note, the enhanced penalty of Rs. 2.00 lakhs having been reduced by learned Tribunal to Rs. 20,000/- under Rule 209A, leaving Mr. Budhia satisfied, could not amount to extinguishment of....
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....unted purchase of raw materials (ii) consumption of raw materials (iii) manufacture of finished goods (iv) consumption of electricity (v) payment of wages (vi) transportation / dispatch of finished goods (vii) flow back of consideration (viii) acceptance of buyer of finished goods (ix) acceptance of seller of raw materials (x) excess / shortage of raw materials / finished goods etc. (xi) no evidence of extra use of electricity (xii) no evidence of extra use of labour or payment of unaccounted wages (xiii) no evidence in the nature of Challans, parallel invoices etc. for removal of impugned goods and no unaccounted cash was found during the search. The Adjudicating Authority has, in fact, relied upon only the above two incriminating materials i.e. statement of the Managing Director under Section 14 of the C.E.A and the notings in the private diary i.e. Ambassador diary and no other corroborative evidence as above. The legal principles in this regard are well settled that in the absence of corroborative evidences, clandestine removal of manufactured goods cannot be established. [See Balashri Metals Pvt. Ltd. and Ors. Vs. Union of India [2017 (345) E.L.T....
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.... appellant. 56. It needs to be examined as to what is evidentiary value of the private diary of the Managing Director. Section 34 of the Evidence Act reads as follows. "34. [Entries in books of accounts including those maintained in an electronic form] when relevant.- [Entries in the books of accounts including those maintained in an electronic form], regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability." In the case of Central Bureau of Investigation versus V.C. Shukla and others [(1998) 3 SCC 410], the Apex Court while dealing with the issue in connection of certain entries in Jain Hawala Note Books expatiated on the ingredients of Section 34 of the Evidence Act at para-17 in the following words: "17. From a plain reading of the section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above section it is also manifest that even if the above....
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....y of the offences mentioned in clauses (a) and (b) of this section; shall be punishable, - (i) in the case of an offence relating to any excisable goods, the duty leviable thereon under this Act exceeds [fifty lakhs] of rupees, with imprisonment for a term which may extend to seven years and with fine : Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court such imprisonment shall not be for a term of less than six months; (ii) in any other case, with imprisonment for a term which may extend to three years or with fine or with both." That is why it has been observed by the Apex Court in V.C. Shukla (Supra) at para-34 in the following manner. "34. ...... Since, however, an element of self-interest and partisanship of the entrant to make a person - behind whose back and without whose knowledge the entry is made - liable cannot be ruled out the additional safeguard of insistence upon other independent evidence to fasten him with such liability, has been provided for in Section 34 by incorporating the words "such statements shall not alone be sufficient to charge any person with liability". 58. It has been c....
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.... is also answered in favour of the Appellant-Assessee. 60. Learned counsel for the Respondent has also relied upon the case of Commissioner of Central Excise, Mumbai Versus Kalvert Foods India Private Limited and others [(2011) 12 SCC 243]. In the case of Kalvert Foods (Supra), during course of raid conducted on the factory premises of the Company and also at the premises of distributors, wholesale dealers / traders of the Respondent Company in and around Mumbai and other connected premises, several incriminating documents, articles and records were found and huge quantity of finished goods were also found lying in the factory premises. It was also noticed that there was one tempo parked inside the factory premises loaded with cartoons containing the excisable goods manufactured by the said Company and was about to leave the factory premises. The driver of the said tempo was not in possession of any documents relating to the goods loaded in the said tempo. On inspection of the invoices at the premises of the Respondent Company, it was also found that there were two invoices with the same serial number, in respect of different products. The officers took stock of the goods in the f....
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....om the record that the aforesaid statements were given by the persons concerned out of their own volition and there is no allegation of threat, force, coercion, duress or pressure being utilised by the officers to extract the statements which corroborated each other. Besides, the Managing Director of the Company on his own volition deposited 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 persons concerned were of their volition and not the outcome of any duress." The Apex Court also took into account that the Adjudicating Authority had recorded findings of recovery of unaccounted finished excisable goods from eight different dealers in and around Mumbai and that there has been use of parallel sets of invoices from the same serial numbers supported by recovery of a serially numbering machine and blank invoices without any printed serial numbers. In the said case, the sole proprietor of M/s RTC when examined under section 14 of Central Excise Act, clearly stated that large q....
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....tted that a quasi-judicial order has to be judged on the basis of the reasoning contained therein. It is submitted that the order passed by the Adjudicating Authority as upheld by the learned Tribunal is proper in the eye of law. However, for the reasons discussed above in the facts and circumstances of this case, the decision of GTC Industries Ltd (Supra) has no application herein. 63. Having considered the submissions of learned counsel for the parties and the materials on record including the principles of law as culled out from the provisions of C.E.A, 1944 and the decisions referred to hereinabove, I am of the considered view that the order of learned Tribunal cannot be sustained in the eye of law. It is accordingly set aside. The substantial questions of law framed for adjudication in this appeal are accordingly answered in favour of the Appellant Assessee. Let the Lower Court Records be sent to the concerned Tribunal and Authorities. (Aparesh Kumar Singh, J) Anubha Rawat Choudhary J: 64. I have had the benefit of going through the judgement of my esteemed Brother Hon'ble Mr. Justice Aparesh Kumar Singh. I express my inability to agree with him, therefore I am writi....
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.... have been a basis for passing the impugned order against the appellant?" 68. Submission of the Appellant on the substantial question of law: I. On the first substantial question of law a. The learned Tribunal has failed to appreciate that the statement of the Managing Director of the appellant was irrelevant piece of material due to non-compliance of the mandatory conditions of Section 9D of the Act of 1944. b. Under Section 9D(1)(b) read with Section 9D(2) of the Act of 1944, statement made before the Central Excise Officer during the course of any inquiry or proceeding under Section 14 of the Act of 1944 shall be relevant for the purpose of proving the truth of the facts only when the person who made the statement is examined as a witness before the Adjudicating Authority and the Adjudicating Authority is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence. c. The provisions of Section 9D (2) are applicable to quasi-judicial/ adjudication proceedings under the Act of 1944, so far as may be, as it applies before the Court under Section 138 of the Indian Evidence Act, 1872 for examination of the witness. d. Se....
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....T 90 (P & H): Ambika International Vs. Union of India iii. 2018 (362) E.L.T 961 (Chhatisgarh): Hi Tech Abrasives Ltd. Vs. Commissioner of C. Ex. & Cus., Raipur iv. 2016 (332) E.L.T 416 (Del.): Flevel International Vs. Commissioner of Central Excise v. (1995) 3 SCC 367: Sukhwant Singh Vs. State of Punjab vi. 2007 (220) E.L.T 3 (SC): Mohtesham Mohd. Ismail Vs. Spl. Director, Enforcement Directorate k. 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. l. Learned counsel for the appellant submits that the decision in the case of "Silicone Concepts International Pvt. Ltd. Vs. Pr. Commr. of Cus., ICD, TKD (Import), New Delhi" reported in 2019 (368) E.L.T 710 (Tri-Del) wherein, it has been held that the statement recorded under Section 14 of the Act is a substitute of examination-in-chief and therefore, without further examination-in-chief, witness can be offered for cross-examination, is per incuriam being passed in ignorance of the relevant statute or binding precedent and has no evidentiary value. Learned counsel for the appellant has further argued in support of th....
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.... 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. e. The Apex Court in the case of "Collector of Central Excise, Baroda Vs. L.M.P. Precision Engg. Co. Ltd." reported in (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. f. Even if it is assumed that before the Adjudicating Authority, only quantification of demand was 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. g. In the instant case, the taxability has undisputedly been challenged before the Commissioner (Appeals) which is evident from the show cause reply dated 07.12.2005, filed by the Managing Director of the appellant company before the appellate authority. h. In this regard, reliance is placed upon the provisions of Section 35 and 35B of the Act of 1944 and the decision of the Apex Court in the case of "MIL India Ltd. Versus Comm....
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....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 issuance 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. In the aforesaid background, mere deposit of any amount during the investigation before issuance of show cause notice, an adjudication order, cannot be treated as admission of the charge. The liability to duty had to be determined in accordance with Section 11A (1) and 11A (2) of the Act of 1944 by following the due process of law. No duty or tax can be collected, without authority of law, as per Article 265 of Constitution of India. b. Learned counsel for the appellant has placed reliance upon the following decisions in support of the aforesaid submissions. i. (1997) 5 SCC 536, para-92: Mafatlal Industries Ltd. and others Vs. Union of India & others ii. 2017 (350) E.L.T 145 (Del): Digipro Import & Export Pvt. Ltd. Vs. Union of ....
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....charge against the Appellant Company in the show-cause notice was of purported clandestine removal and in the case of the Managing Director of the appellant company was of purported maintenance of records. The Department itself has treated them as two separate entities, and not one being the agent of the other, by initiating separate proceedings. Therefore, when the parties are different, issues are different and reliefs claimed are different, no question of any finality would arise. f. Learned counsel for the appellant has relied upon the following decisions:- i. Sarva Shramik Sangh Versus Indian Oil Corporation Limited and others [(2009) 11 SCC 609, para-28]; ii. State of Rajasthan Versus Nemi Chand Mahela and others [(2019) 14 SCC 179] iii. Commissioner of Central Excise, Chennai-I Vs. B.S. Garg [2016 (339) E.L.T 518 (Madras]. iv. State Trading Corporation of India Ltd. Versus Commercial Tax Officer and others [AIR 1963 SC 1811, para-23]. V. On the fifth substantial question of law a. The duty in the instant case has been demanded without any allegation or evidence or finding of "manufacture of the impugned goods by the appellant" in the show-cause notice. Since le....
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....earned counsel for the appellant that the findings of the learned Tribunal are entirely based on the private diary without any corroborative evidence obtained through independent inquiry. Therefore, such a serious charge of clandestine removal cannot be sustained merely on the basis of entries in the private records which is denied by the buyers. b. Learned counsel for the appellant has placed reliance upon the following decisions: - i. 2013 (287) E.L.T 243 (Gujarat): Commissioner of C. Ex. Cus. & Service Tax Vs. Vishwa Traders P. Ltd. ii. 2016 (332) E.L.T 416 (Del): Flevel International Vs. Commissioner of Central Excise iii. 2017 (345) E.L.T 187 (Jhar): Balashri Metals Pvt. Ltd. Vs. Union of India iv. 2018 (309) E.L.T 411 (All): Continental Cement Company Vs. Union of India v. 2011 (271) E.L.T 184 (Pat): Commissioner of Central Excise Vs. Brims Products. vi. 2015 (318) E.L.T 487(Tribunal-Ahmadabad): Suzuki Synthetics Pvt. Ltd. Vs. Commr. of C. Ex, Ahmedabad-III VII. Based on these submissions, learned counsel for the appellant submits that all the substantial questions of law framed by this Court are fit to be answered in favour of the appellant and against the Re....
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....ot issued under the cover of Central Excise Invoice. Where invoices were found to have been issued, the Assessee had quoted wrong price as in the Central Excise Invoice, prices were lower than what was noted in the said diary, resulting in under valuation of the so dispatched excisable goods and short payment of duty of central excise thereon. From the notings of the said diary, and in the inquiry / investigation, it was revealed that dispatches were made to the following buyers of the Assessee. vii. 'Jharkhand'-M/s Jharkhand Steel, Upper Bazar, Ranchi viii. 'Kavita'-M/s Kavita Steel, Ratu Road, Ranchi ix. 'Ashish'-M/s Ashish Steel, Upper Bazar, Ranchi x. 'Pravin'-M/s Pravin Agency, Ranchi xi. 'Arshad'- M/s Arshad Steel, Ranchi xii. 'Prasad'-M/s Prasad Steel, Ranchi. b. During the investigation, summons was issued to the officers / staff of the Assessee for recording their statements under Section 14 of the Act of 1944. Shri Prem Shankar Mishra, Administrative Officer of the Assessee stated that the Managing Director, Shri Hari Krishna Budhia is himself seeing production, procurement of raw materials and sale of finished goods and the aforesaid diary belongs to Mr. Bud....
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....period 2001-02. f. The Assessee meanwhile deposited the differential duty for the period 2000-01 to the tune of Rs. 3,36,023/- and differential duty for the period 2001-02 to the tune of Rs. 7,32,275/-. Intimation was given on 24.11.2001 through FAX. g. Learned counsel for the Respondent Revenue submits that suo-motu payment of differential duty on CTD bars and rods for the period 2000-01 and 2001-02 are conclusive evidence of evasion of duty for the reason that it shows an existing liability of the Assessee by way of differential duty. Such liability occurred due to earlier non-payment / short payment of duty. Further, the Managing Director Shri Budhia had agreed to examine the issue and had stated that, if found that dispatches were not covered under the invoices, they shall bear the duty. After examination of those dispatches having been made without cover of central excise, they actually made payment of duty. It therefore amounted to acceptance of the allegation of clandestine clearances without payment / short payment of duty. h. Based on the aforesaid materials, a show-cause notice was issued on 22.02.2002 upon the Appellant Company demanding central excise duty of Rs. 12,....
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....tion of the submissions and the grounds taken by the appellant in the Memo of Appeal and the materials on record, the Commissioner (Appeals) vide Order-in-Appeal dated 29.12.2005 upheld the Order-in-Original. At the same time, penalty on Shri Budhia was enhanced to Rs. 20,00,000/- from Rs. 20,000/- under Rule 209A of the 1944 Rules read with Rule 26 of 2001 Rules. However, penalty of Rs. 20,000/- under Rule 173Q of 1944 Rules read with Rule 25 of 2001 Rules on the Company and penalty of Rs. 10,77,678/- on Mr. H.K. Budhia, Managing Director were dropped. k. It is contended that the appellant preferred appeal before the learned Tribunal against the order passed by the Commissioner (Appeals). Learned Tribunal vide order impugned dated 21.09.2017 (Annexure-9) reduced the increased penalty of Rs. 20,00,000/- imposed upon the Managing Director by the Commissioner (Appeals) and restored it to Rs. 20,000/-. l. On the basis of the aforesaid materials and findings of the Adjudicating Authority, Commissioner (Appeals) and learned Tribunal, learned counsel for the Respondent has advanced the following submissions: (A) The statement of Shri Prem Shankar Mishra, Administrative Officer of the....
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....djudicating Authority or in the subsequent appeals. This ground has been taken up for the first time before this Court and, therefore, neither the Adjudicating Authority nor the Appellate Forum have discussed this issue in their order. Reference is made to the decision of the Apex Court in the case of Modern Insulators Limited versus Oriental Insurance Company Limited [(2000) 2 SCC 734]. It has been held that in an appeal, the parties cannot urge new facts. It is emphatically asserted by the Respondent that Mr. Budhia or the Appellant Company never rebutted the entries in the diary having been made in the hands of the Managing Director or his statement recorded under Section 14 of the Act of 1944, were never retracted before the Adjudicating Authority any time later. Therefore, it was not open for the appellant to take such a point. Respondent has placed reliance upon the decision of the Apex Court in the case of "Assistant Collector of Central Excise, Rajamundry versus Duncan Agro Industries Ltd. and others" [(2000) 7 SCC 53]. It has been held therein that statements recorded by the Customs Officer under Section 108 of the Customs Act which is practically the same as Section 14 of....
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....2001, spread over two financial years 2000-01 and 2001-02. c. Statements of Administrative Officer, Sr. Accounts Officer, Assistant, Excise and Dispatch Section and Production Manager of the Appellant Company were recorded and lastly on 15.11.2001, statement of the Managing Director of the Company was recorded under Section 14 of the Act of 1944. d. Investigations were also carried out against all the three alleged buyers of the appellant i.e. M/s Jharkhand Steels, Ranchi, M/s Kavita Steels, Ranchi and M/s Ashish Steels, Ranchi, whose names in short form appeared in the aforesaid private diary of the Managing Director of the Appellant Company and whose full names and details were disclosed by the Managing Director during his examination under section 14 on 15.11.2001. The managing director has also stated in his statement that he would get the matter verified and in case of any gap differential amount will be deposited by the company. He had also disclosed that he was a heart patient. Although the Statement of the Managing Director, which is the bone of contention in the present case has not been brought on record but the aforesaid aspect of this statement is not in dispute. e. ....
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....2000-2001 and of Rs. 8,55,411/- for the period from 01.04.2001 to 24.11.2001. There were allegations of short payment with regards to a number of invoices and non-payment with regards to other remaining transactions. Regarding payment made by the appellant prior to the show cause, the details of cheques etc. were also mentioned showing payment of Rs. 3,36,023/- for the period 2000-01 and Rs. 7,32,275/- for the period 2001-02 both vide cheques dated 24.11.2001. The show-cause also referred to aforesaid letter dated 22.01.2002 issued by the appellant company -the assessee, intimating that the aforesaid payment of differential duty was finally deposited in the bank. The show cause also mentioned that it was agreed by the Managing director during his statement recorded under Section 14 of the Act of 1944 that he would examine the issue and if the dispatches were not covered, they shall bear the duty and on such examination by the assessee the aforesaid payment was made which amounted to acceptance of allegation of clandestine clearances without payment of duty/short payment of duty. i. The two noticees were directed to show cause as to why - (i) "Central Excise duty amounting to Rs....
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.... aforesaid Act of 1944 as well as the reply to the show cause notice from the side of the appellant company and its Managing Director, has neither been filed by the appellant in its paper book nor the same forms part of the records received from the authorities. This aspect of the matter was also pointed out to the learned counsel appearing for the appellant during the course of hearing, who submitted that the relevant extract of the statement of the Managing Director of the appellant has been quoted in orders passed by the authorities and the reply to show cause has to be gathered from the materials available on record. During the course of arguments, it is not in dispute that the statements recorded under Section 14 of the aforesaid Act of 1944 formed a part of the relied upon evidences/documents annexed with show cause notice issued by the adjudicating authority. l. In the aforesaid circumstances, I have to refer to the recordings made in the impugned Order-in-Original to find out the stand taken by the appellant company and its Managing Director in their show-cause reply and during course of hearing by the adjudicating authority. As recorded in the Order-in-Original, defence r....
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....a Ispat Nigam [2003 (161) ELT 285 (Tri.- Bang.)]. The Supreme Court has upheld this order of the Tribunal as per 2004 (163) ELT A 53 (SC) Therefore, treating the sale price as the cum-duty price, the duty should be Rs. 10,57,495.68/-. As a result, they have already paid excess duty of Rs. 10,802.32/- by depositing Rs. 10,68,298/- on 24.11.2001. During P.H. he also submitted case law of Western Industries (2004 (168) ELT 101 (Tri.-Bang.)] in support of their claim to treat the sale price as cum-duty price." m. Thus, the aforesaid Defence reply to the Show Cause Notice and Records of personal hearing clearly reflect admission of clandestine removal by both the noticees. On the one hand, they did not refute the allegation of clandestine removal, and on the other hand, they insisted that- -the amount paid by them before issuance of show-cause be treated as cum-duty price; -reiterated that the invoices could not be issued by them inadvertently; -there was error in calculation made in show-cause notice; -mandatory penalty be not imposed as the amount has been paid prior to issuance of show-cause notice; Apart from the aforesaid, they also calculated the sale price as cum- dut....
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....r Rule 173Q of the erstwhile CER, 1944 and read with Rule 25 of CER, 2001. I impose a penalty of Rs. 20,000/- on the assessee under these Rules. (6) For the same reason penalty of Rs. 20,000/- is imposed on Shri Hari Krishna Budhia, MD under Rule 209A of erstwhile CER, 1944 and read with Rule 26 of CER, 2001." Appellate proceedings p. Being aggrieved by the Order-in-Original, the Appellant company as well as its Managing Director, filed separate appeals numbered as Order-in-Appeal no. 360-361 of 2005 before the Commissioner (Appeals), Customs and Central Excise, Patna under Section 35 of the Act of 1944 and reiterated their contentions. q. It is important to note that the grounds of appeal from the side of the appellant company as well as its Managing Director, have neither been filed by the appellant in its paper book nor the same form part of the records received from the authorities. So, the grounds of appeal are also to be gathered from the impugned orders. The grounds of appeal, as reflecting from the appellate order are quoted as under: - (i) "In the impugned order, the adjudicating authority has increased Rs. 20,182/- in the valuation in respect of 7 (seven) invoices ....
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....On 07.12.2005, the Managing Director of the appellant filed his reply to the show-cause issued by the appellate authority, opposing enhancement of personal penalty against him and for the first time, disputed and denied each and all allegations. It was also stated in his reply that during the period from 17.11.2001 to 17.12.2001, he was in Chennai in connection with his by-pass heart surgery and during this period, the central excise authorities insisted the officials of the factory to deposit the disputed duty and due to such insistence, the duty of Rs. 10,77,678/- was deposited on 29.11.2001 under TR-6 dated 24.11.2001. The Managing Director of the appellant company for the first time, in his reply to the show cause notice regarding enhancement of penalty against him stated that on 15.11.2001, when his statement was recorded, his mental and physical condition was not such that he could voluntarily make any statement and just to complete the proceedings as early as possible, he recorded several portion of the statement as per the dictates of the departmental officers and thereafter rushed to Ranchi and then to Chennai for surgery and was hospitalized on 17.11.2001. With regards t....
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....ement of personal penalty, the circumstances under which the amount was deposited by the officers of the appellant company in his absence and prior to issuance of show -cause notice by alleging and making a bald statement that the amount was deposited under pressure from the department while he remained hospitalized at Chennai till 10.12.2001. v. The Commissioner (Appeals) vide Order-in-Appeal dated 29.12.2005 upheld the Order-in-Original except penalty under Rule 173Q of Central Excise Rules, 1944 read with Rule 25 of Central Excise Rules, 2001 in respect of the appellant company and also penalty against the Managing Director of the company under Section 11 AC of the aforesaid Act of 1944. In respect of the Managing Director of the appellant company, penalty under Rule 209A of 1944 Rules read with Rule 26 of the Rules of 2001 was enhanced to Rs. 20,00,000/- from Rs. 20,000/-. The appellate authority also held that the Managing Director never denied recovery of diary/ private record showing receipt account in respect of raw materials/dispatches of finished goods from premises and that he accepted that the diary was written in his writing and entries in the diary did not reflect in....
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....um duty price) for arriving at the assessable value under section 4 of the Act, the onus are on the appellant No.1 to prove that the entries in the diary do not represent clear picture. Since, no submissions are being made by appellant No.2 even at any stage so far in this regard, there is no alternative with the department then to accept the entries in the diary in respect of seven consignments as the basis for arriving at the assessable value. In respect of other 71 consignments, BFCL had neither issued any invoices nor paid any Central Excise duty (which comes to Rs. 10,57,495.68 paise). Their plea for neither issuing invoices nor paying Central Excise duty inadvertently is not acceptable. In fact, the Managing Director himself had maintained the diary as per his own statement and the statement of various other employees of the company of BFCL during the stage of investigation and also that the Managing Director was responsible for negotiation with the customers, payment of duty etc. non issue of invoices/non-payment of duty even after maintaining detail account confirms the mens rea on his part. Once malafide intention to evade Central Excise duty exists, the reliance of the ....
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.... appearing in his diary are not reflected anywhere in statutory records/accounts. Therefore, plea that Shri Budhia has been correctly reflecting the production/clearance has not substance at all and required to be dismissed. Had departmental officer not visited their factory, no Central Excise duty might be paid by the appellant. So, taking any lenient view at this juncture on imposition of penalty will make the provision of Act/Rules ibid null and void. Therefore, BFCL is liable for both interest and penalties. However, penalty under Sec 11AC of the Act has already been imposed and upheld here. I feel that penalty on them under Rule 173Q of Central Excise Rules 1944 read with Rule 25 of Rules is not justified. As far as appellant No.2 is concerned, he appears to be only person responsible for all the acts of omission and omission brought out in the preceding paragraphs to cause evasion of central excise duty to the tune of 10,77,678/-. However, penalty under Sec 11AC of the Act cannot be imposed on a person other than the manufacturer (Appellant No.1 in this case). Therefore, penalty on Shri H.K. Budhia under Sec 11AC of the Act is set aside. But considering that he is center ....
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....taken as cum-duty price. - Rs. 10,68,298/- was held to be short-paid, balance amount being Rs. 9,380/- and the balance amount was demanded from the appellant company. Confirmed Confirmed Penalty equal to CED of Rs. 12,50,107/- u/s 11AC be not imposed Penalty of Rs. 10,77,678/-demanded from the appellant company -the assessee. -A separate Penalty of Rs. 10,77,678/-demanded from the Managing Director of the appellant company -Confirmed. -Deleted against the managing director of the appellant company on the ground that penalty under Section 11AC cannot be imposed upon any other person other than the manufacturer Confirmed No cross appeal filed by the department. Order of deletion of separate penalty upon the managing director attained finality. Interest @20% per annum u/s 11AB be not imposed. Demanded Confirmed Confirmed A separate penalty under Rule 173Q or erstwhile rules read with rule 25 be not imposed Since Mandatory penalty was imposed, a separate penalty only of Rs. 20,000/- was imposed Deleted since mandatory penalty u/s11AC was already imposed. No interference in Appellate order. A personal penalty upon the managing director of the appellant ....
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....re can be no doubt that any goods of a manufacturer liable to pay excise duty, if removed without payment of duty or upon short payment of duty by a person, personal penalty under the aforesaid section is imposable. Issue no. (ii), (iii) , (v) and (vi) 76. A finding has been recorded by the learned appellate tribunal in para -6 as follows: - "6. ........... We also note that the entire duty demanded has already been paid and the same has never been contested before the authorities. " 77. The specific case is that the finding of learned Tribunal that the duty demand was never contested by the appellant before the authorities is perverse. However, the said finding of the appellate tribunal at para 6 of the impugned judgement is based on materials, including undisputed materials on record, and is not perverse and this will be apparent from the following discussions. 78. It is not in dispute that on 07.09.2001 raid was conducted in the factory and the office premises of the appellant and a diary having entries 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 com....
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....rtment that the differential duty has been paid by cheques issued by the appellant company. Admittedly, the deposit was not made under any protest. The co-noticee -Managing Director has tried to explain the suo- moto deposit by the appellant company, for the first-time during pendency of the appeal vide his reply dated 07.12.2005 to the show cause issued by the appellate authority proposing to enhance personal penalty imposed on him by the adjudicating authority. The Managing Director stated that he was hospitalized during the period from 17.11.2001 to 10.12.2001 and continued to be at Chennai till 17.12.2001 and the deposit was made on 24.11.2001 upon insistence by the central excise officials upon his factory officials, but there is no explanation regarding reiteration of suo-moto deposit of differential duty vide another letter dated 22.01.2002 issued by the company. The reply does not disclose as to who were the persons pressurized by the 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. ....
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....use notice; d. mandatory penalty be not imposed as the amount has been paid prior to issuance of show-cause notice; Thus, both the noticees denied short payment of duty on account of under valuation and argued that the onus of proving the allegation of short payment was on the department, but there was no denial of clandestine removal of goods without cover of central excise invoice, rather there was clear admission before the adjudicating authority as mentioned above. Not only that, they also calculated the sale price as cum-duty price and asserted that the payable amount would be only Rs. 10,57,495.68 and claimed that excess payment of Rs. 10,802.32 has been made in view of payment of Rs. 10,68,298/- prior to issuance of show-cause notice. 85. In view of the submissions of the appellant that they did not issue central excise invoices in respect of 71 transactions inadvertently, the adjudicating authority 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 per....
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....is not relevant and what is relevant is that the penalty of Rs. 20,000/- imposed by the Order-in- Original passed by adjudicating authority upon the co-noticee- Managing Director was sustained and also that the penalty was imposed under Rule 209A of 1944 rules read with pari-materia Rule 26 of 2001 Rules which provides for penalty upon any person, who acquires possession of, or is in any way concerned in transporting, removing, 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 the Act or the rules. Thus, the plea taken by the co-noticee- Managing Director for the first time before the appellate authority trying to retract from his statement under Section 14 of the Act of 1944 and also trying to explain the suo-moto deposit while responding to the point of enhancement 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 appe....
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....price as cum duty price, which is inconsequential. 90. The argument of the appellant company that the appellant had disputed the entire demand in its show cause reply and prayed for dropping of the demand and alternatively disputed the quantification of the demand is devoid of any merits when seen in the light of the recordings made in the Order-in- Original as well as the appellate order. The appellant has neither placed the show cause reply filed before the adjudicating authority nor has placed the memorandum of appeal filed by the appellant before the appellate authority to suggest any contest on 71 transactions relating to removal of goods without cover of excise invoice i.e clandestine removal, rather the specific stand of the appellant company was that the invoices in connection with 71 transactions could not be issued due to inadvertence. The allegations were denied in entirety only by 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....
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....ent of buyers based on their memories which were held to be insufficient without support of any documentary evidence. The facts of the present case are totally different. 95. Further argument of the appellant company that the Managing Director was joined as co-noticee only for the purpose that he could explain the contents of the diary which was written in his writing, is also devoid of any merits as the show-cause notice proposed imposition of penalty on the Managing Director under Rule 209A of 1944 rules read with Rule 26 of 2001 rules. In fact, the Managing Director had already made important revelations during recording of his statement under Section 14 of the Act of 1944 giving the details of the transactions recorded in the diary and disclosing the name of the parties recorded in short forms in the diary which have been quoted in the show cause itself and such revelations as 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 ....
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....rms of the act and rules. Secondly, the appellant company, who had filed a separate appeal from that of its managing director, neither filed any additional grounds of appeal, nor filed any amendment to the grounds of appeal nor took any other steps to incorporate challenge to the transactions relating to clandestine removal even at the appellate stage. Merely because the Managing Director had taken a particular stand in response to show cause issued by the appellate authority proposing enhancement of personal penalty, by itself, could not be read into the appeal of the appellant company. The fact remains that the personal penalty upon the Managing Director as imposed by the adjudicating authority was ultimately sustained by the learned tribunal in an independent appeal filed by him against enhancement of penalty by the appellate authority and no further 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 adj....
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....uld be explained by the managing director only. Further, the stand of the managing director in his reply to show cause regarding enhancement of penalty with regards to the entries was that the transactions in the pipelines were also recorded and accordingly the same could not be treated as clandestine removal. Further, it is not in dispute that the so-called private diary was maintained by the managing director himself in course of sale and purchase transactions of the appellant company which was admittedly looked after by him for the company. Moreover, such stand was taken belatedly, without any explanation of such delay and for the first time after expiry of more than 4 years from the date of recording of his statement that too when the appellate authority issued show cause for enhancement of personal penalty. So far as the appellant company 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 mana....
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....icees being indicative of their admission. In response to the show cause, both the noticees, On the one hand, did not refute the allegation of clandestine removal, and on the other hand, insisted that- the amount paid by them before issuance of show cause be treated as cum-duty price; reiterated that the invoices could not be issued by them inadvertently; there was error in calculation made in show cause notice and on account of deposit of duty amount prior to issuance of show cause, mandatory penalty be not imposed. This is coupled with the fact that the appellant claimed refund of Rs. 10,802.32 only as excess out of the total deposit. After considering all the facts the adjudicating authority confirmed the amount of the duty already paid after accepting the stand of the appellant that the sale price be treated as cum-duty price by quantifying 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 7....
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....and that it may well happen that the authority to whom the letter of protest is submitted may refuse to record it, if he is not satisfied with the grounds of protest. In our opinion, the said apprehension is not well- founded. Sub-rules (1), (2) and (3) of Rule 233-B read as follows: "233-B. Procedure to be followed in cases where duty is paid under protest.-(1) Where an assessee desires to pay duty under protest he shall deliver to the proper officer a letter to this effect and give grounds for payment of the duty under protest. (2) On receipt of the said letter, the proper officer shall give an acknowledgement to it. (3) The acknowledgement so given shall, subject to the provisions of sub- rule (4), be the proof that the assessee has paid the duty under protest from the day on which the letter of 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, t....
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....e removal of goods under the aforesaid facts and circumstances of this case. 103. In the judgement passed by the Hon'ble Delhi High Court reported in 2017 (350) E.L.T 145 (Del) (Digipro Import & Export Pvt. Ltd. Vs. Union of India), the Hon'ble High Court has deprecated illegal practice of collecting cheques during search. The said judgement has no applicability in the present case as the appellant company had deposited the amount through cheque as per their own calculation much after search etc. and thereafter, they had informed the department about deposit of the cheques suo-moto. So far as the judgement reported in 2019 (365) E.L.T 32 (P&H) (Concepts Global Impex Vs. Union of India) is concerned, the same also does not apply to the facts and circumstances of this case as in the said case, the 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.....
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....oods, has rejected the plea of inadvertence in the matter of non-issuance of invoices and non-payment of excise duty and held that the acts and omissions of the Managing Director confirmed mens rea on his part. The appellate authority was also of the view that once mala fide intention to evade payment of duty exists, the reliance of the appellants before the said authority on various judgements was of no use and discussed and distinguished the judgements relied upon by both the appellants before him. The appellate authority clearly held that in the present case, fraud and suppression of facts exist while distinguishing the judgement passed in the case of Shri Krishna Pipes Industries and quoting para 5 of the said judgement. The appellate authority also rejected the plea of the Managing 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 ....
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....pon the Managing Director and has been pleased to set-aside the increased penalty by the appellate authority and reduced it to penalty of Rs. 20,000/- as imposed by the Adjudicating Authority. 110. The basic ingredients of Rule 209A of 1944 rules read with Rule 26 of 2001 Rules were found to be present by all the authorities below. The basic ingredients of Section 11AC of Central Excise Act, 1944 were also found against the present appellant company. 111. As a result of the findings of clandestine removal of goods of the appellant company, the differential duty and penalty was imposed upon appellant assessee company. The order of penalty against the Managing Director of the appellant company on account of being the 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 compan....
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....udgment passed by the Hon'ble Supreme Court reported in AIR 1968 SC 832 (Haroon Haji Abdulla vs. State of Maharashtra), the Hon'ble Supreme Court was dealing with the statements recorded by the Customs Officers in response to the notices issued under Section 171-A of the Sea Customs Act which was sought to be used in prosecution under the Sea Customs Act. The use of the aforesaid statements recorded under Section 171- A of the Sea Act were objected to interalia on the ground that they are not confessions proper to which Section 30 of the Evidence Act could be made applicable. A plea was also raised that the confessions recorded under Section 171-A of the Sea Customs Act were subsequently retracted and had no probative 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 ....
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....inly be enforced against the proprietors/partners as the liability of the partnership firm is that of partners and the liability of the proprietary concern is that of its proprietor. There can be no dispute that the appellant company and its Managing Director are two distinct persons and the liability of one cannot be enforced against the other. In the present case two persons, the company and its managing director were proceeded in one adjudication proceedings and the foundational facts against both are the same. Penalty for clandestine removal of goods of the company has been imposed upon the managing director and order of penalty against the managing director having attained finality, the appellant 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 appe....
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....al. It has been argued that the whole purpose of Section 9D is to ensure that only true evidence forms the basis of the charge in adjudication proceedings as the central excise officers often record statement under coercion or compulsion which is hit by Section 24 of the Evidence Act, 1872. Further argument is that Section 9D acts as a safeguard against self-incriminating statement and is a constitutional right under Article 20(3) of the Constitution of India. It has also been argued that Section 9D is a general provision and applies to all persons whose statements are recorded under Section 14 irrespective of the fact that he was the director, or Managing Director of the assessee and 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-....
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....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, 1908 (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, 1860 (45 of 1860)." 128. Upon perusal of provision of Section 14 of the aforesaid 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 th....
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....rned was not then in police custody. Nonetheless the caution contained in law is that such a statement should be scrutinised by the court in the same manner as confession made by an accused person to any non-police personnel. The court has to be satisfied in such cases, that any inculpatory statement made by an accused person to a gazetted officer must also pass the tests prescribed in Section 24 of the Evidence Act. If such a statement is impaired by any of the vitiating premises enumerated in Section 24 that statement becomes useless in any criminal proceedings. 13. As early as in 1968 this Court 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 ....
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....ed on account of any of the premises envisaged in Section 24 of the Evidence Act." 130. In view of the aforesaid judgement in the case of Duncan Agro Industries Ltd. (Supra), para 17, the statements made in terms of Section 14 of the Central Excise Act are per se admissible in evidence and formal proof of the same is dispensed with. The statement recorded under Section 14 of the Central Excise Act, 1944 under the signature of the person summoned for the purpose, who is under a legal obligation to state the truth as per Section 14 itself, is straightaway 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 un....
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....iven by the appellant to Customs Officer on summons issued to him under Section 108 of the Customs Act. The Hon'ble Supreme Court held that at the stage of holding inquiry, the customs officer does not, at that stage, accuse the person suspected of infringing the provisions of Sea Customs Act with the commission of an offence and accordingly, it was held that a person examined under Section 171A of Sea Customs Act does not stand in the character of an accused person, in as much as, there is no formal accusation made against him by any person at 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....
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....It was held as under :- "6. According to us, not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the 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 w....
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....ed themselves in the adjudicating proceedings by stating that the impugned transactions were "cum- duty price" and thus disputed the price of the transactions and not the transactions. It was only belatedly, at the appellate stage, the Managing Director retracted his statement recorded under section 14 of the Excise Act when his personal penalty was sought to be enhanced by the appellate authority and even at this stage the company neither amended its grounds of appeal not took any steps to cross- 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 b....
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....the appellant company with various parties whose full names and other details were disclosed by the Managing Director, which could be disclosed only from personal knowledge and could not have been obtained through coercion or duress or through dictation. The said statements were followed by deposit of the differential amount as calculated by the appellant company themselves without any protest. The deposits were made by the appellant company through cheques and factum of deposit was intimated 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 ....
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....ty on 07.12.2005. Admittedly, in the entire records of the case, no application was filed from the side of the appellant - company for the purposes of cross- examination of the co-noticee Managing Director. In fact, the appellant company and its Managing Director had taken identical stand before the adjudicating authority. Introduction and interpretation of Section 9D and inter play of the provisions of Sections 9D, 14 and 21 of the Act of 1944 with regards to relevance of statements recorded 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 und....
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....tatement should be admitted in evidence in the interest of justice. Section 9D(1) deals with prosecution in a proceeding in a criminal court. 143. Section 9D (2) provides that the provisions of sub-section (1) shall, so far as may be, apply in relation to any proceedings under the Act of 1944, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. Such proceedings under the Act of 1944, includes proceedings 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 reco....
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....d its impact is only to the extent as explained below. The only safeguard in connection with use of such statement continues to be scrutiny by the adjudicating officer in the light of Section 24 of the Evidence Act before being relied upon in the show cause notice. Persons making statements under section 14 can be made subject to cross examination by the noticee upon such request for cross-examination made before the adjudicating 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 ....
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....ned as a witness and reiterate his statements or exhibit his statement recorded under Section 14 and he can straightaway be called for cross -examination by the noticee upon a request made by him before the adjudicating authority. If such person is dead etc., Section 9D(1)(a) read with Section 9D (2) can also be invoked by the adjudicating authority subject to any objection or contest by the assessee for which an appropriate 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 ....
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....her a witness can be cross-examined without there being any examination-in-chief. Since the judgement reported in (1971) 2 SCC 42 (State of U.P. versus Jaggo) was passed prior to coming into force of Criminal procedure Code of 1973, the Hon'ble Supreme Court considered the Code of Criminal Procedure, 1898 as well as its amendment vide Act 26 of 1955 and observed that the practice of tendering witnesses for cross-examination 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....
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....ompetent central excise officer by issuance of summons and the person whose statement is so recorded, is already under a statutory legal obligation to state the truth before such officer. In view of the aforesaid, the judgement relied upon by the learned counsel for the appellant company reported in (1995) 3 SCC 367 (Sukhwant Singh Vs. State of Punjab), has no applicability to adjudication proceedings 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-....
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....orded under Section 14 of the Act dispensing with or without the opportunity for testing the truth of such evidence by cross-examination. Meaning thereby, if Section 9D is invoked as per its terms, the obligation to produce the person for cross- examination is also dispensed with. In the present case the department neither 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 conf....
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....r from the judgement passed in the case of "Flevel International Vs. Commissioner of Central Excise" reported in 2016 (332) E.L.T. 416 (Delhi)(Supra), which has followed the earlier judgment in the case of "J & K Cigarettes Ltd. v. Collector of Central Excise" reported in 2011 (22) S.T.R. 225 (Del.) . 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 ....
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....y that such person is first required to be examined in chief again and then cross-examined. This is so because statement under Section 14 is per se admissible in evidence subject to scrutiny by the adjudicating authority in terms of section 24 of the Evidence Act. D. The judgement 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'b....
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.... view of the aforesaid discussions and findings, i. the statement recorded under Section 14 is per-se admissible in evidence by the adjudicatory authority under Central Excise Act, 1944 subject to scrutiny by the adjudicating authority in the light of Section 24 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 pa....