AI Drafter 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2022 (9) TMI 534
X X X X Extracts X X X X
X X X X Extracts X X X X
.... copper alloy ingots issued by M/s Maruti Metals Industries Limited, Kota [Maruti Metals] during the period September , 2012 to December, 2012. 3. As a follow up to a wider investigation of the Directorate General of Central Excise Intelligence [DGCEI ], the Joint Commissioner of Central Excise, Udaipur issued to the respondent a show cause notice [SCN ] dated 06.10.2017 alleging that the invoices issued by the Maruti Metals were based on the inputs which it had procured from M/s Sypher Impex Alloys Pvt Ltd., Bhiwadi [SIPL] and that SIPL had issued invoices to Maruti Metals without supplying the materials mentioned therein and, therefore, the invoices issued by the Maruti Metals to the respondent do not qualify for CENVAT credit. Accordingly, it was proposed to recover CENVAT credit of Rs. 60,00,595/- availed by the respondent. It was also proposed to impose an equal amount as penalty on the Respondent and on some other co-noticees. 4. The Joint Commissioner had, in his order, dated 13.07.2018 disallowed the CENVAT credit and ordered its recovery from the respondent and imposed penalties. On appeal, the Commissioner (Appeals) has, by the impugned order set aside t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....NVAT credit but Maruti Metals could not have supplied the goods because it had recorded that it had received from SIPL who, in turn, had not supplied any goods to Maruti Metals. 10. The basis for coming to this conclusion are the relied upon documents 1 to 18 annexed to the show cause notice. Of these 18 documents, five are statements made by various persons before the Central Excise Officers, three are copies of the summons issued to the various persons, one is the panchnama drawn at the premises of Maruti Metals and two are orders passed by the adjudicating authorities and High Courts and the rest are a few letters and emails. 11. We find from the records of the case that the statements made before the officers of Central Excise which were relied upon in the SCN were not put through the process under section 9D of the Central Excise Act,1944 which reads as follows: Section 9D in the Central Excise Act, 1944 "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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ticed hereinabove, sub-section (1) of Section 9D sets out the circumstances in which a statement, made and signed before a gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/ investigation, before a Gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein. In other words, in the absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a Gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). 12. The consequence would be that, in the absence of the circumstances specified in Section 9D(1), if the adjudicating authority relies on the statement, recorded during investigation in Central Excise, as evidence of the truth of the facts contained in the said s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade the statement has to first be examined as a witness in the case before the adjudicating authority, and (ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. 17. 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. 18. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the Gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common kno....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xamination, can arise. 22. Clearly, if this procedure, which is statutorily prescribed by plenary Parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof." 13. During hearing, we specifically asked the learned authorised representative for the Revenue, if the statements before the Central Excise Officers had been put through the process prescribed under section 9D of the Central Excise Act, 1944 and he replied in negative. As per Section 9D, any statement made before any central excise officer is relevant only if it has gone through the process prescribed therein. In this appeal, revenue has asserted that the cross-examination of the persons who made the statements were not allowed by the authority due to some reasons. However, cross-examination will be necessary only if the statements made before the Central Excise Officers are, in the first place, relevant and they will be relevant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... matter. He submitted that these officers had given reasons for classifying the goods under Heading 39.19 and not 85.46 and could do no more. He submitted that they acted bona fide in the interests of Revenue in not accepting a claim which, they felt, was not tenable. 6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasised that i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or or the Appellate Tribunal as the case may be. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under S. 35E(1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail. 8. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are....