TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 632
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....penalty as adjudged under the original order dated 7.9.2020 of the Adjudicating Authority on the questions of law framed in the memo of appeal as under:- "a. Whether the retracted confessional statement requires corroboration from any other independent evidence? b. Whether demand of duty based on the third party documents supported by corroborative statements was not justified? c. Was the CESTAT justified in ignoring the entire evidence on record and statements of the witnesses and concerned persons? d. Was the CESTAT justified in setting aside or reducing, as the case may be, the demand, redemption fine and confiscation of goods by ignoring material facts? e. Whether statements recorded under provisions of Section 14 of CE Act by the officers of the Department can be taken as proof of the statutory violations by the respondents?" 4. Placing the order passed by the Tribunal, it is argued by Sri Parv Agarwal learned counsel for the Revenue that on the searches conducted on 1.12.2007 and 9.5.2008 at various premises related to the business of three manufacturers namely M/s Raghunath International Limited, M/s Seema Enterprises and M/s Shanker Enterprises of 'Sir' Brand Gut....
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....the material on record has recorded its opinion on the disclosure made by Sri Rajesh Agarwal in his various statements recorded on various occasion as under:- "I observe that he was actively involved in assisting Shri Sri Prakash Agarwal by working in the capacity of Authorized Signatory of all the three firms viz. M/s RIL, M/s Seema and M/s Shanker which were engaged in manufacturing of Sir brand of Gutkha / Pan Masala since beginning. His confirmations regarding management of raw materials and managing removal of clandestinely manufactured Sir brand of Gutkha / Pan Masala to various destinations has confirmed his active involvement in the tax evasion, alongwith that of Shri Alok Gupta, sole dealer of Sir brand of Gutkha / Pan Masala for the state." 6. The entire modus operandi adopted by the manufacturers in clandestine transportation of goods in his various statements was extracted/noted in paragraph '65' of the order in original passed by the Adjudicating Authority. 7. It is argued that all other persons whose statements were recorded during the course of investigation had retracted from their previous statements before the Adjudicating Authority but there was no retraction....
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....ns of three manufacturers, dealer/purchaser, railway booking agents and his associates and some of buyers/re-sellers of the goods manufactured by three manufactures/appellants therein. It was argued that a categorical stand of the appellants manufacturers before the CESTAT was that they have been selling their goods throughout ex-factory at ex-factory price. It is the buyer who after taking delivery, arranges for the transportation themselves. It was held that in view of the material on record, three manufacturers/appellants therein were neither the consignor nor the consignee in any of the third party transporters' records including the railways. Almost all the persons whose statements have been relied upon have either retracted their previous statements which were recorded during investigation and/or the veracity of their statements did not stand the test of cross-examination during the adjudication proceedings. The finding in this regard returned by the CESTAT had been placed before us to assert that the CESTAT had found serious anomaly in the allegations of clandestine removal through railways. A big part of copies of records supplied by railways was held to be unreliable by t....
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....e manufacturers premises. The demand was for the period from September, 2004 till May, 2008 and only on the basis of certain stock of raw material and finished goods found inside the factory premises on the date of search, inference was drawn of clandestine removal of goods to evade excise duty. It is argued that the question is of appreciation of evidence and no presumption can be drawn with regard to evasion of excise duty merely for the fact that some unaccounted raw material and finished goods was lying in the factory premises at the time of search. It is vehemently argued that the counsel for the Revenue has wrongly submitted that Sri Rajesh Agarwal, the Authorized Signatory of three manufacturers, did not retract from his statement during his cross-examination before the Adjudicating Authority. Paragraph 52.17 of the findings returned by the CESTAT based on the cross-examination of Sri Rajesh Agarwal, the Authorized Signatory of three manufacturers recorded on 7.2.2017 before the Adjudicating Authority, has been placed before us, which is to be noted as under:- "52.17 Shri Rajesh Agarwal, Authorised Signatory of the three appellant manufacturers in his cross examination on....
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.... under Section 14 of the Central Excise Act, cannot be admitted in evidence. It is argued that clause (b) of sub-section (1) of Section 9D prescribes specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the Adjudicating Authority, viz, (i) the person who made the statement has to be first examined as a witness in the case before the Adjudicating Authority, and (ii) the Adjudicating Authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. 12. The observation made by the Punjab and Haryana High Court behind the rationale of the precautions contained in clause (b) of Section 9D(1) has been placed before us in paragraph 19 of the decision as under:- "19. 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 knowledge that, on many occasions, the DRI....
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.... of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects: (i). To find out the excess production details. (ii). To find out whether the excess raw materials have been purchased. (iii). To find out the dispatch particulars from the regular transporters. (iv). To find out the realization of sale proceeds. (v). To find out finished product receipt details from regular dealers/buyers. (vi). To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. 14. In the instant case, no investigation was made by the Department, even the consumption of electricity was not examined by the Departmen....
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....ents and acceptance had confirmed his active involvement in the tax evasion by management of raw materials and managing removal of clandestinely manufactured 'Sir' Brand Gutkha/ Pan Masala to various destinations, thus, suffers from apparent perversity. 18. On the basis of the said findings and in view of the statement of Sri Rajesh Agarwal, the Authorized Signatory of three manufactures in his cross-examination, it cannot be accepted that his statement recorded by the Central Excise Officers was voluntary. The question is not of admissibility of the statement recorded under Section 14. The admissibility of the evidence recorded by the investigating authority, when the persons making statements were examined as a witness before the Adjudicating Authority is not under question. The issue is about the weight of the evidence appreciated by the Adjudicating Authority. 19. Clandestine removal is a serious charge as held by the Division Bench in Continental Cement Company (supra). Clinching evidence are required to be produced by the Revenue to discharge its obligation of establishment of the said charge against the manufacturer. In the instant case, it could not be brought by the coun....