TaxTMI 
TaxTMI 
2022 (11) TMI 858
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....t (1) Factory-cum-office premises of M/s. Maa Alloys (P) Ltd., Chikatmati, Kalunga, Dist. Sundergarh, Odisha, (2) Factory-cum-office premises of Maa Foundry (P) Ltd., Chikatmati, Kalunga, Dist.Sundergarh, Odisha, (3) residential premises of Pitabass Chhotray, Director situated at Deogan, Fertilizer Township, Rourkela, (4) Residential premises of Anirudha Sutar, Accountant situated at Plot No.M/32, Chhend Colony (Ground floor), Rourkela and (5) residential premises of Ajay Kumar Das, Office Assistant situated at Kansbahal Jhopri Patti, Kansbahal Chowk, Dist.Sundergarh, Odisha. During the search conducted in the factory-cum-office premises of M/s. Maa Foundry (P) Ltd., several documents were seized with marking for identification of document No.1/DGCEI/RRU/MFPL/F/11 to 20/DGCEI/RRU/MFPL/F/11. Further, joint physical stock verification of finished product was also done and 71.140 MT of C.I. Ingot Mould was physically found. In the residential premises of Pitabass Chhotray, Director, situated at Deogan, Fertilizer Township, Rourkela, he was not present. Search was conducted in presence of Smt. Nirmala Chhotray, wife of Shri Pitabass Chhotray. During the search, 2 unused Invoice books i....
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.... 01/DGCEI/R RU/MAPL/F/1 1 (Annexure- 24) Hand written duplicate Note Book (PRIVATE RECORDS) A.K. Panda, Employee (See Page 46 first Para of impugned OIA) M aker not examined) Office of the Appellant 660.230 24-01- 2011 to 19-03- 2011 Rs.1,79,46,722/- Rs.18,48,512/- 3. Joint Verification report (Annexure- 5) 20.770 19-03- 2011 to 23-03- 2011 Rs.5,81,560/- Rs.59,901/- TOTAL 1964.970 Rs.4,75,05,618/- Rs.44,24,025/- 4. The Appellant vide their reply dated 20.08.2013 and Additional Written submissions vide letter dated 17.12.2015, inter alia contended that the allegations in the instant case were entirely based on unauthenticated private records and there was no tangible, cogent and affirmative evidence to support the allegation of clandestine removal of such huge quantity of 1964.970 MT of C.I. Mould and the statements recorded under Section 14 of the Central Excise Act, 1944 are irrelevant piece of material due to non-compliance with Section 9D of the Central Excise Act, 1944 and therefore have to be eschewed from evidence. 5. The Ld. Add....
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.... Para 12.2] (iv) CCE Vs C.M. Re-Rollers & Fabricators reported in 2004 (168) ELT 506 (Tri.-Del.); 7.6 The demand in the instant case was raised merely on comparison of entries of private records with Central Excise Invoices and unmatched entries were presumed to be related to clandestine removal. The allegations/findings is thus based on suspicion. 7.7 In the case of Sharma Chemicals Vs. CCE reported in (2001) 130 ELT 271 (Tri-Kol), it was held that mere tallying some of the entries of the private record with statutory records may give rise to suspicion but merely on suspicion, serious charge of clandestine removal cannot be sustained. 7.8 Further, it was submitted that : (i) there was no excess/shortage of raw material detected in the physical stock taking. (ii) there is no evidence of receipt of unaccounted raw materials for the manufacture of impugned goods. (iii) there is no evidence of transportation of raw material. (iv) there is no evidence of production of impugned goods by the Appellant. (v) there is no evidence of extra use of labour for production of goods. (vi) there is no evidence of consumption of....
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....ves Ltd. (supra) has observed regarding the applicability of Section 9D. The relevant paragraphs are reproduced :- "9.2 At this juncture, we need to notice the provision contained in Section 9D which provides that sub-section (1) shall, as far as may be, applied in relation to the proceedings under the Act, other than the proceeding before the court, as they apply in relation to proceeding before the Court. This provision when read in juxtaposition, the small clauses (a) and (b) under sub-section (1), requirement of law of recording of examination as witness would be in relation to the proceedings before the adjudicating authority. 9.3 A conjoint reading of the provisions therefore reveals that a statement made and signed by a person before the Investigation Officer during the course of any inquiry or proceedings under the Act shall be relevant for the purposes of proving the truth of the facts which it contains in case other than those covered in clause (a), only when the person who made the statement is examined as witness in the case before the court (in the present case, Adjudicating Authority) and the court (Adjudicating Authority) forms an opinion that havin....
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.... as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer as well as Customs, Excise and Service Tax Appellate Tribunal committed illegality in placing reliance upon the statement of Director Narayan Prasad Tekriwal which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the interest of justice. In taking this view, we find support from the decision in the case of Ambica International v. UOI rendered by the High Court of Punjab and Haryana. Reliance has been placed by the Counsel for the Revenue on the decision in the matter of Commissioner of Central Excise v. Kalvert Foods India Private Limited (Laws (SC) 2011 838) = 2011 (270) E.L.T. 643 (S.C.). That decision turned on its own facts. In para 19 of the judgment, it was concluded as below : "19. We are of the considered o....
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....aw inference of clandestine removal. The inference regarding clandestine removal ought to be outcome of a detailed investigation and consideration of other relevant incriminating material which could be based on the stock of raw material, finished products, use of consumption of electricity, employment of labour and many other relevant material as noticed in the decisions reported in 2014 (309) E.L.T. 411 and 2017 (345) E.L.T. 187 rendered by the High Court of Allahabad and High Court of Jharkhand, respectively. What, amongst other things, could be relevant consideration of clandestine removal, was discussed as below : "12. Further, unless there is clinchingevidence of the nature of purchase 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 a....
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....hey are interested in collector of the correct central excise duty from the noticee upon whom or upon which allegation of clandestine removal of the finished product is levelled. The electricity consumption report like Dr. N.K. Batra report can hardly be treated as a substantive evidence. Time and again, the decisions have been given by the Tribunals but the respondents-departments are turning deaf-ear to. In this case, they are also turning deaf-ear to their own circular dated 26-6-2014 (Annexure-3 to the memo of this writ). In this case, the respondents are relying upon Dr. N.K. Batra's report, also upon the allegation that much less salary has been paid to the employee and the unit is running in losses. All these are nothing but the possibilities, for clandestine removal, but, for proving the clandestine removal, the substantive piece of evidence is must. Few such evidences have been referred by this Court. The list of these evidences is not exhaustive. (I) The department should have collected the proof of amount received from the consignees, statement of consignees, receipts of sale proceeds by the consignor and its disposal." 14. The Hon'ble Punjab & Haryana High C....
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....to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 17. As already noticed herein above, 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). 18. The consequence would be that, in the absence of the circumstances specified in Section 9D(1), if the adjudicating au....
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.... of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 26. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede reexamination. 27. It is only, therefore, - (i) after the person whose statement has already been recorded before a gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for crossexamination, ....
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.... assessee. 16. It is further submitted that the statements of Sri Pitabas Chhotray, Director, Sri Anirudha Sutar and Sri Ajay Kumar Das nowhere indicate or admitthe differential unmatched entries related to clandestine removal. Sri Anirudha Sutar and Sri Ajay Kumar Das stated that the private records also contain repair of C.I. Mould. Sri Anirudha Sutar, in his Statement dated 21-09-2011 in response to a specific query (with regard to Document No. 08/DGCEI/RRu/MFPL/AS(r)/11 vide Q.No. 15 stated that entries referred to in the said ledger relates to said so called 'Ledger' in his statement dated 19-09-2011 in reply to Q.No. 24 stated that said ledger relates to sale and also repairs of C.I. Moulds by the Appellant. Sri Ajay Kumar Das the author of the Ledger (Document No. 08/DGCEI/RRU/MFPL/AS (R)/11) on the basis of which duty of Rs.25,15,612/- is demanded, never stated that unmatched entries are unaccounted clearances by the Appellant. 17. Further, I find that the Ld. Commissioner (Appeal) in the impugned Order has held that Sri Anirudha Sutar, Sri Ajay Kumar Das and Sri Pitbass Chhotray have 'accepted and agreed' that the entries in the said 'Ledger' (Document No. 08/D....