TaxTMI 
TaxTMI 
2023 (7) TMI 1112
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....L). On an investigation conducting by the officer of DGCEI on the appellants and R.K Trading Company (appellant in Appeal No. E/1159/2008), a stockist of M/s GAIL, it appeared to the Department that the appellants were diverting the plastic granules, purchased from M/s GAIL, through the stockist M/s R.K. Trading Company, and were availing CENVAT credit fraudulently. Search of the premises of the appellants, the stockist and other places; it also appeared that there were certain other violations committed by the appellant; statements of different persons were recorded and on the completion of investigation, show cause notice dated 05.04.2002 was issued to the appellants seeking to seize the unaccounted raw material/ process material found at the premises of appellant No.1 and SCN dated 30.04.2003 seeking to recover CENVAT credit of Rs.55,29,455/- alleged to have been fraudulently availed by the appellant No.1 along with interest and seeking to impose penalties on appellant No.1, Shri Anil Kumar Tibrewala, Director of appellant No.1 (Appeal No.E/909/2008-EX-DB) and the stockist R.K. Trading Co. (Appeal No. E/1159/2008), the said SCNs were adjudicated vide Order-in-Original No. 05-6/C....
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....ce involving confiscation, that it is incorrect to state that 67.50 MT of finished goods were lying unaccounted; matter of the fact is that the material was accounted but the records were not available in the factory premises as they were taken to their head office for internal audit and Puja, the re-constructed RG-I reflects the said material. As regards the allegation of re-processed granules of 31.70 MT, he submits that those were semi-finished goods and not reprocessed plastic; the officers took the samples vide Panchnama dated 10.10.2001 but have not produced any testing report till date; he submits that raw material and semi-finished products cannot be seized in the factory premises; sheathing compound cannot manufacture by re-processed plastic. Regarding the EVA Plastic of 3000Kgs, he submits that the same was purchased from M/s Aksh Optifiber and was issued to the shop floor as can be seen from the Entry No.60 dated 29.08.2001 in RG-23A Part-1. Regarding 8325Kgs of granules received from M/s GAIL and 1275Kgs of granules from IPCL found in the factory on 10.10.2001, he submits that 9000Kgs granules of M/s GAIL was lying in balance as on 15.09.2001 and 5675kgs procured from B....
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....e and this is a common practice in the trade; the appellant No.1 has received only four consignments from M/s R.K. Trading; whereas the appellant No.1 has purchased a total quantity of 1078MT from M/s GAIL during the period August 2000 to October 2001, purchase from M/s R.K. Trading was only 9.50MT, as can be seen from the gate register of the appellant No.1; Department while relying on the gate register to establish the case of fraudulent availment of CENVAT credit, ignores the facts recorded in the gate register; it is on record that the goods seized from the premises of R.K. Trading do not match in Batch/ Lot numbers with the goods issued by M/s GAIL; therefore, the allegations of the Department are devoid of any evidence. 7.2. Learned Counsel submits that the Department relies on the statement of Shri Parmeshwar Lal Sharma, Accountant of M/s R.K. Trading; however, even after making a request, opportunity to cross-examine Shri P.L. Sharma and Shri Vijay Kumar Tekriwal was not given in contravention of principles of natural justice and the provisions of Section 9D of Central Excise Act, 1944; Department is oblivious of the fact that the amounts of cash shown to have been withd....
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....stic granules under the guise of job-work to M/s RIC, learned Counsel submits that the Department contends that job-work was not done at the premises, mentioned in the challan, i.e. 5307 Chandrawal Road, Delhi, learned Counsel submits that the job-work could not be done due to electricity problem in the premises; wherever job-work was not completed, charges were deducted; job-work was done in another unit of M/s RIC at 1629, Sohan Ganj, Delhi; there is enough evidence in the form of delivery challans, GRs/ bilties/ST-38 etc; the total material sent for job-work was 2,32,606kgs, out of which, 1,72,060kgs was done of M/s RIC and 60,546kgs was done by others; out of job work challan Nos. 01 to 16 (except 12) belong to job-work done by others whereas the Department claims that all job work were done by M/s RIC. 7.8. Learned Counsel submits that the Department mis-quoted the statement of Shri Ajay Kumar of M/s Ajay Plastic India that plastic granules received from M/s GAIL were diverted to them by the appellant No.1 through M/s R.K. Trading; Shri Ajay Kumar never stated the same; in fact, the material received by the appellant No.1 is not suitable to M/s Ajay Plastic India as they ar....
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.... Mohd. Seth- [1959] 37 ITR 151 (SC) (v) Not allowing cross examination is against principles of natural justice. • CCE Vs New Kishan Cement Pvt. Ltd.- Appeal No. 1226 of 2014 (Guj.-HC) • CIT Vs Ahwinin Gupta, ITA 1264/2008 (Delhi-HC) (vi) Not allowing cross examination is against the provisions of Section 9D of the Central Excise Act, 1944. • Jindal Drugs Pvt. Ltd.- 2016 (340) ELT 67 (P&H) • J&K Cigarettes Ltd.- 2009 (242) ELT 189 (Del.) • CCE Vs Kuber Tobacco India Ltd.- 2016 (338) ELT 113 (Tri. Del.) • Alliance Alloys Pvt. Ltd.- 2016 (338) ELT 749 (Tri. Chan.) • Premier Alloys Ltd.- 2019 (366) ELT 659 (All.) (vi) Penalty on Director of Company not maintainable in every case. • Conic Electronics Pvt. Ltd.- 2004 (173) ELT 490 • Sanjay Gupta- 2004 (172) ELT 58 7.11. Learned Counsel requests to consider the above submissions in respect of the other appeal i.e. Appeal No. E/909/2008-EX (DB) and set aside the penalties. 8. Shri Naveen Bindal appearing on behalf of M/s R.K. Trading Co. and submits that Adjudicating Authority did not consider various submiss....
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....pellant No.1 has diverted the prime purchase from M/s GAIL and purchased seconds material from open market and availed CENVAT credit fraudulently on the strength of invoices issued by M/s GAIL; however, the Department has not bothered to compare the Batch/ Lot numbers of the raw materials; the Batch/ Lot numbers of the materials seized from M/s/ R.K. Trading do not match with that of the material purchased from M/s GAIL and therefore, the entire argument of the Department falls flat. It is also argued that the Department having drawn samples of the so-called raw material used by the appellant No.1 but have not got it tested to ascertain the fact as to whether the same was prime material or otherwise. 11. The appellants also contend that a show cause notice has been issued to M/s R.K. Trading (Appeal No. E/1159/2008) on the same set of investigation and has been dropped by the Adjudicating Authority and the Department has accepted the said order by not preferring to make any further appeal. Under the circumstances, it is not open for the Department to substantiate a case against the appellants on the same set of evidence. The Department has also not considered the fact that the a....
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....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 proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court." 14. We find that Hon'ble Punjab & Haryana High Court observed in the case of Jindal Drugs Pvt. Limited (supra) held that: "15. Once discretion, to be judicially exercised is, thus conferred, by Section 9D, on the adjudicating authority, it is self-evident inference that the decision flowing from the exercise of such discretion, i.e., the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of sub-section (1) thereof, would be ....
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....n order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 19. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely ....
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....ind that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned a....