TaxTMI 
TaxTMI 
2024 (10) TMI 447
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....vision of Shree Raj Exports P. Ltd (herein after referred to as "Yogesh") were manufacturer of "Gutka" under the brand name "GOA 1000" during the period 2004 to August 2007 upon whom duty demand has been confirmed under section 11A(1) of the Central Excise Act, 1944 ("Act" in short) for removal of said goods without payment of duty. M/s. Montage Global Pvt Ltd (herein after referred to as "Montage") and M/s. Balaji Flexi pack (herein after referred to as "Balaji") were inter-alia engaged during the relevant period in manufacturing of Laminate Packings which are used for packing Gutka of Brand name "GOA 1000". M/s. Sachin Perfumery & Cosmetics (herein after referred to as "Sachin") were engaged in manufacturing perfumery compounds used in chewing tobacco, mouth fresheners, agarbatti etc and M/s. Arihant Poly sacks ("Arihant" herein after) were engaged in manufacturing HDPE woven sacks. These are the appellants who have paid duty on the goods manufactured by them however penalty is imposed upon them under Rule 25(1) of the Central Excise Rules, 2002 ("Rules" herein after) mainly on the ground that they have not /incorrectly mentioned names of buyer in the invoices and hence contraven....
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....t of one of the raw materials, lamination packaging, in the absence of evidence of procurement of quantities of other raw materials required for manufacture of the final product and other evidence of consumption of excess electricity and transport of the final products and evidence of buyers of the final products and receipt of payment for the same. He further submitted that most of the persons whose statements have been relied upon have not been examined under Section 9D of the Central Excise Act 1944 and not produced for cross examination and they did not appear for cross examination. The Commissioner has denied cross examination of 10 persons out of 25 persons requested on entirely incorrect grounds,it is vehemently argued that it is not for the Commissioner to choose the witnesses who need to be cross- examined or to decide on the need felt to cross-examine witnesses. 3. On the other hand, Shri Deepak Kumar, learned special counsel, appearing for the revenue relied upon statements of various persons in support of the case of revenue that total quantity of laminate packing of 1944 MT by Balaji and Montage to various parties were non-existent and the same were made to Yogesh o....
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....ersely 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. As far as the Tribunal is concerned, we find 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 ex-factory 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 ....
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....so observed that though it cannot be denied that the right of cross-examination in any quasi judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in Section 9D of the Central Excise Act, 1944. The circumstances referred to in Section 9D, as also in Section 138B, included circumstances where the person who had given a 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 and expense which, under the circumstances of the case, the Court considers unreasonable. It is clear that unless such circumstances exist, the Noticee would have a right to cross-examine the persons whose statements are being relied upon even in quasi judicial proceedings. The Division Bench also observed as under :- "29. Thus, when we examine the provision as to whether the prov....
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....mmissioner, particularly in respect of procurements of packing material by 8 other franchisees who were also manufacturing Goa 1000 Gutka. If the same brand goods namely Goa 1000 were being manufactured by 8 other franchisee holders, the demand of duty based on two laminate packing suppliers namely Balaji and Montage on the premise that the same has been procured by Yogesh only requires to be dealt with considering the submissions advanced in this respect by Yogesh, which are absent in the impugned order. In view of above, matter is required to be remitted to adjudicating authority for fresh decision after considering the above judgements and various submissions advanced by Yogesh. 4.2 At this juncture, it is observed that, the appeals of other appellants namely, Balaji, Montage, Arihant and Sachin who have cleared goods on payment of duty and on whom penalty under Rule 25(1) of Rules is imposed, can be taken up as it appears that the same can be decided irrespective of alleged clandestine removal of goods by Yogesh is established. In respect of these appellants, it has been held by the Commissioner that although investigation has not alleged offence of any clandestine removals ....
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.... of this Act or of the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11AC, shall also be liable to pay a penalty equal to the duty so determined. For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short-levied or short-paid or the refund is erroneously granted by reasons of fraud, collusion or any willful misstatement or suppression of facts. If these ingredients are not present, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to the provisions of Section 11AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules." 4.4 The said judgement of Saurashtra Cement was considered and followed by Hon'ble Delhi High Court in the case of Commissioner of Central Excise Delhi-II Vs. GanpatiRollings - 2016 (338) ELT 587 (Del.) the relevant paras are as under : 9. The opening words of Rule 25 is "Subject to the provisions of Sect....
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.... not in dispute that the show cause notice („SCN‟) made no reference to Section 11AC and, therefore, there was no occasion to adjudicate the issue of imposition of the penalty under Section 11AC of the Act. 11. In Prince MultiplastPvt. Ltd.(supra) the Gujarat High Court was considering Rule173Q of the Central Excise Rules, 1944 (CE Rules, 1944) which begins with the expression "subject to the provisions contained in Section 11AC of the Act and sub-rule (4) of Rule 57-I and sub-rule (6) of Rule 57-U". After referring to the judgment of the Supreme Court in S.N. Chandrashekhar v. State of Karnataka, (2006) 3 SCC 208 and Ashok Leyland v. State of Tamil Nadu, (2004) 3 SCC 1, the Gujarat High Court interpreted Rule 173Q as under : "20. Thus as laid down by the Supreme Court the use of the words "subject to" has reference to effectuating the intention of the law and the correct meaning, is "conditional upon". Rule 173Q opens with the words "subject to the provisions contained in Section 11AC of the Act and sub-rule (4) of Rule 57-I and sub-rule (6) of Rule 57- U". Thus, confiscation of goods and levy of penalty under Rule 173Q of the Rules is conditional upo....