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2024 (10) TMI 816

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....er-in-Original No.MDUCEX- COM-08 dated 22.12.2017 passed by the fifth respondent Commissioner of CGST & Central Excise. 3. By the impugned orders, the fifth respondent has confirmed the demand proposed in Show Cause Notice No.01/2016-CE dated 01.01.2016 and Show Cause Notice No.33/2017-CE dated 04.04.2017. Operative portion of the impugned orders dated 22.12.2017 reads as under:- ORDER (i) I treat both the firms M/s Annai Poly Packs, registered in the name of Shri. M.Ahamed Ibrahim, and M/s.Banu Poly Packs registered in the name of Smt.Fatima Banu, wife of Shri.M.Ahamed Ibrahim as single manufacturer for the purpose of commuting the Central Excise duty as the proprietor of M/s Annain Poly Packs, who has all control over of both firms and manufacturing and a clearing PP/HM Sheets and Bags from the said two factories in terms of Section 2(f) of Central Excise Act 1944 (which defines "manufacturer") read with condition nos. 2(v) and 2(vii) of the SSI Exemption Notification No. 8/2003-CE dated 01-3-2003 as amended. (ii) I confirm the clubbing of the value of clearances of PP/HM Sheets and Bags that have been manufactured by both M/s Annai Poly Packs and M/s Banua Poly Packs for t....

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....of section 11A of Central Excise Act, 1944. (viii) I appropriate Rs. 3,20,207/- Bank Guarantee amount of M/s.Annai Poly Packs which is 25% on execution of B-11 Bond for Rs. 12,08,826/- the value of seized Poly bags in quantity of 9852.51 kgs. executed at the time of provisional release of said seized goods. (ix) I impose a penalty of Rs. 2,61,31,886/- (Rupees Two Crore Sixty One Lakh Thirty One Thousand Eight hundred and Eighty Six only) on Shri.Ahamed Ibrahim under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of Central Excise Rules 2002 for the suppression of the facts with an intent to evade payment of duty, as discussed supra in detail. (x) I impose a penalty of Rs. 5,000/- (Rupees Five thousand only) on Shri.Ahamed Ibrahim under Rule 27 of the Central Excise Rules 2002, for the breach of Rule 9, in as much as he has not registered his firms APP and BPP even after the actual aggregate value of clearance of PP/HM Sheets and Bags manufactured in APP and BPP exceeded the exemption limit of Rs. 1.5 Crores provided under SSI Exemption Notification No.8/2003 dated 1-3-2003 as amended. (xi) I impose penalty of Rs. 5,000/- (Rupees five thousand only) on Shri. ....

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..... 6. It is submitted that the impugned orders are nullity in view of the decision of the Hon'ble Supreme Court in Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkatta-II, (2016) 15 SCC 785. A reference is made to paragraph 6 from the said Judgment which reads as under:- "6. According to us, not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely 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 i....

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....ed and agreed. 11. I have considered the arguments advanced by the learned Senior Counsel for the petitioners and the learned Senior Standing Counsels for the respective respondents. 12. The impugned order is common in both Writ Petitions. By the impugned orders, the value-based Exemption Notification No.8/2003-CE dated 01.03.2003 for the period from January 2012 to May 2016 was sought to be denied by clubbing the clearance of both units. Both the units are located in the following address:- W.P.(MD) No. Name Address 5447/2018 M/s.Annai Poly Packs No.103/7, Aruppukkottai Road, East of Railway Bridge, Virudhunagar 5501/2018 M/s.Banu Poly Packs No.3/2A, Kullursanthai Road, Virudhunagar. 13. However, statements of the proprietors of the respective units are inculpatory in nature. The impugned orders predominantly placed reliance on the records retrieved from the respective petitioner's premises. The proprietrix of Banu Poly Packs Mrs.Fathima Banu, the petitioner in W.P.(MD)No.5501 of 2018 in her statement dated 28.12.2015 which has been recorded in paragraph 17.3 of the impugned order, has stated as follows:- Statement of Smt. Fatima Banu: 17.3. Smt. M.Fatima Ban....

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....ags with bills; * though he knew the sale of PP bags without bills is an offence as per Central Excise Law, due to stiff competition in the PP Bags market and the unwillingness of the customers to pay such duties he was compelled to adopt the aforesaid practice of selling PP bags without bills; * he has been paying approximately Rs. 1.25 lakhs for Electricity consumption which is being paid once in two months; * he has been using Virgin quality of PP granules in the manufacture of PP Bags. 15. Mr.A.Gnanasekar, the Supervisor-cum-Manager of both the petitioners in his statement which has been recorded in paragraph 17.4 of the impugned order has stated as follows:- Statement of Shri A.Gnanasekar, Accountant 17.4. A statement was recorded from Shri A.Gnanasekar, Accountant and In charge of M/s Annai Poly Packs under Section 14 of the Central Excise Act 1944, on 03.12.2015. In his above statement, Shri A. Gnanasekar has inter-alia stated that * he has been working as In-charge of M/s Annai Poly Packs for past 6 years: * he has involved in the day to day activities such as manufacture, packing and despatches of PP bags: * APP has manufactured PP bags in different sizes ....

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....shed by the Hon'ble Division Bench of this Court in S.Rajendran Vs. The Joint Commissioner of Customs (Preventive) and others vide order dated 30.01.2019 in W.A.(MD)No.1469 of 2018. Relevant paragraphs reads as under:- "30. Therefore, denial of cross-examination of co-accomplice who have allegedly retracted their statements is of no consequence as far as the appellant is concerned. 31. Further, in a quasi-judicial proceeding, a quasi judicial authority is not governed by strict rules of evidence. Charge/case can be proved based on preponderance of probability and other available evidences and documents. 32. We are of the view that in the peculiar facts of the case, it was for the appellant to produce such co-accomplice and elicit their statements as they are not unknown or strangers to the appellant as they were working under him. 33. An order of a quasi judicial officer is sustainable if the finding arrived therein are based on preponderance of probability and other overall evidences and documents on record. Whether the finding arrived in the impugned order is solely based on the statements of co-accomplices or based on preponderance of probability or not is something ....

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....sent for cross-examination if the 1st respondent is of the view that reliance has to be placed on the statement of these persons before passing an order in the said show cause proceeding. 64. Therefore, 1st respondent may inform the petitioner whether it proposes to confirm the demand solely based on the statements of the persons whose statements have been recorded under Section 108 of the Customs Act, 1962 and if that be so, produce them for cross examination by the petitioner. 65. As far as the alleged use of threat while recording statements and subsequent retraction is concerned, there are no records before me. Neither the petitioner nor the respondent have filed copies of statements recorded under section 108 of the Customs Act, 1962. The petitioners have also not filed any copy of letter of retraction. 66. Thus, it cannot be said that guidelines of the Hon'ble Supreme Court in D.K Basu Vs the State of MP referred to supra was violated particularly in the light of absence of any material records/documents to substantiate that threat or coercion was exercised on the petitioners when statements were recorded. As there are no documents to substantiate that the statement....