TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1635
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....the appellant is a private limited company, engaged in the business of manufacture and sale of aluminium circles of varying size and thickness falling under tariff entry 7606 9110 of the First Schedule to the Central Excise Tariff Act, 1985. The appellant was duly registered under the provisions of the Central Excise Act and the Rules framed thereunder and were holding Central Excise Registration Certificate bearing No. 19AACCE2817Q1Z7. At its factory situate at J. L. No. 15, Vill.- Palarah, P. O. Behati, Delhi Road, District: Hooghly, the appellant manufactured aluminium articles. The appellant used to utilize, amongst others, aluminium ingots as a major input in the manufacturing process. The appellant availed CENVAT Credit on such inputs of aluminium ingots consumed in the course of manufacturing. The appellant used to sell the low-quality Aluminium Dross, scrap and cuttings arising in the course of manufacturing, which they considered as nondutiable. The appellant maintained its Central Excise records and books of accounts and discharged Central Excise duty on outward clearances of manufactured aluminium circles and filed periodic Central Excise returns, including for the perio....
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....CGST and CX Commissionerate, Howrah, who vide an Order-in- Original dated 30.01.2018, confirmed all the demands of Central Excise duty/cenvat credit aggregating to Rs. 1,75,50,937/- proposed in the notice along with interest and imposed equivalent amount of duty confirmed as penalty. The Ld. adjudicating authority also imposed personal penalties upon the co-noticees, namely, Shri Anubhav Agarwal and Shri Proshant Agarwal. The adjudicating authority also ordered for appropriation of the amount of Rs. 22,85,985/- paid by the appellant during the course of investigations towards the confirmed demands. 2.4. On appeal, the Ld. Commissioner (Appeals) upheld the demands of duty, interest and penalties confirmed in the Order-in-Original. Aggrieved against the impugned order, the appellants have filed these appeals. 3. The appellants submits that the investigation has not gathered any evidence in support of the allegation of clandestine clearance of the goods manufactured by them. The charge of clandestine removal cannot be made without any cogent or affirmative evidence. The appellant stated that the alleged incriminating evidences recovered during the course of investigations were u....
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....presentative of the entire lot of disputed goods and that the Department should have considered the average weight/rate for determining duty liability, if at all. 3.3. The appellant also objected to the reliability and accuracy of the purported stock taking exercise which formed basis of the demands on shortage of finished goods and raw materials. In this regard, they wanted to cross-examine the 2 panchas who had witnessed the search operations, but the same was not accorded by the lower authorities. 3.4. The appellant also advanced submissions on the point of limitation. 4. The written submissions made by the appellant at the time of personal hearing are summarized as under: (A) There is no substantive evidence on record establishing clandestine removal In the present case there can be no dispute about the following position: (a) The was no evidence to establish actual clandestine clearance or any attempted clandestine clearance; (b) No discrepancy could be detected as regards consumption of inputs or excess electricity vis-à-vis statutory records, for utilization in clandestine manufacture; (c) There was neither any seizure of offe....
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.... 4.3. From a combined reading of the show cause notice dated 19.07.2016 and the impugned order, it is apparent that records of physical stock taking and weighment details are non-relied upon documents, which is astonishing. It was incumbent on the adjudicating authority/appellate authority to call for the relevant records of physical stock taking and weighment, verify the factual position and record his findings on the issue of shortages. Nothing turned on signature having been obtained from the Company's staff on the stock verification reports dated 28.01.2015. In the absence of records of physical stock taking and weighment details of purported stock verifications, determination of shortages deserved to be discarded, notwithstanding that signature of the appellant's staff and personnel had been obtained on the stock verification reports. In support of their contentions, the appellant relied on the following decisions (i) M/s Scan Sponge Iron Ltd. v. Commissioner of Central Excise, Bhubaneshwar-II, reported in 2022-TIOL-817- CESTAT-KOL and (ii) Jai Balaji Industries Ltd. v. Commissioner, reported in 2021 (378) ELT 674 (T); (D) Hand-written chall....
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.... 5.1. In the present case, No Certificate U/s 36B(4) from person occupying responsible position in relation to operation of the device is obtained. In this regard the Appellants relied on the decision of the Tribunal in the case of CCE Vs. Shivam Steel Corporation. 5.2. Statement of person/witness relied on in the Notice are not examined in chief and not be allowed Cross Examination in accordance with Section 9D. Hence, such statement cannot be relevant piece of material. In support of this contention, the Appellants relied on the following decisions:- (i) Hitech Abrasives P. Ltd. Vs. CCE (2018) 362 ELT 96 (CHH.) [Para 2 (last 4 lines), Para 9.1, 9.4, 9.5]; (ii) Ambica International Vs. UOI 2016-TIOL- 1238-HC-P & H.CX [Para 25-27]; (iii) Andaman Timber Industries Vs. CCE 2017 (50) STR 93 SC) [Para 6]; 5.3. No tax can be demanded on matching of some entries in private records with statutory records/Book of Accounts. The Appellant relied on following decisions, in support of this contention: (i) Sharma Chemicals Vs. CCE (2001) 130 ELT 271 (Tri. Kol.)[Para 14]; (ii) Suzuki Synthetics P. Ltd. Vs. CCE (2015) 318 ELT 487 (Tri. Ahmd.)[....
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....count of shortages in finished goods, we observe that the physical stock taking and weighment details are not relied upon in this proceedings. The appellant questioned the method of stock taking and contended that physical stock taking was not done. In this regard, we observe that when the document related to physical stock taking has not been relied upon, then it is incumbent upon the adjudicating authority/appellate authority to call for the relevant records of physical stock taking and weighment, and verify the factual position and record his findings on the issue of shortages, which has not been done in this case. We also observe that more than 39077 kgs of Aluminium Circle have been weighed within a short span of few hours, which was a physical impossibility. We also observe that the documents available on record does not indicate that actual weighment of all the stock of finished goods have been conducted to arrive at the shortages, if any. Thus, we find merit in the contentions of the appellant regarding the actual weighment of the stock. Also, we observe that the investigation has not brought in any evidence to conclude that to whom the shortages found were clandestinely cl....
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....documents retrieved from the private records are admissible evidences only when the mandatory procedure prescribed in Section 36B is followed This view is supported by the observation of the Hon'ble Apex Court in the case of Anvar P.V. Vs. P.K. Basheer reported at 2017 (352) ELT 416 (SC). Thus, we observe that unless the conditions of Section 65B (2) of the Evidence Act, which is parimateria with Section 36B (4) of the Central Excise Act are complied with, no reliance can be placed on any document recovered from the private records. Admittedly, the procedure set out in Section 36B has not been followed in this case. Thus, following the judgement of the Hon'ble Apex Court and the other decisions cited by the appellant supra, we hold that the data resumed from the private records alone cannot be relied upon to demand duty, without any corroborating evidence. 9. The Appellant contended that Statements recorded during the course of investigation cannot be relevant without testing the same under Section 9D. The provisions of Section 9D of the Act is mandatory and unless the prescriptions of Section 9D are complied, the testimony of witness cannot be treated as relevant piec....
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....he procedure contemplated in section 9D(1)(b) of the Central Excise Act. The judgment also highlights the reason why such an elaborative procedure has been provided in section 9D(1) of the Central Excise Act. It notes that a statement recorded during inquiry/investigation by an Officer of the department has a possibility of having been recorded under coercion or compulsion and it is in order to neutralize this possibility that the statement of the witness has to be recorded before the adjudicating authority. The relevant portions of the judgment are reproduced below: 15. A plain reading of sub-section (1) of Section 9D of the Act makes it clear that clauses (a) and (b) of the said sub-section set. out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. 16. Section 90 of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. v. CCE, 2009 (242) E.LT. 189 (Del.). Para 12 of the said decision cle....
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....estigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The ringour of this procedure is exempted only in a case in which ane or more of the handicaps referred to in dause (a) of Section 90(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 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 dause (b) of Section 90(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, 1672, clearly sets out the sequence of evidence, in ....
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....gh Court held: 9.3 A conjoint reading of the provisions therefore reveals that 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 (Adjudicating Authority) forms an court that to opinion having regard the circumstances of the case, the statement should be admitted in the evidence, in the interest of justice. 9.4 The legislative scheme, therefore, is to ensure that the statement of any person which has been recorded during search and seizure operations would become relevant only when such person is examined by the adjudicating authority followed by the opinion of the adjudicating authority then the statement should be admitted. The said provision in the statute book seems to have been made to serve the statutory purpose of ensuring that the assessee are not subjected to demand, penalty interest on the basi....
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....ab and Haryana." (emphasis supplied) 26. In Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd. [2021 (375) E.L.T. 545 (Del.)] decided on 01.06.2020, the Delhi High Court examined the provisions of sections 108 and 1388 of the Customs Act. The department placed reliance upon the statements recorded under section 108 of the Customs Act. The Delhi High Court held that the procedure contemplated under section 1388(1)(b) has to be followed before the statements recorded under section 108 of the Customs Act can be considered as relevant. The relevant paragraphs of the judgment of the Delhi High Court are reproduced below: "76. We are not persuaded to change our view, on the basis of the various statements, recorded under Section 108 of the Act, on which the Learned ASG sought to rely. Statements, under Section 108 of the Act, we may note, though admissible in evidence, acquire relevance only when they are, in fact, admitted in evidence, by the adjudicating authority and, if the affected assessee so chooses, tested by cross-examination. We may, in this context, reproduce, for ready reference, Section 1388 of the Act, thus: A Division B....
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.... an opportunity to cross examine the person who made the statement but that comes only after the statement is, in the first place, after examination by the adjudicating authority, admitted in evidence. This has not been done in respect of any of the 35 statements. Therefore, all the statements are not relevant to the proceedings. 15. It has been held in a catena of judgments including Jindal Drugs Pvt. Ltd. versus Union Of India [2016 (340) E.L.T. 67 (P&H)] that section 9D is a mandatory provision and if the procedure prescribed therein is not followed, statements cannot be used as evidence in the proceedings under Central Excise Act. 16. Therefore, the 35 statements relied upon in the SCN are not relevant and hence also not admissible." (emphasis supplied) 28. It, therefore, transpires from the aforesaid decisions that both section 9D(1)(b) of the Central Excise Act and section 1388(1)(b) of the Customs Act contemplate that when the provisions of clause (a) of these two sections are not applicable, then the statements made under section 14 of the Central Excise Act or under section 108 of the Customs Act during the course of an inquiry under the Acts ....
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....well settled law that the charge of clandestine removal being quasi-criminal in nature, must be is proved with tangible evidences, which are conspicuously absent in the instant case. Also there is no evidence of clandestine clearance of raw materials on which CENVAT Credit has been availed by the appellant and hence the demand of reversal of CENVAT Credit is also not sustainable. Accordingly, we hold that the demands of central excise duty confirmed in the impugned order is not sustainable. 10.2. As the demand of central excise duty is not sustained, the question of demanding interest or imposing penalty does not arise and hence we set aside the same. 11. The appellant submitted that during the course of investigation, they have paid an amount of Rs. 22,85,985/-, which has been appropriated by the adjudicating authority in the impugned order towards the duty liability confirmed in the impugned order. As the demand in this case is not sustained, we hold that the appellant would be eligible for the refund of the same, subject of verification of the issue of unjust enrichment. 12. Regarding the imposition of penalty on Shri Proshant Agarwal, we observe that penalty has been i....