AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1435
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....fter referred as the appellants). The Show Cause Notice proposed recovery of Central Excise duty to the tune of Rs.2,55,37,838/- including Education Cess and S&HE Cess, for the period from 2000-01 to 2003-04, along with interest and imposition of penalty under Section 11AC of the Central Excise Act, 1944. The allegation against the appellants were removal of excisable goods from the factory under the cover of private challans and without payment of Duty. 2.1. The Show cause Notice was adjudicated by the Commissioner of Central Excise, Kolkata-II Commissionerate vide Order-in-Original No. 62/Commissioner/Ce/Kol-11/Adjn/2006(2005-06) dated 24.01.2006 confirming the demands raised in aforesaid Show Cause Notice, along with interest, and imposing an equal amount of penalty on the appellant-company, namely, M/s. Superb Plastic Thermo Forming Private Limited and imposing personal penalty of Rs. 10,00,000/- on each of the other appellants herein, namely, Shri Rajendra Kumar Goenka, Shri G.C. Manipuria, Shri Harshad Ghelani and Shri Bimal Kumar Khetwat, being the Directors of the appellant-company. 2.2. On appeal, the Tribunal, Kolkata has passed order No.S-184-188/A-104-108/Kol/07 s....
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....ed the following list of documents as relied upon documents in the show cause notice, although they have not supplied any of the said documents to the appellant: - "a) Statement of Sri H. Ghelani, Director of M/s. Superb Plastic Thermoforming Pvt. Ltd. dated 07.03.05. b) Statement of Sri R.P. Singh dated 09.03.05, authorized representative and authorized Central Excise signatory of M/s. Superb Plastic Thermoforming Pvt. Ltd c) Statement of Sri Bimal kumar Khetwat dated 18.03.05, Director of M/s. Superb Plastic Thermoforming Pvt. Ltd. d) Statement of Sri Sandip Saha, dated 10.03.05 authorized representative of M/s. Raipur Kolakta Road Carriers, Kolkata. e) Statement of Sri Srinivas Agarwal dated 10.03.05, authorized representative of M/s. Ranilia Carrying Corporation, Kolkata. f) Statement of Sri Subir Kumar Mukherjee dated 10.03.05, authorized representative of M/s. Calcutta Agartala Roadways, Kolkata. g) Statement of Sri Santosh Kr. Biswas dated 15.03.05, authorized representative of M/s. Bengal Transport Agency, Kolkata. h) Statement of Sri Sisir Kumar Patra dated 16.03.05, authorized representative of M/s. N....
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....he same were only for quotation purpose. 4.2. The appellants further submit that they requested the adjudicating authority to produce the original and legible copies of the documents relied upon in the Notice; however, the department failed to produce original copies but passed the adjudication order which was set aside by the Tribunal with a direction to the Department to provide those to them, but the Department again passed the adjudication order on 26.10.2017, without providing the legible copies of the relied upon documents. 4.3. It is the appellants' contention that demands have been confirmed against them on the basis of some statements recorded from third parties, such as transporters and the suspected buyers of the goods from the appellant company. They argue that these statements have not been tested as mandated under Section 9D of the Central Excise Act and hence said statements have no evidentiary value and the same cannot be relied upon in the current proceedings against the appellant. In support of this claim, the appellants relied on the following decisions: i. The decision of the Hon'ble Punjab and Haryana High Court in the case of G-Tech Industri....
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....t in the earlier round, this Tribunal had observed that copies of the documents annexed at Pages 36 to 60 of the Appeal Memorandum, are not legible copies and accordingly, directed for supply of the same and remanded the case for fresh adjudication. Also while remanding the case, a time frame was fixed for re-adjudication and the said order was passed in the presence of Representative of the Appellant as well as the Revenue. The Revenue has unhesitatingly agreed to supply legible copy of the documents to the Appellants. We find that the Appellant had approached the Department on 5th/6th March, 2007 for Inspection/supply of the documents as per direction of this Tribunal. However, the documents were not made available to the Appellants either on the said date or thereafter, and the impugned order was passed ex-parte. Also, from the observations of the Id. Commissioner, we find that letters were only exchanged between the Revenue and the Appellants, but at the end the required copy of documents were not made available to the Appellants. We are constrained to note that no sincere efforts have been taken by the Department for implementation of the direction of this Tribunal and the lit....
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....document does not indicate any clandestine clearance of goods by the appellant-company herein. It is apparent that the Ld. Adjudicating authority only inferred that the entries mentioned the said documents indicate clandestine clearance on the basis of certain statements recorded from the transporters and one of the purchasers. However, we observe that these statements have not been tested as mandated under Section 9D of the Central Excise Act and hence, the said statements have no evidentiary value and cannot be relied upon in the current proceedings against the appellants. This view stands supported by various decisions of the Hon'ble High Courts and Tribunals. 7.4. In this context, we refer to the decision of the Hon'ble Punjab and Haryana High Court in the case of G-Tech Industries Vs. Union of India [2016 (339) ELT 209 (P & H)], wherein it has been held that the Adjudicating Authority should first examine the person whose statement is to be relied upon to form an opinion whether the statement is to be admitted as an evidence. After that if that statement is to be admitted, then an opportunity is to be given for cross examination. The relevant paragraphs of the decision ....
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....er 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. 6. Section 9D 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.L.T. 189 (Del.) = 2011 (22) S.T.R. 225 (Del.). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. 7. There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 8. 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 G....
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....Others in SLP (C) No. 21831/1994, dated 3-1-1995 [since reported in 1995 (75) E.L.T. A177 (S.C.)], wherein it was held that the order passed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challenge by the assessee, if aggrieved thereby. 13. If none of the circumstances contemplated by clause (a) of Section 9D(1) exists, clause (b) of Section 9D(1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), viz. (i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and (ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of ju....
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....ement, 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. 17. 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 re-examination. 18. 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 cross-examination, can arise. 19. Clearly, if this procedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misg....
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....under Section 14 of the Act and referred to in the show cause notices issued to Ambika and Jay Ambey, it would be incumbent on the Revenue to apply to Respondent No. 2 to summon the makers of the said statements, so that the Revenue would examine them in chief before the adjudicating authority, i.e., before Respondent No. 2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the makers of any of the statements on which the Revenue chooses to rely, would have to be made available to the assessee, i.e., to Ambika and Jay Ambey in this case. (iii) Statements recorded during investigation, under Section 14 of the Act, whose makers are not examination-in-chief before the adjudicating authority, i.e., before Respondent No. 2, would have to be eschewed from evidence, and it would not be permissible for Respondent No. 2 to rely on the said evidence while adjudicating the matter. Neither, needless to say, would be open to the Revenue to rely on the said statements to support the case sought to be made out in the show cause notice. (iv) Once examination-in-chief, of the makers of the statements, on whom the Revenue seeks to rely in adjudicat....
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....is obliged under the law to examine him and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. Therefore, we would say that even mere recording of statement is not enough but it has to be fully conscious application of mind by the adjudicating authority that the statement is required to be admitted in the interest of justice. The rigor of this provision, therefore, could not be done away with by the adjudicating authority, if at all, it was inclined to take into consideration the statement recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person 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 ....
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....tails. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. 14. In the instant case, no investigation was made by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties. The statement of so called buyers, namely M/s. Singhal Cement Agency, M/s. Praveen Cement Agency; and M/s. Taj Traders are based on memory alone and their statements were not supported by any documentary evidence/proof. The mischievous role of Shri Anil Kumar erstwhile Director with the assistance of Accountant Sri Vasts cannot be ruled out. 15. In view of the above, we are of the opinion that when ther....
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....ctured and validly cleared on payment of duty; (g) statements of buyers with some details of illicit manufacture and clearance; (h) proof of actual transportation of goods, cleared without payment of duty; (i) links between the documents recovered during the search and activities being carried on in the factory of production; etc. Needless to say, a precise enumeration of all situations in which one could hold with activity that there have been clandestine manufacture and clearances, would not be possible. As held by this Tribunal and Superior Courts, it would depend on the facts of each case. What one could, however, say with some certainty is that inferences cannot be drawn about such clearances merely on the basis of note books or diaries privately maintained or on mere statements of some persons, may even be responsible officials of the manufacturer or even of its Directors/partners who are not even permitted to be cross-examined, as in the present case, without one or more of the evidences referred to above being present. In fact, this Bench has considered some of the case-law on the subject in Centurian Laboratories v. CCE, Vadodara [2013 (....
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....ce of the goods in this case. Accordingly, we hold that the allegation of clandestine clearance against the appellant-company cannot be substantiated on the basis of mere assumptions and presumptions and hence we set aside the demands of central excise duty along with interest confirmed against the appellant in the impugned order. 9. Regarding imposition of penalties on the appellant-company as well as the Directors of the appellant-company (the other appellants before us), we find that the Department has not been able to adduce any evidence to establish their involvement in the alleged offence. As in view of the discussions in the preceding paragraphs, we have held the allegation of clandestine clearances against the appellant-company to be unsubstantiated, we hold that the penalty imposed on all the appellants herein are not sustainable and hence, we set aside the same. 10. In the result, we set aside the impugned order and allow the appeals filed by the appellants, with consequential relief, if any, as per law. (Order pronounced in the open court on 31.10.2025) ============= Document 1 laperla Plastic Thermoforming (1) at. $ 1 M. 10 W Period . 246 Party Name ....