TaxTMI 
TaxTMI 
2025 (12) TMI 362
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....penalty imposed on him by way of the impugned Order-in-Original dated 10.03.2016. 1.2. As both the appeals involve a common issue, they are taken up together for decision by a common order. 2. The facts of the case are that the appellantcompany is a medium scale integrated steel plant engaged in the manufacture of excisable goods viz. TMT Bar, MS Round, MS Flat etc. falling under Chapter 72 of the CETA, 1985. The appellant, during the period 2010-11 and 2011-12, removed 2490.88 MT of MS Round and MS Flat on ex-factory sale basis under 103 & 101 numbers of Central Excise invoices to one M/s. Satabdi Tie-up Pvt. Ltd. on payment of Central Excise duty and the appellant has received payments from the said buyer by Account Payee Cheques. 2.1. A team of officers of Kolkata-III Commissionerate visited the factory premises of M/s Satabdi Tie-Up Pvt. Ltd., 17, Nabin Chandra Das Road, Kolkata-700090, West Bengal (hereinafter referred to as 'M/s. Satabdi') and the residence of Shri Sudarshan Kothari, the Director of the said company, in connection with an investigation against M/s Satabdi who were registered with Central Excise Department. It was alleged that M/s. Satabdi was involve....
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....s instead of physically delivering the goods to M/s. Satabdi, without following Central Excise Rules and procedures, resulting in supply of unaccounted finished goods in the open market without payment of Central Excise Duty. 3. Accordingly, a Show Cause Notice dated 24.04.2014 was issued to the appellant, wherein it was proposed to recover central excise duty amounting to Rs. 71,14,525/- (inclusive of cesses) from the appellant in terms of Section 11D of Central Excise Act 1944 along with interest under Section 11DD of the said Act. The Notice also proposed recovery of Rs. 71,14,525/- (inclusive of cesses) from the appellant for clandestine manufacture and clearance of 2490.880 M.T of M.S Round & M.S. Flats, in terms of Section 11A(4) of Central Excise Act 1944 along with appropriate interest under section 11AA of the Act. Penalties under Section 11AC of Central Excise Act, 1944 read with Rule 26 of Central Excise Rules, 2002 were also proposed. 3.1. On adjudication, the Ld. Commissioner has confirmed the recovery of Rs. 71,14,525/- from the Appellant in terms of Section 11D of Central Excise Act 1944. The said amount of duty already paid by the appellant has been appropriat....
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....his case is 2010-11 and 2011-12. The Show Cause Notice was issued on 24.04.2014, and hence, the extended period of limitation cannot be invoked in this case. xi. Separate penalty on the Director, Shri Jugal Kishor Agarwal, is not maintainable. xii. The proceeding is not maintainable either on merit or on the point of limitation. 4.1. In support of their contention, the appellants have relied on the following decisions and submitted the gist in respect thereof: - (a) Gonterman Peipers (India) Ltd. [Order-in Appeal No. 35-37/Kol-VII/2009 dated 30.09.2009]: In this case Credit was taken on the basis of the Dealer's Invoice where the Dealer himself had stated that no goods were supplied. On contrary, the appellant's Managing Director stated that they received the goods, payments were made through A/c Payee Cheques, the inputs were used in the manufacture of their final products and final products were cleared on payment of duty and there was по evidence of procurement of inputs from any other sources. Inference on the basis of fake number of vehicles cannot be held to be sufficient credit allowed by allowing the appeal. (paras 7-14) (b)....
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....aside the impugned order and allowing the appeals filed by them. 5. The Ld. Authorized Representative of the Revenue submits that the demands have been confirmed on the basis of documentary evidences recovered from M/s. Satabdi, the receiver of the goods. It is his submission that the investigation conducted at the end of M/s. Satabdi has categorically established that the appellant has only supplied invoices and no goods were received by M/s. Satabdi. Accordingly, he justified the demands of central excise duty confirmed and penalties imposed vide the impugned order. 6. Heard both sides and perused the records. 7. We observe that the entire proceedings have been initiated against the appellants on the basis of another investigation initiated by the officers of Kolkata-III Commissionerate against M/s. Satabdi, who is the receiver of the goods supplied by the appellant-company. In his statements, Shri Sudarshan Kothari, Director of M/s Satabdi, admitted that his company had resorted to paper transactions, i.e., received only invoices without actual receipt of goods. However, we observe that Shri Ranen Sarkar, authorised representative of the appellant herein has categorical....
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....he has declared that he had no transporting business under the vehicle No. WB41C 6964, WB 41C 6963 and WB41D 1251 with M/s. Satabdi Tie-up Pvt. Ltd. and offer your comments? Ans: I cannot comment because we have sold the entire goods to M/s. Satabdi Tie-up on ex-factory basis." 7.1. From the Questions and Answers reproduced above, we find that the appellant has sold the goods on ex-factory basis. Since, transportation was the responsibility of the customer, they are not responsible for the discrepancy if any, found on the vehicle numbers said to have been used to transport the said goods sold to M/s. Satabdi. They are not responsible if the customer has not used the said goods for manufacture of finished goods in their factory. They have received the payments for the sale through Account Payee Cheques and discharged duty on the said sale. The duty collected from the customer has also been deposited in the Government account. Thus, we agree with the submission that the appellant cannot be held responsible for the discrepancy, if any, found at the end of the customer. 7.2. In this regard, we observe that there is no dispute that the appellant has discharged duty on the....
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....M/s. Satabdi by issuing Notice dated 25.06.2013, which have been confirmed vide Orderin-Original dated 30.10.2018. 8.1. We find that the Revenue has also alleged that the appellants have not actually supplied the 2490.880 M.T of M.S Round & M.S. Flats to M/s. Satabdi. The case of the Department is that the appellant had adopted the modus operandi of sending the goods to someone and cenvatable invoices were made available to M/s.Satabdi; on the strength of those illegal invoices M/s Satabdi had taken CENVAT credit without receiving the goods physically. We take note of the fact that a separate Notice has been issued to M/s. Satabdi for recovery of the allegedly wrongly availed credit. The said proceedings resulted in disallowance of the CENVAT Credit availed by M/s. Satabdi vide Order-in-Original dated 30.10.2018. Thus, we observe that the allegation against the appellant that they have clandestinely manufactured and cleared 2490.880 M.T. of M.S Round & M.S. Flats to some other customers other than M/s. Satabdi is not substantiated. Thus, we also find that this allegation of clandestine manufacture and clearance of 2490.880 M.T. of M.S Rounds & M.S. Flats against the appellant is....
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....rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) when the person who made the 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 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 provision 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." 5. 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....
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....ub-section, which are contained in clauses (a) and (b) thereof. 11. Clause (a) of Section 9D(1) refers to the following circumstances : (i) when the person who made the statement is dead, (ii) when the person who made the statement cannot be found, (iii) when the person who made the statement is incapable of giving evidence, (iv) when the person who made the statement is kept out of the way by the adverse party, and (v) when the presence of the person who made the statement cannot be obtained without unreasonable delay or expense. 12. 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 pregnable to challenge. While the judgment of the Delhi High Court in J&K Cigarettes Ltd. (supra) holds that the said challenge could be ventilated in appeal, the petitioner has also invited attention to an unreported short order of t....
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....dates 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. 16. 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 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 clause (b) of Section 9D(1). For th....
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....ction 9D of the Act, by holding that attendance of the makers of the said statements could not be obtained for any of the reasons contemplated by the said clause. That being so, it was not open to Respondent No. 2 to rely on the said statements, without following the mandatory procedure contemplated by clause (b) of the said sub-section. The Orders-in-Original, dated 4-4-2016, having been passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, it has to be held that said Orders-in-Original stand vitiated thereby. 23. The said Order-in-Original, dated 4-4-2016, passed by Respondent No. 2 is, therefore, clearly liable to be set aside. 24. In view of the above facts and circumstances, the impugned Order-in-Original dated 4-4-2016 passed by respondent No. 2 stands set aside. Resultantly, the show cause notice issued to the petitioner is remanded to respondent No. 2 for adjudication de novo by following the procedure contemplated by Section 9D of the Act and the law laid down by various judicial Authorities in this regard including the principles of natural justice in the following manner :- (i) In the event that the Revenue....
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....ipur [2018 (362) E.L.T. 961 (Chattisgarh)], wherein the Hon'ble High Court has observed that unless the substantive provisions contained in Section 9D of the Act are complied with, a statement recorded during search and seizure operations cannot be treated as a relevant piece of evidence. The relevant paragraph of the aforesaid judgement is as under: - "9.5 Undoubtedly, the proceedings are quasi criminal in nature because it results in imposition of not only of duty but also of penalty and in many cases, it may also lead to prosecution. The provisions contained in Section 9D, therefore, has to be construed strictly and held as mandatory and not mere directory. Therefore, unless the substantive provisions contained in Section 9D are complied with, the statement recorded during search and seizure operation by the Investigation Officers cannot be treated to be relevant piece of evidence on which a finding could be based by the adjudicating authority. A rational, logical and fair interpretation of procedure clearly spells out that before the statement is treated relevant and admissible under the law, the person is not only required to be present in the proceedings before the a....
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....unsel for the parties and gone through the material available on record, from which it appears that Shri Shubhashis Dev, Government Examiner of questioned documents, Shimla gave his written opinion dated 12-6-1998, wherein he has stated that "the documents of this case have been carefully and thoroughly examined. The enclosed writings and signatures stamped and marked were all written by one and the same persons". 11. From the above, it appears that all the documents were written by one and the same persons, though the dates and the name of the parties are different. When it is so then the genuineness of the documents cannot be accepted. 12. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not ....
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....nces. The relevant observations of Tribunal in the said case are reproduced below for ease of reference: - "40. After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well-settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenue which mainly are the following: (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions; (ii) Evidence in support thereof should be of: (a) raw materials, in excess of that contained as per the statutory records; (b) instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty; (c) discovery of such finished goods outside the factory; (d) instances of sale of such goods to identified parties; (e) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him; (f) use of elec....