TaxTMI 
TaxTMI 
2025 (4) TMI 1771
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....ral Excise Tariff Act, 1985. Their factory was visited by the officers on 21.04.2003, who conducted various checks and verifications. As a result, shortage of 7618 kg. imported raw material viz. "Bright Polyester Spin Draw Yarn" was detected. Shri Altaf Aman Bagad Partner of the appellant unit, in his statement recorded on 21-04-2003 confessed that short found goods stand cleared by them without payment of duty to M/s H N Textiles, Surat. 1.2 In follow-up investigation, statement of Shri Yashin Imran Bhura, Proprietor of M/s. H N Textiles was recorded on 29.03.2004 wherein he admitted having purchased the 7618 Kgs Bright Polyester Spin draw yarn from Appellant without cover of any Central Excise documents and without payment of duty. On further scrutiny of records seized under panchnama dated 21.04.2003, officers found that in Bond-Register while debiting the quantity of raw materials issued, a calculation mistake of 2000 Kg. was committed by the appellant. Hence as per the department there was shortage of 9618 kgs of raw materials instead of 7618 kg. 1.3 On the basis of separate enquiry in connection to M/s Neeraj Exim Pvt. Ltd., West Bengal, it was revealed that Appellant h....
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....02. The Learned Advocate Shri J.C. Patel and Ms. Shamita Patel, Advocates appearing for the appellant submit that the show cause notice dated 07.04.2008 demanding duty for the period April 2003, was not served on the Appellant in the manner required by Section 37C(1) (a) of the Central Excise Act 1944 (Section 153 (1) (a) of Customs Act 1962), within the limitation period of one year nor with the extended period of limitation of five years under the Proviso of said Section 11A(1) and Section 28(1). It was only on 07.03.2014, that the Appellant learnt about a personal hearing notice pasted at the factory gate in respect of the said show cause notice dated 07.04.2008. The Appellant thereupon obtained a copy of the said show cause notice dated 07.04.2008 from the adjudication cell. The said show cause notice was therefore, for the first time received by the Appellant only in March 2014 which is even beyond the extended period of limitation of five years. Since the said Show Cause notice was not served on the Appellant within the normal limitation period of one year nor the within the extended limitation period of five years, the demands made by the said Notice are barred by time. 2....
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....he same, nor evidence of transport of the said 2000 kgs nor evidence of any payment received by the Appellant for the same. The demand for duty on the said 2000 Kgs is therefore clearly unsustainable in law. 2.4 As regards 2,49,175 L. Mtrs of "Polyester Gray Fabrics" cleared against CT-3 Certificate No. 22 dated 12.04.2003 to Neeraj Exim Pvt. Ltd. he submits that it is an admitted position that Superintendent of Central Excise, Kolkata having Jurisdiction over Neeraj Exim Pvt. Ltd. issued Re -warehousing Certificate in respect of the said goods. The allegation that same had not been received in the factory of Neeraj Exim Pvt. Ltd. cannot be a ground for demanding duty thereon from the Appellant. Appellant's partner Altaf Aman Bagad, has in his statement dated 13.07.2004 stated that sales of Grey Fabrics to Neeraj Exim Pvt. Ltd. against the said CT-3 Certificate were made Ex-factory and delivered at the Appellant's factory gate and freight was paid by Neeraj Exim Pvt. Ltd. Appellant had received payment for the said sales by cheque. Shri Puneet Rungta, authorized representative of Neeraj Exim Pvt. Ltd. has in his statement dated 24.07.2003 stated that he arranged transportation o....
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....trs of Polyester Knitted Grey Fabrics were illicitly cleared in domestic market and to adjust the stock, clearance of Polyester Grey Fabrics is shown to have been made against the CT3 to Neeraj Exim Pvt. Ltd. There is no evidence of any buyers in the domestic market to whom clearances was made, no evidence of any transportation of the same, no evidence of any payment received from any buyer in the domestic market. On the contrary, payment from Neeraj Exim Pvt. Ltd., has been received by Account Payee Cheque and there is no allegation or evidence of return of the said amount to Neeraj Exim Pvt. Ltd. In the circumstance, Central Excise Duty demand on 2,49,175 L. mtrs of Polyester Knitted Grey Fabrics and Customs duty demand on 67750.650 Kgs of imported raw material used in manufacture of said 2,49,175 L Mtrs of Polyester Knitted Grey Fabrics is clearly untenable in law. 2.7 Without prejudice, he also submits that in any event, it is settled law as laid down in following Judgments that once duty is demanded on the finished goods, there cannot be a duty demand in respect of the raw materials used in the manufacture of the finished goods. (i) CCE Vs Sanjari Twister - 2009 (2....
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....7 (216) E.L.T. 310 (Tri) Tribunal held that the Revenue cannot make its case on the basis of statement alone in the absence of any independent evidence to corroborate the same. The said decision was confirmed by Hon'ble High Court of Gujarat as reported in 2009 (234) E.L.T. 242 (Guj.), when the appeal filed by the Revenue was dismissed. Further, Tribunal in the case of CCE v. Luxmi Engineering Works as reported in 2001 (134) E.L.T. 811 (Tri.-Del.), has held that there being no corroborating evidence in the form of receipt of raw materials or sale of final products to each buyers, the allegations of clandestine removal cannot be upheld. The said decision was upheld by Hon'ble High Court of Punjab & Haryana as reported in 2010 (254) E.L.T. 205 (P & H), laying that even if some records recovered during raid and corroborated by some supportable evidence for attempt of clandestine production and removal, it is necessary to have some positive evidence of clandestine production and removal. 4.2 We also find that the Appellant sought cross-examination, which has not been considered by the Ld. Adjudicating Authority. It is settled preposition of law that for the purpose of reliance on st....
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....s at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice. 9. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." Similarly, the Hon'ble Delhi High Court in case of JK Cigarettes Vs. Collector of Central Excise 2009 (242) E.L.T. 189 (Del.) held as under: "12. Bare readin....
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....at necessity of allowing cross-examination of the witnesses in departmental adjudication proceedings is well-settled and accepted, as is clear from the following decisions :- (i) Laxman Exports Ltd. v. Collector of Central Excise - 2002 (143) E.L.T. 21 (S.C.) = (2005) 10 SCC 634. (ii) Swadeshi Politex Ltd. v. Commnr. of Central Excise - 2000 (122) E.L.T. 641 (S.C.). (iii) Arya Abhushan Bhandar v. Union of India - 2002 (143) E.L.T. 25 (S.C.). (iv) Gyanchand Sant Lal Jain v. Union of India - 2001 (136) E.L.T. 9 (Bombay High Court). (v) Kellogg India Pvt. Ltd. & Madhukar Patil v. UOI - 2006 (193) E.L.T. 385 (Bombay High Court) = 2007 (8) S.T.R. 84 (Bom.). (vi) Ripen Kumar v. Deptt. of Customs - 2003 (160) E.L.T. 60 (Delhi High Court) (vii) New Decent Footwear Industries v. UOI - 2002 (150) E.L.T. 71 (Delhi High Court)" In view of above settled position of law, the Appellant is required to be afforded the opportunity of cross-examination of persons whose statements have been relied by the Department for confirmation of demand. Here Ld. Adjudicating authority failed to do that. 4.3 We also find that as regard the alleg....
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....t in the case of CCE, Cus. & Ser. Tax, Daman vs. Nissan Thermoware P. Ltd. 2011 (266) E.L.T. 45 (Guj.) (supra), the Hon'ble Gujarat High Court has observed as under:- "7. Thus, on the basis of findings of fact recorded by the Tribunal upon appreciation of the evidence on record, it is apparent that except for the shortage in raw material viz., HD which was disputed by the assessee and the statement of the Director, there was no other evidence on record to indicate clandestine manufacture and removal of final products. On behalf of the revenue, except for placing reliance upon the statement of the Director recorded during the course of the search proceedings, no evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error in giving benefit of doubt to the assessee." The Hon'ble Gujarat High Court has held that the confessional statement of an accused in criminal offence which cannot be par with the statement recorded during preventive checks; therefore, the Hon'ble High C....
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....ty has not granted his cross-examination. Statement recorded during investigation in the present matter, whose maker are not examined in chief before the adjudicating authority, would have to be eschewed from evidence, and it will not be permissible for Ld. Adjudicating Authority to rely on the said evidences. Therefore, we hold that the said statement was not admissible evidence in the present case. 4.8 We, further find that Appellant's partner in his statement dated 13.07.2004 clearly stated that sales of Grey Fabrics to M/s Neeraj Exim Pvt. Ltd. against the CT-3 certificate were made Ex-factory and delivered at the Appellant's factory gate and freight was paid by M/s Neeraj Exim Pvt. Ltd. We also find that in the present matter Appellant had received payment for the said transaction by cheque and the said transaction were recorded in the books & accounts of the Appellant. Shri Puneet Rungta, authorized representative of M/s Neeraj Exim in his statement dated 24.07.2003 also stated that he arranged transportation of raw material from the Appellant's factory. Reliance placed by the Adjudicating authority on statement of Yadvendra R. Singh, Director of Neeraj Exim Pvt. Ltd. to t....
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....o adjust the stock, clearance of polyester Grey fabrics is shown to have been made against the CT3 to M/s Neeraj Exim Pvt. Ltd., totally misconceived. The Revenue has to show from their own records or from the investigation at the consignee's end that the goods did not reach the consignee. Since the department has made the allegation of non-re-warehousing of the goods at the consignee's factory, it has to prove the same by substantial evidence and it cannot be made on assumption. It has to be shown as if the goods were not warehoused then where were the same diverted. In present case there is no evidence of diversion of goods produced. The appellant has submitted the ARE-3 certificates and the payment receipts details and books of accounts to support the contention of clearance of goods to M/s. Neeraj Exim Pvt. Ltd. The goods so cleared by them stands entered in their statutory records. We also agree with the argument of Ld. Counsel that the description of "Polyester Grey Fabrics" is a generic description and is wide enough to cover " Polyester Grey Fabrics" and in daily stock register the goods were being described as "Polyester Grey Fabrics" by the Appellant. No evidence was prod....