AI Drafter 
TaxTMI 
TaxTMI 
2026 (5) TMI 1442
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...., the appellant had offered their total capacity for undertaking production of goods for SAIL and the appellant was not entitled for producing any goods for any other persons. The said agreement also provides for supplying the quantity of materials after allowing percentage of material loss. The said contract also provides that the activities of the appellant would be monitored by the representative of SAIL. In respect of scrap, the appellant was entitled for clearing the same on payment of duty. Since the appellant had offered the total mill capacity of M/s. SAIL, they would not produce and sale of the said product under its banner or for any other buyers agency. As per to said agreement, M/s. SAIL was supplying billets to the appellant and the appellant was manufacturing TMT Bars in their factory and clearing the finished goods as TMT Bar as per the direction of M/s. SAIL or to any other depots of SAIL as per direction of SAIL. The representatives of SAIL was also posted at the factory of the appellant to look after the manufacturing activity and/or quality control aspect and/or inward & outward movement of raw-materials and finished goods as well as consumable properties. There ....
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.... agreement with SAIL and their scope of activities. He clearly stated that Shri Joydev Karmakar was not an employee of the appellant. He was worked under Shri Mukesh Chowdhury, he looked after loading and unloading of their finished goods. He did not know what Shri Joydev Karmakar had written in the note book and he did not offer any comment on the said document and he has no knowledge about the said entries in the note book. The statement of Shri Saibal Saha was also recorded. Shri Saibal Saha was the accountant of the appellant company and was looking after the accounts of the company. He also explained the activities under the agreement with M/s. SAIL. He was made to state about matching of some entries in the note book of Shri Joydev Karmakar with some statutory documents and in some cases he was made to state that Central Excise invoices were not issued against some clearances in comparison to entries in the note book. 2.2 The appellant was issued a Show Cause Notice dated 06.05.2016 demanding Central Excise duty on the basis of the calculation as contained in Annexure-C based on Annexure-C1 to C6. There was no document to verify the said entries and the rest documents were....
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.... Adjudicating Authority confirmed the demand, charged interest and imposed penalty. 2.5 Against the said order, the appellants are before us. 3. The ld.Counsel for the appellants submits that the order passed by the Ld. Adjudicating Authority cannot be maintainable in law for the following reasons that - (i) The Order passed by the Ld. Adjudicating Authority without considering submission and the decision cited seriously affected the decision making process resulting gross violation of the principles of natural justice. The Ld. Commissioner did not consider that no stock verification was made by the visiting officers and the fact of such stock verification, the SAIL did not raise any complaint in respect of unaccounted manufacture and clearance of the goods. The proceeding is based on incomplete investigation. There is no documentary evidence in respect of procurement of huge quantity of inputs from any other sources. No buyer has been identified. No statement from any buyer/transporter/driver or owner of the vehicle was recorded. There is no evidence in respect of huge consumption of electricity, flow of fund and other relevant evidence. In other words, no investiga....
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....on of the persons whose statements have been relied upon including the statement of Shri Joydev Karmakar, but the Ld. Adjudicating Authority rejected such request on the plea that the said cross-examination may further complicate the issue. The Ld. Adjudicating Authority even did not bother to comply with the statutory mandate as contained in Section 9D of the Central Excise Act, 1944 and as a result, statements cannot be relevant and cannot be accepted. (iv) The main and sole contention of the appellant that the third party documents cannot be the basis for raising the demand apart from the said third party documents, there is no other evidence and/or corroborative evidence to establish the clearance of the goods without payment of duty and demand of such basis cannot be maintainable in law. The Ld. Adjudicating Authority did not consider the said vital points, which goes to the route of this case. (v) It was further submitted that the Ld. Commissioner did not consider and/or deny that the appellant had offered their total Mill Capacity to SAIL for the manufacture of the goods of SAIL and was not permitted to manufacture the goods for any other persons. The appel....
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....y under Rule 26(1) of the Central Excise Rules, 2002. The finding of the Ld. adjudicating authority as contained in para 7.40 is not sufficient for imposition of penalty on the Director. In support of his contention, he relies on the following decisions : * Prag Pentachem Pvt. Ltd. : 2018 (360) ELT 1025 (Tri-Del.) * CBI -vs- V. C. Shukla : 1998 (3) SCC 410 * Raj Petroleum Products : 2005 (192) ELT 806 (Tri-Mum) * Mayfair Industries : 2016 (338) ELT 594 (Tri-Del) * Vishnu & Co. Pvt. Ltd. : 2016 (332) ELT 793 (Tri-Del) * P.D. Industries Pvt. Ltd. : 2016 (340) ELT 249 (Para-5) * Lords Chemicals Ltd. : 2009 (245) ELT 695 (Tri-Del), which was confirmed by the Hon'ble High Court, Calcutta as - 2010 (258) ELT 48 (Cal.) * Rinko Alloys Pvt. Ltd. : 2007 (212) ELT 529 (Tri-Mum, Para 3) * Sakeen Alloys Pvt. Ltd. : 2013 (296)ELT 392 (Tri-Ahmd) * Sakeen Alloys Pvt. Ltd. : 2014 (308) ELT 655 (Guj.) * Sakeen Alloys Pvt. Ltd. : 2015 (319)ELT A117 (S.C.) * Capital Ispat Ltd. : 2016 (340) ELT 369 * Triveni Engineering & Industries Ltd. : 2016 (344) ELT 595 (All.) * Jindal D....
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....and a laptop seized from him. Shri Kirti Kala was not maintaining the records in the regular course of business but these records were his personal records and it became third party evidence. Moreover, on examination of the documents, it is revealed that the amount of cash shown in those documents pertained to whom and to whom the cash payment was received and the said entries have not been corroborated by any independent tangible evidence. Therefore, the said evidence cannot be relied upon as admissible piece of evidence being third party record in view of the case of CBI v. V.C. Shukla wherein the Apex Court in paras 34 and 39 has observed as under : - 34. The rationale behind admissibility of parties' books of account as evidence is that the regularity of habit, the difficulty of falsification and the fair certainty of ultimate detection give them in a sufficient degree a probability of trustworthiness (Wigmore on evidence 1546). Since, however, an element of self interest and partisanship of the entrant to make a person - behind whose back and without whose knowledge the entry is made - liable cannot be rules out the additional safeguard of insistence upon other indepe....
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....shed by the Counsel has held that unless there is clinching evidence on the nature of purchase of raw materials, use of electricity, sale, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some workers. The facts in the case of Aswin Vanaspati Industries would be identical to the facts herein as in that case also the allegation was with regard to removal of Vanaspati based on the inputs maintained. The Tribunal went in great detail and have clearly laid down that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly apply to the facts of this case. Hence, following the ratio of the cited judgments, the assessee's appeal is allowed. 23. In the case of Rhino Rubbers Pvt. Ltd. [1996 (85) E.L.T. 260 (Tribunal)] (supra) again this Tribunal has held and observed as under : "Goods not sufficient to prove clandestine manufacture and removal to have b....
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....nt is required to be examined independently. On independent examination of the said statement, I find that the goods/inputs were not available in the Indore and the respondent have procured the inputs from the open market in Delhi without cover of invoices. No prudent manufacturer shall procure inputs from Delhi without cover of invoice to cover those purchases shall procure the invoices from Indore. Possibly, the Revenue has not made any enquiry from Delhi Market in respect of statement of Shri Karni Singh Kothari to ascertain the truth. Moreover, no statement has been recorded from the transporter in order to ascertain that the goods have been procured without cover of invoice from the Delhi market. The statement has not been supported with tangible evidence, the same cannot be relied upon in view of the decision of Hon'ble Allahabad High Court in Vikram Cement Pvt. Ltd. Another evidence relied upon by the Revenue is the statement of the transporter. Shri Vishal Agarwal, proprietor M/s. BGFC and authorised signatory of M/s. BBTC has stated that they have issued LRs to M/s. SOL by charging Rs. 100 for each bilty and on the statement of 3 vehicle owners and out of 32, who refused t....
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....x a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the other books and loose sheets (which we have already found to be not admissible in evidence under Section 34) are admissible under Section 9 of the Act to support an inference about the former's correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of Independent evidence in support thereof. In that view of the matter we need not discuss, delve into or decide upon the contention raised by Mr Altaf Ahmed in this regard. Suffice it to say that the statements of the four witnesses, who have admitted receipts of the payments as shown against them in MR 71/91, can at best be proof of reliability of the entries so far as they are concerned and not others. In other words, the statements of the above witnesses cannot be independent evidence under Section 34 as against the above two respondents. So far as Shri Advani is concerned Section 34 would not come in aid of the prosecution for another reason also. Accord....
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....roprietary interest of RPM. Reliance in this connection, placed on the statutory registrations of JIT with different authorities in respect of Compound at 124, G.D. Ambedkar Marg, rent receipts. Bank record and insurance company policy to show that JIT was actually conducting business and/or operating out of 124, G.D. Ambedkar Marg (were extensively relied upon in reply to show cause notice. Nothing is on record, why the said clearances as taken from Gate Register could not be of JIT & are necessarily of RPM, would be a presumption & assumption. Submission that all goods received at or discharged from common Gate of Compound at 124, G.D. Ambedkar Marg, cannot be attributed to RPM. Therefore demand as made cannot be upheld. Transaction of genuine trading transactions therefore relating to JIT and removed would shield RP-M from payment of excise duty. It is surprising why JIT were not given a notice and examined by the department. Further the said Gate register, is available only for period January 1998 to November 1998. The same cannot be made the basis for allegation for entire period of demand in the Show Cause Notice. (vi) As regards the lab register, it, as been exhibit....
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....a conflict, the documentary evidence should prevail; thereby when documentary evidence does not establish clandestine removal, the statements based thereon cannot prove [see R.P. Industries v. Collector, 1996 (82) E.L.T. 129]. Besides, these statements are qualified and conditional. The statements have to be read together and as a whole are not in part and pieces, when so read, the statements do not establish clandestine removal. (x) The second part of the demand related to and on the documents seized from the premises of transporters as at Annexure - A2 to A4 of the notices. This Tribunal in the following cases held that transporters records are not relevant to prove clandestine removal. (A) Durga Trading Co. v. Commissioner [2002 (148) E.L.T. 967] (B) Brims Products v. Commissioner of Central Excise [2001 (130) E.L.T. 719] (C) Raj Sundeep Co. Gian Singh v. Collector of Central Excise & Customs [2003 (162) E.L.T. 1028 (Tribunal) = 1999 (31) RLT 324] Is the submission made before us in absence of any material to the contrary, the same view has to upheld. In CCE v. Dashmesh [2001 (130) E.L.T. 658] this Tribunal has held that octr....
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....ury, has been recorded, who has assigned the work to Shri Joydev Karmakar. In that circumstances, the statement made by Shri Joydev Karmakar, is not a relied upon piece of evidence in the absence of examination in Chief and by not providing any cross-examination to the appellant as held by the Hon'ble High Court of Punjab & Haryana in the case of Jindal Drugs Pvt. Ltd. Vs. Union of India reported in 2016 (340) ELT 67 (P & H), wherein the Hon'ble Punjab & Haryana High Court has observed as under : "6. The present proceedings essentially emanated from Show Cause Notice No. C.No.V(33)84/HQ/Adj/CE/J&K/JDL/12/1275, dated 5-11-2012 issued to the petitioners by the Commissioner under Section 11A of the Act alleging that the petitioners had without manufacturing any finished products in its premises namely premises in Jammu, wrongly taken refund of Rs. 48,10,79,820/- during the period November, 2007 to March, 2010 proposing to demand a recovery thereof along with interest and penalty and requiring the petitioners to show cause thereagainst. 7. Petitioners filed reply to the show cause notice and attended the personal hearing before respondent no. 2. It is contended by the....
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....o 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. 11. As already noticed hereinabove, 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 Gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein. In other words, in the absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a Gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). 12. The conseq....
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....bes 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 justice. 17. There is no justification for jettisoning this procedure, statutorily prescribed by plenary Parliamentary legislation for admitting, into evidence, a statement recorded before the Gazetted Central Excise Officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 18. The rationale behind the above precaut....
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....rity, 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. 22. 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 misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. 23. Reliance may also usefully be placed on Para 16 of the judgment of the Allahabad High Court in C.C.E. v. Parmarth Iron Pvt Ltd., 2010 (260) E.L.T. 514 (All.), which, too, unequivocally expound the law thus : "If the Revenue choose (sic chose?) not to examine any witnesses in adjudication, their statements cannot be considered as evidence." 24. That adjudicating authorities are bound by the general principles of evidence, stands affirmed in the judgment of the ....