Case Law Details
Ashoka Re-Rolling Mills Private Limited Vs Commissioner of Central Excise (CESTAT Kolkata)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Kolkata has directed a re-examination of a case involving Ashoka Re-Rolling Mills Private Ltd. The case centres around the alleged clandestine removal of goods, resulting in a significant demand for excise duty, along with interest and penalties imposed on the appellant.
The case hinges on a series of handwritten loose sheets, believed to indicate the clandestine removal of goods. These sheets, alongside the statement of Shri Manoj Kumar Jain, a Director at the company, form the crux of the allegations. However, the appellants argue that these pieces of evidence have not been tested in accordance with section 9D of the Central Excise Act, 1944, making them unreliable. Furthermore, no other corroborative evidence, based on independent inquiry, has been presented to substantiate the claim of clandestine removal. The appellant cited numerous previous cases to support their argument.
The Department, on the other hand, contended that the loose sheets were recovered from the company’s premises and that the statement of the Director confirms the validity of these sheets. They claim this as corroborative evidence of the clandestine removal of goods.
However, CESTAT highlighted the need for the statement to be tested according to section 9D of the Central Excise Act, 1944, and therefore remanded the case back to the original authority for re-examination.
This case underscores the importance of thorough examination and adherence to established legal procedures when building a case. It emphasizes the necessity of corroborative evidence, properly examined under the law, to support allegations. The decision by CESTAT to remand the case back to the original authority for re-examination signifies the requirement for fairness and transparency in the judicial process.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The appellants are in appeal against the impugned order wherein central excise duty of Rs.72,12,828/- has been confirmed along with interest and penalties on both the appellants have been imposed alleging clandestine removal of goods.
2. The facts of the case are that the appellants are engaged in the manufacture of MS Rod/MS Flats. On 16.05.2007, the DGCEI Rourkela conducted search in the factory premises of the appellant and during the course of operations, some loose sheets were seized under Panchnama dated 16.05.2007. Statement of Shri Manoj Kumar Jain, Director was also recorded. He also put his signature on the seized Thereafter, on the basis of the loose sheets and the statement of Shri Manoj Kumar Jain a case has been made out against the appellants for clandestine removal of the goods and a show cause notice was issued to demand duty from the appellants and to impose penalty. The matter was adjudicated, demand of duty along with interest was confirmed and penalties on the appellants were also imposed. Against the said order, the appellants are before us.
3. The Ld.Counsel appearing on behalf of the appellants submits that the case has been built out on the basis of hand-written loose sheets of unknown authorship and on the basis of the statement of Shri Manoj Kumar Jain and without testing the same in accordance with section 9D of the Central Excise Act, 1944, hence the said statement has become irrelevant piece of material and there is no other corroborative evidence based on independent enquiry, therefore, charge of clandestine removal is not sustainable. He submits that as the statement of Shri Manoj Kumar Jain has not been tested in terms of Section 9D of the Central Excise Act, 1944, therefore, the same cannot be relied as an evidence as held in the case of Hi-Tech Abrasives P. Ltd. Vs. CCE [2018 (362) ELT 961 (Chatt.)] and Ambica International Vs. UOI [2016-TIOL-1238 (P & H). He also submits that loose sheets are not reliable evidence to allege clandestine removal of goods. In support of his contention, he relied on the decision of K.Raj Gopal Vs. CCE [2002 (142) ELT 128 (Tri)], T.G.L. Poshak Corporation Vs. CCE [2002 (140) ELT 178 (Tri.)], Jindal Cables Vs. CCE [2022-VIL-183-CESTAT-DEL]. He further submits that –
(i) Absolutely no allegation/evidence of unaccounted production of finished goods of 1984.505 MT;
(ii) No acceptance of buyers. No enquiry with buyers was conducted even though names of the buyer is mentioned in
Traders invoices.
(iii) No excess/shortage of raw material/finished goods;
(iv) No evidence of flow back of funds of Rs.4.38 Cr.;
(v) No acceptance transporter for transportation of excisable goods without valid duty paying documents;
(vi0 No investigation with suppliers of raw materials was conducted whose names are mentioned at Page 59 of SCN i.e. Maa Girija Ispat P.Ltd., Maa Laxmi Steels P.Ltd., Birsa Steels P.Ltd.;
(vii) No evidence excess use of electricity;
(viii) No evidence of excess use of labor and payment of wages;
(ix) No statement were recorded from security personnel posted at the factory gate, weighbridge operators, officers/staff dealing with purchase, manufacture and sale of excisable goods etc. to ascertain the truth.
Therefore, he prays that the impugned is to be set aside.
4. On the other hand, the AR for the department submits that the loose sheets were recovered from the factory premises of the appellant and statement of Director has confirmed the receipt of the loose sheets from their factory premises in that circumstances there is corroborative evidence to establish clandestine removal of goods. Hence, the impugned order is to be upheld.
5. Heard the parties, considered the submissions.
6. We find that during the course of arguments, the Ld.Counsel’s main thrust was that the statement of Shri Manoj Kumar Jain has not been tested in terms of section 9D of the Central Excise Act, 1944, therefore, the said statement cannot be the corroborative statement to allege clandestine removal of goods. We find that in the case of Commissioner of Central Excise, Delhi-I v. Kuber Tobacco India Ltd. [2016 (338) ELT 113 (Tri.-Del.)], wherein this Tribunal remanded the matter back to the adjudicating authority for examination of witnesses in terms of section 9D of the Act and thereafter to pass an appropriate order in accordance with law. The relevant paras of the judgement is reproduced below:-
“14. In view of the above analysis, it is clear that during adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross-examined. In the absence of examination-in-chief, allowing the cross-examination, is a futile exercise. We further find that the appellant have challenged the impugned order on the ground that the evidence in the form of statements gathered have no link of the appellant to the activities took at Sandeep Poultry Farm which is required to be examined on the basis of records available during the course of adjudication and the same has not been considered judicially.
15. In view of the above, the impugned order is set aside. The adjudicating authority shall be at liberty to re-adjudicate the matter after following the procedure laid down under Section 9D of the Act as discussed above.”
Therefore, following the said decision of the Tribunal in the case of Commissioner of Central Excise, Delhi-I v. Kuber Tobacco India Ltd. (supra), we remand the matter back to the original authority, who, before coming to the conclusion of clandestine removal is required to test the statement of Shri Manoj Kumar Jain, recorded during the course of search, in terms of section 9D of the Central Excise Act, 1944 and thereafter to proceed to pass an order in accordance with law.
In view of this, by setting aside the impugned order, the appeals are allowed by way of remand.
(Order pronounced in the open court on 27.07.2023.)
