Customs, Excise and Gold Tribunal - Tamil Nadu
Senthil Kumar Soap Works vs Commissioner Of C. Ex. on 3 May, 1996
Equivalent citations: 1997(89)ELT77(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. These appeals are against the order of the Collector of Central Excise, Madurai. Under the impugned order, it has been held that the appellants company have manufactured and cleared detergent cakes falling under Tariff Heading 3401.20 and washing powder falling under 3402.10 clandestinely without payment of duty. A duty of Rs. 1,35,66,084/- has been demanded from the appellants and penalties have also been imposed on the appellants herein.
2. The learned Consultant for the appellants pleaded that in the impugned order heavy reliance has been placed on the evidence of others including that of the suppliers of sodium silicate and stone powder two of the raw materials, required for manufacture of soap. He pleaded that it has been alleged that the appellants had not accounted for the quantity of raw materials as above received by them and that they had been receiving these raw materials for a number of suppliers under different names. He pleaded that statements were recorded from the proprietor of the appellants' firm, suppliers of raw materials, accountants and the driver to show that while they had supplied raw materials in the name of other firms, the same had been unloaded at the premises of the appellants and that they received payment in cash and also by DD from the proprietor of the appellants firm. He pleaded that the appellants have sought for cross-examination of the said persons but the same had been refused and the learned lower authority has held as under in this regard in Para 56 of his order :
"56. As regards the other contentions of the Consultant that his client has been denied the valuable opportunity to prove his innocence by way of refusal of permission to cross-examine the suppliers of Sodium Silicate and Stone Powder and their drivers, I have to observe that the contents of the statements of Shri P. Balamurugan and Shri Kabirdass, Accountants of M/s. Mahashree Aruna Chemicals and M/s. Sowbhagya Lakshmi Silicate respectively and the statements of S/Shri Gunasokaran, S. Muniasamy and X. Dhanush Fernando, Drivers of M/s. Sowbhagya Lakshmi Silicate and Aruna Chemicals are corroborative to each other and are duly supported by the letters of M/s. Mahashree Aruna Chemicals, M/s. Sowbhagya Lakshmi Silicate, M/s. Manohara Saraswathy Glass Works, M/s. Sree Jaya Devi Industries at Kuttalam Village and other documentary evidences in the form of copies of invoices and extracts of ledgers. Further it has not been alleged at any point of time that there was any animosity between the raw materials suppliers with their drivers and M/s. SSW to raise such allegations against M/s. SSW. Therefore, in the absence of any evidence to raise doubt about the genuineness of the information or the records furnished by the above parties or the fact of suppression of receipt of Sodium Silicate and Stone Powder, I am convinced that cross-examination as requestecd by the Consultant without any grounds is not essential. In this regard I feel it relevant to cite the decision of the Hon'ble CEGAT in the case of Eskay Electronics (India) (P) Ltd. v. Collector of Central Excise, reported in 1992 (59) E.L.T. 630 (Tribunal) wherein it has been observed that..." It is also well settled by now that cross-examination is neither an essential part of principles of natural justice nor that of above type of proceedings. However, it may be allowed at the discretion of the adjudicating officer wherever and whenever/necessary in the interest of justice. By the same token it could also be disallowed for good and sufficient reasons to be recorded in writing..."
He pleaded that while the learned lower authority has observed that in the absence of any evidence about the genuineness of the information or record furnished by those parties, he was not convinced that the cross-examination requested for was required to be allowed. He pleaded that it is only to test the genuineness of what has been stated by those persons that the appellants had sought for cross-examination. He pleaded that as it is the learned lower authority did not have in his possession documents and he himself has stated in Para 53 that since Director General Anti-Evasion was taking up the investigation against sodium silicate manufacturers and the original documents have been taken away by them reliance in this case for the purpose of investigation has been placed on some of the invoices which are available and recovered during investigation and the copies of ledgers for supply of sodium silicate. He pleaded that inasmuch as the documents relied upon and the ledgers were not made available and evidence of third parties has been relied upon, the appellants had a right to peruse and test the correctness of those documents and evidence and since cross-examination has not been allowed there has been denial of principles of natural justice and on this ground the impugned order is required to be set aside. The learned Consultant also adduced arguments on various other points. However, since we propose to decide the matter on the question of denial of principles of natural justice, we are not adverting to the same.
3. We observe that the departmental authorities have gathered evidence to the effect that the appellants had been indulging in clandestine manufacture of the goods. Heavy reliance has been placed on the statements of the suppliers of sodium silicate and stone powder and statements were also recorded from them and from their employees. In all these statements it has been indicated that the goods were supplied in various other names and that the goods were unloaded in the appellants' premises and payments have been received from the proprietor of the appellants' firm by them. We observe that the suppliers of sodium silicate and other persons are not co-accused in the proceedings. The basis on which they have made their averments could have been only their records. The appellants can test the veracity of their statements only by cross-examining them and also whether they could relate what they have stated in their statements with the ledgers and also elicit information as to the circumstances in which they supplied the goods to them. It has been held by various Courts and the Tribunals in a number of decisions that when reliance is placed on the third party statements and when these third parties are available, the benefit of cross-examination should be allowed. It could have been a different matter if the other parties were co-accused and they implicated themselves when implicated others in their statements before the authorities. In such an event the Hon'ble Supreme Court in the case of Naresh J. Sukhwani v. U.O.I, reported in 1996 (83) E.L.T. 258 (SC) held that statement of co-accused is a material evidence. In this view of the matter, we hold that there has been denial of principles of natural justice and for that reason, the learned lower authority's order is not a proper order. We, therefore set aside the same and remand the matter to the learned lower authority for de novo adjudication after affording an opportunity of cross-examination of the third parties on whose statements reliance has been placed against the appellants in regard to supply of raw materials and then pass a fresh order in accordance with law.