Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs Unknown on 30 December, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT - I
Appeal No.E/12091,12092,12638-12645,12667-12668,12689-12692,12695-12697,12699,12701/2013-DB
E/12093,12094,12665,12666,12688,12693,12694,12698,12700, 12702-12705,12804-12811/2013-DB
Arising out of:
OIO No.43 & 44/Commr/2013, dt.25.03.2013
OIO No.45/Commr/2013, dt.31.03.2013
Passed by: Commissioner of Central Excise & Customs, Rajkot
For approval and signature:
Mr.M.V. Ravindran, Honble Member (Judicial)
Mr. H.K. Thakur, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant: M/s Jayshree Vyapar Ltd, Shri Shashikantbhai H. Koticha, M/s Hindustan Exports, M/s Kathiawad Industries, M/s Kuldeepsinh Basiya, M/s Pratham Transport, M/s Om Sai Transport, M/s New Kishan Cement Pvt.Ltd., Shri Navneet Gokulbhai Vadaliya, Shri Rajan V. Vadaliya, Shri Bhavin M. Pabari, M/s Radhe Vyapar, M/s Kailash Cement Industries, M/s Tapee Cement Industries, M/s Nilkanth Concrete Pvt.Ltd., Shri Dhirajbhai Meghjibhai Rangani, M/s Pyramid Portland Pvt.Ltd., Shri Pravinbhai Bhanderi, Shri Khodidas D. Sojitra, M/s Samrat Cement & Chemical Industries, Shri Ashokbhai Dhirubhai Vasani, Shri Mansukbhai Parshottambhai Patel, Shri Kalpesh Maradia.
Respondent: CCE Rajkot
Represented by:
For Assessee: Shri Hari Shankar, Shri S.K. Vora, Shri P.D. Rachchh, Shri D.K. Trivedi, Mrs.Muskan Gogia - Advocates For Revenue: Shri K. Sivakumar, Addl.Commissioner (A.R.), Shri P.N. Sarvaiya, Astt. Commissioner (A.R.) Shri Jitendra Nair, A.R. CORAM:
MR.M.V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL) Date of Hearing:30.12.2013 Date of Decision:24.02.2014 Order No. Per: M.V. Ravindran
1. These appeals are directed against impugned orders dated 25.03.13 and 31.03.13. Out of 42 appeals listed for hearing, 21 appeals have been preferred against Order-in-Original dated 25.03.13 and remaining 21 appeals have been preferred against Order-in-Original dated 31.03.13. The main appellant in appeals preferred against Order-in-Original dated 25.03.13, is M/s New Kishan Cement Pvt Ltd [hereinafter referred to as New Kishan Cement] and the main appellant in appeals preferred against Order-in-Original dated 31.3.13, is M/s Major Cement Pvt Ltd [hereinafter referred to as Major Cement].
2. Since the issue involved in all the appeals is common, we propose to dispose of all the appeals by a common order. For the sake of convenience, we would be referring to the facts of New Kishan Cement and Major Cement separately.
3. The relevant facts relating to appeal preferred by New Kishan Cement and other connected appeals, preferred against Order-in-Original dated 25.3.13 in brief are as under.
4. New Kishan Cement is engaged in the manufacture of Cement and Clinker and are duly registered with the Central Excise department. According to New Kishan Cement, the major raw material required for manufacture of cement and clinker are silica, lime stone, pet coke, clay, coke dust/coke breeze, fly ash, gypsum etc. The process of manufacture involved is that raw materials i.e limestone, clay, silica sand, pet coke are mixed proportionately and fed into Raw Mills. The same materials are grinded in the Raw Mill and resultant products are called as Raw Mill Mix, which is further fed into Vertical Shaft Kiln where it is heated at a temperature of 1300 to 1400 degree to obtain clinker. The said clinker is further grinded in Cement Mill along with gypsum and/or fly ash to get cement.
5. Acting on intelligence that New Kishan Cement is availing Cenvat Credit on the invoices of pet coke without physically receiving the same, unit was searched by the officers of Central Excise on 26.4.08. It was noticed during the search operations that New Kishan Cement had shown a quantity of 1153.735 MT of pet coke as stock on 26.4.08, in their Cenvat Account Register and nil stock of coke dust/coke breeze/other coke (non cenvatable inputs) in the Raw Material register i.e Form IV register. On visual examination, the officers were not in a position to ascertain the exact nature of goods, which was claimed to be pet coke by New Kishan Cement, lying in the factory. Therefore, representative samples were drawn for testing and ascertaining its actual description and composition, which is also reflected in the Panchnama dated 26.4.08, annexed at page 71 of the appeal paper book of New Kishan Cement. At Sr. No: 23 and 24 of the Panchnama dated 26.4.08, under the head particular of documents, it has been mentioned as packets of samples of PET COKE and packets of sample of CEMENT respectively. Upon physical stock taking, it was also noticed by the officers that there was an excess stock of 250 bags when compared with records maintained by New Kishan Cement. The said goods valued at Rs.55,225/- was placed under seizure and was thereafter handed over to one of the Directors of New Kishan Cement under Suparidnama dated 26.04.08.
6. In the process of further investigation into the matter, statements of following persons were recorded on various dates.
Harshukh Valji Siroya, (Chief Chemist of M/s New Kishan Cement), Kishore Ramjibhai Soliya, (Excise Clerk of New Kishan Cement), Kuldeep Sinh Basiyaa (Partner of M/s Hindustan Exports), Navneet Gokalbhai Vadaliya, (one of the Directors of M/s New Kishan Cement), Ajay M Pabari (Depot In-charge of M/s Radhe Vyapar), Sabbir Hussain Bhai Sheikh (truck driver), Bhavin M Pabari (Proprietor of M/s Radhe Vyapar), Mohmmad Rafik Gulak Hussain ( Proprietor of Om Sai Ram Transport, Jam Nagar), Dipak Tahkaribhai Sayani (Commission Agent of M/s Maruti Enterprise, Jamnagar), Rajan Vadaliya (one of the Directors of M/s New Kishan Cement), Bipin Bhagwanjibhai Patel (Weighbridge In-charge and Supervisor of New Kishan Cement), Manoj Kanji Virani, (Proprietor of M/s Parthm Transprt, Jamnagar), Dhiraj Rangani (Partner of M/s Kailash Cement Industries), Arvind Gangdas Sakhiya (Partner of M/s Tapee Cement), Khodidas D Sojitra (Director of Nilkant Concrete Pvt Ltd), Satish K Parikh (Godown In-charge of M/s Jayshree Vyapar Ltd), Sashikant Koticha, (Director of Jayshree Vyapar Ltd), Ashok Dhirubhai Vasani (Partner of M/s Samrat Cement & Chemicals Ind.), Chandrakant J Patel (Partner of M/s Karan Chemicals), Gautam J Patel (Partner of M/s Karan Marketing)
7. On 3.5.08, the officers once again visited the factory premises of New Kishan Cement and drew representative samples once again and Panchnama was also drawn in this regard. The representatives samples drawn on 3.5.08 were sent for chemical test at National Small Industries Corporation Ltd (NSIC), Rajkot vide letter dated 5.5.08. The Manager (Testing) vide Test Report dated 7.5.08 forwarded the Test Report bearing No 10858 dated 7.5.08 confirming the contents of the samples drawn on 3.5.08. The Test Report dated 7.5.08, which is annexed with the Appeal Paper Book, as per the case of the Revenue, is to the effect that the sample drawn on 3.5.08 is not Pet coke.
8. Placing reliance upon the statements referred to hereinabove, Test Report dated 7.5.08 and computer print outs taken from the hard disk of one of the suppliers of Pet coke, 2 Show Cause Notices dated 21.10.08 and 29.3.2011 were issued to New Kishan Cement. The Show Cause Notice dated 21.10.08 was issued proposing confiscation of the alleged unaccounted stock of cement which was placed under seizure on 26.4.08. The Show Cause Notice dated 29.03.11 was issued alleging wrongful availment of Cenvat Credit on the basis of invoices of Pet coke without actually receiving such Pet coke. This Show Cause Notice alleged that only invoices were supplied by the following suppliers:
i) Harshiddhi Fertilizers & Chemicals
ii) Hindustan Exports
iii) Kathiawad Industries
iv) Radhe Vyapar Ltd
v) Jayshree Vyapar Ltd
vi) Karan Chemicals
vii) Karan Marketing
9. It has further been alleged that out of aforesaid suppliers, Hindustan Exports and Kathiawad Industries have supplied Coke Dust and Coke Breeze to New Kishan Cement in the guise of Pet coke. The other suppliers have merely supplied invoices of Pet coke to New Kishan Cement. It is the allegation in the Show Cause Notice that New Kishan Cement was only interested in Cenvatable Invoices of Pet coke, whereas, outstation buyers were interested in Pet coke. Outstation buyers were not interested in Cenvatable Invoices. The said outstation buyers were namely, Samrat Cement, Pyramid Portland Cement, Nilkant Cement, Tapi Cement and Kailash Cement.
10. On the aforesaid allegation, the Show Cause Notice dated 29.3.11 (supra) was issued demanding recovery of Cenvat Credit of Rs 1,36,00,295/- along with interest and penalty from New Kishan Cement. Apart from New Kishan Cement, the Show Cause Notice also proposed imposition of penalty on various other persons, who are also in appeal before us.
11. Upon receipt of the Show Cause Notice dated 29.3.11, New Kishan Cement requested the Commissioner vide letter dated 11.9.09 to provide them a copy of Test Report of the samples drawn on 26.4.08 and 2.5.08. Apart from requesting for providing the copy of Test Report of the samples drawn on 26.4.08 and 2.5.08, New Kishan Cement also requested for cross-examination of various persons whose statements have been extensively relied upon while issuing the Show Cause Notice. On 5.9.12 the Commissioner fixed the Show Cause Notice dated 29.3.11 for hearing and on the said date the Counsel representing New Kishan Cement once again requested for providing Test Report of the samples drawn on 26.4.08. It was also requested that if the said samples were not tested, the same may be sent for testing and a copy of the report may be furnished to them.
The Revenue responded to the request for providing the Test Report of the samples drawn on 26.4.08, by issuing a Corrigendum dated 14.02.13 which is annexed with the Appeal Paper Book of New Kishan Cement at page No 352. The Corrigendum issued to New Kishan Cement reads thus:
In the aforesaid Show Cause Notice at para No 3 the following words be deleted. The representative samples were, therefore, drawn for testing and ascertaining its actual description and composition.
12. Further, on 15.02.13, the Superintendent, Central Excise Headquarters, Rajkot issued a letter to New Kishan Cement informing that on verification of Panchnama dated 26.4.08, drawn at the factory premises of New Kishan Cement, it has been observed that there was no narration regarding drawal of any samples. In the absence of any narration for Pet coke regarding drawal of samples and sealing the same in the presence of independent panchas, it cannot be said that any samples were drawn from the factory premises of M/s New Kishan Cement Pvt Ltd on 26.4.08 and hence, the request made by New Kishan in this regard is not relevant for adjudication of the case. By the very same letter dated 15.2.13, the decision of the Adjudicating Authority regarding rejection of the request for cross examination of the persons named in the letter dated 11.9.09 was also informed to New Kishan Cement. Rebutting the allegation made in the Show Cause Notice dated 29.3.11, a detailed reply was submitted before the Adjudicating Authority vide letter dated 28.03.13. In the reply filed by New Kishan Cement, they have not only dealt with the allegation of non receipt of pet coke from the suppliers but has also strongly contested non supply of test report of samples drawn on 26.4.08 and also the reliability of the Test Report of samples drawn on 3.5.08. It was submitted by New Kishan before the Commissioner that the test report of samples drawn on 26.4.08 has been deliberately concealed by the Revenue. The method of drawal of sample was not in accordance with standards specified in Bureau of Indian Standards (BIS). Even the samples drawn on 3.5.08 were not in accordance with BIS standards. It was further submitted that NSICs report analyzed only ash contents, volatile matter and fixed carbon to come to a conclusion that the sample was cock dust. For testing whether it is pet coke or not, the following characteristics are also required to be tested:
a) Total moisture
b) Air dried ash
c) Volatile matter
d) Fixed carbon
e) Gross Calorific value
f) Sulphur
g) HGI
13. Sulphur level and calorific values are very important to decide whether it is pet coke or not. Since NSIC has not ascertained the said characteristics, the Test Report has no value. New Kishan had also placed before the Commissioner copy of specification of Pet coke issued by Reliance Industries Ltd [RIL], who is a major supplier of Pet coke. New Kishan had also placed before the Commissioner technical opinion from Quality Services & Solution opining that Ash, Volatile Matter and Fixed Carbon are not sufficient for deciding the type of coal. Since NSICs report is merely based on the composition of Ash, Volatile Matter and Fixed Carbon, it cannot be relied upon.
14. The Show Cause Notice was also responded to by following notices:
i) M/s New Kishan Cement Pvt Ltd,
ii) Shri Navneet Vadaliya, Director of M/s New Kishan Cement,
iii) M/s Hindustan Exports,
iv) M/s Kathiawad Industries,
v) Shri Kuldipsinh Basiya, Partner of Hindustan Exports & Kathiawadi Industries,
vi) Shri Rajan Vadaliya, Director of M/s New Kishan Cement,
vii) M/s Radhey Vyapar Ltd,
viii) M/s Jayshree Vyapar Ltd,
ix) M/s Karan Chemicals,
x) M/s Karan Marketing,
xi) M/s Maruti Enterprise,
xii) M/s Samrat Cement,
xiii) Shri Ashok Vasani, Partner of M/s Samrat Cement,
xiv) Shri Bhavin Pabari, Proprietor of M/s RadheyVyapar Ltd,
xv) M/s Pyramid Portland Cement, xvi) M/s Om Sai Ram Transport, xvii) Shri Pravin Bhandari, Managing Director of M/s Pyramid Portland Cement, xviii) M/s Pratham Transport, xix) M/s Nilkanth Cement, xx) M/s Kailash Cement Industries, xxi) M/s Tapee Cement, xxii) Shri Khodidas Sojitra, Director of M/s Nikant Cement, xxiii) Shri Arvind G Sakhiya, Parttner of M/s Tapee Cement, xxiv) Shri Dhiraj Rangani, Partner of M/s Kailash Cement Industries, xxv) Shri Shashikant Koticha, Director of M/s Jayshree Vyapar Ltd.
xxvi) Shri Gautam Patel, Partner of M/s Karan Marketing, xxvii) Shri Chandrakant Patel, Partner of M/s Karan Marketing
15. The Commissioner, after considering the replies and submissions made during the personal hearing, vide Order-in-Original dated 25.3.13 has held thus:
(i) Cenvat Credit of Rs 1,36,00,295/- taken by New Kishan Cement is to be denied and liable to be recovered under Rule 14 of the Cenvat Credit Rules, 2004 [CCR, 2004] read with proviso to Section 11A (1) of the Central Excise Act, 1944 [hereinafter referred to as the Act];
(ii) Interest at appropriate rate on the amount of Cenvat Credit denied be recovered from New Kishan Cement, under Rule 14 of the CCR, 2004 read with Section 11AA of the Act;
(iii) penalty of Rs.1,36,00,295/- be imposed on M/s New Kishan Cement under Rule 15(2) of the CCR, 2004;and
(iv) an amount of Rs.1.08 Crore paid by M/s New Kishan Cement may be appropriated against the confirmed duty demand and balance amount of Cenvat Credit be recovered from NKC.
16. As regards other noticees, the Commissioner has revoked Central Excise Registration of following parties:
(i) M/s Hindustan Exports
(ii) M/s Jayshree Vyapar Ltd
(iii) M/s Karan Chemicals
(iv) M/s Karan Marketing
18. Apart from revoking the registration, the Commissioner has also imposed penalty of Rs.5,00,000/- each on the aforesaid parties. The Commissioner also imposed penalty on the following noticees in the Show Cause Notice:
(i) Shri Navnnet Gokulbhai Vadaliya
(ii) M/s Kathiawad Idustries, Bharoodi
(iii) Shri Kuldipsinh Basiya
(iv) Shri Rajan V Vadaliya
(v) M/s Radehy Vypar Ltd, Rajkot
(vi) M/s Maruti Enterprise, Jannagar
(vii) M/s Samrat Cement
(viii) Shri Ashok Vasani Partner of M/s Samrat Cement
(ix) Shri Bhavin Pabari of M/s Radhey Vyapar Ltd
(x) M/s Pyramid Portland Cement
(xi) M/s Om Sai Ram Transport, Jam Nagar
(xii) Shri Pravin Bhandari, MD of M/s Pyramid Portland Cement
(xiii) M/s Pratham Transport, Jamnagar
(xiv) M/s Nilkanth Cement
(xv) M/s Kailash Cement (xvi) M/s Tapee Cement (xvii) Shri Khodidas Sojitra (xviii) Shri Arvind Gangdas Sakhkiya, Partner of M/s Tapee Cement (xix) Shri Dhiraj Rangani, Partner of M/s Kailash Cement (xx) Shri Shashikant Koticha, Director of M/s Jayshree Vyapar, (xxi) Shri Gautam Patel, Partner of M/s Karan Marketing, (xxii) Shri Chandrakant J Patel, Partner of M/s Karan Chemicals.
19. As regards, the Show Cause Notice dated 29.10.08 issued for confiscation of 11.750 MT of Ordinary Portland Cement valued at Rs 55,225/-, the Commissioner has imposed fine of Rs 6,000/- upon New Kishan Cement and penalty of Rs 6,000/- each upon two Directors of New Kishan Cement.
20. The facts and evidence referred to hereinabove referring to the case of New Kishan Cement and other connected appeals are more or less identical in the appeals preferred by Major Cement and other connected appeals preferred against Order-in-Original dated 31.3.13. However, some relevant facts, which would be necessary to be referred to while deciding the present appeal also are stated in brief thus:
21. Major Cement is also engaged in the manufacture of Cement and Clinker and are duly registered with the Central Excise Department. Acting on an intelligence that Major Cement is availing Cenvat Credit on the invoices of pet coke without actually receiving the same, the Unit was searched by the Officers of Central Excise on 26.4.08. Simultaneous search was also conducted at the office premises of Major Cement at Rajkot. Samples were also drawn from the factory premises of Major Cement on 3.5.08 from the heap of Pet coke lying in the factory premises under Panchnama dated 3.5.08 and sent for chemical test at NSIC vide letter dated 5.5.08. The Manager (Testing), NSIC vide Test Report dated 7.5.08 confirmed the contents of the sample as Coke and not of Pet coke. The very same statements which have been recorded during the course of investigation in the case of New Kishan Cement has been relied upon in the Show Cause Notice dated 29.3.11 issued to Major Cement. The Show Cause Notice dated 29.3.11 (supra) was issued to the appellant alleging wrongful availment of Cenvat Credit of Rs.1,50,61,484/- and proposing recovery of interest and imposition of penalty. Besides Major Cement, Show Cause Notices were also issued to several other persons who are also in appeal before us. The allegations in the Show Cause Notice issued to Major Cement and New Kishan Cement are identical. Therefore, the submissions made by Major Cement and various other Noticees in response to the Show Cause Notice more or less identical to the submissions made in response to the Show Cause Notice issued to New Kishan Cement and other noticees. Noticees were also common in the Show Cause Notice issued to New Kishan Cement and Major Cement.
22. The Commissioner after considering the submissions made by Major Cement and other noticees held thus:
(i) Cenvat Credit amounting to Rs.1,50,61,484/- taken by Major Cement be denied and recovered under Rule 14 of CCR, 2004 read with provisions of Sectin 11A of the Act;
(ii) interest at appropriate rate on the aforesaid amount of Cenvat Credit be recovered from Major Cement;
(iii) penalty of Rs.1,50,61,484/- be imposed under Rule 15(2) of CCR, 2004;
(iv) Rs.1.45 Crore paid by Major Cement be appropriated against the confirmed duty demand.
23. Besides confirmation of duty demand and imposition of penalty against Major Cement, in the Order-in-Original dated 31.3.2013, the Commissioner has imposed penalty of Rs.5,00,000/- each on the noticees whose Central Excise Registration were ordered to be revoked vide Order-in-Original dated 25.3.13 (supra). The Commissioner has also imposed penalty on following parties:
i) Shri Kalpesh Maradia, Director of M/s Major Cement Pvt Ltd
ii) M/s Kathiawad Industries, Bharoodi
iii) Shri Kuldipsinh Basiya,
iv) Shri Mansukhbhai Patel, MD of M/s Major Cement Pvt Ltd,
v) M/s Radhey Vyapar,
vi) M/s Maruti Enterprises,
vii) M/s Samrat Cement,
viii) Shri Ashok Vasani,
ix) Shri Bhavin Pabari,
x) M/s Pyramid Portland Cement,
xi) M/s Om Sai Ram Transport,
xii) Shri Pravin Bhandari,
xiii) M/s Pratham Transport,
xiv) M/s Nilkanth Cement,
xv) M/s Kailash Cement, xvi) M/s Tapee Cement, xvii) Shri Khodidas Sojitra, xviii) Shri Arvid Gangdas, xix) Shri Dhiraj Rangani, xx) Shri Sashkiikant Koticha, xxi) Shri Gautam Patel, xxii) Shri Chandrakant J Patel
24. New Kishan Cement and Major Cement are in appeal before us. Besides New Kishan and Major Cement, co-noticees against whom penalty has been imposed by the Commissioner are also in appeal before use.
25. On behalf of New Kishan Cement and Major Cement, arguments were addressed by ld. Counsel Mr. C. Hari Shankar along with Devashis K. Trivedi, Advocate. Connected appeals, were represented by Shri P.D. Racch and Mrs.Muskan Gogia, Advocates.
26. It is the submission of the learned Counsel appearing on behalf of New Kishan Cement and Major Cement that for sustaining the allegation against New Kishan Cement and Major Cement of availing cenvat credit on the basis of invoices without actually receiving Pet coke, the evidence relied upon by the Revenue falls under two categories, i.e.
a) test report dated 7.5.08 of NSIC in respect of Coke found in the factory premises of New Kishan Cement and Major Cement on 3.5.08 which, though stated to be Pet coke, is alleged, as per the test report, to be Coke powder,
b) statements of suppliers of Pet coke and some of the outstation buyers of Pet coke who were interested in only getting Pet coke without any Cenvatable invoice.
27. It is the submission of the learned Counsel appearing on behalf of New Kishan Cement and Major Cement that the test report of NSIC cannot be relied upon and the Coke found in the premises of New Kishan Cement and Major Cement was actually pet coke and not coke dust/coke Ash. The reasons cited by the learned Counsel for not giving credence to the test report of the NSIC are as under:-
(i) Para 3 of the Show Cause Notice issued to New Kishan Cement clearly shows that the samples were drawn for testing on 26.4.08. This fact is also supported by S.No. 23 and 24 of Annexure to the Panchnama dated 24.4.08.
(ii) Though a specific request was made for providing the test report of the samples drawn on 26.4.08, the Commissioner in an astonishing and hitherto unprecedented move has chosen to issue Corrigendum dated 14.2.13, seeking to amend the Show Cause Notice dated 29.3.11, nearly after 2 years of the issuance of the Show Cause Notice by deleting para 3 thereof. Such a cause of action was entirely unheard of and throws away the bona fide of the adjudicatory process starting from the issuance of the Show Cause Notice into jeopardy and serious doubt.
(iii) The communication issued to New Kishan Cement on 15.2.13 on the very next day after issuance of corrigendum by the Revenue is blatant display of complete falsehood as it makes an averment that in the Panchnama dated 24.6.08 there was no recital of drawal of any samples.
(iv) It creates a suspicion that samples drawn on 26.4.08 were actually tested and, was apparently, in favour of New Kishan Cement and Major Cement.
29. It is the submission of the ld. Counsel that the Commissioner has dealt with the issue of drawing of samples and test report in a perverse manner. Our attention, in this regard, was drawn to Para 10.3 of the impugned order, which reads thus:
M/s New Kishan have contended that the Department ought to have tested the sample drawn on 26.4.08 and should have provided them with a copy of the test report in this regard. However, on going through the Panchanama drawn at the premises of M/s New Kishan on 26.4.08, it is observed that the same did not contain any narration regarding drawal of samples of pet coke. There is a mention of 3 packets of samples of pet coke and 3 packets of samples of cement at Sl No 23 & 24 respectively of the annexure to the said panchanama but in the absence of any narration in the panchanama that samples were being drawn and separately packed in 2 packets, it cannot be said that any samples were drawn on 26.4.08. The only inference that can be drawn from the entries at Sl No 23 & 24 of the annexure is that 3 packets of pet coke and 3 packets of cement were taken into custody from their premises by the officers. Further, the statement dated 14.10.2008 of Shri Rajan Vadaliya, Director of M/s New Kishan also refers to samples drawn on 2.5.08 and there is no reference to any samples drawn on 26.4.08. There is a difference between formally drawing of samples of any goods for testing and mere taking into custody of ready-to-carry packets of such goods in the absence of any narration regarding actual drawal of samples in the panchanama, the contention of M/s New Kishan that samples were drawn on 26.4.08 is not supported by the facts on record.
30. The ld. Counsel further submitted that it was not open for the Revenue to rely upon the test report as per their convenience. In view of the discrepancies pointed out before the Adjudicating Authority it was open to the Commissioner to ascertain the same by allowing cross-examination of the chemical examiner which, unfortunately, has been rejected in the present case. Without prejudice to submissions already made before us, the learned Counsel appearing on behalf of New Kishan Cement and Major Cement, further submitted that sampling of the Coke had not been done as per the standards set down by the BIS. The testing of the said samples has not been done as per the BIS standards, as sulphur level and calorific value has not been tested while testing the characteristics of Coke. The submission made by New Kishan Cement and Major Cement, in this regard, has not been denied by the learned Commissioner in the presently impugned order. The submission made by New Kishan Cement and Major Cement that NSIC was not a laboratory equipped for testing of Coke has also not been satisfactorily answered by the adjudicating authority. The ld. Counsel further submitted that New Kishan Cement and Major Cement had placed on record test report of RIL which clearly indicated that sulphur level and calorific value was always mentioned while determining the nature of Coke. Opinion from Quality Services & Solution was also placed on record to show that the characteristics of coke could not be ascertained merely on the basis of ash content and fixed carbon. It is the submission of the learned Counsel that the learned Commissioner in para 10.4 of the presently impugned order passed in the case of New Kishan Cement has entered a factually incorrect finding that Shri Rajan Vadaliya, Managing Director of New Kishan Cement had, in answer to Question No. 10 of his statement dated 14.10.08, expressed his agreement with the manner of sampling, whereas the question and the response to the said question was something different. English translation of the said statement has been placed on record before us which reads thus:
Q 10: You have shown a panchnama dated 2.5.08, regarding the drawal of a representative samples of pet cock from your factory. You are agreed with it?
Ans: Yes, I have read this panchnama and give my dated signature on it.
Q.11: Sample of pet coke drawn from your factory on 2.5.08 was tested at NSIC Technical Service, Rajkot, a Govt. of India Enterprise. You have shown test result dated 7.05.08 of such sample. What you are say about these?
Ans: I am not agree with these report.
31. The learned Counsel appearing on behalf of New Kishan Cement and Major Cement, further submitted that, even otherwise, the test report dated 7.5.08 was unreliable as there are two test reports on the Coke taken from the premises of Major Cement and the results are different in both the cases. Therefore, it is the submission of the learned Counsel that the Test Report would totally dependent on the method adopted for sampling. Had it been done as per BIS standards, the test report would, undoubtedly, have been in favour of New Kishan Cement and Major Cement.
32. As regards the allegation regarding taking of the credit in the past, it is the submission of the learned Counsel appearing on behalf of New Kishan Cement and Major Cement that the entire case has been based on the statements of various persons and third party documentary evidence especially in the form of data recovered from the hard disk of the computer in the premises of Kathiawad Industries. There is no documentary evidence in the form of any document or record, being maintained by New Kishan Cement and Major Cement or oral evidence which inculpates them in any manner, except one statement of Shri Bipin Patel, Weighbridge In-charge of New Kishan Cement. According to the learned Counsel, even if his statement is accepted to be correct, the liability would arise on this count would be a very meager amount.
33. It has also been submitted by the learned Counsel that the request for cross examination has been summarily rejected by the Adjudicating Authority almost after a period of 2 years from the date of the request. Our attention in this regard was drawn to the decision of the Honble Delhi High Court in J & K Cigarettes Ltd v CCE, 2009 (242) ELT 189 (Del) and Basudev Garg v CC, 2013 (294) ELT 353 (Del) and of the Honble Allahabad High Court in CCE v Govind Mills Ltd, 2013 (294) ELT 261 (All.). It was the submission of ld. Counsel that these decisions explicitly hold that where the case does not fall within one of the circumstances contemplated by clause (i) of 9D of the Act, it is mandatory to allow cross-examination of the persons whose statements have been chosen to be relied upon. If the Adjudicating Authority chooses not to allow cross examination, it was not open for the said authority to rely upon the said statement. Having decided not to allow cross-examination, in the present case, it was not open to the Commissioner to rely upon the said statement and fasten such a huge liability upon New Kishan Cement and Major Cement. It has been further submitted before us by the learned Counsel that once oral evidence is eschewed from consideration the entire case made out by the Revenue against New Kishan Cement and Major Cement has to fail, as the case is built on oral evidence and third party documentary evidence which is supported by oral evidence. In the written submissions filed by the ld. Counsel, reliance has also been placed, in this regard, on the judgement of the Honble Supreme Court in CBI v V C Shukla & others, 1998 (75) ECR 484.
34. As regards the oral evidence and third party documentary evidence, which has been relied upon by the Revenue for denying the Cenvat credit, it is the submission of the ld. Counsel appearing for New Kishan Cement and Major Cement that no case could be made against them even on the basis of said evidence. The ld. Counsel, in his written and oral submission has drawn our attention to evidence gathered by the Revenue, in respect of each supplier of Pet coke. With regard to Harshiddhi Fertilizers and Chemicals, it is the submission of the learned counsel that there is no documentary or tangible evidence regarding non-receipt of pet coke in the factory of New Kishan Cement and Major Cement. As regards Radhe Vyapar Ltd, it is the submission of the learned Counsel that the credit of duty has been denied to New Kishan Cement and Major Cement on the basis of the statement of Shri Bhavin M Pabari, Proprietor of M/s Radhe Vyapar Ltd and a red colour diary seized from the premises of M/s Radhe Vyapar Ltd. It has been pointed out that Shri Bhavin M Pabari in his statement has admitted diversion of pet coke only in respect of 15 trucks which were consigned to New Kishan Cement and Major Cement. Therefore, even if the statement is accepted to be correct, only a quantity of 144.470 MT in case of New Kishan Cement and 128.650 MT in case of Major Cement could be said to have been diverted. Even in respect of the aforesaid quantity of 144. 470 MT and 128.650 MT (supra), it has not been clarified by the Revenue as to which specific invoices were given to New Kishan Cement and Major Cement without supply of Pet coke. No case could be made out on the basis of statement of Shri Bhavin M Pabari. Even the deposition made by Shri Bhavin M Pabari with regard to interception of 4 consignments of Pet coke, it is the submission of the learned Counsel that invoices pertaining to goods which was never received by New Kishan Cement and Major Cement. As regards Jayshree Vyapar Ltd, the allegation that 4068.929 MT of Pet coke and 5353.441 MT of Pet coke has not reached the factory premises of New Kishan Cement and Major Cement respectively is based on Daily Despatch Register prepared by Pratam Transport, Jamnagar. Perusal of entries made in the Register shows diversion of only 8 trucks in number at page 17, 19, 21, 23, 73 & 75. These entries referred to pet coke consigned to Major Cement and, therefore, there could be no allegation of consignment by Jayshree Vyapar to New Kishan Cement. Therefore, the demand could be raised only with regard to 8 entries which pertain to Major Cement. The quantities alleged to be dispatched under the said 8 entries were only to the extent of 140.10 MT. Therefore, there could be no question of wrongful avilament of credit of duty barring the 8 consignments consigned to Major Cement. Since the Daily Despatch Register is a document maintained by Pratam Transport, which is a third party document and, on which, New Kishan Cement and Major Cement have no control, no liability could be fastened even on the basis of the said Daily Dispatch Register.
35. As regards Karan Marketing and Karan Chemicals, it is the submission of the learned Counsel appearing on behalf of New Kishan Cement and Major Cement that there is no clear evidence in the Show Cause Notice to support the allegation of diversion as the statement of concerned personnel of the two units were only to the effect that there was a possibility of diversion. Therefore, it cannot be presumed, without tangible evidence that the Pet coke consigned to New Kishan Cement and Major Cement by Karan Marketing and Karan Chemicals have been diverted.
36. As regards Hindustan Exports and Kathiawad Industries, it is the submission of the learned Counsel appearing on behalf of New Kishan Cement and Major Cement that the demand is primarily based on the evidence supposedly contained in the hard disk of the computer found in the premises of Kathiawad Industries. It is the submission of the learned Counsel that the said evidence could not be relied upon for the following reasons:
(i) Electronic evidence recovered from computers can be relied upon only if the pre-requisites of Section 36B(2) of the Act are strictly complied with. In the present case, there was nothing to indicate that the strict requirements of Section 36B(2) of the Act were complied in respect of the HDD printouts relied upon by the Commissioner. Reliance in this context was placed on the judgements of the Honble Tribunal in Jindal Nickel and Alloys Ltd v C.C.E, Delhi, 2012 (279) ELT 134 (Del) and Sri Chakra Cements Ltd v C.C.E. Guntur, 2008 (231) ELT 67 (Bang).
(ii) Moreover, the computer printouts were tampered, as several pages had a caption inserted, on top of the page, in an added row, reading SUPPY OF COKE DUST(SOURCE-HARD DISC M/S. HINDUSTAN EXPORTS, MONTH JANUARY -2008. It is obvious that these words could not have figured in the original data as contained in the HDD, and have been inserted by the Departmental authorities. Once the Departmental authorities have tampered with the data contained in the HDD, the entire data becomes inadmissible in evidence, as its credibility is completely lost.
(iii) Moreover, the HDD wherefrom the said evidence was supposedly retrieved, did not belong to New Kishan Cement or to Major Cement. As such, they could not be made to answer for any data which was contained in the computer. In fact, such data would be ex facie inadmissible in evidence against the appellants.
37. It is the submission of the learned Counsel appearing for New Kishan Cement and Major Cement that in order to place reliance on the data retrieved from the computers, the statement of Kuldsinh Basiya has been relied upon. As the data itself has been tampered and was inadmissible in evidence for non-compliance of Section 36B (2) of the Act, no case could be made merely on the basis of statement of Shri Kuldipsinh Basiya. Moreover, Shri Kuldeep Singh Basiya has retracted his statement by duly notarized affidavit dated 16.5.08. As per the decision of the Honble Gujarat High Court in CCE, Ahmedabad-II v Tejal Dyestuff Industries, 2009 (234) ELT 242, a statement once retracted by way of affidavit cannot be relied on in the adjudication proceedings. It is further submitted on behalf of New Kishan Cement and Major Cement that the deposition of Shri Kuldeep Singh Basiya to the effect that Coke Dust had been supplied by Hindustan Exports and Kathiawad Industries under the invoice of contained in Cash Memo Book Nos 1,2 & 3, is belied even by Annexure B to the Show Cause Notice issued to Major Cement which indicates that these invoices covered supply of Iron and not of Coke Dust whereas Annexure B to the Show Cause Notice issued to New Kishan Cement shows the invoices, incorrectly, to be covering supply of Coke Dust. According to the ld. Counsel, this iron was unusable and was in the nature of waste, which was why it was not entered in the records of New Kishan Cement and Major Cement. The Commissioner has not adverted to this submission made before him in the adjudication proceedings.
38. On behalf of other appellants who are before us in connected appeals, the learned Counsels appearing on behalf of the said appellants, have adopted the submissions made by the learned Counsel, Shri C Hari Shankar appearing on behalf of New Kishan Cement and Major Cement. However, in addition, it was also there submission that imposition of penalty under Rule 26 of the Central Excise Rules, 2002 was not justifiable in the facts of the present case. They have also submitted that since the period in dispute is prior 1.2.2007, no penalty could be imposed under Rule 26. They have relied upon the decision in Ispat Industries v CCE & Cus, Aurangabad, 2008 (226) ELT 218.
39. The learned Counsel appearing on behalf of Hindustan Exports, Kathiawad Industries, Karan Chemicals and Karan Marketing have also submitted that revocation of Central Excise Registration was totally unjustifiable without establishing the fact that they have committed any offence under the Central Excise Act. Even otherwise, there are other provisions in the Act which duly takes care of a situation where any offence is committed by any person under the provisions of Central Excise Act. Without adopting such recourse, revocation of Central Excise Registration was totally unjustifiable.
40. The learned AR appearing for Revenue, in response to the submission made on behalf of New Kishan Cement, submitted that the learned Commissioner has passed the reasoned a detailed order and in view of the findings in the impugned order, the demand of duty and imposition of penalty was wholly justified. As regards the test report, it was submitted before us that the said report was given by NSIC which revealed that the samples drawn from the factory premises of New Kishan Cement and Major Cement was coke dust and not pet coke. He also supported the findings of the learned Commissioner that the narration in Panchnama dated 26.4.08 does not speak of any drawal of samples from the premises of New Kishan Cement and Major Cement. He has also supported the findings of the Commissioner that the Director of New Kishan Cement, Rajan Vadalia has agreed with the sampling procedure Even while his statement was being recorded after a period of 5 months, the Director never disputed the sampling procedure. On a specific query being asked to the learned AR by this Bench during the course of arguments that when there is a specific mention in the Panchnama dated 26.4.08 regarding drawal of samples how can it be said that no samples were drawn on the said date. The learned AR, to this query, has merely supported the stand of the Commissioner and is unable to give any satisfactory explanation. It was the submission of the learned AR that the department has placed overwhelming evidence on record to show that the material lying in the premises of New Kishan Cement and Major Cement was Coke Dust and not Pet coke. The test report of the NSIC coupled with documentary evidence recovered from the premises of Kathiawad Industries and the statement of Shri Kuldip Sinh Basiya, partner of the supplier establishment shows that the goods lying in the premises of New Kishan Cement and Major Cement were actually coke dust and not pet coke. The learned AR appearing for Revenue while dealing with the evidence of suppliers of Pet coke namely, Hindustan Exports, Radhe Vyapar Ltd, Jayshree Vyapar Ltd, Karan Chemicals and Karan Marketing, submitted that under the Cenvat Credit Rules, the burden of proof regarding admissibility of Cenvat Credit was on the manufacturer. New Kishan Cement and Major Cement have failed to submit any documentary evidence to show that they have received pet coke accompanied by a test certificate from an accredited laboratory. He also submitted that documentary evidence in the form of data contained in the hard disk of Hindustan Exports and Kathiawad Industries reveals that they were supplying non-cenvatable items to New Kishan Cement and Major Cement.
41. We have considered the submission made at length by both sides and perused the records.
42. On perusal of the records, we find that the case of the Revenue is mainly based on two evidences i.e. the Test Report of NSIC and the statements of suppliers of Pet coke and of the out-station buyers of Pet coke who were allegedly interested in only getting Pet coke without any Cenvatable invoice. It could be found from the submissions referred to hereinabove that New Kishan Cement and Major Cement have strongly contended that representative samples of Pet coke were drawn for testing on 26.4.08 and the Revenue has deliberately failed to disclose the report to them for reasons best known to them. Though no evidence has been placed before us to ascertain as to whether samples drawn on 26.4.08 were actually sent for testing, we find from the records that the stand taken by New Kishan Cement and Major Cement cannot be faulted with. Para 3 of the Show Cause Notice dated 29.3.11 clearly states that representative samples were drawn for testing and ascertaining its actual description and composition. Further, this fact is also supported by the details entered in the Panchnama dated 26.4.08 at S. No 23 and 24 of the said Panchnama dated 26.4.08 which clearly shows that samples of Pet coke were actually drawn on 26.4.08. Further, the stand taken by the New Kishan Cement and Major Cement is also fortified by the fact that upon request being made for providing test report of samples drawn on 26.4.08, the Revenue has not provided the same and has instead chosen to issue a Corrigendum dated 14.2.13 seeking to amend the Show Cause Notice after a period of almost 2 years from them date of issuance of the Show Cause Notice. Further, the Revenue had made the matter worse for them by issuing a communication on the very next day after issuance of the Corrigendum dated 14.2.13, in which an averment has been made to the effect that in the Panchnama dated 24.6.08, there was no recital of drawal of any samples. Upon a query by the Bench regarding this particular aspect as to why the Revenue has issued such a letter when the facts on record clearly shows that representative samples were dawn on 26.4.08, no satisfactory explanation was forthcoming and ld.A.R. merely supported the stand taken by the learned Commissioner stating that on 26.4.08, samples were only taken for safe custody. We are totally unimpressed, especially, because the facts of record show to the contrary. Therefore, we find force in the submission of the learned Counsel that representative samples were drawn on 26.4.08 which is also supported by S. No 23 and 24 of Panchnama dated 26.4.08. The findings of the Commissioner that no samples were drawn on 26.4.08 are baseless and contrary to the facts on record. The issue as to whether samples drawn on 26.4.08 were sent actually for testing is not verifiable from the facts on record. However, it certainly casts doubt on the case of Revenue as adverse inference can be drawn to the effect that Revenue had sent the samples drawn on 26.4.08 for testing and the test report was not in favour of the Revenue. We are constrained to take such a view because Corrigendum to Show Cause Notice (as referred hereinabove) was issued almost after a period of two years. Moreover, the Corrigendum was issued for deleting the para on which New Kishan Cement and Major Cement was strongly relying upon. It appears as though the corrigendum was issued to defeat the stand taken by New Kishan Cement and Major Cement. Issuance of Corrigendum at a belated stage also fortifies the stand of New Kishan Cement and Major Cement that the test report of the samples drawn on 26.4.08 was apparently in their favour.
43. Now, proceeding further on this aspect we find that test report of samples drawn on 3.5.08, cannot be given much credence. We are unable to understand in the present case that why the samples drawn on 3.5.08 has been sent for testing to NSIC when there are reputed government laboratories for the undertaking the concerned test. The learned AR has also not been able to give any reasonable explanation in this regard. We find that New Kishan Cement and Major Cement have also disputed the methodology adopted for testing and drawing of samples. Our attention was drawn by the ld.Counsel during the course of hearing to the BIS standards specified for testing the pet coke. We find that in the BIS standards it has been clearly mentioned that samples collected from the surface of coke in piles, pins, cars, ships or barges are, in general, unreliable because of size segregation and should not be used for determining conformance to specifications unless the purchaser and the seller agree. We also find that BIS standards also specify the minimum quantity of sample of pet coke required to be drawn for testing. We find from impugned order that the Commissioner has not disputed the BIS standards. The Commissioner has sought to reject the submissions made with regard to BIS standards by stating that Shri Rajan Vadaliya, one of the directors of New Kishan Cement, in his statement dated 14.10.08 has agreed with the sampling procedure followed on 2.5.08 and has not requested for re-drawal of samples. This finding has to be out rightly rejected. We have gone through the translated version of the statement given by Rajan Vadaliya. He has no were agreed to the sampling procedure. He has only stated that he has read the Panchnama and gives his dated signature; this averment cannot be treated as an agreement to the sampling procedure. Further we also find that the Commissioner has brought no concrete material on record to disbelieve the Test Report of RIL relied upon by New Kishan Cement and Major Cement and of the opinion from Quality Services and Solution. The Test Report from RIL clearly indicates that sulphur level and calorific value were always mentioned while determining the nature of coke. The opinion from Quality Services and Solution also states that it could not be ascertained merely on the basis of ash content, volatile matter and fixed carbon, as to whether the coke was pet coke or not. Further, we also find that there are two test reports regarding the same lot of Coke from the premises of Major Cement. The ash content in both the reports is widely varying. In one of the report it is 50.90% and in the other it is 16.80%. We, therefore, agree with the submission of the ld.Counsel that Test Report dated 7.5.08, is totally unreliable and do not find any merit in the finding entered by the Commissioner, in this regard.
44. The credit taken by New Kishan Cement and Major Cement, in the past has been sought to be recovered on the basis of the statements and third party documentary evidence predominantly in the form of data recovered from the Hard Disk of the computer found in the premises of Kathiawad Industries and Hindustan Exports.
45. Dealing with the evidence in the form of statements, we find from the record that New Kishan Cement and Major Cement has made repeated request for cross-examination of the persons whose statements have been relied upon. The Commissioner, in the present case, after keeping the request pending for two years, summarily rejected the request by letter dated 15.2.13. No reason has been stated in the said letter except to state that the Adjudicating Authority has not acceded to the request for cross-examination of person named in letter dated 11.9.09. In the impugned order, the Commissioner while addressing the issue of cross-examination has merely stated that the request for cross-examination was rejected considering the facts of case. The manner in which the adjudicating authority has dealt with the request of cross-examination is clearly incorrect. After having kept the request pending for almost two years, the Commissioner has rejected the request for cross-examination without giving any reason. In this context, it would be worthwhile to refer to the decisions cited by the ld. Counsel. Para 24 to 27 of the decision of Honble Delhi High Court in J&K Cigarattes Ltd v CCE, 2009 (242) ELT 189, merits reproduction:
24.?We may also point out at this stage itself that the power of the Parliament to make such a provision is not in question. It is also conceded by the learned senior counsel appearing for the petitioners in this case that such a provision could be incorporated in the statute, which is pari materia of Section 32 of the Evidence Act viz., to rely upon statements of certain persons even when they have not been produced for cross-examination, under the given circumstances. Thus, though it cannot be denied that the right of cross-examination in any quasi-judicial proceeding is a valuable right given to the accused/noticee, as these proceedings may have adverse consequences to the accused, at the same time under certain circumstances, this right of cross-examination can be taken away. Of course, the circumstances have to be exceptional.
25.?Section 9D of the Act stipulates following five circumstances, already taken note of, under which statements previously recorded can be made relevant. These are :-
(a) when the person who had given the statement is dead;
(b) when he cannot be found;
(c) when he is incapable of giving evidence;
(d) when he is kept out of the way by the adverse party;
(e) when his presence cannot be obtained without an amount of delay or expense, which the Officer considers unreasonable.
26.?Interestingly, the learned senior counsel for the petitioners did not join the issue that the aforesaid circumstances are not exceptional circumstances. They are the circumstances which naturally would be beyond the control of the parties and it would not be possible to produce such a person for cross-examination who had made a statement on earlier occasion. The provisions under Section 9D of the Act are necessary to ensure that under certain circumstances, as enumerated therein, viz. if the witness has been won over by the adverse party or is avoiding appearance despite several opportunities being given. The rationale is that decision making in a case cannot be allowed to continue in perpetuity. These provisions are based on the Doctrine of Necessity. It provides for relevancy of statements recorded under Section 14 of the Act dispensing with or without the opportunity for testing the truth of such evidence by cross-examination. For, when a person is dead or incapable of giving evidence or cannot be found, no better evidence can be had in the circumstances than the statement tendered by witnesses before a quasi-judicial authority.
The safeguards which are enumerated in the provision under Section 32 of the Evidence Act are essential as the provision provides for an exception to the rule of exclusion of hearsay evidence, while proving for relevancy of even direct oral evidence of the fact under enquiry, which otherwise is not admissible, to ensure that there is no miscarriage of justice. Similarly, provisions under Section 9D provide for relevancy of statements recorded under Section 14 of the Act, under certain circumstances, in criminal as well as quasi judicial proceedings, to meet the ends of justice.
27.?We, thus, are intent to agree with the submission of the learned Addl. Solicitor General that if an Act of Parliament uses the same language which was used in a former Act of Parliament referring to the same subject, viz. relevancy of statement of fact by person who is dead or cannot be found under certain circumstances, passed with the same purpose and for the same object, the safe and well known rule of construction is to assume that the legislature, when using well-known words upon which there have been well known decisions, use those words in the sense which the decisions have attached to them. The provisions under Section 32 of the Evidence Act have not been found to be ultra vires of the Constitution. Therefore, the provisions under Section 9D of the Act, which are pari materia with the provisions under Section 32 of the Evidence Act, cannot be held as ultra vires of the Constitution.
28.?The moot question that arises at this stage is as to whether the provision in question is arbitrary. Such a provision can still be held to be offending Article 14 of the Constitution and can be termed as arbitrary if it is established that the provision gives uncanalised and uncontrolled power to the quasi judicial authorities.
But, we are of the opinion that it is not so. The safeguards are inherent in the provision itself. In the first instance, only those statements of such persons, which are made and signed before the Central Excise Officer of a gazetted rank, are treated as admissible. Thus, protection is taken to treat the statements relevant only if they are made before an officer enjoying a higher rank/status. Secondly, (and that has already been taken note of) such statements are made relevant only under certain specified circumstances, and these are the ones which are beyond anybodys control. Thirdly (and this is most important), the quasi-judicial authority can rely upon the statement of such a person only when the stated ground is proved. For example, in those cases where the person who made the statement is dead, there should be sufficient proof that he is dead. In case, where a person cannot be found, the authority would have to form an opinion, based on some material on record, that such a person cannot be found. It would not be mere ipse dixit of the officer. In case, cogent material is not there to arrive at such a finding, the persons against whom the statement of such a person is relied upon can always challenge the opinion of the authority by preferring appeal to the higher authority, which appeal is statutorily available. Same yardsticks would apply to other grounds. If the quasi judicial authority opines that a person is incapable of giving evidence, formation of such an opinion has also to be predicataed on proper material on record, which could be in the form of mental or physical disability of such a person.
29.?Thus, when we examine the provision as to whether this provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial authority. The very fact that the statement of such a person can be treated as relevant only when the specified ground is established, it is obvious that there has to be objective formation of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for forming the opinion. Only then, it would be possible for the affected party to challenge such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject to judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted.
46. Aforesaid decision, therefore, clearly holds that where the case does not fall within one of the circumstances contemplated by clause (i) of Section 9D of the Central Excise Act, then it is mandatory to allow cross-examination of the person whose statements have been relied upon. This legal position has once again been reiterated by the Honble Delhi High Court in the case of Basudev Garg v CC, 2013 (294) ELT 353. The Honble Allahabad High Court in the case of CCE, Allahabad v Govind Mills Ltd has in the context of Section 9D has held thus:
Section 9D of the Act, provides that if a person is dead or cannot be found or incapable of giving evidence or is kept out of the way by the adverse party then his statement recorded before Central Excise Officer of a gazetted rank during course of any inquiry would be relevant.
47. We, therefore, agree with the submission of the ld. Counsel that having rejected cross-examination, it was not open to the Commissioner to place reliance upon the statements. This submission of the ld. Counsel is also in accordance with the decision of the Honble Supreme Court in the case of Swadeshi Polytex Ltd v CCE, Meerut, 2000 (122) ELT 641 (SC), wherein it has been held if the Adjudicating Authority intends to rely upon the statement of any person, the Adjudicating Authority should give an opportunity of cross examination of such persons.
48. According to the learned Counsel, if the statements are taken away, the case of Revenue fails. It is also his submission that there is no corroborative evidence in form of documents etc which could make out a case against New Kishan Cement and Major Cement. The learned AR, however, submits that the evidence gathered from seven suppliers of pet coke would clearly make out a case against New Kishan Cement and Major Cement.
49. Perusal of record reveals that no oral or documentary evidence has been adduced by the Revenue to deny the credit as regards the supplies made by Harshiddi Fertilizers & Chemicals. We find that Revenue has disputed the supplies made by RadheyVyapar, solely on the basis of the statement of Bhavin Mahendrabhai Pabari, recorded on 13.5.08 and 21.05.08 and a Red color diary seized from their premises. While going through the statement of Bhavin Mahendrabhai Pabari, we find that in his statement he has categorically asserted that the practice of diversion is being adopted for 15 trucks only. He has not made any categorical assertion regarding diversion of any other trucks. Therefore, there is force in the submission made by ld. Counsel that out of total purchases of 4633.058 Mts of pet coke, the allegation of non-receipt can be disputed only in respect of 144.470 Mts of pet coke. However, we find from the records that Revenue has failed to bring anything on record to clarify which specific invoices were given to New Kishan Cement and Major Cement without supply of pet coke. We, therefore, hold that the allegation of non-receipt of pet coke from Radhey Vyapar Ltd, is totally presumptuous. The inference drawn in the impugned order regarding non-receipt of pet coke, therefore, is not supported by the evidence on record. Regarding non-receipt of pet coke from Jayshree Vyapar Ltd, we find that the only documentary evidence is in the form of Daily Dispatch Register prepared by Pratham Transport, Jamnagar. We find from the record that entries made in the Daily Dispatch Register shows diversion only in respect of 8 trucks. The said entries show supplies being made to Major Cement and not to New Kishan Cement. Therefore, supplies made to New Kishan Cement cannot be disputed in any event. However, while examining the issue as to whether the entries made in the Daily Dispatch Register with regard to supplies made to Major Cement could be accepted as correct, we find that there is no tangible evidence to support the said entries. Moreover, it is not the case of the Revenue that the said entries were made under the instruction of New Kishan Cement and Major Cement. New Kishan and Major Cement have absolutely no control over the said records. Therefore, we accordingly hold that the allegation of only receiving invoices from Radhey Vyapar Ltd without physically receiving pet coke, cannot be sustained. As regards supplies made by Karan Chemical and Karan Marketing, we find that Revenue has relied upon the statement of Chandrakant J. Patel, Dipak Thakarshibhai Sayani and of Gautam J Patel. On perusal of the statements, we find that there is no categorical assertion by any of the aforesaid persons that there has been diversion of pet coke as regards the supplies made to New Kishan Cement and Major Cement. Some of them have only stated that there is a possibility of diversion having been taken place. No documentary evidence, which would to establish that only invoices of pet coke were being given to New Kishan Cement and Major Cement has been placed on record. We, accordingly, hold that there is no merit in the allegation made pertaining to the supplies made by Karan Marketing and Karan Chemicals. The documentary evidence relied upon in the impugned order regarding supplies made by Hindustan Exports and Kathiawad Industries are in from data retrieved from the Hard Disk supposedly maintained by them. The ld. Counsel while addressing this issue has pointed out that the computers printouts were tampered, which is evident from the relied upon documents supplied to New Kishan Cement and Major Cement. We have been shown the said document. We find that in the said document a caption has been inserted on the top of the page, in an added row, which reads supply of coke dust source-hard disc M/s Hindustan Exports, Month January-2008. We agree with the submission made by the ld. Counsel that these words could not have figured in the original data as contained in the Hard Disc, and have been inserted. It is obvious that once the original data retrieved from the Hard Disc is tampered, the entire data becomes inadmissible in evidence. It looses the credibility in its entirety. Apart from this, we also find that these evidences have been retrieved from Hard Disc, which is neither maintained by New Kishan Cement and Major Cement. New Kishan Cement and Major Cement have absolutely no control over the said Hard Disc. It is not even the case of the Revenue that the data has been entered in the Computer as per the instructions of New Kishan Cement and Major Cement. We also find that there is nothing to indicate that the Computer Print outs taken from the Hard Disc of the said computer was in regular use by Hindustan Exports and Kathiawad Industries. In such an eventuality, we are constrained to hold that computer print outs taken from the Hard Disk of the computer recovered from Hindustran Exports and Kathiawad Industries. While taking such a view, we are also guided by the decision of the coordinate bench of this Tribunal in the case of Jindal Nickel and Alloys Ltd v CCE, 2012 (279) ELT 134 and in the case of Sri Chakra Cements Ltd v CCE, 2008 (231) ELT 67. In the case of Jindal Nickel and Alloys Ltd (supra), it has been held that if the computer print outs are taken from a Computer which is not under the control of the person against whom the demand has been raised, it would be hit by provisions of Section 36B(2) of the Act. In the case of Sri Chakra Cements Ltd (supra), it has been held that the computer prints outs have not evidentiary value in case the print outs have been taken from a Computer which is not in regular use of the person. Section 36B (2) clearly states that computer print outs are admissible in evidence subject to fulfillment of conditions stipulated therein. In the present case, we find that the conditions mentioned in Section 36B(2) has not been complied with while relying upon the computer print outs. Therefore, we have no hesitation in holding that the computer print outs taken from the hard disc of the computer recovered cannot substantiate the case of the Revenue.
50. We also find that in impugned order, the Commissioner while ordering for confiscation, imposing redemption fine and penalty, in connection with the Show Cause Notice dated 21.10.08, has not entered any categorical finding to sustain the said order.
51. In view of the foregoing findings, we set aside the impugned orders dated 25.3.13 and 31.03.13, and allow the appeals filed by New Kishan Cement and Major Cement with consequential relief. Since we are allowing appeals preferred by New Kishan Cement and Major Cement, and setting aside the demand of Cenvat Credit, imposition of penalties on the ground of abetment cannot arise. Accordingly, we set aside the imposition of penalty against all the other parties, who are in appeal before us. Needles to say, once the impugned orders are set aside, the question of sustaining the revocation of Central Excise Registration in the case of Hindustan Exports, Jayshree Vyapar Ltd, Karan Chemicals and Karan Marketing does not arise. We accordingly, set aside the order for revoking the Central Excise Registration qua the aforesaid parties.
(Pronounced in Court on 24.02.2014)
(H.K. Thakur) (M.V. Ravindran)
Member (Technical) Member (Judicial)
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