Customs, Excise and Gold Tribunal - Delhi
M/S. Takshila Spinners vs Cce Chanaigarh on 11 May, 2001
Equivalent citations: 2001(131)ELT568(TRI-DEL)
ORDER
P.S. Bajaj
1. This appeal has been filed by the appellants against the order in original dated 21.4.2000 passed by the Commissioner vide which he had confirmed the duty demand of Rs.22,44,086.79 and imposed penalty of equal amount alongwith the interest, on them.
2. The facts giving rise to this appeal may briefly be stated as under:
3. The appellants were engaged in the manufacture of woollen worsted yarn falling under Chapter 51 (sub-heading 5103.10) of the CETA. They were clearing this yarn in cones in the guise of yarn in plain (straight) reel hanks and wrongly availing benefit of Exemption Notification No.26/94-CE dated 1.3.94 as amended by Notification No.90/94-CE dated 25.4.94. On receipt of information, their factory premises were visited by the Preventive Staff of the Central Excise in the presence of Shri Sanjiv Aggarwal, Director of the appellants company. The staff conducted physical verification of the fully finished goods lying in the stock and the same were found in order as per balance recorded in the RG.1 Register. However, list of the various buyers to whom the woollen yarn was sold by the appellants, was taken and most of the buyers were located at Amritsar and Ludhiana. On enquiry from those buyers, it revealed that the appellants had sold them worsted woollen yarn not in plain(straight) reel hanks, but in cones as they all in their respective statements stated so. However, description in the invoices issued to the buyers given was worsted woollen yarn 'H'. The statement of Shri Sanjiv Aggarwal, Director of the appellants was also recorded on 2.6.95 wherein he admitted availment of benefit of SSI exemption during the year 1994-95, but maintained that the woollen worsted yarn in plain (straight) reel hanks was sold and the same was chargeable to nil rate of duty in terms of Exemption Notification No.26/94-CE dated 1.3.94. However, from the statement of the buyers and the examination of sale invoices, it revealed that during the period 25.4.94 to 31.3.95 the appellants had cleared woollen worsted XXXXXXX yarn in cones valued at Rs.2,47,63,798/- without payment of duty of Rs.22,44,086.79. They were served with slow cause notice dated 27.1.99 vide which duty demand of Rs. 22,44,086.79 was raised by invoking the extended period of limitation and penalty was also proposed to be imposed on them. After getting their reply to that show cause notice wherein they denied the allegations and maintained that they cleared worsted woollen yarn only in plain(straight) reel hanks and not in cones and even mentioned os in their invoices at the time of sale to the buyers and as such they were not liable to pay the duty being entitled to the benefit of exemption Notification No.26/94-CE dated 1.3.94. They also prayed for summoning of the witnesses whose statements were recorded, for cross-examination during the adjudication proceedings, but the Commissioner did not cause the presence of those witnesses and proceeded to decide the case. He through the impugned order confirmed the duty demand as mentioned in the show cause notice and also imposed penalty of equal payable with interest on them.
4. The appellants have come up in appeal before the Tribunal.
5. The learned counsel for the appellants has assailed the validity of the impugned order on the ground that it has been based only on surmises and conjectures and not on any legal evidence as the statements of the witnesses recorded at the back of the appellants, could not be used as substantive evidence against them without permitting their cross-examination. Therefore, the impugned order is illegal and deserves to be set aside. In support of his contention he has placed reliance on Sharma Chemicals Vs. CCE Calcutta-11 2001(42) RLT 631 and Shalimar Agencies Vs. CCE Kandla, 2000(38) RLT 897.
6. Regarding the imposition of penalty, the learned counsel has contended that the same could not be imposed under Section 11-AC of the CEA as the period of alleged evasion of duty involved is prior to the insertion of this Section in the Statute. He has referred to CCE Coimbatore Vs. Elgi Equipments Ltd., 2000(42) RLT 987(SC) to corroborate his contention.
7. On the other hand, the learned JDR has only reiterated the correctness of the impugned order and argued that the statements of the witnesses (buyers); had been rightly used against the appellants as their names were given by the appellants themselves and they all admitted the sale of the worsted woollen yarn in cones and not in reel hanks, to them by the appellants.
8. We have gone through the record and heard both the sides.
9. The allegations attributed to the appellants in the show cause notice were that they had cleared worsted woollen yarn in cones, in the guise of plain (Straight) reel hanks, during the period in question (25.4.94 to 31.3.95) and wrongly availed the benefit of exemption Notification No.26/94-CE dated 1.3.94. To substantiate these allegations, the evidence relied upon before the adjudicating authority, by the Revenue was the statements of the buyers whose name were allegedly supplied by the appellants themselves and they belonged to Amritsar and Ludhiana. All those buyers in their statements allegedly admitted the sale of worsted woollen yarn in cones, to them, by the appellants.
11. But it remains undisputed that statements of all those buyers were recorded at the back of the appellants during investigation. None of them was produced for cross-examination for questioning the varacity of their statements, during the course of adjudication proceedings by the Revenue, even though request to that effect was specifically time and again made by the appellants. The perusal of the impugned order itself shows (refer to para 21) that 15 witnesses were called for cross-examination but none of them appeared and the counsel for the appellants requested the Commissioner that he could not proceed without cross-examination of the witnesses, but still the Commissioner proceeded with the case and relied upon the uncross-examined statements of the witnesses to confirm the duty demand on the appellants. In fact, legally the statements of those witnesses could not be accepted or taken into evidence, for having failed to submit themselves for cross-examination, by the appellants. Whatever those witnesses stated during the investigation before the Preventive staff, could not be accepted as gospil truth by the Commissioner who was supposed to act judiciously and could rely upon only on that piece of evidence which was admissible in law. He could not, legally use the uncross-examined statements of the witnesses against the appellants for holding that they cleared worsted woollen yarn in cones in the guise of plain (straight) reel hanks.
12. Moreover, the statements of those witnesses also did not find corroboration from any other evidence. No cones of the worsted woollen yarn allegedly purchased by them from the appellants ,were found and seized from their premises. No document was produced by any of the witnesses, to corroborate his statement regarding purchase of the worsted woollen yarn in cones and not in plain(straight) reel hanks, from the appellants. Rather, the invoices the copies of which have been placed on file by the appellants, showed that they had sold only worsted woollen yarn in hanks and not in cones. The description of the goods given by them in the invoices was worsted woollen yarn 'H' i.e. in hanks. None of the invoices indicated that sale of worsted woollen yarns in cones to any to the buyers(witnesses). Even from the factory premises of the appellants no unaccounted in the statutory record, cones of the worsted woollen yarn, were found, by the Preventive Staff. Rather on verification the finished goods lying in the stock were found to be in order as per the balance recorded in RG.1 Register and this fact even stands admitted in the show cause notice as well as in the impugned order, also Therefore, ocular and uncorroborative statements of the witnesses recorded during investigation at the back of the appellants, without allowing them to test the correctness of the same by cross-examining those witnesses, could not be made basis for holding that the allegations against them as set out in the show cause notice, stood proved, by the Commissioner. That was in fact, no evidence in the eyes of law which could be used against them. Therefore, the impugned order of the Commissioner being solely based on inadmissible evidence cannot be legally sustained. In Sharma Chemicals Vs. CCE Calcutta-11 (supra) referred by the counsel it had been ruled that denial of cross-examination of the person to whom the appellants denied their employee, amounted to violation of principles of natural justice and as such clandestine removal of the goods based on the entries in the note book recovered from that person did not stand proved. To the same effect is the proposition of law down by the Tribunal in Shalimar Agencies vs. CCE Kandla(supra) cited by the counsel.
13. Regarding the imposition of penalty also under Section 11-AC of the CEA the impugned order of the Commissioner cannot be legally on the face of it sustained, as the said section was not on the statute at the time when the evasion of the duty was allegedly made by the appellants. The period involved is from 25.4.94 to 31.3.95 and at that time Section 11-AC was not on the statute as this section was inserted w.e.f. 28.9.96 by Section 76 of the Finance Act, 1996. This section did not had retrospective but only prospective, operation as ruled by the Apex Court in CCE Coimbatore Vs. Elgi Equipments Ltd. (supra) referred by the counsel.
14. In view of the discussion made above, the impugned order of the commissioner, under appeal, is set aside. The appeal of the appellants is allowed with consequential relief, permissible under the law.