CESTAT Directs Re-Examination of Clandestine Goods Removal Case as Witness Not Examined

Court Name : CESTAT Kolkata

Parties : Ashoka Re-Rolling Mills Private Limited Vs Commissioner of Central Excise 

Decision Date : 27 July 2023

Judgement ref : Excise Appeal No. 422 of 2010

Imagine you're involved in a case of clandestine goods removal. The case is proceeding, but there's a hitch: a key witness hasn't been examined. You're concerned. You know that the testimony of this witness could be crucial to your defense.

This was the situation in a recent case before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT). But here's the twist: CESTAT ordered a re-examination of the case, citing that the key witness was not examined.

The tribunal emphasized the importance of witness examination in ensuring a fair trial. It noted that the failure to examine the witness could have potentially influenced the outcome of the case.

So, if you ever find yourself in a similar situation, remember this ruling. It underscores the importance of a thorough and fair trial process. Always ensure that all key witnesses are examined and their testimonies are properly recorded. And remember, you have the right to request a re-examination if you believe that the trial process has been compromised.

FINAL ORDER NO. 76184-76185/2023

DATE OF HEARING : 14 July 2023

DATE OF DECISION : 27.07.2023

Per : ASHOK JINDAL :

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

documents. 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-CESTATDEL]. 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;

(vi) 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 crossexamined. In the absence of examination-in-chief, allowing the crossexamination, 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.)

Sd/

(ASHOK JINDAL)

MEMBER (JUDICIAL)

Sd/

(K. ANPAZHAKAN)

MEMBER (TECHNICAL)

------------------------------------------------------------------------

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE

TRIBUNAL, KOLKATA

EASTERN ZONAL BENCH : KOLKATA

REGIONAL BENCH - COURT NO.1

Excise Appeal No.422 of 2010

(Arising out of Order-in-Original No.CCE/BBSR-II/NO.01/COMMISSIONER/2010

dated 25.02.2010 passed by Commissioner, Central Excise & Customs,

Bhubaneswar-II)

M/s. Ashoka Re-Rolling Mills Private Limited

(At-Sannuagaon, P.O.-Chikatmati, Kalunga, Dist-Sundergarh, Orissa-770031.)

…Appellant

VERSUS

Commissioner of Central Excise, Bhubaneswar-II

…..Respondent

(C.R. Building, Rajaswa Vihar, Bhubaneswar, Orissa.)

WITH

Excise Appeal No.423 of 2010

(Arising out of Order-in-Original No.CCE/BBSR-II/NO.01/COMMISSIONER/2010

dated 25.02.2010 passed by Commissioner, Central Excise & Customs,

Bhubaneswar-II)

Shri Manoj Kumar Jain, Director

M/s. Ashoka Re-Rolling Mills Private Limited

(At-Sannuagaon, P.O.-Chikatmati, Kalunga, Dist-Sundergarh, Orissa-770031.)

…Appellant

VERSUS

Commissioner of Central Excise, Bhubaneswar-II

…..Respondent

(C.R. Building, Rajaswa Vihar, Bhubaneswar, Orissa.)

APPEARANCE

Shri Kartick Kurmy, Advocate for the Appellant (s)

Shri S.Mukhopadhyay, Authorized Representative for the Revenue

CORAM: HON’BLE SHRI ASHOK JINDAL, MEMBER(JUDICIAL)

HON’BLE SHRI K. ANPAZHAKAN, MEMBER(TECHNICAL)