Placing reliance on statements unjustified as no opportunity for cross-examination granted

Clipped from: https://taxguru.in/excise-duty/placing-reliance-statements-unjustified-opportunity-cross-examination-granted.html

Messrs Growmore Ceramics Pvt. Ltd. Vs C.C.E. & S.T. (CESTAT Ahmedabad)

CESTAT Ahmedabad held that placing reliance on the statements unjustified as no opportunity to cross-examine is granted and even the test of Section 9D of Central Excise Act is not passed.

Facts- A case was booked against appellant for clandestine removal of goods based on certain documents recovered from the appellant and certain statements recorded by Revenue. Tribunal in its order dated 26.11.2007 noticed certain discrepancies in analysis of documents in the order in original. The Tribunal accepted the evidence produced by the appellant to a certain extent and remanded the matter for fresh adjudication.

However, the demand was confirmed ignoring the observations made by the Tribunal twice over.

Conclusion- Held that the observation of the Tribunal are final observations and it is not open to the Commissioner to deviate from the findings given in the order.

The Commissioner has clearly ignored the findings of the Tribunal and come to a difference conclusion. While doing so he is relied on the confessional statements of buyers. We find that no opportunity of cross-examination has been given and the test of Section 9D of the Central Excise Act has not been passed in respect of this statements. In absence of cross-examination no reliance can be placed on these statements.

FULL TEXT OF THE CESTAT AHMEDABAD ORDER

This is the 4th round of litigating before Tribunal.

2. A case was booked against appellant for clandestine removal of goods based on certain documents recovered from the appellant and certain statements recorded by Revenue. Tribunal in its order dated 26.11.2007 noticed certain discrepancies in analysis of documents in the order in original. The Tribunal accepted the evidence produced by the appellant to a certain extent and remanded the matter for fresh adjudication for following observations:

3. We have seen the relevant page for the said entry. Total sale shown as Rs. 72.22.250/- is the sum total of the sale of two varieties as also tax and transportation. As such, we agree with the Ld. Advocate that there is no justification by doubling the said sale figures.

4. Similarly, we have been shown discrepancies while arriving at a sale figure for the year 2000-2001. Apart from showing the actual sale value for a particular month, the appellants have also shown the outstanding recovery amount of sales made in the preceding months and the amount recovered in that particular month. The Commissioner has made sum total of all the figures and have arrived at a clearance figure, which is much higher that the actual clearance figure. This become clear form the fact that amount shown as outstanding recovery amount in one month stands carried forward in the next month are subtracted. As such, it is the progressive total, which has to be taken into consideration. Without going into the details of each and every month, as we feel convinced that the clandestine removal figures have not been computed correctly, we set aside the impugned order and remand the matter to Commissioner to re-quantify the demand after taking into note of the above discrepancies pointed out by the appellants. Needless to say that the appellants would be given an opportunity to put forth their case before the Adjudicating Authority.

5. In as much as the matter stand remanded for re-quantification of duty, the Commissioner would quantify the penalty amount The grievance of M/s. Saffrcn Glass & Ceramics, as regards of imposition of penalty, in respect of their being considered as dummy unit, would also to be looked into by the Adjudicating Authority. Similarly penalty imposition on Shri A. D. Kaneria would also be examined.”

2.1 After this first remand order dated 26.11.2007 the matter was again adjudicated by commissioner vide order no 40/COMMR./2009 dated 31.08.2009. In the said order the commissioner citing largely from the OIO 13/COMMR/2003 dated 11.07.2003 (which was earlier set aside by tribunal order dated 26.11.2007 cited above) came to the conclusion that the demand was correctly made and reconfirmed the same. The matter was again agitated by the appellant before tribunal. After examining the observations made in the earlier order of tribunal dated 26.11.2007, the order of the commissioner was set aside and matter was remanded again. The tribunal in its second order dated 24.01.2019 made following observations:

“6. We have gone through the rival submissions we find that Tribunal vide Order No. A/2966 to 2968/WZB/AHD/2007 dated 26.11.2007, in respect of issue relating to the value of clandestine clearances as per computerized sales record, observed as follows.

“2. It is seen that the period involved in the present appeal is 1 999-2000 and 2000-01. The demand is based upon the sale register retrieved from the computer, which does not stand reflected in statutory records. By drawing our attention to the said sale register for the year 1999- 2000, sh. Dave submits that the total clearances shown in the said register was to the tune of Rs. 72,22,250/-. The said sale was further shown in the computer printout as bifurcated in respect of two varieties i.e. OPEAK and TR. Transportation charges were separately shown and 12% tax was also shown separately. He submits that if the total of the sales of two varieties and along with tax and transportation charge is taken into consideration, the same would amount to Rs. 72,22,250/-, which figure is separately shown as total sale in the said computer print. However, the commissioner instead of taking the total sale as Rs. 72,22,250/-, has erroneously taken the sum total of all the figure and had arrived at a sale of Rs. 1,44,44,500/-

2. We have seen the relevant page for the said entry. Total sale shown as Rs. 72,22,250/- is the sum total of the sale of two varieties as also tax and transportation. As such, we agree with the Ld. Advocate that there is no jurisdiction by doubling the said sale figures.”

7. It is clear from the above that the issue regarding the duplication of demand has been finalized by Tribunal and Commissioner has no jurisdiction to question the said decision. If Revenue had any doubt regarding the aforesaid decision they should challenged the said decision of the Tribunal. Having failed to challenge the said decision it become final and binding on Commissioner. Thus, the impugned order is being in  violation of Tribunal order is set aside.

8. As regard, the issue raised by Revenue regarding non confirmation of the interest in the order portion since, impugned order has been set aside for the re-quantification, the matter regarding interest will be decided a fresh by the lower authority. As regard, the second issue raised by the Revenue relating to the adjustment of outstanding the same requires re­examination as the total clearances/ sales have to be re-quantified and the duty liability re-calculated after re-quantification of the sales value arrived at on the basis of computerized sales register, in light of Tribunal decision dated 26.11.2007.

9. In the view of above impugned order is set aside and matter remanded to the adjudicating authority to pass a fresh adjudication order in terms of the Tribunal order dated 26.11.2007 by which the matter was remanded to the adjudicating order.”

2.2 Thereafter, the matter was taken up for the adjudication by Commissioner once more and vide the order dated 16.04.2020, the demand was once again confirmed ignoring the observation made by the tribunal twice over. In the said order commissioner has observed as follows:

“03.07 In the instant matter, I have noted that Hon’ble Tribunal under Order No. A/10175-10176/2019 dated 24.01.2019 has set aside the OIO No. 40/COMMR./2009 dated 31.08.2009 passed by Commissioner and remanded to pass a fresh adjudication in terms of the Tribunal’s earlier order dated 26.11.2007 by which the matter was remanded.

03.08 From the earlier order dated 26.11.2007 of Hon’ble Tribunal at Para 2, I have noted that the said para was pertaining to the duplication in calculation of duty for the year 1999-2000 and further, at Para 3, discrepancies while arriving at sale figures for the year 2000-2001 as against the submissions made before by M/s. GCPL. As against the first submission the Hon’ble Tribunal has observed, a text of which is reproduced as under:

“We have seen the relevant page for the said entry. The total sale shown as Rs. 72,22,250/- is the sum total of the sale of two varieties as also tax and transportation. As such, we agree with the ld. Advocate that there is no justification by doubling the said sale figures.”

For further submission, the Hon’ble Tribunal has observed, a text of which is reproduced as under”

“…… .without going into the details of each and every month, as we feel convinced that the clandestine removal figures have not been computed correctly, we set aside the impugned order and remand the matter to Commissioner to re-quantify the demand after taking into note of the above discrepancies pointed out by the appellants ”

2.3 Thereafter in the order dated 16.04.2020, the Commissioner once again confirmed the entire demand without following the direction in the first tribunal order dated 26.11.2007 and also the second tribunal order dated 24.01.2019 . The fact of duplication of demand has been specifically examined in both the tribunal’s order and the finding of both the orders are very clear and precise leaving no scope for interpretation. Even if the Adjudicating Authority had any doubts regarding what was stated in the first tribunal order dated 26.11.2007 the same was clarified in the second tribunal order dated 24.01.2019. In case the commissioner was aggrieved by the observation of the second tribunal order dated 24.01.20 19 the right course of action was to take the matter to the higher forum and not to ignore the same. The Tribunal vide order dated 02.03.2021, set aside the said order as it was passed in violation of 2 Tribunal orders. The matter was again remanded back to the Adjudicating Authority for fresh adjudication and following the directions made in earlier order dated 26.11.2007.

2.4 The matter was again adjudicated vide order No. AHM-EXCUS-003- COM-001-21-22 dated 11.05.2021. The said order is now being challenged in this appeal.

2.5 In the impugned order, the Commissioner has allowed the adjustment for the period 1999-2000 as directed in the Tribunal orders dated 26.11.2007.

2.6 As regard the demand for the year 2000-2001, the Commissioner has relied on the statements given by the buyers to confirm the charge of clandestine clearance. The appellants have heavily contested the fact that no cross-examination of the buyers was allowed and therefore no reliance on statements can be made. We note that the matter has travelled between commissioner and Tribunal number of times and on earlier occasion the directions of Tribunal were not followed. The direction of Tribunal made in para 3 of its order dated 26.11.2007, has been followed and relief has been granted by the Commissioner to that extent for the period 1999-2000. It is seen that in para 4 of the order dated 26.11.2007, it has been clearly the following has been observed for the demand for the period 2000-2001:

“4. Similarly, we have been shown discrepancies while arriving at a sale figure for the year 2000-2001. Apart from showing the actual sale value for a particular month, the appellants have also shown the outstanding recovery amount of sales made in the preceding months and the amount recovered in that particular month. The Commissioner has made sum total of all the figures and have arrived at a clearance figure, which is much higher that the actual clearance figure. This become clear form the fact that amount shown as  outstanding recovery amount in one month stands carried  forward in the next month are subtracted. As such, it is the  progressive total, which has to be taken into consideration.  Without going into the details of each and every month, as we  feel convinced that the clandestine removal figures have not been computed correctly, we set aside the impugned order and remand the matter to Commissioner to re-quantify the demand after taking into note of the above discrepancies pointed out by the appellants. Needless to say that the appellants would be given an opportunity to put forth their case before the Adjudicating Authority.”

2.7 We note that the above observation of the Tribunal are final observations and it is not open to the Commissioner to deviate from the findings given in para 4 of the order dated 26.11.2007 reproduced above.

2.8 The order clearly lays down that the amount shown as outstanding recovery amount in one month stands carried forward in the next month and the actual recoveries made in that month are subtracted. The order dated 26.11.2007 clearly holds that the amount shown as a progressive total and has to be treated in that manner.

2.9 The Commissioner has clearly ignored this findings and come to a difference conclusion. While doing so he is relied on the confessional statements of buyers. We find that no opportunity of cross-examination has been given and the test of Section 9D of the Central Excise Act has not been passed in respect of this statements. In absence of cross-examination no reliance can be placed on these statements.

3. We find that Commissioner has quantified the amount of duty payable for the year 1999-2000 has Rs. 1,11,113/- in para 3.09 of the impugned order. The amount of duty for financial year 2000-01 has been confirmed in total ignoring the directions given by the Tribunal in the order dated 26.11.2007. The impugned order is therefore set aside, and the matter is remanded to the Commissioner for determination of the duty liability for the Financial year 2000-01 in terms of para 4 of the Tribunal order dated 26.11.2007. The demand for the financial year 1999-2000 has already been quantified. The quantum of Interest and penalty for the entire period will be re-quantified by the Commissioner in the remand proceedings, the appeal is allowed by way of remand.

(Pronounced in the open Court on 14.03.2023)

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