M/S Batra Enterprises vs Cce, Delhi Ii

[Arising out of the Order-in-Original No. 27-28/2004 dated 29/10/2004 passed by The Commissioner of Central Excise, New Delhi.]

For Approval and signature :

Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial)

1. Whether Press Reporters may be allowed to see :

the Order for publication as per Rule 27 of the

CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of :

the CESTAT (Procedure) Rules, 1982 for

publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair :

copy of the order?

4. Whether order is to be circulated to the :

Department Authorities?

M/s Batra Henlay Cables ]

M/s Batra Enterprises ] Appellants

Shri Brajesh Batra ]

Versus

CCE, Delhi  II Respondent

Appearance

S/Shri Sudhir Malhotra and A.S. Hasija, Advocates  for the Appellants.

Shri M.S. Negi, Authorized Representative (DR)  for the Respondent.

CORAM : Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial)

Final Order No. 51200-51202/2015 Dated : 17/04/2015

Per. Rakesh Kumar :-

The facts leading to filing of these appeals are, in brief, as under.

1.1 M/s Batra Henlay Cables, Delhi is a partnership firm with Shri Rajesh Batra, his mother Mrs. Vidya Batra and Mrs. Madhvi Batra, wife of Shri Brajesh Batra (brother of Shri Rajesh Batra) as its partners. This partnership firm in its factory at Village Molar Band, Badarpur, Delhi manufactures wires and cables, house wires, cables for internal wiring and telecom cables of various sizes under the brand name Batra Henlay. M/s Batra Enterprises is a partnership firm with Shri Brajesh Batra, Rakesh Batra and Shri Vivek Batra, brothers of Shri Rajesh Batra as its partners. Another partner of this firm is Mrs. Mala Batra wife of Shri Rajesh Batra. M/s Grandlay Cinema is a proprietary firm of Shri C.L. Batra Father of Shri Rakesh Batra, Shri Rajesh Batra, Shri Brajesh Batra and Shri Vivek Batra. M/s Batra Enterprises, M/s Batra Henlay Cables and M/s Grandlay Cinema have offices at the same place. The period of dispute in this case is from 1994-1995 to 1997-1998. During this period M/s Batra Henlay were availing of SSI exemption and were not paying any duty on the ground that according to them they were under full duty exemption.

The premises of M/s Batra Henlay Cables, M/s Batra Enterprises were searched by the Jurisdictional Central Excise officers on 17/01/97. At that time while M/s Batra Henlay were not registered with Central Excise Department, they had issued invoices upto 356 dated 20th October, 1996 and after this invoice, there was only an isolated invoice No. 516 dated 28/12/96 and the invoices in between were missing. Certain other records which appeared to be relevant for investigation were taken over under Panchnama for further investigation. During investigation it was found that the invoice No. 183, 192, 205, 215, 250, 276, 280, 320, 323 etc. had been issued to two different sets of buyers and it appeared that under the same invoice numbers goods had been sold to two different sets of buyers, the other set of sale transactions being unaccounted. Beside this, it was also found that the appellant had issued invoices No. 404, 428, 452 and 473 to M/s Sterling and Wilson Electricals and No. 450, 482, 504 and 615 to M/s ETA but the goods sold under these invoices had not been accounted for in their books of accounts.

It, therefore, appeared that M/s Batra Henlay Cables in order to remain within full duty exemption limit and thereby wrongly and fraudulently avail of the SSI exemption were grossly under reporting and suppressing their production and clearance.

1.2 In course of investigation, it was found that account No. 347 had been opened in Ashok Vihar Branch of Catholic Syrian Bank Limited in the name of Shri Vinod Kumar, an employee of Grandlay Cinema, by showing him as Proprietor of M/s Batra Henlay Cables and similarly another account No. 3159 had been opened in Shakur Basti, New Delhi Branch of Punjab National Bank in the name of the same Shri Vinod Kumar by showing him as proprietor of M/s Batra Henlay Cables. Similarly, it was found that an account No. 367 had been opened in Ashok Vihar Branch of Catholic Syrian Bank Limited in the name M/s Cosmoline Electricals through the same Shri Vinod Kumar and an account No. 4077 had been opened in Darya Ganj, Delhi, Branch of Indian Overseas Bank in the name of M/s Cosmoline Electricals through the same Shri Vinod Kumar. As per the statement of Shri Ramesh Chand Jain, Proprietor of M/s Bharat Construction Corporation, one of the customers of M/s Batra Henlay Cables, M/s Cosmoline Electrical is a concern of Shri Brajesh Batra. Another account was found in the Ashok Vihar, New Delhi Branch of Catholic Syrian Bank Limited in the name of M/s Devin Board.

From the bank statements of the accounts of Shri Vinod Kumar in Catholic Syrian Bank Limited and Punjab National Bank and from the bank statements in respect of accounts of M/s Cosmoline Electrical in the Catholic Syrian Bank Limited and Indian Overseas Bank, it was found that the cheques received from various customers were being deposited in these accounts and thereafter the amounts credited in these accounts were being transferred to the account of M/s Devin Board in Catholic Syrian Bank Limited from where the amount were being withdrawn in cash. Shri Vinod Kumar in his statement dated 03/3/98 stated that while he is working as booking clerk in the Cinema Hall of Grandlay Cinema owned by Shri C.L. Batra, and at the instance of Shri Brajesh Batra, he had opened an account No. 347 in Catholic Syrian Bank Limited, Ashok Vihar, New Delhi in November 1994 as Proprietor of M/s Batra Henlay Cables on the introduction of Shri Naveen Mehta, a person known to Shri Brajesh Batra and that similarly he had opened an account No. 3159 in Punjab National Bank in his name as Proprietor M/s Batra Henlay Cables and account No. 367 in Catholic Syrian Bank Limited in his name as Proprietor of M/s Cosmoline Electrical and another account No. 4077 in Indian Overseas Bank in his name as Proprietor of M/s Cosmoline Electrical, that these accounts, though in his name, were being operated by Shri Brajesh Batra, that to his knowledge the amounts received through cheques in these account pertain to sale of wires and cables manufactured in the factory premises of M/s Batra Henlay Cables, that the cash withdrawn by him used to be handed over by him to Shri Brajesh Batra who was the real owner of M/s Batra Henlay Cables and that subsequently when the Bank Manager of Catholic Syrian Bank Limited objected to huge cash withdrawal, he, on the instructions of Shri Brajesh Batra, started issuing cheques in the name of M/s Devin Board, which was a firm of Shri Naveen Mehta which had a bank account in Catholic Syrian Bank Limited, that the cheques issued in the name of Devin Board were being deposited in its account and thereafter cash used to be withdrawn from that account and used to be handed over to Shri Brajesh Batra.

Statement of Shri Rajesh Batra, Partner of M/s Batra Henlay Cables, was recorded wherein he stated that it is his brother Shri Brajesh Batra who is looking after the work of M/s Batra Henlay Cables. Enquiries were made with certain buyers of wires and cables who had made cheque payments in the name of M/s Batra Henlay Cables and M/s Cosmoline Electrical and they confirmed having purchased wires and cables from M/s Batra Henlay Cables. In view of this investigation, it appeared that the amounts deposited in the above-mentioned four bank accounts were for sale proceeds of the wires and cables manufactured by M/s Batra Henlay Cables which had not been accounted for in its books of accounts. The amounts deposited in these accounts during 1994-1995, 1995-1996, 1996-1997 and 1997-1998 were Rs. 43,67,280/-, Rs. 1,38,55,588/-, Rs. 99,14,298/- and Rs. 8,09,212/- respectively against which the value of clearances declared in the books of accounts during these years were Rs. 29,72,193/-, Rs. 29,37,677/-, Rs. 50,00,713/- and Rs. 1,15,40,988/- respectively and, thus, the total value of wires and cables cleared during 1994-1995, 1995-1996, 1996-1997 and 1997-1998 which had not been declared and had been deposited in the four bank account above-mentioned appeared to be Rs. 2,89,47,379/-.

The duty demand of Rs. 66,04,307/- is on this basis. It is in view of this that the show cause notice dated 27/9/99 was issued to M/s Batra Henlay Cables, Shri Rajesh Batra and Shri Brajesh Batra for  (a) demand of Central Excise duty amounting to Rs. 66,04,307/- from them under proviso to Section 11A (1) of Central Excise Act, 1944 for the period from 1994-1995 to 1997-1998 alongwith interest thereon under Section 11AB, (b) imposition of penalty on M/s Batra Henlay Cables under Rule 173Q (1) (d) of Central Excise Rules, 1944 readwith Section 11AC of Central Excise Act, 1944 ; (c) confiscation of land, building, plant, machinery of M/s Batra Henlay Cables under Rule 173Q (2) of the Central Excise Rules, 1944 and (d) imposition of penalty under Rule 209A of Central Excise Rules, 2002 with Shri Rajesh Batra and Shri Brajesh Batra. The show cause notice also sought appropriation of an amount of Rs. 25,00,000/- already deposited by M/s Batra Henlay Cables during investigation.

1.3 Enquiry in respect of Batra Enterprises revealed that during period from 1994-1995 to 1997-1998 they had sold wires and cables to worth Rs. 1,10,34,576/- to various customers. Enquiry was made with the customers and they stated that under the invoices of Batra Enterprises they had purchased Batra Henlay wires. However, it was found that during that period, there were no sales of any Batra Henlay wires/cables by M/s Batra Henlay Cables to M/s Batra Enterprises and, thus, it appeared that the Batra Henlay brand cables supplied by M/s Batra Enterprises to various customers were those which had been manufactured and clandestinely cleared by M/s Batra Henlay Cables. Duty demand of Rs. 23,20,278/- is on this basis. In this regard a show cause notice dated 04/4/01 was issued to M/s Batra Henlay Cables for  (a) demand of Central Excise duty amounting to Rs. 23,20,278/- from them under proviso to Section 11A (1) of Central Excise Act, 1944 alongwith interest thereon under Section 11AB; (b) imposition of penalty on them under Section 11AC of Central Excise Act, 1944 readwith Rule 173Q of Central Excise Rules, 1944 and (c) imposition of penalty under Rule 209A of Central Excise Rules, 1944 on M/s Batra Enterprises, Shri Brajesh Batra and Shri Vivek Batra, partner and Shri Rajesh Batra, Partner of M/s Batra Henlay Cables.

1.4 The above two show cause notices were adjudicated by the Commissioner by a common order-in-original dated 29/10/04 by which the above two duty demands were confirmed against M/s Batra Henlay Cables alongwith interest thereon under Section 11AB and beside this, penalty of equal amount was imposed on them under Section 11AC of Central Excise Act, 1944 readwith Rule 173Q of Central Excise Rules, 1944, penalty of the Rs. 10 lakhs each was imposed on Shri Brajesh Batra partner of Shri Batra Enterprises and M/s Batra Enterprises under Rule 209A of the Central Excise Rules, 1944. No penalty was imposed on individual partners of M/s Batra Henlay Cables. The land, building, plant and machinery of M/s Batra Henlay Cables was ordered to be confiscated under Rule 173Q (2) of Central Excise Rules, 1944 with option to be redeemed on redemption fine of Rs. 10,00,000/-.

1.5 Against the above order of the Commissioner, these appeals have been filed by M/s Batra Henlay Cables, Batra Enterprises and Shri Brajesh Batra.

2. Heard both the sides.

3. Shri Sudhir Malhotra, Advocate, and Shri A.S. Hasija, Advocate, the learned Counsels for the appellants, pleaded that the duty demand against M/s Batra Henlay Cables consists of two components  duty demand of Rs. 66,04,307/- on the basis of deposits in four bank accounts No. 347 and No. 367 in Ashok Vihar, New Delhi Branch of Catholic Syrian Bank Limited, account No. 4077 in Darya Ganj, Delhi Branch of Indian Overseas Bank and No. 3159 in Shakur Basti Branch of Punjab National Bank in the name of Shri Vinod Kumar by showing him as Proprietor of M/s Batra Henlay Cables and M/s Cosmoline Electricals, that the duty demand of Rs. 23,20,278/- is based on the sales made by M/s Batra Enterprises to various customers which as per the statements of the customers were of the cables of Batra Henlay brand, that as regards duty demand of Rs. 23,20,278/-, from perusal of para 46, 47, 48 of the impugned order dated 29/10/04 of the Commissioner, it will be seen that M/s Batra Enterprises had purchased wires and cables from 12 parties during 1994-1995 to 1996-1997 period, that from the scrutiny of the sales and purchase register for 1996-1997 (upto 17/1/97) maintained by M/s Batra Enterprises it will be seen that they had sold electricals goods worth Rs. 87,63,425/- whereas from purchases were worth Rs. 68,24,884/- and they were having closing stock of Rs. 2,57,450/- as on 01/4/06, that the difference between the sale and purchase prices i.e. Rs. 16,81,091/- was the gross margin of M/s Batra Enterprises, that it has been incorrectly held that wires and cables bearing the brand name Batra Henlay valued at Rs. 71,13,121/- were manufactured and clandestinely cleared by M/s Batra Henlay Cables and were supplied to 17 buyers by M/s Batra Enterprises, that there is nothing brought on record to show as to how the unaccounted goods received from M/s Batra Henlay Cables have been accommodated against the statutory invoices issued by M/s Batra Enterprises, that there is no dispute about the purchase of wires and cables by M/s Batra Enterprises from 12 parties, that the sale invoices issued by M/s Batra Enterprises do not mention the brand name Batra Henlay, that the appellant had sought cross examination of the 17 customers of M/s Batra Enterprises, who have given statements to the effect that they had purchased Batra Henlay brand cables, but the same had not been allowed and that in view of this, the statements of the customers of M/s Batra Enterprises cannot be relied upon, that other than the statements of the customers, there is no evidence to prove that M/s Batra Enterprises purchased unaccounted cables of Batra Henlay brand manufactured by M/s Batra Henlay Cable and supplied the same to the 17 customers, that as regard the duty demand of Rs. 66,04,307/- raised vide show cause notice dated 27/9/99, this demand is based on the amount of Rs. 2,89,47,379/- deposited in the above-mentioned 4 accounts in the name of Shri Vinod Kumar, that the appellant were neither having plant and machinery nor infrastructure to manufacture the quantity of goods on which the duty has been demanded, that there is no evidence to show that the goods against which the cheque payments have been made in the name of M/s Batra Henlay Cables and M/s Cosmoline Electricals had been manufactured by M/s Batra Henlay Cables, that Shri Brajesh Batra in his statement dated 09/8/99 has stated that the wires and cables, the sales proceeds of which were deposited in the 4 accounts, were not manufactured by them, but were manufactured by their job workers namely M/s Papu Cables, that the Commissioner has wrongly rejected the appellants plea in this regard on the ground that Shri Brajesh Batra at the time of recording of his statement could not give the name of any job worker, that some of the invoices against which the cheque payments had been made and which had been deposited in the four accounts pertain to supply of under ground power cables which cannot be manufactured by M/s Batra Henlay Cables, as the same have multi core of aluminium, that Shri Kishan Singh Rathore, who was working as Supervisor, in his statement has categorically stated that M/s Batra Henlay Cable have only three extruder machines out of which only one machine was working and that there was no manufacture of aluminium cable, that the cheque payments made in the account of M/s Cosmoline Electricals cannot be linked to the goods manufactured and cleared by M/s Batra Henlay Cables, as M/s Cosmoline Electricals are a trader and there is no evidence to prove that the goods sold by M/s Cosmoline Cables had been purchased by them from M/s Batra Henlay Cables, that in view of this, the cheque payments made in the account of M/s Cosmoline Electricals cannot be assumed to be the payments for the goods manufactured and cleared by M/s Batra Henlay Cables, that in any case, Shri Brajesh Batra was an active partner of M/s Batra Enterprises and he was not a partner of M/s Batra Henlay Cables and if Shri Brajesh Batra opened the four accounts in- connivance with Shri Vinod Kumar, an employee of M/s Grandlay Cinema, the deposits made in the four accounts cannot be linked to M/s Batra Henlay Cables and cannot be treated as payments for the goods manufactured and cleared by M/s Batra Henlay Cables and on this basis M/s Batra Henlay Cables cannot be fastened with the duty liability, that in this regard the cross examination of Shri Brajesh Batra, Shri Vinod Kumar and Shri Naveen Mehta has been denied without lawful reason and that in view of the above submisions, the impugned order is not sustainable.

4. Shri M.S. Negi, the learned DR, defended the impugned order by reiterating the findings of the Commissioner. With regard to the duty demand of Rs. 66,04,307/- based on the amounts deposited by cheque in the four secret accounts  two in the name of Shri Vinod Kumar by showing him as Proprietor of M/s Batra Henlay Cables and two in the name of Shri Vinod Kumar by showing him as Proprietor of M/s Cosmoline Electricals, he pleaded that Shri Vinod Kumar in his statement dated 03/3/98 while stating that he is an employee with M/s Grandlay Cinema, had admitted that these four accounts in Catholic Syrian Bank Limited, Indian Overseas Bank and Punjab National Bank had been opened on the instructions of Shri Brajesh Batra, that he has signed the blank cheque books in advance and handed over the same to Shri Brajesh Batra, that the payments made for the goods sold by M/s Batra Henlay Cables were received by cheques in the name of M/s Batra Henlay Cables or M/s Cosmoline Electricals and deposited in these accounts and thereafter the cash was withdrawn and given to Shri Brajesh Batra, that subsequently on the objection of branch Manager of Punjab National Bank to huge cash withdrawals, cheques were issued in the name of a firm called M/s Devin Board of Shri Naveen Mehta which also had account in Catholic Syrian Bank Limited and, thereafter the withdrawals were made from the account of Shri Naveen Mehta and the cash was handed over to Shri Brajesh Batra, that though Shri Brajesh Batra is not a partner of M/s Batra Henlay Cables, but it is Shri Rajesh Batra who is the partner in this firm, Shri Rajesh Batra in his statement dated 11/6/97 has stated that the entire work relating to sale was being looked after by Shri Brajesh Batra, that Shri Brajesh Batra in his statement dated 21/7/99 has admitted to looking after the sales of M/s Batra Henlay Cables, that some of the buyers of cables who had made cheque payments which had been deposited into the above-mentioned four accounts, were also examined and these buyers were M/s Khandelwal Laminated Ltd., M/s Electrical Associates, M/s ETA, M/s MEC Electrical Contracts Pvt. Ltd., M/s Bharat Construction Corporation, M/s Larsen & Tourbo Ltd., M/s Sterling & Wilson Electricals Pvt. Ltd., M/s Unitech Ltd., M/s Switchgear & Control and M/s Gwalec Electricals (P) Ltd., that all of them have admitted to have purchased wires and cables from M/s Batra Henlay Cables and made payments by cheque, that from this it is clear that all the cheque payments made into the above-mentioned four accounts opened in the name of Shri Vinod Kumar by showing him as Proprietor of M/s Batra Henlay Cables and M/s Cosmoline Electricals have been made against the sales of wires and cables manufactured and cleared by M/s Batra Henlay Cables, that though Shri Brajesh Batra claims that the amounts deposited in the four bank accounts are in respect of the sales of wires and cables which had been got manufactured on job work basis, no evidence in this regard has been produced, that M/s Cosmoline Electricals is a non-existent entity and all the sales made in the name of M/s Cosmoline Electricals are in fact the sales made by M/s Batra Henlay Cables, that in view of this, the duty demand of Rs. 66,04,307/- has been correctly confirmed by the Commissioner alongwith interest and penalty of equal amount has been correctly imposed, that as regards the duty demand of Rs. 23,20,278/- against M/s Batra Henlay Cables, this demand is based on the fact that during period from 1994-1995, to 1996-1997 M/s Batra Enterprises, a firm in which Shri Brajesh Batra is the main partner, had sold wires and cables worth Rs. 71,13,121/- to 17 customers all of which in their respective statements have stated that the wires and cables received by them were of Batra Henlay brand and during that period, there were no sale of any wires and cables by M/s Batra Henlay Cables to M/s Batra Enterprises, that on this basis it has been presumed that the goods worth Rs. 71,13,121/- supplied to 17 customers were of Batra Henlay brand which had been illicitly cleared by M/s Batra Henlay Cables to M/s Batra Enterprises without accountal and without issue of any invoices, that during the period of dispute, as per the records of M/s Batra Enterprises, they had purchased wires and cables from 12 suppliers and all of them in their statements have stated that they have never supplied Batra Henlay brand wires and cables to M/s Batra Enterprises, that in view of this, the only conclusion which can be drawn is that the Batra Henlay brand wires and cables supplied to 17 customers by M/s Batra Enterprises had come from M/s Batra Henlay Cables and the same had been cleared by M/s Batra Henlay Cables without issue of any invoice and without payment of duty and that in view of this, the duty of Rs. 23,20,278/- has also been correctly confirmed alongwith interest and penalty has been correctly imposed.

He, therefore, pleaded that there is no infirmity in the impugned order.

5. We have considered the submissions from both the sides and perused the records.

6. The impugned order adjudicates two show cause notices  show cause notice dated 27/9/99 for demand of duty of Rs. 66,04,307/- and the show cause notice dated 04/4/01 for demand of duty of Rs. 23,20,278/-.

7. Coming first to the duty demand of Rs. 23,20,278/- this demand for the period from 1994-1995 to 1996-1997 is based on the sales of wires and cables made by the trading firm with Shri Brajesh Batra as its main partner to 17 buyers and the statements of those buyers stating that they had received Batra Henlay brand wires and cables. Since, during that period M/s Batra Enterprises were also purchasing wires from 12 supplies and each of those 12 suppliers has stated that they had not supplied Batra Henlay brand wire, it has been inferred that the Batra Henlay brand wires and cables supplied to the 17 buyers had come from M/s Batra Henlay Cables and since during that period as per the books of accounts and other records of M/s Batra Henlay Cables, there was no sales to M/s Batra Enterprises, it has been presumed that the Batra Henlay brand wires and cables supplied to the 17 buyers had been procured from M/s Batra Henlay Cables who had cleared the same clandestinely, without issue of invoices. The value of these sales is Rs. 71,13,121/- on which the duty of Rs. 23,20,278/- has been demanded.

The defence of the appellant is that merely on the basis of the statements of the 17 buyers, it cannot be inferred that the wires and cables supplied by M/s Batra Enterprises were of Batra Henlay brand manufactured by M/s Batra Henlay Cables. Since, this duty demand is based only on the statements of 17 buyers who had stated that they had purchased Batra Henlay brand cables from M/s Batra Enterprises and other than this, there is no evidence, in our view the cross examination of these buyers should have been allowed, which would be necessary in terms of the provisions of Section 9D (2) readwith Section 9D (1) of the Central Excise Act, 1944. In terms of Section 9D (2) the provisions of Section 9D (1) would, so far as may be, apply to any proceeding under this Act, other than the proceeding before the Court, as they apply in the proceeding before a Court. In terms of sub-Section (1) of Section 9D, which is in respect of prosecution proceedings, a statement made and signed by a person before a Gazetted Central Excise Officer in course of enquiry proceeding shall be relevant for the purpose of proving in any prosecution proceeding, the truth of its content when the person who had made the statement is examined as a witness before the Court and the Court of the opinion that having regard to the circumstances of the case, the statement should be admitted as evidence in the interest of justice.

The only situation in which the statement given by a person can be admitted as evidence without his cross examination are enumerated in clause (a) of sub-Section (1) and those situations are when the person who made the statement is dead or cannot be found or is capable of giving evidence or is kept out of the way by the adverse party or whose presence cannot be obtained without an account of delay or expenses, which under the circumstances of the case, the Court considers unreasonable. In accordance with the judgment of Honble Delhi High Court in the case of J&K Cigarette reported in 2009 (242) E.L.T. 189 (Del.) before invoking sub-Section (1) (a) of Section 9D, a specific finding has to be given by the Adjudicating Authority after hearing the assessee against whom such statement is to be applied without examination of the deponent. In terms of sub-Section (2) the provisions of Section 9D (1) shall apply to adjudication proceeding as far as possible. Thus for adjudication proceedings, while it is not mandatory, like in case of prosecution proceedings, to permit cross examination of every witness whose statement is being relied upon, the cross examination has to be allowed as far as possible and more so when the facts and circumstances warrant.

Some of the circumstances warranting cross examination would be where the case against the assessee is based mainly on the oral evidence in form of statements of certain witnesses and those statements are not corroborated by any other independent evidence. In such circumstances, in order to ascertain as to whether the statement given by the deponents are true, their cross examination would be mandatory. Since, in this case, the cross examination of the 17 buyers whose statements are being relied upon in support of the allegation of duty evasion of the appellants company  M/s Batra Henlay Cables has not been allowed, in our view, the duty demand based on their statements would not be sustainable and the matter would have to be remanded to the Commissioner for denovo adjudication after permitting cross examination of the 17 buyers. In case, any of these persons are not available and the Department wishes to rely upon their statements, the directions of Honble Delhi High Court in the case of J&K Cigarette (supra) would have to be followed for relying upon those statements i.e. specific finding would have to be given after hearing the assessee as to whether the person whose statement is to be relied upon is dead or cannot be found or is incapable of giving evidence or is being kept out of the way by the adverse party or whose presence cannot be obtained without an amount of delay or expenses, which under the circumstances of the case, the Court considers unreasonable.

8. As regards the duty demand of Rs. 66,04,307/-, the evidence on which it is based can be summarised as under :-

(1) existence of four secret bank accounts  account No. 347 in Ashok Vihar, New Delhi Branch of Catholic Syrian Bank Limited, account No. 367 in Ashok Vihar, Delhi Branch of Catholic Syrian Bank Limited, account No. 3159 in Shakur Basti Branch of Punjab National Bank and account No. 4077 in Darya Ganj Delhi Branch of Indian Overseas Bank all accounts in the name of Shri Vinod Kumar, an employee of Grandlay Cinema by showing him as Proprietor of M/s Batra Henlay Cables and M/s Cosmoline Electricals ;

(2) Statement dated 03/3/98 of Shri Vinod Kumar an employee of M/s Grandlay Cinema wherein he stated that while he is an employee of M/s Grandlay Cinema owned by Shri C.L. Batra F/o Shri Brajesh Batra and Shri Rajesh Batra, that he also worked for sometimes for Batra Henlay Cables and that he had opened the accounts mentioned above in his name on the instructions of Shri Brajesh Batra, that the cheques issued by various customers in the name of M/s Batra Henlay Cables and M/s Cosmoline Electricals were being deposited in these accounts and the cash was being withdrawn and handed over to Shri Brajesh Batra, that when the Branch Manager of Punjab National Bank objected to the huge cash withdrawals, the cheque were issued by him in the name of M/s Devine Board, a firm of Shri Naveen Mehta, a friend of Shri Brajesh Batra and those cheques were deposited in the account of M/s Devine Board and from the account, the amounts were withdrawn in cash and handed over to Shri Brajesh Batra ;

(3) statement dated 04/3/98 of Shri Shrinath an employee of Batra Enterprises, who also corroborated the statement of Shri Vinod Kumar ;

(4) statement dated 11/6/97 of Shri Rajesh Batra, partner M/s Batra Henlay Cables wherein he stated that though he is the main partner of M/s Batra Henlay Cables and Shri Brajesh Batra is the main partner of M/s Batra Enterprises and the works related to sales of M/s Batra Henlay Cables was being looked after by Shri Brajesh Batra;

(5) statement dated 22/5/98 and 21/7/99 of Shri Brajesh Batra, wherein he admitted to opening of four bank accounts mentioned above in the name of Shri Vinod Kumar in Catholic Syrian Bank Limited, Punjab National Bank and Indian Overseas Bank and that the amounts deposited pertain to the illegal sales from Batra Henlay Cables. However, in the second statement dated 21/7/99, he, while still admitting that the four accounts were opened in the name of Shri Vinod Kumar on his instructions, stated that he had got the cables manufactured from job workers and the payments received into these accounts were of the sale proceeds of the cables got manufactured on job work basis ;

(6) statements from certain customers of Batra Henlay Cables namely M/s Khandelwal Laminated Ltd., M/s Electrical Associates, M/s ETA, M/s MEC Electric Contracts Pvt. Ltd., M/s Bharat Construction Corporation, M/s Larson & Tourbo Ltd., M/s Sterling & Wilson Electricals Pvt. Ltd., M/s Unitech Ltd., M/s Switchgear & Control and M/s Gwalec Electricals (P) Ltd. who had made cheque payments for the wires and cables purchased by them by the cheques issued in the name of Batra Henlay Cables and M/s Cosmoline Electricals. All these buyers have admitted to have purchased Batra Henlay brand wires and cables from Batra Henlay Cables.

8.1 It is on this basis all the above evidence that the Department has alleged that the deposits totalling Rs. 2,89,47,379/- made in the above-mentioned four accounts during the period from 1994-1995 to 1997-1998 pertain to the clearances of wires and cables manufactured by M/s Batra Henlay Cables which have not been declared by them to the Department and have not been included in the value of their clearances and if value of these clearances in included they would not be eligible for full duty exemption during the period from 1995-1995 to 1997-1998 and the total differential duty payable would be Rs. 66,04,307/-.

8.2 The contention of the appellant on the other hand is that all these payments deposited in the above-mentioned four accounts do not pertain to the goods manufactured and cleared by M/s Batra Henlay Cables, that during this period M/s Batra Henlay Cables were also getting certain goods manufactured on job work basis which were being manufactured by the appellant and that the duty can be demanded only in respect of those amounts deposited into the four accounts mentioned above, which are the payments for the goods manufactured and cleared by Batra Henlay Cables and no duty can be demanded in respect of the amounts deposited in the above-mentioned four accounts which represent the payments for the goods which had not been manufactured and cleared by M/s Batra Henlay Cables.

8.3 The amounts totalling Rs. 2,89,47,379/- deposited during the period from 1994-1995 to 1997-1998 have been deposited in the accounts of M/s Batra Henlay Cables as well as M/s Cosmoline Electricals. M/s Cosmoline Electricals is a trading firm and there is no finding of the Commissioner that the same is a fictitious entity. If M/s Cosmoline Electricals is an existing trading firm of Shri Brajesh Batra, it cannot be presumed that the goods sold by M/s Cosmoline Electricals were always those manufactured by M/s Batra Henlay Cables. Such a presumption can be made only if M/s Cosmoline Electricals is a fictitious or dummy entity floated by Shri Brajesh Batra. Therefore, without a specific finding on the point as to whether M/s Cosmoline Electricals is a fictitious entity floated by Shri Brajesh Batra or whether it is a real firm of Shri Brajesh Batra, the amounts deposited in the name of M/s Cosmoline Electricals cannot be presumed to be the payments for the goods manufactured and cleared by M/s Batra Henlay Cables.

8.4 On perusal of some of the invoices procured from the customers who had made cheque payments to M/s Batra Henlay Cables and M/s Cosmoline Electricals, it is seen that some of the invoices are in respect of supply of aluminium cables, while it is the stand of M/s Batra Henlay Cables that their unit was not capable of manufactured aluminium cables. In this regard, Shri Krishan Singh Rathore, an employee of the appellant company, in his statement dated 17/1/97 has stated that Batra Henlay Cables were manufacturing only the house wire cables and telephone cables and were not manufacturing any aluminium cables. On this point no finding has been given by the Commissioner. If M/s Batra Henlay Cables were not having any machinery for manufacture of aluminium cables, the aluminium cables sold by them must obviously have been procured by them from other dealers and accordingly the payments received in the above-mentioned four bank accounts in respect of sales of aluminium cables cannot be treated as the payments received for sale of the cables manufactured and cleared by M/s Batra Henlay Cables.

8.5 It is also seen that while the payments in the four accounts mentioned above have been received from a large number of customers, the enquiries has been made only with 10 customers namely M/s Khandelwal Laminated Ltd., M/s Electrical Associates, M/s ETA, M/s MEC Electrical Contracts Pvt. Ltd., M/s Bharat Construction Corporation, M/s Larsen & Tourbo Ltd., M/s Sterling & Wilson Electricals Pvt. Ltd., M/s Unitech Ltd., M/s Switchgear & Control and M/s Gwalec Electricals (P) Ltd. and sales to these parties have been made under the invoices issued by M/s Batra Henley Cables and M/s Cosmoline Electricals. No enquiry has been conducted with the remaining customers. Without any enquiry with them, it cannot be presumed that the payments made by them were in respect of the goods manufactured and cleared by M/s Batra Henlay Cables which had been sold to them. In view of this, the payments received into the four bank accounts, mentioned above, from the parties with whom no enquiry had been conducted, cannot be treated as the payments for the goods manufactured and cleared by M/s Batra Henlay Cables and those amounts cannot be taken into account for calculation of the duty demandable from M/s Batra Henlay Cables.

8.5 In view of the above discussion, the Commissioners order confirming duty demand of Rs. 66,04,307/- has to be set aside and the matter has to be remanded to the Commissioner for denovo adjudication keeping in view our above observations.

9. In view of the above discussion, the impugned order is set aside and the matter is remanded to the Commissioner for denovo adjudication, strictly according to our observations and directions in this order.

(Pronounced in open court on 17/04/2015.)

(Rakesh Kumar)

Member (Technical)

(S.K. Mohanty)

Member (Judicial)

PK

??

??

??

??

24