M/S. Regent Overseas Pvt. Limited vs Commissioner Of Central Excise & ...
- CitationAppeal No. : C/115-116/2007
Ratio decidendi
The rule this decision rests on
Where a demand of duty rests substantially on statements of third parties recorded by the department, the assessee must be afforded an opportunity to cross-examine those deponents; denial of that opportunity renders reliance on the statements impermissible, following the principle laid down in the decision of the Delhi High Court cited by the Tribunal. Where the department's case is founded on a generalised consumption formula applied uniformly to all imported inputs, and the assessee has placed material showing actual consumption of each input as recorded in its registers, the adjudicating authority must consider that actual consumption material in accordance with law before confirming a demand. Where the adjudicating authority has proceeded without affording cross-examination and without considering the assessee's actual consumption material, the order is liable to be set aside and the matter remanded for fresh adjudication after giving such opportunity and consideration.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
(Arising out of OIO-20/MP/2006 dated 29.11.2006, passed by Commissioner of Central Excise and Customs, Surat)
1. M/s. Regent Overseas Pvt. Limited : Appellant (s) 2. Shri Ramchandra Nargibhai Tandel, Director
VERSUS
Commissioner of Central Excise & Customs, Surat : Respondent (s)
Represented by :
For Appellant (s) : Shri J.C. Patel and Shri K.I. Vyas, Advocates For Respondent (s) : Shri K. Sivakumar, Authorised Representative
For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)
1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes
CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)
Date of Hearing / Decision : 09.06.2015
ORDER No. A/10783-10784/2015 Dated 09.06.2015
Per : Mr. P.K. Das;
The relevant facts of the case, in brief, are that the appellant was a 100% EOU, engaged in the manufacture of Processed/dyed and printed fabrics, Sarees, Dress Material, Made-ups, Knitted fabrics etc. On 23.8.2001, the Central Excise officers visited the appellants factory and conducted stock verification and no irregularity was found. A statement dated 23.08.2001 of Shri Ramchanra N. Tandel, Director of the appellant Company was recorded. Shri Ramchanra N. Tandel in his statement stated that the processing of approximately 4 lakhs meters of MMF (grey), they consume 600 to 1000 Kgs. of chemicals. It was stated that they sold the imported chemicals of different types to the merchants on cash basis without payment of duty of Central Excise and Customs. Shri Ramchanra N. Tandel retracted his statement on 24.08.2001.
2. Thereafter, summons were issued to the Director of the appellant Company on various dates in 2004 to appear before the investigating officers. On 29.11.2005 and 30.11.2005, the Central Excise officers recorded statements of two other processors to corroborate the statement of the Director on the consumption of chemicals. The said two processors confirmed the consumption of chemicals as stated by the Director of the appellant.
3. A show cause notice dated 08.12.2005 was issued proposing demand of duty alongwith interest for the period January 2001 to August 2001 on the basis of consumption of chemicals as stated by the Director in his statement. It has been alleged that the appellant had clandestinely cleared duty free inputs without payment of duty. By the impugned order, the adjudicating authority confirmed the demand of duty alongwith interest and imposed penalty. It has also imposed penalty on Shri Ramchanra N. Tandel, Director of the appellant Company.
4. After hearing both the sides and on perusal of the records, we find that the main contention of the learned Advocate is that the entire demand of duty was raised merely on the basis of formula, can not be sustained. He further submits that the statement of the Director was retracted immediately, can not be relied upon as an evidence. It was further submitted that the appellant requested for cross-examination of two processors, whose statements were relied upon but no opportunity of cross-examination was allowed. He submits that the actual consumption of the chemicals as per the registers maintained by the appellant were as under:-
Sr. No. Description of imported raw material Total quantity consumed per meter 1 Acrylamide 0.004 Kgs 2 Citric Acid 0.013 Kgs 3 Sodium Hidro Sulphite 0.015 Kgs 4 Titanium Dioxide 0.009 Kgs
It is contended that the entire demand was based on the consumption of each chemical of 1000Kgs for each 4 lakh meters of MMF and cannot be sustained for a common consumption ratio.
5. The learned Authorised Representative for the Revenue drew attention of the Bench to the relevant portion of the adjudication order that the appellant had not appeared before the investigating authority even being summoned on several occasions and therefore, retraction of statement cannot be accepted. He also submits that cross-examination is not a right of the appellant as held by various decisions of the Tribunals and High Courts.
6. We find that the entire case was made out on the basis of statement of the Director of the Company and the statements of other two processors. It is seen that the appellants requested for cross-examination of the two processors which was denied. The Hon'ble Delhi High Court in the case of Vasudev Garg vs. Commissioner of Customs 2013 (294) ELT 353 (Del.) held that statement against the assessee cannot be used, without giving them opportunity of cross-examining the deponent. We are unable to accept the contention of the learned Authorised Representative for the Revenue that the adjudicating authority has rightly denied the opportunity of cross-examination. In the present case, the department has strongly relied upon the statements of two processors, in our considered view, the appellant should be allowed cross-examination of the two processors. We also noticed that the actual consumption of the imported raw material, as placed by the learned Advocate should be considered by the adjudicating authority.
7. In view of the above discussion, we set-aside the impugned order and matter is remanded to the adjudicating authority to decide afresh, after giving opportunity of cross-examination to the processors and others and consider the formula as placed by the learned Advocate in accordance with laws. Needless to say that the adjudicating authority shall give proper opportunity of hearing before passing order. We make it clear that this order is passed without giving any observation on merits. Both the appeals are allowed by way of remand. The miscellaneous application for extension of stay order is dismissed as infructuous.
(Dictated and pronounced in the Court)
(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial) ..KL
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