M/S Salasar Steel And Power Limited vs Cce & Customs, Raipur

Excise Appeal No. 58697 of 2013 with Miscellaneous Application No. 55044 of 2014

[Arising out of the Order-in-Original No. Commissioner/RPR/CEX/ 55/2013 dated 31/03/2013 passed by The Commissioner, Central Excise & Customs, Raipur.]

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 Salasar Steel and Power Limited Appellant

Versus

CCE & Customs, Raipur Respondent

Appearance

Ms. Surabhi Sinha, Advocate  for the Appellant.

Shri Pramod Kumar, Authorized Representative (Jt. CDR)  for the Respondent.

CORAM : Honble Shri Rakesh Kumar, Member (Technical)

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

Final Order No. 50446/2015 Dated : 27/01/2015

Per. Rakesh Kumar :-

The fact leading to filing of this miscellaneous application for modification of the stay order No. 52263-52272/2014  EX (DB) dated 11/7/14 are, in brief, as under.

1.1 The appellant M/s Salasar Steel and Power Ltd. are manufacturer of Sponge Iron chargeable to Central Excise duty. M/s Gopal Steel is a commission agent dealing in iron and steel items and in course of search of the premises of M/s Gopal Steel, certain documents recovered from his premises showed sale of consignments of Sponge Iron by the appellant through him to various customers. Since, the appellant had not issued any Central Excise invoices in respect of those clearances, Investigating Officers inferred that the consignments of Sponge Iron whose details are mentioned in the records recovered from commission agent  M/s Gopal Steel represent clearances made without payment of duty. It is on this basis that the Commissioner vide order-in-original dated 31/3/13 confirmed duty demand of Rs. 14,86,913/- against the appellant alongwith interest thereon under Section 11AB and imposed penalty of equal amount on him under Section 11AC. By this order, he confirmed demand against other manufacturers also, but we are not concerned with those demands in this appeal. The appellant filed an appeal against this order alongwith stay application. The stay application was disposed of by the Tribunal vide stay order dated 11/7/14 alongwith stay applications filed by other assessees against whom also, duty demands of various amounts had been confirmed by the same order of the Commissioner. The Tribunal directed the appellant to deposit an amount of Rs. 10,00,000/- for compliance with the provisions of Section 35F and the compliance was to be reported on 15/9/14 subject to which the requirement of pre-deposit of balance amount of duty demand, interest and penalty would stand waived and recovery thereof stayed.

1.2 The appellant, thereafter, filed a miscellaneous application No. E/Misc/55044/2014 for modification of the stay order dated 11/7/14 on various grounds. In the meanwhile, the matter was listed for compliance and the Tribunal vide final order dated 15/9/14 dismissed the appeal filed by the appellant for non-compliance.

1.3 The appellant filed an appeal before Honble Chhattisgarh High Court against the order dated 15/9/14 dismissing their appeal for non-compliance. Honble High Court vide order dated 17/12/14 set aside the final order dated 15/9/14 and remanded the matter to the Tribunal to dispose of the appellants application dated 22/8/14 for modification at the earliest. Honble High Court in this order observed that before dismissing the appeal filed by the appellant for non-compliance of the provision of Section 35F, their application filed on 22/8/14 for modification of the stay order dated 11/7/14 should have been considered.

1.4 Accordingly, in accordance with the directions of Honble High Courts order, the modification application was heard.

2. Heard both the sides.

3. Ms. Surabhi Sinha, Advocate, the learned Counsel for the appellant, pleaded that the entire case of the Department against the appellant is based on the documents recovered from commission agent M/s Gopal Steel, that neither the appellants factory was visited nor there is any discrepancy in the stock of finished goods or raw material was found, that no incriminating documents have been found from the factory of the appellant, that the records recovered from M/s Gopal Steel mentioned the transporters and dealers also but no inquiry has been made with the transporters or the dealers, that the appellant had requested for cross-examination of Shri Gopal Krishna Agarwal, Proprietor of M/s Gopal Steel, but the same was not allowed, that the order suffers from cross violation of principles of natural justice, that in similar circumstances, the Tribunal in the case of Aggarwal Round Rolling Mills Ltd. and Mukesh Kumar Aggarwal vs. CCE, Raipur (Final order No. 52488/2014 dated 26/05/14) where the case against the manufacturer was based on the records recovered from a commission agent  M/s Monu Steel, the Tribunal has set aside the order and has remanded the matter to commission for denovo adjudication after permitting the cross examination and that in view of this, the impugned order is not correct. She pleaded that she has no objection if the matter is remanded to the Commissioner for denovo adjudication.

4. Shri Pramod Kumar, learned Jt. CDR, opposed the application for modification, pleading that the Tribunal before ordering pre-deposit vide its order dated 11/7/14 had called for the records and had perused the same. With regard to the appellants plea regarding denial of cross-examination he pointed out to the Commissioners finding in para 9.1 of the impugned order and stated that the Commissioner had given valid reasons for denying the cross examination. He also pointed out to para 10.6 of the Tribunals stay order dated 11/7/14, wherein the Tribunal observed that adjudication order does not show denial of natural justice. He pleaded that the Tribunal in the stay order has correctly observed that all the details of the evidence of the manufacturers and commission agent were threadbare examined after granting reasonable opportunity of hearing given to them and none of the appellant disowned the entries recorded in the books of M/s Gopal Steel.

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

6. The case against the appellant is based only on the records recovered from M/s Gopal Steel, a commission agent whose proprietor is Shri Gopal Krishna Aggarwal. The records recovered from M/s Gopal Steel indicate the sale of several consignments of sponge iron manufactured by the appellant to various customers through him for which he had received the commission. However, it is seen that no inquiry has been made with the customers mentioned in the documents recovered from M/s Gopal Steel. Similarly, the factory premises of the appellant had also not been searched and as such there is no allegation of discrepancy in the records of raw material or the finished products. The statement of the appellant also does not support the Departments case and as such the only evidence relied upon by the Department, is the records recovered from M/s Gopal Steel readwith the statement of Shri Gopal Krishna Aggarwal. It is not in dispute that the request for cross examination of Shri Gopal Krishna Agarwal had been made, but the Commissioner for the reason discussed in para 9.1 of the order has not allowed the cross examination. Apex court in the case of Kishin Chand Chela Ram vs. Commissioner of Income Tax  1980 (Supp) SCC - 660 has held that when the Department relied upon the records recovered from a third party and the cross-examination of the person from whom the records had been recovered is requested, the same must be allowed. In this case, admittedly, the entire case against the appellant is based on the records recovered from M/s Gopal Steel and the statements of Shri Gopal Krishna Agrawal but the cross-examination of Shri Gopal Krishna Aggarwal, Proprietor of M/s Gopal Steel has not been allowed. In view of this, we hold that the impugned order suffers from the violation of principles of natural justice. The same is, therefore, set aside and the matter is remanded to the Commissioner for denovo adjudication after permitting the cross examination of Shri Gopal Krishna Aggarwal and considering other pleas made by them. The appeal as well as miscellaneous application for modification of the stay order stand disposed of as above.

(Dictated and pronounced in open court.)

(Rakesh Kumar)

Member (Technical)

(S.K. Mohanty)

Member (Judicial)

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