M/S.Sarlia Steel Pvt. Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.E/1126 to 1130/10

(Arising out of Order-in-Appeal/Final Order No.AKP/103 to 107/NSK/2010 dated 30/03/2010 passed by Commissioner of Central Excise & Customs (Appeals), Nashik)

For approval and signature:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S. S. Garg, Member (Judicial)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

M/s.Sarlia Steel Pvt. Ltd., Shri Satbir Ramanand Sarlia M/s.Shri Salasar Ispat Pvt. Ltd., Shri Vijay Kumar Jindal Appellants Shri Vijaykumar Mahaveer Prasad Mittal

Vs. Commissioner of Central Excise, Respondent Nashik

Appearance:

Shri.A.K. Singh, Advocate for appellants No.1 to 3 None for appellant No.4 & 5 Shri.V.K.Agarwal, Addl. Comm. (AR), for respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial)

Date of Hearing : 30/06/2015 Date of Decision : /07/2015

ORDER NO

Per: P. K. Jain

1. Brief facts of the case are that based upon an intelligence that the appellant No.3 and another manufacturer were manufacturing and clandestinely clearing the goods, namely, TMT Bars without payment of duty through a broker, simultaneous searches were conducted at number of places which included the appellant No.3s factory at Nashik and their office in Mumbai. In the appellant No.3s office in Mumbai, certain incriminating documents were recovered (in addition, incriminating documents were recovered in the factory at Nashik as also at the brokers place. However, the same are not being discussed as not relevant in the present appeals). In the search carried out in the appellants office in Mumbai among the various documents recovered, there were three diaries which are described as item No.23, 24 & 26 of the Panchnama. Shri Pravesh Gautam, who is the Director of the appellant No.3 was present and his statement was recorded on that date and also on various dates. The appellant explained the contents of these diaries. The diaries contain the details of MS ingots purchased by them from various manufacturers of MS ingots.

The details included consignment-wise, date, rate, suppliers name, brokers name, etc. Another diary (No.26) contains the details of the payments made. All the three diaries were explained by Shri Gautam in his statement. Based upon the details available in these diaries it was found that the appellant No.3 have received MS ingots from number of manufacturers and such MS ingots were both with payment of duty and also without payment of duty. Based upon the tabulation made from these diaries, statement of appellant No.3 as also other persons viz., suppliers and brokers were also recorded. One of such supplier is appellant No.1 and Appellant No.2 is the Director in appellant No.1 company, the appellant No.4 and 5 are brokers. Both the supplier, viz., Appellant No.1 as also brokers admitted of having supplied the MS ingots to the appellant No.3without payment of duty. Appellant No.3 has also admitted of having purchased the MS ingots. After the investigation, show-cause notice was issued to the manufacturer of MS ingots i.e. appellant No.1 for recovery of duty and penalty and to appellant No.2 to 5 for penalty.

The case was adjudicated wherein the duty, interest and penalties were confirmed against the appellant No.1, i.e. manufacturer of MS ingots and penalties were also imposed on the appellant No.2 to 5. Aggrieved by the order, the appellant had filed appeals before the Commissioner (Appeals), who has upheld the order and aggrieved by the said order, the appellants are before us.

2. The learned Counsel for the appellants main submission was that no investigation has been carried out at the appellants No.1 and the entire demand is based upon the documents recovered from the office of the appellant No.3. The department did not even visit or check up the records of the appellant No.1 and in the absence of any investigation at the end of the appellant No.1 demand cannot be sustained. The learned Counsels other submission was that the statement of appellant No.2 recorded on 23/01/2007 was retracted on the first available opportunity, i.e. on 24/01/2007 and the second statement recorded on 31/05/2007 was also retracted on 01/06/2007 and under the circumstances these statements cannot be relied upon. It was also submitted that cross examination requested by them was not allowed by the original authority and in the absence of cross examination, the statements of other person cannot be relied upon and on this ground itself the matter needs to be remanded back to the original authority to permit the cross examination of the witnesses.

3. Ld. Counsel for the appellant No.3s main contention was that the documents have been recovered from Mumbai office and this office was common office for three firms which included M/s.Gautam Enterprises, which is a trading firm and is owned by Shri RL Gautam. It was his submission that the diaries which were recovered were common for all the three firms and many entries were made in the hand writing of Shri R.L Gautam and the Revenue has not bothered to record the statement of Shri RL Gautam and in the absence of his statement, it cannot be said that all the entries are relating to the present appellant. Keeping in view this factual mistake committed by investigators , penalty cannot be imposed on the appellant.

3.1 Second submission of the learned Counsel was that the statement of Shri Pravesh Gautam, Director in the appellant company were recorded under duress and after recording of the statement, on the next day, the statements were retracted by him and under the circumstances statements made by him cannot be relied upon by the Revenue.

3.2 The third submission made by the learned Counsel was that he has asked for the cross examination of the supplier of the goods as also the brokers who have given the statement about the clandestine clearance of the goods without payment of duty. Such cross-examination was not allowed by the original authority and since the cross-examination has not been allowed, their statements cannot be relied upon by the Revenue; hence, the whole case of the Revenue has no merit.

a) Slotco Steel Products Pvt. Ltd. Vs. CCE  2012 (281) ELT 193 (Del)

b) Basudev Garg Vs. CC  2013 (294) ELT 353 (Del)

c) CCE Vs. Parmarth Iron Pvt. Ltd., - 2010 (260) ELT 514 (All.)

d) Vinod Solanki Vs. UOI  2009 (233) ELT 157 (SC)

3.3 The learned Counsel also submitted that the Revenue has not found any details about the transportation of the goods and under the circumstances, penalty cannot be imposed on the appellant.

4. The learned Additional Commissioner (AR) reiterates various points made in the order. The learned AR s submission is that the appellant No.2s statement was recorded on 23/01/2007 and on 30/01/2007. The appellant so called retraction on 24/01/2007 was not sent to the investigating officer or his immediate senior or any other higher officer in Mumbai but was sent under the certificate of posting to DGCEI, Delhi. This is as per their claim. There is no evidence that the said letter has been received by the said office. Further, in the so called retraction there is no details indicating what was recorded under duress and what is wrong in the statement or what is the correct position. It was further submitted that on 30/01/2007 when the second statement was recorded, the appellant did not speak anything about the retraction. On the contrary, confirmed the contents of the statement made on 23/01/2007. Even the retraction on 01/02/2007 is a general statement without giving any details and again addressed to DGCEI, Delhi under Certificate of posting. Under these circumstances, the retractions are of no consequences and the fact remains that the appellant No.2, who was the Director of the appellant No.1 has admitted the clandestinely cleared the goods without payment of duty.

Since the appellant has admitted the evasion of duty, no further proof or visit to his unit was required and that is what was done in the investigation and it is a settled position of law that what is admitted need not be proved. It was further submitted that the appellant No.3 has purchased the goods with bill and without bill and the incriminating documents were recovered from his premises. It is appellant No.3 who has explained the contents of the diaries. These diaries indicate precise details of the quantity of the goods purchased both with bill and without bill, rate, brokers name, suppliers name etc. Further documents at Sl.No.26 of the Panchnama indicate the details of the payments made. Under these circumstances, it cannot be said that the appellant No.3 did not purchase the goods. At the time of recording the statement, the appellant No.3 did not speak anything about Shri RL Gautam. Further, if there was any entry relating to M/s.Gautam Enterprises, the appellant No.3 should have said so in the statement and also clarified which are the entries relating to M/s.Gautam Enterprises.

Even today, the Appellant No.3 not clarified which are the entries relating to Sarlia Steel, which are pertains to M/s.Gautam Enterprises. Under the circumstances, the issue raised is for the sake of raising the issue and is required to be out-rightly rejected. As far as the question of cross-examination is concerned, the learned AR submitted that the people to be cross-examined are co-noticees and calling them for cross-examination would imply them to admit the clandestine clearance and evasion of duty during cross-examination which is violation of article 20 (3) of the Constitution of India. Learned AR relied upon the decision of this Tribunal in the case of Maya Mahal Industries reported in 1995 (80) ELT 118 (Tri). Under these circumstances, co-noticees could not have been called for cross-examination and this plea is only to delay the adjudication proceedings. As far as appellant No.4 & 5 are concerned they have admitted their role.

5. We have considered the rival submissions.

5.1 We note that whole case of the department is based upon the documents recovered from the appellant No.3s office in Mumbai. The documents are diary No.23, 24 & 26. It is not disputed that these diaries were recovered in Mumbai from a place where the appellants No.3 office exists.

5.2 A plea is being made that the office is a common office for three firms. Out of other two firms, one is owned by the father of Shri Pravesh Gautam in the name and style of M/s.Gautam Enterprises and other firm is owned by Shri Pravesh Gautam. The fact that the place is used as common office will not make any difference. We also note that the learned Counsel for the appellant has submitted that no statement of Shri RL Gautam, who was the proprietor of M/s.Gautam Enterprises was recorded. Contents of each diary (viz., 23, 24 & 26) have been explained by Shri Pravesh Gautam, Director in the appellants firm. We also note that based upon these diaries detailed tabulations were prepared by Revenue indicating various suppliers from whom clandestinely cleared goods were purchased by the appellant No.3. These were again shown to Shri Pravesh Gautam who after going through the diary and the tabulation has confirmed the details in the statements prepared. Shri Pravesh Gautam has not stated in any of the statements about any particular entry that the said entry does not pertains to Appellant No.3 but pertains to M/s.Gautam Enterprises or any other firm. Under the circumstances, we are of the considered view that the plea of the learned Counsel requires outright rejection and we accordingly do so.

5.3 The other plea of the learned Counsel is relating to retraction of the statement. We have gone through the statement as also the retraction letters of Appellant No.2 & 3.

5.4 We have gone through the retraction letters. We note that the contents of the statements provides lot of details and such details can be known only to the person who is involved in day to day activities of organisation and not to officers. Further in the retraction letter it is not specified what portion of a statement was incorrect. We also note that the so called retraction letter were posted to DGCEI Delhi and not to any officer in Mumbai. This itself shows that appellant No.2 did not want any enquiry on the duress, etc. Further during second statement, the appellant No.2 did not speak of any retraction and also confirmed the contents of first statement. Under the circumstances, we are of the view that these retractions are of no consequence.

5.5 We find that the statements of Shri Pravesh Gautam, Director of Appellant No.3 were recorded over a period of more than one year and there are as many as nine statements. We do not find anything contradictory in these statements. We also find that in the subsequent statements including the ones which have not been retracted, Shri Pravesh Gautam has confirmed the details given in the initial statements. We have also gone through the retraction letters which do not indicate which portion of the statement is incorrect or recorded under duress.

5.6 Keeping in view the overall circumstances of the case and the contents of the statements as also the so called as retraction letter, we hold that the statements of both appellant No.2 as also Shri Pravesh Gautam as far as the contents relating to this case are true and correct and can be used as an evidence in the present proceedings and the retraction letter needs to be rejected outright.

6. Another contention of the learned Counsel was that no investigation was taken up at the factory of the appellant No.1. We note that in the present case, the appellant No.2 who was the director in the appellant No.1 company, has admitted the offence and it is well settled principle of law that what has been admitted need not be proved. This has been so held by Honble Supreme Court in the case of CCE, Madras Vs. System & Components Pvt. Ltd., reported in 2004 (165) ELT 136 (SC). Moreover the Appellant No.2 has stated in his statement that such details are neither recorded or destroyed. No purpose would have therefore served. We therefore, do not find any merit in the said contention.

7. As far as the learned Counsels contention about the cross examination is concerned, it is seen that in the present case, statement of only four persons were recorded and are relevant. It is to be noted that all the four persons whose statements are recorded and relied upon, are the noticees in this case. Thus what is being sought is to cross examine the co-noticees. We also note that even if relied upon the statements of the appellant No.3, 4 & 5 are ignored, case against appellant No.1 & 2 will stand based upon documents and statement of appellant No.2. Similarly, documents recovered from appellant No.3s office is sufficient to impose penalty on appellant No.3. Statements of appellant No.4 & 5 along with documents recovered are sufficient for imposition of penalty on them. Further, we note that this Tribunal in the case of Maya Mahal Industries Vs. CCE reported in 1995 (80) ELT 118 (Tribunal) as also in the case of Jagdish Shanker Trivedi Vs. CCE reported in 2006 (194) ELT 290 (Tri-Del) has observed that the cross examination of witnesses cannot be claimed as a matter of right under Section 124 of the Customs Act, 1962. It was also observed that denial of cross examination of co-noticees/accused does not result in violation of natural justice and cannot be insisted on as a matter of right by them. Otherwise each of accused can claim right against testimonial compulsion under Article 20 (3) of Constitution of India and thereby by their joint effort bring about failure of natural justice. In the case of Jagdish Shanker Trivedi, this Tribunal observed as under:

9.?As noted above, all the noticees including the appellants were informed about all the material which was sought to be relied on against them along with the relevant documents and statements as stated in the detailed show cause notices issued to them, and they sent their replies to the show cause notices. Some of the appellants were represented by consultants. The appellants remained absent on various dates resulting delay in the proceedings. Statements of the two drivers of the vehicles from which contraband silver was recovered, the employee of the appellant Ashish Kumar Chaurasia and the statements of the persons who were travelling in the vehicles for taking the contraband silver to Delhi as also the statements of Ram Avatar Singhal, and the statements of independent persons before whom seizures were made clearly establish that all the appellants were persons concerned with prohibited silver and were liable to imposition of penalty under Section 112 of the said Act. In such a situation insistence for cross-examining one of them can be purely strategic with a view to raise a contention of violation of principles of natural justice.

In almost all the cases such persons dealing in contraband would refuse to be cross-examined on the ground that they are accused of an offence and, had a fundamental right against testimonial compulsion under Article 20(3), and thereby create a situation where each one of them, in the same breath, would ask for cross-examination of the other and refuse to be cross-examined, and then contend that refusal has resulted in failure of proper hearing. Therefore, principles of natural justice do not require that in matters like this, persons who had given information should be allowed to be cross-examined by the co-noticees on the statements made before the customs authorities. If cross-examination is to be allowed as a matter of right then in all cases of conspiracy and joint dealings between the co-noticees in the commission of the offences in connection with the contraband goods, they can bring about a situation of failure of natural justice by a joint strategic effort such co-noticees by each one refusing to be cross-examined by resorting to Article 20(3) of the Constitution and simultaneously claiming cross-examination of the other co-noticees.

We, therefore, hold that the appellants, including the appellant Ashish Kumar Chaurasia were not entitled to claim cross-examination as a matter of right. The appellant Ashish Kumar Chaurasia had, in fact, cross-examined two official witnesses and at the end, he had only sought for time for further hearing. The cross-examination made by the appellant, Ashish Kumar Chaurasia of two officers, A.K. Chaturvedi and Simon has been set out in the impugned order and it is recorded that, various dates of personal hearing was given one after the other but neither Ashish Kumar Chaurasia nor his advocate turned up. It is clear from the record that the appellants had been given adequate opportunity of being heard in the matter pursuant to the show cause notice issued under Section 124 of the said Act, and there has not been any violation of the principles of natural justice.

8. In view of the above position, in the facts and circumstances of the present case, in our view the denial of cross examination has not prejudiced the cause of the appellants particularly as the case would stand even ignoring the statement of other noticees.

9. As far as the appellant No.4 & 5 are concerned, both of them were brokers who have clinched the deals between the appellant No.1 & 3 and were concerned with the goods. Further, in the appeal memorandum, the only point that is stated by them is appellant No.2 & 3 have gone back to their statements and hence no case exists against them. We have already held that the statement given by the appellants No.2 & 3 can be relied upon and the retraction is no consequence in the facts and circumstances of the present case and in view of this position, their arguments does not hold good. As far as the appellant No.4 & 5 are concerned, we observe that penalty imposed is Rs.1 lakh on each. In our view the penalty is on the higher side and we reduce the penalty to Rs.50,000/- (Rupees fifty thousand only) each.

10. In the result, the appeal filed by appellant No.1, 2 & 3 are dismissed. Appeals of appellant No.4 & 5 are dismissed except the reduction in penalty amount.

11. All the five appeals are disposed of in above terms.

(Pronounced in Court on .)

(S.S. Garg) Member (Judicial) (P.K. Jain) Member (Technical)

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