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CX – Cross-examination – Gap in adjudication proceeding is not required to be filled up by Tribunal and that too after 21 years of booking the case, which, in all probability, would be merely non-productive: Majority CESTAT

2019-TIOL-2202-CESTAT-CHD

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SCO 147-148, SECTOR 17-C, CHANDIGARH-160017
DIVISION BENCH
COURT NO. I

Appeal Nos. E/2745-2746/2005-Ex(DB)

Arising out of the OIO No.7/RH/ADJ/05-06, Dated: 17.5.2016
Passed by the CCE, Faridabad

Date of Hearing: 23.01.2018
Date of Decision: 23.01.2018

M/s MANISH VINYLS
SHRI O P KHETAN, DIRECTOR

Vs

COMMISSIONER OF CENTRAL EXCISE
FARIDABAD

Appellant Rep by: Shri B L Narsimhan, Adv.
Respondent Rep by: Shri G M Sharma, AR

CORAM: Ashok Jindal, Member (J)
Devender Singh, Member (T)

CX – The appellants are in appeal against impugned order demanding duty alongwith interest and imposing penalties on both of them – The demand has been confirmed on two counts i.e. non receipt of inputs by the appellants and receipt of the inputs without cover of invoices and non-accountal of goods in statutory records and the same were used in manufacturing of final goods which were cleared clandestinely – As there are difference of opinion between the Members, therefore, the matter is referred to the third Member – The issue regarding compliance of mandatory provisions of Section 9D have been discussed by various Courts/Tribunals in many cases where it is held that the compliance to the provisions of Section 9D is mandatory and non-negotiable and the adjudicating authority has no option but to follow the same – The case pertaining to the period 1998-99 and 1999-2000 and the SCN was issued on 11.02.2002, which was adjudicated by impugned order, which is nearly after 21 years of institution of the proceedings against the appellant – Otherwise also, the gap in adjudication proceeding is not required to be filled up at the level of this Tribunal that too after so many years, of the booking of the case, where in all probability would be a merely non-productise – The Member (J) has rightly followed the law, and therefore, the decision of High Court in the case of Flevel International – 2015-TIOL-2230-HC-DEL-CX is rightly applicable in the present proceeded – The Member (T) has simply held that the circumstance under the case of Flevel International is not applicable in the present case without making only differentiation on record – Thus, the observation of Member (T) is not devoid of any legal proposition – Under the circumstance, the Member (T) observation is not as per the provisions of Section 9D of the Act as held in various case laws including the case of Flevel International, therefore, disagree with the view expressed by Member (T) and concur with the findings of Member (J) – In view of the majority decision, the credit cannot be denied to the appellant and no demand can be confirmed against the appellant on account of clandestine removal of the goods – Therefore, the impugned order is set aside: CESTAT

Appeals allowed

Case laws cited:

Neepez Steels Ltd.-2008 (230) ELT 218 (P&H)… Para 3

Pioneer Industries- 2014-TIOL-2910-CESTAT-MUM… Para 3

Motabhai Iron Steel Industries – 2014-TIOL-1617-HC-AHM-CX… Para 3

Ambika International – 2016-TIOL-1238-HC-P&H-CX… Para 3

Flever International – 2015-TIOL-2230-HC-DEL-CX… Para 3

Alliance Alloys Pvt.Ltd. vs. CCE, Delhi – 2016-TIOL-1922-CESTAT-CHD… Para 6

Kuber Tobacco India Ltd.- 2016-TIOL-769-CESTAT-DEL… Para 6

G-Tech Industries vs. UOI – 2016-TIOL-2749-HC-P&H-CX… Para 8

Hind Industries Ltd. vs. CC, New Delhi – 2017-TIOL-4097-CESTAT-DEL… Para 8

J&K Cigarettes Ltd vs. Coll. Of C.Ex – 2009-TIOL-478-HC-DEL-CX… Para 8

Jindal Drugs Pvt Ltd vs. UOI- 2016-TIOL-1230-HC-P&H-CX… Para 8

INTERIM ORDER NOS. 39-49/2018
FINAL ORDER NOS. 60359-60360/2019

Per: Ashok Jindal:

The appellants are in appeal against the impugned order demanding duty alongwith interest and imposing penalties on both appellants.

2. The duty has been confirmed against the main appellant as under:

Sl.No.DescriptionDuty Demand
(i)Denial of credit on inputs received from ChemplastSanmar (13 invoices)10,29,387
(ii)Denial of credit on inputs imported and received from head office of appellants (12 invoices)9,17,570
(iii)Denial of credit on inputs transported in own vehicles (2 invoices)1,15,212
(iv)Demand on the ground of alleged clandestine removal of final products on the basis of transporter’s documents33,69,797
 TOTAL54,31,966

3. The show cause notice was issued to the appellants on 11.1.2002 to deny credit availed by the appellants on PVC resin an input of Rs.20,62,169/- on the allegation that inputs have not been received in the factory of the appellant. The demand at sl.No.(i) was confirmed on the basis that the transportation was done in the lorry receipts were fictitious and therefore it was alleged that the inputs were not received by the appellants. The demand at S.No.(ii) has been confirmed on the ground that the PVC resin imported by the appellant was not received in the factory. The demand at Sl.No.(iii) was confirmed by denying the credit on the ground that the inputs under cover of 2 invoices transported by the appellants in their own vehicles were not received in the factory. The demand a Sl.No.(iv) of Rs.33,69,797/- has been confirmed on the ground that the appellant received PVC resin and knitted fabric and did not account for the same in the books of accounts relying on the documents maintained by a transporter. The matter was agitated by the appellant before the adjudicating authority but the adjudicating authority confirmed the above demands.

(a) Denial of credit of Rs.10,29,387 availed on PVC resin purchased from depot Chemplast.

3. Shri B.L.Narsimhan, Advocate, the learned Counsel appeared for the appellant and submits that the credit has been denied on the ground that the PVC resin was not received by the appellants in their factory. The adjudicating authority has held that the transporters have shown the lorry receipt are fictitious and the appellants fabricated the transport documents and wrongly availed credit on 13 invoices. He submits that the appellants were purchasing PVC resin from Chemplast Sanmar and for this purpose one of the their employees were deputed and the said person after purchase of the PVC resin arranged for transportation from the nearby tempo stand and accompanied the goods. The goods were physically accompanied by their employee, therefore, they did not indicate in the lorry receipt. He submits that the said goods were physically received in their factory and duly entered in their records like gate register, bill for payment of freight, RG 23A Part I register and the payments were made through account payee cheque proves physical receipt of the goods. He submits that the fact of delivery of inputs was also admitted by the transporter Shri Vinod Gupta in his cross examination. He further submits that in one of the case of such transaction, the Commissioner has himself dropped the demand which proves that the reliance placed on the statement of the transporter was irrelevant. He submits that the duty cannot be demanded merely on the basis of the statement of the transporter that he did not transport the goods when the goods have been duly entered in their records, therefore, the credit cannot be denied. To support his contention, he relied on the decision Neepez Steels Ltd.-2008 (230) ELT 218 (P&H) which has been followed in the case of Pioneer Industries- 2014 (306) ELT 671 (Tri.-Mum.) = 2014-TIOL-2910-CESTAT-MUM. He also relied on the decision of the Hon’ble Gujarat High Court in the case of Motabhai Iron Steel Industries-2015 (316) ELT 374 (Guj) = 2014-TIOL-1617-HC-AHM-CX. He also submitted that the appellant was specifically asked for cross examination but none of the transporters were examined in person by the Commissioner or allowed to be cross examined by the appellant. Therefore, in view of the section 9D of the Act, the statement of these parties cannot be relied on as evidence against the appellant. To support his contention, he relied on the decision of the Hon’ble Punjab and Haryana High Court in the case of Ambika International-2016-VIL-P&H-CE = 2016-TIOL-1238-HC-P&H-CX , Flever International-2016 (332) ELT 416 (Del.) 2015-TIOL-2230-HC-DEL-CX.

(b) Denial of credit of Rs.9,17,570 availed on PVC imported:

4. With regard to the denial of credit availed on PVC imputed, it is his submission that the credit availed on 12 invoices has been denied on the ground that the imported PVC was not received by the appellant. He submits that the appellant has paid customs duty on the imported material and the inputs have been received and accounted for in the RG 23D register and transported to the factory under the cover of proper invoices issued by the importer. To support this contention, he produced the documents like gate register, bill for payment of freight, RG 23A Part I register, etc. which clearly shows that the goods were physically received. He submits that the cross examination of Shri Rajender Singh owner of SR Freight Carriers was denied by the adjudicating authority. Therefore, the credit cannot be denied.

(c) Denial of credit of Rs.1,15,212 availed on PVC transported in own vehicle.

5. This credit has been denied on PVC resin transported in their own vehicle on the ground that the inputs were not received and the appellant’s vehicle were used for other purposes during the relevant period. He submits that there was actual purchase of PVC resin from Chemplast Sanmar and the inputs were physically received in the factory as is evident from the gate register, bill for payment of freight, RG 23A Part I register, and payment to Chemplast Sanmar, therefore, the credit cannot be denied.

(d) Demand of duty of Rs.33,69,797 on the basis of alleged clandestine removal of final products.

6. This demand has been confirmed against the appellant on the allegation of clandestine removal of the goods. The allegation of the Revenue is that the appellant received unaccounted knitted fabrics from M/s.Roongta Textiles, Ankleshwar and relied on the statement of Mr.Rajeev Porwal, a transporter. It was also alleged that the appellants neither received unaccounted PVC resin from M/s.B B Trading and M/s.Poonam Plastics nor these inputs were used for removal of finished goods clandestinely. This allegation is based on the documents like loading slips and freight bills maintained by the transporter. He submits that the adjudicating authority has denied the cross examination of Shri Rajeev Porwal, therefore, his statement cannot be taken as evidence and denial of cross examination is the gross violation of the principles of natural justice in the light of the decision of the Ambika International and Flevel International and Vishnu & Co. With regard to the unaccounted receipt of knitted fabric, the reliance placed on the statement of Shri Rajeev Porwal is erroneous. He submits that the entire quantity of knitted fabric received from M/s.Roongta Textiles have been duly accounted for. The reliance placed on the statement of Shri Rajeev Porwal is not correct. He submits that it is admitted in the statement of Shri Somani of Madhu Textile, Mumbai that M/s.Roongta Textiles were issuing bogus invoices without physical delivery of the goods to avail bill discounting facility. Thus, the allegation of unaccounted receipt of knitted fabric on the basis of statement given by Mr.Porwal is not correct. He submits that the appellants have in fact received 22 consignments which have duly accounted for in the books of accounts. He further submits that the allegation of unaccented receipt of PVC resin on the basis of documents maintained by the transporter is also not sustainable as the reliance placed by the adjudicating authority on 106 invoices. He submits that the appellant has received the inputs and duly accounted for. He submits that no corroborative evidence has been produced by the Revenue to prove clandestine removal of the goods and receipt of money consideration, purchase of other raw materials etc. used in the manufacture of final products to allege clandestine removal. Therefore, the entire demand is on the basis of assumptions and presumptions. Ld. Counsel for the appellant also relied upon the decision of this Tribunal in the case of Alliance Alloys Pvt.Ltd. vs. CCE, Delhi-2016 (338) ELT 749 (Tri.-Chan.) =2016-TIOL-1922-CESTAT-CHD and Kuber Tobacco India Ltd.-2016 (338) ELT 113 (Tri.-Del.) = 2016-TIOL-769-CESTAT-DEL. In that circumstance, the impugned order is to be set aside.

7. On the other hand, learned AR supported the impugned order. He further submits that vehicle numbers shown in the invoices were different in which inputs were transported from Cemplast Sanmar to the factory of the appellant and on investigation it was found that either transporter was not available at the given address or vehicle number was different. He submits that on enquiry from the RTO, it was found that the vehicle numbers mentioned in the invoices are of two wheeler. In that circumstance, the contention is that the appellant has not received inputs, therefore, the demand is rightly made. With regard to the demand on the basis of clandestine removal of the goods, the appellant has received knitted fabric from M/s.Roongta Textiles which was not accounted for in the statutory records. His contention is that the owner of Singhal Express Carriers has specifically mentioned the goods cleared from M/s.Roongta Textile in the name of various parties M/s.Madhu Textiles, etc. to the factory of the appellants. His submission is that the GRs having the same number and name of the consignor but vehicle numbers were different in each case. He also submits that weighment slips on record to establish that the inputs have been received by the appellants. He submits that the finished goods have been cleared by the transporter and his statement is placed on record. Therefore, the impugned order is to be upheld.

8. Heard both sides.

9. On careful consideration of the submissions made by both sides, we find that the demand has been confirmed on two counts:

(i) non receipt of the inputs by the appellants and

(ii) receipt of the inputs without cover of the invoices and nonaccountal of the goods in the statutory records and the same were used in manufacturing of final goods which were cleared clandestinely.

Issue No.1

10. We have seen that the credit sought to be denied merely on the ground that the transporters whose vehicle numbers have been entered in the invoices found non- existence or having made statement that they have not transported the goods. It shows that the sole ground for denial of credit is based on the transporter’s statement. No other corroborative evidence has been produced by the Revenue except the statement of the transporter. In this case, the appellant specifically asked for cross examination of the transporter but the adjudicating authority neither called for examination in chief nor allowed cross examination of the transporter to the appellants. As the Revenue’s case is based on the transporter’s statement, the examination in chief of the transporter is essential for the adjudicating authority as held by the Hon’ble Punjab and Haryana High Court in the case of Ambika International (supra) wherein the Hon’ble High Court has observed as under:

29. Reliance may also usefully be placed on para 16 of the judgment of the Allahabad High Court in C.C.E. V Parmarth Iron Pvt Ltd, 2010 (250) ELT 514 (All), which, too, unequivocally expound the law thus:

“If the Revenue choose (sic chose?) not to examine any witnesses in adjudication, their statements cannot be considered as evidence.”

30. That adjudicating authorities are bound by the general principles of evidence, stands affirmed in the judgement of the Supreme 13 of 16 CWP No. 12615 of 2016, CWP No. 12616 of 2016, CWP No. 12617 of 2016 and CWP No. 12618 of 2016.

Court in C.C. V Bussa Overseas Properties Ltd, 2007(216) ELT 659 (SC) = 2007-TIOL-185-SC-CUS, which upheld the decision of the Tribunal in Bussa Overseas Properties Ltd v C.C., 2001 (137) ELT 637 (T).

31. It is clear, from a reading of the Orders-in-original dated 19.05.2016 and 01.06.2016 supra, that Respondents No.2 has, in the said Orders-in-Original, placed extensive reliance on the statements, recorded during investigation under Section 14 of the Act. He has not invoked clause

(a) of sub-section (1) of Section 9D of the Act, by holding that attendance of the makers of the said statements could not be obtained for any of the reasons contemplated by the said clause. That being so, it was not open to Respondent No.2 to rely on the said statements, without following the mandatory procedure contemplated by clause (b) of the said sub-section. The Ordersin- Original, dated 19/05/2016 and 01/06/2016, having been passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, it has to be held that said Orders-in- Original stand vitiated thereby.

32. The said orders-in-Original, dated 19/05/2016 and 01/06/2016, passed by Respondent No.2 are, therefore, clearly liable to be set aside.

11. Therefore, we hold that apart from the statement of transporter, no corroborative evidence has been produced by the Revenue. The said statement has not been examined in chief, therefore, in view of the decision of the Hon’ble Punjab and Haryana High Court in the case of Ambika International, the statement of the transporter cannot be relied without examination in chief of the same by the appellants.

12. We further take note of the fact that the investigation and the matter was started in the year 1999 and thereafter the show cause was notice issued in 2002. After lapse of 17 years, if the matter is remanded to the adjudicating authority that will not serve the purpose as held by the Hon’ble Delhi High Court in the case of Flever International (supra) wherein the Hon’ble Delhi High Court as observed as under:

58. The Court is not inclined to consider the plea of the respondent that the matter should be remanded for a fresh consideration by the CESTAT. In the first place, it must be remembered that the search operation in this case took place way back in 1992. The long drawn process of adjudication over a period of 12 years was followed by the judicial review process for another 10 years. Sending the case back to the CESTAT for a fresh determination would prolong the case interminably. The question of now producing persons whose statements were recorded 23 years after the event for cross-examination is impractical and not feasible. Secondly, no fresh material has to be brought on record to warrant a re-look. The Court is satisfied that the existing material is insufficient to sustain the adjudication order of the CCE on the issue.

13. Further Hon’ble Delhi High Court in the case of Vishu & Co. (supra) wherein the Hon’ble Delhi High Court has observed as under:

40. In fact Ms. Sharma too insisted upon reading from such retracted statements in order to persuade the Court to hold that the impugned order of the CESTAT is perverse. According to her the retraction made more than 20 months after the making of the initial statements “would have no effect in the eye of law”. She too submitted that the responsibility of ensuring the presence of such persons for cross-examination was of the noticees themselves.

41. What the above submission overlooks is the ‘reliability’ of such statements. Once it is shown that the maker of such statement has in fact resiled from it, even if it is after a period of time, then it is no longer safe to rely upon it as a substantive piece of evidence. The question is not so much as to admissibility of such statement as much as it is about its ‘reliability’. It is the latter requirement that warrants a judicial authority to seek, as a rule of prudence, some corroboration of such retracted statement by some other reliable independent material. This is the approach adopted by the CESTAT and the Court finds it to be in consonance with the settled legal position in this regard.

42. The contention that it is the responsibility of the noticees to produce the witnesses for cross-examination is a strange one considering that they are witnesses of the Department and that their statements are being relied upon by the Department in support of the SCNs. Since it is relying on such statements, it is the responsibility of the Department to ensure their presence for cross-examination. As already mentioned, whenever such witnesses (i.e. six of them) were produced for cross-examination they resiled from their earlier statements.

43. It is not a matter of mere coincidence that none of the witnesses who were cross-examined stood by their earlier statements. It is one thing to overlook this feature on the premise that all of them were under the pressure and control of the noticees. The other approach is to view this with some caution and ask what might be the case if the remaining witnesses were also produced for cross-examination? Importantly, what would be the prejudice caused to the noticees, in such circumstances, by their non-production for crossexamination? Thus a doubt is created in favour of the noticees when such witnesses do not turn up for cross-examination. It is the latter approach that has weighed with the CESTAT. That, in view of this Court, was a possible approach and does not render its order perverse on that score.

14. Therefore, we hold that the credit cannot be denied to the appellant.

Issue No.2

15. We find that it is alleged against the appellants that they have received the goods from M/s.Roongta Textile without cover of invoices and the same has been used in the manufacture of final products which have been cleared without payment of duty. We find that the said allegation is based on the statement of the transporter Mr.Rajeev Porwal whose cross examination was not granted to the appellant despite request made by the appellant. Moreover, the statement is not relied on as it is admitted by the Commissioner in the impugned order that the statement of Shri Somani of Madhu Textile, Mumbai that M/s.Roongta Textiles were issuing bogus invoices without physical delivery of the goods to avail bill discounting facility. As on the one hand the case of the Revenue the invoices issued in the name of Madhu Textile, Faridabad and the said goods have been delivered at the factory of the appellants on the other hand, there is statement on record that Madhu Textile is receiving only invoices without receipt of any goods. The said statement cannot be relied on without cross examination of the transporter who has stated that they have transported the goods to the appellants. We further take note of the fact that no evidence has been produced by the Revenue to allege clandestine manufacture/removal of the goods how the goods were manufactured or from where the other raw materials were procured and how clandestine manufacture goods were transported and how the payment on the said goods have been received. In the absence of any corroborative evidence, except the statement of the transporter whose cross examination has not been granted, therefore, denial of cross examination is in the gross violation of the principles of natural justice, the allegation of clandestine removal of the goods is not sustainable. Therefore, in the light of the decision of the Ambika International (supra) and Flevel International (supra) and Vishnu & Co. (supra), the demand on account of clandestine removal of the goods is not sustainable. Accordingly, the same is set aside.

16. We also take note of the fact that in the case of Kuber Tobacco India Ltd. (supra), this Tribunal has examined the issue in para 14 of the order which is reproduced as under:

“14.In view of the above analysis, it is clear that during adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross-examined. In the absence of examination-in-chief, allowing the cross examination, is a futile exercise. We further find that the appellant have challenged the impugned order on the ground that the evidence in the form of statements gathered have no link of the appellant to the activities took at Sandeep Poultry Farm which is required to be examined on the basis of records available during the course of adjudication and the same has not been considered judicially.”

17. We also take note of that in the case of Kuber Tobacco India Ltd.(supra) in a similar set of facts, this Tribunal has observed hereinabove. Similar view was taken by this Tribunal in the case of Alliance Alloys Pvt.Ltd. (supra).

18. In view of the above observation, we hold that the credit cannot be denied to the appellant and no demand can be confirmed against the appellant on account of clandestine removal of the goods. Therefore, the impugned order is set aside and the allowed the appeals with consequential relief, if any.

(Pronounced in the open court)

(Devender Singh)
Member (Technical)

(Ashok Jindal)
Member (Judicial)

Per: Devender Singh:

19. While I agree with the findings given in para 10 and 15 by the Ld. Member (Judicial) that the adjudicating authority has not followed the provisions of Section 9D of the Central Excise Act, 1944 and the cross examination of witnesses has been denied, which has resulted in violation of the process of natural justice, I am of the view that in these circumstances, it will be in the interest of justice that the matter is remanded back to the adjudicating authority for fresh adjudication by following the provisions of Section 9D. The appellant have relied upon judgment in the case of Flever International-2016 (332) ELT 416 (Del.) 2015-TIOL-2230-HC-DEL-CX wherein Hon’ble Delhi High Court had allowed the appeal and did not consider it fit to remand the matter for fresh adjudication of matter by the CESTAT. The ruling of Hon’ble High Court to remand the matter was in the context of particular facts of that case where existing material was held to be insufficient to sustain the adjudication order. Besides, I find that the request in that case was for remanding the matter to the CESTAT and the Hon’ble Court had held in the facts of the case that there should be a practice to introduce persons for cross examination.

20. In the facts of the present case, I find that instead of going by presumption or assumption whether witnesses would be available or would present themselves, it would be appropriate to give chance to adjudicating authority to follow the provisions of Section 9D ibid and meet its requirements. The adjudicating authority would also follow the tenets of natural justice including dealing with requests for cross examination and give fair opportunity to appellant to defend their case. After the procedure of Section 9D ibid has been followed, the adjudicating authority would pass a reasoned and speaking order in the matter in accordance with law.

Devender Singh
Member (Technical)

21. As there are difference of opinion between the Members, therefore, the matter is referred to the the Hon’ble President to appoint third Member to resolve the following issue :-

POINTS OF DIFFERENCE

(a) Whether, Member (Judicial) is correct in holding that in light of the decision of Hon’ble Delhi High Court in the case of Flever International (supra), no purpose will be served to remand the matter and the appeal be allowed.

Or

(b) Whether the Member (Technical) is correct in holding that the matter is required to remanded back to the adjudicating by following the provisions of Section 9D and thereafter pass appropriate orders.

(Pronounced in the court)

Devender Singh
Member (Technical)

Ashok Jindal
Member (Judicial)

Per: Bijay Kumar:

Heard the Ld. Advocate, Mr. B.L. Narsimhan, on behalf of the appellants and the Ld. A.R., Mr. G.M. Sharma, on behalf of the Revenue.

2. The following points of difference have been placed for consideration before me:

“(a) Whether the Member (Judicial) is correct in holding that in light of the decision of Hon‟ble Delhi High Court in the case of Flevel International (supra), no purpose will be served to remand the matter and the appeals be allowed.

Or,

(b) Whether the Member (Technical) is correct in holding that the matter is required to remand back to the adjudicating authority by following the provisions of Section 9D and thereafter pass appropriate orders.”

3. The factual matrix of the case are available in the order under reference and the same are not being repeated for the sake of brevity as the same have already been heard and taken on the records by the referral bench.

4. I find that the Ld. Member (T) has no disagreement with the Ld. Member (J) on the points as contended in para 10 and 15 in the order recorded by the Ld. Member (J). The only point of difference is regarding the course to be adopted for non-observance of provisions of Section 9D of the Central Excise Act, 1944 (in short “the Act”). The Ld. Member (J) having relied on the case of Hon’ble Delhi High Court in the case of Flevel International – 2016 (332) ELT 416 (Del) = 2015-TIOL-2230-HC-DEL-CX. held that no purpose would be served by remanding the matter afresh to the adjudicating authority for compliance of procedure have prescribed in the provisions of Section 9D of the Act which was not followed by him during the course of adjudication.

5. In contrary to that, the Ld. Member (T) has held that this case is fit for remand the matter back to the adjudicating authority for curing the defect of non-compliance of provisions of Section 9D of the Act. The Ld. Member (T) further held that the case of Flevel International (supra) is not applicable in the facts and circumstances of the case at hand, on account of presumption or assumption as to whether witnesses would be available or would present themselves, therefore, he concluded that a chance needed to be given for the compliance of provisions of Section 9D of the Act.

6. With this background, I find that the reference in confined to only one point whether in the present case the observations held by the Ld. Member (J) is correct or whether that of Ld. Member (T)?

7. Before deciding the issue, it would be appreciated to provisions of Section 9D of the Act, which are as under:

“Section 9D in The Central Excises And Salt Act, 1944

9D. Relevancy of statements under certain circumstances.

(1) A statement made arid signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains,-

(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or

(b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.

(2) The provisions of sub- section (1) shall, so far as may be, apply in relation to- any proceedings under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court.”

8. The issue regarding compliance of mandatory provisions of Section 9D have been discussed by various Courts/Tribunals in many cases where it is held that the compliance to the provisions of Section 9D is mandatory and non-negotiable and the adjudicating authority has no option but to follow the same, some of which are as under:-

(i) G-Tech Industries vs. UOI – 2016 (339) ELT 209 (P&H) = 2016-TIOL-2749-HC-P&H-CX

(ii) Hind Industries Ltd. vs. CC, New Delhi – 2018 (364) ELT 218 (Tri.Delhi) = 2017-TIOL-4097-CESTAT-DEL

(iii) J&K Cigarettes Ltd vs. Coll. Of C.Ex – 2009 (242) ELT 189 (Del.) = 2009-TIOL-478-HC-DEL-CX

(iv) Jindal Drugs Pvt Ltd vs. UOI- 2016 (340) ELT 67 (P&H) = 2016-TIOL-1230-HC-P&H-CX

(v) Ambika International vs. UOI – 2016-VIL-P&H-CE = 2016-TIOL-1238-HC-P&H-CX

(vi) Flevel International vs. CCE – 2016 (332) ELT 416 (Del) = 2015-TIOL-2230-HC-DEL-CX.

9. I find that in the case of Flevel International (supra), Hon’ble High Court of Delhi has held as under:

“58. The Court is not inclined to consider the plea of the respondent that the matter should be remanded for a fresh consideration by the CESTAT. In the first place, it must be remembered that the search operation in this case took place way back in 1992. The long drawn process of adjudication over a period of 12 years was followed by the judicial review process for another 10 years. Sending the case back to the CESTAT for a fresh determination would prolong the case interminably. The question of now producing persons whose statements were recorded 23 years after the event for cross examination is impractical and feasible. Secondly, no fresh material has to be brought on record to warrant a re-look. The court is satisfied that the existing material is insufficient to sustain the adjudication order of the CCE on the issue.”

In this case also, I find that the case pertaining to the period 1998-99 and 1999-2000 and the show cause notice was issued on 11.02.2002, which was adjudicated by the impugned order on 17.05.2005, which is nearly after 21 years of institution of the proceedings against the appellant. Otherwise also, I find that the gap in adjudication proceeding is not required to be filled up at the level of this Tribunal that too after so many years, of the booking of the case, where in all probability would be a merely non-productise. The Ld. Member (J) has rightly followed the law, and therefore, the decision of Hon’ble High Court in the case of Flevel International (supra) is rightly applicable in the present proceeded. The Ld. Member (T) has simply held that the circumstance under the case of Flevel International (supra) is not applicable in the present case without making only differentiation on record. Thus, I find that the observation of Ld. Member (T) is not devoid of any legal proposition. Under the circumstance, I find that the Ld. Member (T) observation is not as per the provisions of Section 9D of the Act as held various case laws including the case of Flevel International (supra), therefore, I disagree with the view expressed by the Ld. Member (T) and concur with the findings of Ld. Member (J).

10. The reference is answered accordingly.

11. The Registry is directed to place matter before the referral bench for further proceedings.

(Pronounced in the court on 22.02.2019)

Bijay Kumar
Member (Technical)

FINAL ORDER NOS. 60359-60360/2019

22. In view of the majority decision, we hold that the credit cannot be denied to the appellant and no demand can be confirmed against the appellant on account of clandestine removal of the goods. Therefore, the impugned order is set aside and the allowed the appeals with consequential relief, if any.

(Pronounced in the open court on 04.04.2019)

(Paras are numbered as per the original text: Editor)

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