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2002 DIGILAW 514 (PNJ)

ComOf C. Ex. , Chandigarh-i v. Takshila Spinners

2002-05-08

JAWAHAR LAL GUPTA, N.K.SUD

body2002
Judgment Jawahar Lal Gupta, J. 1. The first respondent is engaged in the manufacture of woollen worsted yarn. The Revenue alleges that the respondent was clearing this yarn in cones in the guise of plain reel hanks. Thus, it was wrongly availing the benefit of exemption granted vide notifications dated March 1, 1994 and April 25, 1994. On this basis, a show cause notice was issued to the respondent. After considering the reply, the Commissioner vide order dated April 27, 2000, held that the respondent was liable to pay a duty of Rs. 22,44,086.79. A penalty of Rs. 22,44,087/- was also imposed under Section 11AC of the Central Excise Act, 1944 . On failure to make the deposit, interest @ 20% had to be paid. 2. Aggrieved by the order, the respondent filed an appeal. The Tribunal vide its order dated May 11, 2001, has found that the Authority had placed reliance on the statements of 15 persons recorded during investigation. These persons had not appeared during the proceedings to face cross-examination. Thus, the Commissioner had erred in recording findings on the basis of the statements of these persons. It was further held that "there was no evidence to corroborate the statements. No cones of the worsted woollen yarn were found and seized from their premises. No document was produced by any of the witnesses to corroborate his statement regarding purchase of the worsted woollen yarn in cones and not in plain (straight) reel hanks..." Still further, it was also noticed that "the description of the goods given by the respondent in the invoices was worsted woollen yarn H i.e. in hanks. None of the invoices indicated the sale of worsted woollen yarn in cones to any of the buyers (witnesses)." It was also noticed that no cones of the worsted woollen yarn were found at the factory premises of the respondent which may not have been accounted for in the records. On a cumulative consideration of these facts, the Tribunal came to the conclusion that the levy of duty could not be sustained. 3. So far as the penalty is concerned, the Tribunal found that the period involved was April 25, 1994 to March 31, 1995. Section 11AC was promulgated with effect from September 28, 1996. The provision did not have retrospective operation. Thus, it could not be invoked to justify the levy of penalty. 3. So far as the penalty is concerned, the Tribunal found that the period involved was April 25, 1994 to March 31, 1995. Section 11AC was promulgated with effect from September 28, 1996. The provision did not have retrospective operation. Thus, it could not be invoked to justify the levy of penalty. Consequently, the order of the Commissioner was set aside. 4. The Revenue has now filed this petition under Section 35H(1) of the Central Excise Act, 1944. It prays that the important questions of law arise out of the order of the Tribunal. Thus, the Tribunal should be directed to refer the following questions for the opinion of this Court :- (i) "Whether the Hon ble Tribunal has not erred in allowing the appeal of the party merely on the ground that the buyers, whose statements were recorded, have not been cross-examined, when the buyers did not retract their statements and whether to meet the principles of natural justice, it was not imperative on Tribunal to remand the case back to the adjudicating authority for afresh adjudication after cross-examining the witnesses ? (ii) Whether the confessional statements of buyers placed on record are not sufficient to prove the removal of dutiable goods in the guise of exempted goods when the statements have neither been retracted nor proved otherwise? (iii) Whether the statements recorded under Section 14 of Central Excise Act, 1944 are not ipso facto admissible and sufficient evidence to arrive at a conclusion? (iv) Whether the Hon ble Tribunal has erred in law in not accepting the principle of reasonable degree of probability? (v) Whether the evidence placed on record was not sufficient to prove the clandestine manufacture and removal of the goods?" 5. Mr. Govind Goel, learned Counsel contends that the Tribunal had erred in accepting the respondents appeal merely on the ground that the 15 persons whose statements had been recorded during the course of investigation were not produced for cross-examination. In any event, the Tribunal should have remanded the case to the adjudicating authority for proceeding afresh and recording their statements. He further submits that during the cross-examination, corroborative evidence would have come on record. 6. As noticed above, the Tribunal has not rested its decision merely on the failure of the Commissioner to allow cross-examination of the 15 persons. Various other factors have also been taken into consideration. He further submits that during the cross-examination, corroborative evidence would have come on record. 6. As noticed above, the Tribunal has not rested its decision merely on the failure of the Commissioner to allow cross-examination of the 15 persons. Various other factors have also been taken into consideration. It is undoubtedly true as was held by their Lordships of the Supreme Court in Commissioner of Sales Tax, U.P. v. R.P. Dixit, JT 2000 (7) SC 547 that in such a situation, the case should be remanded so that the persons concerned can appear before the adjudicating authority. We would have also normally taken that view. However, in the present case, no cones of worsted woollen yarn which may not have been accounted for were recovered from the premises of the respondent. Similarly, no recovery of cones had been made from the premises of the buyers. Not even a single invoice indicating the supply of worsted woollen yarn cones by the respondent to any of the buyers was produced. Still further, the documents collected during the course of investigation clearly showed that the respondent had described the goods as worsted woollen yarn - hanks. Thus, the documentary evidence clearly belies the suggestion that the respondent had supplied worsted woollen cones to the respondent. 7. Lest there should be failure of justice, we have repeatedly asked Mr. Govind Goel to refer to any evidence on the record which may even remotely suggest that any of the findings of fact recorded by the Tribunal is inaccurate. Learned Counsel has not been able to pin-point or refer to any evidence on the record of the department. In this situation, we find that the decision of the Tribunal does not rest merely on the statements of the 15 persons which were recorded during the course of investigation. It is based on a perusal of the invoices and the fact that no unaccounted for cones were recovered from the factory premises of the respondent or the buyers. 8. Litigation is an expensive affair. In the circumstances of this case, issue of notice to the respondent and subsequent proceedings would be an exercise in futility as no evidence whatsoever pointing out any inaccuracy in the findings of fact of the Tribunal has been pointed out. In this situation, we find no justification for prolonging the agony of the respondent and the pendency of the case. 9. In this situation, we find no justification for prolonging the agony of the respondent and the pendency of the case. 9. No other point has been raised. 10. In view of the above, we find no merit in this petition. It is, consequently, dismissed in limine.