M/s Bihar Foundry & Casting Ltd Vs Commissioner Of Central Excise, Ranchi Commissionerate, Ranchi

,,,,

Aparesh Kumar Singh, J",,,,

1. The instant appeal has been preferred under section 35(G) of the Central Excise Act, 1944 (hereinafter referred to in short as â€˜Actâ€™) against",,,,

the final order dated 21.09.2017 (Annexure-9) passed by the learned Customs, Excise and Service Tax Appellate Tribunal, Eastern Zonal Bench,",,,,

Kolkata (hereinafter referred to in short as â€˜CESTATâ€™) in Appeal Nos. E/173 & 174 / 2006, so far as it relates to Appeal No. E/173/2006.",,,,

2. The following substantial questions of law have been framed for adjudication of this appeal:,,,,

i. Whether, the statement of Mr. H.K Budhia, Managing Director of the appellant-company recorded under Section 14 of the Central Excise Act,",,,,

1944 could be treated as a relevant piece of material without complying with the provisions of Section 9D of Central Excise Act, 1944?",,,,

ii. Whether the finding of learned Tribunal that the duty demand was never contested by the appellant before the authorities is perverse?,,,,

iii. Whether suo-moto deposit of differential duty liability, whose details have been mentioned in para 5.0 of the notice to show cause issued to the",,,,

appellant as well as to its Managing Director can be said to be an admission on the part of the appellant regarding clandestine removal of goods?,,,,

iv. Whether the fact that the penalty imposed by the adjudicating authority upon the Managing Director of the Company, having attained finality, can",,,,

itself be used against the appellant?,,,,

v. Whether the impugned order was passed solely on the statement of the Managing Director of the Company recorded under Section 14 of the,,,,

Central Excise Act, 1944 or there was further material to confirm the demand against the appellant?",,,,

vi. Whether the entries made in private diary of the Managing Director of the Company could have been a basis for passing the impugned order,,,,

against the appellant?,,,,

Case of the Appellant:,,,,

3. Appellant is engaged in manufacture of Alloy Steel Ingots (SH 7224) and Non-Alloys Steel Ingots (SH 7206). The appellant is also engaged in the,,,,

manufacture of CTD bars and rods (SH 721490). The chronology of dates and events, as per the appellant, relevant for adjudication of the appeal, are",,,,

as under: 07.09.2001: On 07.09.2001, Central Excise Officers conducted a search at the factory premises of the appellant. It is pleaded that no",,,,

incriminating materials were recovered. Stocks of raw materials and finished goods were also taken and no discrepancies were noticed. Searches,,,,

were also conducted on 07.09.2001 at their office premises where one private diary (Ambassador maroon colour) relating to the year 2000-01 and,,,,

2001-02 written by Shri Hari Krishna Budhia, Managing Director, was seized which purportedly contained entries for the period 12.01.2001 to",,,,

05.09.2001, as per para 2.0 of the show-cause notice. Entries related to purchase of sponge iron from Tata, Bihar, (Kusum), dispatch of ingots to",,,,

(Punjab), Silico Manganese (related to M/s Gautam Ferro Alloys). No dispute was however found in respect of the said entries of Sponge Iron, Ingots",,,,

and Silico Manganese. The dispute in the present case relates to dispatch of CTD bars and rods to Jharkhand, Kavita, Ashish, etc. The entries in the",,,,

private diary were compared with the excise invoices issued and it was found that for some entries, no excise invoices were issued and in some other",,,,

cases, though excise invoices were issued, but the value in the private diary is on higher side.",,,,

4. Statements of Shri Prem Shankar Mishra, Administrative Officer, Shri S.K. Jaiswal, Sr. Accounts Officer, Shri A.D. Singh, Assistant, Excise and",,,,

Dispatch Section and Sri Abdul Kalam, Production Manager of the Appellant Company were recorded. According to the appellant, these persons",,,,

stated that they have no idea or they were not sure about the contents / entries of the private diary. Such statements are referable to para 3.2 to 3.5 of,,,,

the show-cause notice.,,,,

15.11.2001: On 15.11.2001 statement of Shri Hari Krishna Budhia, Managing Director of the Company was recorded under section 14 of the Act. He",,,,

deposed that he had no idea about any unaccounted clearances of CTD bars and rods. According to the appellant, such statement of Mr. Budhia is",,,,

not disputed by the Respondent in their counter affidavit. On the same date, Shri Budhia also deposed that he is a heart patient. Mr. Budhia fell",,,,

seriously ill and was immediately rushed to Apollo Hospital, Chennai on the next day i.e.16.11.2001 and he underwent by-pass surgery on 03.12.2001.",,,,

He was discharged on 10.12.2001. The aforesaid fact has not been disputed by the Respondent in their counter affidavit. 24.11.2001: According to the,,,,

appellant, the Central Excise Officials exerted pressure tactic upon the appellantâ€™s employee to deposit the duty and an amount of Rs. 10,68,298/-",,,,

was accordingly deposited vide TR-6 Challan dated 24.11.2001i.e. much before issuance of show cause notice on 22.02.2002.,,,,

Investigations were also carried out against all three buyers of the appellant i.e. M/s Jharkhand Steels, Ranchi, M/s Kavita Steels, Ranchi and M/s",,,,

Ashish Steel, Ranchi on 09.10.2001. Searches revealed that these buyers had purchased excisable goods from the appellant under the cover of proper",,,,

excise invoice only, as per para 3.0 of the show-cause notice. This itself proved that the entries in the private diary were not related for clandestine",,,,

removal. On the contrary, statements of Shri Budhia before the Commissioner (Appeals) and learned Tribunal that the extra entries were related to",,,,

offers, negotiations, etc. which never materialized, stands proved.",,,,

22.02.2002: The Additional Commissioner of Central Excise, Jamshedpur issued show-cause notice on 22.02.2002 demanding central excise duty of",,,,

Rs. 12,50,107/- under section 11A(1) / 11A(2) of the Act along with interest under section 11AB and proposed penalty under section 11AC / Rule",,,,

173Q of Central Excise Rule, 1944 read with Rule 25 of the Central Excise Rules, 2001. It required the appellant to show cause as to why an amount",,,,

of Rs.10,68,298/- collected during investigation, should not be confirmed. Shri Hari Krishna Budhia was also required to show-cause as to why a",,,,

penalty under Rule 209A of Central Excise Rules, 1944 read with Rule 26 of C.E.R., 2001 should not be imposed upon him for his purported abetment",,,,

in the offences of the appellant Company. It was alleged that Shri Budhia is liable to penalty under the aforesaid provisions as purchases, sales, rate",,,,

with buyers/suppliers were finalized by him and a clandestine removal appears to be resorted on his behest. He himself was maintaining accounts of,,,,

such clandestine clearances in his private ambassador diary. He also maintained records of consideration on account of rate difference. Relevant,,,,

facts of the show-cause notice are as under:,,,,

i. Disputes related to dispatch of CTD rods and bars referable to para 2.1 and 2.2 of the show cause notice.,,,,

ii. Buyers did not accept clandestine dispatch, as per entries in the private diary.",,,,

iii. When asked about difference between the entries in the private diary and excise invoice, Shri Budhia said that he had no idea and it might have",,,,

happened inadvertently. He undertook to examine the issue and if dispatches were not covered under the invoices and duty quantified, he shall bear",,,,

the duty.,,,,

iv. The appellant deposited Rs. 10,68,298/-, as per statement made at para 3 of the show cause notice.",,,,

v. Clandestine removal of CTD bars without cover of the excise invoice and without payment of duty has been alleged.,,,,

vi. It is alleged against Shri Hari Krishna Budhia that he dealt with purchase, sales, supplier, buyer, rate finalization and himself maintained the records",,,,

of clandestine clearances and additional consideration in ambassador diary.,,,,

07.03.2005: The appellant vide his reply dated 07.03.2005 denied the allegation in the show cause notice which is not disputed by the Respondent in,,,,

their counter affidavit dated 10.05.2019.,,,,

13.04.2005: The Joint Commissioner, Central Excise, Headquarters, Patna vide his Order-in-Original dated 13.04.2005 confirmed the duty demand",,,,

along with interest and imposed a penalty of Rs. 20,000/- under Rule 173Q of the C.E.R., 1944 read with Rule 25 of C.E.R., 2001 and further imposed",,,,

penalty of Rs. 10,77,678/- under section 11AC. Further penalty of Rs. 10,77,678/- under section 11AC and penalty of Rs. 20,000/- under the erstwhile",,,,

Rule 209A of the C.E.R., 1944 read with Rule 26 of the C.E.R. 2001 were also imposed upon Shri Hari Krishna Budhia, Managing Director.",,,,

5. The Appellant being aggrieved, went in appeal before the Commissioner (Appeals), Central Excise, Patna under section 35 of the Act and",,,,

reiterated their contentions. 29.09.2005: Learned Commissioner (Appeals) in purported exercise of powers conferred under section 35A (3) of the Act,,,,

issued a show-cause notice on 29.09.2005 proposing enhancement of penalty under erstwhile Rule 209A of the C.E.R, 1944 and Rule 26 of the",,,,

C.E.R., 2001.",,,,

07.12.2005: The appellant made his submission dated 07.12.2005 vehemently disputing and denying each and all allegations. It was contended that the,,,,

entries in the private diary did not relate to any clandestine removal, but contains a schedule of work, negotiation with buyers, offers from buyers, etc.,",,,,

some of which never materialized or partly materialized. Aforesaid facts are not disputed by the Respondent in their counter affidavit dated,,,,

10.05.2019.,,,,

29.12.2005: The Commissioner (Appeals) vide Order-in-Appeal dated 29.12.2005 upheld the Order-in-Original. In respect of Mr. Hari Krishna,,,,

Budhia, it was held that existence of mensrea on his part is in â€˜doubtâ€™ which was upheld by the learned Tribunal. However, penalty on Hari",,,,

Krishna Budhia under Rule 209A was enhanced to Rs. 20,00,000/- from Rs. 20,000/-which was reduced by the learned Tribunal to Rs. 20,000/-.",,,,

Penalty of Rs. 20,000/- under Rule 173Q of C.E.R, 1944 / Rule 25 of C.E.R, 2001 on the Company and penalty of Rs. 10,77,678/- on Shri Budhia",,,,

were also however dropped.,,,,

6. The Commissioner (Appeals) upon consideration of the grounds of appeal and the reply to the show-cause notice submitted by Shri Budhia held that,,,,

the decision of the Adjudicating Authority to enhance Rs. 20,182/- in respect of 07 invoices was not based on direct, cogent and acceptable evidence.",,,,

Thus, it was not a case of undervaluation. Since the duty had been paid before issuance of show-cause notice, penalty could not be imposed under",,,,

section 11AC of the C.E.R, 1944 and interest also could not be levied. Imposition of penalty of Rs. 20,000/- on the Appellant Company under rule",,,,

173Q of C.E.R, 1944 and on Appellant No. 2 Shri Hari Krishna Budhia under rule 209A of C.E.R, 1944 was also contrary to the settled law and is not",,,,

tenable. It further held that since an amount of Rs. 10,802.32 in excess was paid, any imposition of interest under section 11AB of the Act does not",,,,

arise and is required to be returned in accordance with the provisions of law.,,,,

07.04.2006: The Appellant being aggrieved preferred an appeal before the learned CESTAT against the Order-in-Original dated 29.12.2005.,,,,

30.08.2017: Learned Tribunal heard the appeal on 30.08.2017 and reserved its order. The appellant vehemently disputed and denied the allegations,,,,

before the learned Tribunal also. The appellant also filed written notes of argument on 30.08.2017.,,,,

21.09.2017: The learned Tribunal by the impugned order dated 21.09.2017 (Annexure-9) rejected the appeal filed by the appellant inter-alia solely,,,,

relying upon the statement dated 15.11.2001 of Shri Hari Krishna Budhia, Managing Director and the private diary seized from the office.",,,,

Submission of the Appellant on the substantial question of law:,,,,

7. The first substantial question of law framed for consideration in this appeal is â€œwhether, the statement of Mr. H.K Budhia, Managing Director of",,,,

the Appellant-Company recorded under Section 14 of the Central Excise Act, 1944 could be treated as a relevant piece of material without complying",,,,

with the provisions of Section 9D of Central Excise Act, 1944?â€ Learned counsel for the appellant has answered this question in the following",,,,

manner:,,,,

According to him, learned Tribunal failed to appreciate that the statement of Shri Budhia was irrelevant piece of material due to non-compliance of the",,,,

mandatory conditions of section 9D of the Act. According to him, under section 9D(1)(b) read with section 9D(2) of the Act, statement made before",,,,

the Central Excise Officer during the course of any inquiry or proceeding under section 14 the Act shall be relevant for the purpose of proving the,,,,

truth of the facts only when the person who made the statement is examined as a witness before the Adjudicating Authority and the Adjudicating,,,,

Authority is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence. According to him,",,,,

provisions of section 9D (2) is applicable to quasi-judicial / adjudication proceedings under the Act, so far as may be, as it applies before the Court.",,,,

Section 9D being mandatory in nature, cannot be dispensed with. Therefore, unless the statements made under section 14 are tested in accordance",,,,

with section 9-D, it cannot be admitted into evidence. Such statements have to be eschewed. Rigors of section 9D (1) (b) can be waived only under",,,,

exceptions carved out under sub-section 1(a) of section 9D 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 expenses which,,,,

under the circumstances, the Adjudicating Authority considers unreasonable. Power of the Central Excise Officer under section 14 of the Act to",,,,

summon any person to give evidence or produce a document is subject to section 9D of the Act. Here, the Central Excise Officer acts in the capacity",,,,

of an investigator and not a Court or Adjudicating Authority. Hence, such statement cannot be said to be examination-in-chief. Learned Tribunal failed",,,,

to appreciate that Shri Budhia was never examined by the Adjudicating Authority, nor his statement was admitted into evidence by the Adjudicating",,,,

Authority in accordance with section 9D(1). Hence, it was irrelevant piece of material. The purpose behind inserting section 9D is to ensure that only",,,,

true evidence form the basis of charge in an adjudication proceeding as the Central Excise Officers often records statement under coercion or,,,,

compulsion. It is further submitted that section 9D is a general provision and applies to all persons whose statements are recorded under the Act,,,,

irrespective of the fact whether he is a Director or Managing Director or an employee or a third person. Therefore, the statement of Mr. Budhia could",,,,

not have been excluded from the purview of section 9D. Section 9D acts as a safeguard against self-incrimination also and is protected as a,,,,

constitutional right under Article 20 (3) of Constitution of India. Learned counsel for the appellant has submitted that interpretation of statute involves,,,,

giving content to the meaning of expression used and also what is not said. In support of the submissions, learned counsel for the appellant has placed",,,,

reliance upon the following decisions:,,,,

i. (1995) 3 SCC 367: Sukhwant Singh Vs. State of Punjab,,,,

ii. 2007 (220) E.L.T 3 (SC): Mohtesham Mohd. Ismail Vs. Spl. Director, Enforcement Directorate",,,,

iii. 2016 (340) E.L.T 67 (P&H): Jindal Drugs Pvt. Ltd Vs. Union of India,,,,

iv. 2016 (332) E.L.T 416 (Del.): Flevel International Vs. Commissioner of Central Excise,,,,

v. 2018 (361) E.L.T 90 (P&H): Ambika International Vs. Union of India,,,,

vi. 2018 (362) E.L.T 961 (Chhatisgarh): Hi Tech Abrasives Ltd. vs. Commissioner of C. Ex. & Cus., Raipur",,,,

8. Based on these decisions, it is submitted that the consistent line of interpretation of section 9D is that the protection of section 9D is mandatory in",,,,

nature. Learned counsel for the appellant submits that the decision in the case of 2019 (368) E.L.T 710 (Tri-Del) wherein it has been held that the,,,,

statement recorded under section 14 of the Act is a substitute of examination-in-chief and therefore, without further examination-in-chief, witness can",,,,

be offered for cross-examination, is per incuriam being passed in ignorance of the relevant statute or binding precedent and has no evidentiary value.",,,,

Learned counsel for the appellant has further argued in support of the aforesaid proposition that in such an eventuality, if a witness is said to be",,,,

examined in chief by making a statement under section 14 but not allowed to cross-examine, it would amount to giving up the witness by the Revenue.",,,,

Converse is also true. A witness who is not examined in chief but offered for cross-examination, would also amount to giving up the witness. Reliance",,,,

has been placed upon the case of Sukhwant Singh (Supra).,,,,

9. The second substantial question of law inter-alia â€œwhether the finding of learned Tribunal that the duty demand was never contested by the,,,,

appellant before the authorities is perverse?â€ has been answered by the learned counsel for the appellant in the following manner :,,,,

He submits that the finding of the learned Tribunal that the appellant did not contest the demand before the lower authorities, is perverse. It would",,,,

appear from the finding of the learned Commissioner (Appeals) in his Order-in-Appeal dated 29.02.2005 and the written submission dated 07.12.2005,,,,

filed before him that the demand was disputed before the lower authorities and also before the learned Tribunal. Therefore, Shri Budhia in his reply",,,,

dated 07.12.2005 explained that the entries in his diary were related to offers and negotiations, some of which did not materialize. Since diary was",,,,

written by Shri Budhia, hence he could only explain as to what the diary contains and the Appellant Company could not have explained the content of",,,,

the diary. Shri Budhia was, therefore, joined as a co-noticee. Appellant in his defence reply had disputed the entire demand of Rs. 12,50,107/- in the",,,,

show-cause notice and also prayed for dropping the entire demand. The appellant alternatively disputed the quantification of demand. The,,,,

Adjudicating Authority in his Order-in-Original dated 13.04.2005 arbitrarily held that the appellant had challenged only the quantification of duty. It is,,,,

well settled that the charges in the show-cause notice are prima-facie in nature based on uncontested material. Even non-filing of any reply, in the",,,,

worst case scenario, is not admission of the charges. The appellant has disputed the entire demand at every stage of the proceedings right from the",,,,

Adjudicating Authority till the learned Tribunal. Since section 11A (2) mandates determination of duty of excise in accordance with law even where,,,,

no replies were filed, it was the duty of the Adjudicating Authority to determine it in accordance with law. In any case, defence reply cannot be",,,,

treated as evidence in support of the charge in the show-cause notice. The Apex Court in the case of (2004) 9 SCC 703 para 14 has held that,,,,

statement in reply to the show-cause notice is not evidence. The Tribunal erred in treating it as evidence in support of the case. Even if it is accepted,,,,

assumingly before the Adjudicating Authority that quantification of demand was only challenged, then also nothing would turn out of it inasmuch as",,,,

there is no estoppel against challenging the taxability before the Commissioner (Appeals) who is also an Assessing Authority.,,,,

10. In the instant case, the taxability has undisputedly been challenged before the Commissioner (Appeals) which is evident from the reply dated",,,,

07.12.2005. In this regard, reliance is placed upon the provisions of section 35 and 35B of the Act and the decision of the Apex Court in the case of",,,,

MIL India Ltd. Versus Commissioner of Central Excise, Noida [(2007) 3 SCC 533, para 2 & 4]. According to the appellant, in the defence reply",,,,

dated 07.03.2005, appellant took five alternative pleas that, (a) they are entitled to the benefit under section 11A(2)(B) as they have already deposited",,,,

Rs. 10,68,298/-, (b) quantification of the demand is not correct, (c) the entire demand of Rs. 12,50,107/- is not sustainable, (d) the burden of proof is on",,,,

the department which has not been discharged and (e) amount of Rs. 10,68,298/- is a â€˜depositâ€™ and not â€˜paymentâ€™ of tax. It is the",,,,

submission of the appellant that on inquiry, the buyers did not accept the correctness of 71 entries of purported clandestine removal. Hence,",,,,

correctness of the entries in the private diary did not stand proved. Mere assertion in defence reply cannot be made the basis for confirmation of,,,,

demand. The demand has to be adjudicated and duty had to be determined under section 11A (1) and 11A (2) following the settled principles of law.,,,,

In the instant case, there were only two evidences, (i) statement of Shri H.K. Budhia dated 15.01.2001 and (ii) private diary on the basis of which only",,,,

demand has to be adjudicated. The buyers did not accept the correctness of 71 entries of purported clandestine removal, as alleged in the show-cause",,,,

notice.,,,,

11. The third substantial question of law which is to the following effect â€œwhether suo-moto deposit of differential duty liability, whose details have",,,,

been mentioned in para 5.0 of the notice to show cause issued to the appellant as well as to its Managing Director can be said to be an admission on,,,,

the part of the appellant regarding clandestine removal of goods?â€ has been answered by the learned counsel for the appellant in the following,,,,

manner :,,,,

Learned Tribunal failed to appreciate that the amount of Rs. 10,68,298/- made during investigation was only â€˜depositâ€™ and not â€˜paymentâ€™",,,,

of duty. The proceedings in the instant case were initiated under section 11A (1) / 11A(2) and not under section 11A(2)(B) of the Act. Hence, no",,,,

question of accepting any duty liability before the show-cause notice arose. Section 11A (2)(B) envisages that the person chargeable with duty may,,,,

pay the duty before service of show cause notice on him under Section 11A(1) and inform the Central Excise Officer of such payment in writing. In,,,,

such cases, the Central Excise Official â€˜shall notâ€™ serve any show-cause notice under section 11A (1) in respect of duty so paid. As per",,,,

explanation 1 to section 11A (2) (B), it shall not apply to the cases where duty was not levied / paid by reason of fraud or collusion or wilful mis-",,,,

statement or suppression of facts. Since in the instant case, suppression of facts etc. were alleged in the show cause notice, hence the adjudication",,,,

had to be done under section 11A (1) and 11A(2). In such a case, there is no scope to pay duty and settle the case before issue of show-cause notice.",,,,

Further, there is no other provision for collection of duty before issuance of show-cause notice and passing of adjudication order. Any collection of",,,,

amount at the investigation stage is without authority of law and is merely a deposit made under protest and such collection is without authority of law.,,,,

In the aforesaid background, mere deposit of any amount during the investigation before issuance of show cause notice, an adjudication order, cannot",,,,

be treated as admission of the charge. The liability to duty had to be determined in accordance with section 11A (1) and 11A 2) of the Act by,,,,

following the due process of law. No duty or tax can be collected save by authority of law, as per Article 265 of Constitution of India. Learned",,,,

counsel for the appellant has placed reliance upon the following decisions in support of the aforesaid submissions.,,,,

i. (1997) 5 SCC 536, para-92: Mafatlal Industries Ltd & others vs. Union of India & others",,,,

ii. 2017 (350) E.L.T 145 (Del): Digipro Import & Export Pvt. Ltd. vs. Union of India,,,,

iii. 2019 (365) E.L.T 32 (P&H): Concepts Global Impex vs Union of India,,,,

12. The fourth substantial question of law framed for adjudication in this appeal is as under: â€œWhether the fact that the penalty imposed by the,,,,

adjudicating authority upon the Managing Director of the Company, having attained finality, can itself be used against the appellantâ€? Learned",,,,

counsel for the appellant has made the following submissions in answer to the above question of law. He has submitted that non-challenge of order,,,,

against the co-noticee / Director cannot affect the appeal of the manufacturing Company since the Company is a separate legal entity from its,,,,

Member / Director. The right to appeal under section 35G of the Act read with section 100 of the CPC is a valuable right of the party aggrieved,,,,

which cannot be defeated or made illusory by any narrow pedantic interpretation and non-challenge of the order by any other person. Before the,,,,

learned Tribunal, issues and relief (s) prayed for by the Appellant Company were different from that of Shri H.K. Budhia, Managing Director of the",,,,

Company. Therefore, finality in one case would not affect the other. Referring to the Order-in-Appeal dated 29.12.2005, it is submitted that the",,,,

Commissioner (Appeals) has held in respect of Shri H.K. Budhia that existence of mensrea on his part was of doubt and still he was held liable for,,,,

heavy deterrent penalties under Rule 209A of the C.E.R., 1944 read with Rule 26 of the C.E.R., 2001. Learned Tribunal, though it reduced the penalty",,,,

on Shri Budhia to Rs. 20,000/-but upheld the adjudication order and Order-in-Appeal on all other aspects. Thereby, the finding of the learned",,,,

Commissioner (Appeals) as to the doubtful mensrea on the part of Shri H.K. Budhia stood upheld by the learned Tribunal. It is submitted that doubts,,,,

and suspicion cannot act as a substitute for legal proof. Charges of clandestine removal being a serious charge cannot be upheld on mere doubts. The,,,,

prayer and issues raised by the Appellant Company before the learned Tribunal was in relation to dutiability of the demand under section 11A and,,,,

imposition of penalty under section 11AC of the Act on charges of purported clandestine removal of excisable goods and for setting aside of the same.,,,,

Whereas, the issues and relief (s) claimed by Shri H.K. Budhia, Managing Director before the learned Tribunal was with respect to imposition of",,,,

personal penalty under Rule 209A of the C.E.R., 1944 read with Rule 26 of C.E.R., 2001 for dealing with buyers / suppliers and writing of diary in his",,,,

own handwriting for purported accounted and unaccounted sales, the charge against the Appellant Company in the show-cause notice was of",,,,

purported clandestine removal and in the case of Shri Budhia was of purported maintenance of records. The Department itself has treated them to be,,,,

two separate entities and not one being the agent of the other by initiating separate proceedings. Therefore, when the parties are different, issues are",,,,

different and reliefs claimed are different, no question of any finality would arise. Learned counsel for the appellant has relied upon the decision of the",,,,

Apex Court in the case of Sarva Shramik Sangh Versus Indian Oil Corporation Limited and others [(2009) 11 SCC 609, para-28]; The Commissioner",,,,

of Central Excise, Chennai I Commissionerate Vs. B.S. Garg and Ors [2016 (339) E.L.T 518 (Madras] and State of Rajasthan Versus Nemi Chand",,,,

Mahela and others [(2019) 14 SCC 179]. He has also relied upon a Constitution Bench judgment of nine Judges in the case of State Trading,,,,

Corporation of India Ltd. Versus Commercial Tax Officer and others [AIR 1963 SC 1811, para-23]. Learned counsel submits that therefore, the",,,,

instant question has to be answered in favour of the appellant.,,,,

13. The fifth substantial question of law is to the following effect:,,,,

â€œWhether the impugned order was passed solely on the statement of the Managing Director of the Company recorded under Section 14 of the,,,,

Central Excise Act, 1944 or there was further material to confirm the demand against the appellant?â€",,,,

On behalf of the appellant, it has been urged that the duty in the instant case has been demanded without any allegation or evidence or finding of",,,,

â€œmanufacture of the impugned goods by the appellant in the show-cause noticeâ€. Since levy under section 3 of the Act is on the taxable event,,,,

â€œof â€˜manufactureâ€™, therefore, on mere allegation without any evidence or finding of manufacture, such duty cannot be demanded. It is",,,,

submitted that to prove manufacture; unaccounted purchase of raw materials; unaccounted consumption of raw material; consumption of electricity;,,,,

payment of wages, etc., must be proved to corroborate the charge. The private diary of Mr. Budhia cannot be made the basis to uphold a finding of",,,,

dutiability of the demand. No other legal evidence has been brought on record in support of the charge. By referring to the statements of Shri Budhia,,,,

in relation to his private diary, it is submitted that there is no unequivocal admission on the part of Mr. Budhia either amounting to a confession for",,,,

recording such a finding and that too without any corroborative evidence. Therefore, findings of the learned Tribunal are perverse and contrary to the",,,,

undisputed facts of the case. Even during inquiry with the buyers, entries in the private diary could not be corroborated as none of the buyers accepted",,,,

any unaccounted purchase. There is no evidence i.e. challan, parallel invoices, etc. for removal of impugned goods, nor is there any evidence of flow",,,,

back of funds. No unaccounted cash was found during search. Therefore, the entire findings are based upon the statement of Mr. H.K. Budhia,",,,,

Managing Director of the Company without any compliance of section 9D of the Act or any corroboration by independent legal evidence. Learned,,,,

counsel for the appellant has placed reliance upon the case of Continental Cement Company Vs. Union of India [2014 (309) E.L.T 411 (All.)]; Triveni,,,,

Engineering & Industries Ltd. Versus Commr. of C.Ex. Allahabad [2016 (334) E.L.T 595 (All.); Balashri Metals Pvt. Ltd. Vs. Union of India [2017,,,,

(345) E.L.T 187 (Jhar.)]; Hi Tech Abrasives Ltd. Vs. Commissioner of C. Ex. & Cus., Raipur [2018 (362) E.L.T 961 (Chhatisgarh) and in the case",,,,

of Sakeen Alloys Pvt. Ltd. Vs. Commissioner of C. Ex., Ahmedabad [2013 (296) E.L.T 392 (Tri-Ahmd.)] which stood affirmed up to the Supreme",,,,

Court as reported in Micro Inks Ltd. Vs. Commissioner of Central Excise, Daman [2015 (319) E.L.T 117 (SC)].",,,,

14. The last and sixth substantial question of law is â€œwhether the entries made in private diary of the Managing Director of the Company could,,,,

have been a basis for passing the impugned order against the appellant?â€ It is the categorical submission of learned counsel for the appellant that the,,,,

findings of the learned Tribunal is entirely based on the private diary without any corroborative evidence obtained through independent inquiry.,,,,

Therefore, such a serious charge of clandestine removal cannot be sustained merely on the basis of entries in the private records which is denied by",,,,

the buyers. Learned counsel for the appellant has placed reliance upon the following decisions in support of his submission.,,,,

i. 2011 (271) E.L.T 184 (Pat): Commissioner of Central Excise Vs. Brims Products.,,,,

ii. 2013 (287) E.L.T 243 (Gujarat):Commissioner of C. Ex. Cus. & Service Tax Vs. Vishwa Traders P. Ltd.,,,,

iii. 2015 (318) E.L.T 487(Tribunal-Ahmadabad): Suzuki Synthetics Pvt Ltd vs. Commr. of C. Ex, Ahmedabad-III",,,,

iv. 2016 (332) E.L.T 416 (Del): Flevel International Vs. Commissioner of Central Excise,,,,

v. 2017 (345) E.L.T 187 (Jhar): Balashri Metals Pvt Ltd Vs.Union of India,,,,

vi. 2018 (309) E.L.T 411(All):Continental Cement Company Vs Union of India,,,,

Based on these submissions, learned counsel for the appellant submits that all the substantial questions of law framed by this Court are fit to be",,,,

answered in favour of the appellant and against the Revenue. The impugned order of learned Tribunal being perverse in the eye of law and on facts, is",,,,

fit to be set aside.,,,,

Case of the Respondents:,,,,

15. Learned counsel Mr. Amit Kumar has inter-alia made the following submissions on behalf of the Respondent Department.,,,,

On the basis of an intelligence report, search was conducted on 07.09.2001 by team of officers of Central Excise, Headquarters (Preventive),",,,,

Jamshedpur, both at the factory premises at Marar, Ramgarh as well as office premises at Ranchi in which certain incriminating documents were",,,,

recovered from the office premises and were resumed under panchnama for further investigation. A maroon colour Ambassador diary for the year,,,,

2001 of M/s B.F.C.L was recovered from the office premises of the Assessee at Ranchi which on preliminary examination revealed that it belonged,,,,

to Shri Hari Krishna Budhia, Managing Director of the Company. It contained the entries of purchases, sales of goods by the Assessee for the period",,,,

12.01.2001 to 05.09.2001. It also contained the details of quantities of sale / dispatch of finished goods, rate charged from the buyers. A detailed entry",,,,

wise examination of the diary was carried out which revealed that entries on top of each page as â€˜Tataâ€™, â€˜Biharâ€™, â€˜Kusumâ€™, etc",,,,

pertains to the purchase of raw materials namely Sponge Iron from (i) M/s Tata Sponge Iron, Orissa, Bihar Sponge Iron Ltd., Chandil, M/s Kusum",,,,

Powernet (P) Ltd., Kelajhad, Orissa, etc.. (ii) Entries as â€˜Punjabâ€™ and quantity mentioned against it appear to be the total dispatches / sales of",,,,

ingots through its consignment agent M/s Bihari Lal & Company, Mandi, Govindgarh, Punjab, (iii) Entries in the said diary such as of Jharkhand,",,,,

Kavita, Ashish, Prasad, Pravin, Arshad and quantities as well as rates thereon pertains to dispatch / sale of CTD bars and rods through different",,,,

buyers. The measurement of CTD bars and rods such as 8 mm, 12 mm, 16 mm and 20 mm mentioned randomly showed that it related to CTD bars",,,,

and rods. Prima facie, it appears that majority of such dispatches were clandestine in nature as figures did not match in the books of accounts. (iv) On",,,,

scrutiny of the notings of the diary with the corroborative records of dispatch / sales, it revealed that the Assessee had made dispatch of CTD bars",,,,

and rods to the buyers during the period 12.01.2001 to 05.09.2001, wherein in majority of the cases, same were not issued under the cover of Central",,,,

Excise Invoice. Where invoices were found to have been issued, the Assessee had quoted wrong price as in the Central Excise Invoice, prices were",,,,

lower than what was noted in the said diary, resulting in under valuation of the so dispatched excisable goods and short payment of duty of central",,,,

excise thereon. From the notings of the said diary, and in the inquiry / investigation, it was revealed that dispatches were made to the following buyers",,,,

of the Assessee.,,,,

i. â€˜Jharkhandâ€™-M/s Jharkhand Steel, Upper Bazar, Ranchi",,,,

ii. â€˜Kavitaâ€™-M/s Kavita Steel, Ratu Road, Ranchi",,,,

iii. â€˜Ashishâ€™-M/s Ashish Steel, Upper Bazar, Ranchi",,,,

iv. â€˜Pravinâ€™-M/s Pravin Agency, Ranchi",,,,

v. â€˜Arshad- M/s Arshad Steel, Ranchi",,,,

vi. â€˜Prasadâ€™-M/s Prasad Steel, Ranchi.",,,,

16. During the investigation, summons were issued to the officers / staff of the Assessee for recording their statements under section 14 of the",,,,

C.E.R., 1944. Shri Prem Shankar Mishra, Administrative Officer of the Assessee stated that the Managing Director Shri Hari Krishna Budhia is",,,,

himself seeing production, procurement of raw materials and sale of finished goods and the aforesaid diary belonged to Mr. Budhia and entries made",,,,

in the diary are in the handwriting of the Managing Director only.,,,,

17. Mr. S.K. Jaiswal, Sr. Accounts Officer in his statement dated 14.09.2001 stated that they also received sale proceeds in cash and in such",,,,

instances, case account is debited and S-debtors account is correct. Regarding the aforesaid diary, he said it is of M/s B.F.C.L and Alphabets seem to",,,,

be of the Managing Director; digits he was not sure. He said that they are given quantitative details as well as value of certain items exactly to be,,,,

explained by the writers. (M.D). Statement of Mr. Budhia was thereafter recorded upon summon on 15.11.2001. Mr. Budhia stated that said diary is,,,,

of M/s B.F.C.L and notings are in his handwriting. He accepted that he looked after the work relating to the dispatch and purchase, finalization of",,,,

rates and party, quantity as also of payment. When asked about the dispatches in cover under invoice specifically his rolling mill division product CTD",,,,

bars and rods and as such, no duty of central excise having been paid thereon, Mr. Budhia replied that he had no idea but added that if at all that show",,,,

entry, it must have occurred inadvertently. He undertook to examine the issue and if dispatches were not covered under the invoices and duty was",,,,

quantified, he would bear the duty. He also agreed to pay duty difference in case of rates being on the higher side in his diary. During investigation of",,,,

detailed entry-wise examination of the diary in the handwriting of the Managing Director Mr. Budhia, it was revealed between the period 12.01.2001",,,,

to 31.03.2001, out of altogether 23 dispatches shown in the diary, 21 dispatches were shown without payment of central excise duty amount assessed",,,,

to Rs. 3,86,733/-, whereas two dispatches were found showing short paid duty amount assessed to Rs. 70,963/-. Total short payment amounted to Rs.",,,,

3,94,696/- during the period 2000-01.",,,,

18. Further, from the notings in the said diary, it revealed that during the period 01.04.2001 to 05.09.2001, out of altogether 55 dispatches shown in the",,,,

diary, 50 were shown being made without payment of central excise duty amount assessed to Rs. 8,39,962/-, whereas five dispatches were shown as",,,,

short paid duty amount assessed to Rs. 15,449/-, total amounting to Rs. 8,55,411/- during the period 01.04.2001 to 05.09.2001 corresponding to the",,,,

period 2001-02.,,,,

19. The Assesse meanwhile deposited the differential duty of CTD bars to the tune of Rs. 36,023/- and differential duty on CTD bars for the period",,,,

2001-02 to the tune of Rs. 7,32,275/-. Intimation was given on 29.11.2001. Learned counsel for the Respondent Revenue submits that suo-motu",,,,

payment of differential duty on CTD bars and rods for the period 2000-1 and 2001-02 are conclusive evidence of evasion of duty for the reason that it,,,,

shows an existing liability by way of differential duty with the Assessee. That such liability occurred due to earlier non-payment / short payment of,,,,

duty. Further, the Managing Director Shri Budhia had agreed to examine the issue and if found that dispatches were not covered under the invoices,",,,,

they shall bear the duty. After examination of those dispatches being made without cover of central excise, they actually made payment of duty. It",,,,

therefore amounted to acceptance of the allegation of clandestine clearances without payment / short payment of duty.,,,,

20. Based on the aforesaid materials, a show-cause notice was issued on 22.02.2002 upon the Appellant Company demanding central excise duty of",,,,

Rs. 12,50,107/- under section 11A(1) of the Act and determined under section 11A(2) along with interest under section 11AB and proposed penalty",,,,

under section 11AC / Rule 173Q of C.E.R, 1944 read with Rule 25 of C.E.R, 2001 asking the appellant to show-cause as to why an amount of Rs.",,,,

10,68,298/- collected during investigation should not be confirmed. Shri Hari Krishna Budhia was also asked to show-cause as to why penalty under",,,,

Rule 209A of C.E.R, 1944 read with Rule 26 of C.E.R., 2001 should not be imposed upon him for his purported abetment in the offences of the",,,,

Appellant Company.,,,,

21. The Assessee submitted his defence reply on 07.03.2005. It submitted that the duty alleged to be short paid, as per show cause notice, has not",,,,

been properly calculated, since the amount indicated in the show-cause notice should be treated as cum duty price. Therefore, to arrive at a correct",,,,

assessable value, it was proper in law to deduct the duty amount from the cum duty value. It also submitted that in this case, they could not issue the",,,,

invoices inadvertently and therefore, immediately deposited the duty for CTD bars and rods for the period January 2001 to September 05, 2001,",,,,

totalling Rs. 10,68,298/- on 24.11.2001, much before issuance of show-cause notice on 22.02.2002.",,,,

22. It is submitted that the Joint Commissioner, Central Excise, Headquarters upon consideration of the materials collected during search, inquiry /",,,,

investigation, passed the Order-in-Original dated 13.04.2005 confirming the duty demand of Rs. 10,77,678/- along with interest under section 11AB",,,,

with a penalty of Rs. 20,000/- under Rule 173Q of C.E.R, 1944 read with Rule 25 of C.E.R, 2001 and further penalty of Rs. 10,77,678/- under section",,,,

11AC of the Act. A penalty of Rs. 20,000/- under the erstwhile Rule 209A of the C.E.R., 1944 read with Rule 26 of C.E.R., 2001 was also imposed",,,,

upon Shri Hari Krishna Budhia, Managing Director of the Appellant Company. The Assessee / Appellant went in appeal before the Commissioner",,,,

(Appeals) under section 35 of the Act, reiterating his contentions being aggrieved by the Order-in-Original. Learned Commissioner (Appeals) in",,,,

exercise of the power conferred under section 35A (3) of the Act issued show-cause notice dated 29.09.2005 upon Shri Budhia proposing,,,,

enhancement of penalty under Rule 209A of C.E.R, 1944 read with Rule 26 of C.E.R, 2001. Upon consideration of the submissions and the grounds",,,,

taken by the appellant in the Memo of Appeal and the materials on record, the Commissioner (Appeals) vide Order-in-Appeal dated 29.12.2005",,,,

upheld the Order-in-Original. At the same time, penalty on Shri Budhia was enhanced to Rs. 2,000,000/- from Rs. 20,000/- under Rules 209A of",,,,

C.E.R., 1944. However, penalty of Rs. 20,000/- under Rule 173Q of C.E.R., 1944 read with Rule 25 of C.E.R., 2001 on the Company and penalty of",,,,

Rs. 10,77,678/- on Mr. H.K. Budhia, Managing Director were however dropped.",,,,

23. It is contended that the appellant preferred appeal before the learned Tribunal against the order passed by the Commissioner (Appeals). Learned,,,,

Tribunal vide order impugned dated 21.09.2017 (Annexure-9) reduced the increased penalty of Rs. 2,000,000/- imposed upon the Managing Director",,,,

by the Commissioner (Appeals) and restored it to Rs. 20,000/-.",,,,

24. On the basis of the aforesaid materials and findings of the Adjudicating Authority, Commissioner (Appeals) and learned Tribunal, learned counsel",,,,

for the Respondents has advanced the following submissions:,,,,

The statement of Shri Prem Shankar Mishra, Administrative Officer of the Assessee that the Managing Director Shri Budhia himself sees the",,,,

production, procurement of raw materials and sale of finished goods and that the private diary belonged to Mr. Budhia containing entries made in his",,,,

own handwriting, are confirmed by the statement of Shri Budhia recorded under section 14 of the Act. Shri S.K. Jaiswal, Sr. Accounts Officer of the",,,,

Assessee also stated that Alphabets in the diary seem to be that of the Managing Director. Mr. Budhia, during his examination, admitted that",,,,

dispatches have been made without issuance of central excise invoice in respect of 71 invoices and stated that it must have occurred inadvertently. He,,,,

undertook to examine the issue and deposit the duty quantified. He also agreed to pay the duty difference in case the rates were on the higher side in,,,,

his diary. The deposit of Rs. 10,68,298/- as differential duty liability by the appellant before issuance of the show-cause notice clearly shows that they",,,,

admitted the allegation of clandestine clearances without payment / short payment of duty.,,,,

25. Learned counsel for the Respondent has further made categorical submission that the duty demand was never contested by the appellant before,,,,

the Adjudicating Authority, as would appear from the Order-in-Original since they only contested that the correct demand has been re-calculated by",,,,

them based on lawful deduction of duty @16% which comes to Rs. 10,68,298/-. This amounted to admission of non-issuance of 71 invoices mentioned",,,,

in the diary. In respect of seven invoices found to be undervalued, duty was calculated on the basis of a higher rate quoted in the diary compared to",,,,

what was mentioned in the invoices. Since the Assessee had accepted the rate quoted in his diary for the remaining 71 dispatches, there is no reason",,,,

why the rate quoted for remaining seven invoices should not be taken as authentic.,,,,

26. Learned counsel for the Respondent submits that contention of the appellant that the order is based only on the basis of the entry in the private,,,,

diary, is not correct. In fact, a detailed entry-wise examination was done during the course of investigation and the entries made in the diary was also",,,,

corroborated by the admission of the Managing Director in his statement recorded under section 14 of the Act that the same must have occurred,,,,

inadvertently. On the specific plea raised by the appellant regarding compliance of the provisions of section 9D of the Central Excise Act, 1944, it is",,,,

submitted that at no point, such a plea was raised by the appellant either before the Adjudicating Authority or in the subsequent appeals. This ground",,,,

has been taken up for the first time before this Court and, therefore, neither the Adjudicating Authority nor the Appellate Forum have discussed this",,,,

issue in their order. Reference is made to the decision of the Apex Court in the case of Modern Insulators Limited versus Oriental Insurance,,,,

Company Limited [(2000) 2 SCC 734]. It has been held that in an appeal, the parties cannot urge new facts. It is emphatically asserted by the",,,,

Respondent that Mr. Budhia or the Appellant Company never rebutted the entries in the diary having been made in the hands of the Managing,,,,

Director or his statement recorded under section 14 of the Act, were never retracted before the Adjudicating Authority any time later. Therefore, it",,,,

was not open for the appellant to take such a point. Respondent have placed reliance upon the decision of the Apex Court in the case of Assistant,,,,

Collector of Central Excise, Rajamundry versus Duncan Agro Industries Ltd. and others [(2000) 7 SCC 53]. It has been held therein that statements",,,,

recorded by the Customs Officer under section 108 of the Customs Act which is practically the same as section 14 of the Central Excise Act is,,,,

admissible in evidence. The Court has to test whether inculpating portions were made voluntarily or whether it is vitiated on account of any of the,,,,

premises envisaged in section 24 of the Evidence Act. Further reliance has been placed upon the case of Assistant Collector of Customs, Madras-1",,,,

versus Govind Swamy Raghupati [(1998) 98 E.L.T 50 (Mad) wherein it has been held that confessions made before the police or in custody in,,,,

presence of the police cannot be relied upon within the meaning of section 25 and 26 of the Evidence Act, 1872, except as provided under sections 27",,,,

and 32 of the Evidence Act. Therefore, the confession made by the person before the proper Central Excise Officer is to be viewed with enormous",,,,

evidentiary value. Findings can therefore be recorded on the basis of such confessional statement alone before the Custom Officer. Learned counsel,,,,

for the Respondent has, in support of the aforesaid submissions, also placed reliance upon the following decisions:",,,,

i. (1997) 1 SCC 508: Surjeet Singh Chhabra Vs. Union of India & Ors,,,,

ii. (2003) 5 SCC 106: Union of India and another vs. GTC Industries Ltd., Bombay",,,,

iii. (2011) 12 SCC 243: Commissioner of Central Excise, Mumbai vs. Kalvert Foods India Private Limited and others",,,,

27. Based on the aforesaid submissions and the decisions, learned counsel for the Respondent Mr. Amit Kumar submits that the appellant has failed to",,,,

make out any case for interference in the order of the learned Tribunal. The substantial questions of law involved in this appeal are fit to be answered,,,,

in favour of the Revenue and against the appellant. The appeal may therefore, be dismissed.",,,,

Discussion & Analysis:,,,,

28. The conspectus of facts borne from the records and as pleaded by the parties show that the present appeal by the Appellant Company arose from,,,,

a proceeding initiated against the Appellant-Assesse engaged in the manufacture of ingots as well as non-alloy steel falling under Chapter-72 of the,,,,

Central Excise Act, 1985, on the basis of a search operation in the factory of the Appellant and other connected premises. In course of search on",,,,

07.09.2001 by the officers of Central Excise, Headquarters (Preventive), Jamshedpur, some incriminating documents were recovered which created",,,,

an impression that the Assesse had indulged in clandestine removal of goods namely CTD bars and rods of both non-alloy steel and alloy steel falling,,,,

under Chapter sub-heading 7214.90 and 7228.30 of Central Excise Tariff Act, 1985 (in short â€˜CETA, 1985â€™) respectively without the cover of",,,,

central excise invoices and without payment of duty. It also appeared that in some instances, the Assesse had resorted to modus operandi of",,,,

undervaluation by substituting the rates of such goods with an intent to evade payment of duty of central excise amounting to Rs. 12,50,107/-. During",,,,

the course of search at the factory premises at Marar, Ramgarh, nothing incriminating was recovered or seized from the premises of the Assesse at",,,,

Marar, Ramgarh. However, from the search of the office premises of the Assesse at Ranchi on 07.09.2001, a maroon colour Ambassador Diary for",,,,

the year 2001 of M/s BFCL was recovered which revealed entries of purchase / sale of goods by the Assesse for the period 12.01.2001 to,,,,

05.09.2001. The Department conducted a detailed entry wise examination of the said diary with reference to other corroborating records of dispatch /,,,,

sales which revealed that the Assesse had made a dispatch of goods (CTD bars and rods) to their buyers during January 2001 to September 2001,,,,

(12.01.2001 to 05.09.2001) wherein the majority of dispatches were not issued under the cover of central excise invoices and were removed without,,,,

any payment of duty. In some instances where central excise invoices were found to have been issued, the Assesse had quoted wrong price as it was",,,,

found lower than what was noted in the said diary which pointed to undervaluation and short payment of duty of central excise thereon. On the basis,,,,

of the notings of the said diary and inquiry / investigation in respect of the buyers of the Assesse namely, â€œJharkhandâ€- M/s Jharkhand Steels,",,,,

Upper Bazar, Ranchi, â€˜Kavitaâ€™-M/s Kavita Steels, Ratu Road, Ranchi, â€˜Ashishâ€™-M/s Ashish Steels, Upper Bazar, Ranchi,",,,,

â€˜Pravinâ€™-M/s Pravin Agency, Ranchi, â€˜Arshad- M/s Arshad Steels, Ranchi and â€˜Prasadâ€™-M/s Prasad Steels, Ranchi, the office cum",,,,

business premises of M/s Jharkhand Steels, M/s Kavita Steels and M/s Ashish Steels were searched on 09.10.2001 by the Officers of Central Excise",,,,

Headquarters (Preventive), Jamshedpur. Searches revealed that the Assesse was transacting business with these buyers, whereupon the buyers",,,,

entered only those dispatches in their books of accounts which were covered under the central excise invoices and no other dispatches, as it was",,,,

revealed from the notings in the diary of BFCL, could be found in their stock accounts. Statements of the proprietor / authorized persons of the",,,,

aforesaid three parties were recorded under section 14 of the C.E.A., 1944 on 09.10.2001. During the course of investigations, statements of the",,,,

officer / staff of the Assesse were recorded under section 14 of the C.E.R., 1944 and documents such as Purchase Register, PLA, Master File of",,,,

correspondences, RG-1 Register, Raw Material Register, Invoice Books, etc. were called for examination. Shri Prem Shankar Mishra, Administrative",,,,

Officer of the Assesse, Shri S.K. Jaiswal, Sr. Accounts Officer, BFCL, Shri A.D. Singh, Assistant, Excise and Dispatch Section of the Assesse and",,,,

Abdul Kalam, Production Manager of the BFCL recorded their statement under section 14 of C.E.A., 1944 which revealed that procurement of raw",,,,

materials and sale of finished goods and rates thereon as well as selection of buyers were all done by the Managing Director Shri Hari Krishna,,,,

Budhia. Shri H.K. Budhia was summoned during the course of investigation and his statement was recorded on 15.11.2001 under section 14 of,,,,

C.E.A., 1944. Shri Budhia stated that he looked after the work related to dispatches and purchases starting with finalization of rates, party, quantity as",,,,

also payment. The notings in the diary were accepted by him as in his own handwriting. When asked about the dispatches not covered under invoices,",,,,

he replied that he had no idea, but added that if at all that was a fact, it must have occurred inadvertently. He undertook to examine the issue and",,,,

agreed to pay duty difference in cases where rates were in the higher side in his diary and further, if such dispatches were not covered under the",,,,

invoices, he shall bear the duty as quantified. On the basis of the notings in the said diary, it appeared to the Department that during the period",,,,

12.01.2001 to 31.03.2001, out of 23 dispatches, 21 dispatches were made without the cover of central excise and payment of duty thereon and against",,,,

each such dispatch, quantity and rate of the consignment was mentioned in the said diary and sale amounts were realized from the buyers. The total",,,,

duty of central excise not paid on such 21 dispatches came to Rs. 3,86,733/-. Further, during the period 2000-2001, it was found that out of said 23",,,,

dispatches, 02 dispatches were covered under the central excise invoices in which there were short payment of duty amounting to Rs. 3,744/- and Rs.",,,,

4,219/-, respectively, totalling Rs. 7,963/-. Therefore, it revealed that the Assesse had not paid / short paid duty amounting to Rs. 3,94,696/- during the",,,,

period 2000-2001.,,,,

29. During the period 01.04.2001 to 05.09.2001, notings in the said diary revealed that 55 dispatches of CTD bars and rods were not covered under",,,,

the central excise invoices or in some instances, dispatches under central excise invoice were undervalued, causing deliberate short payment of duty.",,,,

Out of such 55 dispatches, 50 dispatches were without cover of central excise invoices or any central excise duty thereupon which were taken to",,,,

have been cleared in a clandestine manner without payment of central excise duty amounting to Rs. 8,39,962/-. Out of 55 such dispatches, 05",,,,

dispatches under central excise invoices were found to have been undervalued, as compared to the notings in the said diary resulting in not paid / short",,,,

paid duty to the tune of Rs. 3,944/-, Rs. 2,016/-, Rs. 2,336/-, 3,569/- and Rs. 3,584/- respectively totalling Rs. 15,449/-. Thus, Assesse was found to",,,,

have not paid / short paid duty to the Central Excise Department amounting to Rs. 8,55,411/- on clearances of their goods during the period 2001-",,,,

2002. The Assesse meanwhile on 24.11.2001 had deposited differential duty on CTD bars in the State Bank of India, Main Branch, Ranchi in favour",,,,

of Central Excise Department for the period 2000-2001 totalling Rs. 3,36,023/- and for the period 2001-2002 totalling Rs. 7,32,275/- respectively.",,,,

The Additional Commissioner, Central Excise, Jamshedpur thereafter issued show-cause notice upon the Assesse, alleging evasion of central excise",,,,

duty and undervaluation of central excise duty amounting to Rs. 12,50,107/-. It was also indicated that after deposit of central excise duty totalling Rs.",,,,

10,68,298/-, the balance to be paid was Rs. 1,81,809/-. The Adjudicating Officer observed that making suo-motu payments of differential duty was",,,,

conclusive evidence of evasion of duty by the Assesse and acceptance of clandestine clearance without payment of duty / short payment of duty,,,,

which amounted to violation of the relevant provisions of Central Excise Act and Central Excise Rules, 1944 as also Central Excise Rules, 2001 i.e.",,,,

Rules 9, 52, 52A and 173(c) (ii) and 173Q of Central Excise Rules, 1944 as also Rules 7, 11, 25(1) (a) of C.E.R, 2001 which was liable for recovery",,,,

under the provisions of section 11A of C.E.A, 1944. The SCN further alleged that the Assesse had violated the provisions of Rules 53 and 173G(4)",,,,

(a) of C.E.R, 1944 and also the provisions of Rules 10 and 251 (b) of C.E.R, 2001 by suppressing their books of account regarding the actual quantity",,,,

of CTD bars and rods cleared during January 2001 to September 2001. The Assesse had thus rendered the Clandestine goods for deemed,,,,

confiscation under section 173Q of C.E.R, 1944 read with rule 24 of C.E.R, 2001 and liable for penalty under Rule 173Q of C.E.R, 1944 read with",,,,

rule 25 of C.E.R, 2001. It is further alleged that such evasion of payment of central excise duty was at the behest of their Managing Director Shri",,,,

Hari Krishna Budhia whose statement revealed that he was himself maintaining the accounts of such clandestine clearances in his private records i.e.,,,,

Ambassador diary. The statement and the notings in the said diary corroborated from the statement of his employees recorded during investigation,,,,

under section 14 of C.E.R, 1944 indicates that Shri Budhia had indulged in such clandestine acts with full knowledge and is, therefore liable for",,,,

personal penalty under Rule 209A of erstwhile C.E.R, 1944 read with rule 26 of C.E.R, 2001. Accordingly, notices were issued on the Appellant-",,,,

Assesse and Shri Hari Krishna Budhia, calling upon them to show-cause as to why,",,,,

i. Central Excise Duty amounting to Rs. 12,50,107/- for the period 12.01.2001 to 05.09.2001 as not paid / short paid, should not be demanded from",,,,

them under section 11A(1) of C.E.R, 1944;",,,,

ii. Central Excise Duty of the aforesaid amount of Rs. 12,50,107/-may not be determined under section 11A(2) of C.E.R, 1944;",,,,

iii. the amount of duty already paid by the Assesse amounting to Rs. 10,68,298/- be not confirmed and the remaining balance of Rs. 1,81,809/- be not",,,,

recovered under the provisions of section 11A of C.E.R, 1944;",,,,

iv. penalty equal to the duty determined under section 11A(2) of C.E.R, 1944 be not imposed and recovered from them under section 11AC of C.E.R,",,,,

1944;,,,,

v. a separate penalty be not imposed under the provisions of rule 173Q of the erstwhile C.E.R, 1944 read with rule 25 of C.E.R, 2001;",,,,

vi. interest @ 20% per annum from the first day of the month succeeding the month on which duty ought to have been paid (but for the provisions,,,,

contained in section 11A(2) of C.E.R, 1944) till the date of payment of such duty, be not recovered from them under section 11AB of C.E.R, 1944;",,,,

and,,,,

vii. a personal penalty be not imposed upon Shri Hari Krishna Budhia, Managing Director, M/s BFCL under rule 209A of erstwhile C.E.R, 1944 read",,,,

with rule 26 of C.E.R, 2001.",,,,

30. The Appellant Assesse submitted its show-cause and personal hearing was also accorded through learned Advocate appearing for the appellant.,,,,

The Adjudicating Officer after consideration of the reply to the SCN and submission of the Assesse, held that in respect of 71 invoices, the Assesse",,,,

had submitted that they did not issue central excise invoices inadvertently and that the sale price be taken as cum duty price and duty demand should,,,,

be reworked accordingly. For the remaining 07 invoices, the Assesse had submitted that the Department is required to prove that there is",,,,

undervaluation. The A.O found that the allegations of undervaluation in respect of 07 invoices is on the basis of the rates quoted in the diary which are,,,,

on the higher side as compared to what has been mentioned in the body of many invoices. The A.O also found that the Assesse had accepted the,,,,

rates quoted in the diary for the remaining 71 dispatches. Therefore, there was no reason before him to hold as to why the rates quoted for the",,,,

remaining 07 invoices should not be taken as the authentic. It accordingly held that the sale price should be taken as cum duty price and the duty,,,,

demand needs to be reworked accordingly. Therefore, it held that for the 71 dispatches for which invoices were not issued by the Assesse, the duty",,,,

liability is of Rs. 10,57,498.68 by treating the sale price as cum duty price. For the remaining 07 invoices pertaining to undervaluation, the duty liability",,,,

is of Rs. 20,182/- by treating the sale price as cum duty price. Therefore, the total duty liability comes to Rs. 10,77,678/- (Rs. 20,182 + Rs. 10,57,496/-",,,,

). The Assesse was still required to pay the balance duty amounting to Rs. 9,380/- as they had already deposited Rs. 10,68,298/- on 24.11.2001. The",,,,

A.O has referred to section 11A (2B) of the Act of 1944 and held that there is a protection for the Assesse only in respect of notice issued under,,,,

section 11A (1) of the Act of 1944 if it informs the Central Excise Officer of such payment in writing, who on receipt of such information, shall not",,,,

serve any notice under sub section-1 in respect of the duty so paid. However, the present case being that of clandestine removal of goods, the",,,,

production details were not intimated to the Department and amounted to wilful mis-statement and suppression of facts and contravention of the Acts,,,,

/ Rules with intention to evade payment of duty. The Assesse had paid duty on 24.11.2001 after detection of clinching evidence by the Department,,,,

during the search conducted on 07.09.2001. Therefore, penalty was imposable and interest was also required to be paid under section 11AB of C.E.A,",,,,

1944. A.O has held that otherwise in all such cases of clandestine production and clearance, the Assesse will escape simply on payment of duty",,,,

before issuance of SCN without interest / penalty. If it was not detected by the Department, he would have evaded payment of duty. Accordingly, the",,,,

Adjudicating Officer ordered confirmation of demand of Rs. 9,380/- taking into account the deposit of Rs. 10,68,298/- on 24.11.2001 under section",,,,

11A(2) of C.E.R, 1944 read with section 2B of the same section; recovery of interest under section 11AB of C.E.A, 1944 @ 20% per annum from",,,,

the first day of the month succeeding the month on which duty ought to have been paid till the payment of such duty; penalty of Rs. 10,77,678/- under",,,,

section 11AC of C.E.A, 1944 was imposed on the Assesse; and penalty of Rs. 10,77,678/- was imposed on Shri Hari Krishna Budhia under section",,,,

11AC of C.E.A, 1944. Since mandatory penalty had been imposed, penalty of Rs. 20,000/- was imposed under rule 173Q of the erstwhile C.E.R, 1944",,,,

read with rule 25 of C.E.R, 2001 on the Assesse by taking a lenient view. Similarly, Rs. 20,000/- was imposed as penalty on Shri Hari Krishna Budhia,",,,,

M.D under rule 209A of erstwhile C.E.R, 1944 read with rule 26 of C.E.R, 2001 by the Adjudicating Officer vide order dated 13.04.2005.",,,,

31. The appellant and Shri Hari Krishna Budhia, Managing Director both went in appeal against the adjudication order before the Commissioner",,,,

(Appeals), Central Excise. Before the Commissioner (Appeals), the Managing Director Shri Hari Krishna Budhia submitted his response to the show-",,,,

cause notice issued by the Commissioner (Appeals) for enhancement of penalty under rule 209A of C.E.R, 1944 read with rule 26 of C.E.R, 2001",,,,

taking the following grounds (Annexure-5):-,,,,

Managing Director Mr. Budhia took the plea that the adjudication order dated 13.04.2005 and the show-cause notice dated 22.02.2002 were based on,,,,

the entries in the diary which have been read by the Department with wholly unwarranted presumption and assumption without any evidence. The,,,,

diary many a times contains different offers received from the buyers and / or prospective buyers which ultimately did not materialize and no,,,,

dispatches were made in some cases. The diary contains the entries of the quantity and the rates and offers, although ultimately after negotiation,",,,,

rates were reduced and goods were sold at the reduced rates under cover of proper central excise invoices wherein the prices charged were the only,,,,

prices received by the Company. The Adjudicating Authority drawing unwarranted assumptions from the entries made in the diary, proceeded on the",,,,

basis that it must be those relating to clandestine clearances, even though the entries in the diary were not tallying with the statutory records and there",,,,

was no evidence to support any such finding. There is no evidence of any receipt of any raw materials; no evidence of any dispatches of final product,,,,

from the factory without cover of proper central excise documents; no evidence of any transportation of goods from the factory without cover of,,,,

proper central excise document; no evidence of any buyers who allegedly bought any clandestine cleared goods; no evidence of receipt of sale,,,,

proceeds of goods cleared clandestinely. Nothing incriminating was found from the inquiries and records made from the so-called buyers at their,,,,

premises to show any clandestine clearance of goods from the Appellant Factory. None of the buyers stated as regards purchase of any goods,,,,

without cover of proper documents which were allegedly cleared from their factory clandestinely.,,,,

32. The Commissioner (Appeals) held that there was no dispute about the duty demanded for the goods cleared against 71 entries made in the,,,,

recovered diary for which neither central excise invoices were issued, nor any central excise duty was paid by M/s BFCL. In respect of the remaining",,,,

7 entries relating to undervaluation, as compared to the rate mentioned in the recovered diary, the Commissioner (Appeals) held that since the",,,,

transaction value has to be taken from the entries made by Shri H.K. Budhia, Managing Director of the Appellant No. 1 Company, the invoice value",,,,

which were in the lower side in all the 07 cases, were required to be out rightly rejected. Once the Department had taken such entries as the basis i.e.",,,,

cum duty price for arriving at an assessable value under section 4 of the Act, the onus was on the Appellant No. 1 Company to prove that the entries",,,,

in the diary do not represent clear picture. Since no submissions were made by the Appellant No. 2 Shri Hari Krishna Budhia at any stage,",,,,

Department had no other alternative than to accept the entries in the diary in respect of 07 consignments as the basis for arriving at the assessable,,,,

value. In respect of 71 consignments, the plea of the Appellant Company that it had neither issued invoices nor paid central excise duty inadvertently,",,,,

was not acceptable. The Commissioner (Appeals) held that the Managing Director himself had maintained the diary, as per his own statement and the",,,,

statement of various employees of the Company M/s BFCL during the stage of the investigation that the Managing Director was responsible for,,,,

negotiation with the customers, payment of duty, etc., non-issue of invoices / non-payment of duty even after maintaining detailed accounts confirm",,,,

mens rea on his part. Since Shri Budhia had not denied recovery of the diary and accepted it to be in his own handwriting and that the entries,,,,

appearing in his diary were not reflected in the statutory records of accounts, the plea that Shri Budhia has been correctly reflecting the production,",,,,

was not acceptable. The Commissioner (Appeals) therefore held the Managing Director Shri H.K. Budhia personally responsible for all the acts of,,,,

omission and commission causing evasion of central excise duty and imposed a deterrent penalty of Rs. 20.00 lakhs under rule 209A of C.E.R, 1944",,,,

read with rule 26 of C.E.R, 2001. It also upheld the Order-in-Original except penalty under rule 173Q of C.E.R, 1944 read with rule 25 of C.E.R, 2001",,,,

in respect of the Appellant Company, since penalty under section 11AC of C.E.R, 1944 had already been imposed and upheld upon the Company. The",,,,

Appellant Company being aggrieved, went in appeal before the learned CESTAT, taking a plea that the entire demand is based on the private diary",,,,

and there are no evidence of receipt of raw materials; no evidence of transportation of impugned goods; no evidence of acceptance of buyers; no,,,,

evidence of dispatches of impugned goods; no evidence of receipt of sale proceeds of any clandestinely cleared goods. Managing Director Shri,,,,

Budhia also went in appeal. He submitted that the enhancement of penalty under rule 209A of C.E.R., 1944 from Rs. 20,000/-to Rs. 20.00 lakhs on",,,,

the finding that he is the person responsible and is at the centre of allegation, therefore his role is â€˜doubtfulâ€™, is unsustainable as penal provision",,,,

has to be strictly construed and not on the basis of doubts. Before the learned Tribunal, this Appellant contended that the demand could not be",,,,

sustained on the basis of private records only. The duty has already been deposited by the appellant along with interest. Learned Tribunal after hearing,,,,

the parties and on perusal of the records, held that since the entire duty demand had already been paid and the same had never been contested before",,,,

the authorities, that the duty demand was confirmed on the basis of the diary seized from the Appellant-Assesse factory during search proceeding,",,,,

which the Managing Director in his statement admitted to have been maintained by him in his own handwriting, recording the details of accounted and",,,,

as well as unaccounted clearances made from the factory, therefore, there was no reason to interfere with the duty demand which is sustainable along",,,,

with the liability to pay interest under section 11AB of Central Excise Act. However, the Tribunal did not find any justification for stiff increase in the",,,,

penalty upon the Managing Director by the Commissioner (Appeals). Accordingly, the enhanced penalty upon the Managing Director was set aside",,,,

and the penalty of Rs. 20,000/- as imposed by the Original Authority was restored. The impugned order was upheld in all other aspects.",,,,

33. From the aforesaid conspectus of facts, it is evident that the search and seizure proceedings in the factory premises as well as at the office",,,,

premises of the Appellant Company and the investigation by the Central Excise Authorities, found the following incriminating materials against the",,,,

Assesse as is also apparent from the show cause notice:,,,,

i. The statement of Sri Hari Krishna Budhia, Managing Director recorded under Section 14 of C.E.A. 1944;",,,,

ii. The Private Ambassador diary seized from the office;,,,,

iii. The statement of the staff and officers recorded under Section 14 of the C.E.A. 1944 namely Sri Prem Shankar Mishra, Administrative Officer, Sri",,,,

S.K. Jaiswal, Sr. Accounts Officer, Sri A.D. Singh, Assistant Excise & Dispatch of the Assesse and Md. Abdul Kalam, Production Manager of M/s",,,,

BFCL revealed that the procurement of raw materials and sale of finished goods and rate share as well as selection of bus etc. are all done by the,,,,

Managing Director Sri Hari Krishna Budhia.,,,,

Apart from these incriminating materials, the SCN also took into account the suo motu payment of differential duty on CTD bars and rods cleared",,,,

during the period 2000-01 and 2001-02 as providing a clinching and conclusive evidence of evasion of duty by the Assesse and amounted to,,,,

acceptance of allegations of clandestine clearance without payment of duty/ short payment of duty. It is also evident that the Assesse had made the,,,,

deposit of differential duty to the tune of Rs.10,68,298 on 29.11.2001 before issuance of the show notice on 02.02.2002.",,,,

34. In the broad canvass of facts, the first substantial question of law framed for adjudication in the instant case is, whether the statement of Mr. H.K.",,,,

Budhia, Managing Director of the Appellant Company recorded under Section 14 of the C.E.A. 1944 could be treated as a relevant piece of material",,,,

without complying with the provisions of Section 9D of the C.E.A. 1944.,,,,

Section 14 and Section 9D of the C.E.A. 1944 reads as under:,,,,

â€œSection 14. Power to summon persons to give evidence and produce documents in inquiries under this Act.,,,,

(1) Any Central Excise Officer duly empowered by the Central Government in this behalf, shall have power to summon any person whose attendance",,,,

he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making for any of the,,,,

purposes of this Act. A summons to produce documents or other things may be for the production of certain specified documents or things or for the,,,,

production of all documents or things of a certain description in the possession or under the control of the person summoned.,,,,

(2) All persons so summoned shall be bound to attend, either in person or by an authorised agent, as such officer may direct; and all persons so",,,,

summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents,,,,

and other things as may be required:,,,,

Provided that the exemptions under Sections 132 and 133 of the Code of Civil Procedure (5 of 1908) shall be applicable to requisitions for attendance,,,,

under this section.,,,,

(3) Every such inquiry as aforesaid shall be deemed to be a ""judicial proceeding"" within the meaning of Section 193 and Section 228 of the Indian",,,,

Penal Code (45 of 1860).â€,,,,

â€œSection 9D. Relevancy of statements under certain circumstances-,,,,

(1) A statement made and 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.â€",,,,

35. Section 9D was introduced in the Act by an amendment in the year 1973 by the Customs, Gold (Control and Central Excises and Salt)",,,,

Amendment Bill No. 119/1972. Section 14 of the C.E.A provides that during an inquiry or investigation, a Central Excise Officer, duly empowered by",,,,

the Central Government in that behalf, can summon any person whose attendance the Central Excise Officer considers it necessary to give evidence",,,,

or to produce a document or anything in any inquiry which such officer is making for any of the purposes of the Act. All persons so summoned are,,,,

bound to attend either in person or by authorized agent and state the truth upon any subject in respect of which they are examined to make statements,,,,

and to produce such documents and other things, as may be required. The person summoned is bound to state the truth as there is a threat of",,,,

prosecution since such enquiry is deemed to be a â€œjudicial proceedingâ€ within the meaning of Section 193 and 228 of the Indian Penal Code.,,,,

However, such statements recorded before a Gazetted Central Excise Officer during inquiry or investigation would be relevant only after the",,,,

statement is admitted in evidence in accordance with the procedure prescribed under Section 9D (1)(b). The rigors of this procedure is exempted only,,,,

in case in which one or more of the handicaps referred to in clause (a) of Section 9D (1) would apply. The proceedings for recording of the,,,,

statements during search and seizure operation under C.E.A. 1944 are quasi criminal in nature because it results in imposition of not only duty but also,,,,

a penalty and in some cases, it may also lead to prosecution. Therefore the statement recorded before a Gazetted Central Excise officer during inquiry",,,,

or investigation, would be relevant only after the statement is admitted in evidence in accordance with the procedure prescribed under Clause (b) of",,,,

Section 9D(1). The rationale behind the precaution contained in Section 9D (1) (b) is obvious as the statement recorded during inquiry / investigation,,,,

by the Gazetted Central Excise Officer has every chance of having been recorded under coercion or compulsion. Therefore, the provisions contained",,,,

in Section 9D have to be construed strictly and held as mandatory and, non-compliance would result in rendering the statement as irrelevant piece of",,,,

evidence that cannot be used by the Adjudicating Authority to arrive at its finding. (See: Flevel International Vs. Commissioner of Central Excise,,,,

[2016 (332) E.L.T 416 (Del.) Para 40-46); Jindal Drugs Pvt. Ltd. Vs. Union of India [2016 (340) E.L.T 67 (P & H), para 9 to 25]; High Tech",,,,

Abrasives Ltd. Vs. Commissioner of C. Ex. & Cus, Raipur [2018 (362) E.LT 961 (Chhattisgarh) Para 9.3 -9.5 and Ambika International Vs. Union of",,,,

India [2018 (361) E.L.T 90 (P & H) Para 17 to 28]. Para 23, 24, 25 and 27 thereof are quoted hereunder:",,,,

â€œ23. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a",,,,

statement recorded before the gazetted Central Excise Officer, which does not suffer from the handicaps contemplated by clause (a) of Section",,,,

9D(1) of the Act. The use of the word â€œshallâ€ in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory.",,,,

Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory.",,,,

24. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation,",,,,

by the gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge",,,,

that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this",,,,

possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1)mandates that the evidence of the witness has to be",,,,

recorded before the adjudication authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness",,,,

concerned.,,,,

25. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a gazetted Central Excise Officer during",,,,

inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of",,,,

Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section,,,,

9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the",,,,

statement recorded during investigation/inquiry before the gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of",,,,

Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first",,,,

admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement,",,,,

examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the",,,,

statement should be admitted in the interests of justice.,,,,

27. It is only, therefore,-",,,,

i. after the person whose statement has already been recorded before a gazetted Central Excise Officer is examined as a witness before the,,,,

adjudicating authority, and",,,,

ii. the adjudicating authority arrives at a conclusion, for the reasons to be recorded in writing, that the statement deserves to be admitted in evidence.",,,,

that the question of offering the witness to the assessee, for-examination, can arise.â€",,,,

In the case of High Tech Abrasives Ltd. (Supra), it was held that if the procedure under section 9D has not been strictly followed, statement of the",,,,

Director recorded during investigation under Section 14 of the Act could not be treated as a relevant piece of evidence. No distinction has been made,,,,

with regard to the statement of a Director of the Company or any other person under Section 9D of C.E.A, 1944. Division Bench of Chhattisgarh",,,,

High Court has held as under:,,,,

â€œ9.5 Undoubtedly, the proceedings are quasi criminal in nature because it results in imposition of not only of duty but also of penalty and in many",,,,

cases, it may also lead to prosecution. The provisions contained in Section 9D, therefore, has to be construed strictly and held as mandatory and not",,,,

mere directory. Therefore, unless the substantive provisions contained in Section 9D are complied with, the statement recorded during search and",,,,

seizure operation by the Investigation Officers cannot be treated to be relevant piece of evidence on which a finding could be based by the,,,,

adjudicating authority. A rational, logical and fair interpretation of procedure clearly spells out that before the statement is treated relevant and",,,,

admissible under the law, the person is not only required to be present in the proceedings before the adjudicating authority but the adjudicating",,,,

authority is obliged under the law to examine him and form an opinion that having regard to the circumstances of the case, the statement should be",,,,

admitted in evidence in the interest of justice. Therefore, we would say that even mere recording of statement is not enough but it has to be fully",,,,

conscious application of mind by the adjudicating authority that the statement is required to be admitted in the interest of justice. The rigor of this,,,,

provision, therefore, could not be done away with by the adjudicating authority, if at all, it was inclined to take into consideration the statement",,,,

recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person as required under Section 9D and opinion",,,,

formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible",,,,

evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer as well as Customs, Excise and Service Tax",,,,

Appellate Tribunal committed illegality in placing reliance upon the statement of Director Narayan Prasad Tekriwal which was recorded during,,,,

investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor,,,,

formation of an opinion that it requires to be admitted in the interest of justice. In taking this view, we find support from the decision in the case of",,,,

Ambica International vs. UOI rendered by the High Court of Punjab and Haryana.,,,,

Reliance has been placed by the Counsel for the Revenue on the decision in the matter of Commissioner of Central Excise vs. Kalvert Foods India,,,,

Private Limited (Laws (SC) 2011 838) = 2011 (270) E.L.T. 643 (S.C.). That decision turned on its own facts. In para 19 of the judgment, it was",,,,

concluded as below:,,,,

19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of",,,,

their own volition and there is no allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which",,,,

corroborated each other. Besides the Managing director of the Company of his own volition deposition the amount of Rs. 11 lakhs towards excise duty,,,,

and therefore in the facts and circumstances of the present case, the aforesaid statement of the Counsel for the Respondents cannot be accepted.",,,,

This fact clearly proves the conclusion that the statements of the concerned persons were of their volition and not outcome of any duress.""",,,,

Accordingly, on the first and second question of law, we hold that the statement of the Director could not be treated as relevant piece of evidence nor",,,,

could be relied upon without compliance of Section 9D of the Act. The two questions of law accordingly, stand answered in that manner.â€",,,,

36. It has also been well settled that in respect of an inculpatory statement or confession made before an authority, a close scrutiny is required as the",,,,

Court has to see whether the confession is voluntary or free from pressure for it to be accepted. (See Mohtesam Mohd. Ismail Vrs. Enforcement,,,,

Directorate and others [2007 (220) E.L.T 3 (SC) para 16]. Mr. Budhia, Managing Director of the Appellant Company, as a matter of fact, was never",,,,

examined by the Adjudicating Authority pursuant to his statement made under Section 14 of the Act of 1944. The learned Tribunal proceeded to hold,,,,

that Sri Budhia had admitted that in the private diary, he had recorded details of the accounted as well as unaccounted clearances made from the",,,,

factory. The statement of Sri Budhia as referred to in the SCN indicates that when he was asked about the dispatches not covered under the invoices,",,,,

he replied that he had no idea but added that if at all that was a fact, it must have occurred inadvertently. He further undertook to examine the issue if",,,,

such dispatches were not covered under the invoices and if duty were quantified, he shall bear the duty. He also agreed to pay the duty difference in",,,,

case of the rates being on the higher side.,,,,

37. What amounts to a confession has been explained by the Apex Court in the case of Veera Ibrahim Versus The State of Maharashtra [(1976) 2,,,,

SCC 302] at para-15, which reads as under:",,,,

â€œ15......... It is now well settled that a statement in order to amount to a â€œconfessionâ€ must either admit in terms the offence, or at any rate",,,,

substantially all the facts which constitute the offence. An admission of an incriminating fact, howsoever grave, is not by itself a confession.",,,,

.............â€,,,,

In the case of Central Bureau of Investigation versus V.C. Shukla and others [(1998) 3 SCC 410], it has been held at para-45 as under:",,,,

Â â€œ45. It is thus seen that only voluntary and direct acknowledgement of guilt is a confession but when a confession falls short of actual admission,,,,

of guilt it may nevertheless be used as evidence against the person who made it or his authorised agent as an â€œadmissionâ€ under Section,,,,

21...................â€,,,,

Considered in this light, can it be conclusively said that the statements attributed to Mr. Budhia were a direct unambiguous and unequivocal",,,,

acknowledgement of his guilt or substantially all the facts which constitute the offence. Apparently, it doesnâ€™t seem so. For it to be treated as an",,,,

â€˜Admissionâ€™ for being proved by or on behalf of the person making it under Section 21 of the Evidence Act, it should consist of a statement of",,,,

the existence of any state of mind or body, relevant or an issue accompanied by conduct rendering the falsehood improbable. The statement of Mr.",,,,

Budhia neither point to any specific instance or facts in issue nor were unequivocal in acknowledgement of guilt. They were rather coupled with,,,,

â€˜ifsâ€™ and in the realm of uncertainty. The question of retraction would arise for the first time when such statement was being admitted by the,,,,

Adjudicating Officer as per Section 9D. The Adjudicating Officer never followed this procedure. Even if his statement under Section 14 of the C.E.A.,,,,

1944 is taken on its face value, they were never admitted in evidence by the Adjudicating Authority in compliance of the provisions of Section 9D of",,,,

the Central Excise Act 1944.,,,,

The question of cross examination of Sri Budhia, Managing Director during the adjudication proceeding on the part of the appellant could come when",,,,

the Adjudicating Authority formed an opinion that the statement of Mr. Budhia under Section 14 of the Act is to be admitted in evidence as a relevant,,,,

piece of material evidence upon compliance of the rigors of clause (b) of section 9D (1) by recording a satisfaction that it was made voluntarily and,,,,

without any compulsion or coercion and the Assessee was confronted with such statement to be used against him. In this regard appellants have relied,,,,

upon a decision in the case of Sukhwant Singh Vs. State of Punjab [1995) 3 SCC 367], which postulates that under Section 138 of the Evidence Act,",,,,

1872 a witness could first be examined in chief and then subjected to cross examination and for seeking any clarification, the witness may be re-",,,,

examined by the prosecution.,,,,

38. In the case of State of Mysore versus S.S. Makapur [AIR 1963 SC 375: 1963 S.C.R Vol-2 943], the Constitution Bench of the Supreme Court",,,,

stated the following principles in regard to judicial or quasi judicial proceedings before an Administrator:,,,,

â€œ............ that the purpose of an examination in the presence of a party against whom an enquiry is made, is sufficiently achieved, when a witness",,,,

who has given a prior statement is recalled, the statement is put to him, and made known to the opposite party, and the witness is tendered for cross-",,,,

examination by that party......â€,,,,

It was further held that,,,,

â€œthat tribunals exercising quasi- judicial functions are not courts and that therefore they are not bound to follow the procedure prescribed for trial of,,,,

actions in courts nor are they bound by strict rules of evidence. They can unlike courts, obtain all information material for the points under the enquiry",,,,

from all sources, and through all channels, without being fettered by rules and procedure, which govern proceedings in court. The only obligation which",,,,

the law casts on them is that they should not act on any information which they may receive unless they put it to the party against whom it is to be,,,,

used and give him a fair opportunity to explain it. What is a fair opportunity depend on the facts circumstances of each case but where such an,,,,

opportunity has been given, the proceedings are not open to attack on the ground that the enquiry was not conducted in accordance with the procedure",,,,

followed in courts.â€,,,,

39. It would not be out of place to refer to the recommendation of the Law Commission of India contained under Chapter 14 of the 47th report on the,,,,

â€œTrial and Punishment of Social and Economic Offencesâ€ dated 28th February 1972, whereafter the Customs, Gold (Control) And Central Excise",,,,

and Salt (Amendment) Bill No. 119 of 1972 was placed before the Parliament and Section 9D came to be inserted into the C.E.A, 1944. Para-14.1,",,,,

14.2, 14.3 and 14.4 of CHAPTER 14 â€œAdministrative Adjudicationsâ€ are quoted hereunder for better appreciation:",,,,

â€œ14.1. Many of the Acts dealing with economic offences empower the enforcement officers to summon and examine witnesses. The statements,,,,

made by these witnesses before such officers are not, however, admissible in evidence in the subsequent criminal prosecutions. We are of the view",,,,

that these statements, if recorded by officers of sufficiently high status, to be determined by the Government should be admissible in such",,,,

prosecutions, since they are very often the earliest officially recorded version of the facts.",,,,

14.2 Certain conditions and safeguards will, no doubt, be necessary. Reference in this connection may be made to the Evidence Act, which has a",,,,

provision relating to the admissibility of a statement made in a previous judicial proceeding.,,,,

The relevant provision in the Evidence Act, is as follows:",,,,

â€œ33. Evidence given by a witness in a judicial proceeding, or before any person authorised by law to take it, is relevant for the purpose of proving,",,,,

in a subsequent judicial proceeding, or in a later stage of the same judicial proceeding, the truth of the facts which it states, when the witness is dead",,,,

or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or if his presence cannot be obtained without an",,,,

amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable:",,,,

Provided â€",,,,

that the proceeding was between the same parties or their representatives in interest;,,,,

that the adverse party in the first proceeding had the right and opportunity to cross-examine;,,,,

that the question in issue were substantially the same in the first as in the second proceeding.,,,,

Explanation.- A criminal trial or inquiry shall be deemed to be a proceeding between the prosecutor and the accused within the meaning of this,,,,

section.,,,,

14.3. We think that the safeguards mentioned in the proviso to section 33 need not appear in the new provision which we contemplate. We are further,,,,

of the view that the court should have a discretion to admit the statement in evidence, if the circumstances of the case so require, even where the",,,,

maker of the statement is a witness in the proceedings before the Court.,,,,

Though such a discretion is not very frequently met with in Indian statute law, in this case it is necessary for obvious reasons.",,,,

Twenty years ago, Stone stressed the importance of excluding similar conduct evidence (even though it is relevant otherwise than via disposition),",,,,

where its effect was too prejudicial, in these words- â€œwhere the peg is so small and the linen is so bulky and dirty that a jury will never see the peg,",,,,

but merely yield to indignation at the dirt.â€ Somewhat similar considerations make it desirable that the court should have this power, since the",,,,

provision which we are recommending is itself new.,,,,

14.4 We, therefore, recommend that a provision on the following lines may be inserted in the relevant Acts:-",,,,

â€œA statement made and signed by a person in a proceeding under this Act before any officer authorised by law to record it, being an officer of a",,,,

rank notified by the Central Government in this behalf, shall be relevant, for the purpose of proving, in a prosecution for an offence under this Act, the",,,,

truth of the facts which it states.-,,,,

(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or kept out of the way by the adverse",,,,

party, or if his 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, and the Court is of the opinion that having regard to the",,,,

circumstances of the case, the statement should be admitted in evidence in the interest of justice.â€",,,,

The relevant extract of the objects and reasons of the Bill No. 119 of 1972 is also reproduced for better appreciation.,,,,

Â â€œBill No. 119 of 1972,,,,

The Customs, Gold (Control) and Central Excise and Salt (Amendment) Bill, 1972 Bill further to amend the Customs Act, 1962, the Gold (Control)",,,,

Act, 1968 and the Central Excises and Salt Act, 1944. Be it enacted by Parliament in the Twenty-third Year of the Republic of India as follows:-",,,,

CHAPTER I,,,,

PRELIMINARY,,,,

1. This Act may be called the Customs, Gold (Control) and Central Excises and Salt (Amendment) Act, 1972.",,,,

CHAPTER II,,,,

AMENDMENTS TO THE CUSTOMS ACT, 1962",,,,

2. In section 111 of the Customs Act, 1962 (hereafter in this Chapter referred to as the Customs Act), in clause",,,,

(m), for the words â€œany dutiable or prohibited goods which do not correspond in any material particularâ€, the words â€œany goods which do not",,,,

correspond in respect of value or in any other particularâ€ shall be substituted.,,,,

3. In section 112 of the Customs Act, after clause (ii), the following clauses shall be inserted namely:-",,,,

(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under",,,,

section 77 (in either case hereafter in this,,,,

STATEMENT OF OBJECTS AND REASONS,,,,

The Law Commission in its Forty-Seventh Report on the â€œTrial and Punishment of Social and Economic Offencesâ€ had made certain,,,,

recommendations for amending certain statutes like the Customs Act, 1962, the Gold (Control) Act, 1968, the Central Excises and Salt Act, 1944 and",,,,

the Foreign Exchange Regulation Act, 1947. The Study Team on â€œLeakage of Foreign Exchange through Invoice Manipulationâ€ had also, in its",,,,

Report, made certain recommendations for amending some of the aforesaid Acts. This Bill seeks to amend the Customs Act, 1962, the Gold (Control)",,,,

Act, 1968, and the Central Excises and Salt Act, 1944, in the light of the aforesaid recommendations of the Law Commission and the Study Team.",,,,

The amendments to these Acts proposed in the Bill mainly seek to make the punishments prescribed thereunder more severe and to make certain,,,,

other provisions therein with regard to the rules of evidence and procedure with a view to removing the loopholes noticed in the working of these Acts,,,,

and making their enforcement more effective.,,,,

2. The notes on clauses explain in detail the various provisions of the Bill.,,,,

NEW DELHI;,,,,

The 7th December 1972â€,,,,

40. Learned counsel for the Respondent has urged that the appellant has raised a new plea with regard to compliance of Section 9D before this Court,",,,,

as it was not raised before the Adjudicating Authority or in subsequent appeal and hence, could not be sustained. In this connection, he has relied upon",,,,

the case of Modern Insulators Ltd. Vs. Oriental Insurance Company Ltd. reported in [(2000) 2 SCC 734 para-10], wherein the Apex court has laid",,,,

down that in an appeal, parties cannot urge a new fact. On the contrary, it is well settled that a legal plea which can be substantiated from the",,,,

pleadings on record without any additional facts being brought on record can always be raised in appeal [See: K. Lubna and others versus Beevi and,,,,

others (2020) 2 SCC 524]. Para-10 thereof is quoted hereunder:,,,,

â€œ10. On the legal principle, it is trite to say that a pure question of law can be examined at any stage, including before this Court. If the factual",,,,

foundation for a case has been laid and the legal consequences of the same have not been examined, the examination of such legal consequences",,,,

would be a pure question of law.â€,,,,

In the instant case, the appellant has not urged any new facts but raised a legal plea relating to non-compliance of Section 9D of the C.E.A by the",,,,

Adjudicating Authority. The fact that the Adjudicating Authority did not scrutinize the statement of the Managing Director made under section 14 of,,,,

the Act in terms of section 9D (1) (b) is not in dispute. The Adjudicating Authority was duty bound to do so. As such, the instant legal plea cannot be",,,,

rejected on the ground that it is a new fact which is not open to the appellant to urge in the instant appeal.,,,,

41. Learned counsel for the Respondent has submitted that Mr. Budhia or the Appellant Company had never rebutted the entries in the diary having,,,,

been made in the hands of the Managing Director or his statement recorded under section 14 of the Act were never retracted before the Adjudicating,,,,

Authority any time later. Therefore, it was not open for the appellant to take such a point. He has relied upon a decision in the case of Assistant",,,,

Collector of Central Excise, Rajamundry versus Duncan Agro Industries Ltd. and others [(2000) 7 SCC 53], para-9, 12 & 17]. A perusal of the",,,,

decision in the case of Duncan Agro Industries Limited (supra) indicates that section 14 of the Central Excise Act, is practically the same as section",,,,

108 of the Customs Act. Statements recorded by Customs Officer under section 108 of the Customs Act are admissible in evidence. In the case of,,,,

Duncan Agro Industries Ltd. (Supra), Respondent were held not guilty and acquitted by the learned Special Judge for the offences under different",,,,

clauses of section 9(1) of Central Excise Act and under section 120-B of the Indian Penal Code. In Appeal, the learned single Judge excluded all",,,,

confessional statements from consideration relying upon the decision rendered by the Division Bench of the same High Court in N.S.R. Krishna,,,,

Prasad Versus Collector of Customs [(1992) 57 ELT 568 (AP)].,,,,

According to the said decision, any inculpatory statement recorded by the authorities under Section 108 of the Customs Act without following and",,,,

complying with the constraints prescribed in Section 164 of the Code would be inadmissible evidence in a trial against the maker of that statement.,,,,

Learned single Judge held that since the Excise Officer had not administered the warning to the accused, as required under Section 164 sub-section",,,,

(2) of the Code of Criminal Procedure, those statements are rendered inadmissible in evidence against the maker thereof or against the co-accused.",,,,

The Apex Court noticed that the decision in N.S.R. Krishna Prasad (Supra) had been challenged by the Union of India and two Judgesâ€™ Bench of,,,,

the Apex Court had set aside the said decision on the premise that the challenge made before the High Court in that case was not sustainable in a writ,,,,

petition. However, the Court did not express any opinion on the merits of the case and the question of law was left open. Therefore, in the instant",,,,

appeal, the Apex Court considered the desirability to examine the sustainability of the legal position adumbrated by the decision in N.S.R. Krishna",,,,

Prasad (Supra). In this context, the issue which fell for consideration has been coined at para-2 of the judgment, quoted as under:",,,,

â€œ2. Is it necessary to comply with the precautions envisaged in Section 164 of the Code of Criminal Procedure (for short â€œthe Codeâ€) when,,,,

Customs Officers record statement under section 108 of the Customs Act?........................â€,,,,

The Apex Court upon consideration of the relevant provisions of Section 108 of the Customs Act, 1962 and Section 171 of Sea Customs Act, 1878",,,,

(which was repealed by the Customs Act, 1962 and corresponded to Section 108 of the Customs Act), and after observing and pointing that Section",,,,

14 of the Central Excise Act is the same as Section 108 of the Customs Act, dealt with the earlier decision of the Apex Court to discern how the",,,,

scope of the provisions have been understood earlier and held as under:,,,,

â€œ12. In this context we bear in mind that a confession made to a police officer can be recorded by him without any of the constraints incorporated,,,,

under Section 164 of the Code. But the safety of the confessor who makes such confession to the police officer is that the same is forbidden from use,,,,

in evidence. The ban contained in Section 25 of the Evidence Act is an absolute ban. But it must be remembered that there is no ban in regard to the,,,,

confession made to any person other than a police officer, except when such confession was made while he is in police custody.",,,,

The inculpatory statement made by any person under Section 108 is to non-police personnel and hence it has no tinge of inadmissibility in evidence if it,,,,

was made when the person concerned was not then in police custody. Nonetheless the caution contained in law is that such a statement should be,,,,

scrutinised by the court in the same manner as confession made by an accused person to any non-police personnel. The court has to be satisfied in,,,,

such cases, that any inculpatory statement made by an accused person to a gazetted officer must also pass the tests prescribed in Section 24 of the",,,,

Evidence Act. If such a statement is impaired by any of the vitiating premises enumerated in Section 24 that statement becomes useless in any,,,,

criminal proceedings.,,,,

17. We hold that a statement recorded by Customs Officers under Section 108 of the Customs Act is admissible in evidence. The court has to test,,,,

whether the inculpating portions were made voluntarily or whether it is vitiated on account of any of the premises envisaged in Section 24 of the,,,,

Evidence Act. Such an exercise can be made only after the appeal is regularised by granting leave to appeal. Since leave was declined on a wrong,,,,

interpretation of law we have to interfere with the impugned order.â€,,,,

42. It stipulates same degree of scrutiny of a statement recorded under section 108 thereof during enquiry or investigation. However, the court has to",,,,

test whether inculpatory portions of the statement were made voluntarily or whether it is vitiated on account of the premises envisaged under section,,,,

24 of the Evidence Act. Apparently, the scrutiny required to be conducted by the Adjudicating Officer under section 9D (1) (b) of the C.E.A to",,,,

ascertain whether the inculpatory portions of the statement of Mr. Budhia recorded under section 14 of the C.E.A, 1944 were voluntary or under",,,,

compulsion or coercion, were not followed. It is only upon following the procedure prescribed under section 9D(1)(b) of C.E.A that such statement",,,,

acquire relevancy for the purpose of proving the truth of the facts which it contains in any prosecution for an offence under this Act or in an,,,,

adjudicating proceedings also. Sub-section (2) of Section 9D(1)(b) of C.E.A mandates that 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.",,,,

43. The meaning of the expression â€˜so far as may beâ€™ has been explained by the Supreme Court in the case of DR Partap Singh and Another,,,,

versus Director of Enforcement, Foreign Exchange Regulation Act and Others [(1985) 3 SCC 72] in the following manner:",,,,

Â â€œ12. â€¦... The expression â€œso far as may beâ€ has always been construed to mean that those provisions may be generally followed to the,,,,

extent possible. â€¦â€¦â€¦. In order to give full meaning to the expression â€œso far as may beâ€, sub-section (2) of Section 37 should be interpreted to",,,,

mean that broadly the procedure relating to search as enacted in Section 165 shall be followed. But if a deviation becomes necessary to carry out the,,,,

purposes of the Act in which Section 37(1) is incorporated, it would be permissible except that when challenged before a court of law, justification will",,,,

have to be offered for the deviation. This view will give full play to the expression â€œso far as may be.â€,,,,

In the present case, the Adjudicating Officer has not shown any justification for departing from the specific procedure prescribed under Section 9D(1)",,,,

(b) of the C.E.A.,,,,

Since neither such scrutiny have been conducted by the Adjudicating Officer, as held in the case of Duncan Agro Industries Ltd. (Supra), nor such",,,,

procedure have been followed, as contemplated under Section 9D(1)(b) of the C.E.A, Respondent cannot seek the aid of the said decision. It is true",,,,

that under sub-section (3) of Section 14, any person summoned by the Central Excise Officer is supposed to speak the truth on the threat of facing",,,,

prosecution under Section 193 and Section 228 of the Indian Penal Code as every such inquiry shall be deemed to be a â€œjudicial proceedingâ€. But,,,,

applying the test in the case of Duncan Agro Industries Ltd. (Supra), even such statement has to be tested to see whether inculpatory portions were",,,,

made voluntarily or whether it is vitiated on account of any of the premises envisaged in section 24 of the Evidence Act. Apart from that, such",,,,

statement has to undergo the scrutiny by the Court and likewise by the Adjudicating Officer, as per Section 9-D (1)(b) introduced by an amendment in",,,,

the year 1973. It nowhere appears from the order of the Adjudicating Officer that such a course was adopted before relying upon the statement of the,,,,

Managing Director Mr. Budhia to hold the Appellant Company liable for evasion of duty and penalty on account of clandestine removal of goods.,,,,

Surprisingly, no other tangible corroborative material evidence could be collected during the inquiry or investigation to substantiate such a finding.",,,,

44. Section 40 of the Foreign Exchange Regulation Act, 1973 is akin to Section 14 of the C.E.A, 1944. The Apex Court in the case of K.T.M.S. Mohd",,,,

and Another versus Union of India [(1992) 3 SCC 178] while dealing with the matter relating to receiving a statement made under section 40 of the,,,,

FERA, held as under:",,,,

Â â€œ24. It is pertinent to note in this connection that in the manner of recording a statement under Section 40 of FERA there are no safeguards as in,,,,

the case of recording a statement of an accused under Section 164 of the Criminal Procedure Code by a Magistrate. Nevertheless, before receiving",,,,

that statement in evidence and making use of the same against the maker, it must be scrutinised to find out whether that statement was made or",,,,

obtained under inducement, coercion, threat, promise or by any other improper means or whether it was voluntarily made. There are a catena of",,,,

decisions of this Court that the statements obtained from persons under the provisions of FERA or the Customs Act, should not be tainted with any",,,,

illegality and they must be free from any vice. .........â€,,,,

Further at para-34, it was held as under:-",,,,

â€œ34. We think it is not necessary to recapitulate and recite all the decisions on this legal aspect. But suffice to say that the core of all the decisions,,,,

of this Court is to the effect that the voluntary nature of any statement made either before the Custom authorities or the officers of Enforcement,,,,

under the relevant provisions of the respective Acts is a sine qua non to act on it for any purpose and if the statement appears to have been obtained,,,,

by any inducement, threat, coercion or by any improper means that statement must be rejected brevi manu. At the same time, it is to be noted that",,,,

merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obtained. It is only for the maker of the statement who",,,,

alleges inducement, threat, promise etc. to establish that such improper means has been adopted. However, even if the maker of the statement fails to",,,,

establish his allegations of inducement, threat etc. against the officer who recorded the statement, the authority while acting on the inculpatory",,,,

statement of the maker is not completely relieved of his obligations in at least subjectively applying its mind to the subsequent retraction to hold that the,,,,

inculpatory statement was not extorted. It thus boils down that the authority or any court intending to act upon the inculpatory statement as a voluntary,,,,

one should apply its mind to the retraction and reject the same in writing. .............â€,,,,

45. Evidently, the Court has to first see the voluntary nature of such statement made before the Central Excise Officer or Customs Officer before",,,,

acting on it for any purpose and even if the maker of statement subsequently retracts, the Authority while acting on such inculpatory statement is not",,,,

relieved of his obligation in at least subjectively by applying its mind to the subsequent retraction to hold that the inculpatory statement was not,,,,

extorted. In the facts of the present case, the Adjudicating Authority never followed the procedure to test the voluntary nature of the statement of Mr.",,,,

Budhia. Learned counsel for the Respondent has argued that confession made before the Central Excise Officer is to be viewed with enormous,,,,

evidentiary value and findings can be recorded thereupon. In this regard also, he has relied upon a decision of the Madras High Court in the case of",,,,

Assistant Collector of Customs, Madras-1 versus Govind Swamy Raghupati [(1998) 98 E.L.T 50 (Mad) at Para 18 to 21 rendered in relation to",,,,

Customs Act. The proposition which emerges from the reading of the instant judgment is that only the confession made before the police or in custody,,,,

in the presence of the police cannot be relied upon within the meaning of section 25 and 26 of the Evidence Act excepting the purposes of section 27,,,,

and 32 of the Evidence Act. No confessional statement made before any authority or prosecuting official barring the above circumstances could be,,,,

viewed with suspicion and have enormous evidentiary value and conviction could be based on such confessional statement alone. The burden is upon,,,,

the accused to prove that it was not voluntary and then the onus shifts on to the prosecution to prove that it was made voluntarily.,,,,

It is true that the statement made before a Central Excise Officer under section 14 of the C.E.A, 1944 is not a statement made before the police or in",,,,

the custody of the police, but such statement attains evidentiary value only if it is subjected to scrutiny under section 9D (1)(b) of the C.E.A for being",,,,

relevant for the purposes of proving the truth of the facts. The Adjudicating Authority has to arrive at an opinion that having regard to the,,,,

circumstances of the case, the statement should be admitted in evidence. This safeguard has been incorporated by an amendment in the Central",,,,

Excise Act, 1944 in the year 1973 with the only purpose that statements made before the Central Excise Officer under section 14 of the Act during",,,,

inquiry / investigation are treated as relevant evidence on the satisfaction of the Adjudicating Authority as having been made voluntarily without any,,,,

coercion or compulsion for the purposes of proving the truth of the facts. Otherwise, the Legislature had no reason to incorporate the provisions of",,,,

section 9D by way of an amendment in the year 1973. Moreover, the series of decisions referred to above also reiterate that in adjudication",,,,

proceedings, only true evidence forms the basis of the findings of the Adjudicating Authority. Similar view has been taken by other High Courts such",,,,

as in the case of Ciabro Alemao versus The Commr. of Customs, Goa [(2018) (362) Excise Law Times 465 (Bom)]; Kallatra Abbas Haji versus",,,,

Government of India [1985 (5) ECR 1746 Kerala: 1994 (69) E.L.T 212 (Ker);]. In Kallatra Abbas Haji (Supra), Kerala High Court while dealing with",,,,

the application of section 138B of the Customs Act, has also taken the same view as early as in 1985 and held as under:",,,,

Â â€œ26. True, Section 138B states that a statement made and signed by a person before any gazetted officer of customs is relevant to prove the",,,,

truth of the fact it contains in any proceeding under the Act. But these statements are relevant only if the conditions prescribed under clauses (a) or,,,,

(b) of Section 138B are satisfied. Here, there is no case that clause (a) applies. If at all, clause (b) alone can be attracted. Under this clause, the",,,,

statement is relevant when (a) the person who made the statement is examined and (b) the statement is admitted in evidence after the authority forms,,,,

an opinion that in the interest of justice and having regard to the circumstances of the case, it should be so admitted.â€",,,,

This decision has been relied recently in the case of Sampad Narayan Mukherjee versus Union of India and others [2019 SCC Online Cal 150: (2019),,,,

366 E.L.T 280].,,,,

Any other interpretation of the applicability of section 9D could render it otiose and meaningless because otherwise, the statements recorded by the",,,,

Central Excise Officer under section 14 would itself be sufficient to indict or render a finding of liability and penalty upon the Assesse by the,,,,

Adjudicating Officer. Section 9D (2) makes it all the more clear that it applies to adjudicatory proceedings.,,,,

46. Learned counsel for the Respondent has relied upon the case of Surjeet Singh Chhabra versus Union of India and others [(1997) 1 SCC 508, para-",,,,

3] to submit that in view of the confession made by the Managing Director Mr. Budhia in the facts and circumstances of the case, failure to give the",,,,

appellant an opportunity to cross-examine the witnesses, is not violative of principles of natural justice. The facts of the instant case show that the",,,,

dispute concerns the confiscation of the jewellery, whether at conveyor belt or at the green channel and the petitioner had confessed that he had",,,,

purchased the gold and brought it and converted it into a kara which was in contravention of the Customs Duty Act and also FERA as it was bought,,,,

without permission of the authority. The petitioner had retracted from the confession after six days and sought cross-examination of the panch,,,,

witnesses before the authority took a decision on the proof of the offence. The Apex Court found no force in this contention holding that the Custom,,,,

Officials are not police officers. In the facts of the present case, Appellant is a Company upon whom duty liability has been saddled on the basis of the",,,,

statement of the Managing Director of the Company recorded under section 14 of the Act without any corroborative tangible evidence. Such,,,,

statement of the Managing Director was not subjected to scrutiny under section 9D (1) (b) of the C.E.A., 1944 and treated as relevant material",,,,

admissible for evidence for the purposes of proving the truth in casting the liability upon the Appellant Company. Therefore, the purported confession",,,,

of the Managing Director could not bind the Appellant Company as such statement was not subjected to scrutiny in terms of section 9D(1)(b) of the,,,,

C.E.A, 1944.",,,,

47. In the light of the well settled principles governing the operation of Section 9D of the Act, the statement of Mr. Budhia recorded under Section 14",,,,

of the Act of 1944 could not be treated as relevant piece of material for the purpose of proving the truth of facts which it contains in a proceeding,,,,

under the C.E.A without complying with the provisions of Section 9D of the Act. The first substantial of law question is answered in favour of the,,,,

Assessee- appellant.,,,,

48. The second substantial question of law which has arisen for adjudication in this appeal is, whether the findings of learned Tribunal that the duty",,,,

demand was never contested by the appellant before the authorities, is perverse? This question is linked to the third question of law framed for",,,,

adjudication in this appeal i.e., whether suo-moto deposit of differential duty liability, whose details have been mentioned in para 5.0 of the notice to",,,,

show cause issued to the appellant as well as to its Managing Director can be said to be an admission on the part of the appellant regarding,,,,

clandestine removal of goods?,,,,

49. The appellant has stated at para-2 (xix) of the Memo of Appeal that the allegation in the show cause notice were denied by them in their reply,,,,

dated 07.03.2005 and that the Respondents have not disputed this fact at para-14 of their counter affidavit. It is pertinent to mention that the lower,,,,

court records summoned by this Court does not contain the reply to the SCN. The appellant has contested his liability by way of appeal before the,,,,

Commissioner (Appeals) then before the learned CESTAT and in the present appeal under Section 35G of the Act of 1944. If the duty has been,,,,

contested till this stage, it is difficult to imagine that the appellant has paid the amount without protest. In this regard, appellant has placed reliance upon",,,,

the decision of the Apex Court in the case of Mafatlal Industries Ltd. and others Versus Union of India and others[ (1997) 5 SCC 536] at Para 92, 93",,,,

and 94, which is quoted hereunder.",,,,

92. It is then pointed out by the learned counsel for the petitioners-appellants that if the above interpretation is placed upon amended Section 11-B, a",,,,

curious consequence will follow. It is submitted that a claim for refund has to be filed within six months from the relevant date according to Section,,,,

11-B and the expression â€œrelevant dateâ€ has been defined in clause (B) of the Explanation appended to sub-section (1) of Section 11-B to mean,,,,

the date of payment of duty in cases other than those falling under clauses (a), (b), (c), (d) and (e) of the said Explanation. It is submitted that clauses",,,,

(a) to (e) deal with certain specific situations whereas the one applicable in most cases is the date of payment. It is submitted that the,,,,

appellate/revision proceedings, or for that matter proceedings in High Court/Supreme Court, take a number of years and by the time the claimant",,,,

succeeds and asks for refund, his claim will be barred; it will be thrown out on the ground that it has not been filed within six months from the date of",,,,

payment of duty. We think that the entire edifice of this argument is erected upon an incomplete reading of Section 11-B. The second proviso to,,,,

Section 11-B (as amended in 1991) expressly provides that â€œthe limitation of six months shall not apply where any duty has been paid under,,,,

protestâ€. Now, where a person proposes to contest his liability by way of appeal, revision or in the higher courts, he would naturally pay the duty,",,,,

whenever he does, under protest. It is difficult to imagine that a manufacturer would pay the duty without protest even when he contests the levy of",,,,

duty, its rate, classification or any other aspect. If one reads the second proviso to sub-section (1) of Section 11-B along with the definition of",,,,

â€œrelevant dateâ€, there is no room for any apprehension of the kind expressed by the learned counsel.",,,,

93. It was then submitted that Rule 233-B which prescribes the procedure to be followed in cases where duty is paid under protest requires the,,,,

assessee to state the grounds for payment of duty under protest and that it may well happen that the authority to whom the letter of protest is,,,,

submitted may refuse to record it, if he is not satisfied with the grounds of protest. In our opinion, the said apprehension is not well-founded. Sub-rules",,,,

(1), (2) and (3) of Rule 233-B read as follows:",,,,

â€œ233-B. Procedure to be followed in cases where duty is paid under protest.â€"(1) Where an assessee desires to pay duty under protest he shall,,,,

deliver to the proper officer a letter to this effect and give grounds for payment of the duty under protest.,,,,

(2) On receipt of the said letter, the proper officer shall give an acknowledgement to it.",,,,

(3) The acknowledgement so given shall, subject to the provisions of sub-rule (4), be the proof that the assessee has paid the duty under protest from",,,,

the day on which the letter of protest was delivered to the proper officer.â€,,,,

94. The rule no doubt requires the assessee to mention the â€œgrounds for payment of the duty under protestâ€ but it does not empower the proper,,,,

officer, to whom the letter of protest is given, to sit in judgment over the grounds. The assessee need not particularise the grounds of protest. It is open",,,,

to him to say that according to him, the duty is not exigible according to law. All that the proper officer is empowered to do is to acknowledge the",,,,

letter of protest when delivered to him â€" and that acknowledgement shall be the proof that the duty has been paid under protest. A reading of the,,,,

rule shows that the procedure prescribed therein is evolved only with a view to keep a record of the payment of duty under protest. It is meant to,,,,

obviate any dispute whether the payment is made under protest or not. Any person paying the duty under protest has to follow the procedure,,,,

prescribed by the rule and once he does so, it shall be taken that he has paid the duty under protest.",,,,

The period of limitation of six months will then have no application to him.â€ (Underline supplied),,,,

50. The appellant has further relied upon the decision of Delhi High Court where it has been held that there is no provision in the C.E.A that allows for,,,,

the collection of duty prior to issuance of SCN / adjudication demand and that any amount collected during the investigation is wholly illegal. (See:,,,,

Digipro Import & Export Pvt. Ltd. Vs. Union of India [2017 (350) E.L.T 145 (Del) Para 13 to 16, 18, 19)]). Under the scheme of the Act, till the",,,,

demand is adjudicated by a reasoned order, the amount paid by the Assesse before issuance of SCN could at best be a deposit. In the case of",,,,

Collector of Central Excise, Baroda Versus L.M.P Precision Engg. Co. Ltd. reported in [(2004) 9 SCC 703], the Apex Court has at para 14 of the",,,,

judgement held that the statement in reply to the show cause notice is not an evidence and cannot be treated as such without the support of any,,,,

evidence on record. The appellant has relied upon the case of MIL India Ltd. Vs. Commissioner of Central Excise Noida reported in [(2007) 3 SCC,,,,

533] in support of the proposition that the order of Commissioner (Appeals) could also be treated as order of assessment, since he has the power to",,,,

add or subtract certain items in the order of assessment made by the Adjudicating Authority. Section 35-B indicates that the decision of order passed,,,,

by the Commissioner (A) shall be treated as an order of an adjudicating authority. In the circumstances, the Apex Court held that the High Court had",,,,

erred in holding that the Assessee was not entitled to agitate the question of dutiability in appeal before the Tribunal.,,,,

51. The conspectus of facts in the instant case do not leave any room of doubt that the Adjudicating Officer treated the suo motu deposit of an amount,,,,

of Rs. 10,68,298/- by the Appellant- Assesse on 29.11.2001 before issuance of the SCN on 21.02.2002 as a conclusive evidence of evasion of duty",,,,

and acceptance of clandestine clearance without payment of duty / short payment of duty before any adjudication of the demand had been made by,,,,

the A.O.,,,,

52. In the light of the legal position discussed above, such an opinion by the learned Tribunal would be unsustainable in law as by that reasoning, the",,,,

Adjudicating Authority stands absolved of the duty to adjudicate upon the liability in accordance with law on the basis of evidence collected during,,,,

investigation or inquiry which have crossed the scrutiny of Section 9D (1) (b) of the C.E.A. On the date of the deposit even before the SCN have,,,,

been issued, there was no demand which had crystallized in the eye of law. The learned Tribunal also failed to take into note that the Adjudicating",,,,

Authority relied upon two incriminating materials i.e. the statement of Shri H.K Budhia, Managing Director recorded under Section 14 of the C.E.A",,,,

and the notings contained in the private diary i.e. Ambassador diary, apart from the suo motu deposit of an amount of Rs. 10,68,282/- before issuance",,,,

of SCN, though there were no other evidence collected during inquiry or investigation, which corroborate the allegations of clandestine removal of",,,,

manufactured goods without cover of central excise invoices. As such, both these questions are answered in favour of the appellant.",,,,

53. The fourth substantial question of law which arises for adjudication is, whether the fact that the penalty imposed by the Adjudicating Authority",,,,

upon the Managing Director of the Company having attained finality, can itself be used against the appellant?",,,,

In Corporate Laws, the criminal intent of person (s) controlling Company can be imputed to Company based on the principles of alter ego â€" when",,,,

the Company is an accused, its Directors can be roped in only if",,,,

(a) there is sufficient incriminating evidence against them coupled with criminal intent or,",,,,

(b) the statutory regime attracts the doctrine of vicarious liability. [See: (2015) 4 SCC 609, Sunil Bharti Mittal versus Central Bureau of Investigation;",,,,

(2011) 1 SCC 74, Iridium India Telecom Limited versus Motorola Incorporated and others].",,,,

Section 9A creates vicarious liability on the Companyâ€™s officers in case of offences.,,,,

In the instant proceedings, Appellant-Company was served with a show-cause notice for charges of clandestine removal of excisable goods and not",,,,

for any criminal offences. The reliefs prayed for, by the Appellant-Assesse was for setting aside the duty demand under Section 11A and penalty",,,,

imposed under Section 11AC of C.E.A. Shri H.K. Budhia, Managing Director was imposed with a personal penalty under Rule 209A of C.E.R, 1944",,,,

read with Rule 26 of C.ER, 2004 for dealing with buyers /suppliers and for purported accounted or unaccounted sale by making entries in his own",,,,

private diary i.e. the irregular maintenance of records. The Appellant-Company is a legal entity on its own, capable to sue and being sued. Therefore,",,,,

finality of the adjudication proceedings against the Managing Director of the Company on non-filing of any further appeal against the order of learned,,,,

CESTAT, cannot be said to operate as res judicata binding the Appellant-Company. Moreover, on a factual note, the enhanced penalty of Rs. 2.00",,,,

lakhs having been reduced by learned Tribunal to Rs. 20,000/-under Rule 209A, leaving Mr. Budhia satisfied, could not amount to extinguishment of",,,,

the right available to the Appellant-company to go in appeal, if aggrieved by the order of the learned Tribunal. Since the reliefs are different and the",,,,

parties being the Appellant-Company and its Managing Director being different and moreover, since the statute provides a remedy to an aggrieved",,,,

Assesse to move in appeal under Section 35-G of the C.E.A, any finding as against the Managing Director of the Company by the learned Tribunal",,,,

would not operate as estoppel upon the appellant-company, which is a distinct legal entity. Moreover, it is pertinent to mention here that the",,,,

Department failed to bring on record any tangible corroborative evidence to substantiate the charges of clandestine removal against the Company,,,,

apart from the statement of Mr. Budhia and certain entries in the private diary of Mr. Budhia regarding which, opinion has been observed in the",,,,

judgment earlier and also later in answer to the VIth substantial question of law. [See: Sarva Shramik Sangh Versus Indian Oil Corporation Limited,,,,

and others (2009) 11 SCC, 609, Para-28; State of Rajasthan Versus Nemi Chand Mahela and others (2019) 14 SCC 179 Para-11; State Trading",,,,

Corporation of India Ltd. Versus Commercial Tax Officer and others (AIR 1963 SC 1811 Para-29]. As such, even though, the penalty imposed upon",,,,

the Managing Director of the company had attained finality, it cannot be used against the appellant. This answers the substantial question of law no.",,,,

IV also in favour of the appellant.,,,,

54. The fifth substantial question of law which has arisen for adjudication in this appeal is, whether the impugned order was passed solely on the",,,,

statement of the Managing Director of the Company recorded under Section 14 of the C.E.A, 1944 or there was further material to confirm the",,,,

demand against the appellant?,,,,

The conspectus of the facts of the case noted above shows that the SCN was issued upon the Appellant-Company on the basis of two incriminating,,,,

materials i.e. the statement of the Managing Director of the Company recorded under Section 14 of the Central Excise Act, 1944 and notings in the",,,,

private diary i.e. Ambassador diary. Apart from that, the Adjudicating Officer relied upon the suo motu deposit made by the appellant on 29.11.2001",,,,

of an amount of Rs. 10,68,282/- before issuance of SCN on 21.02.2002. It is not in dispute that no other corroborative and tangible evidence such as",,,,

(i) unaccounted purchase of raw materials (ii) consumption of raw materials (iii) manufacture of finished goods (iv) consumption of electricity (v),,,,

payment of wages (vi) transportation / dispatch of finished goods (vii) flow back of consideration (viii) acceptance of buyer of finished goods (ix),,,,

acceptance of seller of raw materials (x) excess / shortage of raw materials / finished goods etc. (xi) no evidence of extra use of electricity (xii) no,,,,

evidence of extra use of labour or payment of unaccounted wages (xiii) no evidence in the nature of Challans, parallel invoices etc. for removal of",,,,

impugned goods and no unaccounted cash was found during the search. The Adjudicating Authority has, in fact, relied upon only the above two",,,,

incriminating materials i.e. statement of the Managing Director under Section 14 of the C.E.A and the notings in the private diary i.e. Ambassador,,,,

diary and no other corroborative evidence as above. The legal principles in this regard are well settled that in the absence of corroborative evidences,",,,,

clandestine removal of manufactured goods cannot be established. [See Balashri Metals Pvt. Ltd. and Ors. Vs. Union of India [2017 (345) E.L.T 187,",,,,

para-5]; Hi Tech Abrasives Ltd. Vs. Commissioner of C. Ex. & Cus., Raipur [2018 (362) E.L.T 961 (Chhatisgarh), Para-12.2 & 12.3]; Continental",,,,

Cement Company Vs. Union of India [2014 (309) E.L.T 411 (All), Para-12] As such, there was no other legally admissible evidence on record to",,,,

draw inference of clandestine removal. Accordingly, substantial question of law no. V is answered in the aforesaid manner in favour of the appellant.",,,,

55. The last substantial question of law to be answered is, whether the entries made in private diary of the Managing Director of the Company could",,,,

have been a basis for passing the impugned order against the appellant? The discussions made hereinabove while answering the substantial question of,,,,

law no. 5, needs reiteration. The notings in the private Ambassador diary collected during search in the office premises of the Appellant-Company in",,,,

the handwriting of the Managing Director Shri H.K. Budhia were accepted by him. However, certain entries made in short form such as Tata, Bihar,",,,,

Kusum etc. were followed up during course of investigation by the team of officers of Central Excise Headquarters (Preventive), Jamshedpur upon",,,,

the office-cum-business premises of M/s. Jharkhand Steels, M/s Kavita Steels and M/s. Ashish Steels, but nothing incriminating was found, neither the",,,,

statements of the proprietor of the aforesaid three parties revealed anything. The SCN records at para 3.0 that these Assesses were meticulously,,,,

transacting business with these buyers whereupon buyers entered in their books of account only those dispatches covered under Central Excise,,,,

Invoices and no other dispatches as revealed from the notings in the diary of M/s BFCL could be found entered in their stock accounts. Apparently,",,,,

the Central Excise officials did not find any evidence of production of the impugned goods, nor any evidence of transportation of raw materials or the",,,,

impugned goods, no evidence of acceptance of the buyers of any unaccounted purchase or any Challans, parallel invoices etc. for removal of",,,,

impugned goods, neither any evidence of flow back of funds from dispatch of such impugned goods to these buyers. The notings in the private diary,",,,,

which is not a substantive piece of evidence, therefore remained uncorroborated by any tangible evidence collected during inquiry or investigation to",,,,

establish the charge of clandestine removal against the appellant.,,,,

56. It needs to be examined as to what is evidentiary value of the private diary of the Managing Director. Section 34 of the Evidence Act reads as,,,,

follows.,,,,

â€œ34. [Entries in books of accounts including those maintained in an electronic form] when relevant.â€" [Entries in the books of accounts,,,,

including those maintained in an electronic form], regularly kept in the course of business, are relevant whenever they refer to a matter into which the",,,,

Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability.â€",,,,

In the case of Central Bureau of Investigation versus V.C. Shukla and others [(1998) 3 SCC 410], the Apex Court while dealing with the issue in",,,,

connection of certain entries in Jain Hawala Note Books expatiated on the ingredients of Section 34 of the Evidence Act at para-17 in the following,,,,

words:,,,,

â€œ17. From a plain reading of the section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book,",,,,

that book is a book of account and that book of account has been regularly kept in the course of business. From the above section it is also manifest,,,,

that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not",,,,

alone be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the,,,,

entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. .....................â€",,,,

The Apex Court dealt with the rationale behind admissibility of parties book of Account and the decision of the different High Courts held at para-39:,,,,

â€œ39. A conspectus of the above decisions makes it evident that even correct and authentic entries in books of account cannot without independent,,,,

evidence of their trustworthiness, fix a liability upon a person. ....................â€",,,,

57. The Evidence Act is applicable to a proceeding in Court. However, even in an adjudicatory proceedings like the present case, the Adjudicating",,,,

Officer has to test the probative value of the evidence on sound principles.[See (2012) 1 SCC 186, Para-17, Commissioner of Customs,",,,,

Vishakhapatnam versus Aggarwal Industries Limited]. The private diary of the Managing Director Mr. Budhia even if assumingly comes within the,,,,

meaning of the first part of Section 34, though all the ingredients were required to be established, alone would not be sufficient evidence to charge any",,,,

person with liability. Otherwise even a third party could also be liable for prosecution on the basis of entries in a private diary, though uncorroborated",,,,

by any cogent tangible evidence. Section 9 (1) (bbb), 9(1)(c) and 9(1) (d) of the C.E.A which creates offences upon other persons, is being extracted",,,,

hereunder for appreciation:,,,,

â€œSection 9. Offences and penalties. -(1)] Whoever commits any of the following offences, namely: -",,,,

(bbb) acquires possession of, or in any way concerns himself in transporting, depositing, keeping, concealing, selling or purchasing, or in any other",,,,

manner deals with any excisable goods which he knows or has reason to believe are liable to confiscation under this Act or any rule made thereunder;,,,,

(c) fails to supply any information which he is required by rules made under this Act to supply, or (unless with a reasonable belief, the burden of",,,,

proving which shall be upon him, that the information supplied by him is true) supplies false information;",,,,

(d) attempts to commit, or abets the commission of, any of the offences mentioned in clauses (a) and (b) of this section;",,,,

shall be punishable, -",,,,

(i) in the case of an offence relating to any excisable goods, the duty leviable thereon under this Act exceeds [fifty lakhs] of rupees, with imprisonment",,,,

for a term which may extend to seven years and with fine :,,,,

Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court such imprisonment shall not,,,,

be for a term of less than six months;,,,,

(ii) in any other case, with imprisonment for a term which may extend to three years or with fine or with both.â€",,,,

That is why it has been observed by the Apex Court in V.C. Shukla (Supra) at para-34 in the following manner.,,,,

â€œ34. ...... Since, however, an element of self-interest and partisanship of the entrant to make a person â€" behind whose back and without whose",,,,

knowledge the entry is made â€" liable cannot be ruled out the additional safeguard of insistence upon other independent evidence to fasten him with,,,,

such liability, has been provided for in Section 34 by incorporating the words â€œsuch statements shall not alone be sufficient to charge any person",,,,

with liabilityâ€.,,,,

58. It has been contended by learned counsel for the appellant Mr. K.Kurmi relying upon the decision in the case of Commissioner of Central Excise,,,,

Vs. Brims Products [2011 (271) ELT 184 (Pat)] that the charge for clandestine manufacture and surreptitious removal of final product is required to,,,,

be proved beyond any doubt by the Revenue by positive legal evidence and cannot be based upon presumption and assumption and in the absence of,,,,

positive evidence, the benefit of doubt should always go in favour of the Assesse. Reliance has also been placed upon the case of Flevel International",,,,

(supra) Paragraphs 50,51,52,55,56 and Balashri Metals Pvt. Ltd. and others Vs. Union of India reported in [2017 (345) E.L.T 187].",,,,

As such, the entire adjudication proceedings proceeded on the basis of statements of M/s Budhia which did not go through scrutiny of Section 9D (1)(",,,,

b) of the Act of 1944 and the notings made in the private diary of the Managing Director which were not supported by any corroborative tangible,,,,

evidence collected during investigation. Further investigation from certain buyers of the appellant also did not reveal any incriminating evidence of,,,,

clandestine removal of manufactured goods. It was the notings in the private diary alone which formed the foundational basis for comparison with the,,,,

documents such as, Purchase Register, PLA, Master file of correspondence, RG-I Register, Raw Material Register, Invoice book etc. by the",,,,

investigating team. The comparison was made from a private diary of the Managing Director without any such tangible corroborative evidence which,,,,

could form the basis for passing the impugned order. As such, the entries made in the private diary of the Managing Director of the Company being",,,,

not a substantive piece of evidence, could not alone be made the basis for passing the impugned order against the appellant.",,,,

59. In answer to the substantial question nos. II and III in the above paragraphs, it has been held that suo motu deposit of the amount of differential",,,,

duty liability before issuance of show cause notice without any adjudication of the duty liability, could not be treated as evidence of clandestine",,,,

removal of goods since the Adjudicating Officer was duty bound to determine the duty liability in accordance with law on the basis of tangible material,,,,

evidence collected during inquiry or investigation. As such, the substantial question of law no. VI is also answered in favour of the Appellant-",,,,

Assessee.,,,,

60. Learned counsel for the Respondent has also relied upon the case of Commissioner of Central Excise, Mumbai Versus Kalvert Foods India",,,,

Private Limited and others [(2011) 12 SCC 243]. In the case of Kalvert Foods (Supra), during course of raid conducted on the factory premises of the",,,,

Company and also at the premises of distributors, wholesale dealers / traders of the Respondent Company in and around Mumbai and other connected",,,,

premises, several incriminating documents, articles and records were found and huge quantity of finished goods were also found lying in the factory",,,,

premises. It was also noticed that there was one tempo parked inside the factory premises loaded with cartoons containing the excisable goods,,,,

manufactured by the said Company and was about to leave the factory premises. The driver of the said tempo was not in possession of any,,,,

documents relating to the goods loaded in the said tempo. On inspection of the invoices at the premises of the Respondent Company, it was also found",,,,

that there were two invoices with the same serial number, in respect of different products. The officers took stock of the goods in the factory and it",,,,

was found that the finished goods lying in the factory were in excess of the stock shown and accounted for in the RG-I register. The specific,,,,

allegation against the Respondent was that the goods were found lying in excess of the stock than what were entered into RG-I register valued at Rs.,,,,

7,33,668/- and the same were seized. Thereafter, search was carried out at the premises of the dealers / traders to whom the Company allegedly",,,,

supplied the finished goods and the goods found lying in those premises to the value of Rs. 6,22,946/- were also seized on the ground that they were",,,,

not duty paid. Similarly, search was carried out at the premises of the selling agent of the Respondent Company M/s Relish Trading Company; M/s",,,,

Sai Krupa, a partnership firm of the Managing Director of the Respondent Company and at the premises of sole proprietor of RTC and records",,,,

pertaining to the sale and purchase of the goods lying in the offices of these Companies revealed on seizure that the Respondent Company had cleared,,,,

jams, syrups, sauces, pickles, etc. from the factory premises to the aforesaid selling agents without payment of duty, but had shown those clearances",,,,

as that of the sugar in the invoices and had also cleared the branded goods to the dealers /traders. Thereafter, a show-cause notice was issued to the",,,,

Company and its Director and also to the proprietor of R.T.C, its partner and M/s Sai Krupa Corporation, proposing imposition of duty demand and",,,,

penalty. Statement of the Managing Director of the Company and other persons were recorded during the course of proceedings but the same were,,,,

retracted. It was contended by the Respondent Assesse that such statement could not be relied upon. The Apex Court refused to accept the,,,,

contention as it was established from the record that these persons had given the aforesaid statements out of their own volition and there was no,,,,

allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corroborated each other. The",,,,

Managing Director of the Company had, on his own, deposited an amount of Rs. 11.00 lakhs towards excise duty which proved the conclusion that the",,,,

statement of the persons concerned were of their own volition and not the outcome of duress. Para-19 of the Report is quoted herein below:,,,,

â€œ19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the persons concerned out,,,,

of their own volition and there is no allegation of threat, force, coercion, duress or pressure being utilised by the officers to extract the statements",,,,

which corroborated each other. Besides, the Managing Director of the Company on his own volition deposited the amount of Rs 11 lakhs towards",,,,

excise duty and therefore in the facts and circumstances of the present case, the aforesaid statement of the counsel for the respondents cannot be",,,,

accepted. This fact clearly proves the conclusion that the statements of the persons concerned were of their volition and not the outcome of any,,,,

duress.â€,,,,

The Apex Court also took into account that the Adjudicating Authority had recorded findings of recovery of unaccounted finished excisable goods,,,,

from eight different dealers in and around Mumbai and that there has been use of parallel sets of invoices from the same serial numbers supported by,,,,

recovery of a serially numbering machine and blank invoices without any printed serial numbers. In the said case, the sole proprietor of M/s RTC",,,,

when examined under section 14 of Central Excise Act, clearly stated that large quantities of excisable goods were bought from the Respondent",,,,

Company and in turn sold to its distributors and the seizure of these documents from her residence included correspondence with their customers,,,,

regarding promotion of the Kalvert brand products. In these facts and circumstances, the Apex Court found that the Company was guilty of",,,,

clandestine removal of excisable goods as non-excisable goods in order to evade excise duty and that the Managing Director of the Company had,,,,

voluntarily come forward to sort out the issue and to pay the excise duty of Rs. 11.00 lakhs on different dates. Clandestine removal of excisable goods,,,,

as non-excisable goods was clearly proved from the materials on record. The applicability of Section 9D to the admissibility of such a statement of the,,,,

Managing Director recorded under Section 14 of C.E.A was not an issue raised or decided in this case. Therefore, ratio of the instant case is",,,,

distinguishable on facts from the present case.,,,,

61. Therefore, it is unsafe to uphold the findings rendered by the Adjudicating Authority, as upheld up to the learned Tribunal simply on the basis of",,,,

deposit of certain amount by the Assessee even before issuance of the show-cause notice in a situation where the Assessee has contested the,,,,

findings of the Adjudicating Authority up to the learned CESTAT and has questioned the decision of the learned Tribunal in the instant appeal,,,,

preferred under section 35-G of C.E.A, 1944. In the present case, no such tangible corroborative evidence of clandestine removal of excisable goods",,,,

as non-excisable goods were seized and recovered except the statement of the Managing Director of the Company made under section 14 of the Act,,,,

and certain notings in the private diary. Such statement of the Managing Director of the Company for being used against the Appellant Company, had",,,,

not been subjected to scrutiny under section 9D(1)(b) of the Act either. Therefore, the facts of the present case portray a totally different picture,",,,,

where the Respondent Department has not been able to produce any tangible corroborative evidence of such clandestine removal of goods even after,,,,

inquiry / investigation and search on the premises of the buyers of the Appellant Company.,,,,

62. Learned counsel for the Respondent has also relied upon the case of Union of India and another versus GTC Industries Ltd., Bombay [(2003) 5",,,,

SCC 106] and submitted that a quasi-judicial order has to be judged on the basis of the reasoning contained therein. It is submitted that the order,,,,

passed by the Adjudicating Authority as upheld by the learned Tribunal is proper in the eye of law. However, for the reasons discussed above in the",,,,

facts and circumstances of this case, the decision of GTC Industries Ltd (Supra) has no application herein.",,,,

63. Having considered the submissions of learned counsel for the parties and the materials on record including the principles of law as culled out from,,,,

the provisions of C.E.A, 1944 and the decisions referred to hereinabove, I am of the considered view that the order of learned Tribunal cannot be",,,,

sustained in the eye of law. It is accordingly set aside. The substantial questions of law framed for adjudication in this appeal are accordingly,,,,

answered in favour of the Appellant Assessee. Let the Lower Court Records be sent to the concerned Tribunal and Authorities.,,,,

(Aparesh Kumar Singh, J)",,,,

64. I have had the benefit of going through the judgement of my esteemed Brother Honâ€™ble Mr. Justice Aparesh Kumar Singh. I express my,,,,

inability to agree with him, therefore I am writing a separate Judgement.",,,,

65. My judgement has the following heads: -,,,,

I. Submission of the Appellant on each substantial question of law.,,,,

II. Arguments on behalf of the Respondent III. Findings: -,,,,

a. Factual background, and events prior to issuance of show cause notice by the adjudicating authority and proceedings and findings of the adjudicating",,,,

authority.,,,,

b. Appellate proceedings and Findings of the learned Commissioner (Appeals), Patna",,,,

c. Proceedings before the appellate tribunal,,,,

d. The nature of allegations against the Managing Director and the penalty which attained finality against him,,,,

e. Decision on issues i.e. substantial questions of law.,,,,

66. This appeal has been filed under Section 35(G) of the Central Excise Act, 1944 (hereinafter referred to as the Act of 1944) against the Judgement",,,,

and order dated 21.09.2017 (Annexure-9) passed by the learned Customs, Excise and Service Tax Appellate Tribunal, Eastern Zonal Bench, Kolkata",,,,

(hereinafter referred to as the Tribunal) to the extent it relates to Excise Appeal No. EDM-173 of 2006.,,,,

67. The present appeal has been admitted on following substantial questions of law:-,,,,

vii. â€œWhether, the statement of Mr. H.K Budhia, Managing Director of the appellant-company recorded under Section 14 of the Central",,,,

Excise Act, 1944 could be treated as a relevant piece of material without complying with the provisions of Section 9D of Central Excise Act,",,,,

1944?,,,,

viii. Whether the finding of learned Tribunal that the duty demand was never contested by the appellant before the authorities is perverse?,,,,

ix. Whether suo-moto deposit of differential duty liability, whose details have been mentioned in para 5.0 of the notice to show cause issued",,,,

to the appellant as well as to its Managing Director can be said to be an admission on the part of the appellant regarding clandestine,,,,

removal of goods?,,,,

x. Whether the fact that the penalty imposed by the adjudicating authority upon the Managing Director of the Company, having attained",,,,

finality, can itself be used against the appellant?",,,,

xi. Whether the impugned order was passed solely on the statement of the Managing Director of the Company recorded under Section 14 of,,,,

the Central Excise Act, 1944 or there was further material to confirm the demand against the appellant?",,,,

xii. Whether the entries made in private diary of the Managing Director of the Company could have been a basis for passing the impugned,,,,

order against the appellant?â€,,,,

68. Submission of the Appellant on the substantial question of law:,,,,

I. On the first substantial question of law,,,,

a. The learned Tribunal has failed to appreciate that the statement of the Managing Director of the appellant was irrelevant piece of material due to,,,,

non-compliance of the mandatory conditions of Section 9D of the Act of 1944.,,,,

b. Under Section 9D(1)(b) read with Section 9D(2) of the Act of 1944, statement made before the Central Excise Officer during the course of any",,,,

inquiry or proceeding under Section 14 of the Act of 1944 shall be relevant for the purpose of proving the truth of the facts only when the person who,,,,

made the statement is examined as a witness before the Adjudicating Authority and the Adjudicating Authority is of the opinion that having regard to,,,,

the circumstances of the case, the statement should be admitted in evidence.",,,,

c. The provisions of Section 9D (2) are applicable to quasi-judicial/ adjudication proceedings under the Act of 1944, so far as may be, as it applies",,,,

before the Court under Section 138 of the Indian Evidence Act, 1872 for examination of the witness.",,,,

d. Section 9D being mandatory in nature, cannot be dispensed with. Therefore, unless the statements made under Section 14 are tested in accordance",,,,

with Section 9D, they cannot be admitted into evidence. Such statements have to be eschewed.",,,,

e. Rigors of Section 9D (1) (b) can be waived only under exceptions carved out under clause (a) of sub-section (1) of Section 9D 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 expenses which, under the circumstances, the Adjudicating Authority considers",,,,

unreasonable.,,,,

f. Power of the Central Excise Officer under Section 14 of the Act of 1944 to summon any person to give evidence or produce a document is subject,,,,

to Section 9D of the Act. Here, the Central Excise Officer acts in the capacity of an investigator and not a Court or Adjudicating Authority. Hence,",,,,

such statement cannot be said to be examination-in-chief.,,,,

g. Learned Tribunal failed to appreciate that Shri Budhia was never examined by the Adjudicating Authority, nor his statement was admitted into",,,,

evidence by the Adjudicating Authority in accordance with Section 9D(1), hence, it was irrelevant piece of material. The purpose behind inserting",,,,

Section 9D is to ensure that only true evidence forms the basis of charge in an adjudication proceeding as the Central Excise Officers often record,,,,

statement under coercion or compulsion.,,,,

h. It is further submitted that Section 9D is a general provision and applies to all persons whose statements are recorded under the Act irrespective of,,,,

the fact whether he is a Director or Managing Director or an employee or a third person. Therefore, the statement of Mr. Budhia could not have been",,,,

excluded from the purview of Section 9D.,,,,

i. Section 9D acts as a safeguard against self-incrimination and is also a protection as a constitutional right under Article 20 (3) of Constitution of,,,,

India. Learned counsel for the appellant has submitted that interpretation of statute involves giving content to the meaning of expression used and also,,,,

what is not said.,,,,

j. In support of the submissions, learned counsel for the appellant has placed reliance upon the following decisions:",,,,

i. 2016 (340) E.L.T 67 (P & H): Jindal Drugs Pvt. Ltd Vs. Union of India,,,,

ii. 2018 (361) E.L.T 90 (P & H): Ambika International Vs. Union of India,,,,

iii. 2018 (362) E.L.T 961 (Chhatisgarh): Hi Tech Abrasives Ltd. Vs. Commissioner of C. Ex. & Cus., Raipur",,,,

iv. 2016 (332) E.L.T 416 (Del.): Flevel International Vs. Commissioner of Central Excise,,,,

v. (1995) 3 SCC 367: Sukhwant Singh Vs. State of Punjab,,,,

vi. 2007 (220) E.L.T 3 (SC): Mohtesham Mohd. Ismail Vs. Spl. Director, Enforcement Directorate",,,,

k. Based on these decisions, it is submitted that the consistent line of interpretation of Section 9D is that the protection of Section 9D is mandatory in",,,,

nature.,,,,

l. Learned counsel for the appellant submits that the decision in the case of â€œSilicone Concepts International Pvt. Ltd. Vs. Pr. Commr. of Cus.,",,,,

ICD, TKD (Import), New Delhiâ€ reported in 2019 (368) E.L.T 710 (Tri-Del) wherein, it has been held that the statement recorded under Section 14",,,,

of the Act is a substitute of examination-in-chief and therefore, without further examination-in-chief, witness can be offered for cross-examination, is",,,,

per incuriam being passed in ignorance of the relevant statute or binding precedent and has no evidentiary value. Learned counsel for the appellant has,,,,

further argued in support of the aforesaid proposition that in such an eventuality, if a witness is said to be examined in chief by making a statement",,,,

under Section 14, but not allowed to cross-examine, it would amount to giving up the witness by the Revenue. Converse is also true. A witness who is",,,,

not examined in chief, but offered for cross-examination, would also amount to giving up the witness. Reliance has been placed upon the case of",,,,

Sukhwant Singh (Supra).,,,,

II. On the second substantial question of law,,,,

a. The finding of the learned Tribunal that the appellant did not contest the demand before the lower authorities, is perverse.",,,,

b. It would appear from the finding of the learned Commissioner (Appeals) in his Order-in-Appeal dated 29.12.2005 and the show cause filed before,,,,

the appellate authority on 07.12.2005 and the written submissions dated 30.08.2017 filed before the appellate Tribunal that the demand was disputed,,,,

before the lower authorities and also before the learned Tribunal. Therefore, the Managing Director of the appellant company in his reply dated",,,,

07.12.2005 to show cause issued by the appellate authority explained that the entries in his diary were related to offers and negotiations, some of",,,,

which did not materialize. Since diary was written by the Managing Director of the appellant company, hence he could only explain as to what the",,,,

diary contains and the Appellant Company could not have explained the content of the diary. The Managing Director of the appellant company was,",,,,

therefore, joined as a co-noticee.",,,,

c. The Appellant in his defence reply had disputed the entire demand of Rs. 12,50,107/- in the show-cause notice and also prayed for dropping the",,,,

entire demand. The appellant alternatively disputed the quantification of demand. The Adjudicating Authority in his Order-in-Original dated 13.04.2005,,,,

arbitrarily held that the appellant had challenged only the quantification of duty.,,,,

d. It is well settled that the charges in the show-cause notice are prima-facie in nature based on uncontested material. Even non-filing of any reply, in",,,,

the worst-case scenario, is not admission of the charges. The appellant has disputed the entire demand at every stage of the proceedings right from",,,,

the Adjudicating Authority till the learned Tribunal. Since Section 11A (2) mandates determination of duty of excise in accordance with law even,,,,

where no replies were filed, it was the duty of the Adjudicating Authority to determine it in accordance with law. In any case, defence reply cannot be",,,,

treated as evidence in support of the charge in the show-cause notice.,,,,

e. The Apex Court in the case of â€œCollector of Central Excise, Baroda Vs. L.M.P. Precision Engg. Co. Ltd.â€ reported in (2004) 9 SCC 703 para",,,,

14 has held that statement in reply to the show-cause notice is not evidence. The Tribunal erred in treating it as evidence in support of the case.,,,,

f. Even if it is assumed that before the Adjudicating Authority, only quantification of demand was challenged, then also nothing would turn out of it",,,,

inasmuch as there is no estoppel against challenging the taxability before the Commissioner (Appeals) who is also an Assessing Authority.,,,,

g. In the instant case, the taxability has undisputedly been challenged before the Commissioner (Appeals) which is evident from the show cause reply",,,,

dated 07.12.2005, filed by the Managing Director of the appellant company before the appellate authority.",,,,

h. In this regard, reliance is placed upon the provisions of Section 35 and 35B of the Act of 1944 and the decision of the Apex Court in the case of",,,,

â€œMIL India Ltd. Versus Commissioner of Central Excise, Noidaâ€ [(2007) 3 SCC 533, para 2 & 4].",,,,

i. According to the appellant, in the defence reply dated 07.03.2005 filed by the Managing Director of the appellant company, appellant took five",,,,

alternative pleas that, (a) they are entitled to the benefit under Section 11A(2)(B) as they have already deposited Rs. 10,68,298/-, (b) quantification of",,,,

the demand is not correct, (c) the entire demand of Rs. 12,50,107/- is not sustainable, (d) the burden of proof is on the department which has not been",,,,

discharged and (e) amount of Rs. 10,68,298/- is a â€˜depositâ€™ and not â€˜paymentâ€™ of tax.",,,,

j. It is the submission of the appellant that on inquiry, the buyers did not accept the correctness of 71 entries of purported clandestine removal. Hence,",,,,

correctness of the entries in the private diary did not stand proved. Mere assertion in defence reply cannot be made the basis for confirmation of,,,,

demand. The demand has to be adjudicated and duty had to be determined under Section 11A (1) and 11A (2) following the settled principles of law.,,,,

In the instant case, there were only two evidences, (i) statement of Shri H.K. Budhia dated 15.01.2001 and (ii) private diary, on the basis of which",,,,

only demand was to be adjudicated. The buyers did not accept the correctness of 71 entries of purported clandestine removal, as alleged in the show-",,,,

cause notice.,,,,

III. On the third substantial question of law,,,,

a. Learned Tribunal failed to appreciate that the amount of Rs. 10,68,298/- paid during investigation was only â€˜depositâ€™ and not â€˜paymentâ€™",,,,

of duty. The proceedings in the instant case were initiated under Section 11A (1) /11A(2) and not under Section 11A(2)(B) of the Act. Hence, no",,,,

question of accepting any duty liability before the show-cause notice arose. Section 11A (2)(B) envisages that the person chargeable with duty may,,,,

pay the duty before service of show cause notice on him under Section 11A(1) and inform the Central Excise Officer of such payment in writing. In,,,,

such cases, the Central",,,,

Excise Official â€˜shall notâ€™ serve any show-cause notice under Section 11A (1) in respect of duty so paid. As per explanation 1 to Section 11A,,,,

(2)(B), it shall not apply to the cases where duty was not levied / paid by reason of fraud or collusion or willful mis-statement or suppression of facts.",,,,

Since in the instant case, suppression of facts etc. were alleged in the show cause notice, hence the adjudication had to be done under Section 11A (1)",,,,

and 11A (2). In such a case, there is no scope to pay duty and settle the case before issuance of show-cause notice. Further, there is no other",,,,

provision for collection of duty before issuance of show-cause notice and passing of adjudication order. Any collection of amount at the investigation,,,,

stage is without authority of law and is merely a deposit made under protest. In the aforesaid background, mere deposit of any amount during the",,,,

investigation before issuance of show cause notice, an adjudication order, cannot be treated as admission of the charge. The liability to duty had to be",,,,

determined in accordance with Section 11A (1) and 11A (2) of the Act of 1944 by following the due process of law. No duty or tax can be collected,",,,,

without authority of law, as per Article 265 of Constitution of India.",,,,

b. Learned counsel for the appellant has placed reliance upon the following decisions in support of the aforesaid submissions.,,,,

i. (1997) 5 SCC 536, para-92: Mafatlal Industries Ltd. and others Vs. Union of India & others",,,,

ii. 2017 (350) E.L.T 145 (Del): Digipro Import & Export Pvt. Ltd. Vs. Union of India,,,,

iii. 2019 (365) E.L.T 32 (P&H): Concepts Global Impex Vs. Union of India,,,,

IV. On the fourth substantial question of law,,,,

a. Non-challenge of order against the co-noticee- the Managing Director of the appellant company, cannot affect the appeal of the Appellant",,,,

Company since the Company is a separate legal entity.,,,,

b. The right to appeal under Section 35G of the Act read with Section 100 of the CPC is a valuable right of the party aggrieved which cannot be,,,,

defeated or made illusory by any narrow pedantic interpretation and non-challenge of the order by any other person.,,,,

c. Before the learned Tribunal, issues and relief (s) prayed for by the Appellant Company were different from that of the Managing Director of the",,,,

Company. Therefore, finality in one case would not affect the other.",,,,

d. Referring to the Order-in-Appeal dated 29.12.2005, it is submitted that the Commissioner (Appeals) has held in respect of the Managing Director of",,,,

the appellant company that existence of mens rea on his part was of doubt and still he was held liable for heavy deterrent penalties under Rule 209A,,,,

of the C.E.R., 1944 read with Rule 26 of the C.E.R., 2001. Learned Tribunal, though it reduced the penalty on the Managing Director of the appellant",,,,

company to Rs. 20,000/-, but upheld the adjudication order and Order-in-Appeal on all other aspects. Thereby, the finding of the learned Commissioner",,,,

(Appeals) regarding mens rea on the part of the Managing Director of the appellant company stood upheld by the learned Tribunal. It is submitted that,,,,

doubts and suspicion cannot act as a substitute for legal proof. Charges of clandestine removal being a serious charge cannot be upheld on mere,,,,

doubts.,,,,

e. The prayer made and issues raised by the Appellant Company before the learned Tribunal were in relation to dutiability of the demand under,,,,

Section 11A and imposition of penalty under Section 11AC of the Act on charges of purported clandestine removal of excisable goods and for setting,,,,

aside of the same. Whereas, the issue and relief claimed by the Managing Director of the appellant company before the learned Tribunal was with",,,,

respect to imposition of personal penalty under Rule 209A of the erstwhile Rule of 1944 read with Rule 26 of the Rules of 2001 for dealing with,,,,

buyers / suppliers and writing of diary in his own handwriting for purported accounted and unaccounted sales. The charge against the Appellant,,,,

Company in the show-cause notice was of purported clandestine removal and in the case of the Managing Director of the appellant company was of,,,,

purported maintenance of records. The Department itself has treated them as two separate entities, and not one being the agent of the other, by",,,,

initiating separate proceedings. Therefore, when the parties are different, issues are different and reliefs claimed are different, no question of any",,,,

finality would arise.,,,,

f. Learned counsel for the appellant has relied upon the following decisions:-,,,,

i. Sarva Shramik Sangh Versus Indian Oil Corporation Limited and others [(2009) 11 SCC 609, para-28];",,,,

ii. State of Rajasthan Versus Nemi Chand Mahela and others [(2019) 14 SCC 179],,,,

iii. Commissioner of Central Excise, Chennai-I Vs. B.S. Garg [2016 (339) E.L.T 518 (Madras].",,,,

iv. State Trading Corporation of India Ltd. Versus Commercial Tax Officer and others [AIR 1963 SC 1811, para-23].",,,,

V. On the fifth substantial question of law,,,,

a. The duty in the instant case has been demanded without any allegation or evidence or finding of â€œmanufacture of the impugned goods by the,,,,

appellantâ€ in the show-cause notice. Since levy under Section 3 of the Act is on the taxable event of â€˜manufactureâ€™, therefore, on mere",,,,

allegation without any evidence or finding of manufacture, such duty cannot be demanded. It is submitted that to prove manufacture, unaccounted",,,,

purchase of raw materials; unaccounted consumption of raw material; consumption of electricity; payment of wages, etc., must be proved to",,,,

corroborate the charge. The private diary of the Managing Director of the appellant company cannot be made the basis to uphold a finding of,,,,

dutiability of the demand. No other legal evidence has been brought on record in support of the charge. By referring to the statements of the,,,,

Managing Director of the appellant company in relation to his private diary, it is submitted that for recording such a finding, there is no unequivocal",,,,

admission on the part of the Managing Director of the appellant company, amounting to a confession, that too without any corroborative evidence.",,,,

Therefore, findings of the learned Tribunal are perverse and contrary to the undisputed facts of the case. Even during inquiry with the buyers, entries",,,,

in the private diary could not be corroborated as none of the buyers accepted any unaccounted purchase. There is no evidence i.e. challan, parallel",,,,

invoices, etc. for removal of impugned goods, nor is there any evidence of flow back of funds. No unaccounted cash was found during search.",,,,

b. Therefore, the entire findings are based upon the statement of the Managing Director of the Company without any compliance of Section 9D of the",,,,

Act or any corroboration by independent legal evidence.,,,,

c. Learned counsel for the appellant has placed reliance upon following judgements: -,,,,

i. Balashri Metals Pvt. Ltd. Vs. Union of India [2017 (345) E.L.T 187 (Jhar.)];,,,,

ii. Hi Tech Abrasives Ltd. Vs. Commissioner of C. Ex. & Cus., Raipur [2018 (362) E.L.T 961 (Chhatisgarh);",,,,

iii. Continental Cement Company Vs. Union of India [2014 (309) E.L.T 411 (All.)];,,,,

iv. Triveni Engineering & Industries Ltd. Vs. Commr. of C.Ex. Allahabad [2016 (334) E.L.T 595 (All.),,,,

v. Sakeen Alloys Pvt. Ltd. Vs. Commissioner of C. Ex., Ahmedabad [2013 (296) E.L.T 392 (Tri-Ahmd.)] which stood affirmed up to the",,,,

Supreme Court as reported in Micro Inks Ltd. Vs. Commissioner of Central Excise, Daman [2015 (319) E.L.T 117 (SC)].",,,,

VI. On the sixth substantial question of law,,,,

a. It is the categorical submission of learned counsel for the appellant that the findings of the learned Tribunal are entirely based on the private diary,,,,

without any corroborative evidence obtained through independent inquiry. Therefore, such a serious charge of clandestine removal cannot be sustained",,,,

merely on the basis of entries in the private records which is denied by the buyers.,,,,

b. Learned counsel for the appellant has placed reliance upon the following decisions: -,,,,

i. 2013 (287) E.L.T 243 (Gujarat): Commissioner of C. Ex. Cus. & Service Tax Vs. Vishwa Traders P. Ltd.,,,,

ii. 2016 (332) E.L.T 416 (Del): Flevel International Vs. Commissioner of Central Excise,,,,

iii. 2017 (345) E.L.T 187 (Jhar): Balashri Metals Pvt. Ltd. Vs. Union of India,,,,

iv. 2018 (309) E.L.T 411 (All): Continental Cement Company Vs. Union of India,,,,

v. 2011 (271) E.L.T 184 (Pat): Commissioner of Central Excise Vs. Brims Products.,,,,

vi. 2015 (318) E.L.T 487(Tribunal-Ahmadabad): Suzuki Synthetics Pvt. Ltd. Vs. Commr. of C. Ex, Ahmedabad-III",,,,

VII. Based on these submissions, learned counsel for the appellant submits that all the substantial questions of law framed by this Court are fit to be",,,,

answered in favour of the appellant and against the Revenue. The impugned order of learned Tribunal being perverse in the eye of law and on facts, is",,,,

fit to be set aside. He has also submitted that the appellant would be entitled to refund of the entire amount with statutory interest.,,,,

69. Arguments on behalf of the Respondent,,,,

a. On the basis of an intelligence report, search was conducted on 07.09.2001 by team of Officers of Central Excise, Headquarters (Preventive),",,,,

Jamshedpur, both at the factory premises at Marar, Ramgarh as well as office premises at Ranchi in which certain incriminating documents were",,,,

recovered from the office premises and were resumed under panchnama for further investigation. A maroon colour Ambassador diary for the year,,,,

2001 of M/s B.F.C.L was recovered from the office premises of the Assessee at Ranchi which on preliminary examination revealed that it belonged,,,,

to Shri Hari Krishna Budhia, Managing Director of the Company. It contained the entries of purchases, sales of goods by the Assessee for the period",,,,

12.01.2001 to 05.09.2001. It also contained the details of quantities of sale / dispatch of finished goods, rate charged from the buyers. A detailed entry",,,,

wise examination of the diary was carried out which revealed that entries on top of each page as â€˜Tataâ€™, â€˜Biharâ€™, â€˜Kusumâ€™, etc.",,,,

pertain to the purchase of raw materials namely Sponge Iron from (i) M/s Tata Sponge Iron, Orissa, Bihar Sponge Iron Ltd., Chandil, M/s Kusum",,,,

Powernet (P) Ltd., Kelajhad, Orissa, etc. (ii) Entries as â€˜Punjabâ€™ and quantity mentioned against it appear to be the total dispatches / sales of",,,,

ingots through its consignment agent M/s Bihari Lal & Company, Mandi, Govindgarh, Punjab, (iii) Entries in the said diary such as of Jharkhand,",,,,

Kavita, Ashish, Prasad, Pravin, Arshad and quantities as well as rates thereon pertain to dispatch / sale of CTD bars and rods through different",,,,

buyers. The measurement of CTD bars and rods such as 8 mm, 12 mm, 16 mm and 20 mm mentioned randomly showed that it related to CTD bars",,,,

and rods. Prima facie, it appears that majority of such dispatches were clandestine in nature as figures did not match in the books of accounts. On",,,,

scrutiny of the notings of the diary with the corroborative records of dispatch / sales, it revealed that the Assessee had made dispatch of CTD bars",,,,

and rods to the buyers during the period 12.01.2001 to 05.09.2001, wherein in majority of the cases, same were not issued under the cover of Central",,,,

Excise Invoice. Where invoices were found to have been issued, the Assessee had quoted wrong price as in the Central Excise Invoice, prices were",,,,

lower than what was noted in the said diary, resulting in under valuation of the so dispatched excisable goods and short payment of duty of central",,,,

excise thereon. From the notings of the said diary, and in the inquiry / investigation, it was revealed that dispatches were made to the following buyers",,,,

of the Assessee.,,,,

vii. â€˜Jharkhandâ€™-M/s Jharkhand Steel, Upper Bazar, Ranchi",,,,

viii. â€˜Kavitaâ€™-M/s Kavita Steel, Ratu Road, Ranchi",,,,

ix. â€˜Ashishâ€™-M/s Ashish Steel, Upper Bazar, Ranchi",,,,

x. â€˜Pravinâ€™-M/s Pravin Agency, Ranchi",,,,

xi. â€˜Arshadâ€™- M/s Arshad Steel, Ranchi",,,,

xii. â€˜Prasadâ€™-M/s Prasad Steel, Ranchi.",,,,

b. During the investigation, summons was issued to the officers / staff of the Assessee for recording their statements under Section 14 of the Act of",,,,

1944. Shri Prem Shankar Mishra, Administrative Officer of the Assessee stated that the Managing Director, Shri Hari Krishna Budhia is himself",,,,

seeing production, procurement of raw materials and sale of finished goods and the aforesaid diary belongs to Mr. Budhia and entries made in the",,,,

diary are in the handwriting of the Managing Director only.,,,,

c. Mr. S.K. Jaiswal, Sr. Accounts Officer in his statement dated 14.09.2001 stated that they also received sale proceeds in cash and in such instances,",,,,

cash account is debited and S/debtorâ€™s account is credited. Regarding the aforesaid diary, he said it is of M/s B.F.C.L and Alphabets seem to be",,,,

of the Managing Director; about the digits he was not sure. He said that the entries are giving quantitative details as well as value of certain items, to",,,,

be exactly explained by the writer (the Managing Director).,,,,

d. Statement of Mr. Budhia was thereafter recorded upon summon on 15.11.2001. Mr. Budhia stated that said diary is of M/s B.F.C.L and notings are,,,,

in his handwriting. He accepted that he looked after the work relating to the dispatch and purchase, finalization of rates and party, quantity as also of",,,,

payment. When asked about the dispatches not covered under invoices, specifically his Rolling Mill Division products viz. CTD bars and rods and as",,,,

such no duty of central excise having been paid thereon, Mr. Budhia replied that he had no idea but added that, if at all that showed entry, it must have",,,,

occurred inadvertently. He undertook to examine the issue and if dispatches were not covered under the invoices and duty is quantified, he would bear",,,,

the duty. He also agreed to pay duty difference in case of rates being on the higher side in his diary. During investigation of detailed entry-wise,,,,

examination of the diary in the handwriting of the Managing Director Mr. Budhia, it revealed that between the period 12.01.2001 to 31.03.2001, out of",,,,

altogether 23 dispatches shown in the diary, 21 dispatches were shown without payment of central excise duty amounting to Rs. 3,86,733/-; whereas",,,,

two dispatches were found showing short paid duty amount assessed to Rs. 7,963/-. Total short payment/non-payment of duty amounted to Rs.",,,,

3,94,696/- during the period 2000-01.",,,,

e. Further, from the notings in the said diary, it revealed that during the period 01.04.2001 to 05.09.2001, out of altogether 55 dispatches mentioned in",,,,

the diary, 50 were without payment of central excise duty amounting to Rs. 8,39,962/-; whereas five dispatches suffered from short payment of duty",,,,

amounting to Rs. 15,449/-, total amounting to Rs. 8,55,411/- during the period 01.04.2001 to 05.09.2001 corresponding to the period 2001-02.",,,,

f. The Assessee meanwhile deposited the differential duty for the period 2000-01 to the tune of Rs. 3,36,023/- and differential duty for the period",,,,

2001-02 to the tune of Rs.7,32,275/-. Intimation was given on 24.11.2001 through FAX.",,,,

g. Learned counsel for the Respondent Revenue submits that suo-motu payment of differential duty on CTD bars and rods for the period 2000-01 and,,,,

2001-02 are conclusive evidence of evasion of duty for the reason that it shows an existing liability of the Assessee by way of differential duty. Such,,,,

liability occurred due to earlier non-payment / short payment of duty. Further, the Managing Director Shri Budhia had agreed to examine the issue and",,,,

had stated that, if found that dispatches were not covered under the invoices, they shall bear the duty. After examination of those dispatches having",,,,

been made without cover of central excise, they actually made payment of duty. It therefore amounted to acceptance of the allegation of clandestine",,,,

clearances without payment / short payment of duty.,,,,

h. Based on the aforesaid materials, a show-cause notice was issued on 22.02.2002 upon the Appellant Company demanding central excise duty of",,,,

Rs. 12,50,107/- under Section 11A(1) of the Act of 1944 and determined under Section 11A(2) along with interest under Section 11AB and proposed",,,,

penalty under Section 11AC / Rule 173Q of C.E.R, 1944 read with Rule 25 of C.E.R, 2001, inter alia, asking the appellant to show-cause as to why an",,,,

amount of Rs. 10,68,298/-collected during investigation should not be confirmed. Shri Hari Krishna Budhia was also asked to show-cause as to why",,,,

penalty under Rule 209A of 1944 Rules read with Rule 26 of 2001 Rules should not be imposed upon him for his purported abetment in the offences of,,,,

the Appellant Company.,,,,

i. The Assessee submitted its defence reply on 07.03.2005. It submitted that the duty alleged to be short paid as per show cause notice, has not been",,,,

properly calculated, since the amount indicated in the show-cause notice should be treated as cum-duty price. Therefore, to arrive at a correct",,,,

assessable value, it was proper in law to deduct the duty amount from the cum-duty value. It also submitted that in this case, they could not issue the",,,,

invoices inadvertently and therefore, immediately deposited the duty for CTD bars and rods for the period January 2001 to September 05, 2001,",,,,

totaling Rs. 10,68,298/- on 24.11.2001, much before issuance of show-cause notice on 22.02.2002.",,,,

j. It is submitted that the Joint Commissioner, Central Excise, Headquarters , Ranchi , upon consideration of the materials collected during search,",,,,

inquiry / investigation, passed the Order-in-Original dated 13.04.2005 confirming the duty demand of Rs. 10,77,678/-along with interest under Section",,,,

11AB with a penalty of Rs. 20,000/-under Rule 173Q of 1944 Rules read with Rule 25 of 2001 Rules and further penalty of Rs. 10,77,678/- under",,,,

Section 11AC of the Act. A penalty of Rs. 20,000/- under the erstwhile Rule 209A of the 1944 Rules read with Rule 26 of 2001 Rules was also",,,,

imposed upon Shri Hari Krishna Budhia, Managing Director of the Appellant Company. The Assessee / Appellant went in appeal before the",,,,

Commissioner (Appeals) under Section 35 of the Act, reiterating its contentions being aggrieved by the Order-in-Original. Learned Commissioner",,,,

(Appeals) in exercise of the power conferred under Section 35A (3) of the Act issued show-cause notice dated 29.09.2005 upon Shri Budhia,,,,

proposing enhancement of penalty under Rule 209A of the 1944 Rules read with Rule 26 of 2001 Rules. Upon consideration of the submissions and,,,,

the grounds taken by the appellant in the Memo of Appeal and the materials on record, the Commissioner (Appeals) vide Order-in-Appeal dated",,,,

29.12.2005 upheld the Order-in-Original. At the same time, penalty on Shri Budhia was enhanced to Rs. 20,00,000/- from Rs. 20,000/- under Rule",,,,

209A of the 1944 Rules read with Rule 26 of 2001 Rules. However, penalty of Rs. 20,000/-under Rule 173Q of 1944 Rules read with Rule 25 of 2001",,,,

Rules on the Company and penalty of Rs. 10,77,678/- on Mr. H.K. Budhia, Managing Director were dropped.",,,,

k. It is contended that the appellant preferred appeal before the learned Tribunal against the order passed by the Commissioner (Appeals). Learned,,,,

Tribunal vide order impugned dated 21.09.2017 (Annexure-9) reduced the increased penalty of Rs. 20,00,000/- imposed upon the Managing Director",,,,

by the Commissioner (Appeals) and restored it to Rs. 20,000/-.",,,,

l. On the basis of the aforesaid materials and findings of the Adjudicating Authority, Commissioner (Appeals) and learned Tribunal, learned counsel for",,,,

the Respondent has advanced the following submissions:,,,,

(A) The statement of Shri Prem Shankar Mishra, Administrative Officer of the Assessee that the Managing Director Shri Budhia himself sees the",,,,

production, procurement of raw materials and sale of finished goods and that the private diary belonged to Mr. Budhia containing entries made in his",,,,

own handwriting, are confirmed by the statement of Shri Budhia recorded under Section 14 of the Act. Shri S.K. Jaiswal, Sr. Accounts Officer of the",,,,

Assessee also stated that Alphabets in the diary seem to be that of the Managing Director. Mr. Budhia, during his examination, admitted that",,,,

dispatches have been made without issuance of central excise invoice in respect of 71 transactions and stated that it must have occurred,,,,

inadvertently. He undertook to examine the issue and deposit the duty quantified. He also agreed to pay the duty difference in case the rates were on,,,,

the higher side in his diary. The deposit of Rs. 10,68,298/- as differential duty liability by the appellant before issuance of the show-cause notice clearly",,,,

shows that they admitted the allegation of clandestine clearances without payment / short payment of duty.,,,,

(B) The duty demand was never contested by the appellant before the Adjudicating Authority, as would appear from the Order-in-Original since they",,,,

only contested that the correct demand has been re-calculated by them based on lawful deduction of duty @16% which comes to Rs. 10,68,298/-.",,,,

This amounted to admission of non-issuance of 71 invoices mentioned in the diary. In respect of seven invoices found to be undervalued, duty was",,,,

calculated on the basis of a higher rate quoted in the diary compared to what was mentioned in the invoices. Since the Assessee had accepted the rate,,,,

quoted in his diary for the remaining 71 dispatches, there is no reason why the rate quoted for remaining seven invoices should not be taken as",,,,

Sl. No.,Period,"Duty liability

ascertained","Duty deposited Suo-

Moto",Balance to be paid

1,2000-2001,"Rs. 3,94,696/","Rs. 3,36,023/","Rs. 58,673/-

2,2001-2002,"Rs. 8,55,411/","Rs. 7,32,275/-","Rs. 1,23,136/-

Total :-,,"Rs.12,50,107/-","Rs.10,68,298/-","Rs. 1,81,809/-

h. The show cause notice extensively referred to the statements of various officers of the appellant company as well as the statements of the,,,,

Managing Director (co-noticee), all recorded under Section 14 of the Act of 1944. It included explanation given by the Managing Director with",,,,

regards to the entries in the private diary de-codifying the names and other details of the persons with whom transactions were done; his acceptance,,,,

that he looked after all the work relating to dispatches and purchases, starting from finalization of rates, party, quantity as also of payment. When",,,,

specifically asked regarding non-payment of duty upon such dispatches, he replied that he had no idea, but added, if at all that was a fact, it must have",,,,

occurred due to inadvertence and undertook to examine the issue and if such dispatches were not covered under invoices and if duty was quantified,",,,,

he agreed to pay the duty and also agreed to pay the duty difference in case of the rates being on the higher side in his diary.,,,,

Upon detailed discussions of the various dispatches reflecting from the diary, the show cause alleged short payment of duty amounting to Rs.",,,,

3,94,696/- for the period 2000-2001 and of Rs. 8,55,411/- for the period from 01.04.2001 to 24.11.2001. There were allegations of short payment with",,,,

regards to a number of invoices and non-payment with regards to other remaining transactions.,,,,

Regarding payment made by the appellant prior to the show cause, the details of cheques etc. were also mentioned showing payment of Rs.3,36,023/-",,,,

for the period 2000-01 and Rs.7,32,275/- for the period 2001-02 both vide cheques dated 24.11.2001. The show-cause also referred to aforesaid letter",,,,

dated 22.01.2002 issued by the appellant company -the assessee, intimating that the aforesaid payment of differential duty was finally deposited in the",,,,

bank. The show cause also mentioned that it was agreed by the Managing director during his statement recorded under Section 14 of the Act of 1944,,,,

that he would examine the issue and if the dispatches were not covered, they shall bear the duty and on such examination by the assessee the",,,,

aforesaid payment was made which amounted to acceptance of allegation of clandestine clearances without payment of duty/short payment of duty.,,,,

i. The two noticees were directed to show cause as to why â€",,,,

(i) â€œCentral Excise duty amounting to Rs.12,50,107/- (Rupees twelve lakhs fifty thousand and one hundred and seven) only as detailed in",,,,

Annexure â€" â€˜AIâ€™ & â€˜AIIâ€™ to this Show Cause Notice not paid / short paid by the assessee on removal of their goods CTD Bars,,,,

and Rods during the period from January, 2001 to September, 2001 (12.01.2001 to 05.09.2001) should not be demanded from them under",,,,

Section 11A (1) of the CEAâ€™44.,,,,

(ii) Central Excise duty aforesaid amounting to Rs.12,50,107/- may not be determined under the provisions of Section 11A (2) of",,,,

CEAâ€™44.,,,,

(iii) With reference to para (i) above and not in addition to the amount of duty specified thereon, amount of duty already paid by assessee",,,,

amounting to Rs.10,68,298/- may not be confirmed and why the balance amount of duty at Rs.1,81,809/- (Rupees one lakh eighty-one",,,,

thousand eight hundred and nine) only may not be recovered from them under the provisions of Section 11A of CEAâ€™44.,,,,

(iv) Penalty equal to the duty as determined under Section 11A (2) of the CEAâ€™44 may not be imposed and recovered from them under,,,,

Section 11AC of the CEAâ€™44.,,,,

(v) A separate penalty should not be imposed under the provisions of Rule 173Q of erstwhile CERâ€™44 read with Rule 25 of the,,,,

CERâ€™2001.,,,,

(vi) Interest @ 20% per annum from the first day of the month succeeding the month on which duty ought to have been paid [but for the,,,,

provisions contained in Sec. 11A(2) of CEAâ€™44] till the date of payment of such duty be not recovered from them under Section 11AB of,,,,

the CEAâ€™44.,,,,

(vii) A personal penalty may not be imposed upon Shri Hari Krishna Budhia, Managing Director, M/s Bihar Foundry & Castings Ltd under",,,,

the provisions of Rule 209A of erstwhile CERâ€™44 read with Rule 26 of CERâ€™2001.â€,,,,

j. The assessee -appellant company as well as its Managing Director was directed to submit their reply in defence of this notice,,,,

alongwith documents in their defence, and, also, to mention in writing whether they desire to be heard in person before the case is",,,,

decided. It was also mentioned that if no cause is shown, the case will be decided on merit on the basis of evidences on record. The",,,,

evidences on record were enclosed with the show-cause notice which included the private diary as well as statements recorded under,,,,

Section 14 of the aforesaid Act of 1944.,,,,

k. It is important to note that the statement of the Managing Director of the appellant company recorded under Section 14 of the,,,,

aforesaid Act of 1944 as well as the reply to the show cause notice from the side of the appellant company and its Managing Director,",,,,

has neither been filed by the appellant in its paper book nor the same forms part of the records received from the authorities. This,,,,

aspect of the matter was also pointed out to the learned counsel appearing for the appellant during the course of hearing, who",,,,

submitted that the relevant extract of the statement of the Managing Director of the appellant has been quoted in orders passed by the,,,,

authorities and the reply to show cause has to be gathered from the materials available on record. During the course of arguments, it is",,,,

not in dispute that the statements recorded under Section 14 of the aforesaid Act of 1944 formed a part of the relied upon,,,,

evidences/documents annexed with show cause notice issued by the adjudicating authority.,,,,

l. In the aforesaid circumstances, I have to refer to the recordings made in the impugned Order-in-Original to find out the stand taken by the appellant",,,,

company and its Managing Director in their show-cause reply and during course of hearing by the adjudicating authority. As recorded in the Order-in-,,,,

Original, defence replies to the show-cause were filed by the noticees and personal hearing was also held on 07.03.2005 through an advocate. Since",,,,

the defence replies are not on record, its contents, as reflecting from the Order-in-Original, are quoted as under: -",,,,

â€œDefence reply to the Show Cause Notice and Records of P.H.,,,,

During the P.H. held on 7.3.05, Shri K. P. Chaudhary, Advocate appeared. He Submitted defence reply to the Show Cause Notice also.",,,,

The assessee has submitted that duty alleged to be short paid as per annexure AI & AII of the SCN has not been properly calculated. As the,,,,

amount indicated in the SCN should be treated as cum-duty price. Therefore, to arrive at correct assessable value it was proper in law to",,,,

deduct duty amount from the cum-duty value as per the following Tribunal decisions: -,,,,

(i) Dugar Tetenal India Ltd. [2002 (147 ) ELT 578 (Tri.-Del.)],,,,

(ii) Srichakra Tyres Ltd. [1999 (108) ELT 361 (Tribunal)],,,,

(iii) Plasopan Engineers (India) Pvt. Ltd. [2003 (156) ELT 540 (Tri.- Del.)],,,,

(iv) Maruti Udyog Limited [2002 (141) ELT 3(SC)],,,,

They have submitted that in this case, they could not issue the invoices inadvertently. They immediately deposited the duty for CTD Bars and",,,,

rods for the period January 2001 to September 5, 2001. Accordingly, a total amount of Rs. 10,68,298/- was deposited on 24.11.2001, much",,,,

before issuance of the SCN on 22.02.2002.,,,,

The correct amount of demand has been re-calculated based on lawful deduction on duty @16% which comes to Rs. 10,68,298/-.",,,,

There are two invoices for the period 2000-01 (para 4.1 of SCN) and 5 invoices for the period 2001-02 (para 4.4 of the SCN), relating to",,,,

which there is allegation of short payment of duty on account of under valuation by way of substitution of the sale price in the invoice. The,,,,

total alleged short payment of duty is Rs. 23,412/-. The assessee has submitted that onus of the proving the same is on the department and",,,,

the same burden has not been discharged by the department.,,,,

Regarding imposition of mandatory penalty under section 11AC of the Central Excise Act, 1944, they have submitted that since duty has",,,,

been deposited before issuance of the SCN, no penalty is imposable nor any interest is chargeable as per following judgements of Tribunal:",,,,

-,,,,

(i) Machino Montell (I) Ltd. [2004 (168) ELT 466 (Tri.- LB)],,,,

(ii) Shree Krishna Pipe Industries [2004 (165) ELT 508 (Kar.)],,,,

(iii) Rashtriya Ispat Nigam [2003 (161) ELT 285 (Tri.- Bang.)]. The Supreme Court has upheld this order of the Tribunal as per 2004 (163),,,,

ELT A 53 (SC),,,,

Therefore, treating the sale price as the cum-duty price, the duty should be Rs. 10,57,495.68/-. As a result, they have already paid excess",,,,

duty of Rs. 10,802.32/- by depositing Rs. 10,68,298/- on 24.11.2001.",,,,

During P.H. he also submitted case law of Western Industries (2004 (168) ELT 101 (Tri.-Bang.)] in support of their claim to treat the sale,,,,

price as cum-duty price.â€,,,,

m. Thus, the aforesaid Defence reply to the Show Cause Notice and Records of personal hearing clearly reflect admission of clandestine removal by",,,,

both the noticees. On the one hand, they did not refute the allegation of clandestine removal, and on the other hand, they insisted that-",,,,

-the amount paid by them before issuance of show-cause be treated as cum-duty price;,,,,

-reiterated that the invoices could not be issued by them inadvertently;,,,,

-there was error in calculation made in show-cause notice;,,,,

-mandatory penalty be not imposed as the amount has been paid prior to issuance of show-cause notice;,,,,

Apart from the aforesaid, they also calculated the sale price as cum- duty price and asserted before the adjudicating authority that the payable amount",,,,

would be only Rs. 10,57,495.68 and claimed excess payment of Rs.10,802.32 having been made in view of payment of Rs.10,68,298/- prior to issuance",,,,

of show cause notice.,,,,

They specifically denied allegation of short payment of duty on account of under valuation by taking a clear stand that the sale price was cum-duty,,,,

price and asserted that the onus of proving short payment was on the department. However, there was no denial of clandestine removal of goods,",,,,

rather there was clear admission as is apparent from the aforesaid contents of the show cause reply as quoted in the order- in-original and by,,,,

reiterating that the invoices could not be issued by them inadvertently.,,,,

n. The adjudicating authority accepted the stand of the noticees with regards to the duty liability of 71 dispatches, for which invoices were not issued,",,,,

as Rs.10,57,495.68, by treating the sale price as cum-duty= price, and fully accepted the specific stand and calculation made by the appellant in this",,,,

regard.,,,,

For remaining 7 invoices, pertaining to under-valuation, the duty liability was found to Rs.20,182/- again by treating the sale price as cum-duty price.",,,,

Thus, the total liability was calculated as Rs. 10,77,678/- and Rs.10,68,298/- having been deposited on 24.11.2001 (prior to issuance of show cause),",,,,

the balance was calculated as Rs.9,380/-. Penalty was also imposed upon the noticees.",,,,

o. The operative portion of the Order-in-Original dated 13.04.2005 passed by the adjudicating authority reads as follows: -,,,,

(1) â€œThe amount of Rs.10,68,298/- deposited on 24.11.2001 is short paid. I confirm the demand for the balance amount of Rs.9380/-",,,,

under Section 11A(2) of the Central Excise Act, 1944 read alongwith proviso to Section 2B of the same section.",,,,

(2) I order recovery of interest under section 11AB of the Central Excise Act, 1944 @ 20% per annum from the first day of the month",,,,

succeeding the month on which duty ought to have been paid till the payment of such duty.,,,,

(3) Penalty of Rs.10,77,678/- is imposed on the assessee under section 11AC of the Central Excise Act, 1944.",,,,

(4) Penalty of Rs.10,77,678/- is imposed on the Shri Hari Krishna Budhia under section 11AC of the Central Excise Act, 1944.",,,,

(5) Since mandatory penalty has been imposed, I take a lenient view in imposing separate penalty under Rule 173Q of the erstwhile CER,",,,,

1944 and read with Rule 25 of CER, 2001. I impose a penalty of Rs.20,000/- on the assessee under these Rules.",,,,

(6) For the same reason penalty of Rs.20,000/- is imposed on Shri Hari Krishna Budhia, MD under Rule 209A of erstwhile CER, 1944 and",,,,

read with Rule 26 of CER, 2001.â€",,,,

Appellate proceedings,,,,

p. Being aggrieved by the Order-in-Original, the Appellant company as well as its Managing Director, filed separate appeals numbered as Order-in-",,,,

Appeal no. 360-361 of 2005 before the Commissioner (Appeals), Customs and Central Excise, Patna under Section 35 of the Act of 1944 and",,,,

reiterated their contentions.,,,,

q. It is important to note that the grounds of appeal from the side of the appellant company as well as its Managing Director, have",,,,

neither been filed by the appellant in its paper book nor the same form part of the records received from the authorities. So, the",,,,

grounds of appeal are also to be gathered from the impugned orders. The grounds of appeal, as reflecting from the appellate order are",,,,

quoted as under: -,,,,

(i) â€œIn the impugned order, the adjudicating authority has increased Rs.20,182/- in the valuation in respect of 7 (seven) invoices which",,,,

are without any positive, direct, cogent and acceptable evidences but only on presumption and assumption which is contrary to the decision",,,,

of Honâ€™ble Tribunal in the case of Purolator India Ltd, reported in 2005 (182) ELT 385. In this case, clearances of goods pertaining to",,,,

seven invoices were also based on transaction value in which the price actually paid at the time of sale of goods were mentioned in the,,,,

invoices. Thus, this is not a case of under valuation;",,,,

(ii) Since, duty has been paid before issue of Show Cause Notice, penalty cannot be imposed under Section 11AC of the Act and interest",,,,

also cannot be levied. In this connection, they have referred the following decisions of Honâ€™ble Tribunal: -",,,,

(a) CCE Vs. Machino Montell (I) Ltd.; 2002 (168) ELT 466 (T-LB),,,,

(b) Rashtriya Ispat Niam Ltd. Vs. CCE â€" 2003 (161) ELT 285 (T),,,,

(d) Sanjay Insecticides Vs. CCE, Aurangabad â€" 2005 (68) RLT 110 (T)",,,,

(e) CCE Vs. Rastriya Ispat Nigam Ltd. â€" 2004 (163) ELT A53 (SC),,,,

(iii) Imposition of penalty of Rs.20,000/- each on the appellant No.1 under Rule 173Q of erstwhile Central Excise Rules, 1944 and on",,,,

appellant No.2 under Rule 209A of erstwhile Central Excise Rules, 1944 is also contrary to the settled law and not tenable; and",,,,

(iv) Since an amount of Rs.10,802.32 paid in excess, imposition of interest under Section 11AB of the Act does not arise and the same is",,,,

required to be returned in accordance with the provisions of law.â€,,,,

r. Thus, even at the appellate stage, the appellant company did not challenge the imposition of differential duty on account of clandestine removal but",,,,

challenged the allegation of under-valuation with respect of 7 invoices only and claimed refund of Rs.10,802.32, to have been paid in excess.",,,,

From the final appellate order, it also appears that on 22.08.2005, the Managing Director appeared before the appellate authority and reiterated that",,,,

there were some duty calculation mistakes and they had paid major amount of duty confirmed, before issuance of show cause itself.",,,,

s. However, on 29.09.2005, during the pendency of the appeal, the Learned Commissioner (Appeals) issued a show-cause notice proposing",,,,

enhancement of personal penalty upon the Managing Director of the appellant company under erstwhile Rule 209A of the 1944 Rules and Rule 26 of,,,,

the 2001 Rules.,,,,

t. On 07.12.2005, the Managing Director of the appellant filed his reply to the show-cause issued by the appellate authority, opposing enhancement of",,,,

personal penalty against him and for the first time, disputed and denied each and all allegations. It was also stated in his reply that during the period",,,,

from 17.11.2001 to 17.12.2001, he was in Chennai in connection with his by-pass heart surgery and during this period, the central excise authorities",,,,

insisted the officials of the factory to deposit the disputed duty and due to such insistence, the duty of Rs.10,77,678/- was deposited on 29.11.2001",,,,

under TR-6 dated 24.11.2001. The Managing Director of the appellant company for the first time, in his reply to the show cause notice regarding",,,,

enhancement of penalty against him stated that on 15.11.2001, when his statement was recorded, his mental and physical condition was not such that",,,,

he could voluntarily make any statement and just to complete the proceedings as early as possible, he recorded several portion of the statement as per",,,,

the dictates of the departmental officers and thereafter rushed to Ranchi and then to Chennai for surgery and was hospitalized on 17.11.2001.,,,,

With regards to the entries in the private diary, it was stated as under:",,,,

Â â€œIn the diary, there was absolutely nothing to show or indicate any clandestine clearance. The entries in the diary have been read by",,,,

the Department in a totally distorted manner and wholly unwanted presumptions and assumptions have been sought to be drawn therefrom.,,,,

Many a times different offers received from the buyers and/or prospective buyers were also noted in the diary. These offers ultimately did,,,,

not materialize and no despatches were made. In some cases, the diary also contained entries of the quantities and the rates of the offers,",,,,

although ultimately after negotiations the rates were reduced and the goods were sold only at the reduced rates. Actual quantities of the,,,,

goods cleared from the factory and actual prices charged from the buyers were always clearly entered in the statutory records and,,,,

registers. All goods from the factory were cleared under cover of proper Central Excise Invoices wherein the prices charged from the,,,,

buyers were clearly mentioned. It is only these prices which were received by our company. There is absolutely no evidence whatsoever to,,,,

the contrary.â€,,,,

u. The Managing Director of the appellant company, for the first time, denied the allegations regarding clandestine removal on 07.12.2005 in his",,,,

independent reply to show cause issued by the appellate authority regarding enhancement of penalty against him in personal capacity. In the same,,,,

reply for the first time, he also-",,,,

A. tried to explain the circumstances in which entries were made in his private diary and how they are to be read.,,,,

B. After expiry of more than 4 years stated that on 15.11.2001 i.e the date of recording of his statement under Section 14 of the Act of 1944,",,,,

he was not well and his mental and physical condition was not good enough to voluntarily make any statement and just to complete the,,,,

proceedings he recorded several portions of the statement as per the dictates of the Departmental officer and thereafter he rushed to,,,,

Chennai to be admitted in the hospital on 17.11.2001.,,,,

C. After expiry of more than 4 years from the date of deposit by cheque i.e 29.11.2001 and without taking any such stand before the,,,,

adjudicating authority or even in the memorandum of appeal before the appellate authority tried to explain, in response to the show cause",,,,

notice issued by the appellate authority regarding enhancement of personal penalty, the circumstances under which the amount was",,,,

deposited by the officers of the appellant company in his absence and prior to issuance of show -cause notice by alleging and making a,,,,

bald statement that the amount was deposited under pressure from the department while he remained hospitalized at Chennai till,,,,

10.12.2001.,,,,

v. The Commissioner (Appeals) vide Order-in-Appeal dated 29.12.2005 upheld the Order-in-Original except penalty under Rule 173Q of Central,,,,

Excise Rules, 1944 read with Rule 25 of Central Excise Rules, 2001 in respect of the appellant company and also penalty against the Managing",,,,

Director of the company under Section 11 AC of the aforesaid Act of 1944. In respect of the Managing Director of the appellant company, penalty",,,,

under Rule 209A of 1944 Rules read with Rule 26 of the Rules of 2001 was enhanced to Rs. 20,00,000/- from Rs. 20,000/-. The appellate authority",,,,

also held that the Managing Director never denied recovery of diary/ private record showing receipt account in respect of raw materials/dispatches of,,,,

finished goods from premises and that he accepted that the diary was written in his writing and entries in the diary did not reflect in the statutory,,,,

records and the plea of the Managing Director as taken in his show cause reply to enhancement of personal penalty that he has been correctly,,,,

reflecting production/clearances, was rejected, being of no substance.",,,,

w. Findings of the learned Commissioner (Appeals), Patna",,,,

â€œI find that there is no dispute about the duty demanded for the goods cleared against seventy-one entries made in the recovered diary,,,,

for which neither any Central Excise Invoices were issued nor Central Excise duty at all was paid by the BFCL. In respect of remaining,,,,

seven entries, proper Central Excise invoices were issued but the assessable values shown in the invoices were lower than the rate",,,,

mentioned in the recovered diary. Since, all the entries in the diary regarding rates, name of customer, quantity etc. were made by the",,,,

appellant No.2 i.e. Managing Director of BFCL himself and price quoted against seventy one entries were admitted by himself and he also,,,,

agreed to pay duty difference in case of the rates being on higher side in the diary. The price shown against the corresponding entries in,,,,

the diary also would obviously be the basis of assessable value of the goods, so cleared. Hence, their plea that the assessment of goods",,,,

under Section 4 of the Act should be based on invoice value is not acceptable. This value does not reflect the transaction value, i.e. the",,,,

actual payment received for the goods which is available in the diary written by Managing Director himself. In this connection, the",,,,

appellants has placed reliance on the judgement of Honâ€™ble Tribunal in the case of Purolator India Ltd. reported in 2005 (182) ELT,,,,

385 (Trib.).â€,,,,

â€œI agree that the transaction value and not normal price is to be considered for the purpose of section 4 of the Act. However, it does not",,,,

mean that the invoice value has always been accepted because it cannot represent the transaction value i.e., actual value paid by the",,,,

customer to the manufacturer, in case there is some payment made by the Customer apart from that shown in the commercial or Central",,,,

Excise invoice. In this particular case, the transaction value has to be taken from the entries made by Sri N.K. Budhia appellant No.2 who is",,,,

Managing Director of appellant No.1 and the invoice values being in lower side in all the seven cases are required to be out-rightly,,,,

rejected. Once the department has taken such entries as the basis (cum duty price) for arriving at the assessable value under section 4 of,,,,

the Act, the onus are on the appellant No.1 to prove that the entries in the diary do not represent clear picture. Since, no submissions are",,,,

being made by appellant No.2 even at any stage so far in this regard, there is no alternative with the department then to accept the entries in",,,,

the diary in respect of seven consignments as the basis for arriving at the assessable value.,,,,

In respect of other 71 consignments, BFCL had neither issued any invoices nor paid any Central Excise duty (which comes to",,,,

Rs.10,57,495.68 paise). Their plea for neither issuing invoices nor paying Central Excise duty inadvertently is not acceptable. In fact, the",,,,

Managing Director himself had maintained the diary as per his own statement and the statement of various other employees of the company,,,,

of BFCL during the stage of investigation and also that the Managing Director was responsible for negotiation with the customers, payment",,,,

of duty etc. non issue of invoices/non-payment of duty even after maintaining detail account confirms the mens rea on his part. Once,,,,

malafide intention to evade Central Excise duty exists, the reliance of the appellants on various judgments mentioned above is misplaced",,,,

because in none of the judgement, the facts were such that no duty has been paid even invoices not issued, even though entries were made",,,,

in the private records. For clarity I discuss all the five judgement relied upon by them as below:-,,,,

(a) CCE Vs. Machino Montell (I) Ltd. â€" 2004 ( 168) ELT 466 (T-LB),,,,

In this case even though the duty has been deposited by the assessee before issue of show cause notice yet this case does not involve non-,,,,

issuance of invoice which is primary requirement for clearance of goods from the factory premises. It was also not the case that the duty has,,,,

been deposited after search and detection of private record from the asessees or its directories/employeesâ€™ premises. Further from para,,,,

4 of this judgement in the case of Shri Krishna Pipes Industries has been quoted, this para is reproduced below for reference:-",,,,

In so far as question 1 & 2 are concerned, questions are framed on the assumption that the tribunal has granted relief without any",,,,

justifiable reason. We find that Tribunal has in fact given a reason i.e. the disputed duty has been paid by the party even before the issue of,,,,

Show Cause Notice and this would show that there was no question of any fraud, misrepresentation or suppression of facts. In fact, the",,,,

Tribunal in Rashtriya Ispat Nigam Ltd.â€™s case, held that where assessee deposits the duty even prior to the issue of a Show-Cause-",,,,

Notice, penalty should not be imposed and interest should not be levied. The Supreme Court has rejected the appeal filed against the said",,,,

order. Therefore, we find that order of the Tribunal is a reasoned order though brief and no question of law arises in regard to the said",,,,

order. j Petition is therefore dismissed.,,,,

It may be observed from above para 5 that there was no question of any fraud or suppression of facts involved in that case, whereas in this",,,,

appeal before me, fraud and suppression of facts exists. Under circumstances para 6 of the judgement does not have much reliance as it",,,,

relies upon judgement of,,,,

Honâ€™ble Karnataka High Courtâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦..â€,,,,

â€œShri Budhia has not denied anywhere recovery of the impugned diary/private record showing receipt account in respect of raw material,,,,

/ dispatches of finished goods from his premises. He has also accepted that the diary was written on his own hand writing. It is also a fact,,,,

that these entries appearing in his diary are not reflected anywhere in statutory records/accounts. Therefore, plea that Shri Budhia has",,,,

Show-cause as to why-

CED (Central Excise

Duty)",Order in original,"Appellate

authority","Appellate

Tribunal",

CED-u/s 11A(1) and

11A(2)

amounting to

Rs.12,50,107/- being not

paid or short paid at the

time of removal of goods

mentioned in the show

cause notice.

CED already paid

amounting to Rs.

10,68,298/- be not

confirmed

differential CED of

Rs.1,81,809/- be not

demanded and recovered

u/s 11A","-Rs.10,77,678/- was

determined as CED by

accepting the plea that

the sale price should be

taken as cum-duty price.

- Rs.10,68,298/- was held

to be short-paid, balance

amount being Rs.9,380/-

and the balance amount

was

demanded from the

appellant company.",Confirmed,Confirmed,

Penalty equal to CED of

Rs.12,50,107/- u/s 11AC

be not imposed","Penalty

of Rs.10,77,678/-

demanded from the

appellant company

-the assessee.

-A separate Penalty of

Rs.10,77,678/-demanded

from the Managing

Director of the appellant

company","-Confirmed.

-Deleted against

the managing

director of the

appellant company

on the ground that

penalty under

Section 11AC

cannot be imposed

upon any other

person other than

the manufacturer","Confirmed

No cross appeal

filed by the

department.

Order of deletion

of separate

penalty upon the

managing director

attained finality.",

Interest @20% per annum

u/s

11AB be not imposed.",Demanded,Confirmed,Confirmed,

A separate penalty under

Rule 173Q or erstwhile

rules read with rule 25 be

not imposed","Since Mandatory penalty

was imposed, a separate

penalty only of

Rs.20,000/-

was imposed","Deleted since

mandatory penalty

u/s11AC was

already imposed.","No interference in

Appellate order.",

A personal penalty upon

the managing director of

the appellant company

under Rule 209A or

erstwhile rule read with

rule 26 of the rule of 2001

be not imposed.","Since Mandatory penalty

was imposed, a separate

personal penalty only of

Rs.20,000/- was imposed.","Personal penalty

upon the managing

director Enhanced

to Rs.20 lakhs

after issuing show

cause notice

regarding

proposed

enhancement","Enhancement of

personal penalty

deleted and

penalty imposed

by the Order-in-

Original to the

extent of Rs.

20,000/- restored.",

79. The appellant company suo-moto deposited the following amount and informed the department through FAX on 24.11.2001 about the following,,,,

deposits: -,,,,

2000-01- Rs.3,36,023/- deposited in bank by cheque 2001-02 Rs.7,32,275/- deposited in bank by cheque 80. On 22.01.2002, the appellant again",,,,

intimated the department that aforesaid differential duty has been deposited in the bank.,,,,

81. Thus, there are two communications prior to issuance of show cause notice dated 22.02.2002, one on 24.11.2001 and another on 22.01.2002,",,,,

intimating the department that the differential duty has been paid by cheques issued by the appellant company. Admittedly, the deposit was not made",,,,

under any protest. The co-noticee -Managing Director has tried to explain the suo-moto deposit by the appellant company, for the first-time during",,,,

pendency of the appeal vide his reply dated 07.12.2005 to the show cause issued by the appellate authority proposing to enhance personal penalty,,,,

imposed on him by the adjudicating authority. The Managing Director stated that he was hospitalized during the period from 17.11.2001 to 10.12.2001,,,,

and continued to be at Chennai till 17.12.2001 and the deposit was made on 24.11.2001 upon insistence by the central excise officials upon his factory,,,,

officials, but there is no explanation regarding reiteration of suo-moto deposit of differential duty vide another letter dated 22.01.2002 issued by the",,,,

company. The reply does not disclose as to who were the persons pressurized by the officials and who was the signatory of the cheques. Further, the",,,,

amount having been deposited through cheques issued by the appellant company, it cannot be said that the deposit was made by a person not so",,,,

authorized by the appellant company.,,,,

82. Show-cause notice dated 22.02.2002 was issued by the adjudicating authority to the appellant as well as the Managing Director. It was alleged in,,,,

para 5.1 that suo-moto deposit of the amount provided clinching and conclusive evidence of evasion of duty and that the Managing Director had stated,,,,

on 15.11.2001(during his examination under section 14 of the Central Excise Act) that he would examine the issue regarding alleged short payment /,,,,

non-payment, and if found that the dispatches were not covered under invoice, they shall bear the duty upon examination. In para 5.2 it was alleged",,,,

that differential duty was still short by Rs.58,673/- for the period 2000-01 and by Rs.1,23,136/-for the period 2001-02.",,,,

Both the noticees were inter-alia directed to show-cause as to why the duty already paid be not confirmed and differential amount of Rs. 1,81,809/- be",,,,

not demanded. A personal penalty was also sought to be imposed upon the co-noticee i.e. Managing Director of the appellant company under Rule,,,,

209 of 1944 rules read with Rule 26 of 2001 rules.,,,,

83. On 07.03.2005, personal hearing was given to the advocate of the appellant who also submitted defence replies to the show-cause. The reply to",,,,

the show cause notice has neither been filed by the appellant in the paper book nor it has been found in the records received from the respondent and,,,,

the learned counsel for the appellant has stated that the reply has to be gathered from the order passed by the adjudicating authority.,,,,

84. The Defence reply to the Show Cause Notice and Records of personal hearing, as recorded in the Order-in-Original, has already been quoted,",,,,

discussed and analyzed in details in para 70 (j) to (o) and also in para 76 onwards, there is clear admission of clandestine removal of the goods and it",,,,

remained admitted even during hearing held on 07.03.2005 before the adjudicating authority wherein the appellant as well as the managing director had,,,,

reiterated the factum of suo-moto deposit prior to issuance of show cause. On the one hand, they did not refute the allegation of clandestine removal,",,,,

and on the other hand, they argued in furtherance to their admission and insisted that-",,,,

a. the amount paid by them before issuance of show cause be treated as cum-duty price;,,,,

b. reiterated that the invoices could not be issued by them inadvertently;,,,,

c. there was error in calculation made in show-cause notice;,,,,

d. mandatory penalty be not imposed as the amount has been paid prior to issuance of show-cause notice;,,,,

Thus, both the noticees denied short payment of duty on account of under valuation and argued that the onus of proving the allegation of short",,,,

payment was on the department, but there was no denial of clandestine removal of goods without cover of central excise invoice, rather there was",,,,

clear admission before the adjudicating authority as mentioned above. Not only that, they also calculated the sale price as cum-duty price and asserted",,,,

that the payable amount would be only Rs. 10,57,495.68 and claimed that excess payment of Rs.10,802.32 has been made in view of payment of",,,,

Rs.10,68,298/- prior to issuance of show-cause notice.",,,,

85. In view of the submissions of the appellant that they did not issue central excise invoices in respect of 71 transactions inadvertently, the",,,,

adjudicating authority accepted the duty liability of 71 dispatches for which invoices were not issued, as Rs.10,57,495.68, by treating the sale price as",,,,

cum-duty price, and fully accepted the specific stand and calculation made by the appellant company in this regard. For remaining 7 invoices pertaining",,,,

to under-valuation, the duty liability was found to be Rs.20,182/- by treating the sale price as cum-duty price. Thus, the total liability was calculated as",,,,

Rs. 10,77,678/-, and Rs.10,68,298/- having been deposited on 24.11.2001(prior to issuance of show cause), the balance was calculated and demanded",,,,

only to the extent of Rs.9,380/-.",,,,

86. The memorandum of appeal filed before the appellate authority has neither been filed by the appellant in the paper book nor it has been found in,,,,

the records received from the respondent and the learned counsel for the appellant has stated that the grounds of appeal have to be gathered from the,,,,

order passed by the appellate authority.,,,,

87. Even at the appellate stage, as is apparent from the appellate order itself, the appellant company did not challenge the imposition of differential",,,,

duty on account of clandestine removal, but challenged the valuation with respect of 7 invoices only and claimed refund of Rs.10,802.32, to have been",,,,

paid in excess.,,,,

From the final appellate order, it also appears that on 22.08.2005, the Managing Director appeared before the appellate authority and reiterated that",,,,

there were some duty calculation mistakes and they have already paid major amount of duty confirmed.,,,,

The aforesaid specific stand of the appellant company continued even before the appellate authority as is apparent from the appellate order.,,,,

However, Managing Director, who filed a separate appeal, was contesting the show cause issued to him by the appellate authority for enhancement of",,,,

personal penalty by filing a show cause reply dated 07.12.2005 where he took a stand for the first time that the payment was made while he was in,,,,

hospital at Chennai; his statements under Section 14 of the act of 1944 were recorded while he was not in right state of physical and mental health due,,,,

to which he had given statements under the dictates of the authorities of the department. The appellant company had filed an independent appeal but,,,,

no steps were taken to amend the grounds of appeal or to take additional grounds of appeal. However, the plea of the managing director was rejected",,,,

by the appellate authority and the personal penalty was enhanced from Rs.20,000/- to Rs.20,00,000/- which was again reduced to Rs.20,000/- by the",,,,

appellate tribunal which has attained finality.,,,,

The quantum of penalty imposed upon the Managing Director is not relevant and what is relevant is that the penalty of Rs.20,000/- imposed by the",,,,

Order-in-Original passed by adjudicating authority upon the co-noticee- Managing Director was sustained and also that the penalty was imposed under,,,,

Rule 209A of 1944 rules read with pari-materia Rule 26 of 2001 Rules which provides for penalty upon any person, who acquires possession of, or is",,,,

in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable",,,,

goods which he knows or has reason to believe are liable to confiscation under the Act or the rules. Thus, the plea taken by the co-noticee- Managing",,,,

Director for the first time before the appellate authority trying to retract from his statement under Section 14 of the Act of 1944 and also trying to,,,,

explain the suo-moto deposit while responding to the point of enhancement of personal penalty by the appellate authority, was ultimately never",,,,

accepted and the penalty imposed by the Order-in-Original was sustained even by the Learned Tribunal. The fact that the appellant company claimed,,,,

refund of Rs.10,802.32 only out of the entire payment even till the appellate stage clearly shows that the remaining amount, Rs. 10,57,495.68",,,,

(Rs.10,68,298/- minus Rs.10,802.32) was admitted liability and as per the calculation of the appellant company, this related to removed goods without",,,,

cover of excise invoice i.e., clandestine removal of 71 transactions as they had contested only allegation of short payment relating to undervaluation",,,,

concerning 7 invoices.,,,,

88. In view of the aforesaid materials on record and upon reading of the Order-in-Original passed by the adjudicating authority as well as appellate,,,,

order, I have no doubt that the appellant company never contested the duty demanded in connection with 71 transactions relating to removal of goods",,,,

without cover of excise invoice i.e. clandestine removal and only contended that the sale price should be treated as cum duty price and offered its,,,,

calculation as Rs. 10,57,495.68 which was duly accepted by the department. In fact, the appellant company had taken a definite stand that the invoices",,,,

in connection with 71 transactions could not be issued due to inadvertence and such plea was also rejected. This specific stand of non-issuance of,,,,

invoices due to inadvertence, by itself, amounts to clear admission of clandestine removal of goods without invoice, though claimed to have been done",,,,

inadvertently. For the remaining 7 invoices relating to allegation of under valuation, the duty liability was a small amount of Rs.20,182/- only, and the",,,,

dispute was on the plea to treat the sale price as cum duty price by the appellant company. In fact, the appellant company wanted to take advantage",,,,

of the factum of suo-moto deposit of the duty amount before issuance of show-cause notice and had contested the proposed penalty and interest on,,,,

the ground that the penalty and interest should not be imposed as the duty was already paid much prior to issuance of show-cause notice and relied,,,,

upon a number of judgements, but such plea was also rejected.",,,,

89. In view of the aforesaid discussions, the finding of the learned tribunal that the appellant company never contested the duty demand",,,,

before the authorities is based on materials available on record except to the extent of goods covered by 7 invoices relating to,,,,

allegation of under valuation and the differential duty liability was found to a small amount of Rs.20,182/- only accepting the contention",,,,

of the assessee company and treating the sale price as cum duty price, which is inconsequential.",,,,

90. The argument of the appellant company that the appellant had disputed the entire demand in its show cause reply and prayed for dropping of the,,,,

demand and alternatively disputed the quantification of the demand is devoid of any merits when seen in the light of the recordings made in the Order-,,,,

in-Original as well as the appellate order. The appellant has neither placed the show cause reply filed before the adjudicating authority nor has placed,,,,

the memorandum of appeal filed by the appellant before the appellate authority to suggest any contest on 71 transactions relating to removal of goods,,,,

without cover of excise invoice i.e clandestine removal, rather the specific stand of the appellant company was that the invoices in connection with 71",,,,

transactions could not be issued due to inadvertence. The allegations were denied in entirety only by the managing director that too at a much belated,,,,

stage i.e at the time of responding to the notice issued by the appellate authority for enhancement of personal penalty upon the managing director.,,,,

91. So far as the judgement passed by the Honâ€™ble Allahabad High Court reported in 2016 (334) E.L.T 595 (All.) (Triveni Engineering &,,,,

Industries Ltd. Vs. Commr. of C.Ex. Allahabad) is concerned, the same does not apply to the facts of the present case as in the said case the",,,,

allegation of clandestine removal was based on assumption and on surmises and conjectures and demand of duty was contested by the noticee, which",,,,

is not the case here.,,,,

92. So far as the judgement reported in 2017 (345) E.L.T 187 (Jhar.) (Balashri Metals Pvt. Ltd. Vs. Union of India) is concerned, the same does not",,,,

apply to the facts and circumstances of this case as in the present case, on the one hand, the appellant did not dispute the allegation of clandestine",,,,

removal of goods and on the other hand, the relied upon documents and evidences were duly forwarded to the appellant along with the show-cause",,,,

notice to which the appellant as well as the co-noticee â€" Managing Director had responded and accordingly there is no question of violation of,,,,

principles of natural justice.,,,,

93. In the judgement passed by the Honâ€™ble Gujarat High Court reported in 2013 (296) E.L.T 392 (Tri-Ahmd.) (Sakeen Alloys Pvt. Ltd. Vs.,,,,

Commissioner of C. Ex., Ahmedabad), the cross-examination of the person whose statement was relied upon was not allowed and it was held that in",,,,

a case of clandestine removal, the fact of clandestine removal of excisable goods cannot be established only on the basis of certain statements which",,,,

were retracted later, but there has to be positive evidences like purchase of raw-material etc. The said judgement does not apply to the facts and",,,,

circumstances of this case as none of the persons whose statement were recorded under Section 14 including that of Managing Director ever,,,,

retracted their statements before the adjudicating authority and appellant company never prayed to call any one of them for cross-examination, rather",,,,

the appellant company never disputed the allegation with regard to clandestine removal of goods. Even the managing director whose statement was,,,,

also recorded under Section 14 and was a co-noticee, never disputed his statement recorded under Section 14 of the Act of 1944 before the",,,,

adjudicating authority.,,,,

94. The judgement passed by the Honâ€™ble Allahabad High Court reported in 2014 (309) E.L.T 411 (All.) (Continental Cement Company Vs.,,,,

Union of India) also does not apply to the facts of the present case as in the said case, the allegation was made on mere statement of buyers based on",,,,

their memories which were held to be insufficient without support of any documentary evidence. The facts of the present case are totally different.,,,,

95. Further argument of the appellant company that the Managing Director was joined as co-noticee only for the purpose that he could explain the,,,,

contents of the diary which was written in his writing, is also devoid of any merits as the show-cause notice proposed imposition of penalty on the",,,,

Managing Director under Rule 209A of 1944 rules read with Rule 26 of 2001 rules. In fact, the Managing Director had already made important",,,,

revelations during recording of his statement under Section 14 of the Act of 1944 giving the details of the transactions recorded in the diary and,,,,

disclosing the name of the parties recorded in short forms in the diary which have been quoted in the show cause itself and such revelations as,,,,

recorded in the statement of the managing director in his statement under section 14 of the Central Excise Act formed part of the relied upon,,,,

evidences and enclosed with the show cause notice itself. The appellant has not even filed the statement of the Managing Director recorded under,,,,

Section 14 of the Act of 1944, although admittedly, it formed part of the enclosures/relied upon evidences of the show- cause notice issued by the",,,,

adjudicating authority.,,,,

96. The learned counsel for the appellant company has also submitted that defence reply cannot be treated as evidence. In the instance case the,,,,

defence reply has not been treated as evidence. In fact the following were the basis of passing the order in original by the adjudicating authority:-,,,,

a. the evidences of the various officers of the appellant company, including that of the Managing Director recorded under Section 14 of the Act of",,,,

1944, were on record;",,,,

b. The Managing Director during his examination under Section 14 of the Act of 1944 stated that he would get the matter examined and differential, if",,,,

any, would be paid;",,,,

c. The appellant company had taken a specific stand that the invoices in connection with 71 transactions could not be issued due to inadvertence and,,,,

paid the admitted amount through cheques,,,,

d. Appellant company claimed refund of Rs.10,802.32 only being the excess payment as per their own calculation,",,,,

. Further it is important to note that at the stage of the proceedings before the adjudicating authority, the stand of the appellant company and its",,,,

Managing Director was identical and continued to be the same even at the appellate stage till the stage just prior to issuance of show cause notice,,,,

dated 29.09.2005 by the appellate authority to the Managing Director proposing enhancement of personal penalty upon him to which he filed reply,,,,

dated 07.12.2005 and for the first time denied the entire allegations and tried to retract the statements recorded under Section 14 of the Central Excise,,,,

Act, though unsuccessfully .",,,,

97. So far as the argument that even if it is assumed that only the quantification of duty was challenged before the adjudicating authority and there,,,,

could be no estoppel in challenging the liability before the appellate authority is concerned, the same is also devoid of any merits on account of two",,,,

reasons. Firstly, the appellant company had taken a specific stand before the adjudicating authority that the invoices in connection with 71 transactions",,,,

could not be issued due to inadvertence, and having taken such a plea, any challenge to existence of very transactions would be inconsistent and once",,,,

the transactions are admitted, the consequences are bound to follow in terms of the act and rules. Secondly, the appellant company, who had filed a",,,,

separate appeal from that of its managing director, neither filed any additional grounds of appeal, nor filed any amendment to the grounds of appeal nor",,,,

took any other steps to incorporate challenge to the transactions relating to clandestine removal even at the appellate stage. Merely because the,,,,

Managing Director had taken a particular stand in response to show cause issued by the appellate authority proposing enhancement of personal,,,,

penalty, by itself, could not be read into the appeal of the appellant company. The fact remains that the personal penalty upon the Managing Director",,,,

as imposed by the adjudicating authority was ultimately sustained by the learned tribunal in an independent appeal filed by him against enhancement of,,,,

penalty by the appellate authority and no further appeal has now been preferred by the Managing Director.,,,,

So far as the judgement in the case of MIL India Ltd. (supra) is concerned, the same does not help the appellant company in any manner whatsoever.",,,,

In the said case, the Honâ€™ble Supreme court held that an order of assessment under taxing law does not become final before the adjudicating",,,,

authority in every matter, it is subject to appeal and the appellate authority can even add or subtract certain items from the order of assessment and",,,,

such order of appellate authority could be treated as an order of assessment. In the said case of MIL India Ltd. (supra), it was also held that power of",,,,

remand by the appellate authority was taken away with effect from 11.05.2001 by amending Section 35-A, therefore the appellate authority continues",,,,

to exercise the powers of adjudicating authority in the matter of assessment, and under Section 35B, any person aggrieved by the order of the",,,,

commissioner as an adjudicating authority could move the tribunal and the order passed by the appellate authority is to be treated as an order of the,,,,

adjudicating authority. The aforesaid principle of law has no application in the present case as the appellant company continued with the same points,,,,

even before the appellate authority which were raised before the adjudicating authority. In fact, before the appellate authority also, the appellant",,,,

company admitted its duty liability of Rs. 10,57,495.68 with regards to 71 transactions of clandestine removal and specifically claimed refund of excess",,,,

amount of Rs.10,802.32 only out of total deposit of Rs.10,68,298/-, as per their own calculation.",,,,

98. The argument of the appellant that there was no evidence of manufacture of the goods in the show cause, has no relevance under the facts and",,,,

circumstances of the instant case. The allegation was in two parts, one, was clandestine removal of goods with regards to 71 transactions, which stood",,,,

admitted by the appellant throughout the proceedings and second, undervaluation of goods with regards to 7 invoices, in connection with which the",,,,

production cannot be disputed as the invoices issued were allegedly undervalued.,,,,

99. The entries made in the private diary of the Managing Director which was seized by the authorities from the office premises were duly explained,,,,

by him in his statement recorded under Section 14 from his personal knowledge. The fact that this diary was written and maintained by him is not in,,,,

dispute and it is also not in dispute that he was the person responsible for purchase and sales of the appellant company and the other officers of the,,,,

company during their examination under section 14 duly corroborated this fact and stated that entries made in the diary could be explained by the,,,,

managing director only.,,,,

Further, the stand of the managing director in his reply to show cause regarding enhancement of penalty with regards to the entries was that the",,,,

transactions in the pipelines were also recorded and accordingly the same could not be treated as clandestine removal. Further, it is not in dispute that",,,,

the so-called private diary was maintained by the managing director himself in course of sale and purchase transactions of the appellant company,,,,

which was admittedly looked after by him for the company. Moreover, such stand was taken belatedly, without any explanation of such delay and for",,,,

the first time after expiry of more than 4 years from the date of recording of his statement that too when the appellate authority issued show cause for,,,,

enhancement of personal penalty. So far as the appellant company is concerned, the clearance of 71 transactions without invoice was never disputed.",,,,

The entries made in the diary were corroborated by other materials on record including the fact that the same remained undisputed by the appellant,,,,

company throughout and the fact that the entries in the diary which were in short forms were explained by the managing director during his statement,,,,

recorded under section 14 of the Central Excise Act. The reply to the show cause notice issued by the adjudicating authority has not at all been,,,,

treated as evidence.,,,,

100. As a cumulative effect of the aforesaid discussions, the finding of the learned tribunal that the duty demand was never contested",,,,

by the appellant company before the authorities is not perverse, rather the same is based on materials, including the aforesaid specific",,,,

stand of admission by the appellant company of clandestine removal of goods with regards to 71 transactions and claiming non issuance,,,,

of corresponding invoices to be on account of inadvertence, before the adjudicating as well as appellate authority; coupled with the fact",,,,

that refund of Rs.10,802.32 only was claimed and the remaining deposit of Rs. 10,57,495.68 stood as admitted liability throughout. The",,,,

statement of the Managing Director, recorded under Section 14 of the Act of 1944, was only one, amongst other materials, coupled",,,,

with clear admission of the appellant company with regards to 71 transactions of clandestine removal. The impugned order was not,,,,

passed solely on the statement of the Managing Director of the Company recorded under Section 14 of the Central Excise Act, 1944",,,,

and the entries made in his private diary which was seized by the authorities from the office premises but there were further materials,,,,

to confirm the demand against the appellant company as fully discussed above. The issue nos. (ii), (v) and (vi) are accordingly decided",,,,

in favour of the respondent.,,,,

101. So far as suo-moto deposit of duty is concerned, the same cannot be seen in isolation and is to be seen in the light of the aforesaid findings. At",,,,

the time of recording of statement of the Managing Director he had stated that he would get the matter examined and if there is any amount payable,",,,,

the same would be paid. Subsequently, an amount of Rs.10,68,298/- was paid by cheques. The payment was not coupled with any protest. After the",,,,

payment and before the issuance of show cause, another letter dated 22.01.2002 was issued saying that the duty amount has been paid and this",,,,

communication also did not indicate payment under protest. The show cause was issued, inter alia, on the point as to why the duty amounting to",,,,

Rs.10,68,298/- already paid be not confirmed and circumstance of suo-moto deposit was put to the noticees being indicative of their admission. In",,,,

response to the show cause, both the noticees, On the one hand, did not refute the allegation of clandestine removal, and on the other hand, insisted",,,,

that- the amount paid by them before issuance of show cause be treated as cum-duty price; reiterated that the invoices could not be issued by them,,,,

inadvertently; there was error in calculation made in show cause notice and on account of deposit of duty amount prior to issuance of show cause,",,,,

mandatory penalty be not imposed. This is coupled with the fact that the appellant claimed refund of Rs.10,802.32 only as excess out of the total",,,,

deposit. After considering all the facts the adjudicating authority confirmed the amount of the duty already paid after accepting the stand of the,,,,

appellant that the sale price be treated as cum-duty price by quantifying the duty liability under 71 transactions to the extent of Rs. 10,57,495.68 as",,,,

calculated by the appellant. Thus, suo-moto deposit of the amount prior to issuance of show cause, when seen in the light of the aforesaid",,,,

circumstances certainly amounts to admission on the part of the appellant regarding clandestine removal of goods relating to 71 transactions. So far as,,,,

the judgement reported in (1997) 5 SCC 536, Mafatlal Industries Ltd. And others Vs. Union of India & others, para 92, which has been heavily relied",,,,

upon by the learned counsel for the appellant is concerned, the same is quoted as under along with para 93 and 94 to complete the narration: -",,,,

â€œ92. It is then pointed out by the learned counsel for the petitioners-appellants that if the above interpretation is placed upon amended,,,,

Section 11-B, a curious consequence will follow. It is submitted that a claim for refund has to be filed within six months from the relevant",,,,

date according to Section 11-B and the expression â€œrelevant dateâ€ has been defined in clause (B) of the Explanation appended to sub-,,,,

section (1) of Section 11-B to mean the date of payment of duty in cases other than those falling under clauses (a), (b), (c), (d) and (e) of the",,,,

said Explanation. It is submitted that clauses (a) to (e) deal with certain specific situations whereas the one applicable in most cases is the,,,,

date of payment. It is submitted that the appellate/revision proceedings, or for that matter proceedings in High Court/Supreme Court, take a",,,,

number of years and by the time the claimant succeeds and asks for refund, his claim will be barred; it will be thrown out on the ground that",,,,

it has not been filed within six months from the date of payment of duty. We think that the entire edifice of this argument is erected upon an,,,,

incomplete reading of Section 11-B. The second proviso to Section 11-B (as amended in 1991) expressly provides that â€œthe limitation of,,,,

six months shall not apply where any duty has been paid under protestâ€. Now, where a person proposes to contest his liability by way of",,,,

appeal, revision or in the higher courts, he would naturally pay the duty, whenever he does, under protest. It is difficult to imagine that a",,,,

manufacturer would pay the duty without protest even when he contests the levy of duty, its rate, classification or any other aspect. If one",,,,

reads the second proviso to sub-section (1) of Section 11-B along with the definition of â€œrelevant dateâ€, there is no room for any",,,,

apprehension of the kind expressed by the learned counsel.,,,,

93. It was then submitted that Rule 233-B which prescribes the procedure to be followed in cases where duty is paid under protest requires,,,,

the assessee to state the grounds for payment of duty under protest and that it may well happen that the authority to whom the letter of,,,,

protest is submitted may refuse to record it, if he is not satisfied with the grounds of protest. In our opinion, the said apprehension is not",,,,

well-founded. Sub-rules (1), (2) and (3) of Rule 233-B read as follows:",,,,

â€œ233-B. Procedure to be followed in cases where duty is paid under protest.â€"(1) Where an assessee desires to pay duty under protest,,,,

he shall deliver to the proper officer a letter to this effect and give grounds for payment of the duty under protest.,,,,

(2) On receipt of the said letter, the proper officer shall give an acknowledgement to it.",,,,

(3) The acknowledgement so given shall, subject to the provisions of sub-rule (4), be the proof that the assessee has paid the duty under",,,,

protest from the day on which the letter of protest was delivered to the proper officer.â€,,,,

94. The rule no doubt requires the assessee to mention the â€œgrounds for payment of the duty under protestâ€ but it does not empower the,,,,

proper officer, to whom the letter of protest is given, to sit in judgment over the grounds. The assessee need not particularise the grounds of",,,,

protest. It is open to him to say that according to him, the duty is not exigible according to law. All that the proper officer is empowered to",,,,

do is to acknowledge the letter of protest when delivered to him â€" and that acknowledgement shall be the proof that the duty has been,,,,

paid under protest. A reading of the rule shows that the procedure prescribed therein is evolved only with a view to keep a record of the,,,,

payment of duty under protest. It is meant to obviate any dispute whether the payment is made under protest or not. Any person paying the,,,,

duty under protest has to follow the procedure prescribed by the rule and once he does so, it shall be taken that he has paid the duty under",,,,

protest. The period of limitation of six months will then have no application to him.â€,,,,

Upon perusal of the para 92 of the judgement, I find that it simply lays down that whenever a payment is made even without protest and the assessee",,,,

proposes to contest its liability of duty, rate, classification or any other aspect, by way of appeal or revision or in higher courts, the claim for refund",,,,

cannot be said to be barred by limitation of six months from the date of payment as prescribed under the Act of 1944. Para 93 and 94 deal with the,,,,

prescribed procedure for making payment â€œunder protestâ€ by referring to Rule 233B and its interpretation. It has been clearly held in para 94 that,,,,

rule requires the assessee to mention grounds for payment of duty under protest but the assessee need not particularise the ground of protest. It has,,,,

been held that any person paying duty under protest has to follow the procedure prescribed by the rule and once he does that, it shall be taken that the",,,,

duty has been paid under protest and then the period of limitation for claiming refund will have no application.,,,,

102. In the present case neither the Rule 233B regarding payment under protest has been followed nor the appellant contested the allegation of 71,,,,

clandestine transactions, rather the appellant admitted its duty liability on such transaction to the extent of Rs. 10,57,495.68 which was duly accepted",,,,

by the authorities. Thus suo-moto deposit of differential duty liability on account of clandestine removal of goods relating to 71 transactions without any,,,,

protest coupled with the specific stand and conduct of the appellant at the stage of adjudication by the adjudicating authority, amounts to be an",,,,

admission on the part of the appellant regarding clandestine removal of goods under the aforesaid facts and circumstances of this case.,,,,

103. In the judgement passed by the Honâ€™ble Delhi High Court reported in 2017 (350) E.L.T 145 (Del) (Digipro Import & Export Pvt. Ltd. Vs.,,,,

Union of India), the Honâ€™ble High Court has deprecated illegal practice of collecting cheques during search. The said judgement has no",,,,

applicability in the present case as the appellant company had deposited the amount through cheque as per their own calculation much after search,,,,

etc. and thereafter, they had informed the department about deposit of the cheques suo-moto. So far as the judgement reported in 2019 (365) E.L.T",,,,

32 (P&H) (Concepts Global Impex Vs. Union of India) is concerned, the same also does not apply to the facts and circumstances of this case as in",,,,

the said case, the amount was deposited while goods were detained in transit and under the pressure from the Directorate of Revenue Intelligence",,,,

officials to avoid delay in clearance. Accordingly, the aforesaid judgements do not apply to the facts and circumstances of this case.",,,,

104. In view of the aforesaid findings, the issue no. (iii) is also decided against the appellant and in favour of the respondent.",,,,

Issue no. iv.,,,,

105. The Managing Director of the assessee -appellant company was, inter alia, directed to show cause as to why penalty under Rule 209A of 1944",,,,

Rules read with Rule 26 of the 2001 Rules, be not imposed upon him. It was alleged that (i) the clandestine clearances resulting in non-payment of",,,,

excise duty and undervalued clearances resulting in short payment of excise duty were carried out at the behest of the Managing Director (ii) he,,,,

himself was maintaining the private diary and receipt of additional consideration (iii) he was consciously and with full knowledge concerned with,,,,

selling, dispatching and/or otherwise dealing with excisable goods which he had reason to believe are liable to confiscation.",,,,

106. Rule 209A of Central Excise Rules, 1944 and Rule 26 of Central Excise Rules, 2001 are identically worded. Rule 26 of Central Excise Rules,",,,,

2001 has already been quoted and explained above . The period involved in the case are 2000-01 and 2001-02 and accordingly notice referred to both,,,,

the rules. Penalty under this rule is imposed when any person acquires possession of, or is in any way concerned in transporting, removing, depositing,",,,,

keeping, concealing, selling or purchasing, or in any other manner dealing with, any excisable goods, which he knows or has reason to believe are liable",,,,

to confiscation under the Act or the rules. He has been found guilty of clandestine removal of 71 transactions of excisable goods of the appellant,,,,

company and also under valuation of 7 invoices of the appellant company being the Managing Director of the company responsible for handling sales,,,,

and purchases. Accordingly, the arguments advanced by the learned counsel for the appellant that penalty was imposed upon the Managing Director",,,,

for only dealing with buyers/suppliers and writing of diary in his own writing for purported and unaccounted sales is not the complete narration of the,,,,

allegations against the Managing Director.,,,,

107. Further, the arguments that the appellate authority has recorded a finding about absence of mens rea on the part of the Managing Director, is also",,,,

devoid of any merits when the findings of the appellate authority are read as a whole. The findings of the appellate authority have already been quoted,,,,

above. The appellate authority while considering the 71 consignments without issuance of invoices i.e. allegation of clandestine removal of goods, has",,,,

rejected the plea of inadvertence in the matter of non-issuance of invoices and non-payment of excise duty and held that the acts and omissions of the,,,,

Managing Director confirmed mens rea on his part. The appellate authority was also of the view that once mala fide intention to evade payment of,,,,

duty exists, the reliance of the appellants before the said authority on various judgements was of no use and discussed and distinguished the",,,,

judgements relied upon by both the appellants before him. The appellate authority clearly held that in the present case, fraud and suppression of facts",,,,

exist while distinguishing the judgement passed in the case of Shri Krishna Pipes Industries and quoting para 5 of the said judgement. The appellate,,,,

authority also rejected the plea of the Managing Director that the production/clearances were correctly reflected. However, the appellate court in the",,,,

last paragraph of its judgement, while deleting the penalty upon the Managing Director under Section 11AC of the Act of 1944 on the ground that",,,,

penalty under the said section cannot be imposed upon a person other than the manufacturer has also recorded â€"â€œbut considering that he is,,,,

center of all the activities and â€œthere is existence of mensrea on his part of doubt , he is liable for heavy deterrent penalty under rule 209A of",,,,

central excise rules 1944 read with rule 26 of Central excise Rules, 2001.â€",,,,

The aforesaid sentence in italics is self-contradictory and the words â€œthere is existence of mensrea on his part of doubt, he is liable for heavy",,,,

deterrent penaltyâ€ are incomprehensible and meaningless. Otherwise also, orders and judgements are required to be read as a whole and upon",,,,

perusal of the findings recorded in the earlier portions of the appellate judgement, it is clear that the appellate authority has recorded a well-reasoned",,,,

finding of mens-rea against the Managing Director.,,,,

108. Penalties imposed upon Managing Director of the company,,,,

The following penalties were imposed upon the Managing Director:,,,,

By the adjudicating authority: -,,,,

a. Penalty of Rs.10,77,678/- under Section 11 AC of Central Excise Act, 1944 -equivalent to duty not paid /short paid.",,,,

b. Penalty of Rs.20,000/- under Rule 209A of erstwhile Central Excise Rules, 1944 read with Rule 26 of Central Excise Rules, 2001 being the person",,,,

responsible for clandestine removal of goods of the appellant assessee company.,,,,

By the appellate authority -,,,,

a. The penalty upon the Managing Director of the appellant company under Section 11AC was set-aside on the ground that the same cannot be,,,,

imposed on any person, other than the assessee and assessee in the instant case was the appellant company and not the Managing Director.",,,,

b. The penalty under Rule 209A of erstwhile Central Excise Rules, 1944 read with Rule 26 of Central excise rules, 2001 was enhanced from Rs.",,,,

20,000/- to Rs. 20,00,000/-.",,,,

By the appellate tribunal -,,,,

a. The enhancement of penalty by the appellate authority was set-aside.,,,,

b. Penalty of Rs. 20,000/- under Rule 209A of erstwhile Central Excise Rules, 1944 read with Rule 26 of Central excise rules, 2001 imposed by the",,,,

adjudicating authority was sustained.,,,,

109. The notice for enhancement of penalty upon the Managing Director was issued as the appellate court was of the view that the penalty was,,,,

insufficient and the appellate court ultimately enhanced the penalty of Rs. 20,000/- under Rule 209A of 1944 rules read with Rule 26 of 2001 Rules to",,,,

Rs.20,00,000/-. The learned tribunal was of the view that there was no justification for such stiff increase in the penalty upon the Managing Director",,,,

and has been pleased to set-aside the increased penalty by the appellate authority and reduced it to penalty of Rs. 20,000/- as imposed by the",,,,

Adjudicating Authority.,,,,

110. The basic ingredients of Rule 209A of 1944 rules read with Rule 26 of 2001 Rules were found to be present by all the authorities below. The,,,,

basic ingredients of Section 11AC of Central Excise Act, 1944 were also found against the present appellant company.",,,,

111. As a result of the findings of clandestine removal of goods of the appellant company, the differential duty and penalty was imposed upon",,,,

appellant assessee company. The order of penalty against the Managing Director of the appellant company on account of being the person responsible,,,,

for clandestine removal of goods of the appellant company has attained finality.,,,,

112. It is not in dispute that the appellant company was under direct control of the Managing Director and because of his controlling position he was,,,,

directing the company and the order of penalty passed against the Managing Director of the company has attained finality. It is not in dispute that the,,,,

foundational facts for passing the order of penalty against the company and its Managing Director are identical. Rather, the appellant company, though",,,,

a juristic person cannot distance itself from the act of clandestine removal/under valuation of its goods due to the acts and omissions of its Managing,,,,

Director who was admittedly responsible for sales and purchases of the goods of the appellant company and was also a co-noticee in the adjudication,,,,

proceedings. Further, the quantum of penalty upon the Managing Director is irrelevant and what is relevant is the provision under which the penalty",,,,

has been imposed. Merely because a small amount of penalty has been imposed upon the Managing Director, the same does not erase the proved",,,,

allegations resulting in imposition of penalty prescribed by law i.e clandestine/ undervaluation of cleared goods of the assessee company. It is,,,,

important to note that this appeal has been filed through the same Managing Director against whom the order of penalty has attained finality .I also,,,,

find that the appellant company never distanced itself from the acts and omission of the managing director of the company and all other persons,,,,

whose statements were recorded under section 14 of Central Excise Act (which formed part of the relied upon evidence and enclosure to show cause,,,,

notice issued by the adjudicating authority) consistently stated that the Managing Director of the company was the person who was responsible for,,,,

entire sale, purchase of the goods of the company and it is not in dispute that the diary recovered from the premises of the company was maintained",,,,

by the Managing Director. The Managing Director also never disputed the aforesaid facts and some of the transactions as recorded in the diary were,,,,

clearly admitted throughout the adjudication proceedings while taking a stand that the amount mentioned in the diary with regards to such transactions,,,,

were cum-duty price.,,,,

113. Thus, finality of the order of penalty against the Managing Director of the company will itself get disturbed if the order of demand of differential",,,,

duty and consequent penalty against the appellant company is interfered by this court. Further, once the order of penalty on the allegations of",,,,

clandestine removal of goods of the assessee company has been accepted by its Managing Director, there is no scope for the company to dispute",,,,

clandestine removal of goods by its Managing Director and consequential penalty.,,,,

114. In the judgment passed by the Honâ€™ble Supreme Court reported in AIR 1968 SC 832 (Haroon Haji Abdulla vs. State of Maharashtra), the",,,,

Honâ€™ble Supreme Court was dealing with the statements recorded by the Customs Officers in response to the notices issued under Section 171-A,,,,

of the Sea Customs Act which was sought to be used in prosecution under the Sea Customs Act. The use of the aforesaid statements recorded under,,,,

Section 171-A of the Sea Act were objected to interalia on the ground that they are not confessions proper to which Section 30 of the Evidence Act,,,,

could be made applicable. A plea was also raised that the confessions recorded under Section 171-A of the Sea Customs Act were subsequently,,,,

retracted and had no probative value. It was held at para-6 as under:,,,,

Â â€œâ€¦â€¦â€¦â€¦â€¦â€¦â€¦These statements are not confessions recorded by a Magistrate under Section 164 of the Code of Criminal,,,,

Procedure, but are statements made in answer to a notice under Section 171-A of the Sea Customs Act. As they are not made subject to the",,,,

safeguards under which confessions are recorded by Magistrates they must be specially scrutinised to finding out if they were made under,,,,

threat or promise from someone in authority. If after such scrutiny they are considered to be voluntary, they may be received against the",,,,

maker and in the same way as confessions are received, also against a co-accused jointly tried with him. Section 30 of the Evidence Act",,,,

does not limit itself to confessions made to Magistrates, nor do the earlier sections do so, and hence there is no bar to its proper application",,,,

to the statements such as we have here.â€,,,,

115. So far as the judgement passed in the case of â€œSarva Shramik Sangh Versus Indian Oil Corporation Limited and othersâ€ reported in (2009),,,,

11 SCC 609 is concerned, it has been argued by the learned counsel for the appellant that when the parties are different, issues are different, reliefs",,,,

are different, the question of either res judicata, or finality of proceedings, acquiescence or estoppel will not arise and they have stressed that in the",,,,

present case finality of litigation against the Managing Director will have no bearing. The other judgement relied upon by the appellant is the judgement,,,,

reported in (2019) 14 SCC 179 (State of Rajasthan Versus Nemi Chand Mahela and others). The aforesaid judgements do not apply to the facts and,,,,

circumstances of this case as the point involved in the present case is not of res-judicata or estoppel. In the present case, the appellant company as",,,,

well as the Managing Director were co-noticee and it was the specific case of the department that the Managing Director was responsible for,,,,

clandestine removal of goods of the company. Such allegation having attained finality against the Managing Director, has direct bearing on the",,,,

appellant company. Further, the appellant company did not deny the allegation of clandestine removal of goods at any point of time.",,,,

116. In so far as the judgement reported in 2016 (339) E.L.T 518 (Madras) (Commissioner of Central Excise, Chennai-I Vs. B.S. Garg) is concerned,",,,,

the same also does not apply to the facts of this case. In the said case, the appeal filed against the manufacturer was entertained, but the appeal filed",,,,

against co-noticee individuals i.e. proprietors /partners stood dismissed on account of being barred by limitation and it was held that non-admission of,,,,

appeal against co-noticee was not fatal to the appeal of the department against the manufacturer considering the fact that if the department succeeds,,,,

in the main appeal as against the manufacturer, the orders could certainly be enforced against the proprietors/partners as the liability of the partnership",,,,

firm is that of partners and the liability of the proprietary concern is that of its proprietor. There can be no dispute that the appellant company and its,,,,

Managing Director are two distinct persons and the liability of one cannot be enforced against the other. In the present case two persons, the",,,,

company and its managing director were proceeded in one adjudication proceedings and the foundational facts against both are the same. Penalty for,,,,

clandestine removal of goods of the company has been imposed upon the managing director and order of penalty against the managing director having,,,,

attained finality, the appellant company, whose goods were clandestinely removed coupled with the fact that the company never disputed the allegation",,,,

of clandestine removal of goods, cannot deny its liability under the Act of 1944.",,,,

117. In the present case, the statements of the co-noticee-Managing Director has, inter alia, been rightly used against the appellant company as they",,,,

were proceeded together in the adjudication proceedings. Additionally, there were other materials on record including admission of the appellant",,,,

company regarding 71 transactions without cover of excise invoice claimed to be due to inadvertence.,,,,

118. It is true that the assessee company and its Managing Director are two distinct persons in the eyes of law but it is equally true that in the instant,,,,

case the alleged acts and omissions are attributable to the company as a juristic person represented by its managing director as well as attributable to,,,,

its Managing Director on the same foundational facts, against whom the order of penalty for the very same acts and omissions has become final.",,,,

119. The order of differential duty and penalty against the appellant company is directly and inseparably linked with imposition of penalty upon its,,,,

Managing Director and both, the company as well as the Managing Director, have been found guilty of clandestine removal of the goods of the",,,,

company on account of common foundational facts on record.,,,,

120. The Managing Director of the company has chosen to file this appeal on behalf of the company but has accepted the order of penalty passed,,,,

against him and accordingly the factual basis of the order of penalty on account of clandestine removal of companyâ€™s goods has been accepted by,,,,

the Managing Director in his individual capacity also.,,,,

121. In view of the aforesaid findings, the order of penalty against the Managing Director which has attained finality, can certainly be",,,,

used against the appellant company and has an important bearing in the matter. The issue no. (iv) is accordingly decided in favour of,,,,

the respondent. Issue no. (i),,,,

122. The crux of the argument of the learned counsel for the appellant on the first substantial question of law is that the statement of the Managing,,,,

Director of the appellant recorded under Section 14 of the Act of 1944 could be relevant only when he was examined as a witness before the,,,,

Adjudicating Authority in terms of Section 9D(2) who would then form an opinion, having regards to the circumstances, that the statement should be",,,,

admitted or not. It has been argued that this would be in terms with Section 138 of the Evidence Act, 1872 which provides for examination-in-chief,",,,,

and then cross-examination. The specific argument is that the Managing Director of the appellant company having not been examined-in-chief by the,,,,

Adjudicating authority, his statement recorded under Section 14 of the Act of 1944 is an irrelevant piece of material. It has been argued that the whole",,,,

purpose of Section 9D is to ensure that only true evidence forms the basis of the charge in adjudication proceedings as the central excise officers,,,,

often record statement under coercion or compulsion which is hit by Section 24 of the Evidence Act, 1872. Further argument is that Section 9D acts",,,,

as a safeguard against self-incriminating statement and is a constitutional right under Article 20(3) of the Constitution of India. It has also been argued,,,,

that Section 9D is a general provision and applies to all persons whose statements are recorded under Section 14 irrespective of the fact that he was,,,,

the director, or Managing Director of the assessee and also irrespective of the fact that he was a co-noticee.",,,,

123. In support of the submissions, certain judgements mentioned above have been relied upon.",,,,

124. The learned counsel has also submitted that the judgement reported in 2019 (368) E.L.T. 710 (Tri-Del) [Silicone Concepts International Pvt. Ltd.,,,,

Vs. Pr. Commr. of Cus., ICD, TKD (Import), New Delhi] holding that statement recorded under Section 14 of the 1944 Act is a substitute of",,,,

examination-in-chief and the witness has to be offered for cross-examination, is per incuriam, being passed in ignorance of the relevant statute or",,,,

judicial precedent. It has been argued that if a witness is examined in chief while making a statement under Section 14 but not allowed to be cross-,,,,

examined, it will amount to giving up the witness, the converse is also true, i.e. a witness who is not examined in chief, but offered for cross-",,,,

examination, would amount to giving up the witness. For this argument, specific reference is made to the judgement reported in (1995) 3 SCC 367.",,,,

125. The respondent, on the other hand, has opposed the submissions and has submitted that the statements recorded under Section 14 of the Act of",,,,

1944 are per-se admissible in evidence subject to scrutiny by the court itself in the light of Section 24 of the Indian Evidence Act, 1944 as to whether",,,,

the statements have been given under any coercion or duress or through dictation extended from the person in authority. The arguments of the,,,,

respondent along with judgement relied upon, have been recorded in details above.",,,,

126. The issue no.(i) is required to be dealt with under the following sub-headings:-,,,,

A. Interpretation of Section 14 of the Act of 1944 and its evidentiary value.,,,,

B. Introduction and interpretation of Section 9D and inter play of the provisions of Section 9D, 14 and 21 of the Act of 1944 with regards to relevance",,,,

of statements recorded under different circumstances under the Act of 1944.,,,,

Interpretation of Section 14 of the Act of 1944 and its Evidentiary value.,,,,

127. Section 14 of the Central Excise Act, 1944 is quoted hereunder for ready reference:",,,,

â€œSection 14. Power to summon persons to give evidence and produce documents in inquiries under this Act.-,,,,

(1) Any Central Excise Officer duly empowered by the Central Government in this behalf, shall have power to summon any person whose",,,,

attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is,,,,

making for any of the purposes of this Act. A summons to produce documents or other things may be for the production of certain specified,,,,

documents or things or for the production of all documents or things of a certain description in the possession or under the control of the,,,,

person summoned.,,,,

(2) All persons so summoned shall be bound to attend, either in person or by an authorised agent, as such officer may direct; and all",,,,

persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to,,,,

produce such documents and other things as may be required:,,,,

Provided that the exemptions under sections 132 and 133 of the Code of Civil Procedure, 1908 (5 of 1908) shall be applicable to",,,,

requisitions for attendance under this section.,,,,

(3) Every such inquiry as aforesaid shall be deemed to be a ""judicial proceeding"" within the meaning of section 193 and section 228 of the",,,,

Indian Penal Code, 1860 (45 of 1860).â€",,,,

128. Upon perusal of provision of Section 14 of the aforesaid Act of 1944, it is clear that the person summoned is bound to attend, either in person or",,,,

by his authorized agent, as the officer may direct and all persons summoned are bound to state the truth and to produce such documents or things as",,,,

may be required. Similar provision exists under Section 108 of the Customs Act as held in the case reported in (2000) 7 SCC 53 (Assistant Collector,,,,

of Central Excise, Rajamundry Vs. Duncan Agro Industries Ltd. and Others), relied upon by the respondent. It has been held in para 9 of the",,,,

aforesaid judgement that Section 14 of the Central Excise Act, 1944 is practically the same as Section 108 of the Customs Act. The Sea Customs Act",,,,

was repealed vide The Customs Act, 1962 and Section 108 of the Customs Act, 1962 is pari materia to Section 171A of Sea Customs Act.",,,,

129. The judgements passed under the Customs Act dealing with Section 108 were considered in the case of Duncan Agro (supra) while dealing with,,,,

the issue, as to whether, it is necessary to comply with the precautions envisaged in Section 164 of Code of Criminal Procedure i.e. recording of",,,,

confessions and for the statements, when Customs Officers record statement under Section 108 of the Customs Act. The findings of the Honâ€™ble",,,,

Supreme Court in the case of Duncan Agro (supra) in Paragraph nos. 11, 12, 13, 14, 15 and 16 are quoted as under:",,,,

â€œ11. Section 108 of the Customs Act does not contemplate any magisterial intervention. The power under the said section is intended to,,,,

be exercised by a gazetted officer of the Customs Department. Sub-section (3) enjoins on the person summoned by the officer to state the,,,,

truth upon any subject respecting which he is examined. He is not excused from speaking the truth on the premise that such statement could,,,,

be used against him. The said requirement is included in the provision for the purpose of enabling the gazetted officer to elicit the truth from,,,,

the person interrogated. There is no involvement of the Magistrate at that stage. The entire idea behind the provision is that the gazetted,,,,

officer questioning the person must gather all the truth concerning the episode. If the statement so extracted is untrue its utility for the,,,,

officer gets lost.,,,,

12. In this context we bear in mind that a confession made to a police officer can be recorded by him without any of the constraints,,,,

incorporated under Section 164 of the Code. But the safety of the confessor who makes such confession to the police officer is that the same,,,,

is forbidden from use in evidence. The ban contained in Section 25 of the Evidence Act is an absolute ban. But it must be remembered that,,,,

there is no ban in regard to the confession made to any person other than a police officer, except when such confession was made while he",,,,

is in police custody. The inculpatory statement made by any person under Section 108 is to non-police personnel and hence it has no tinge,,,,

of inadmissibility in evidence if it was made when the person concerned was not then in police custody. Nonetheless the caution contained in,,,,

law is that such a statement should be scrutinised by the court in the same manner as confession made by an accused person to any non-,,,,

police personnel. The court has to be satisfied in such cases, that any inculpatory statement made by an accused person to a gazetted",,,,

officer must also pass the tests prescribed in Section 24 of the Evidence Act. If such a statement is impaired by any of the vitiating premises,,,,

enumerated in Section 24 that statement becomes useless in any criminal proceedings.,,,,

13. As early as in 1968 this Court had considered the scope of the statement made under Section 171-A of the Sea Customs Act in Haroom,,,,

Haji Abdulla v. State of Maharashtra. Hidayatullah, J. (as he then was) made the following observations:",,,,

â€œThese statements are not confessions recorded by a Magistrate under Section 164 of the Code of Criminal Procedure but are statements,,,,

made in answer to a notice under Section 171-A of the Sea Customs Act. As they are not made subject to the safeguards under which,,,,

confessions are recorded by Magistrates they must be specially scrutinised to finding out if they were made under threat or promise from,,,,

someone in authority. If after such scrutiny they are considered to be voluntary, they may be received against the maker and in the same",,,,

way as confessions are received, also against a co-accused jointly tried with him.â€",,,,

14. In Ramesh Chandra Mehta v. State of W.B. it was held that â€œwhen an inquiry is being conducted under Section 108 of the Customs,,,,

Act, and a statement is given by a person against whom the inquiry is being held it is not a statement made by a person accused of an",,,,

offence and the person who gives the statement does not stand in the character of an accused personâ€.,,,,

This was followed by this Court in Percy Rustomji Basta v. State of Maharashtra. It was a case in which the appellant was convicted under,,,,

Section 135 of the Customs Act and Section 120-B IPC. The question which this Court considered in that case was whether Section 24 of the,,,,

Evidence Act was a bar to the admissibility of a statement given by the accused of offences under the Customs Act. This Court repelled the,,,,

contention based on Section 24 of the Evidence Act and the facts.,,,,

15. A three-Judge Bench of this Court has again reiterated the same position in Harbansingh Sardar Lenasingh v. State of Maharashtra. It,,,,

was again followed in Veera Ibrahim v. State of Maharashtra. Another three-Judge Bench in Poolpandi v. Supdt., Central Excise took the",,,,

same view.,,,,

16. It is unfortunate that the Division Bench of the Andhra Pradesh High Court has not addressed itself to the above well-settled legal,,,,

position when learned Judges of the Bench (Ramanujula Naidu and Panduranga Rao, JJ.) held that the statement recorded under Section",,,,

108 of the Customs Act without complying with Section 164 of the Code â€œwill be inadmissible in evidence for any purposeâ€.,,,,

Ultimately, in paragraph 17, the Honâ€™ble Supreme Court held that statement recorded by customs officer under Section 108 of the Customs Act is",,,,

admissible in evidence. The Court has to test whether the inculpating portions were made voluntarily or whether it is vitiated on account of any of the,,,,

premises envisaged in Section 24 of the Evidence Act. Para 17 of the aforesaid judgement is quoted as under: -,,,,

â€œ17. We hold that a statement recorded by Customs Officers under Section 108 of the Customs Act is admissible in evidence. The court,,,,

has to test whether the inculpating portions were made voluntarily or whether it is vitiated on account of any of the premises envisaged in,,,,

Section 24 of the Evidence Act.â€,,,,

130. In view of the aforesaid judgement in the case of Duncan Agro Industries Ltd. (Supra), para 17, the statements made in terms of Section 14 of",,,,

the Central Excise Act are per se admissible in evidence and formal proof of the same is dispensed with. The statement recorded under Section 14 of,,,,

the Central Excise Act, 1944 under the signature of the person summoned for the purpose, who is under a legal obligation to state the truth as per",,,,

Section 14 itself, is straightaway admissible in evidence without its formal proof. Further the adjudicating authority or court has to test whether the",,,,

inculpating portions were made voluntarily or whether it was vitiated on account of any of the premises envisaged in Section 24 of the Evidence Act,,,,

as held in the case of Duncan Agro Industries Ltd. (Supra). Thus, this court is of the considered view that the maker of the statement under Section",,,,

14 of the Act of 1944 need not be summoned again and depose again before the adjudicating officer, by way of examination in chief, to prove the",,,,

statement or reiterate the same statement. This is more so, when the statement under Section 14 is made by the co-noticee of the show cause in the",,,,

adjudication procedure as in the present case. In case the statement recorded under section 14 of the Central Excise Act (wherein the person,,,,

concerned is already under legal obligation to state the truth) is relied upon by the adjudicating authority in the show cause notice and the statement is,,,,

an enclosure to the show cause notice , it is enough to indicate that prima-facie scrutiny has been done by the adjudicating authority and it is for the",,,,

noticee to either accept or deny such statement on the grounds of section 24 of the Evidence Act and call for cross-examination of such person who,,,,

would then appear and may explain the circumstances under which such statement under section 14 was recorded and whether any threat or coercion,,,,

was extended from the gazetted officer who had recorded his statement. The objection, if any, has to be raised by the noticee in the adjudication",,,,

proceedings at the proper time.,,,,

131. In the Judgement passed by the Honâ€™ble Supreme Court reported in (1976) 2 SCC 302 â€œVeera Ibrahim Vs. The State of Maharashtraâ€,",,,,

the Honâ€™ble Supreme Court enumerated in para 14 of the report as to the facts which are to be established to attract the provision enacted in,,,,

Section 24 of the Evidence Act. Thus, in order to attract the prohibition enacted in Section 24, Evidence Act, to the statements recorded under Section",,,,

14 of the Act of 1944 the statements should have been obtained by reason of any inducement, threat or promise proceeding from the person in",,,,

authority.,,,,

132. In the judgement passed by the Honâ€™ble Supreme Court reported in (1971) 1 SCC 847 (Percy Rustomji Basta Vs. State of Maharashtra), the",,,,

appellant was convicted for offence under Section 120B of Indian Penal Code read with Section 135 of the Customs Act and the conviction was,,,,

substantially based on the confessional statement which referred to various matters concerning his relationship with other accused and his connection,,,,

with several of the seized articles. An objection was raised by the appellant regarding admissibility of his confessional statement on the ground that it,,,,

was hit by Article 20(3) of the Constitution of India and Sections 24 and 25 of the Evidence Act. The Honâ€™ble Supreme Court considered the,,,,

issue whether Section 24 of the Evidence Act is a bar to admissibility in evidence of the statement (Exhibit T) given by the appellant to Customs,,,,

Officer on summons issued to him under Section 108 of the Customs Act.,,,,

The Honâ€™ble Supreme Court held that at the stage of holding inquiry, the customs officer does not, at that stage, accuse the person suspected of",,,,

infringing the provisions of Sea Customs Act with the commission of an offence and accordingly, it was held that a person examined under Section",,,,

171A of Sea Customs Act does not stand in the character of an accused person, in as much as, there is no formal accusation made against him by any",,,,

person at that time and hence, any statement made by such a person to the customs officer is not hit by Article 20(3) of the Constitution of India or by",,,,

section 24 of the Evidence Act.,,,,

133. In another case decided by the Honâ€™ble Supreme Court reported in (2015) 13 SCC 198 (IVRCL Infrastructure and Projects Limited Vs.,,,,

Commissioner of Customs, Chennai), it was held that the statements made to an officer of customs under Section 108 of the Customs Act, 1962 are",,,,

admissible in evidence and the court has merely to scrutinize whether the admissions were made voluntarily or otherwise. In paragraph 8 of the,,,,

aforesaid judgment, it was held as under:",,,,

Â â€œ8. It is settled law that statements made to an officer of Customs are admissible in evidence under Section 108 of the Customs Act,",,,,

1962. This Court has held in Gulam Hussain Shaikh Chougule v. Supt. of Customs, after quoting from several other judgments, that such",,,,

statements are admissible in evidence. The Court has merely to scrutinise whether the admissions made were voluntary or otherwise. In the,,,,

present case, it is clear that unretracted statements made by none other than the Vice-President of the appellant Company, representatives",,,,

of Marshalls, and a representative of the National Highways Authority of India, having never been retracted later, were made voluntarily.",,,,

Reliance on the said statements, therefore, by the authorities below cannot be said to be unwarranted in law.â€",,,,

(emphasis supplied),,,,

134. There in another judgement passed by the Honâ€™ble Supreme court which indicates that the statements of a person recorded under Section 14,,,,

can be relied upon by the adjudicating authority and the veracity of the same, if questioned by the noticee, can be tested by cross examining the person",,,,

concerned and for this a prayer is required to be made by the noticee before the adjudicating authority who in turn is required to pass appropriate,,,,

order. In the judgement passed by the Honâ€™ble Supreme Court in Andaman Timber Industries v. CCE, (2016) 15 SCC 785, the assessee had filed",,,,

its declaration under Section 173-C of the Central Excise Rules showing the price of the goods at which they were sold ex-factory and delivery basis,,,,

and the Revenue found that there was a lot of price difference between the goods sold at ex-factory and delivery basis in comparison with the goods,,,,

which were sold to the buyers from their depots and accordingly ,investigation was carried out and statements of two buyers were recorded and on",,,,

that basis, show-cause notice was served upon the assessee stating as to why the price at which the goods were sold to these customers from the",,,,

depots may not be the basis for determining the value for the purpose of excise duty. The assessee contested the show-cause notice by furnishing its,,,,

reply and also questioned the correctness of the statements of the aforesaid two witnesses and demanded right to cross-examine them. The,,,,

adjudicating authority passed the order confirming the demand of the show- cause notice without allowing cross-examination of witnesses. It was held,,,,

as under :-,,,,

â€œ6. According to us, not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statements of",,,,

those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to,,,,

violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the,,,,

Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the,,,,

statements and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to",,,,

note that in the impugned order passed by the adjudicating authority he has specifically mentioned that such an opportunity was sought by,,,,

the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority.",,,,

â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.,,,,

7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their",,,,

testimony for which purpose it wanted to avail the opportunity of cross-examination. â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦..,,,,

8. In view of the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the",,,,

Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the",,,,

show-cause notice.,,,,

9. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal. No costs.â€",,,,

This judgement clearly demonstrates the mode and method of discrediting and disputing the statement of the witnesses recorded during investigation,,,,

followed by issuance of show cause based on such statement. The assessee may dispute the statement in his reply and pray for cross-examination of,,,,

the witnesses and if such opportunity for cross-examination is denied causing prejudice to the assessee, such statements are to be discarded.",,,,

135. In view of the aforesaid legal position, the adjudicating authority under central excise, as in the instant case also, has clearly mentioned in the",,,,

show cause notice itself that the assessee company as well as its Managing Director was directed to submit their reply in defence of the notice,,,,

alongwith documents in their defence, and, also, to mention in writing whether they desire to be heard in person before the case is decided. It was also",,,,

mentioned that if no cause is shown, the case will be decided on merit on the basis of evidences on record. The evidences on record were enclosed",,,,

with the show-cause notice which included the private diary as well as statements recorded under Section 14 of the aforesaid Act of 1944. It was at,,,,

this stage for the company or its Managing Director to dispute any of the statements made under Section 14 of the Central Excise Act or to call any,,,,

third person whose statement was recorded under Section 14 for cross-examination to discredit his statement, interalia, on any of the grounds under",,,,

section 24 of the Evidence Act. In the instant case, neither the managing director (who himself was the co-noticee ) ever retracted his statement",,,,

made under section 14 of the Excise Act nor the appellant company denied the statement of the managing director recorded under section 14 of the,,,,

Excise Act nor took any steps for his cross examination at the stage of adjudicating proceedings and both of them conducted themselves in the,,,,

adjudicating proceedings by stating that the impugned transactions were â€œcum-duty priceâ€ and thus disputed the price of the transactions and not,,,,

the transactions. It was only belatedly, at the appellate stage, the Managing Director retracted his statement recorded under section 14 of the Excise",,,,

Act when his personal penalty was sought to be enhanced by the appellate authority and even at this stage the company neither amended its grounds,,,,

of appeal not took any steps to cross- examine Managing Director to discredit his statement recorded under Section 14 of the Excise Act. Ultimately,",,,,

the enhanced personal penalty upon the managing director by the appellate authority was deleted by the Tribunal and the Tribunal sustained the,,,,

personal penalty of Rs.20,000/- imposed by the adjudicating authority without disturbing the finding of adjudicating authority. The penalty imposed upon",,,,

the Managing Director has attained finality.,,,,

136. Thus, the statements recorded under Section 14 of the Act of 1944, when seen in the light of aforesaid judicial pronouncements,",,,,

are per-se admissible in evidence and can be relied upon by the adjudicating authority in the show cause upon being satisfied that the,,,,

statements were voluntary in nature and not hit by Section 24 of the Evidence Act. For this purpose, there is no requirement for the",,,,

maker of the statement to be summoned again and examined in chief by the adjudicating authority, as such person has already been",,,,

summoned and examined by an authorized Central Excise Officer before whom the person was already under a legal obligation to state,,,,

the truth followed by penal consequences for making false statement. Accordingly, in absence of any adverse material on record",,,,

attracting Section 24 of the Indian Evidence Act, the veracity of the statements recorded under Section 14 cannot be doubted and can",,,,

be relied upon by the adjudicating authority in the show cause notice. In case the noticee has any objection to the statement so relied,,,,

upon by the adjudicating officer, the noticee can certainly ask for cross examination of such person. There is no requirement for the",,,,

adjudicating authority to again summon the person concerned in order to reiterate or exhibit the statement recorded under Section 14,,,,

of the Act of 1944.,,,,

137. In another judgement passed by the Honâ€™ble Supreme Court reported in (2011) 12 SCC 243 (Commissioner of Central Excise, Mumbai Vs.",,,,

Kalvert Foods India Private Limited and Others), the officers of the respondent company of the said case made statements which themselves pointed",,,,

to evasion of excise duty. The statements were made before the Central Excise Officer and they subsequently retracted. However, the company had",,,,

voluntarily deposited the excise duty of Rs. 11 lakhs. The issue was whether statements before the Central Excise Officers, though subsequently",,,,

retracted, were admissible in evidence. The Honâ€™ble Supreme Court was of the view that the statements which were recorded before the Central",,,,

Excise Officer, who were not police officers, and were made by the Managing Director of the company and other persons, containing all details about",,,,

the functioning of the company which could be made only with personal knowledge, could not have been obtained through coercion or duress or",,,,

through dictation. Therefore, the Honâ€™ble Supreme Court found no reason as to why the said statements recorded under Section 14 should not be",,,,

considered, looked into and relied upon.",,,,

138. In the present case also, the statements contained disclosures about details about the sales and dispatches of the appellant company with various",,,,

parties whose full names and other details were disclosed by the Managing Director, which could be disclosed only from personal knowledge and",,,,

could not have been obtained through coercion or duress or through dictation. The said statements were followed by deposit of the differential amount,,,,

as calculated by the appellant company themselves without any protest. The deposits were made by the appellant company through cheques and,,,,

factum of deposit was intimated to the Central Excise officer. The cheques must have been signed by an authorized representative of the Company.,,,,

The appellant company has neither disclosed the name of the signatory of the cheque nor disclosed the name of the person who was alleged to have,,,,

been pressurized by the department in absence of the Managing Director, to deposit the amount. Further, such allegation of pressure from the side of",,,,

the department was made by the Managing Director for the first time after expiry of more than 4 years from the date of recording of his statement,,,,

that too at appellate stage when a show cause was issued to him for enhancement of personal penalty. The aforesaid plea of deposit under pressure is,,,,

further negated and is apparently an afterthought, as during the adjudication proceedings as well as appellate proceedings, it was the specific case of",,,,

the appellant company that they have paid Rs.10,802.32 in excess and only the excess amount was to be refunded to them. This specific stand was",,,,

stressed upon to avoid penalty and interest by stating that the duty amount was deposited prior to show cause notice as the 71 transactions were,,,,

cleared without invoices due to inadvertence. Thus, there is no material whatsoever from the side of the appellant company to indicate an element of",,,,

coercion or duress or dictation extended from the side of the person in authority so as to discard the statements made by the Managing Director,,,,

recorded under Section 14 of the Act of 1944 by referring to Section 24 of the Indian Evidence Act. Moreover, the Managing Director retracted his",,,,

statement after expiry of more than 4 years, that too at appellate stage when a notice for enhancement of personal penalty upon him was issued and",,,,

such retraction was not accepted by the appellate authority and personal penalty was enhanced. Such retraction was not even accepted by the,,,,

appellate tribunal and the imposition of personal penalty was sustained but only the steep enhancement by the appellate authority was set-aside.,,,,

139. From the records of the case, it appears that the appellate authority had issued a notice upon the Managing Director on the point of enhancement",,,,

of penalty. The Managing Director, in response to the said notice, stated in his reply that his statement was recorded on 15.11.2001 when he was",,,,

seriously ill being a heart patient. He further stated that his physical and mental condition at that point of time was not such that he could voluntarily,,,,

make any statement and just to complete the proceedings as early as possible, he recorded several portions of statement as per the dictates of the",,,,

department and rushed for his surgery at Chennai where he was admitted to hospital on 17.11.2001. Even the retraction was partial and he did not,,,,

disclose as to which portion or portions of his statement under Section 14 were recorded as per the dictates of the department. There is no explanation,,,,

as to why no such objection was ever taken earlier before the adjudicating authority or even before the appellate authority prior to filing his reply to,,,,

show cause before the appellate authority on 07.12.2005. Admittedly, in the entire records of the case, no application was filed from the side of the",,,,

appellant â€" company for the purposes of cross-examination of the co-noticee Managing Director. In fact, the appellant company and its Managing",,,,

Director had taken identical stand before the adjudicating authority.,,,,

Introduction and interpretation of Section 9D and inter play of the provisions of Sections 9D, 14 and 21 of the Act of 1944 with regards",,,,

to relevance of statements recorded under different circumstances under the Act of 1944.,,,,

140. The learned counsel appearing on behalf of the appellant has placed before this Court the Customs, Gold (Control) and Central Excises and Salt",,,,

(Amendment) Bill, 1972. This Amendment, inter alia, introduced Section 9A to Section 9D in the Act of 1944 vide amendment Act of 1973. Section",,,,

9D is quoted hereunder for ready reference:,,,,

â€œSection 9D. Relevancy of statements under certain circumstances.,,,,

(1) A statement made and 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 partly, 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 proceeding under this Act, other than a proceeding",,,,

before a Court, as they apply in relation to a proceeding before a Court.â€",,,,

141. Section 9D(1)(a) clearly provides that a statement made and signed by a person before any Central Excise officer of a Gazetted rank during,,,,

course of any inquiry or proceeding under the Act of 1944 shall be relevant for the purposes of proving, in any prosecution before a court for an",,,,

offence under the Act of 1944, the truth of the facts which it contains, if any of the conditions of death etc, as mentioned in Section 9D(1)(a), is",,,,

satisfied.,,,,

Section 9D(1)(b) provides for another situation when such person is examined as a witness in prosecution before the court, such a statement made",,,,

and signed by a person before any Central Excise officer of a Gazetted rank during course of any inquiry or proceeding under the Act of 1944 shall be,,,,

relevant, when the court is of the opinion that the statement should be admitted in evidence in the interest of justice.",,,,

142. Both under Section 9D(1)(a) and Section 9D(1)(b), the statement referred to is the statement made and signed in any inquiry or proceeding under",,,,

the Act of 1944 before any Central Excise officer of a Gazetted rank. If the situation is covered under Section 9D(1)(a), there is no question of",,,,

examination in chief and cross examination of the person concerned, but if the situation is covered under Section 9D (1) (b), the concerned person has",,,,

to be examined as a witness, reliance upon his statement made before any Central Excise officer of a Gazetted rank during course of any inquiry or",,,,

proceeding under the Act of 1944 is dependent upon the opinion of the court as to whether such statement should be admitted in evidence in the,,,,

interest of justice. Section 9D(1) deals with prosecution in a proceeding in a criminal court.,,,,

143. Section 9D (2) provides that the provisions of sub-section (1) shall, so far as may be, apply in relation to any proceedings under the Act of 1944,",,,,

other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. Such proceedings under the Act of 1944, includes",,,,

proceedings before the adjudicating authority by issuance of show cause.,,,,

144. Section 9D covers all the statements recorded by any Central Excise officer of a Gazetted rank but its applicability in relation to any proceedings,,,,

under the Act of 1944, other than a criminal proceeding before the court, is neither absolute nor universal and is circumscribed by the words so far as",,,,

may be. The import of the words so far as may be is required to be considered and given due weightage keeping in view the law already summarized,,,,

above regarding admissibility and evidentiary value of the statements recorded under section 14 of the Excise Act in the light of judicial,,,,

pronouncements.,,,,

145. The statements referred to in Section 9D are neither required to be recorded under an oath nor under any statutory legal obligation to speak the,,,,

truth. The only requirement is that it should have been recorded by a gazetted central excise officer under the Act of 1944 and should have been made,,,,

and signed by the person concerned.,,,,

146. There are different provisions under the Act of 1944 for recording and collecting evidences/ recording of statement of witnesses which include,,,,

Sections 14 and 21. There is wide difference between the mode and manner of recording of statement under Section 14 and Section 21 of the Act of,,,,

1944.,,,,

147. A person whose evidence/statement is to be recorded under Section 14 is summoned by a Central Excise Officer duly empowered by the Central,,,,

Government in this behalf and the person so summoned is under a statutory legal obligation to speak the truth and is liable to be punished for giving,,,,

false evidence under Section 193 of IPC. Every such inquiry under Section 14 is deemed to be a judicial proceeding within the meaning of Sections,,,,

193 and 228 of Indian Penal Code.,,,,

148. Thus, central excise officers are also empowered to make inquiry under Section 21 and take statements from arrested persons who are",,,,

forwarded to them under Section 19 and exercise the same powers and are subject to the same provisions, as the officer in charge of a police station",,,,

may exercise and is subject to under the Code of Criminal Procedure, when investigating a cognizable case. Sections 18 to 23 of the Act of 1944 deal",,,,

with searches, arrests, disposal of person arrested, procedure to be followed by the officer-in-charge of the police station and how inquiry is to be",,,,

made by central excise officers against arrested persons forwarded to them under Section 19 of the Act of 1944.,,,,

149. Thus, the statements made during inquiry under Section 21 by arrested persons if made before any gazetted officer under Central Excise are",,,,

another category of statements falling under Section 9D and are materially different from statements recorded under Section 14 of the Act of 1944 as,,,,

section 14 casts statutory obligation to speak the truth and to produce documents coupled with penal consequences for violating such obligation.,,,,

150. The introduction of Section 9D has not made any material change in the interpretation of Section 14 and use of statements recorded under,,,,

Section 14 while issuing show -cause notice for adjudication under the Act of 1944 and its impact is only to the extent as explained below. The only,,,,

safeguard in connection with use of such statement continues to be scrutiny by the adjudicating officer in the light of Section 24 of the Evidence Act,,,,

before being relied upon in the show cause notice. Persons making statements under section,,,,

14 can be made subject to cross examination by the noticee upon such request for cross-examination made before the adjudicating authority. In case,,,,

the relied upon statement is of the noticee himself, he can challenge the same in the show cause reply on the grounds mentioned under Section 24 of",,,,

the Evidence Act. However, when the person making the statement under Section 14 is dead etc., the role of Section 9D(1)(a) read with Section 9D",,,,

(2) will come into play and such statement will be relevant in terms of Section 9D(1)(a) read with Section 9D(2) if Section 9D is invoked by the,,,,

adjudicating authority. Invocation of Section 9D(1)(a) read with Section 9D (2) will be subject to any objection or contest by the noticee, for which the",,,,

adjudicating authority has to pass a reasoned order which can also be challenged in an appropriate proceeding. Relevance of such statement of the,,,,

category of persons mentioned under Section 9D(1)(a) is otherwise also referrable to section 32 and 33 of the Evidence Act.,,,,

151. Again the condition precedent for invoking Section 9D is that the statement must be made and signed by a person before any Central Excise,,,,

officer of a Gazetted rank during course of any inquiry or proceeding under the Act of 1944 and it is important to note that Section 14 of the Act of,,,,

1944 requires the statement to be recorded pursuant to summons issued by a Central Excise Officer duly empowered by the Central Government in,,,,

this behalf, and there is no such rider that he ought to be a gazetted central excise officer. It can certainly be possible that the central government",,,,

empowers only gazetted officers to issue summons for recording statement under Section 14 but in case any non gazetted officer is empowered, the",,,,

same will not vitiate the statement recorded under Section 14 by such an officer.,,,,

152. There can be yet another situation. In case the adjudicating authority wants to rely upon a statement of an arrested person recorded under,,,,

Section 21 by a gazetted central excise officer, the same would require compliance of Section 9D (2). Accordingly, the statements recorded under",,,,

Section 21 can be relied upon by the adjudicating authority only if such person is a witness and is examined by the adjudicating officer. The,,,,

adjudicating officer in turn may admit such statement of the maker at his discretion and if the interest of justice so requires only in terms of Section 9D,,,,

(1) (b) read with Section 9D (2). If such person is dead etc., Section 9D(1)(a) read with Section 9D (2) can also be invoked by the adjudicating",,,,

authority subject to any objection or contest by the assessee for which an appropriate order is to be passed by the adjudicating authority which may be,,,,

subject to challenge.,,,,

153. With regards to the statements recorded under Section 14, when relied upon by the adjudicating authority in the show cause notice, Section 9D",,,,

(1) (b) read with section 9D(2) will have no application. Such statement will only be subject to scrutiny by the adjudicating authority in terms of section,,,,

24 of the Evidence Act as held by the judgements discussed above and, in the manner, stated above. There is no requirement to comply with Section",,,,

9D (1) (b) by asking the concerned person to again appear in person before the adjudicating authority to be examined as a witness and reiterate his,,,,

statements or exhibit his statement recorded under Section 14 and he can straightaway be called for cross -examination by the noticee upon a request,,,,

made by him before the adjudicating authority. If such person is dead etc., Section 9D(1)(a) read with Section 9D (2) can also be invoked by the",,,,

adjudicating authority subject to any objection or contest by the assessee for which an appropriate order is to be passed by the adjudicating authority,,,,

which may be subject to challenge.,,,,

154. It is relevant to note that as per Section 33A of the Act of 1944, which deals with adjudication procedure, even an opportunity of being heard is to",,,,

be given to the noticee, only if he so desires. Meaning thereby, if a request for hearing is not made by the noticee, the authority may even proceed to",,,,

decide the matter on the basis of materials relied upon in the show cause notice including the statement of the persons recorded by issuing summons,,,,

under Section 14. This course of action can be permissible only if the statements recorded under Section 14 are per-se admissible in evidence without,,,,

calling upon the person concerned to reiterate or exhibit his statement before the adjudicating authority again in order to get his statement admitted. In,,,,

the instant case also, the show-cause notice was in accordance with Section 33A of the Act of 1944, to which the noticees responded and at their",,,,

request an opportunity of hearing was given and they were represented by their advocate before the adjudicating authority who also filed the show,,,,

cause replies on 07.03.2005. However, the statement recorded under section 14 of the co-noticee- Managing Director was neither retracted nor any",,,,

objection was raised before the adjudicating authority in terms of Section 24 of the Evidence Act, rather a specific stand was taken that invoices in",,,,

connection with 71 transactions could not be issued due to inadvertence and such plea was also rejected and both the noticees were held guilty of,,,,

clandestine removal of goods.,,,,

155. The judgements relied upon by the appellant on the point are considered as under:,,,,

A. Learned counsel appearing on behalf of the appellant has heavily relied upon the judgment passed by the Honâ€™ble Supreme Court reported in,,,,

(1995) 3 SCC 367 (Sukhwant Singh Vs. State of Punjab) to submit that it has been held by the Honâ€™ble Supreme court that unless a witness is,,,,

produced for recording of examination-in-chief, he cannot be produced for cross-examination only and such a course of merely producing the witness",,,,

for cross-examination would amount to giving up the witness itself. This argument has been advanced to submit that the Managing Director of the,,,,

appellant company ought to have been examined as a witness before the adjudicating officer who ought to have recorded his evidence as examination-,,,,

in-chief and then only his statement recorded by the Excise Officer under Section 14 of the Central Excise Act, could form a part of the evidence and",,,,

for this purpose he has referred to Section 138 of the Evidence Act and the aforesaid judgement reported in (1995) 3 SCC 367 (Sukhwant Singh Vs.,,,,

State of Punjab).,,,,

In the said judgement reported in (1995) 3 SCC 367 (Sukhwant Singh Vs. State of Punjab), the case was relating to prosecution under Section 320 of",,,,

IPC and the two eye witnesses of the case were produced only for cross examination by the court and this was done in the light of a judgement,,,,

passed by the Honâ€™ble Supreme court reported in (1971) 2 SCC 42 (State of U.P. versus Jaggo). The issue before the Honâ€™ble Supreme,,,,

Court was as to whether a witness can be cross-examined without there being any examination-in-chief. Since the judgement reported in (1971) 2,,,,

SCC 42 (State of U.P. versus Jaggo) was passed prior to coming into force of Criminal procedure Code of 1973, theH onâ€™ble Supreme Court",,,,

considered the Code of Criminal Procedure, 1898 as well as its amendment vide Act 26 of 1955 and observed that the practice of tendering witnesses",,,,

for cross-examination in session trials was frequently resorted to since the enactment of Code of Criminal Procedure, 1898 which though was",,,,

inconsistent with Section 138 of the Evidence Act but was permissible under Section 288 of Code of Criminal Procedure, 1898 as the evidence of",,,,

witnesses recorded by the committing magistrate could be treated, at the discretion of the sessions judge, as substantive evidence during trial,",,,,

however, by its amendment vide Act 26 of 1955 some restrictions were made. Section 288 of Code of Criminal Procedure, 1898 was subject matter",,,,

of consideration by various High Courts as recorded in the judgement itself and it has been observed in para 18 that the various high courts,",,,,

notwithstanding Section 288 of Code of Criminal Procedure, 1898, have consistently taken a view that there is no procedure whereby the prosecution",,,,

is permitted to tender a witness for cross-examination only, without there being any examination in chief in relation to which the witness can be cross-",,,,

examined. It has been held that the practice of tendering the witness for cross examination has been rightly condemned by the various high courts.,,,,

The Honâ€™ble Supreme Court at para-20 of the aforesaid judgment further held that,,,,

â€œ20â€¦â€¦â€¦â€¦. After the coming into force of the Criminal Procedure Code, 1973, which replaced the Code of 1898, recording of",,,,

evidence in commitment proceedings has been totally dispensed with and Section 288 of that Code has been omitted. Consequently, the",,,,

course suggested by some of the High Courts in the earlier quoted judgments regarding tendering of a witness for cross-examination, who",,,,

had been examined in the committal court, is also no more relevant or available. The Jaggo case, which was decided when the Code of 1898",,,,

was operating in the field could not, therefore, be pressed into service by the trial court while dealing with the instant case tried according",,,,

to the Code of 1973â€¦â€,,,,

The aforesaid judgement has no applicability to the adjudication proceedings under Central Excise Act of 1944. Recording of evidence by any Central,,,,

Excise Officer duly empowered by the Central Government in this behalf in terms of Section 14 of the Act of 1944 is permissible but the aforesaid,,,,

judgement was passed considering the fact that recording of evidence in commitment proceedings was totally omitted under the Code of Criminal,,,,

Procedure, 1973 and accordingly the evidence recorded in commitment proceedings was nonest in the eyes of law being totally impermissible and",,,,

various high courts, notwithstanding Section 288 of Code of Criminal Procedure, 1898, have consistently taken a view that there is no procedure",,,,

whereby the prosecution is permitted to tender a witness for cross-examination only, without there being any examination in chief in relation to which",,,,

the witness can be cross-examined. In this context, it was held in (1995) 3 SCC 367 (Sukhwant Singh Vs. State of Punjab) that the witness has to be",,,,

first examined and then cross-examined and cannot be just produced for cross-examination.,,,,

On the contrary, under the Act of 1944, it is permissible to record evidences in terms of Section 14 which are recorded by the competent central",,,,

excise officer by issuance of summons and the person whose statement is so recorded, is already under a statutory legal obligation to state the truth",,,,

before such officer. In view of the aforesaid, the judgement relied upon by the learned counsel for the appellant company reported in (1995) 3 SCC",,,,

367 (Sukhwant Singh Vs. State of Punjab), has no applicability to adjudication proceedings under the Act of 1944 involved in the present case.",,,,

B. In the judgment passed by the Honâ€™ble Delhi High Court reported in 2009 (242) E.L.T. 189 (Del.), (J & K Cigarettes Ltd. v. Collector of",,,,

Central Excise), the validity of Section 9D of Central Excise Act, 1944 was under challenge and the Honâ€™ble Delhi High Court upheld the validity",,,,

of the said Section. The Honâ€™ble Delhi High Court has taken a view that Section 9D comes into play under following five circumstances: -,,,,

(a) When the witness is dead.,,,,

(b) When he cannot be found.,,,,

(d) When he is kept out of the way by the adverse party.,,,,

(e) When his presence cannot be obtained without an amount of delay or expense which the Court considers unreasonable.,,,,

It has also been held at para-26 of the aforesaid judgement that the provisions of Section 9D of the Act are necessary to ensure that under certain,,,,

circumstances, as enumerated therein, decision making in a case cannot be allowed to continue in perpetuity. The Honâ€™ble High Court also held",,,,

that these provisions are based on the Doctrine of Necessity. It provides for relevancy of statements recorded under Section 14 of the Act dispensing,,,,

with or without the opportunity for testing the truth of such evidence by cross-examination, when a person is dead or incapable of giving evidence or",,,,

cannot be found, no better evidence can be had in the circumstances than the statement tendered by witnesses before a quasi-judicial authority.",,,,

In the aforesaid judgment, the Honâ€™ble Delhi High Court at para-32 has held as under: -",,,,

â€œ32. Thus, we summarize our conclusions as under: -",,,,

(i) we are of the opinion that the provisions of Section 9D(2) of the Act are not unconstitutional or ultra vires;,,,,

(ii) while invoking Section 9D of the Act, the concerned authority is to form an opinion on the basis of material on record that a particular",,,,

ground, as stipulated in the said Section, exists and is established;",,,,

(iii) such an opinion has to be supported with reasons;,,,,

(iv) before arriving at this opinion, the authority would give opportunity to the affected party to make submissions on the available material",,,,

on the basis of which the authority intends to arrive at the said opinion; and,,,,

(v) it is always open to the affected party to challenge the invocation of provisions of Section 9D of the Act in a particular case by filing,,,,

statutory appeal, which provides for judicial review.â€",,,,

The aforesaid judgment is not on the point as to whether the statement recorded under Section 14 of the Act of 1944 can be taken into consideration,,,,

by the adjudicating authority without examining the person concerned in-chief. It has been simply held in the aforesaid judgement that before invoking,,,,

Section 9D of the Act of 1944, it would be essential that the condition precedent therein is satisfied. It does not hold that the evidence recorded under",,,,

Section 14 of the Central Excise Act is of no use and cannot be considered unless a person is examined in terms of Section 9D(1)(b) of the Act of,,,,

1944. In fact, it holds that these provisions are based on the Doctrine of Necessity and it provides for relevancy of even the statements recorded",,,,

under Section 14 of the Act dispensing with or without the opportunity for testing the truth of such evidence by cross-examination. Meaning thereby, if",,,,

Section 9D is invoked as per its terms, the obligation to produce the person for cross-examination is also dispensed with. In the present case the",,,,

department neither invoked Section 9D of the Act of 1944 nor there was any occasion to invoke the said section as the condition precedent for,,,,

invoking Section 9D was not at all satisfied in view of the fact that the Managing Director was himself a co-noticee. In view of the aforesaid,,,,

discussions, the aforesaid judgment passed by the Honâ€™ble Delhi High Court does not apply to the facts and circumstances of this case.",,,,

C. The appellant has relied upon judgement reported in 2007 (220) E.L.T. 3 (S.C.) (Mohtesham Mohd. Ismail Vs. Spl. Director, Enforcement",,,,

Directorate) (Supra), para 16, which reads as follows:",,,,

â€œ16. We may, however, notice that recently in Francis Stanly @ Stalin v. Intelligence Officer, Narcotic Control Bureau, Thiruvanthapuram [2006",,,,

(13) SCALE 386], this Court has emphasized that confession only if found to be voluntary and free from pressure, can be accepted. A confession",,,,

purported to have been made before an authority would require a closure scrutiny. It is furthermore now well-settled that the court must seek,,,,

corroboration of the purported confession from independent sources.â€,,,,

The para 17 of the judgement refers to following passage of the judgement of Assistant Collector of Central Excise Rajamundry Vs. Duncan Agro,,,,

Industries Ltd. (Supra) :,,,,

â€œâ€¦The inculpatory statement made by any person under Section 108 is to non-police personnel and hence it has no tinge of,,,,

inadmissibility in evidence if it was made when the person concerned was not then in police custody. Nonetheless the caution contained in,,,,

law is that such a statement should be scrutinized by the court in the same manner as confession made by an accused person to any non-,,,,

police personnel. The court has to be satisfied in such cases, that any inculpatory statement made by an accused person to a gazetted",,,,

officer must also pass the tests prescribed in Section 24 of the Evidence Act. If such a statement is impaired by any of the vitiating premises,,,,

enumerated in Section 24 that statement becomes useless in any criminal proceedings.â€,,,,

There can be no dispute about the aforesaid proposition of law. It has been held in the case of â€œAssistant Collector of Central Excise Rajamundry,,,,

Vs. Duncan Agro Industries Ltd.â€ (Supra) itself that Section 108 of the Customs Act is similar to that of Section 14 of the Act of 1944. Thus, in view",,,,

of the aforesaid judgement, the corollary would be that the statement recorded under Section 14 of the Act of 1944 is per-se admissible in evidence",,,,

subject to scrutiny by the adjudicating authority in the light of the Section 24 of the Indian Evidence Act and the authority is required to be satisfied in,,,,

this regard before relying upon the statement in the show -cause notice. Once he relies upon the statement, the statement gets admitted in evidence",,,,

and the noticee acquires the right to cross-examine the person and if the statement is that of the noticee, he has a right to retract the statement on any",,,,

of the grounds mentioned in Section 24 of the Evidence Act. There is no requirement to summon the person again, whose statement has already been",,,,

recorded under Section 14 of the Act of 1944 and record his statement again by way of examination-in-chief in order to admit his statement in,,,,

evidence recorded under Section 14. This would be more clear from the judgement passed in the case of â€œFlevel International Vs. Commissioner,,,,

of Central Exciseâ€ reported in 2016 (332) E.L.T. 416 (Delhi)(Supra), which has followed the earlier judgment in the case of â€œJ & K Cigarettes",,,,

Ltd. v. Collector of Central Exciseâ€ reported in 2011 (22) S.T.R. 225 (Del.) .,,,,

In the aforesaid judgement reported in 2016 (332) E.L.T. 416 (Delhi) (Flevel International Vs. Commissioner of Central Excise), statements of two",,,,

persons were relied upon by adjudicating authority and a specific request for cross-examination was denied on the ground that it would delay the,,,,

adjudication process on an incorrect understanding that it was not the requirement of law. The law settled in this regard has been mentioned in para 42,,,,

as under:,,,,

â€œ42. It is settled law that the denial of an opportunity of cross-examination of a witness whose statements have been relied upon in the,,,,

adjudication order would vitiate the order of adjudication. In Basudev Garg v. Commissioner of Customs â€" 2013 (294) E.L.T. 353 (Del.),",,,,

this Court referred to Section 9D of the CE Act and noted that even while upholding its constitutional validity in J & K Cigarettes Ltd. v.,,,,

Collector of Central Excise - 2011 (22) S.T.R. 225 (Del.) = 2009 (242) E.L.T. 189 (Del.), a Division Bench of this Court had observed that",,,,

the circumstances under which the right of cross-examination can be taken away would have to be â€˜exceptionalâ€™. This would include,,,,

circumstances where the person who had given the statement was dead or cannot be found or is incapable of giving evidence or is kept out,,,,

of the way by adverse party or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances,",,,,

the Court considers unreasonable. It was held by the Court in Basudev Garg (supra) that â€œit is clear that unless such circumstances exist,,,,

the noticee would have a right to cross-examine the person whose statements are being relied upon even in quasi-judicial proceedings.â€,,,,

It was further held as follows:,,,,

â€œ46. The CCE also wrongly proceeded on the basis that there was no right of cross-examination overlooking the fact that Section 9D of,,,,

the Act restricts the grounds on which the cross-examination can be denied. It also overlooks the decision of the Supreme Court in Swadeshi,,,,

Polytex Ltd. v. Collector of Central Excise â€" 2000 (122) E.L.T. 641 (S.C.) and Laxman Exports Ltd. v. Collector of Central Excise â€",,,,

2002 (143) E.L.T. 21 (S.C.) to the effect that when a statement is used against an assessee an opportunity of cross-examining the persons,,,,

who made those statements ought to be given to the assessee.â€,,,,

Upon perusal of the aforesaid judgement reported in 2016 (332) E.L.T. 416 (Delhi)(Flevel International Vs. Commissioner of Central Excise) which,,,,

also relied upon certain supreme court judgements, it is apparent that there is a right to cross-examination of the person, whose statement is recorded",,,,

under Section 14 of the Act of 1944 and relied upon by the adjudicating authority. The grounds/situations on which cross-examination can be denied,,,,

are those enumerated under Section 9D(1)(a) of the Act of 1944 and are the same grounds/situations where the witnesses cannot be called for,,,,

examination as provided under Section 32 as well as 33 of the Indian Evidence Act i.e. where a person is dead, incapable of giving evidence etc.",,,,

The aforesaid judgement clearly lays down that the person whose statement is recorded under Section 14 and if such statement is relied upon by the,,,,

adjudicating authority, he may be cross-examined at the request of the noticee. It does not say that such person is first required to be examined in",,,,

chief again and then cross-examined. This is so because statement under Section 14 is per se admissible in evidence subject to scrutiny by the,,,,

adjudicating authority in terms of section 24 of the Evidence Act.,,,,

D. The judgement of the Honâ€™ble Punjab and Haryana High Court in the case reported in 2016 (340) ELT 67 (P & H) (Jindal Drugs Pvt. Ltd. Vs.,,,,

Union of India) as well as the judgement in the case of â€œAmbika International Vs. Union of Indiaâ€ reported in 2018 (361) E.L.T. 90 (P & H) has,,,,

been decided on 21.06.2016 and on 17.06.2016 respectively and the Honâ€™ble High Court relied upon the judgement passed by Honâ€™ble Delhi,,,,

High Court in the case of â€œJ & K Cigarettes Ltd. v. Collector of Central Exciseâ€ reported in 2011 (22) S.T.R. 225 (Del.)(supra). The Honâ€™ble,,,,

Chhattisgarh High Court in judgement passed in the case of â€œHi Tech Abrasives Ltd. Vs. Commissioner of Central Excise and Customs, Raipurâ€",,,,

reported in 2018 (362) E.L.T. 961 (Chhattisgarh) has further relied upon the aforesaid judgement passed in the case of â€œAmbika International Vs.,,,,

Union of Indiaâ€ [2018 (361) E.L.T. 90 (P & H)]. In the aforesaid judgements passed by Honâ€™ble Punjab and Haryana High Court followed by,,,,

Honâ€™ble Chhattisgarh High Court, in sum and substance, it has been held that the statement recorded under Section 14 of the Act of 1944 is",,,,

irrelevant material unless the same is brought on record by examination of the maker of the statement again by the adjudicating authority and then the,,,,

adjudicating authority would admit the statement in evidence in terms of Section 9D(1) (b) read with Section 9(2). In the aforesaid judgements passed,,,,

by Honâ€™ble Punjab and Haryana High Court and Honâ€™ble Chhattisgarh High Court, the judgement passed by Honâ€™ble Delhi High Court in",,,,

the case of â€œFlevel International Vs. Commissioner of Central Exciseâ€ reported in 2016 (332) E.L.T. 416 (Delhi) (Supra), which has explained",,,,

and relied upon the judgement passed in the case of â€œJ & K Cigarettes Ltd. v. Collector of Central Exciseâ€ reported in 2011 (22) S.T.R. 225,,,,

(Del.) (supra) has not been placed. The judgements passed by Honâ€™ble Delhi High Court clearly held that the person whose statement is recorded,,,,

during investigation by the Central Excise Officer, if relied upon in show-cause, such person is required to be produced for cross-examination if asked",,,,

for by the noticee and the cross examination is dispensed with only under the conditions mentioned in section 9D(1) (a) of the Act of 1944 . It never,,,,

laid down that first the person has to be examined in chief by the adjudicating authority and then to be cross-examined.,,,,

Further, the import of the words so far as may be as used in Section 9D (2) has also not been considered in any of the judgements relied upon by the",,,,

learned counsel for the appellant. The judgement passed by the Honâ€™ble Supreme Court in the case of â€œAssistant Collector of Central Excise,,,,

Rajamundry Vs. Duncan Agro Industries Ltd.â€ (Supra) which lays down that the statements recorded under Section 14 of the Act of 1944 or,,,,

Section 108 of the Customs Act are admissible in evidence with the only precaution that the same is to be scrutinized by the adjudicating officer,,,,

before relying upon such statement, has not been placed. The other provisions and manner of inquiries under Section 21 of the Act of 1944 were also",,,,

not placed before the Honâ€™ble Courts. Accordingly, with great respect and humility, I do not agree with the aforesaid view taken by the",,,,

Honâ€™ble Punjab and Haryana High Court and Honâ€™ble Chhattisgarh High Court.,,,,

156. In view of the aforesaid discussions and findings,",,,,

i. the statement recorded under Section 14 is per-se admissible in evidence by the adjudicatory authority under Central Excise Act, 1944 subject to",,,,

scrutiny by the adjudicating authority in the light of Section 24 of the Indian Evidence Act.,,,,

ii. Such scrutiny is required to be done by the adjudicating authority on the basis of materials available before him including the evidences collected and,,,,

statements recorded under Section 14, before relying upon such statements and treating them as relied upon evidence while issuing show-cause",,,,

notice.,,,,

iii. Upon scrutiny under Section 24 of the Evidence Act, such statement recorded under Section 14 of the Act of 1944 can be relied upon by the",,,,

adjudicating authority while issuing show-cause notice without calling upon the person to depose as a witness in terms of Section 9D (1) (b) read with,,,,

Section 9D (2) of the Act of 1944. The moment the adjudicating authority relies upon the statement recorded under section 14 of the Central Excise,,,,

Act, it is indicative of the fact that necessary scrutiny in terms of Section 24 of the Evidence Act has been done and no separate order is required to",,,,

be passed to this effect and this is also subject to any objection to be raised by the noticee/ person whose statement has been recorded .This is,,,,

because the recording of evidence is permissible under Section 14 of the Act of 1944 by issuing summons by a Central Excise Officer duly,,,,

empowered by the Central Government in this behalf and the person concerned is under statutory legal obligation to disclose the truth and there are,,,,

penal consequences for giving false evidence and the recording of evidence under section 14 of the Act of 1944 is deemed to be a judicial proceeding,,,,

under Section 193 and Section 228 of Indian Penal Code.,,,,

iv. This will not be the position with regards to the statements under other provision of the Act of 1944 which are not recorded pursuant to summons,,,,

under Section 14, including those of arrested persons under Section 21 of the Act of 1944. They would require compliance of Section 9D (1) (b) read",,,,

with Section 9D (2) of the Act of 1944, if they are to be relied upon by the adjudicating authority and the only exception are those circumstances as",,,,

provided under Section 9D (1) (a) of the Act of 1944.,,,,

v. In case of any objection with regards to the statements recorded under Section 14 of the Act of 1944, the person can be called upon at the instance",,,,

of the noticee for cross-examination and the adjudicating authority is bound to consider such request and pass an appropriate order, failing which such",,,,

statement recorded under Section 14 of the Act of 1944 is to be eschewed. On account of situation covered under Section 9D(1)(a), the statement",,,,

becomes relevant in terms of Section 9D(1)(a) read with Section 9D (2) of the Act of 1944 as the person need not be produced for cross-,,,,

examination.,,,,

vi. It is the right of the noticee to have the statements excluded from relied upon evidence by the adjudicating authority in light of Section 24 of the,,,,

Indian Evidence Act and equally the duty of the adjudicating authority to exclude it even suo-moto if the vitiating circumstances appear from the,,,,

records, as Section 24 of the Evidence Act uses the word â€œappears to the courtâ€. When the noticee alleges that the statement recorded under",,,,

Section 14 of the Act of 1944 was a result of threat or undue pressure of the authority, he must prove his allegation to be true, though the burden of",,,,

this proof on the noticee is not very heavy, but certainly such allegation should be based on some material.",,,,

vii. Admittedly in the instant case no request was made before the adjudicating authority to cross examine any witness whose statements were,,,,

recorded under section 14 of the Act of 1944 including that of the Managing Director of the appellant company. Admittedly no objection whatsoever,,,,

was made in connection with the relied upon statements before the adjudicating authority and there was no material before the adjudicating authority,,,,

to discard the statements in the light of Section 24 of the Evidence Act. The retraction by the Managing Director for the first time at appellate stage,,,,

after expiry of more than four years was clearly an afterthought as fully discussed above.,,,,

157. In view of the aforesaid findings, the statement of the Managing Director recorded under Section 14 of the Act of 1944 could be",,,,

relied upon and treated as a relevant piece of material while issuing the show-cause notice to the Managing Director as well as the,,,,

appellant company and the same could be relied upon without calling upon the Managing Director to again depose as a witness before,,,,

the adjudicating authority in terms of Section 9D (1) (b) read with Section 9D (2) of the Act of 1944.,,,,

158. Issue No. (i) is accordingly decided in favour of the respondent.,,,,

159. All the issues having been decided in favour of the respondent, there is no merits in the present appeal, which is accordingly dismissed.",,,,

Since there is a difference of opinion amongst the Honâ€™ble Members of the Bench on all the substantial questions of law framed for adjudication,",,,,

let the matter be placed before Honâ€™ble the Chief Justice for placing it before the appropriate Bench in terms of Section 35-G(8) of Central Excise,,,,

Act, 1944.",,,,

M/s Bihar Foundry & Casting Ltd Vs Commissioner Of Central Excise, Ranchi Commissionerate, Ranchi

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