No Demand Sustainable Merely on Shortage and Statements of Persons, who has not Cross-Examined: CESTAT [Read Order]

The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal has held that no demand sustainable merely on shortage and statements of persons, who has not cross-examined. The appellant M/s. FaizanTexturising is a 100% EOU engaged in the manufacture of Polyester TexturisedYarn and Polyester Twisted Yarn. The lower authorities have arrived at the findings of illicitly cleared 9618 kgs of Bright Polyester Spin yarn on the basis of the shortages detected at the time of the visit of the officers and by observing that the 7618 Kgs cleared to M/s HN Textiles and remaining 2000kgs have been cleared and sold in open market. The said removal was accepted by the partner of the unit as also by the proprietor of M/s H N Textiles.The adjudicating authority confirmed the Custom duties of Polyester Spin Draw yarn along with interest and penalty. The appellants submitted that the allegation and finding of illicit clearance to H.N. Textiles is based on statements of Appellant’s partner and proprietor of H.N. Textiles. The said statements are not admissible is evidence since none of the said two persons has been examined during the adjudicating proceedings as required by Section 138B of the Customs Act 1962 (Section 9D of the Central Excise Act 1944). The Appellant sought cross-examination, which has not been considered by the Adjudicating Authority. It was observed by the Tribunal that it is settled preposition of law that for the purpose of reliance on statement, Section 138B of the Customs Act 1962 (Section 9D of Central Excise Act 1944) mandates cross-examination of person whose statement is relied upon, otherwise the said statement cannot be relied upon in the proceedings. This denial of cross-examination has resulted in denial of principle of natural justice. By giving reliance to the decisions of the Supreme Court in Andman Timber Ind. Vs. CCE, 2015 (324) ELT 641(SC)andthe Delhi High Courtin case of JK Cigarettes Vs. Collector of Central Excise 2009 (242) E.L.T. 189 (Del.)the Tribunal observed that the Appellant is required to be afforded the opportunity of cross-examination of persons whose statements have been relied by the Department for confirmation of demand. Here Adjudicating authority failed to do that. The appellant further submitted that the alleged clearance of balance 2000 kgs in the open market, he submits that there is absolutely no evidence of the same. There is no single statement to that effect nor any evidence of any buyer or recipient of the same, nor evidence of transport of the said 2000 kgs nor evidence of any payment received by the Appellant for the same. Tribunalby giving reliance to the Allahabad High Court decision in the case of Minakshi Castings reported in 2011 (274) E.L.T. 180 (All.) as also the Punjab& Haryana High Court in the case of CCE, Ludhiana v. NexoProducts (India) reported in 2015 (325) E.L.T. 106 (P & H) and to another decision of Punjab & Haryana High Court in the case of C.C.E. & S.T., Ludhiana v. Anand Founders & Engineers reported as 2016 (331) E.L.T. 340 (P & H)observed that the clandestine removal charges based on shortages in stock cannot be upheld in the absence of any other evidence brought on record by the Revenue showing such illegal activities on the part of an assessee. The Coram ofMr. Ramesh Nair, Member (Judicial) and Mr. Raju Member (Technical), has held that “In view of above, we find that no demand is sustainable merely on thebasis of shortage and statements of persons, who has not been offered for cross-examination. We find no justifiable reason to uphold the said demands. The same is accordingly set aside along with setting aside of penalty on the said count”. Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.

No Demand Sustainable Merely on Shortage and Statements of Persons, who has not Cross-Examined: CESTAT [Read Order]

Your free access to Taxscan has Expired

To read the article, get a premium account.

Taxscan Premium

Topics