The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the statement made under section 14 of the Central Excise Act, 1944 becomes admissible evidence, when person is examined and his/her cross examination is allowed under Section 9D of Central Excise Act 1944.
The appellant, M/s Sohni Ceramics was engaged in manufacturing of Ceramic Floor Tiles of Chapter 69 of the Central Excise Tariff Act, 1985. The central excise department made an addition of Rs. 10,00,000/- against the appellant and the same was quashed by the Tribunal allowing cross-examination of seven witnesses.
On the second round of litigation, the appellants and its partner Dineshbhai Patel, approached the Tribunal against the Order of the first appellate authority wherein demand of excise duty Rs. 8,66,588/- is confirmed with interest and penalty against M/s Sohni Ceramics and also a Separate penalty Rs. 2,00,000/- is imposed on Shri Dineshbhai Patel. It was contended that all Witnesses not examined or cross-examination allowed for all, in terms of Section 9D of the Central Excise Act 1944.
Judicial Member Mr. Ramesh Nair observed that the Revenue has not produced any clinching positive evidence of such receipt of goods by those buyers.
“There is no evidence either in the form of their statements or any other corroborative evidence in respect of those 115 Invoices and buyers who are shown in Annexure A-2 as buyers of goods in respect of Invoices. The Commissioner (Appeals) has also not examined these facts critically,” the Tribunal said.
Quashing the impugned demand and penalty orders, the Tribunal held that “There should be clinching positive evidence on record in support of case of clandestine manufacture and clearances. Statements made under Section 14 of Central Excise Act, 1944 becomes admissible evidence, when person is examined and his/her cross examination is allowed under Section 9D of Central Excise Act 1944. Adjudicating Authority has not allowed Cross Examination of all witness under Section 9D ibid, despite directions by this Tribunal. In absence of Cross Examination, statements used against appellants to confirm demand have to be discarded as per the settled law. Thus, in absence of clear evidence of manufacture, transporting goods twice on same or parallel Invoice or receipt of such goods and payment made twice by buyer, alleged charge of clandestine removal or on parallel Invoices is not proved, in the facts of this case.”
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