Judgment:
P.R. Chandrasekharan
The appeals and stay applications are directed against order-in-original No.10/2011/C dated 17.10.2011 passed by the Commissioner of Central Excise, Nagpur.
2. The facts arising for consideration in this case are as follows. The main appellant, M/s. Malerkotla Steel Rolling Mill Pvt. Ltd., is manufacturer of iron and steel rerolled products. Intelligence was received that the appellant was indulging in clandestine production and removal of the said goods. Accordingly, a search was conducted in the factory premises of the appellant on 30.1.2009 by the Central Excise authorities at Nagpur. The stock verification conducted revealed shortage of raw materials to the extent of 106.990 MT and excess stock of finished goods which were not accounted for in the production register, to the extent of 49.051 MT. Searches were conducted in the combined office premises of M/s. Trimurti Ispat Ltd., Kalmeshwar, M/s. Malerkotla Steel Rolling Mill Pvt. Ltd., Gondkhairy, M/s. Surendra Springs and M/s. Lalchand Steel Industries, Gondkhairy situated at Sheela Complex, Amravati Road, Nagpur, on 30.1.2009 and incriminating records/documents were recovered under panchnama dated 30.1.2009. A car bearing registration No. MH-31-CN-9570 belonging to Shri Lalchand Garg, Director of M/s. Malerkotla Steel Rolling Mill Pvt. Ltd., was also searched and incriminating documents were recovered from the said car. A private register recording receipt of raw materials such as steel ingots and production of finished goods, i.e. rolled products, and clearance of the same was found to be recorded in the said private register. Correlation of the entries made in the said private register with the statutory records maintained by the appellant revealed that a quantity of 14818.015 MT was found unaccounted in the statutory records vis-Ã -vis the private register and a quantity of 13793.804 MT of finished goods was not recorded in the statutory records, but which were found to be recorded in the private register and cleared to various buyers in Nagpur. The period in respect of the receipt of raw materials and production of finished goods pertained to January 2006 to August 2007 month-wise. This register also contains clearance of the finished goods and vehicle numbers under which the same goods were said to have been cleared. Enquiry conducted with the Octroi Naka around the city of Nagpur revealed that the vehicle mentioned in the private register had crossed into the Nagpur Municipal Corporation limits area and also the details of the goods carried along with their weighments etc. were found in the declarations made before the Octroi authorities, which tallied with the details contained in the said private register. The investigation conducted revealed that the said register was written by one Shri Prakash P. Band who was the manager and authorized signatory of the main appellant. In the statement recorded under Section 14 of the Central Excise Act, 1944, Shri Prakash Band admitted that the details recorded in the seized private register pertained to receipt of raw materials, production and clearance of finished goods by the main appellant. The statements of the directors of the appellant firm were also recorded and investigation was also conducted of the transaction undertaken by the sister units of the main appellant. On the basis of such investigation, a show cause notice dated 7.7.2010 was issued demanding central excise duty amount to Rs.4,89,14,867/-, education cess of Rs.9,78,297/- and higher secondary education cess of Rs.1,89,012/- in respect of clandestine removal of 15582.755 MT of rerolled products valued at Rs.30,57,17,916/- under the provisions of Section 11A of the Central Excise Act, 1944. The show cause notice also proposed to demand excise duty amounting to Rs.16,619/- + education cess of Rs.332/- in respect of clandestine removal of 9.455 MT of C.I. scrap valued at Rs.1,03,868/- under the said Section 11A. The said notice also proposed to demand excise duty amounting to Rs.2,46,720/- in respect of raw materials found short in the factory at the time of panchnama proceedings dated 30.1.2009. Interest on the above demands was also proposed to be recovered under Section 11AB ibid and penalty on the main appellant and on Shri Lalchand Garg, Director of the appellant firm, was proposed under Section 11AC of the Central Excise Act read with Rules 25 and 26 of the Central Excise Rules, 2002. The notice was adjudicated vide the impugned order wherein the above duty demands totaling to Rs.5,03,45,847/- were confirmed along with interest thereon and a penalty of equivalent amount was imposed on the main appellant under Section 11AC and a penalty of Rs.50,00,000/- each was imposed on the main appellant and its Director, Shri Lalchand Garg, under Rule 26 of the Central Excise Rules, 2002. Hence the appellants are before us.
3. The learned Advocate for the appellants makes the following submissions. The show cause notice relied on 23 documents specified in annexure 6 thereto, out of which only the documents mentioned at serial Nos.1 to 13 were provided to the appellants. In respect of the documents mentioned at serial Nos.14 to 23, the appellants were directed to visit the office of the adjudicating authority and obtain copies from the Preventive branch on any working day between 10 am to 6 pm by prior appointment. In other words, these documents were not supplied to the appellants. The appellants, vide preliminary reply dated 11.8.2010, had specifically indicated that copies of the relied upon documents should be supplied to them and it was not possible for them to sit in the office of the Preventive branch for days and months and to make photocopies thereof. Vide letter dated 4.10.2010, the appellants had informed the Superintendent, Preventive branch, their inability to arrange xerox machine and depute a person for making copies of the relied upon documents, but in spite of this, the appellants were not supplied with the copies. The appellants had sought for cross-examination of all the persons connected with the investigation, namely, the officers, panch witnesses, Shri Prakash Band who was the author of the private register, the transporters, drivers, Octroi officers of the Nagpur Municipal Corporation and the Government Examiner of documents and handwriting expert who had examined the writings of Shri Prakash Band and confirmed that the writings in the private register were in fact made by him. However, opportunities were not given to the appellants to cross-examine these persons, which denied the appellants an opportunity to make effective submissions in their defence. In fact they had mentioned that only after cross-examination of these witnesses, they would be able to file the written submissions to the show cause notice. However, the learned adjudicating authority, without considering their request, proceeded with the adjudication and passed the impugned order thereby violating the principles of natural justice and the impugned order needs to be set aside on this ground alone.3.1 The learned counsel for the appellants relies on the judgment of this Tribunal in the case of Meenakshi Re-rollers Pvt. Ltd. vs. CCE, Nagpur vide order No. A/281-282/09/EB/C-I dated 24.8.2009, wherein this Tribunal set aside an order passed without following the principles of natural justice and remanded the matter back to the adjudicating authority for allowing cross-examination of witnesses, providing English translation of Hindi documents and for granting personal hearing and thereafter to pass a speaking order. The ratio of the said judgment would apply to the facts of their case. The Advocate also relies on the judgment of this Tribunal in the case of Bhagirathi Iron and Steel Pvt. Ltd. vs. CCE, Meerut reported in 2010 (261) ELT 654 (Tri.-Del.), wherein the Tribunal set aside the order for violation of the principles of natural justice and for giving an opportunity to the assessee to cross-examine witnesses. The Advocate further relies upon the judgment of this Tribunal in the case of Bharti Bhutada vs. CC, Mumbai reported in 2012 (25) STR 284 (Tri.-Mumbai), wherein an order was set aside for not allowing cross-examination of witnesses. In the light of these submissions, the learned Advocate pleads for setting aside the impugned order and remanding the matter back to the adjudicating authority for complying with the principles of natural justice.
4. The learned Additional Commissioner (AR) appearing for the Revenue reiterates the findings given by the adjudicating authority and he invites our attention especially to paras 20, 21, 22, 23, 24, 25 and 26 of the impugned order wherein the Commissioner has given detailed justification of why he has not allowed cross-examination of the witnesses sought for and the plea of the appellant in this regard was only a dilatory tactic to delay the proceedings.
5. We have carefully considered the rival submissions. After hearing the argument made by both sides, we are of the view that the appeals themselves can be disposed of at this stage. Therefore, after grant of stay, we take up the appeals themselves for consideration and disposal.
6. As regards the first charge that the appellants have not been supplied with the copies of relied upon documents, from the records, it is seen that the department had written a letter F.No. IV(16)20/09/Prev dated 3.12.2010 wherein it was stated that ‘The Zerox copies of all the requisite documents as required by you are ready. Since the records/documents are voluminous, you are requested to depute your authorized person to this office to collect the same.’ Since the documents as requested by the appellants are ready, the appellants are directed to go and collect the same from the office of the adjudicating authority within a period of 15 days from the date of receipt of this order. If the appellants fail to avail this opportunity, it will be deemed that the appellants have been supplied with the relied upon documents.6.1 Coming to the cross-examination of witnesses, the appellants have sought for cross-examination of all the persons concerned with the investigation without giving their names or details and the reasons for cross-examination. Cross-examination is not a matter of absolute right and the appellants have to justify their request for cross-examination. Further, cross-examination can be asked only of those persons whose statements have been relied upon and also those of panch witnesses. As regards the cross-examination of Govt. Examiner of Questioned Documents and the Handwriting Expert, we observe that Shri Prakash Band himself has admitted to making entries in the private register seized from the car. Hence their cross-examination is not necessary. Similarly as regards the cross-examination of Octroi check-post officers, no statement has been recorded from any of these officers. Only copies of documents pertaining to movement of the goods by the main appellant were obtained. Therefore copies of these documents and other correspondence, if any, entered into with them only needs to be given to the appellants and there is no need to cross-examine any of these officers as no examination by way of recording the statements has been done by the department. So long as the correspondence bears the signature of the Government authorities, it is a sufficient evidence with respect to the contents contained therein. In the light of the above, in the instant case, we direct the adjudicating authority to provide cross-examination of the following persons, namely:-
(i) The panch witnesses;
(ii) The main investigating officer and the officer(s) who has recorded the statement;
(iii) Shri Prakash P. Band, who is said to be the person who has written the private register containing the details of illicit procurement of raw materials and clandestine production and removal of finished goods;
(iv) The transporter, Shri Arjun S. Chormare, owner of vehicle No. MH-34-A-1661, whose vehicle has been used to transport the clandestinely produced goods to various dealers in Nagpur.
The cross-examination of the rest of the persons is not required for establishing the case.7. With these directions, we set aside the impugned order and remand the case back to the adjudicating authority for submission of relied upon documents to the appellants and cross-examination of the persons cited above. The appellants are directed to co-operate with the department in speedy completion of the adjudication proceedings without unnecessarily seeking postponement of personal hearing on some pretext or another. Thus the appeals are allowed by way of remand.