The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that statement made during investigation before a central excise officer cannot be relied upon unless examined as witness.
The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that section 9D of the Central Excise Act it is clear that a statement made during investigation/enquiry before a central excise officer cannot be relied upon unless it is first admitted and for this the person who made the statement has to be summoned and examined as a witness in adjudication proceedings. Failure to do so would mean that the adjudicating authority has relied upon an irrelevant material and, therefore, the order would be vitiated.
Table of Contents
Background
The appellant/assessee is in the business of manufacturing and exporting of Menthol Crystal and Essential Oils (Pharmaceutical grade) falling under Chapter 30 and Chapter 33 of Central Excise Tariff Act, 1985. The Menthol Crystal and Essential Oils are substantially exported by the appellant on payment of duty, under a claim for rebate.
For manufacturing the products, the appellant procures raw material namely, Menthols and its derivatives, De terpenated/fractioned Mentha Oil, DFSO & DFPO from manufacturers in Jammu, including Amarnath Industries who were operating under a Notification No. 52/2008-CE dated 14.11.2002.
The dispute in the present appeal pertains only to the raw materials received from Amarnath Industries.
In terms of the Notification dated 14.11.2002, the duty paid by the said manufacturers in cash on the raw materials cleared to the appellant was refunded/ granted as self-credit to them. Basis the invoice issued by Amarnath Industries and other raw material manufacturers, CENVAT credit was claimed by the appellant of the duty paid on the raw materials purchased from such suppliers.
The DGCEI investigated the premises of the appellant on the basis of an intelligence that the units located in Jammu, including Amarnath Industries, had certain discrepancies in their record. Investigation was carried out by the department for about 26 months, during which statements of various employees and the Director of the appellant were recorded and documents/ information were resumed.
The investigation culminated in the issuance of a show cause notice dated 20.08.2008. The appellant filed a number of replies to the above show cause notice. Despite repeated requests documents which were relied upon were not provided to the appellant.
The show cause notice was adjudicated by the Commissioner by an order. The entire CENVAT credit claimed by the appellant from Amarnath Industries was denied and ordered to be recovered with interest and penalty.
Arguments
The appellant contended that the statement of various persons like Employees/Directors of Amarnath Industries and the appellant were relied upon though they were inadmissible since they failed to comply with the provisions of section 9D of the Central Excise Act and denial of cross examination of the said persons has also vitiated the order.
Conclusion – Statement Made During Investigation
The tribunal held that the Commissioner has placed reliance upon the statements without following the procedure prescribed under section 9D of the Central Excise Act. The order passed by the Commissioner deserves to be set aside.
The tribunal while allowing the appeal held that the penalties imposed upon the Managing Director of the appellant cannot be sustained. The order passed by the Commissioner so far as it concerns the two appellants deserves to be set aside.
Case Details
Case Title: M/s Sharp Mint Ltd. Versus Commissioner, Central Excise
Case No.: Excise Appeal No. 2579 Of 2010
Date: 16.10.2024
Counsel For Appellant: Prakash Shah, Mohit Raval
Counsel For Respondent: Mihir Ranjan Kumar
