ORDER
P.S. Bajaj, Member (J)
1. The above captioned appeals have been filed by the appellants against the impugned order-in-original dated 19-12-2001 passed by the Commissioner of Central Excise vide which duty demand of Rs. 24,49,234.17 with equal amount of penalty under Section 11AC and interest payable thereon under Section 11AB had been confirmed/imposed on appellants No. 1, M/s. HRS Fibres (P) Ltd., and further penalty of Rs. 5 lakhs each had been imposed on other appellants. The appellants No. 1 is a private limited company (in short referred to as ‘Company’) engaged in the manufacture of cotton yarn. On scrutiny of the record of the company, it revealed that they were clearing cotton yarn without payment of duty in the guise of plain reel hanks. They were supplying the yarn to the other appellants. The company was thus availing the duty benefit, by mis-description of the goods in the invoices, which were exempt from payment of Central Excise Duty under Notification No. 5/98, dated 2-6-1998. They were also clearing the cotton yarn in the form of cones, but describing the same as plain reel hanks, while supplying the same to the other appellants. The records of the appellants Nos. 2 to 5 were also checked and it revealed from the statements of Shri Sandeep Batra and Shri Devki Nandan, Storekeepers, of M/s. Sheena Exports, appellants No. 2 that the company was clearing the cotton yarn in cones, but wrongly showing it as plain reel hanks. The company was served with a show cause notice vide which duty demand was raised, which the company had evaded during the period April, 1997 to December, 1998 and penalties under Rule 209A were also proposed to be imposed on other appellants for having received the goods knowing fully that those were not duty paid. The Commissioner who adjudicated the show cause notice after getting the reply from the appellants, passed the impugned order.
2. We have heard both sides and gone through the facts on record. The bare perusal of the impugned order shows that the learned Commissioner has relied upon the statements of Shri Sandeep Batra and Shri Devki Nandan of M/s. Sheena Export, appellants No. 2 and the slips allegedly maintained by them, to hold that the company, appellants No. 1, cleared the cotton yarn in the form of cones, without payment of duty, by wrongly describing the same in the invoices as yarn in the form of plain reel hanks which was exempt from payment of duty and thereby evaded the central excise duty to the extent of Rs. 24,49,234.17 during the period in question. But the statements of both these witnesses were admittedly recorded at the back of the company, appellants No. 1, and their prayer for cross-examination of these witnesses was also declined. Therefore, the statements of both these witnesses could not be legally used against the appellants.
3. Apart from this, the evidence of both the above referred witnesses does not find corroboration from any other tangible evidence. The slips which they were allegedly maintaining while receiving the goods from the company, appellants No. 1, in the godowns, and wherein they were allegedly describing the goods as cotton yarn in the form of cones, were never shown to the company, appellants No. 1. The copies of these slips were also never supplied to the company. Even during the examination of both these witnesses, the slips which were allegedly taken into custody, were never put to them. Therefore, the alleged slips relied upon by the Commissioner in the impugned order, for substantiating the allegations of mis-description of the yarn by the company, appellants No. 1, did not see the light of the day. That being so, no reference could be made to them in the impugned order by the Commissioner.
4. Moreover, even in their ex-parte statements, both the above referred witnesses, had nowhere stated that, the yarn cleared by the company, appellants No. 1, was in the form of cones and not plain reel hanks. We have gone through the statements of both these witnesses and we do not find any such reference in their statements. They had simply stated that they were receiving the goods from the company, appellants No. 1, and on the instructions of their owner, M/s. Sheena Exports, they had been putting them in the godowns. Therefore, their statements even otherwise did not carry any legal value and no reliance can be placed on the same for holding that the allegations against the company, appellants No. 1, as well as against the other appellants, stood proved.
5. In the case of Takshila Spinners v. CCE, Chandigarh, 2001 (131) E.L.T. 568 (T), it has been held by the Tribunal that uncross-examined statements of the witnesses cannot be relied upon for proving the clandestine removal of the goods against the assessee, especially when those statements do not find corroboration from any other reliable evidence. In that case also, the statements of the witnesses were relied upon by the adjudicating authority for holding that the assessee gave the misdescription of the goods by describing the same as worsted woollen yarn ‘H’ in plain reel hanks, whereas in reality, the assessee had cleared the worsted woollen yarn in cones. But their statements were held to be not admissible in evidence as they were not permitted to be cross-examined by the assessee and their evidence also did not find corroboration from any other evidence. That order of the Tribunal had been even upheld by the Punjab and Haryana High Court when it was challenged in appeal before that Court, as reported in 2002 (144) E.L.T. 265 (P & H) = 2002 (82) ECC 613 (P & H) [CCE, Commissionerate-I, Chandigarh v. Takshila Spinners and Anr.].
6. For want of any reliable tangible evidence, neither the allegations against the appellants No. 1, of having cleared the cotton yarn in the form of cones in the guise of cotton yarn in plain reel hanks without payment of duty nor against the other appellants of having received such yarn with full knowledge that no duty had been paid thereon, stands proved. Therefore, the impugned order of the Commissioner cannot be sustained and the same is set aside against all the appellants.
7. Consequently, all the appeals of the appellants stand allowed with consequential relief, if any, permissible under the law.