* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Central Excise Act Case No. 15/2010
Reserved on: 20th October, 2011
% Date of Decision: 8th November, 2011
Slotco Steel Products Pvt. Ltd. ....Appellant
Through Mr. M.P. Devnath, Mr. Amar Pratap Singh
Mr. Aditya Bhattacharya, Advocates.
Versus
Commissioner of Central Excise, Delhi-I ...Respondent
Through Mr. Satish Kumar, Sr. Standing Counsel.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE R.V. EASWAR
1. Whether Reporters of local papers may be
allowed to see the judgment?
2. To be referred to the Reporter or not ? Yes.
3. Whether the judgment should be reported Yes.
in the Digest ?
SANJIV KHANNA, J.
The present appeal by Slotco Steel Products Pvt. Limited under
Section 35G of the Central Excise Act, 1944, was admitted on 28th
September, 2010, recording inter alia that the following two substantial
questions of law arise for consideration:-
“1. Whether the CESTAT was correct in dismissing the
Appeal of the Appellants by relying upon Section 9D of the
Central Excise Act when the adjudicating authority had not
invoked the provision in its order-in-original?CEAC 15/2010 Page 1 of 19
2. Whether the CESTAT has failed to appreciate that
failure on the part of the Central Excise Department to
produce witnesses on whose statement they are relying
upon does not mean that the Appellant has given up its
right for cross-examining the witnesses.”2. The subject matter of challenge in the present appeal is the order
dated 30th April, 2010, passed by Customs, Excise and Service Tax
Appellate Tribunal (tribunal, for short) in E/STAY/1456/09-Ex in and
Central Excise Appeal No. E/1408/09-EP and E/Stay/2252/09-Ex in and
Central Excise Appeal No. E/2252/09-Ex.
3. As is noticeable from the title of the order that by the impugned
order, the tribunal has disposed of both the stay application as well as
the main appeals.
4. The appellant is engaged in manufacture of slotted angles,
shelves, cable trays and other sheet fabrication goods falling under
headings 7216, 7308 and 9403 of the Schedule to the Central Excise
Tariff Act, 1985. The appellant submits that they were/are engaged in
manufacture of above goods since 1988 and being a Small Scale
Industrial (SSI, for short) unit were entitled to avail exemption from
payment of central excise duty under notification No. 8/2003-C.E dated
1st March, 2003. The appellant had got themselves registered under
the Act in 1997, but the registration was withdrawn on 4th April, 2003 as
the clearances made by the appellant were always within the SSI limit.
CEAC 15/2010 Page 2 of 19
The case of the appellant was that they were also trading in the saiditems. They used to purchase these items from other
manufacturers/traders in addition to manufacturing the said goods
themselves. The appellant have stated that they were/are registered
under Delhi Sales Act/VAT Department as a manufacturer and a trader
of steel goods.
5. On 27th December, 2005, officers of the prevention wing of the
Central Excise Department spotted one loaded truck parked outside the
factory premises of the appellate at Naraina Industrial Area. On being
questioned, the driver of the truck admitted that the truck was loaded
with goods in the factory of the appellant and had produced a bill in
which the appellant was not mentioned as the consignor.
6. Premises of the appellant at B-81, Naraina Industrial Area were
searched and statement of Subhash Khattar, Director of the appellant
was recorded. The contention of the Revenue is that Subhash Khattar
admitted his fault and accepted that the goods loaded in the truck
belonged to the appellant and were manufactured by the appellant.
7. Thereafter the Revenue conducted detailed investigation on the
so called purchases/trade/manufacture undertaken by the appellant
and the purchases recorded by them. Statements of Mahesh Kaushik,
Naresh Kaushik, Tarun Kaushik, who are related to each other were
CEAC 15/2010 Page 3 of 19
recorded on different dates in 2005 and 2006. Premises of fourconcerns associated with them, namely Nahtek Engineers, Rising Steel
Industries, Konark Engineers and Shree Krishna Trading were also
searched. A search was conducted in the premises of Alpine Industries,
Ganapati Enterprises and Instyle Creations and statements of Sandeep
Dalmiya and Harish Dalmiya, proprietors of Instyle Creations and Alpine
Industries were recorded. Harish Dalmiya was also managing affairs of
Ganapathi Enterprises, sole proprietorship of his wife. Searches were
conducted in the premises of SBJAY Auto Transmissions and statement
of Jagmohan Aggarwal, Director of the said company was also recorded.
Statements of Vikas Arora, proprietor of Sudarshan Industries, Anil
Kanodia of K.G. Metal Industries and Ashok Arora, proprietor of SSP
Manufacturing & Trading Co. were recorded on different dates of 2006
and 2007. Statement of Wajinder Singh, proprietor of Continental Steel
Sales, Ruchika Furnishers and Western-Eastern Industrial Enterprises,
and that of Rajendra Kumar Sharma, proprietor of Wembley Furnishers,
were recorded in 2006 and 2007.
8. In addition, premises of Precision Steel Craft & Equipments were
searched and statement of R.L. Batra, husband of one of the partners of
the said firm was also recorded by the Revenue. Premises of Summit
Engineering Corporation was searched and statement of Mukesh
CEAC 15/2010 Page 4 of 19
Khanna, partner of the said firm was also recorded. Statement of AnilKumar Jindal of Jindal Sons (India) Ltd. was recorded. Mr. Anil Kumar
Jindal also made a statement on behalf of Jindal Industrial Corporation.
Statement of M.L. Jindal of M/s M.L. Jindal & Sons was recorded.
Investigation was carried out to locate Bankey Bihari Industries,
Marshall Industries, Shiv Shakti Industries and Bhartia Industries from
whom the appellant had claimed that they had made purchases but
these parties could not be located/traced by the Department.
9. Pursuant to the investigations, a show cause notice dated 17th
October, 2007, was issued to the appellant for evasion of duty
amounting to Rs.1,48,60,803/- during the period 2002-03 to 2005-06.
Reliance was placed by the Revenue on the statements of various
persons recorded during the investigation. For computation of the
quantum of the alleged clandestine but not declared manufactured
goods, the Revenue relied upon comparative electricity consumption of
another manufacturer, namely SSP Manufacturing & Trading Company.
The appellant belatedly filed their reply to show cause notice on 17th
December, 2008, denying the allegations. The appellant also requested
for an opportunity to cross-examine the persons whose statements had
been relied upon by the Revenue. Matter was thereafter fixed on 7th
CEAC 15/2010 Page 5 of 19
January, 2009 for personal hearing/cross-examination. Order-sheet ofthe said date reads as under:-
“Present Sh B.Lakshmi Narsimhan, Learned Advocate on
behalf of Noticee No.1 & 2 Sh Subhash Khatter was also
present in person. Learned Advocate filed his vakalatnama
on behalf of both the noticees. Learned Advocate submits
that they have also filed detailed written reply on behalf of
the company M/s Slotco Steel (Noticee No.1). Sh Subhash
Khatter, noticee no.2 seeks to file written submissions on his
behalf which are duly taken on record. Noticees had saught
cross-examination of 15 persons. Notice for cross
examination for today have been duly issued to all those 15
persons. Sh Mahesh Kaushik vide his letter dated 2.1.2009
addressed to Superintendent (AdJ.) on behalf of himself,
Tarun Kaushik and Naresh Kaushik has declined to come for
cross-examination and stated that their statements
recorded earlier may be relied upon. Notice addressed to Sh
Rajender Dutt Sharma and Sh. Jitender have come back from
postal authority with the remarks that no such persons have
been found on the given address. No communication have
been received from other 10 persons called for cross-
examination. In such circumstances Learned Advocate very
graciously agreed that there is no alternative but to proceed
with the personal hearing. He very pains-takingly takes me
through written submissions filed by him on behalf of both
the notices and submits that it is clear from the written
submissions that no case whatsoever has been made out
against his clients. It is his submission that there is no
evidence on record against his clients except statements
recorded from those suppliers. Since they have not turned
up for cross-examination, show cause notice has to be
considered without relying on the statement of these
persons.He seeks one week’s time to file additional written
submissions to support the submissions made by him.
Time granted. He also requests for photocopy of letter
dated 2.1.2009 sent by Sh Mahesh Kaushik addressed to
Superintendent (Adj.) to enable him to submit written
reply. Request is granted.He also seeks to file compendium of notifications
and citation relied upon by him in his written submissions
which is duly taken on record. He has nothing further to
add.”CEAC 15/2010 Page 6 of 19
10. As is apparent from the said order-sheet, the proceedings were
closed. The appellant had filed another additional written submissions
after closure of hearing. In the written submissions, it was stated as
under:-
“The Noticees submit that in the present Show Cause
Notice demands have been raised against the Noticees
based on the uncorroborated statements of certain
suppliers, and their officers, the tempo driver Shri Jitender
and Mr. Vijender Kumar of M/s. Surya Enterprises. Further
the statements of certain other individuals viza. Shri Vicky
Gupta and Mrs. Sunita Gupta of M/s. Surya Enterprises,
and Mr. Anil Kanodia of M/s. K.G.Metal Industries is also
relevant for final determination of the present case.The Noticees strongly dispute the statement/statements subscribed by anyindividual/individuals concerned directly or indirectly with
the Noticees, where the contents of such statements
is/are inconsistent with the fact not supported by any
documents/record. The Noticees do not give credence to
such un-corroborative statements, whhic may have been
extracted under extraneous circumstances or by exploiting
individual interest. The Noticees contend that such
incriminating statements are malicious and not have any
evidentiary value in the eye of law. The statements which
are not supported by any documentary evidence don’t
carry any value under the law. On this submissions the
Noticees rely on the following decision:-(i)Premium Packaging Vs. CCE, 2005(184) ELT 165 (T)
(ii)Raj Petroleum Products vs. CCE, 2005(192) ELT 806 (T)
(iii) Hindustan Aegis LPG Bottling Co. Vs. CCE, 2005(182)
ELT 180(T)(iv)CCE Vs. Latex Chemicals, 2005(181) ELT 138(T)
The Noticees have already submitted copies of the
above referred decisions in the compilation submitted to
the Ld. Commissioner on 07.01.2009 during the Personal
Hearing.CEAC 15/2010 Page 7 of 19
To prove its defence the Noticees had requested
for cross-examination the above referred persons whose
statements have been relied upon by the Department to
raise the present duty demand. However, none of the
above referred witnesses presented themselves for being
cross-examined by the Noticees.It is submitted that as none of the witnesses on
whose statement Department has relied for raising the
demand in the present Show Cause Notice, have been
produced for being cross examined by the Noticees.
Department cannot rely on their statement to sustain the
demands raised on the Noticees.The Noticees submit that as the witnesses on
whose statement Department has relied have failed to
answer the summon and produce themselves for cross
examination no sanctity or credence can be attached to
the statements made by them to the Central Excise
Officers.It is submitted that therefore the Ld. Commissioner
has to adjudicate the present Show Cause Notice without
considering or relying on the statements given by the
witnesses which have been relied upon in the Show Cause
Notice by the Department. The Tribunal in a host of
decisions has held that the statements of witnesses who
have not been produced for cross examination cannot be
relied upon by Department to sustain the allegations made
on the assessee or to confirm the demands raised on the
assessee.”11. The assessing officer thereafter passed an order dated 27th
January, 2009. He relied upon statements of the witnesses who had
not been cross-examined, inter-alia recording as under:-
“I thus have no hesitation to hold that all the
statements admitting offence committed by them
including giving facts are all tangible evidence. It is also a
matter of record that none of the statements being relied
upon by the department have been retracted by anyone
till date. On the request of the noticee, due opportunity
for cross examination was also offered. The fact that the
person summoned for cross examination choose not to
come or not to respond or to stick to their earlier
statements recorded under Section 14 of the CentralCEAC 15/2010 Page 8 of 19
Excise Act, 1944 does not dilute the department’s case
against the noticee.”12. We have recorded in detail the aforesaid aspects for two reasons.
Firstly Section 9D of the Act was not relied upon and pressed into
service by the Assessing Officer and secondly there is a dispute
between the appellant and the Revenue with regard to whether the
appellant on 7th January, 2009, had voluntarily given up their right to
cross-examine the witnesses or whether the appellant had argued the
matter on the assumption, which is also their contention, that the
statements of the persons who have not been cross-examined cannot
be relied upon.
13. The tribunal in the impugned order has referred to Section 9D of
the Act and has applied the same. Section 9D reads as under:-
“9-D. Relevancy of statements under certain
circumstances –(1) A statement made and signed by a person before any
Central Excise Officer of a gazetted rank during the course
of any inquiry or proceeding under this Act shall be
relevant, for the purpose of proving, in any prosecution for
an offence under this Act, the truth of the facts which it
contains, –(a) when the person who made the statement is dead or
cannot be found, or is incapable of giving evidence, or is
kept out of the way by the adverse party, or whose
presence cannot be obtained without an amount of delay
or expense which, under the circumstances of the case,
the Court considers unreasonable; or(b) when the person who made the statement is examined
as a witness in the case before the Court and the Court is
of the opinion that, having regard to the circumstances of
the case, the statement should be admitted in evidence in
the interests of justice.CEAC 15/2010 Page 9 of 19
(2) The provisions of sub-section (1) shall, so far as may
be, apply in relation to any proceedings under this Act,
other than a proceeding before a Court, as they apply in
relation to a proceeding before a Court.”14. The constitutional validity of the said Section was challenged and
rejected by this Court in J & K Cigarettes Ltd. vs. Collector of Central
Excise, 2009(242) E.L.T. 189 (Del.). A Division Bench of this High Court
examined the scope and ambit of Section 9D and held that the said
Section is applicable in the following circumstances:-
“(a) when the person who had given the statement is dead;
(b) when he cannot be found;
(c) when he is incapable of giving evidence;
(d) when he is kept out of the way by the adverse party;
and(e) when his presence cannot be obtained without an
amount of delay or expense, which the Officer considers
unreasonable.”15. It was held that the aforementioned circumstances are
exceptional circumstances and not ordinary or normal circumstances.
Before Section 9D of the Act is applied or enforced, the authority must
examine whether the conditions or pre-requisites mentioned above are
satisfied. Accordingly, the said section itself provides safeguards and
that Section 9D cannot be enforced or applied without the authority
examining and considering whether the conditions mentioned in
Section 9D are satisfied or not. In this regard, we may appropriately
reproduce paragraphs 26 to 31 of the said decision:-
“26. Interestingly, the learned senior counsel for the
petitioners did not join the issue that the aforesaidCEAC 15/2010 Page 10 of 19
circumstances are not exceptional circumstances. They are
the circumstances which naturally would be beyond the
control of the parties and it would not be possible to
produce such a person for cross-examination who had
made a statement on earlier occasion. The provisions
under Section 9-D of the Act are necessary to ensure that
under certain circumstances, as enumerated therein, viz. if
the witness has been won over by the adverse party or is
avoiding appearance despite several opportunities being
given. The rationale is that decision making in a case
cannot be allowed to continue in perpetuity. These
provisions are based on the Doctrine of Necessity. It
provides for relevancy of statements recorded under
Section 14 of the Act dispensing with or without the
opportunity for testing the truth of such evidence by cross-
examination. For, when a person is dead or incapable of
giving evidence or cannot be found, no better evidence
can be had in the circumstances than the statement
tendered by witnesses before a quasi-judicial authority.
The safeguards which are enumerated in the provision
under Section 32 of the Evidence Act are essential as the
provision provides for an exception to the rule of exclusion
of hearsay evidence, while proving for relevancy of even
direct oral evidence of the fact under enquiry, which
otherwise is not admissible, to ensure that there is no
miscarriage of justice. Similarly, provisions under Section
9-D provide for relevancy of statements recorded under
Section 14 of the Act, under certain circumstances, in
criminal as well as quasi judicial proceedings, to meet the
ends of justice.27. We, thus, are intent to agree with the submission of
the learned Addl. Solicitor General that if an Act of
Parliament uses the same language which was used in a
former Act of Parliament referring to the same subject, viz.
relevancy of statement of fact by person who is dead or
cannot be found under certain circumstances, passed with
the same purpose and for the same object, the safe and
well known rule of construction is to assume that the
legislature, when using well- known words upon which
there have been well known decisions, use those words in
the sense which the decisions have attached to them. The
provisions under Section 32 of the Evidence Act have not
been found to be ultra vires of the Constitution. Therefore,
the provisions under Section 9-D of the Act, which are pari
materia with the provisions under Section 32 of the
Evidence Act, cannot be held as ultra vires of the
Constitution.CEAC 15/2010 Page 11 of 19
28. The moot question that arises at this stage is as to
whether the provision in question is arbitrary. Such a
provision can still be held to be offending Article 14 of the
Constitution and can be termed as arbitrary if it is
established that the provision gives uncanalised and
uncontrolled power to the quasi judicial authorities. But,
we are of the opinion that it is not so. The safeguards are
inherent in the provision itself. In the first instance, only
those statements of such persons, which are made and
signed before the Central Excise Officer of a gazetted rank,
are treated as admissible. Thus, protection is taken to
treat the statements relevant only if they are made before
an officer enjoying a higher rank/status. Secondly, (and
that has already been taken note of) such statements are
made relevant only under certain specified circumstances,
and these are the ones which are beyond anybody‟s
control. Thirdly (and this is most important), the quasi-
judicial authority can rely upon the statement of such a
person only when the stated ground is proved. For
example, in those cases where the person who made the
statement is dead, there should be sufficient proof that he
is dead. In case, where a person cannot be found, the
authority would have to form an opinion, based on some
material on record, that such a person cannot be found. It
would not be mere ipse dixit of the officer. In case, cogent
material is not there to arrive at such a finding, the
persons against whom the statement of such a person is
relied upon can always challenge the opinion of the
authority by preferring appeal to the higher authority,
which appeal is statutorily available. Same yardsticks
would apply to other grounds. If the quasi judicial
authority opines that a person is incapable of giving
evidence, formation of such an opinion has also to be
predicated on proper material on record, which could be
in the form of mental or physical disability of such a
person.29. Thus, when we examine the provision as to whether
this provision confers unguided powers or not, the
conclusion is irresistible, namely, the provision is not
uncanalised or uncontrolled and does not confer arbitrary
powers upon the quasi judicial authority. The very fact
that the statement of such a person can be treated as
relevant only when the specified ground is established, it is
obvious that there has to be objective formation of
opinion based on sufficient material on record to come to
the conclusion that such a ground exists. Before forming
such an opinion, the quasi-judicial authority would
confront the assessee as well, during the proceedings,
CEAC 15/2010 Page 12 of 19
which shall give the assessee a chance to make his
submissions in this behalf. It goes without saying that the
authority would record reasons, based upon the said
material, for forming the opinion. Only then, it would be
possible for the affected party to challenge such a decision
effectively. Therefore, the elements of giving opportunity
and recording of reasons are inherent in the exercise of
powers. The aggrieved party is not remediless. This
order/opinion formed by the quasi judicial authority is
subject to judicial review by the appellate authority. The
aggrieved party can always challenge that in a particular
case invocation of such a provision was not warranted.30. Therefore, it cannot be said that the provision gives
uncanalised or uncontrolled power upon the quasi judicial
authority. Granting of opportunity and passing reasoned
order are the conditions inbuilt in exercise of power by any
quasi judicial authority and, therefore, it is not necessary
that these conditions should be specifically mentioned in
the provision. The very fact that before power under
Section 9- D(2) of the Act could be exercised, the authority
has to satisfy itself about the existence of any of the
conditions stipulated therein, which provides clear and
sufficient guidance to such quasi judicial authority to
exercise its power under the section. We may also state
that such arguments have been repelled by the Supreme
Court on number of occasions. {See – Harishankar Bagla v.
State of Madhya Pradesh, AIR 1954 SC 465; and
Bhatnagars & Co. Ltd. v. Union of India, AIR 1957 SC 478}.31. Interestingly, even in the present case, the attempt of
learned senior counsel appearing for the petitioners was
to show that the respondent No.1 ought to have given
prior intimation and granted an opportunity to the
assessee to make its submissions on invocability of Section
9-D itself and thereby enabling the assessee to take
appropriate steps, as may be possible, in the
circumstances of the case. He submitted that if a particular
witness was not allowed to be cross-examined by stating
that it was not possible to procure his presence without
delay or expense, had the opportunity been given to the
petitioners to meet the expenses, the petitioners would
have borne the expenses and could have procured the
presence of witnesses. Likewise, he argued that if the
opinion was that it is the adverse party, i.e. the petitioner,
who kept a particular person out of the way, the petitioner
should have been confronted with that so as to enable him
to contact the witness through his own resources and
inform him about the time and place of the cross-CEAC 15/2010 Page 13 of 19
examination, or else, to enable the petitioners to clarify
the relevant facts and assist and cooperate with the
adjudicator in contacting the witness. These examples, at
the most, would indicate as to how the powers are to be
exercised by the adjudicating authority. That would not
make the provision arbitrary. As stated in the beginning,
validity of the provision is totally different from exercise of
powers by an authority invoking those provisions. We may
only refer, at this stage, to the judgment of the Supreme
Court in the case of Mahesh Chandra v. Regional Manager,
U.P. Financial Corporation, (1993) 2 SCC 279. In that case,
the Supreme Court categorically observed that wherever
vide power is conferred by statutes on public
functionaries, the same is subject to inherent limitation
that it must be exercised in just, fair and reasonable
manner, bona fide and in good faith; otherwise, it would
be arbitrary. In such cases, test of reasonableness is more
strict. Following observations therefrom are worth
quoting:-“15. Every wide power, the exercise of which has
far reaching repercussion, has inherent limitation
on it. It should be exercised to effectuate the
purpose of the Act. In legislations enacted for
general benefit and common good the
responsibility is far graver. It demands purposeful
approach. The exercise of discretion should be
objective. Test of reasonableness is more strict.
The public functionaries should be duty conscious
rather than power charged. Its actions and
decisions which touch the common man have to
be tested on the touchstone of fairness and
justice. That which is not fair and just is
unreasonable. And what is unreasonable is
arbitrary. An arbitrary action is ultra vires. It does
not become bona fide and in good faith merely
because no personal gain or benefit to the
person exercising discretion should be
established. An action is mala fide if it is contrary
to the purpose for which it was authorised to be
exercised. Dishonesty in discharge of duty vitiates
the action without anything more. An action is
bad even without proof of motive of dishonesty,
if the authority is found to have acted contrary to
reason.”
CEAC 15/2010 Page 14 of 19
16. As noticed above, Section 9D of the Act was not relied upon by
the Assessing Officer. He did not examine and go into the aspect as to
whether the pre-conditions or the prevailing circumstances justified the
invoking of Section 9D. The contention of the appellant is that when
the matter was heard by the tribunal on 19th March, 2010, the Revenue
had not relied upon or referred to Section 9D of the Act during the
course of arguments. During the course of hearing before us, learned
counsel for the Revenue could not controvert or deny the said
statement. It may be noted that both the appellant and the Revenue
had filed written submissions before the tribunal after the hearing was
held on 19th March, 2010. We have examined the said written
submissions and appellant had not referred to Section 9D of the Act in
their written submissions. The respondent Revenue in their written
submissions had also not relied upon Section 9D of the Act. However,
as noticed above, the tribunal, in paragraphs 15 to 19 of the impugned
order dated 30th April, 2010, has gone into the question of statements
of witnesses which were not cross-examined and has applied Section
9D of the Act. It is apparent that the tribunal has invoked the said
Section and held that the conditions mentioned in the said Section are
satisfied. Learned counsel for the appellant is right in their contention
that the said section could not have been invoked by the tribunal
CEAC 15/2010 Page 15 of 19
without the appellant being given an opportunity to meet the saidcontention. It is the contention of the appellant before us that the pre-
conditions of Section 9D are not satisfied and that the said section
cannot be invoked. It is submitted that the judgment of this Court in
J&K Cigarettes (supra) requires satisfaction of the said conditions and
an opportunity should have been given to the assessee to contest and
oppose the applicability of Section 9D of the Act. The observations of
the Delhi High Court in J&K Cigarettes (supra) quoted above supports
the aforesaid contention of the appellant that an opportunity should be
given to the assessee to offer explanation and contest, when the
Revenue relies upon Section 9D of the Act.
17. We refrain from going into the contentions of the appellant on
merits that on the facts of the present case, the conditions mentioned
in Section 9D including condition No. (e) are not satisfied. We may only
record that it is a submission of the appellant that the assessing
authority had not given or recorded any finding to the effect that
presence of witnesses cannot be obtained without undue delay or
expense, which the officer concerned considers to be unreasonable.
Appellant, in this connection, has relied upon order dated 7th January,
2009 and had urged that summons were issued only once but no
opportunity was granted to the appellant to serve the summons on the
CEAC 15/2010 Page 16 of 19
witnesses. It is stated that the appellant should have been given
another opportunity. It is also contended that the question of quantum
of demand is also an issue and that the tribunal has accepted the entire
quantum/addition. It is pointed out that the assessment order confirms
the entire demand mentioned in the show cause notice dated 17th
October, 2007 for a sum of Rs.1,48,60,803/- and a penalty of equal
amount has been imposed along with an interest thereon. A penalty of
Rs.50/- lakhs has been imposed on the Director.
18. As we find that the matter requires a remit for a fresh decision,
we are not specifically answering the question whether Section 9D can
be invoked and relied upon by the tribunal when the adjudicating
authority has not relied upon the said section in its order. This aspect
can be examined by the tribunal while deciding the matter on remand.
We may, however, note the contention of the Revenue that Section 9D
is a procedural section and when conditions mentioned in the said
section are satisfied, it comes into operation and can be applied and it
is immaterial whether the Assessing Officer has specifically invoked the
said provision or mentioned the same. The contention of the appellant
is to the opposite.
19. In view of the aforesaid discussion, question No.2 raised above is
partly answered in favour of the appellant and against the respondent
CEAC 15/2010 Page 17 of 19
and it is held that this aspect has to be reexamined and reconsidered by
the tribunal. In respect of question No. 1, it is directed that the tribunal
will reexamine the question of application of Section 9D of the Act.
20. The appellant during the pendency of the investigation had
deposited a sum of Rs.28 lakhs on account of excise duty. As per the
impugned assessment, total duty evaded by the appellant is
Rs.1,48,60,803/-. Penalty of an equal amount has been imposed. Even
if Rs.28 lakhs is reduced from the aforesaid amount of Rs.1,48,60,803/-,
the appellant is still liable to pay Rs.1,20,60,803/- towards duty as per
the assessment order. The stay application filed by the appellant
before us has been dismissed. Thus, the entire demand including
penalty can be recovered. As an interim measure, we feel that the
appellant should deposit a further sum of Rs.30 lakhs within one month
with the respondent Revenue and should file an undertaking with the
tribunal that they shall not create any encumbrances and dispose of
their immovable assets including fixed plant and machinery without the
permission of the tribunal. Details of existing encumbrances, if any, on
the assets, will be stated in the undertaking. The aforesaid direction has
been given to cut short delay and on balance of equities. As noticed
above, the orders passed on the stay application is itself subject matter
CEAC 15/2010 Page 18 of 19
of challenge in this appeal on which an order of remand for fresh
decision has been passed.
21. The appeal is accordingly disposed of. No costs.
(SANJIV KHANNA)
JUDGE
( R.V. EASWAR )
JUDGE
November 8th, 2011
kkb
CEAC 15/2010 Page 19 of 19
