Order date – 15 September 2022

Facts – 

• The appellant, M/s. Anjani Steel Limited, are the manufacturer of sponge iron, M.S. Billets and TMT Bars. They are also availing the facility of Cenvat Credit of inputs, capital goods and service tax.
• The Department alleged that the appellant has cleared sponge iron, Billets and TMT Bars and coal without issuing invoices with the sole intention to not to pay the requisite Central Excise Duty on those clearances. 
• Accordingly, the clandestine removal of the finished goods was alleged alongwith violation of several provisions of Central Excise Rules, 2002. The Show Cause Notice bearing No.20710 dated 16.12.2015 was served upon the appellants proposing the duty demand of Rs.46,32,957/- from the appellants alongwith interest and the imposition of penalty.
• Based on DCS recovered from the Desktop of the appellant’s Manager and the loose sheets recovered from the factory premises, the demand was confirmed with interest and penalty. 
• Aggrieved, the appellant filed an appeal.

Issue – 

• Whether the appellant is liable to pay the duty demanded along with interest and penalties?

Order – 

• The Tribunal observed that Section 9D of Central Excise Act prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), 

(i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and 

(ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice, which in this case was not followed.

• Relying on the case of C.C. vs. Bussa Overseas Properties Ltd. the Tribunal held that the Adjudicating Authorities are bound by the general principles of evidence since Commissioner (Appeals) has placed extensive reliance on the statements recorded during investigation without invoking speaking section (1) of Section 9 D of Central Excise Act. The findings of confirmation of duty demand due to alleged clandestine removal are liable to be set aside.
• Also, it was held that the documents recovered at the investigation stage are nothing but third party evidence for want of their author not being examined by the Department. Third party evidence cannot be relied upon to confirm the allegations as that of clandestine removal, the same view was taken in Bajrangbali Ingots & Steel Pvt. Ltd. & Suresh Agarwal vs. CCE, Raipur.
• Appeal allowed.