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2007 Supreme(P&H) 1618
PUNJAB & HARYANA HIGH COURT
M.M.Kumar and Ajay Kumar Mittal JJ.
Shiv Shakti Steel Tubes
Versus
Commissioner Of C. Ex., Ludhiana
C.E.A. No. 18 of 2007,
Decided On : SEPTEMBER 7, 2007
The admissibility of statements made under Section 14 of the Central Excise Act, 1944 and the requirement for corroboration by other evidence to sustain penalty and duty demand.
Headnote:
Central Excise Act - Admissibility of statements under Section 14 - 1944 - [ERW Pipes] - [Section 11A(1), Rule 9(1), 52A, 173F, 173C, 53, 173G, 173Q, 11AC, 11AB] - The court discussed the admissibility of statements made under Section 14 of the Central Excise Act, 1944 in sustaining penalty under the Central Excise Rules, 1944. The court referred to various sections and rules including Section 11A(1), Rule 9(1), 52A, 173F, 173C, 53, 173G, 173Q, 11AC, and 11AB, and emphasized the admissibility of statements as evidence and the requirement for corroboration by other evidence.
Fact of the Case:
The assessee was charged with duty demand, penalty, and interest under the Central Excise Act, 1944 for violations of the Central Excise Rules, 1944. Statements made under Section 14 of the Act were heavily relied upon by the department.
Finding of the Court:
The court found that the statements made under Section 14 were admissible as evidence to sustain penalty and duty demand, and the appeal was dismissed.
Issues: Admissibility of statements made under Section 14, requirement for cross-examination of witnesses, and reliance on retracted statements.
Ratio Decidendi: The court held that statements made under Section 14 are admissible as evidence and can be relied upon if not vitiated by any defects. The inculpatory part of the statement can be acted upon if corroborated by other evidence.
Final Decision: The appeal was dismissed, and the court upheld the penalty and duty demand imposed on the assessee.
M.M.Kumar, J.
1. The pristine question raised in this appeal is whether statements made under Section 14 of the Central Excise Act, 1944 are admissible in evidence to sustain penalty under the Central Excise Rules, 1944. The assessee has filed the instant appeal under Section 35G of the Central Excise Act, 1944 (for brevity, #24;the Act#25;), challenging order dated 17-5-2006, passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for brevity, #24;the Tribunal#25;), in Appeal No. Excise/1053/2004, upholding the order-in-original dated 10-12-2003, passed by the Commissioner of Central Excise, Ludhiana, whereby invoking proviso to Section 11A(1) of the Act, demand of duty of Rs. 59,79,963/- (Rs. 54,99,963/- + Rs. 4,80,000/-) has been raised. The assessee-appellant has also been held liable for penal action for violations of Rule 9(1), 52A, 173F, 173C, 53 read with Rule 173G of the Central Excise Rules, 1944 (for brevity, #24;the Rules#25;). Accordingly, a penalty of Rs. 59,79,963/- has been imposed under Rule 173Q of the Rules read with Section 11AC of the Act. Further the assessee-appellant has been ordered to pay interest on the duty demanded, under the provisions of Section 11AB of the Act.
2. The assessee-appellant has claimed that the following substantial questions of law would arise for determination of this Court :-
(i) Whether any demand or penalty could be levied against the appellant in the absence of any evidence except the so-called diary maintained by an employee or the confessional statement of the proprietor of the recipient firm? (ii Whether in the facts and circumstances of the case an opportunity to cross-examine the witnesses was required to be given to the appellant? (ii Whether the so-called recovery from one Shri Ram Kumar is admissible piece of evidence in view of law laid down by Hon#25;ble the Supreme Court in the case of CBI v. V.C. Shukla [(1998) 3 SCC 410]? (iv Whether the statements recorded of Shivji Ram, proprietor during the course of search, which later stood withdrawn was of any value as the same was under duress? (v) Whether the aforesaid statement of Shivji Ram was admissible piece of evidence? (vi Whether any demand/penalty could be levied on the appellant in the absence of any opportunity of cross- examination having been granted with regard to the witnesses relied upon by the department?
3. Facts of the case may first be noticed. The assessee firm is having their manufacturing unit at Sangrur Road, Dirba, District Sangrur and registered with the Central Excise Department for manufacture of #24;ERW Pipes#25; falling under Chapter 73 of the First Schedule of the Act.
4. On 1-11-1999, intelligence officers of the department conducted search of the premises of (i) Shiv Shakti Tubes, Sangrur Road, Dirba; (ii) Bhiwani Tubes (P) Ltd., (BTPL) Sangrur Road, Dirba; (iii) Jagdamba Steel Traders (JST), Z-4 Loha Mandi - Naraina New Delhi, (iv) Jagdamba Steel Traders (JST), Plot No. 13 Gali No. 1, Mundka. Delhi; and (v) Jagdamba Steel Traders (JST), E-49, Naraina, New Delhi. During search operations certain records/documents were seized and statements of persons were also recorded under Section 14 of the Act. At the time of search carbon copies of certain note/slip pads were recovered indicating the details of receipt and dispatch of goods in the Mundka godown of Jagdamba Steel Traders. Details such as date of receipt/dispatch, name of party from whom received and to whom dispatched, truck No., size/dimension of the goods, No. of bundles and weight etc. were mentioned therein. Consignment wise entries relating to dispatch/receipt were made which bears the signature of the Godown Incharge Shri Ram Kumar. Shri Ram Kumar disclosed that the original copies of the aforementioned note/slip pads were sent to Shri Shivji Ram, Proprietor of the firm Jagdamba Steel Traders. Other than this, weighment slips indicating weighment of goods at Shiv Shanker Dharam Kanta were al
