Statements recorded under Section 14 of Central Excise Act inadmissible without Section 9D compliance; clandestine removal charge unsustainable absent corroborative evidence from assessee's premises and relying solely on untested third-party records.

Order : [Per Shri Ashok Jindal]

The appellant is in appeal against the impugned order under Central Excise duty wherein demand of Central Excise duty amounting to Rs. 2,64,56,630/- has been confirmed against the Appellant for the period February 2012 to December, 2012 alleging clandestine removal of the goods.

2. The facts of the case are as under:

2.1. The Appellant is engaged in the manufacture of M.S. Ingots, falling under Chapter 72 of the Central Excise Tariff Act, 1985. The Appellant is duly registered with the Central Excise Department and has been regularly discharging Central Excise duty on the goods manufactured and cleared from its factory. The Appellant maintains proper statutory records relating to manufacture, clearance and payment of duty, as prescribed under the provisions of the Central Excise Act, 1944 and the Rules made thereunder. The Appellant also files the prescribed periodical returns before the Department from time to time. The finished goods manufactured by the Appellant are cleared under cover of proper Central Excise invoices on payment of appropriate Central Excise duty, and such duty-paid clearances of the Appellant have never been in dispute.

2.2. That the present proceedings arise out of investigations conducted by the officers of the Directorate General of Central Excise Intelligence (DGCEI), New Delhi. On the basis of certain intelligence, the officers of DGCEI conducted simultaneous search operations at various premises of M/s. Shree Parasnath Re-Rolling Mills Limited (hereinafter referred to as "the Third Party). During the course of the said search, certain records were recovered from the premises of the Third Party and statements of the Chief Financial Officer (CFO) and Director of the said Third Party were recorded on different dates under the provisions of the Central Excise Act, 1944,

2.3. It was alleged in the said statements that the Third Party had purportedly purchased M.S. Ingots, M.S. Billets, Sponge Iron, etc. from various suppliers including the present Appellant, and that 6077.510 MT of M.S. Ingots were allegedly procured from the Appellant without cover of Central Excise invoices and that the payments were made in cash. On the basis of the aforesaid statements and certain documents recovered from the premises of the Third Party, the Department initiated proceedings against the Appellant alleging clandestine removal of excisable goods. Pursuant to the said investigation, a Show Cause Notice dated 27/02/2027 was issued proposing demand of Central Excise duty amounting to Rs.2,64,56,630/- for the period February-2012 to December-2012, along with applicable interest and penalty under the provisions of the Central Excise Act, 1944. The said demand has been confirmed vide the impugned Order-in-Original dated15/01/2018 which is under challenge in the present Appeal before this Hon'ble Tribunal.

2.4. That the impugned Order-in-Original is a cryptic and non-speaking order and has been passed in gross violation of the principles of natural justice. It is respectfully submitted that a personal hearing in the matter 05.12.2017. However, the Appellant had sought adjournment of the said hearing on the ground that the Counsel representing the Appellant was unwell and therefore unable to appear and present the case. The said request for adjournment was duly communicated to the Respondent.

However, without granting any further opportunity of hearing and without affording a reasonable opportunity to the Appellant to present its case, the Learned Adjudicating Authority proceeded to pass the impugned Order-in-Original dated 15.01.2018. The action of the Respondent in passing t