Full Judgment
They accordingly seized semi finished and finished goods valued at Rs 14,14,864/- along with other incriminating documents and drew samples of finished goods as well as raw materials. Technical opinions were also obtained from one Mr. Arun Shah. B. Tech and Chartered Engineering and one Mr. Shailesh C Gupta, Quality Control Inspector of M/s Graham Firth Steel Products (I) Ltd, who by having a visual examination of the samples concluded that they were cold rolled strips of stainless steel.
Accordingly, a show cause notice was issued seeking to demand duty amounting to Rs 47,89,727.81 in respect of cold rolled stainless steel strips already cleared in the guise of hot rolled stainless steel pattas/patties and Rs. 2,12,219.60 in respect of goods seized valued at Rs. 14,14,864/-. Penalty was also proposed along with confiscation etc.
The case was adjudicated by Commissioner vide his order dated 24.7.1997 who confirmed the entire demand, confiscated the seized goods, ordered recovery of interest under Section 11AB of the Act and imposed penalties under Rule 9 (2), Rule 52A and Rule 226 of the Central Excise Rules and Section 11AC of the Act on both the partners of the respondents in the first round of proceedings.
3. On appeal, the matter was remanded back by the Tribunal to the Commissioner with direction that the Commissioner should have considered the affidavits of various persons filed by the respondents to substantiate their claim that the goods manufactured by them were hot rolled strips and that the Commissioner should not have doubted the samples once the samples were drawn under panchnama specifically for the purpose and should have considered the opinions of Shri Agarwal, Professor of IIT, Mumbai, and two other Institute of Technology of repute standing namely VJTI Matunga and IIT Powai which show that samples were of hot rolled material. Further the Commissioner should have allowed the cross examination of the Chartered Engineer and another person on whose statement it has relied upon.
4. The matter was thereafter readjudicated by the Commissioner. In the meanwhile, it may be stated that the department has sent another sample on 02.09.1997 out of the sample which was originally drawn on 7.10.1996 at the time of seizure to one Mr. R.K. Prabhu, Professor, IIT, Mumbai for his opinion as to whether the sample was cold rolled stainless steel strips or otherwise. His report was received after the first Order-in-Original was passed and was neither referred to in the show cause notice or in the earlier Order-in-Original but has been considered by the Commissioner in his present impugned order. In this opinion dated 21.11.1997, Dr Prabhu has testified that the product manufactured by Krishna Metal Works were cold rolled strips. He however qualified the test report by stating that the report should not be furnished to a third party and should not be taken as opinion of IIT.During the cross examination it came to notice that the sample which was claimed to have been shown to Mr. Arun Shah was different from the sample drawn, inasmuch as the sample drawn by the department, one set of which was available with the respondents was having lips and tails on the lengthwise ends, whereas Mr. Arun Shah in his deposition dated 27.10.98 stated that what he has seen were the strips having rectangular shape and did not have lips and tail ends. Mr. Shailesh Gupta also could not stand the scrutiny of cross examination inasmuch as he stated that whatever was contained in the statement was dictated by the officer and was not his own version. These facts have been taken cognizance of by the Commissioner in his present impugned order and, he has also noted that the sample sent to Dr Prabhu was not cut in the presence of the respondents and accordingly cannot be relied upon and therefore after taking into consideration the opinion furnished by the respondents from Dr B.K Agrawal, Professor of IIT, Powai stating that the product emerging from the respondent's re-rolling mills are not cold rolled stainless strips because the mill is capable of hot re-rolling only and also the opinion of VJTI, Mumbai, who also examined the samples and visited the factory premises and concluded that the sample exhibits hot rolled material structure and is in hot rolled condition dropped the proceedings against them. It is against this order that the revenue has come up in appeal.
5. The Ld D.R. submits that the Commissioner has rejected the test report submitted by Dr Prabhu, Professor of IIT on the ground that the sample was cut without the presence of the witness or the assessee and therefore cannot be accepted which is incorrect as the samples as such was taken to the office of Dr Prabhu where it was cut in his presence for the purpose of testing and the balance was brought back and there is no procedure that the cutting by the expert should be in the presence of respondents as long as the samples bear the markings and signature of the panchas. It has further been pointed out that the opinions furnished by other experts should not have been accepted as it is not coming on record that the samples were in sealed condition and further the units were visited by these experts in the absence of the department's representative. In view of this the matter should be remanded back to the Commissioner to consider the opinion of Prabhu also and to decide the matter afresh after analyzing the materials on record.
6. The Ld Advocate from the respondent however submits that the opinion of Dr Prabhu was not a relied upon document in the show cause notice and was not referred to at all by the Commissioner in the first round of proceedings and the test report came after the first Order-in-Original was delivered. Even subsequently, they were never furnished a copy of the test report and therefore could not have been considered by the Commissioner as they were never aware of the contents of the same and were therefore deprived of submitting their comments on the same. It is on record that the sample which was in possession of the department was tampered inasmuch as Shri Arun Shah has in his deposition stated that the samples shown to him was different than the one shown to him by the respondent which were having lips and tails. In view of this, the report of Dr Prabhu cannot be considered and further even this report of Dr Prabhu has stated that "This report is for your information only and cannot be quoted to a third party as a test certificate from IIT, Bombay." In view of this, it is an individual report and has no meaning.
7. We have considered the submissions. We find that Dr Prabhu's test report relied upon by the department was never a part of relied upon document and was obtained after the first Order-in-Original was issued and has never been conveyed to the respondents. Though the Ld D.R.submits that once the respondent has not challenged the order of the Commissioner (Appeals), they cannot take it now in the appeal filed by the revenue, the fact remains that this report was never a part of a relied upon document and in the remand order liberty was not given to the revenue to get another-opinion. Even otherwise, we find that the sample in possession of the departments itself in doubt inasmuch as Shri Arun Shah has stated that the sample shown by the department was different from one drawn at the time of seizure a set of which was available with the. respondents, a fact which has not been controverted by the revenue except saying that the sample which was sent to Dr Prabhu was cut in his laboratory and not before sending it for retest, the opinion of Dr Prabhu on such a. sample cannot be considered as credible. Even otherwise, the report itself says that "It is for information and should not be quoted to a third party, nor should it be considered as an opinion of IIT." In such circumstances it can be considered as an individual opinion only and not an opinion of IIT.Whereas the respondent has produced an opinion of IIT, and VJTI of those very samples stating that they were not cold rolled stainless steel strips but only hot rolled. These experts have found the necessary markings on the samples which were cut by the revenue itself from the samples available with the respondents and therefore the genuineness of the same cannot be questioned.
8. In view of above, we do not find any merits in the revenue's appeal and accordingly dismiss the same.