Can an earlier recorded statement be relied upon in subsequent periodical demand notices?
WE received this mail from a netizen –
“Issuances of show-cause notices at the drop of a hat are a norm nowadays. Probably, this gives a sadistic pleasure to the authorities concerned. The recently reported decision in Hino Motor Sales India () is a classic example in this regard.
In my case, a demand notice was issued by the Anti Evasion authorities proposing to deny the benefit of the exemption notification availed in respect of clearances made against International Competitive Bidding. Statements of company officials are a part and parcel of the relied upon documents. The demand notice invokes the extended period and also makes a few company officials as noticees for imposition of penalty under rule 26 of CER, 2002. While the matter is pending adjudication, the range authorities have been issuing periodical demand notices. I too have been diligently accumulating the same and replies are being submitted by adopting the copy-paste technique. Incidentally, I observed that even the periodical demand notices refer and rely upon the statements of the company officials recorded three years ago. Similarly, although some of the referred company officials left their jobs for greener pastures, the present day SCNs continue to make a reference to their statements and also seek to impose penalty on them.
Following basic questions came to my mind –
+ Can a statement recorded u/s 14 of the CEA, 1944 at the time of booking the case be relied upon for demanding Central
Excise duty in respect of similar clearances for the subsequent period?+ If the officials have left the company and are no longer in the decision making process in respect of the subsequent clearances, can their statements be relied upon and can there be a proposal to make them liable to penalty under rule 26?
My understanding yielded the following answers –
+ Since the case was booked on a particular day/date and statements were obtained of the company officials on that day/date, the same can be relied upon in respect of the clearances effected on that day/date and the prior period extending up to five years; for the subsequent period these statements cannot be relied upon as evidence which inference can be drawn from the Indian Evidence Act, 1872, and their continuing employment in the company or otherwise being of no consequence.
+ The company officials can be saddled with penalty under rule 26 of CER, 2002 if and only if they were a part of the decision making process during the material period and attract the contents of rule 26(1) of CER, 2002.
No doubt, I may have to face a tough legal battle ahead, but cannot such preliminary issues be incorporated by the Central Board of Excise & Customs in its Supplementary Manual, which was last updated and issued in March, 2005.
I request DDT to carry this query and seek netizen response.