2010 (4) TMI 890 - AT - Central Excise

Insufficient evidence leads to rejection of revenue's appeal in clandestine removal case.

COMMR. OF C. EX., HYDERABAD Versus DHARIWAL INDUSTRIES LTD.

COMMR. OF C. EX., HYDERABAD Versus DHARIWAL INDUSTRIES LTD. - 2012 (283) E.L.T. 113 (Tri. - Bang.) Issues Involved:1. Transport of Gutkha through Shri Ramakrishna Road Lines (SRLT)2. Clearance effected to Good Luck Marketing Agency (GMA) Pondicherry3. Sales of Tamil Nadu Enterprises (TNE) to Jeetendra Agencies4. Clearance through Shri Kaleshwari Lorry Service (SKLS) in the name of 'Swamy and Chandy'Issue-wise Detailed Analysis:1. Transport of Gutkha through Shri Ramakrishna Road Lines (SRLT):The revenue alleged that consignments of Manikchand Gutkha were cleared without invoices and without payment of duty from DIL to TNE and transported through SRLT. The transit documents like invoice, LR, and waybill of the consignments delivered earlier were reused to accompany subsequent consignments to prevent detection. The inward register of SRLT showed repeated LR numbers for different consignments, which the revenue interpreted as evidence of clandestine removal. However, the adjudicating authority found that there was no corroborative evidence to support the allegations. Statements from DIL and TNE representatives denied receiving goods without invoices, and no discrepancies were found in the stock registers or commercial tax check post records.2. Clearance effected to Good Luck Marketing Agency (GMA) Pondicherry:The revenue's allegations were based on memos issued by SRLT, which were not correlatable to invoices issued by DIL. The memos indicated transportation of goods to GMA without proper documentation. However, the adjudicating authority concluded that there was no evidence of clandestine removal, as the statements from DIL and GMA representatives consistently denied receiving goods without invoices. The investigation did not provide concrete evidence linking the alleged transactions to DIL.3. Sales of Tamil Nadu Enterprises (TNE) to Jeetendra Agencies:The revenue presented evidence from private records recovered from Jeetendra Agencies, showing unaccounted purchases of Manikchand Gutkha. However, neither TNE nor Jeetendra Agencies could produce purchase documents from any source other than DIL. The adjudicating authority noted that the evidence was insufficient to prove clandestine removal by DIL, as there was no corroboration of the alleged unaccounted transactions with DIL's records.4. Clearance through Shri Kaleshwari Lorry Service (SKLS) in the name of 'Swamy and Chandy':The revenue relied on 'Ara Patties' from SKLS, which contained entries correlating to sales invoices issued by Rafiq Brothers. The adjudicating authority found that the authenticity of the Ara Patties was not disputed, but there was no evidence proving that the goods transported were non-duty paid or clandestinely manufactured by DIL. The investigation did not verify the receipt of raw materials or other inputs required for manufacturing the alleged quantities of gutkha.Conclusion:The adjudicating authority concluded that the evidence provided by the revenue was insufficient to prove the allegations of clandestine removal by DIL. The statements from transporters and other parties were not corroborated by concrete evidence such as unaccounted raw material receipts, excess electricity consumption, or discrepancies in stock records. The authority emphasized the need for tangible and concrete evidence to support charges of clandestine removal, which was lacking in this case. Consequently, the proceedings initiated by the show cause notice were dropped, and the appeal filed by the revenue was rejected.