TaxTMI 
TaxTMI 
2008 (12) TMI 514
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....r (A) also sustained a penalty of Rs. 2000/- imposed under Rule 26 of Central Excise Rules, 2002 (CER) read with Rule 209A of CER, 1944 on M/s. VSM Associates (VSM), Palani. 2. The brief facts are that following a visit to the premises of the appellants on 5-1-2000, the officers attached to the Central Excise division, Dindigal-II, detected irregularities committed by the appellants as regards maintenance of statutory records and payment of duty on excisable goods manufactured and cleared during 06/99 to 12/99. After completing investigation, a Show Cause Notice was issued to the appellants and one of its buyers VSM Traders on 16-12-03. Adjudicating the allegations of clandestine removal by KVT, the original authority demanded duty ....
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....d figures of its performance and profit. The assessee had removed cotton yarn on cones in the guise of hank yarn under invoices addressed to fictitious buyers. He found that the entries of receipts as per bank account statement matched with the assessee's ledger. KVT had only one reeling machine when the departmental authorities visited the assessee's factory. Considering its capacity to produce 360 kgs of yarn in 3 shifts, during the material period KVT could not have produced and cleared the amount of hank yarn, 1,48,906 kgs recorded to have been manufactured and cleared. Shri J. Victor, employee of VSM had admitted to the departmental officers of having purchased cone yarn from KVT under invoices showing them as hank yarn in his statemen....
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....material period. The receipts of money from them reflected in the bank accounts clearly indicated real transactions with these dealers. The department had not investigated and collected reliable evidence in this regard on the allegation that the dealers were fictitious. No detailed statement was obtained from Shri Gopinath. It was not hence clear whether the private file was maintained to show inflated figures of performance to the bank. 4. I have considered the rival submissions. The charge of clearances of cotton yarn on cones in the guise of hank yarn with a view to remain within the SSI exemption limit is found primarily on the basis of a private record maintained by one of the employees of KVT. The Managing Director of KVT had ....
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....uyers were fictitious. That the details of the transactions reflected in the ledger of VSM were not examined by the departmental authorities also displays the weakness in the investigation. The statement of Shri. J. Victor would have been acceptable had the authorities verified their ledger when they called on Shri. J. Victor and had found that the goods purchased from KVT shown in the invoices as hank yarn was cotton yarn on account of the price rate. The authorities have not conclusively established that the assessee did not have machinery required to manufacture and clear the amount of cotton yarn on cone found to have been clandestinely cleared. Assessee had four reeling machines, two of them were not in working condition when the offic....