TaxTMI 
TaxTMI 
2010 (7) TMI 357
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....o. 3. The appellant company was engaged in the manufacture of processed fabrics, pillows, cushions and quilted fabrics classifiable under Chapters 52, 54, 55, 58 and 84 of the Central Excise Tariff Act, 1985. The appellants had obtained grey fabrics in bales with each bale containing 8 to 9 pieces of approximately 100 metres each. The pieces required to be dyed in the same colour were segregated from different bales and 15 to 16 of those pieces were stitched together to form fabric length of 1500/1600 metres known as a lot. Before stitching, each of the fabric pieces was given piece number and a common lot number was marked at both the ends of those pieces. Before commencement of processing, the grey fabric was thus given running lot number and piece number of each lot number and the same information was entered in the packing slip. The manufacturing activity was being carried out with the aid of power and the appellants were availing modvat credit facility. 4. It is the case of the appellants that pursuant to the intelligence report received by the Department about suppression of some of the production of excisable goods by the appellants, search was conducted at t....
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....ture produced on the record regarding alleged clandestine removal of goods. There is no statement of any of the supplier of raw-materials brought on record. He further submitted that, admittedly, the premises were visited and searched by the Officers of the Department on 16-1-1998, 22-4-1998 and 18-8-1998 and various records were taken into possession, however, at no point of time any variation in the records for the period prior to 18th August, 1998 could be noticed. Therefore, merely on the basis of assumption, the respondents could not have assumed that the appellants had clandestinely removed the goods during the period June, 1998 to August 1998. The conclusions in that regard arrived at by the Commissioner are purely on conjunctures and surmises. Besides, the show cause notice came to be issued only on 23-7-2001 without disclosing any reason for delay in issuing the same. There is no evidence of disposal of the final product which could relate to the alleged clandestine removal of the goods. There is not a single statement of any purchaser of such goods nor the investigation revealed any identity of any such purchaser. The Department has not been able to prove the flow back of....
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....It is further contended that there is absolutely no material to justify imposition of penalty. 8. On the other hand, the learned DR submitted that the impugned order is not based solely on the statements but also on consideration of the records placed before it and the goods seized in the course of investigation. The admission about non-entering of some of the bale numbers in the statutory records clearly disclosed non-accountal of the material. The statements recorded under Section 14 of the Central Excise Act, 1944 are admissible in evidence and deemed to be correct unless duress is established. The charge of clandestine removal need not be proved with mathematical precision. Since the clandestine production and the clearance was being done in a planned manner, there was no question of evidence being available thereof as possibly the same was destroyed. It was further contended that the appellants' Company is closely held by the Members of a single family. Shri Ashok Kumar Agarwal, Director of M/s. Ambika Trading Co. is the brother of Shri Pawan Kumar Agarwal, Managing Director of the appellants' Company. Reliance is placed in the decisions in the matter of Haroon....
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....of 51/2 months during the period from August to November, 1998, and that too without any documentary or other cogent materials in support thereto, can be accepted as true and correct calculations of the production from the appellants factory and corresponding duty liability of the appellants. It is nobody's case that subsequent to the day of raid, the appellants had reduced their production capacity. At the same time, undisputedly, the Department had not verified in the course of the investigation the production capacity of the appellants factory. Even the electricity consumption record in respect of the appellants factory was not checked. In these circumstances, it will be absurd to believe the claim of the Department about the possibility of huge production and clearance thereof without payment of duty by the appellants from their factory during the relevant period. 11. According to the respondent's own case, no records pertaining to the alleged clandestine removal of the goods by the appellants were available and the allegations in that regard are made solely on the basis of the calculations done by the Department on the basis of certain statements by the employe....
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....ng the statements. Clear statements in that regard by the employees were neither controverted nor even there was an attempt to examine the officer who had recorded their statements to establish that no coercion or duress was ever used while recording their statements. The concerned officers and witnesses were not produced for cross-examination, though the same was asked for. Undoubtedly, the statements recorded by the excise officers in the course of the investigation are admissible in evidence and can be relied upon. But, in the facts and circumstances of the case in hand wherein the calculations are based solely on uncorroborated documents and apparently the qualification of the production appear to be exaggerated in view of the Department's own finding about annual production capacity at much lesser quantity, there is every reason to doubt the genuineness of the statements recorded in the course of the investigation. 14. The Department appears to be helpless while conceding the fact of non-availability of any other evidence in support of the allegation of clandestine removal of the goods by the appellants, apart from contending that no such evidence was available, as....
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....sp;As a consequence of cumulative effect of all the above circumstances and the factors, it is difficult to accept the allegations against the appellants about clandestine removal of goods during the relevant period. The findings in this regard by the authority below are not borne out from the records. 19. In Pals Microsystems Ltd.'s case (supra), the Karnataka High Court after noting the fact that the suppression of duty payable goods by the assessee was noticed by the Superintendent of Central Excise when he had visited the premises on 25th October, 1996, whereas the show cause notice was issued on 26th June, 2000 held that, the Tribunal was right in recording a finding of fact stating that the initiation of the proceedings against the assessee and the assessment order passed by the assessing authority was barred by limitation. 20. In Mohan Bakers Pvt. Ltd.'s case (supra), the learned Single Member of the Tribunal noted that the Department had without finding a clear cut case on the date of inspection brought the appellant to frivolous charges by a show cause notice issued after two years from the date of inspection. While observing that such action was no....
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.... would not be right to base calculations on the surmise that overfilling of the tanks was being practiced systematically. It was further held that, no doubt, during the test, when the tanks were slightly over filled on nine out of ten occasions, the same could be attributed to a failure of the human element resulting from the fact that a special operation was being conducted by the operators in the presence of the Government officials. It was also held that it is not always possible to draw conclusion about the total output from the factory merely on the basis of experiment carried out in relation to the production capacity of a factory. There has to be some other evidence to support the findings to be arrived at the test proceedings. 24. In Haroon Haju Abdulla's case (supra), the Apex Court held that, when the allegations of duress and torture in the course of the recording of the statements are made by the defendant months after the recording of the statement, it is impossible to give any importance to such allegations. The Apex Court was dealing with the matter wherein a batch of 18 persons were tried jointly before the Chief Presidency Magistrate, Bombay, for offenc....