TaxTMI 
TaxTMI 
2011 (10) TMI 94
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....ies imposed by adjudicating authority on them. 3. The relevant facts that arise for consideration are that: (i) The factory premises of M/s Vishwa Traders Pvt.Ltd. (hereinafter referred to as M/s VTPL), was visited by the officers of DGCEI on an information that VTPL had indulged in clandestine removal of the goods under fake invoices prepared by the authorized signatories. Simultaneous visits were carried out in the factory, office, residential premises of the Director, Factory Manager, Employees, Production Manager, premises of dealers and also the suppliers of raw materials and purchasers of final product from M/S VTPL. Statements were recorded of various persons. On culmination of such detailed investigations and scrutiny of the records, it was noticed by the officers that the appellant herein M/s VTPL has indulged themselves in clandestine removal of final products. In view of this, Show Cause Notices were issued to M/s VTPL, Shri Vivek Maheshwari, Director of M/s VTPL, M/s Sun Borax Industries, M/s Excel Ceramics, M/s Weldecor Mosaic Tiles and M/s Amar Ceramics Industries. The said Show Cause Notices were adjudicated by the adjudicating authority and Order-in-Original w....
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....1st proviso shall be available if the amount of penalty so determined has also been paid within the period of 30 days referred to in that proviso. (iii) I impose personal penalty on Shri Vivek Maheshwari, Director of M/s VTPL, Shri B.M. Patel, and Shri M.J. Devasia, Employee of M/s VTPL under Rule 209A of Central Excise Rules, 1944 read with Rule 26 of Central Excise Rules,2002, as under: a) Shri Vivesk B. Maheshwari, Rs.50,00,000/- (Rs.Fifty Lakhs) b) Shri B.M. Patel, Rs.10,000/- (Rs.Ten Thousands) c) Shri M.J. Devasia, Rs.25,000/- (Rs.Twenty Five Thousand)" 4. From the above reproduced order, we are concerned with M/s VTPL and Shri Vivek Maheshwari. The other 2 persons have not preferred any appeal. As regards other appeals as mentioned in 1st Para, their appeals are against penalty imposed by adjudicating authority in the first round of litigation. 5. Shri Devan Parikh, ld.Sr.Advocate, along with other advocates appeared for the appellants. Ld.Counsel would submit that the evidences relied upon by the Department are not sufficient to uphold the charge of clandestine removal. It is his submission that the evidences relied upon by the Department, unde....
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....tatements of only 2 customers M/s Amar Ceramics Industries and M/s Excel Ceramics were recorded and relied upon to show that they were receiving the goods without invoices. 5.2 Statement of raw material supplier viz. M/s Sun Borax was also taken and relied upon by, to indicate purchases of raw materials without accounting for in the records. 5.3 Statement of dealer i.e. M/s Weldecor Ceramics Industries reads to indicate that they were collecting the cash and demand draft on behalf of M/s VTPL and depositing the same in their bank account. It is his submission that as regards documents recovered from the premises of employees and 3rd party, they are not official records and they are not kept on day to day basis. It is also his submission that despite request for cross examination of these very persons, it was denied by adjudicating authority on the frivolous ground and the documents recovered from the employee's residence and statements made by them and 3rd party are to be discarded as not proved, in the absence of any cross examination. It is further his submission that evidences recovered from the premises of employees are themselves not consistent and are ....
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....urpose, he would rely upon the following decisions: i) 2003 (153) ELT 437 CCE Chennai Vs Dhanvilas (Madras) Snuff Co. ii) 2006 (200) ELT 234 - S.T. Texturisers Vs. CCE Surat iii) 2002 (140) ELT 187 - T.G.L. Poshak Corporation Vs. CCE Hyderabad iv) 2005 (183) ELT 101 - Rajasthan Foils Pvt.Ltd. Vs CCE Jaipur v) 1989 (39) ELT 655 - Kashmir Vanaspati Pvt.Ltd. Vs CCE vi) 2001 (130) ELT 271 - Sharma Chemicals Vs CCE Calcutta vii) 2011 (266) ELT 45 (Guj) - CCE Daman Vs Nissan Thermoware Pvt.Ltd. viii) 2002 (141) ELT 676 - Shree Jay Jyoti Vs CCE Madurai 5.4 To sum up, it is his submission that the case of clandestine removal cannot be upheld merely on the basis of documents, etc been found along with statement unless there is tangible, independent, corroborating proof like financial flow back, actual manufacture and clearance, excess purchase of raw material, electricity consumption, statements of workers, actual transportation of the goods, statement of purchasers. Alternately, it is his submission that assuming that the submissions made by and has met the approval of the Tribunal, the value of clearance has to be considered as cum-duty value and duty liability ....
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....nt, there were clandestine clearances. It is his submission that the documents recovered from the residential premises of the employees when cross checked with the statutory records, indicate clandestine removal of the goods. It is his submission that bulk of the clandestine sales or clearance were made by M/s VTPL without payment of duty to M/s Weldecor and it has been admitted by the partner of M/s Weldecor in their statement, even though there was no official agreement. It is his submission that the amount which was received by cash/DD/Pay Order by M/s Weldecor Mosaic Tiles, deposited in Canara Bank/Central Bank. He would submit that above all the statement of the Managing Director of the Company, which indicate that they were making clandestine clearance of final product from their factory premises without recording the same in their books of account. He would submit that the efforts of the ld.Sr.Advocate to show the commissions and omissions in the evidences relied upon by the Revenue is totally incorrect. It is his submission that the statements or the evidences clearly point out that there was a well-calculated operation to remove the goods clandestinely without ....
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....ees and that of Managing Director, which are inculpatory in nature. iii) Out of the visit to most of the customers who purchased the material from M/s VTPL, statements of only 2 customers were recorded and that of one dealer was recorded. iv) Statement of supplier of one of the raw material. 10. First and foremost evidences which are on record whether they indicate clandestine removal of the goods vis-a-vis statement of the Managing Director and other persons. 10.1 As regards documents recovered from the premises of the employees and 3rd party, it is definitely pertinent to note that these are not official records maintained in the place of business and it is also noticed that they are not kept on day to day basis and were not recovered from regular business premises. 10.2 Few documents which were recovered from the factory premises of the appellant were not tallying with any of the official documents, but were sought to be tallied with the evidences on record recovered from the residence of three employees. We find that the ld.advocate for the M/s VTPL had specifically requested for cross examination of the following persons, as recorded by the adjudicating au....
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....Cochin 2002 (246) ELT 248 (SC), wherein their Lordship held 'no reliance can be placed on the oral statement of the raw material suppliers as he is not subjected to any examination and cross examination during adjudication.' On discarding of the evidences from the above persons, we find that there is paucity of tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods. 11. The basic charge of the Revenue on M/s VTPL is that they have removed finished goods clandestinely from the factory. For this purpose, they have relied upon the inculpatory statement of M/s Amar Ceramics Industries and M/s Excel Ceramics. We find from the records that authorized signatory of M/s Amar Ceramics Industries, during his recording of the statement, has admitted that they had received the Frit without bill from M/s VTPL and also deposed that the same was used in the manufacture of glazed tiles, which were cleared without payment of duty. This is to indicate that the authorized person of M/s Amar Ceramics Industries had stated that they had cleared their final product i.e. glazed tiles manufactured by using unaccounted purchases of Frit from M....
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....liers of these raw materials. There is a solitary evidence in the form of statement of supplier of one of the raw material i.e. Borax Powder, who indicated that the appellant had procured Borax Powder and not accounted the same in his record; and the said entries and information were deduced from the documents of the premises of Shri Anil Jadav and whose evidence has been discarded for having not been produced for cross examination; in the absence of any other tangible evidence to show that the appellant had been procuring the other major raw materials required for manufacture of Frit without recording in books of accounts, we are unable to accept the contentions of the ld.AR appearing for the Revenue and the findings of the adjudicating authority, that there was clandestine manufacture and clearance of the finished goods. The investigation has not proceeded further to bring on record unaccounted purchases of all the raw materials required for manufacturing of 'Frit'. 14. In the case of Dhanavilas (Madras) Snuff Co. 2003 (153) ELT 437 (Tri-Chennai), we find that in Para 6, the Tribunal has recorded as under: "6.......Revenue ought to have produced the evidence of purcha....
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....see's appeal is concerned, we notice from the extracted portion of the Commissioner's order that Revenue is solely relying on the exercise note books mainly balance steets. The Tribunal in large number of cases which have already been noted above in the tabulated list of citations furnished by the Counsel has held that unless there is clinching evidence on the nature of purchase of raw materials, use of electricity, sale, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some workers. The facts in the case of Aswin Vanaspati Industries would be identical to the facts herein as in that case also the allegation was with regard to removal of Vanaspati based on the inputs maintained. The Tribunal went in great detail and have clearly laid down that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly apply to the facts of this case. Hence, following the ratio of ....