TaxTMI 
TaxTMI 
2013 (11) TMI 785
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....ntioned in the lot register maintained by the assessee which did not tally. Shri Sanjay Patel who was present in the factory premises during search supposedly explained the investigation officers that these loose papers showed the quantity of grey fabrics received by them for processing; these fabrics were processed in their factory and removed to the concerned buyers; these fabrics were not accounted for in any statutory record/register and were cleared without payment of central excise duty. On the basis of these loose papers a worksheet was prepared to show that the said assessee (respondents) had illicitly processed and clandestinely cleared 388797 l. mtrs of MMF (man-made fabrics) valued at Rs.64,39,962/- and 510753 l. mtrs of cotton fabrics valued at Rs.1,01,89,410/- and thereby evaded the central excise duty of Rs.16,62,937/-. Statement of Shri Sanjay Patel, Excise Clerk and Shri Subhash Agrawal, Director and Shri Shambu Bhavsar, supposedly middlemen for purchasing fabris was recorded, which was subsequently retracted by Shri Subhash Agrawal, Director and Shri Shambu Bhavsar. The retracted statements were also sent to the ADG, DGCEI. The assessee explained the discrepancy of....
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....mitted fact that the whole stock lying in the factory was not measured, the whole case of the Revenue about clandestine removal of fabrics and also about shortage of fabrics falls because the whole case is made out on the basis of kachcha chits. They have submitted that as per the say of the investigating agency all the unprocessed fabrics received in the factory were recorded in such kachcha chits irrespective of the fact whether such fabrics were recorded in lot register while receiving and in RG-1 after processing or not. If all these fabrics were received in the factory were recorded in kachcha chits, then it would not be possible to find out which lots were not recorded in the statutory lot register and RG-1 register unless all the fabrics are physically measured and verified. I find substantial force in the argument of the respondents that the department has admitted that physical verification of entire stock was not taken. In this scenario, the departments case should have been that kachcha chits were only for unaccounted fabrics or that only those fabrics were recorded in such chits which were removed clandestinely and therefore the department has not totaled up all the....
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....es of all the 12 buyers whose names were given by Shri Agrawal, Director on the first day of visit of the officers. (iii) Regarding acceptability of statements which have been retracted the department has contended that the Commissioner (A) did not bother to find out whether the ADG, DGCEI had received a copy of affidavit purportedly sent by Shri Agrawal, Director by UPC. As per the department letters sent by Registered post or Speed Post are recognized mode of service under Section 37C of the Central Excise Act, 1944 and an affidavit sent under UPC cannot be said to have been treated as served. Retraction of Shri Agrawal is contrary to facts on record. Duty has been debited by cheque or entry in RG-23-A-Pt.II and letters informing the same have been sent to DGCEI which does not show that duty was paid under protest. Voluntary payment of duty on 3 occassions which are all subsequent to date of purported retraction clearly brings out that affidavit dt.20.07.2004 is a fabricated document. The department has also contended that demand was made not only on the basis of statement of Shri Agrawal rather demand was made on the basis of entries in kaccha slips and such kachcha slips are....
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.... (iv) It is the contention of the Revenue that the sanctity and authority of kachcha slips is that the same were recovered from the factory premises of the assessee and from the possession of excise clerk who is authorized to sign all the documents related to central excise. These kachcha slips have been corroborated by the statements of Shri Sanjay Patel, Clerk and Shri Subhash Agrawal, Director and Annexure B and C of panchnama. The lot numbers were mentioned in these kachcha slips which when tallied with lot register statutorily maintained by the assessee were not found entered in lot register. This clearly proves that fabrics mentioned in kachcha slips were not accounted for in the official lot register which means that such processed fabrics were cleared clandestinely without entry in official books of accounts and without payment of duty. Moreover, 73088 l.mtrs of grey and bleached fabrics of lot numbers mentioned in kachcha slips were seized on 28/29.06.2004 during search and said fabrics were also not entered in the lot register. The respondents have contended that there is no dispute raised about factual position that none of the 12 buyers was approached by DGCEI and t....
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....ent to whom the difference of opinion was referred that recording of a confessional statement would not put an end to investigation and the Revenue officers should be careful to ensure that they are not tricked out of a regular and detailed investigation. By observing so, the dispute was decided in favour of the appellant. The said decision stand confirmed by Hon'ble Gujarat High Court when the appeal filed by Revenue stand rejected as reported in 2009 (234) ELT 242 (Guj). 7. In view of foregoing discussions, it becomes clear that the charges of clandestine removal which also result in criminal liabilities by way of prosecution of concerned persons are required to be proved by sufficient evidences and cannot be decided on the basis of some documents which is the only piece of evidence which may at the most create a suspicion but not a full proof evidence. I have already recorded a finding on the evidentiary value of loose papers (slips) as also the other documents relied upon by the Revenue for corroborating the loose slips. 8. When viewed in the light of the above decisions referred to, it is to be noted that the investigation in the present case did not go to the logical en....
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....s was not traced and made available for cross-examination. Moreover, these documentary evidence were not recovered from the office or factory premises of the appellant manufacturer company, and there is no tangible evidence on record to conclusively relate the same with the appellant manufacturer company, except the retracted oral evidence. There isn't any untainted, undisputed admission by the concerned Director of the company that these records relied by the department were of company's unaccounted production and removal thereof. The entire accounted production of the appellant manufacturer for the relevant period is not recorded in these Kachha records besides the alleged unaccounted production. The Hon'ble Member (Technical) was persuaded to assume that Shri Bothra would have keys to premises at '4130, Gali Barna, Sadar Bazar, Delhi', and although Panchnama drawn at this premises nowhere records the name of the appellant company, he was persuaded to further assume that it was a guest house of the appellant company. Although the names of the consignors on GR/RR were found fictitious, the Hon'ble Member (Technical) was persuaded to assume that the same related to the Appellant co....
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....e of raw materials, the same should be proven with reference to unaccounted use of all such major raw materials. 22. In a case of clandestine removal the department should produce positive evidence to establish the same. In the absence of corroborative evidence, a finding cannot be based on the contents of loose chits of uncertain authorship. Department has not produced evidence of use of inputs to prove that there was manufacture of unaccounted finished product. Moreover, in the case of Atlas Conductors (supra), this Tribunal has taken a clear view that the demand cannot be on presumption of manufacture but on the basis of actual manufacture which is the basis to come to conclusion as recorded by Hon'ble President in para 47 onwards that the findings of the adjudicating authority are without any evidence and is not correct view and is liable to be set aside. 31. My above views are fortified by a recent case in the case of Viswa Traders Pvt. Ltd. & others v. CCE, Vadodara being Final Order No. A/1846-1851/WZB/AHD/2011, dated 1-11-2011, a similar issue of clandestine removal was decided by co-ordinate Bench of Tribunal in Ahmedabad, wher....
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.... and removed in a clandestine manner from the factory of the appellant. There was no recovery of any unaccounted sales proceeds in substantial cash in the factory or office premises or anywhere else in the control of the appellant company, backed by any confirmation oral or written from the person giving such cash against goods removed in clandestine manner without payment of duty from the factory of appellant company. 10. By taking note of the legal positions as enunciated in the above referred decisions, I note that the confirmation of demand of duty against the assessee based upon the allegations of clandestine removal leading to the financial burden to the assessee as also resulting in criminal prosecution of the authorised persons is required to be done on the basis of evidences which generates confidence in the prosecution case. As observed in the majority order of the Tribunal in the case of M/s. Kuber Tobacco Products P. Ltd., the mathematical procedure to the last extent may not be required but the distance between might have and must have is required to be travelled and filled by the Revenue by producing independent evidences on record, which can lead to inevitable con....
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....chase or for job-work. The visiting officer from Revenue Department very plainly and innocently had admitted the statement of Mr. Pravinbhai L. Patel as gospel of truth as if all such processed fabrics were sold in cash at factory gate. The names of purchaser were not elicited nor the statement of even any one of the supplier/purchases, office bearer of such company or of the office/director were got recorded. The statement of Mr. P.L. Patel was admitted by Revenue officials so sacrosent that as if revealed truth and only truth which does not warrant corroboration even in slightest detail. It may be recorded that while investigating the tax evasion case, the deposition made before the such Revenue officer are admitted as an evidence as the person whose statement are recorded are fore-warned that their statement would be used against them. Therefore, they are told to make correct and truthful statement. The provisions of Section 108 of Customs Act, 1962 or of Section 14 of the Central Excise Act, 1944 also enjoins that charged persons are supposed to make correct and truthful statement. In tax-evasion statement, the persons whose statement are recorded are not accused nor can be or ....
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....ssessee was in the nature of the statement recorded under Section 14 of the Act, which had been subsequently retracted. Before the adjudicating authority, the respondent assessee had led evidence to establish that the charge of clandestine removal is not made out and that there was no shortage of material as recorded in the panchnama which was accepted by the adjudicating authority. The findings of the adjudicating authority stand confirmed by both the appellate authorities. Learned counsel for the appellant is not in a position to point out any evidence to the contrary, in support of the case of the revenue as regards shortage of material or clandestine removal of goods. Thus, the conclusion arrived at by the Tribunal is based solely upon concurrent findings of fact recorded by all the authorities below. In absence of any perversity being pointed out in the findings recorded by the Tribunal, it is not possible to state that the conclusion arrived at by the Tribunal is, in any manner unreasonable so as to warrant interference. A case of clandestine removal of goods has to be made out on facts which find corroboration from the material on record. In absence of any corroborative mate....