AI Drafter 
TaxTMI 
TaxTMI 
2014 (4) TMI 376
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.... Excise (Goods of Special Importance) Act, 1957. The factory premises of the appellant M/s Mahesh Silk Mills and seven shop premises of cloth merchants/ traders were searched on 19.10.1995 by the officers of the Directorate General of Central Excise Intelligence, Zonal Unit, Mumbai, and the shop premises of M/s Chandan Silk Mills being one of the seven shops searched. During the course of search at M/s Mahesh Silk Mills on 19/20.10.1995, some short and some excess quantities of finished/ semi-finished/ grey man-made fabrics were detected by the officers, for which show cause notice was issued on 17.04.1996 by the Commissioner, Central Excise, Surat. The officers also seized one diary from the factory premise of Mahesh Silk Mills containing fabric details like Name, Date, No., Meterage, Name of Fabric etc. allegedly showing quantities of grey fabrics received from 47 cloth merchants / traders and corresponding processed fabrics sent back by M/s Mahesh Silk Mills after processing to the said merchants/ traders during the period September to October, 1994. On comparing the figures contained in the diary with the Lot Register maintained by M/s Mahesh Silk Mills, the officers suspected ....
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....ewd on a total quantity of 16.82 lakh meters in these proceedings. That, panchnamas were drawn at the premises of various other traders/ cloth merchants also but those evidences are not relied upon by the Revenue for the reasons best known to them. (c) that huge quantity of 16.82 lakh meters of fabrics is alleged to have been processed during two months of September and October, 1994, but no corroborative evidence of excess consumption of electricity, colours, dyes, chemicals etc is adduced by Revenue. That even the production capacity of the factory is also not considered by the investigation. (d) that penalty on only one trader Chandan Prints, who allegedly received a small quantity of 24,255 L. Meters of processed fabrics, has been imposed. However, there were no proceedings against any of the other 46 traders, who allegedly got their grey fabrics processed from Mahesh Silk Mills, and whose identity is also not established by the Department. (e) that in view of the above circumstances, a serious charge of clandestine production and illicit removal of goods cannot be held to have been proved beyond a reasonable doubt. 3.2 The learned advocate cited the following citat....
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....k Glazes Private Limited Vs. Union of India, reported as [2014 (300) ELT 25 (Guj.)] 3.5. The learned advocate also argued that penalties under Rules 173Q and 209A imposed on the appellants were without jurisdiction in view of the judgment of Hon'ble Supreme Court in the matter of Collector of Central Excise Vs. Orient Fabrics Pvt. Ltd., [2003 (158) ELT 545 (SC) = (2004) 1 SCC 517]. 3.6. Ld Advocate further argued that the first show cause notice dated 17.04.1996 was issued after investigations were over, and no new evidence was found by the Revenue to justify delay of almost two years in issuing the second show cause notice on 31.03.1998. The second show cause notice dated 31.03.1998 is, therefore, time barred. He cited the following case laws in this regard: (a) Nizam Sugar Factory Vs. Union of India [2006 (197) ELT 465 (SC)], (b) Riva Textile Industries Ltd. [2006 (197) ELT 555 (Tri. Mum)], (c) Lovely Food Industries [2006 (195) ELT 90 (Tri. Bang)], and (d) Neminath Fabrics - [Order No. A/ 1676-1677/ WZB/ AHD/ 2008 (Tri. Ahd.) dated 20/ 26.08.2008]. 3.7 The Ld. Advocate, therefore, contended that the demand of Additional Duty of Excise is not sustainable in v....
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.... (a) Hi-Tech Needles (P) Ltd. Vs. Commissioner of Customs, Allahabad - [2012 (279) 461 (Tri. Del.)]; (b) Commissioner of Central Excise, Daman Vs. Caprihans India Limited - [2010 (261) ELT 357 (Tri. Ahmd.)]; (c) Commissioner of Central Excise, Visakhapatnam Vs. Mehta & Co. - [2011 (264) ELT 481 (SC)]; and (d) Commissioner of Central Excise, SUrat-I Vs. Neminath Fabrics Pvt. Ltd. - [2010 (256) ELT 369 (Guj.)] 4.4. The learned AR, thus, contended that the demand of Additional Duty of Excise along with interest is maintainable and consequently penalties were correctly imposed upon the appellants apart from confiscation of land, plant and machinery of Mahesh Silk Mills. 5. We have heard both sides and perused the case records. The issue involved is alleged clandestine and manufacture of manmade fabrics by the appellant M/s Mahesh Silk Mills. 6. It is observed from the records that the total demand of duty of Rs. 30,18,378/- in the case has been raised mainly on the basis of figures taken from the diary recovered from the factory premises of Mahesh Silk Mills on 19/20.10.1955. While recovery of the impugned diary from the factory prewmises of Mahesh Silk Mills is not ....
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....ure of the goods during that period by the company. All the entries detailed in Annexure A, had also been shown in Annexure B. The details of the raw material received by the company had been given in Annexure C prepared from the notebook mentioned at Sl. No. 4 of the resumption memo. But it is quite evident even from the impugned order itself that certain entries made in all the five seized notebooks tallied with the invoices issued under Rule 52A, by the company at the time of clearances of the goods. The entries in the notebooks mentioned at Sl. Nos. 4 and 5 of the resumption memo, pertains to goods sent for weighment by the company to the Dharamkanta and from these entries, it could not be inferred that these goods were cleared to the buyers without payment of duty specially when there is no evidence/statement of any buyer of having received the goods without cover of invoice or payment of duty from the company. In the entries of notebook mentioned at Sl. No. 4 of the resumption memo, at pages 20 to 40, only the names of the customers in short, quantity of the aluminium foils and figures showing certain amount in rupees equal to the quantity in kg., had been detailed and these ....
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....uty (g) statements of buyers with some details of illicit manufacture and clearance; (h) proof of actual transportation of goods, cleared without payment of duty (i) links between the document recovered during the search and activities being carried on in the factory of production; etc. Needless to say, a precise enumeration of all situations in which one could hold with activity that there have been clandestine manufacture and clearances, would not be possible. As held by this tribunal and Superior Courts, it would depend on the facts of each case. What once could, however, say with some certainty is that inferences cannot be drawn about such clearances merely on the basis of note books or diaries privately maintained or on mere statements of some persons may even be responsible official of the manufacture or even of its Directors/ partners who are not even permitted to be cross examined, as in the present case, without one or more of the evidence referred to above being present. In fact, this Bench has considered some of the case-law on the subject in Centurion Laboratories v CCE, Vadodara, 2013(293) ELT 689. It would appear that the decision though rendered on 3.5.2....