TaxTMI 
TaxTMI 
2011 (9) TMI 875
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....e, Bangalore-I, which itself has been passed in pursuance of Tribunal's remand order No. 485 to 488/2003 dated 31-3-2003. 2. Heard the learned advocate, Shri M.G. Varadarajan, for the party. Heard Smt. Sudha Koka, Additional Commissioner, duly assisted by Shri V. Srinivas, Superintendent of Central Excise, on behalf of the department. 3.1 The relevant facts, in brief, are that on information, the Officers of Directorate General of Anti Evasion along with Officers of Central Excise conducted simultaneous search operations at the factory and office premises of M/s. Ramachandra Rexins Pvt. Ltd., hereinafter referred to as "the appellant company", the residential premises of the Director of the appellant-company, premises of sister concern M/s. Ramachandra Pesticides Pvt. Ltd. and premises of main dealer M/s. Subramanya & Company and premises of other dealers at Hyderabad, Vijayawada, Calcutta, Madras and Bombay. 176 rolls of Coated Cotton Fabrics (CCF) valued at Rs. 2 lakhs was seized from the factory premises of the appellant company; 178 rolls of CCF valued at Rs. 1,10,000/- was seized from the factory premises of M/s. Ramachandra Pesticides (P) Ltd.; incriminating d....
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....on report given to the bank that 9 MT of raw materials was not accounted as on 31-7-1991 has to be viewed in the context of their accounting the same on 6-8-1991 and it was merely a case of delay in accounting the raw materials which is a technical omission. Further, this discrepancy was noticed by the bankers to whom the statements were submitted. The statement furnished to the bank, incidentally, is for altogether a different purpose. A shortage of 6 MT of PVC Resins alleged in the show-cause notice has been satisfactorily explained, as they have subsequently produced the invoices. (c) They had a practice of preparing hand-written invoices referred by them as kachcha invoices and thereafter, they used to prepare typed invoices. The departmental authorities have mistaken the same as maintenance of parallel invoices and alleged double transportation/clearances. The department has not adduced any evidence to the effect that two different consignments have indeed been cleared to two different parties using the same invoice number. In the absence of producing such evidence, the allegations of maintenance of parallel invoices and double clearance are baseless....
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....ion in purchased quantities from the appellant company and the actual sales figures of Subramanya & Co. treating the excess as unaccounted clearances by the appellant company over and above the alleged unaccounted clearances as per Annexure-E.1. This is clearly a case of duplication of demand. 4.2 He submitted that no demand can be raised solely based on invoices raised for the purpose of securing bank loans. No allegation of clandestine removal can be inferred when no documents for purchase of inputs or evidence for use of inputs are relied upon. He also submitted that no case of clandestine removal can be made out on the basis of excess consumption of one of the raw materials. He also submitted that notebooks and private records maintained by workers and employees of the company cannot be relied upon for demand of duty without adducing evidence corroborating the entries in the said private records. Mere statements cannot be used for demand of duty alleging clandestine removal without corroborative evidence. Further, he also submitted that documents which are not tested for veracity cannot be relied upon for confirming demand alleging clandestine removal. The learned advoc....
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....particular industry. (c) That there was excess production is evident from the fact that when the appellant company has not shown any production in RG-I during the period from 4-9-1991 to 20-9-991, there have been issues of all raw materials required for production and batch-wise production of coated cotton fabrics were found recorded in the private records. During this period, Shri Ashok Reddy, the Production Manager accepted that the production figures were being maintained in katcha papers. (d) Regarding the prevalence of practice of assigning parallel roll numbers, it was submitted that roll numbers in katcha papers in the name of some parties were found to be the same as in delivery challans for delivery of goods for some other parties. It was also submitted that Shri Suresh Babu admitted the same as duly recorded by the Commissioner in para 25 of his order. The submission that 80 to 90% were supplied to transport companies out of the list of 758 entries is factually not correct. Referring to the reconciliation statement furnished by the appellant company, the learned Additional Commissioner drew our attention to the fact that in most o....
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....his is not being disputed by the appellant-company. Their submission is that they were working only at about 50% of the installed capacity and that they were working mostly one shift and only occasionally, on two shifts. Therefore, the finding of the Commissioner that the appellant-company had capacity to produce in excess of the accounted production can be treated as not in dispute. 6.3 The appellant company has clearly admitted that the production and figures given to other agencies like Banks were on the higher side. However, it was sought to be explained claiming that the same were intended for the purpose of getting loan from the bank or other facilities like more quota of coal, kerosene. It was also contended that the declarations given for different purposes cannot be relied upon for alleging clandestine production and clearance. While noting this submission by the appellant-company as relevant, it is observed that such a declaration of higher quantum of production and sales will definitely be a relevant factor to conclude whether there was unaccounted production and clandestine removal, when there are other evidences. 6.4 The department has relied on certain....
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....me roll numbers in the invoices/delivery challans relating to different parties. The company sought to explain the same by saying that some of the consignments supplied by them to different customers have been rejected by them and the same were returned and re-sold through their sister concerns like Subramanya & Co. It is surprising that when several consignments are claimed to have been returned, no correspondence from any of their buyers indicating rejection of the consignment sent to them or evidence for transport of the returned consignment either to their factory or to Subramanya & Co. or directly to a third party has been produced. Therefore, it is clear that the appellant-company has used parallel numbers in respect of batches of consignments produced and sold to different customers. The prevalence of parallel roll numbers is a clear indication of unaccounted production. Shri Suresh Babu, in his statement dated 14-2-1992, clearly admitted to prevalence of parallel roll numbers and in fact, claimed that the same was done at the instance of the Director of the appellant-company. The statements of Suresh Babu and the two Assistants working under him admitting the above modus op....
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.... and the names of the consignees. Such wide variation clearly demolishes the claim and apparently an after-thought. At any rate, even if the goods were to be cleared from the factory to their office, the legal requirement is that the gate-passes are required to be prepared indicating the consignment as meant for 'self and cleared only on payment of duty. 6.9 As already mentioned, on the date of visit, certain quantity of coated cotton fabrics manufactured was found unaccounted as they were not entered in RG-1 and that a few days earlier, a consignment was found cleared without preparing gate-pass and without payment of duty, as admitted by Shri N. A. Jayaram (para 17.6 of the Order-in-Original refers). 6.10 It is also noticed that the transporters have clearly stated that whenever they have issued LRs, the same were issued after receiving the goods for transportation clearly contradicting the claim of the appellant-company that they got advance LRs to enable them to discount the bills without actually dispatching the goods to various customers. 6.11  It is undisputed fact that Subramanya & Co. is a partnership concern whose partners are close relatives of th....
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....ds have been raised only in cases where the gate-passes were not available corresponding to the invoices prepared by the appellant-company deserves to be accepted. The Commissioner has rightly rejected the reconciliation statement submitted belatedly by the appellant-company. 7.1 The learned advocate relied on several decisions. In one of the decisions, it has been held that solely based on reports indicating inflated figures of sales for bank loans, demand alleging clandestine removal cannot be raised. Inflation of sales figures for the purpose of getting undue bank loan may be possible though not permissible. No doubt, merely based on such statement to the bank, demand cannot be raised. When clandestine removal is alleged, no doubt, evidences like procurement of excess inputs, use of excess inputs, etc. are to be looked into. Private records maintained by the employees alone cannot be relied upon as per some of the decisions. Some of the decisions relied upon are also to the effect that documents not tested for veracity cannot be relied upon. All these decisions have been rendered in the facts of the said cases. In the present case, we find that there was excess use of ra....