TaxTMI 
TaxTMI 
2012 (4) TMI 557
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....kh stand imposed upon M/s. Aum for non-accountal of finished goods in RG-1 register. In addition, penalty of Rs. 1 lakh and Rs. 50,000/- stand imposed upon Shri Vijay N. Agarwal and Shri G.G. Bansal in terms of provisions of Rule 209A of CER for non-accountal of billets in RG-1 register. 2. As per facts on record, the appellants M/s. Aum Aluminum Pvt. Ltd. (hereinafter referred to as M/s. Aum) is engaged in the manufacture of aluminum sections, bars, rods, pipes, etc. classifiable under Chapter Heading 76 of CETA 1985. Their factory was visited by Directorate General of Excise Intelligence on 12-4-2001, who conducted various checks and verifications. The final products, lying unaccounted in statutory record were seized by the officers under Panchnama on 12-4-2001. 3. During the post-seizure investigation, statements of various persons were recorded. Simultaneous searches were also made at the premises of M/s. Vinviv Holding & Trading Co. and M/s. Allied Aluminum, the alleged buyers of the final product. The various articles of Aluminum lying at the said trading company were also put to seizure. Shri Jayesh Sharma, Godown in-charge of M/s. Allied Aluminum could not p....
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....f Shri G.G. Bansal, Shri V.N. Agarwal and transporters were conducted in de novo proceedings. Based upon the duty confirmation and cross-examination, the appellants put forth the following submissions before adjudicating authority. (i) The Revenue's case is based upon the procurement of excess furnace oil and aluminum scrap, which is one of their raw materials. The said documents showing excess recovery of furnace oil were recovered from the residential premises of Shri G.G. Bansal, who was maintaining his own private record, showing the purchases of certain aluminum scrap and furnace oil in excess of what has been recorded in the appellant's books of accounts. Shri Bansal, during his cross-examination, has admitted that he was engaged in the business of trading and said purchases were made by him in his personal capacity. Inasmuch as the furnace oil could not be procured by any person and was being supplied by the oil company only to the unit who has explosive licence and as M/s. Aum had requisite licence, the furnace oil was purchased in their name and was sold to the other unit by Shri Bansal without knowledge of the company's director Shri V.N. Agarwal. The said ....
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....ave also produced a certificate from chartered engineer showing capacity of the plant as 400 MT per annum. As such, the charges of clandestine removal indicate only production of 1000 MT is not only impracticable but impossible. (ix) The department has not supported its allegations by production of any evidence of increased power consumption, employment of higher number of labours, purchase of raw material, etc. They also invited Revenue to verify the production capacity of their plant. A new certificate by another chartered engineer showing production of 432 MT per annum was also placed on record. (x) They also drew attention of the adjudicating authority to the electricity consumption, which has remained constant for the last 7-8 years. Revenue has not laid any evidence to show as to how such excess production was procured by the appellant, without use of excess electricity. Even at the time of search, no excess stock of input or fuel had been found by the officers. (xi) They relied upon the various judgments of judicial as also quasi-judicial authorities in support of their submissions that the charges of clandestine removal are required to be es....
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....y Shri Vipin Kumar Jain, learned advocate, Shri Vishal Agarwal, learned Chartered Accountant, both appearing on behalf of the appellant and Dr. M.K. Rajak, learned SDR appearing on behalf of the Revenue. 12. After appreciating the submissions made by both sides and after going through the impugned order, we find that the appellants who are manufacturing aluminum sections, require three main inputs i.e. aluminum scrap, furnace oil and electricity. The allegations of clandestine removal are primarily based upon the documents recovered from the residential premises of Shri Bansal showing purchase of furnace oil and small quantity of aluminum scrap. In addition, the Revenue has also relied upon the documents recovered from the transporter's premises showing booking of various trucks in the name of M/s. Aum. 13. We shall be dealing with the various submissions made by the appellant before the adjudicating authority in the manner in which he has dealt with the same one by one. 14. While dealing with the appellant's contention that their annual production capacity is to the tune of around 400 MT, the Commissioner has referred to the Chartered Engineer's certificate....
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....ed under special scheme allowed by the legislature, wherein the movement of the inputs or intermediate product is under special procedure involving issuance of challans by the principal manufacturer and giving of an undertaking as regards use of such intermediate product in his factory and clearance of the final product on payment of duty. It is not the Revenue's case that such movement of the goods was under Section 57F challan (as it there was) or under other relevant rules. The above observations of the Commissioner that the sections can be made by the job workers, even if accepted on the face of it, cannot make M/s. Aum liable to duty. 16. The period involved in the present appeal is April, 1997 to 12-4-2001. Having accepted the appellant's limited production capacity, the Commissioner has not examined as to how such a huge quantity of Sections could have been manufactured by the appellant. 17. The next proof of evidence relied upon by the Revenue is documents recovered from the premises of various transport companies, in the nature of TR, booking receipts, memo books, etc. The appellants, apart from contesting that such recovery of the documents from the premis....
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.... 19. At this stage, we may refer to the Tribunal's majority decision in the case of M/s. Indo Green Textiles Pvt. Ltd. - 2007 (212) E.L.T. 343 (Tri.-Mumbai) wherein it was observed that Transporter's documents cannot be made the basis for upholding the finding of clandestine removal. Apart from the fact that they are third party documents recovered from the Transporter's premises, we note that the result of cross-examination of transporters as also of Shri Bansal clearly point out to one fact that places of loading and destination were different and such use of trucks was by Shri Bansal only in the interest of his business activities. 20. Tribunal in the case of Raj Petroleum Product v. CCE - 2005 (192) E.L.T. 806, Brims Products v. CCE - 2001 (130) E.L.T. 719, Kothari Products - 2003 (159) E.L.T. 1187 has held that allegation of clandestine removal cannot be established merely based on documents seized from the premises of transporters. The transporters, during the course of investigation as also on cross-examination have stated that invoice has accompanied each and every removal from the company. The absence of any allegation of maintenance of duplicate invoice bo....
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....ppellant is procurement of furnace oil in excess than the recorded balance, which in turn, is based upon the recovery of documents from the residential premises of Shri Bansal. Apart from the above fact that such documents recovered from Shri Bansal's residence, cannot be linked with the appellants M/s. Aum, it is also seen that the appellants have a sufficient explanation for the same. Shri Bansal has categorically deposed in his statements that he was procuring furnace oil in the name of M/s. Aum as they were having the requisite explosive licence and he was selling the same at a huge premium, in the open market to the other persons without the knowledge of his employer. Such use of authorative position by one of the employees of company is not something not heard of and one comes across the same very frequently. The question which arises is as to whether apart from the such documents, which stand recovered from the employee's residence and stand explained by him, is there any evidence to link furnace oil procured under the cover of such document, with their utilization in the manufacture of alleged excess product, especially when the appellants having accepted to have lower prod....
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....moval charges being serious in nature, are required to be established by production of sufficient, tangible and positive evidences and cannot be made on the basis of circumstantial evidences leading to doubt. In case of M/s. Raj Petroleum Product - 2005 (192) E.L.T. 806 (T), it was observed that when initially oral statement travelled beyond the documentary evidence, the same has to be viewed with suspicion and in the event of a conflict, the documentary evidence should prevail. In the present case, statement initially given by the appellant was retracted and in any case, do not advance the Revenue's case having been established incorrect in reference to the production capacity. In the same judgment of M/s. Raj Petroleum Product, Tribunal rejected the Revenue's reliance on the records and returns of the transporters in absence of any material to the corroboration of dispatches, invoices and receipt of cash in accounts. Similarly, in case of M/s. Kothari Synthetics Industries - 2002 (141) E.L.T. 558 (Delhi), it was held that entries in the transporter's register of transport company cannot be made legal basis for saddling the appellants with the duty liability by raising assumptions....
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....erance of probability as observed by the Commissioner. Sufficient evidence is required for the same. As we have already discussed that the appellant's production capacity is not being doubted by the Commissioner; that there is no direct evidence of procurement of main raw material furnace oil and scrap by M/s. Aum; that the suppliers of alleged excess inputs have not been identified; that the excess production of electricity is neither alleged nor proved on record; that excess labour utilization has not been examined; and above all, the buyers of the allegedly removed Sections have not been identified and their statements recorded. In fact, the Commissioner has himself dropped the proceedings against one of the alleged buyer of the aluminum sections i.e. M/s. Vinviv by holding that there is no sufficient material to show the receipt of Sections without payment of duty. 30. In view of the above discussions, we do not find any justification for confirming demand of duties against M/s. Aum or for imposing penalty upon them in terms of Section 11AC of the Act. Accordingly, the impugned order confirming demand and imposing penalty on M/s. Aum along with penalty imposed upon Shri....
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....nd consignees were mainly two trading firms owned and controlled by Shri V. Agarwal, Managing Director of AAPL. 35.3 The documentary evidences relating to the transactions were recovered from the transporters' premises. 36. Unaccounted purchases of furnace oil which showed that AAPL has shown purchases of only 2,67,000 KL of furnace oil and 4,05,878 KL of furnace oil supplied to AAPL as per the oil companies record was not accounted for by AAPL. 37. Revenue has also recovered files relating to purchase of aluminum scraps during March, 2001 to 12-4-2001 (the date of visit of the officers), from a flat near factory. The scrutiny revealed that several purchases of scrap were not accounted by the appellant in their books. Further, officers also recovered eight files from the premises of AAPL which contains details of purchases of aluminum scrap, aluminum foils and other raw materials made by AAPL, which were found not to have been accounted for in the account of AAPL. 38. There was also seizure of unaccounted billets and aluminum sections from AAPL. 39. Now, I take up the issues one by one and discuss the defence arguments vis-a-vis evidences pro....
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.... their annual report for the year 2006-2007, the company had declared 600 MT as capacity of production. Being a statutory document and a public document, the correctness of the same cannot be questioned. On the other hand, the certificate of Chartered Engineers gives much lower figures. He also submitted that report of Shri Nilesh Patel submitted on 1-8-2006 says that the data is based on verification of past production record/trend of the plant for the last 10 years. He also submits that contrary to the claim of engineer, the appellants had produced 485 Tons in the year 1999-2000 which is more than the capacity declared by both the engineers. Further, he also submits that it is not rare to find companies producing more than 150% of the capacity of the production declared and on this ground also it is quite possible that the appellants could have produced the excess quantity found to have been removed clandestinely. Another point that has been considered by the Commissioner in his adjudication order is that the aluminum sections can be manufactured with different gauges of aluminum. The finer the gauge, less the quantity that can be produced. Unfortunately, in the accounts maintain....
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....the required size. The billets before being used for manufacture of aluminum sections in the extruder, are subjected to pre-heating, which is also done in an OIL FIRED FURNACE. For manufacture of Aluminum Sections, dies are also required to be pre-heated, but the pre-heating of dies is done by electricity. The pre-heated billets are fed into the extruder and the Aluminum Sections of the required gauge are obtained and cut into required size by an electric machine. The Sections which are free from defects are subjected to ageing by putting them in an ageing oven heated at a certain temperature. For maintaining the required temperature in the ageing oven either furnace oil or electricity can be used." It cannot be denied that one of the strongest evidences which the department has brought out is purchase and utilisation of furnace oil by the appellant. To what extent the claim of the appellant regarding diversion of furnace oil is credible and acceptable would be discussed later, but if it is accepted that the appellants have not been able to show that the furnace oil was diverted, the obvious conclusion would be that the appellants could have produced 4 Tons of billets everyday w....
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....cation, this point had not been raised by the appellants at all. What they have submitted was that they have not received the excess quantity of Furnace oil at all and they had merely did not admit diversion. However subsequently they made this claim and it is also the claim of the appellants that Shri Bansal has done this without their knowledge. But, it is to be noted that the total quantity of furnace oil actually accounted for by the appellant is only 2,67,000 KL whereas the actual quantity purchased from oil companies and not accounted in the books of Company is more than 4.58 lakhs KL. This shows that while getting quota fixed, the appellants have apparently declared much higher capacity of production or have convinced oil companies of a need of substantially higher quantity. Unfortunately, the investigating officers have not gone into this aspect and therefore it is out of the purview of this appeal also. Nevertheless, during the cross-examination and examination of witnesses as directed by the Tribunal in remand order it has been brought out very clearly that the claim of illegal trading on personal account of this product by Shri Bansal is not based on facts. This is becau....
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....s for whom he was doing the business and at that time Shri Agarwal gave the names of the following companies : M/s. Chemit Industries, M/s. Parvati Industries, M/s. Maruti Induction, M/s. Vega Extrusion, M/s. Dhatu Sanskar, M/s. Sameer Tubes, M/s. Kanungo Tubes, M/s. Golden Copper, M/s. Gujarat Metal Cast and M/s. Vinayak. Further, they also produced an affidavit by Shri Sonu Singh who was missing for a long time even though he was mentioned as a broker, who assisted Shri Bansal in his trading activity. This person was traced by the appellants themselves and also submitted an affidavit in October, 2006 and gave the names of the same parties which were given by Shri Vijay Agarwal for whom the trading was done. However, the learned SDR submitted during the hearing based on a report submitted by Revenue that out of ten companies mentioned by Shri Vijay Agarwal and in the affidavit dated 16-10-2006 filed by Shri Sonu Singh, it was found that - M/s. Parvati Industries was closed in December, 1999, M/s. Maruti Induction was closed in March, 1998, M/s. Sameer Tubes was closed in December, 1998 (the name of the company is Sharmee Tubes), M/s. Kanungo Tubes was closed in December, ....
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....y, another employee Shri Nitin Mehta of Shri Matangi Transport Co. was examined and cross examined. He had been deputed by the transporter to attend the hearing and he stated that he was working for the company for 30 years and he was working at the time of hearing also. The statement of this employee who is continuously working for 30 years for the company, during the examination and cross-examination clearly stated that invariably the lorry receipts reflected the correct position; that goods could be loaded from elsewhere, but it would invariably be the godown of the person who has booked the goods; he also confirmed that all the documents such as lorry receipts, submitted by him or office copies and the statement enclosed to the SCN are correct. 42.3 The cross-examination and examination of the employees of the transporters clearly shows that the goods have actually been transported. As regards release of the goods to Allied Aluminum and non-confiscation of the goods seized from M/s. Vinviv trading, it really does not help the appellant. Unless the investigating agency establishes that the goods in question can be identified clearly as non-duty paid, the confiscation can....
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.... corresponding Central Excise invoices. This is possible because as per law the Central Excise invoice is required to show the vehicle number, time and date of dispatch. Therefore, the consignment has been accounted for or not in the Central Excise Record can be easily verified. Therefore, even in the cases where there was no LR, there are several instances where the corresponding Central Excise invoices have been found and all such consignments have been omitted for calculation of differential duty. The worksheets enclosed to the SCN are detailed and contain all relevant particulars. The statements of the employees confirming correctness of the records, copies of LRs and entries which have been correlated with Central Excise invoices in cases where LR is not available clearly show that aluminium sections were transported by the transporters. 42.4 The learned advocate Shri Vipin Jain, during the argument, had explained that if 5 Star Hotel like Taj provides concessional rate to one of his friends on account of his being a frequent customer, he may like to get the room booked in his name to save money, though it would be he and not his friend who would be staying in the room....
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....not mentioned, but FTL is booked. The transporters also have admitted that when full truck is booked, they are not bothered about the weight and weight may be mentioned or may not be mentioned. Further, it is also noticed that in almost all the cases, the statement contained number of packages except in some cases where it is mentioned as loose and in some cases where it is mentioned full truck load. It is also noticed that number of packages and the quantity taken correspond to each other. Therefore, the appellants claim that the memo book, register maintained by the transporter are not reliable documents for the purpose of arriving at quantity of illicit removal is not based on facts and the conclusion emerges from the facts placed on record and is very logical and rational. 44. The fact of illicit removal is also supported by the facts that excess quantity of Aluminum Sections and billets were found. As regards Aluminum Sections, Shri C.G. Bansal at the time of seizure had clearly stated that these Sections were in fully finished stage. Point to be noted is that the appellants themselves do not have a record or evidence to show the quantum of Sections and their gauge. Ma....
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.... ton since appellants have given data in value terms. Production has varied from 300 Tons to 535 Tons over the past 15 years as per the data submitted. Appellants do not maintain accounts to show the gauge of aluminum and nature of goods manufactured. Billet production capacity is 1200 Tons per year which easily translates to nearly 1000 tons of Sections. Statements are inculpatory and statement of witnesses do not support appellants. 47. Several Tribunal's decisions were cited by the appellants but I find that in all these cases the appellants have drawn support from one part of the evidence. In clandestine removal cases, the conclusion has to be arrived at after a detailed analysis and assessment of all the evidences in the form of statement, documents recovered, etc. before coming to the conclusion. Unless the facts are comparable and all the evidences are also comparable, it is not possible to apply a decision in one case of clandestine removal in favour of the party in an altogether different case. Therefore, after considering all the cases cited by the learned advocate, I have reached the conclusion that none of them is comparable on facts and applicable to the presen....
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....at stake, in some special type of case, lighten the burden of proof resting on the prosecution. For instance, once it is shown that the accused was travelling without a ticket; a prima facie case against him is proved. If he once had such a ticket and lost it, it will be for him to prove this fact within his special knowledge. Similarly, if a person is proved to be in recent possession of stolen goods, the prosecution will be deemed to have established the charge that he was either the thief or had received those stolen goods knowing them to be stolen. If his possession was innocent and lacked the requisite incriminating knowledge, then it will be for him to explain or establish those facts within his peculiar knowledge, failing which the prosecution will be entitled to take advantage of the presumption of fact arising against him, in discharging its burden of proof." In the same judgment, the Hon'ble Supreme Court had also observed as regards standard of evidence required which also I feel is very relevant and accordingly reproduced below : "30. It cannot be disputed that in proceedings for imposing penalties under clause (8) of Section 167, to which Section 178A ....
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....ers on the plenary power of the Appellate Court to review the whole evidence on which the order of acquittal is founded and, indeed, it has a duty to scrutinize the probative material de novo, informed, however, by the weighty thought that the rebuttable innocence attributed to the accused having been converted into an acquittal the homage our jurisprudence owes to individual liberty constraint the higher Court not to upset the holding without very convincing reasons and comprehensive consideration." 26. Putting emphasis on balance between importance of individual liberty and evil of acquitting guilty persons, this Court observed as follows : "6. Even at this stage we may remind ourselves of a necessary social perspective in criminal cases which suffers from insufficient forensic appreciation. The dangers of exaggerated devotion to the rule of benefit of doubt at the expense of social defence and to the soothing sentiment that all acquittals are always good regardless of justice to the victim and the community, demand especial emphasis in the contemporary context of escalating crime and escape. The judicial instrument has a public accountability. The cherished....
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....f such events may also be said to be dependent. In a criminal case, different pieces of evidence directed to establishing that the defendant did the prohibited act with the specified state of mind are generally dependent. A junior may feel doubt whether to credit an alleged confession, and doubt whether to infer guilt from the fact that the defendant fled from justice. But since it is generally guilty rather than innocent people who make confessions, and guilty rather than innocent people who run away, the two doubts are not to be multiplied together. The one piece of evidence may confirm the other." 36. Doubts would be called reasonable, if they are free from a zest for abstract speculation. Law cannot afford any favourite other than truth. To constitute reasonable doubt, it must be free from an overemotional response. Doubts must be actual and substantial doubts as to the guilt of the accused persons arising from the evidence, or from the lack of it, as opposed to mere vague apprehensions. A reasonable doubt is not an imaginary, trivial or a merely possible doubt, but a fair doubt based upon reason and common sense. It must grow out of the evidence in the case. 37.&ems....
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.... - Vide Order No. M/764-767/WZB/AHD/2009, dated 23-2-2009, difference of opinion was recorded as under : "Whether appeals are to be partially allowed as held by Member (Judicial) or to be rejected as held by Member (Technical)" 55. The matter was referred to the Hon'ble President to nominate a third Member to decide on the difference. Hon'ble President in his order dated 10-8-2010 observed that the two Members cannot refer the entire appeal because of difference of opinion instead of making a statement referring the point or points of difference between them. He relied upon the decision of the Hon'ble Gujarat High Court in the case of Colourtex v. UOI reported in 2006 (198) E.L.T. 169 (Guj.) = 2008 (9) S.T.R. 426 (Guj.) reiterated by the Hon'ble High Court in the case of CCE & Cus. v. Jagat Texturising reported in 2010 (255) E.L.T. 353 (Guj.) = 2010 (20) S.T.R. 564 (Guj.). With these observations, Hon'ble President directed that the matter be returned and placed before the concerned Bench. 56. As directed by the Hon'ble President, the difference of opinion is revised as under : DIFFERENCE OF OPINION (i) Whether the claim of the....
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....accepted as held by ld. Member (Judicial) or has to be rejected in view of the fact that audited annual report of the company indicates the production capacity as 600 tons and the annual production in one of the years by the appellant was 485 tons and two chartered engineers had given different capacities as held by Member (Technical). (ii) The claim of private trading in furnace oil by Shri Bansal has to be accepted as held by learned Member (Judicial) or the same has to be rejected as done by Member (Technical). (iii) As regards clandestine removal whether the documentary evidence and statement of Shri Nitin Mehta are to be accepted as held by Member (Technical) or rejected as held by learned Member (Judicial). (iv) Whether non-confiscation of goods available with Vinviv Mumbai supports the case of the appellant as held by learned Member (Judicial) or it has no bearing on the case as held by Member (Technical). (v) Whether defence of private trading and scrap by an employee claimed by the appellant has to be accepted as held by learned Member (Judicial) or the same has to be rejected as held by Member (....
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....roceeds on the premise that the appellant may have got the Aluminum Sections manufactured on job work basis. It is his submission that in the case of clandestine removal, the same has to be established based upon the cogent and valid documentary evidences and cannot be based on hypothesis. It is his submission that assuming, but not accepting that the appellant could have got the Aluminum Sections manufactured from his job workers after the manufacturing of Billets, the said activity would amount to manufacture in the hands of job workers and not in the hands of the appellant. It is his submission that having not identified the said job worker and having not found any records as to the appellant had, in fact, worked under the provisions of job work by giving the declaration as required, the presumption that the appellant had clandestinely manufactured and removed the Aluminum Sections clandestinely, is not supported by any evidence. It is his submission that if the goods are held to be manufactured on job work, the liability to pay Excise duty would be on the manufacturer who manufactures the goods on job work basis and not on the appellant. It is his submission that the entire cas....
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....n the books of account. It is his further submission that reliance cannot be placed upon the transporter's records, is a settled law as held by the various decisions of the Tribunal which are as under : (i) Raj Petroleum Products v. CCE, Mumbai-I - 2005 (192) E.L.T. 806 (Tri.-Mumbai) (ii) Durga Trading Co. v. Commissioner - 2002 (148) E.L.T. 967 (iii) Brims Products v. CCE - 2001 (130) E.L.T. 719 (iv) Raj Sundeep Co. Gian Singh v. Collr. of C.E. & C. - 2003 (162) E.L.T. 1028 (Tribunal) It is also his submission that there is no presumption under Section 36A regarding truth and accuracy of third party records in cases where third parties are not being jointly tried with the accused, it his submission that the transporters, in this case, were never made the parties to the notice and consequently, there cannot be any presumption regarding truth and accuracy of the documents for proceeding against the appellant. It is his submission that it is settled law as to that the allegation of clandestine removal has to be proved with reference to unaccounted purchases of raw materials, unaccounted consumption of el....
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..... It is his submission that during the hearing before the Tribunal, the ld. SDR has suggested that some of the entities for whom Shri G.G. Bansal was allegedly trading, has stopped their business operation prior to period in dispute. It is his submission apart from the fact that such report, at this stage, cannot be relied upon, the said report itself shows that some of the entities indicated therein were functioning at least for a part of the relevant period in this case. It is his submission that the investigating officers have not established as to whom the goods clandestinely cleared were sold. It is his submission that they had, in fact, found some finished goods in the premises of M/s. Vinviv and M/s Allied Aluminum, on the suspicion that the same were clandestinely cleared goods, but the adjudicating authority, in his order, came to a specific conclusion that the goods seized from the premises of M/s. Vinviv and M/s. Allied Aluminum cannot be said to be unaccounted clearances from the appellant's firm. It is his submission that in the absence of any corroborative and cogent documentary evidence, the entire case of the Revenue is solely on the records and statements of the tr....
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....o his submission that it is important to note that AAPL has declared the production capacity of 600 MT per annum in the balance sheet for the relevant year, which is contrary to the production capacity as certified by Chartered Engineer. It is his submission that the Chartered Engineer's certificate does not instill any confidence as it is based on the production records of previous year and not on actual working capacity of the machine. It is his submission that the nature of evidences of clandestine clearances needs to be considered from the angle of preponderence of the probability. It is his submission that in this case, it is important to note that in respect of bills/LRs/Memos listed in worksheets D-I to D-IV annexed to the show cause notice, where AAPL is mentioned as a consignor and its consignment agents as consignees; there is no dispute that the LRs have been issued by the respective transport companies and the trucks have been booked for transportation of goods mentioned in LRs supposedly delivered to consignee of AAPL as mentioned in the LR. It is his submission that this fact has not been denied by the employees of transport company in the statements recorded by the i....
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.... IOCL and HPCL were called. But, only the officers of IOCL appeared and confirmed that they had supplied the furnace oil to AAPL. It is his submission that the company which transports the furnace oil i.e. Alaknanda Transport, confirmed that the furnace oil was purchased by AAPL from HPCL and was transported by them and was delivered to the factory premises of AAPL. It is his submission that one of the claim of the AAPL is that the power and fuel consumption during the relevant period was constant and there was no excess production and alleged clandestine clearance of aluminum sections is bereft in merit in view of the unaccounted purchase of furnace oil. It is his submission that as regards consumption of electricity in the case of clandestine clearances, assessee is known to, not to show correct state of affairs. For this proposition, he relies upon the judgment of Hon'ble High Court of Karnataka in the case of P.K. Ravindran v. CCE - 2003 (156) E.L.T. 182 (Mad.). It is his submission that another important aspect of the case is that the appellant had purchased unaccounted aluminum scrap documents relating to such purchases are recovered from the office premises of AAPL. It is hi....
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....led with the Revenue. It is his submission that various transporters were called for cross-examination and they have confirmed that the LRs which were shown to them, were of the transport companies only. It is his submission that the decision of the Hon'ble Supreme Court in the case of Sujreet Singh Chhabra v. UOI - 1997 (89) E.L.T. 646 (S.C.) and the decision of Hon'ble High Court of Madras in the case of CCE, Madras v. K. Ranganathan - 1995 (76) E.L.T. 261 (Mad.), is to the effect that the statements recorded earlier have to be accepted as true and correct, notwithstanding subsequent retraction. The same view has been propounded by Hon'ble Apex Court in the case of CCE, Mumbai v. Kalvert Foods India Pvt. Ltd. - 2011 (270) E.L.T. 643 (S.C.). It is his submission that the Department's allegation of clandestine removal is not only based on the transport company's records, but also on the statements of employees of transport company, which have not been retracted, records of unaccounted purchase of huge quantity of furnace oil - one of the main input for manufacture of Aluminum Sections during the relevant period, records of unaccounted purchase of aluminum scrap during the relevant ....
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.... cogent evidence, and while the evidence obtained cannot be discarded totally but should be scrutinized and examined carefully and what weight should be attached to such material should be decided depending upon facts of each case. 60.4 The ld. Representative for the Revenue have taken me through the findings and the material which the ld. Member (Technical) has considered in support of the charges in the two show cause notices. 60.5 As per the Revenue, the above evidence is sufficient to sustain the charge. I find that at first blush, it may appear to be sufficient, however a deeper scrutiny reveals to the contrary. The above evidence is not relevant and credible material evidence, sufficient to establish the case against the appellant company even applying the test of preponderance of probability and requires too many assumptions and presumptions to uphold the allegation of clandestine removal and undervaluation. 60.6 It would be necessary to analyze whether the evidences, other than the oral evidences, are credible for being used as corroborative evidence. The Hon'ble Supreme Court in case of Sitaram Sao v. State of Jharkhand - (2007) 12 SCC 630, pithily ....
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....duce 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 [2008 (221) E.L.T. 231 (Tri.-Mum.)], 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, and I notice that the findings of the adjudicating authority are without any evidence and is not correct view and is liable to be set aside. 60.9 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 [2012 (278) E.L.T. 362 (Tribunal), a similar issue of clandestine removal was decided by co-ordinate Bench of Tribunal in Ahmedabad, wherein it is held that unless clandestine manufacturing is brought on record, there cannot be any allegation of clandestine clearances, uncorroborated with evidences. I was one of th....
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....duty from the factory of appellant company. 61. I find that in the peculiar facts of this case, for confirming the charges and for accepting the evidence adduced, a series of assumptions and presumptions are to be made, which is addressed hereunder : (i) The production capacity of the plant and machinery for manufacture of Aluminum Sections, though being old, is able to produce the entire installed capacity of 600 MT per annum. As per the appellant, the production capacity with such machines, is not sufficient to manufacture the alleged huge quantity alleged to be removed in clandestine manner, and moreover the experts i.e. chartered engineers after visiting and considering the working of the plant, has certified that the production that can be produced by working of the machine, can at most be 430 MT per annum. As rightly observed by the Hon'ble Member (J), the working of the machines in the appellant's factory was verified to ascertain the production capacity of the machines installed. This verification was done at the instance of the adjudicating authority. It is indeed noted by th....
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....d direction would have given some evidence to arrive at proper conclusion, I find that the adjudicating authority should have gone into details of the payments made for the purchases of furnace oil recorded in appellant's name and could have come to a conclusion as to who made the payments for the furnace oil which was cleared from IOCL/HPCL and remained unaccounted by the appellant. In the absence of any such information, despite clear direction from the Tribunal, I find it difficult to hold that the furnace oil was procured by the appellants and utilized the same without accounting for in records. Furthermore, it gives a chance and scope to explore the possibility to the appellant's contention that Shri G.G. Bansal, one of their senior employee, was engaged in the activity of trading in furnace oil by procuring the same in the name of the appellant. It would also be not out of place to mention that during the relevant period, the furnace oil was allotted only to those persons who have quota. In my view, in the absence of further investigation as to who made the payment for the furnace oil cleared in appellant's name, the same cannot be attributed to as unaccounted purchases of ap....
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....sp; This is again an assumption without any evidence. It is the findings in the Order-in-Original by the adjudicating authority that for manufacturing of aluminum sections, the aluminum billets have to be manufactured. It is also on record that aluminum billets are manufactured by melting aluminum scrap in furnace, wherein the furnace oil is used for heating of furnace. In my considered view, the worst case against the appellant, if any, could be clandestine manufacturing of aluminum billets in the appellant's factory. The entire show cause notice along with its annexures do not propose the charge of clandestine manufacturing and clearance of aluminum billets from the appellant's factory. The entire show cause notice and annexures thereto proceeds on the ground that the appellant had clandestinely manufactured the aluminum sections and cleared the same without payment of duty. It is also on record that, for manufacturing of aluminum sections from the aluminum billets, only power is consumed for working of dies and moulds, and no further material is consumed. It is demonstrated from the records that the power consumption of the appellant's factory durin....
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....ian Singh (supra), for the proposition that the transporter's records are not relevant for the purpose of proving allegations of clandestine removal of the goods. It is also to be admitted that there is no presumption under Section 36A regarding truth and accuracy of third party records, in which cases, such transporters are not being jointly tried with the accused, which is a fact in this case. (vi) There is no further investigation as to whom the goods were clandestinely cleared and sold, despite the fact that there was seizure of finished goods from the premises of M/s. Vinviv and M/s. Allied Aluminum on the pretext that the same were clandestinely removed goods. The said goods were released on the ground that there was no evidence of identifying the said goods from whom the clandestine clearances were made. In this case, it is admitted fact that 95% of the goods sold by the appellant are cleared to M/s. Vinviv and M/s. Allied Aluminum, M/s. Chitra Hardware. If that be so, in the absence of corroborative or cogent documentary evidence, the entire case of the Revenue falls. (vii) There is no dispute on the fact that in adjudication proceedings, the charge ....