TaxTMI 
TaxTMI 
TaxTMI 
2012 (4) TMI 557
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....ntal 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 produce duty paying documents for the same. The g....
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....ere 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 sales were made in cash to other users. The fact that ther....
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.... 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 established by positive evidence in respect of capacity to manufacture, procurem....
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....tant, 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 certificates dated 29-7-2002 and 1-8-2006 produced on record by the appellant. He has not doubted the gen....
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....ediate 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 premises of the third party cannot be made the basis for upholding the allegations of clandestine removal,....
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....een 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 book, the above stand of transporters disapproves the Revenue's case. 21. We also further note that th....
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....ery 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 product capacity. The adjudicating authority has not allowed the cross-examination of Shri Sonu Singh, broker for sale....
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.... 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 and presumptions that they must have indulged in clandestine removal. 27. Tribunal in the case of Premium Packagi....
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....sed 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 V.N. Agarwal, Shri G.G. Bansa and M/s. Vinviv Holding & Trading Co. is set aside. 31. In addition to the above, the Commi....
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....elating 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 produced by the department. 40. The first argument put forth by the defence is that the appellants do not have a capacity to produce the quantity of aluminum....
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....ectness 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 maintained by the appellant, nowhere the gauge of aluminum is written nor these details are put forth by the appellants. Except the statement by Shri Bansal that most of ....
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....RED 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 which would work out to 1200 Tons per annum and consequently the quantity of Aluminum Sections confirmed to have been produced by the Commissioner in his findings and ....
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....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 because the Manager of Indian Oil Company Ltd. who was cross-examined clearly stated that the oil is supplied only to companies and customers who actually need the same and ....
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....ruti 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, 1998, M/s. Golden Copper was closed in December, 1999, M/s. Gujarat Metal Cast Ltd. was closed in 1999 and M/s. Vega Extrusion was closed in 1997 and M/s. Dhatu Sanskar was c....
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....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 cannot be upheld. Therefore, merely because the goods have not been confiscated or seized goods have been released, would not help the appellant. In fact, it would show that Commissione....
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....he 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. I agree with the learned advocate that it would the advocate who would be staying in the room but I am unable to agree that the analogy applies to the private trade story given by Sh....
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....oned. 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. Manager Shri Bansal only stated that major portion of production is of finer gauge and no record is available as to the gauge. Under these circumstances, it is difficult to note what is finish....
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....w 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 present case. However, some of the decisions cited by the learned SDR are relevant and worth quoting since they lay down the principles for arriving at conclusion in such cases. 48. Tribunal in ca....
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....m 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 does not apply, the burden of proving that the goods are smuggled goods, is on the Department. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statu....
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.... 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 principles or golden thread of proof beyond reasonable doubt which runs through the web of our law should not be stretched morbidly to embrace every hunch, hesitancy and degree of doubt. The excessive solicitude reflected....
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....nior 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. The concepts of probability, and the degrees of it, cannot obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt. There is an unmistakable ....
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....o 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 appellants with regard to the capacity of production made by them based on chartered engineer's certificate is to be accepted as held by learned Member (Judicial) or has to be rejected in view of the fact that audited annual report of the company indicates the production c....
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....es 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 (Technical). (vi) Whether confiscation of excess billets and aluminum sections has to be upheld as done by Member (Technical) or is required to be set aside as held by learned Member (Judicial). (vii) Whether the department's contention that scrap accounted in the name of Allied Aluminum was ....
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....ssuming, 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 case of clandestine removal is based upon the different worksheets, which are based on booking registers, memo book, registers and statements of the transporters and not based on any other documents. It is his submission that the booking register, which has been relied upon by the authorities, is nothing but a register ....
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....sp; 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 electricity and unaccounted labours besides there being sufficient production capacity. It is his submission that in the present case, there are only few instances of purchases of very small quantity of aluminum scrap for few days which were said to be unaccounted and documents found in the residential premises of Shri G.G. Bans....
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....n, 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 transporters, and more specifically on the statements of Shri V.N. Agarwal, and Shri G.G. Bansal, whose statements stand retracted. It is his submission that the reliance of the adjudicating authority on the unaccounted purchases of the furnace oil cannot be held to be conclusive evidence as it is on record that the furnace oil ....
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....ce 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 investigating officers, but at the time of cross-examination, it is not denied that the truck bookings in the name of AAPL and had been done by Shri G.G. Bansal of AAPL. It is his submission that Shri G.G. Bansal, has initially admitted that the LRs, wherein the AAPL is mentioned as consignor, were the clearances of the appellant....
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....vered 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 his submission that the details of these unaccounted purchases are available in notebooks, which were recovered and none of these aluminum scrap have been recorded in RG23A Part I register or any of the books of account of AAPL. It is his submission that from this fact, it is quite clear that unaccounted purchases of aluminum scra....
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....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 period, and recovery of blank invoice book of allied aluminum angles from the office premises of AAPL. It is his submission that no satisfactory explanation has been given to the unaccounted purchase of furnace oil and aluminum scrap or for recovery of blank invoice book of M/s. Allied Aluminum from the office premises of AAPL. ....
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....h 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 encapsulated the idea of "corroborative" evidence, in the following words : "34. The word 'corroboration' means not mere evidence tending to confirm other evidence. In DPP v. Hester - (1972) 3 All ER 10.16, Lord Morris said : "The purpose of corroboration is not to give validity or credence to evidence which is deficient or suspect or ....
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..... 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 the Members in that Bench and while coming to the conclusion, the Bench had relied upon the judgment of Hon'ble High Court of Gujarat in the case of Nissan Thermoware Pvt. Ltd. - 2011 (266) E.L.T. 45 (Guj.) I am reproducing the relevant portion of the said order, which is fortifying my view in this case also. "15. We find that Hon'ble High Court of Gujarat....
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....ons, 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 the Hon'ble Member (Judicial) that the authority had caused inspection of the working of the appellant's manufacturing activity of finished goods "Aluminum Section", by a team of officers. Though their report is not on record, but the adjudicating authority, in his Order-in-Original at Paragraph 5.1.3, has recorded tacitly that the appellant had no capacity to manufacture "Aluminum....
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.... 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 appellant. (iii) It is presumption that the appellant had or could have manufactured the aluminum sections from the job workers, is totally without any evidence as adjudicating authority was not able to bring on record as to who were the job workers who manufactured the aluminum sections for the appellant which were clandestinely removed. Secondly, the adjudicating authori....
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....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 during the relevant period remained same, as per the standard for the manufacturing activity of aluminum sections. It is also on record that the appellant did not have any Diesel Generating sets for the production of electricity which could have consumed for manufacturing of aluminum sections, allegedly clandestinely manufactured. In the absence of any such evidence, the presumption of consumptio....
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.... (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 of clandestine removal is definitely to be established on the basis of preponderance of probabilities. However, it cannot be merely on the basis of presumptions and assumptions. Suspicion however grave cannot replace the proof. As rightly pointed out by the Hon'ble Member (J) with detailed findings, the link between the documents recovered in search and the activities of the appellants in their fact....