TaxTMI 
TaxTMI 
2006 (9) TMI 72
X X X X Extracts X X X X
X X X X Extracts X X X X
....tally valued at Rs. 74.63 lakhs (Approximately). Another quantity of processed MMF totally valued at Rs. 31.80 lakhs (Approximately) were found to be excess than the recorded balance, which was seized. Similarly search was conducted in the office premises of the said appellant resulting in seizure of documents/records. It is seen that Shri Kamal Singhania one of the Directors of the company accepted the shortages and excess and also deposited an amount of Rs. 10 lakhs (Rupees ten lakhs only) towards duty vide TR6 Challan dated 28-5-2002. 3. Apart from searches conducted at the factory and office premises of the said appellant, the office premises of the transporter M/s. S.P. Thakkar Transport Company (hereinafter referred to as M/s. SPTT), situated at Bhiwandi and Kalbadevi, were also put to search. The records maintained by the said transport company were taken into custody. Simultaneous searches were also made in the residential premises of M/s. Kamal Singhania Director of M/s. Indo Green Textiles Pvt. Ltd. as also in the factories of merchant manufacturers and their statements recorded. 4. Based upon the above, proceedings were initiated against the appellants by way of is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the same pertain to M/s. "S" One Tex' and there is no indication showing any connection with the appellant. It is the statement of the transporter of the said transport company indicating that the said "S One Tex/Dying" relates to the appellant. Ld. Advocate submits that the cross-examination of the said transporter has been denied by the Commissioner on the ground that the same amounts to delaying tactics on the part of the appellant. Ld. Advocate submits that inasmuch as the entire case of the Revenue is based upon the said statement of the Transporter, his cross-examination was vital to their case. Inasmuch as, the veracity of the said statement of the transporter has not been tested by the tool of cross-examination, his statement cannot be taken into consideration. If the said statement of Shri S.P. Thakkar is taken out of the records, there is no other evidence to show that the said code number belongs to the appellant. In any case, submits the Ld. Advocate that the said statement being in the nature of statement of co-accused cannot be made the sole basis for confirming the charge of clandestine removal against the appellant in the absence of any other corroborative evide....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bserved that going by the settled position in law regarding presumptive evidences and burden of proof, the burden in the instant case, is first on the Department to prove that the code number "S" One Tex/Dying' were belonging to M/s. Indo Green. By observing so he has referred to the show cause notice, which has brought out the Modus Operandi adopted by the appellant. It has been clarified by the Commissioner that it is only w.e.f. April 2001 onwards, when the Compounded Levy Scheme was done away with, that the appellant started indulging in clearing the goods in their code name. The Commissioner has also referred to the fact that during the course of search of their appellant factory, one truck loaded with grey fabrics and carrying documents which indicated the name of the party as 'S One Tex/Dying', which show that the name 'S One Tex/ Dying' refers to the appellant only. 11. We have heard the submissions made by both the sides and have gone through the impugned order. The fact of search of the appellant's premises and seizure of the excess found goods from various placed relates to the duty demand of Rs. 11,94,219.20. The various statements recorded also related to the cleara....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e and removal of the goods is required to be proved by the Revenue by product on of affirmative and tangible evidence and beyond doubt. The same cannot be sustained on the basis of surmises and conjectures. The Tribunal in number of decisions, has reiterated that entries in private records can at the most raise a doubt but cannot take the place of evidence in the absence of other corroborative evidences like raw material utilization, labour employed, power consumption and packing etc. As observed by the Tribunal in the case of Sharma Chemicals v. Commissioner of Central Excise, Calcutta-II [2001 (130) E.L.T. 271 (Tri.-Kolkata)], which discusses the law on the point, the distance between 'may be true' and 'must be true' is long distance which must be covered by legal and impeachable evidence. We find absence of such evidence in the present case. The corroboration, which the Commissioner has sought to achieve by referring to the presence of a truck loaded with grey fabrics sent by merchant manufacturers under the documents describing the processors as 'S One Tex' stand on the same doubtful platform as that of the transporters statement. There is again, nothing in the said documents t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red clandestinely from the appellants factory. Accordingly we set aside the confiscation and redemption fine of Rs. 8,00,000/- (Rupees eight lakhs only) in respect of the same. 17. As regards the goods found at the Merchant Manufacturers premises and the transporter premises, we find that the appellant have admitted clandestine removal of the same and his duty liability. As such, the said goods are liable to confiscation. We note that the redemption fine imposed by the adjudicating authority in lieu of option to redeem the goods are not on the higher side keeping in view the value of the seized goods We accordingly uphold the confiscation and the quantum of redemption fines fixed by the Commissioner. Similarly, the penalties imposed upon the Merchant Manufacturers are also not on the higher side, the same are accordingly confirmed. The penalty of Rs. 3,00,000/- (Rupees three lakhs only) imposed on M/s. Indo Green Textile Pvt. Ltd. and penalty of Rs. 5 lakhs (Rupees five lakhs only) imposed on Mr. Kamal K. Singhania, Director of the said firm is not called for inasmuch as penalties have already been imposed on the said appellants, while confirming the demand of duty of Rs 11,94 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he above order. For better appreciation of facts, it would be necessary to describe the modus operandi adopted by the appellant for clandestinely clearing fabrics processed by them. 20. The appellant M/s. Indo Green is engaged in the processing of grey fabrics on behalf of various merchant manufacturers who were sending their grey fabrics under delivery challans through M/s. S.P. Thakkar Transport Company, Bhiwandi (SPTT). The freight for transport of grey fabrics as well as for the transport of processed fabrics, were both for paid by M/s. Indo Green. The entire quantity of the grey fabrics sent by all the merchant manufacturer was transported by only one transport company i.e. M/s. SPTT and the processed fabrics were also delivered through them only. As per the investigation, it was found that after receipt of grey fabrics the entire quantity was not accounted for in the statutory records & only part was recorded while other remained unrecorded. For this purpose the appellants were maintaining two or three types of job cards carrying alphabets 'C', 'D' & 'E'. While job card carrying alphabet 'C' related to the fabric on which duty was intended to be paid and lot numbers were a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... been cleared with out payment of duty. The merchant manufacturer in their respective statement admitted the clandestine clearances and also admitted the fact that they were allotted an account code number specific to them and that some times the grey delivery challans and the packing slips referred to them by their account code number rather than by their name. M/s. Indo Green also admitted the shortages in their factory premises and paid duty on the shortages so discovered. 22. Scrutiny of records of the transporter revealed that the quantity of the grey fabrics delivered by the SPTT was much higher than the quantity of processed fabrics cleared on payment of duty as reflected in the record of M/s. Indo Green. The quantity of grey fabrics delivered under the gate passes of transporter more or less tallied with the quantity of processed fabrics delivered by the transporter and found to be entered in the daily trip sheets of the transporter leading to a conclusion that though the fabrics were processed, cleared and delivered to the merchant manufacturers, duty was paid only on a part quantity and accounted for in the statutory records of M/s Indo Green while the balance quantity....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Computer Operator, that Mr. Sushil Raika gave him the programme orally or sometimes on rough paper/challan, which he entered in his card book; that so far he has prepared cards starting with alphabet 'C', 'E' & 'D' series that in case any party wanted to process fabrics in its own name, then such grey fabrics as well as challans were allotted card number starting with alphabet 'C' series, that those parties which did not want to process its grey fabrics in its own name, Mr. Sushil Raika directed him to make entries in cards starting with alphabet 'E' or 'D' series that in respect of the lot numbers allotted with card number starting with alphabet 'C' the corresponding grey delivery challans were kept on its records, however in respect of the lot nos. allotted with card numbers stating from alphabet 'E' or 'D', the respective grey delivery challans, as per the directions of Mr. Sushil Raika, were destroyed after stamping on the grey fabrics; that once the grey fabrics was forwarded to the dyeing plant for dyeing/processing, his responsibility ceased; that after forwarding the grey fabrics to the dyeing department, he destroyed the respective page from the card book from time to time....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of the transport company and is also supported by the facts that on the day of search of the factory premises of M/s Indo Green, on 21/22-5- 2002, the officers of anti-evasion found one truck loaded with grey fabrics and carrying documents which indicated the name of the party as 'S One Dyeing". This fact was recorded in the panchnama dated 21/22/2005.2002 and has not been subsequently negated by any of the noticees. The documents in the possession of the driver of the aforesaid truck included delivery challans of various merchant manufacturers and a consolidated slip of M/s. SPTT, the transporter The particulars entered in the afroresaid delivery challans regarding total number of pieces/takas (402 pieces) tallied with the total number of pieces mentioned in the M/s. SPTTs aforesaid consolidated gate pass (1871 dtd. 21-5-2002) under the cover of which the grey fabrics were received in the premises of M/s. Indo of which the grey fabrics were received in the premises of M/s. Indo Green. Further the particulars of the delivery challan nos. of individual merchant manufacturers were also duly found incorporated in the consolidated delivery challan of the transporter. This confirmed t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....only by the statement of the transporter but that of the driver whose cross-examination has not been asked for and whose evidence cannot be brushed aside. The documents recovered on the day of visit was a consolidated slip of M/s SPTT attached with the delivery challans of each merchant manufacturer whose goods were brought for processing and the details contained in these challans regarding number of pieces etc. exactly tallied with the details contained in the consolidated gate pass/slip of the transporter. The consolidated gate pass/slip issued by the transporter gave the name of the manufacturer as "S One Dyeing" and delivery challans of the merchant manufacturer indicated that goods were to be delivered at the premises of M/s Indo Green and therefore, when looked together it leads to one and only one conclusion that the code name "S One Dyeing" belongs to M/s Indo Green only. The appellant has also not denied that he was referred to as "S One dying" in the consolidated gate passes/slips of the transporter, but disputes the use of such name in those gate passes which were not accounted for by him. This is brought out by the fact that those gate passes which are accounted for in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....blish. In this case also the goods cleared without, payment of duty have been found at every conceivable place i.e. the premises of M/s. Indo Green, its all merchant manufacturers and the godown of M/s SPTT in Bombay from where the goods are further delivered to merchant manufacturers and therefore in such a situation correctness of the records cannot be doubted specially when the transporter has stood by his statement, reiterated the same before the Bench and not retracted so far. In case of Sunvijay Re-rolling & Engineering Works v. Commissioner - 2000 (124) E.L.T. 862, clandestine removal was established on the basis of detail of entries in the labour pay book seized and the fact of payment of loading & un-loading of goods of assessee. It can not therefore, be stated that the charge is based on assumption & presumption. Even the apex court has in the case of Collector v. Dasani Electra Pvt. Ltd. - 2001 (129) E.L.T. A85 (S.C.), has upheld clandestine removal on the basis of missing Sr. Nos. of alternators in the statutory records when in practice alternators were given a running serial numbers. Besides, the Commissioner in his order at para 127 has referred to Supreme Court decis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso supported by the recovery of non duty paid stock at the premises of merchant manufacturers and godown of SPTT. 31. The learned Member (Judicial) has also set aside the penalty of Rs. 1 Crore imposed on Shri Kamal K. Singhania, Director of the processing unit as a consequence of setting aside the demand of Rs. 4.16 Crore (approx.). A penalty of Rs. 5 Lakhs on him has again been set aside on similar ground even though demand of Rs. 11,94,219.20 has been upheld against M/s Indo Green. In view of the same some amount of penalty on Mr. Singhania, Director of the firm is definitely called for. The ultimate determination of penalty on M/s Indo green and Mr. Kamal K. Singhania will of course depend on the fact whether the demand of Rs. 4.16 crore can be sustained against M/s. Indo Green. So will be the case with set ting aside of the penalty on the transporter. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mber for his opinion on the following question :- Whether the demand of duty to Rs. 4,30,85,192/- is required to be (set aside on the ground of insufficient evidence to establish the clandestine removal as held by the Ld. Member (Judicial) or the same is required to be confirmed in terms of the order of Member (Technical). Whether the confiscation of the goods found in appellants premises in excess of the recorded balance in RG1 register is required to be set aside as held by Member (Judicial) or confiscation is to be upheld in terms of the order of Member (Technical). Whether penalty is to be set aside on the Director of the firm Shri Kamal K. Singhania as held by Member (Judicial) of the same is required to be imposed as opined by Member (Technical). Sd/-  ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erence arises regarding confirmation of this amount. Duty demand of Rs. 2,17,005/- has open accepted by Ld. Member (Judicial) as forming part of the duty demand of Rs. 11,94,219/- and therefore set aside, while Ld. Member (Technical) has upheld this demand. The bulk duty demand has been set aside by Ld. Member (Judicial) but upheld by Ld. Member (Technical). I am therefore required to only consider whether the demands of Rs. 4,16,73,971/- and Rs. 2,17,005/- are required to be set aside or sustained. 34. The main duty demand is for the period 1-3-2001 to 23-5-2002, and is based upon the records maintained by M/s. S.P. Thakkar Transport Company (hereinafter referred to as M/s. SPTT) and the allegation is that fabrics processed by the appellants were transported by M/s. SPTT under the name of 'S One Tex/S One Dying". Reliance has been placed upon the statement of Shri Ajay S. Thakkar, who confirmed that "S One Tex/ S One Dying" is the code name for the appellants and that he had been instructed by Shri Kamal Singhania one of its Directors, to use the said code name. The demand is based only on month wise charts ostensibly prepared from trip sheets of Shri S.P. Thakkar. The charts a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the code name "S One Tex/S One Dyeing" was the code name of the appellants. 36. Ld. Member (Technical) has relied upon the fact that the appellants were maintaining job cards with the alphabets 'D' & 'E' and not entered the fabrics shown in the job card 'D' & 'E' in the lot register, since they were meant to be cleared without payment of duty. However, this job card have no co-relation with the demand of Rs. 4,16,73,971/-. The job cards are the evidence for the allegation and finding of shortages of 3,73,193.50 Mtrs. of processed fabrics at the appellants factory premises and seizure at the premises of various merchants, resulting in duty demand of Rs. 11,94,219.20 which the appellants do not contest. The statement of Shri Nilesh Patil and Shri Dubey, the Excise Clerk of the appellants also does not pertain to the records maintained by the transporter. The demand of Rs. 11,94,219/- includes the demand of Rs. 2,17,004.64 as processed fabrics have been seized from the premises of the transporter and the merchant manufacturers. As regards excess fabrics found in the appellants premises, neither from the Panchanama nor the show cause notice is it forth coming that they were covered ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by Ld. Member (Judicial). 41. The file is now returned to the original bench for passing the majority order. Sd/- (Jyoti Balasundaram) Vice-President FINAL ORDER 42. In view of the majority order, the following order is being passed :- (i) Duty of Rs. 4,16,73,971/- and Rs. 2,17,005/- is set aside. (ii) Duty of Rs. 11,94,219.20 is upheld. (iii) Penalty imposed upon M/s. Indo Green Textiles Pvt. Ltd. under Section 11AC is reduced to Rs. 3 lakhs (Rupees three lakhs only). (iv) Penalty imposed upon the said appellant under Rule 25 and Rule 173Q is set aside. (v) Penalty of Rs. 40 lakhs imposed upon the Transporter is set aside. (vi) Penalty of Rs. 1 crores imposed upon Shri Singhania, Director of the firm is set aside. (vii) Confiscation of excess found goods and redemption fine of Rs.8 lakhs is also set aside. (viii)Confiscation of the goods found at the Merchant manufacturer's premises with an option to redeem the same is upheld. (ix) Penalty imposed upon the Merchant manufacturers are also confirmed. (x) Penalty of Rs. 3 lakhs imposed on M/s. Indo Green Textiles Pvt. Ltd., and of Rs. 5 lakhs imposed o....