TaxTMI 
TaxTMI 
2016 (1) TMI 104
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctory premises of the appellant on 25th May, 2004 and had a search operation. They did not find any discrepancy in any stock physically present and in records. On 21st May, 2004, the statement of Shri Baldev Singh, Managing Director of the appellant was recorded, wherein shortages has been worked out on the basis of the statement i.e. 15 to 20% wastage took place in manufacturing of their final product and the same was admitted by Shri Baldev Singh. Therefore, it was alleged that appellants have cleared the goods without issue of invoice and without accountal and without payment of duty. The said statement was retracted by Shri Baldev Singh on 31st May, 2004. Thereafter on 3rd May, 2005, another statement was recorded by the Department which was also retracted on the same day by Shri Baldev Singh. Thereafter, a show cause notice was issued to the appellants on 5th October, 2005 by invoking extended period of limitation on the ground that appellants have clandestinely manufactured Mufflers and T-Shirts from different type of yarns found short and removed the same clandestinely without payment of duty, invoices and without accounting the same. The matter was adjudicated and the impug....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was done later on, therefore, same is admissible evidence. Moreover, the appellant is an exporter under DEEC Scheme and while filing their shipping bills, the appellant has declared the composition and quality of raw material used for manufacture of goods exported and on the basis of composition declared on shipping bills which corroborates with the statement of Shri Baldev Singh, the learned Commissioner has come to a conclusion that the statement given by Shri Baidev Singh is correct, therefore, the charge of clandestine removal has been proved. He further submits that the wastage claimed by the appellant on the basis of the letter issued by Knitwear Club is not relevant when the wastage is ascertainable from the export documents and which has been admitted by the Managing Director of the appellant. Therefore, the impugned order is to be upheld. 5. Heard the parties considered the submissions. 6. In this case during the course of investigation, the statement was recorded and the statement given by Shri Baldev Singh, Managing Director admits that there is a shortage of 10 to 15% for manufacturing the final product and it is also admitted by Shri Baldev Singh that they have c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of Rule 57A/57AB of the Central Excise Rules, 1944 and Rule 3(4) of the Cenvat Credit Rules, 2001-2002 inasmuch as they had not used Cenvat credit availed plastic granules in the manufacture of woven fabrics/sacks, but appear to have clandestinely removed them without payment of duty. The said show cause notices while quantifying the demand, worked out the demands based upon the wastage that could be permitted to the appellants which was pegged at 7.5% (based upon percentage of wastes in other factories) and input-output ratio in the Handbook of Procedures of the EXIM Policy and concluded that the reasonable wastage that could be allowed to the appellants is in the range of 7.5%, while the actual percentage of waste is more than that. Coming to such a conclusion, a demand was raised on all the appellants.". 7. In these set of facts, this Tribunal has observed as under:- "5.1 As regards the merits of the case, we find that the impugned orders have proceeded on the ground that the appellants had shown excess percentage of waste and by showing such excess percentage of waste, they had cleared the HDPE/PP granules clandestinely without reversal of Cenvat credit or without....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that there is no specific evidence to uphold the finding of clandestine removal, the remand of the matter for re-calculation of shortages would be only a theoretical exercise. It is settled law that such calculation of shortages arrived at on the basis of input-output calculation, cannot be made the basis of clandestine removal. The appellants have also challenged that the statement of the authorized signatory as also by the partner do not stand corroborated with sufficient evidence as they are against the record and cannot be made the sole basis for holding against them. I agree that the veracity of the statements has to be gauged from the accompanying circumstances and has to be corroborated by way of same independent evidences, which is fully absent in the present case. As such, I am of the view that in the light of various decisions relied upon by the appellant in their memo appeal, such statements which are inconsistent with the documentary evidences, only raises a doubt, but cannot take the place of an evidence. As such, I am of the view that the impugned order is required to be set aside in totality and the appeal is required to be allowed. 16. On perusal of the Ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proceedings, no evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error in giving benefit of doubt to the assessee." 18. In view of the foregoing and there being no concrete evidence (as agreed by both the Members) of clandestine removal of the goods, the appeals are required to be allowed as held by Hon'ble Member (Judicial). I have concurred with her views". 10. Further, we find that the Hon'ble Gujarat High Court in the case of CCE vs. Saakeen Alloys Pvt. Ltd. (supra), the Hon'ble Gujarat High Court has observed as under:- "7. As can be noted from the decision of the Tribunal, it has extensively dealt with the entire factual matrix presented before it. The Tribunal rightly concluded that in the case of clandestine removal of excisable goods, there needs to be positive evidences for establishing the evasion, though contended by the Revenue. In absence of any material reflecting the purchase of excessive raw material, shortage of finished goods....