TaxTMI 
TaxTMI 
2016 (4) TMI 605
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....eshpande, Advoate For the Respondent : Shri V.K. Agarwal, Addl. Commr (AR) ORDER PER: M.V. RAVINDRAN All these following appeals are arising out of the very same order-in-original No. 11/2011/C dated 11.11.2011 hence being disposed of by a common order. Sl. No. Name of the appellant Demand of duty Demand of penalty in Rs. 1. Shree Sidhbali Ispat Ltd 2,81,61,001/- 28,25,000/- 2. M/s. Shridhar Castings Pvt. Ltd. 5,00,000/- 3. M/s. Shree Balaji Steel Inds. 5,00,000/- 4. M/s. Ramsons TMT Pvt. Ltd. 5,00,000/- 5. Shri Darpan Kadi 1,00,000/- 6. M/s. Sangam Mount Transport Corporation 1,00,000/- 7. M/s. Ramsons Casting Pvt. Ltd. 5,00,000/- 8. Shri Natwarlal Vallabhadas Dholakia 1,00,000/- 9. M/s. Chandda Transport 1,00,000/- 10. M/s. Akola Goods Transport 1,00,000/- 11. M/s. Shree Vyenkatesh Casting Pvt. Ltd. 5,00,000/- 12. Shri Anil Kansal 28,25,000/- 13. Shri K.K. Pandey 28,25,000/- 14. M/s....
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....conclusion that the main appellant had indulged in clandestine removal of finished goods; other appellants have abated the main appellant in such clandestine removal of the goods, a show-cause notice dated 23.03.2010 was issued to the main appellant as also to other appellants. The show-cause notice directed the main appellant to show cause as to why Central Excise duty amounting to approximately Rs. 2.82 Crores should not be demanded and recovered by invoking extended period, interest be not demanded and recovered and penalty not imposed on them under the provisions of Section 11AC of the Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002. Show-cause notices were also issued to other appellants for imposition of penalties under Rule 26 of the Central Excise Rules, 2002. The main appellant filed interim reply and sought cross examination of various persons whose submissions were relied upon by the department for working out the details as well as the allegation of clandestine removal. Various dates were given by the adjudicating authority for hearing of the matter. The adjudicating authority on 26.08.2011, finally heard the matter and on that day the main appellant ....
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....is incorrect as during the search which was carried out on 22.07.2008 no incriminating document evidence was resumed from the factory premises of the main appellant and the shortages was based on theoretical conclusion and it was compared with the book stock recorded hence there was shortage. It was also submitted that the main appellant had disputed the correctness of the stock verification on the very next day. It is also his submission that though stock verification was undertaken on 24.07.2008, there also random sampling method was undertaken and the weight of three bundles of TMT were taken and extrapolated for arriving at the weight of other bundles of TMT which was totally incorrect as the length of TMT varies between 15-35 feet. It was informed by the Counsel for the main appellant that this panchanama was also contested by them. (e) It is the submission that the reason for difference in stock was not accepted by the lower authorities despite by the over all evidences in their favour and the shortage of stock cannot be alleged on estimation basis. (f) As regards the duty demand approximately of Rs. 83.09 lakhs for the period 14.01.2008 till 30.....
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....97 (89) ELT 11 (SC) and South India Television v. CC - 2001 (136) ELT 243 (SC). It is the submission that the authorities did not question any of the main appellant's personnel with respect of photocopies of 276 invoices received from Octroi department as also regarding 123 LRs received from the Octroi department. It is the submission that the reliance placed by the adjudicating authority on the statements of transporters, most of them were commission agents who had arranged for transportation and used to hand over blank LR copies to the actual transporters and no records were maintained. The statements of the transporters were neither corroborated nor were any cross examination granted to elicit the actual facts. He relies upon the judgement of the Tribunal in the case of Maya Mahal Industries v. CCE - 1995 (80) ELT 118 for the proposition that the co-noticee can refuse to be subjected to cross examination but the adjudicating authority has to put to co-noticee whether he would like to be cross-examined. He also relies upon the Hon'ble Supreme Court in the case of Andaman Timber Industries - 2015-TIOL-255-SC-CX wherein it has been held that an opportunity to cross-examine the witn....
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....pancies noticed by them during the raid/surprised visit to the main appellant's factory and the residential premises. (m) It is the submission that since the demand of duty cannot be sustained on the above detailed submissions made, demand of interest and penalties are also not sustainable. 4. We have also considered the submissions of the various Counsel who were appeared for other appellants on whom penalties have been imposed. The common thread of the submissions of these cases wherein penalties have been imposed that there is no question of penalty as there was clear-cut knowledge that the goods have been removed from the factory premises on documents. 5. Learned D.R. after taking us through the show-cause notice and the order-in-original would submit that (a) the main issue involved in this case is regarding the clandestine manufacturing and clearance of excisable goods through the parallel invoices by the main appellant. He would submit that there was no accounting for the excess manufactured goods in any of the statutory records. (b) During the search operation in the factory premises and of the stock was taken there was substantial sho....
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....uments and invoices were cleared clandestinely and all the transporters during the investigation have confirmed that the goods were loaded from the factory of the main appellant. (g) The adjudicating authority has given detailed reasons for not granting the cross-examination of various transporters and reiterates the same and also relied upon the following judgements:- (i) Patel Engineering Ltd. Union of India - 2014 (307) ELT 862 (Bom) upheld by the Apex Court as reported at 2015 (323) ELT A73 (S.C.). (ii) Dharampal Satyapal Ltd. v. CCE - 2015 (320) ELT 3 (S.C.). (iii) Maya Mahal Industries v. CCE - 1995 (80) ELT 118 (T) (iv) Arjandas Metal Industries Pvt. Ltd. v CCE - 2015 (324) ELT 381 (Bom). (h) It is his submission that the appellants claim as to they are unaware how the documents from Octroi department of Nagpur Municipal Corporation have been obtained and whether original of these documents are available or not, it is found from the show-cause notice that officers of the Central Excise department were deputed to collect the documents from Octroi department of Nagpur Municipal Corporation and these documents were received ....
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....rused the records and also considered the case laws quoted by both sides. 8. The issue involved in these cases is whether the main appellant has indulged in clandestine manufacture and clearances of finished goods or otherwise; whether revenue is able to make out a case of clandestine removal and whether penalties are to be imposed on the appellants. 9. Having heard both sides at length and after perusing the record, we are of the view that the investigations in this matter raise more questions than answer them. To say that the investigations have been slipshod in our view will only be an understatement. It appears that the vital and clinching evidence has not been brought on record for reasons beyond us. Some of the stark gaffes that we have noticed in the investigation are enumerated here-in-below. 9.1 The notice relies upon LRs of a transporter and claims that non duty paid goods were transported under cover of the said LRs. Surprisingly, however, the testimony of none of the consignees has been brought on record even though the LRs mentions the names and addresses of the consignees. The testimony of the consignees backed by their records would have clearly nailed the a....
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....as however, without establishing how the said documents could be correlated with the Appellant assumed the same to be correct and pertaining to the Appellant. 9.7 Having summarised the lacunae and shortcomings in the investigation, we shall now deal with the broad evidence relied upon qua each of the demands confirmed in the impugned order and examine whether the evidence relied upon is sufficient to establish the case of clandestine removal. 9.8 The largest demand of Rs. 83.09 lakhs is based on LRs/Daily Account Book Register seized from the premises of Mr. K.K. Pandey, brother in law of Mr. Monu Pant -the proprietor of M/s Aishwarya Roadlines. The evidence relied upon in support of this demand appears to be, vague and unreliable in as much as, except for copies of 136 LRs for the period 14.1.2008 to 30.05.2008 and daily account book register for the period of 14.12.2007 to 13.1.2008 and for the day of 2.4.2008, there is absolutely no other evidence that has been relied upon. Admittedly, as per the Revenue the LRs/the daily account book Register were prepared by Mr. Padmakar Wankhede, however there is no testimony of Mr. Padmakar Wankhede on record. There does not appear to ....
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....hout payment of duty; (i) links between the documents recovered during the search and activities being carried on in the factory of production; etc" 9.9 The aforesaid ratio also finds support in the following judgements: (a) Vishwa Traders Pvt. Ltd. v. CCE, 2012 (278) ELT 362 (T),as affirmed by the Hon'ble Gujarat High Court in CCE v. Vishwa Traders, 2013 (287) ELT 243 (Guj.), (b) Sakeen Alloys Pvt. Ltd. v. CCE, 2013 (296) ELT 392 (T), which has been affirmed by the Hon'ble Gujarat High Court in CCE v. Sakeen Alloys, 2014 (308) ELT 655 (Guj.), (c) Mahesh Silk Mills v. CCE, 2014 (304) ELT 703 (T), as affirmed by the Hon'ble Gujarat High Court in CCE v. Mahesh Silk Mills, 2015 (319) ELT A52 (Guj.) (d) CCE v. Air Carrying Corporation, 2009 (248) ELT 175 (Bom.) 9.10 The only contrary evidence is statement of Shree Monu Pant which seeks to suggest that the goods were being clandestinely cleared by the Appellant. The statement does not inspire any confidence in the absence of the same having not been examined on the touchstone of cross-examination. Further, the impugned order has recorded that the clandestine clearances reflected in the ....
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....cial & Accounts) of the Appellant Company were recorded and both of them have, in their statements dated 18.09.2009 and 17.09.2009 respectively, denied the existence of such parallel invoices by the appellant. In so far as the 123 LRs supposed to have been received from the Octroi department have been received, the investigating authority did not even deem it necessary to record statement of the appellants personnel all the same. 9.13 The statement of the transporters which have been relied upon to corroborate the said records supposed to have been furnished by the Octroi authorities, also do not support the case of the revenue as much as a reading of their statements show that mostly all of them were commission agents who had only arranged for transportation and used to hand over blank LR copies to the actual transporters and did not maintain any records regarding actual transportation having been undertaken, as they were concerned only with the commission for arranging the transport. No testimony of the actual transporter, if any, has been recorded. The statements of the transporters in question are without reference to any documentary evidence/record maintained by them and a....
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.... clandestine removal cannot be sustained based merely on transporters records which are not corroborated by any other evidence. 9.16 Even in regard to the smaller demand of Rs. 10.58 lakhs based on the alleged shortage of raw materials/finished goods, the explanation given by the appellant on the very next day of the Panchnama wherein the shortages were disputed have not been countered or dealt with in the notice. Further the Panchnama as clearly record that the stock positions have been worked out based on theoretical calculations by assuming the length, breadth, width of the raw materials/finished goods. Such theoretical calculations cannot be the basis for foisting demand on account of shortages. 9.17 In these circumstances, we are left with no option but to draw an adverse inference against the investigation in all the aforesaid cases as the best evidence which was easily available and steering in the investigators on the face have been either not examined or, if examined, the results of such examination was not convenient or supporting the revenues case. The evidence relied upon in the notice, no doubt, create a lot of suspicion against the conduct of the appellant but ....
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....ot support the theory of clandestine removal. 9.20 The order records that there were 8 hard disks that were seized from the residential premises of Mr. K. K. Pandey however it is an admitted position that the said hard disks were cloned in some private organization by the name of AGAPE Inc., Nagpur. In fact, 2 of the 8 hard disks after being cloned showed loss of master boot record and were recloned. In our view such cloning and recloning, which is not in accordance with the provision of 36B of the Central Excise Act, 1944 and has been done at some private organization cannot be accepted. 9.21 Paragraph 21(I) of the impugned order refers to print out that were taken from the cloned hard disks and a statement prepared by comparing the closing balances that had been furnished to the banks, as appearing in the hard disks, vis-`-vis that appearing in the RG-1 register. This comparative statement cannot be used to draw any adverse inference as firstly the veracity of the cloned hard disk is in serious doubt and secondly it is an undisputed position that the actual stock statement furnished to the bank has been seized from the residential premises of Mr. D.D. Rathi. It is surprisin....