AI Drafter 
TaxTMI 
TaxTMI 
2016 (5) TMI 777
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.... by the DGCEI, it was found that these appellants are engaged in evasion of duty way of clandestine clearances and manufacture of goods. The factory premises were searched on 7.9.2007 of the appellants and residence of Shri Ajay Goyal and records/documents were resumed under panchnama. The stocks were also verified wherein in the case of M/s.Nabah Steels 78.305 MT of pig iron, 25.180 MT of MS ingots were also found short and 102,185 MT of sponge iron was found in excess. In the case of M/s.Pushpanjali Steels Alloys 12 MT of MS ingots were found in excess. No other discrepancy was found in the records at the time of visit of the officers in their factory but certain kachcha slips were recovered from their premises, On scrutiny of these kachcha slips, it was revealed that these are relating to the cash transactions of M/s. NSL and M/s. PSAL. Thereafter the statements were recorded. The statement of Shri Ajay Goyal was recorded who admitted involvement in the clandestine removal of the goods. The statements of raw material supplier and one broker were also recorded. The statements of the buyers of clandestine manufactured goods were also recorded. On the basis of these statements, a s....
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.... as these parties had not retracted their statements, the cross examination is not required. The appellants asked the statements of remaining 12 parties under RTI but the department refused to give/ supply the statements of these parties on the ground that if the statement is supplied, it will endanger the life and liberty of the 12 parties. Remaining 16 statements identically worded and are not in the handwriting of the persons who alleges to have rendered the statement. Therefore, those statements cannot be relied upon as all the statements are identically worded un-rebutted statements. All these statements in that fashion the concerned officer and these persons merely put their signatures at the asking of the department. He further submitted that it is not possible to remember alleged entry from February 2005 to August, 2007 when the statements were recorded during the period March, 2008 to September, 2008 on the basis of one statement made out on the basis of kachha slips as in this case the department has made before us the statement on the basis of kachcha slips and no kachcha slips were shown to these appellants. Therefore, veracity of the statements of these parties having ....
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....7. With regard to the statements of broker and raw material suppliers, he submitted that 10-15 raw materials suppliers and the statement of two raw material suppliers and one broker has been recorded. The statement of Shri Bittu was heavily relied upon by the department. The job of the broker is only to facilitate sale and purchase of raw materials. He merely told the quantities and the rate to the seller and the buyer and after this his job is over. The invoices or other documents are never routed through the brokers and, therefore, the statement of the broker is having no relevance to the case of clandestine removal or receipt of raw materials. If the statements of both broker and supplier is taken into account then the supply works out to maximum of 10% of raw material and there is no statement of any other raw material suppliers revealed that kuccha or puccha documents produced by the department to show purchase of remaining 90% of the raw materials. It is the confusion or may be doubt as regard the statement of other raw materials suppliers have not relied upon. Thus, the statements of these persons have not supported the case of the department. The statement of raw material s....
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....transporters were not reliable to prove charge of clandestine removal of goods. 12. He further submitted that as no cross examination was granted to them in the light of the decision, Chhajusing S.Kanwal (supra), the impugned order is liable to be set aside. 13. On the other hand, learned AR reiterated the findings of the impugned order and submitted that all the ground raised by the appellants in the appeals has been duly considered by the adjudicating authority while in the adjudication and dealt each and every issue thereafter the adjudicating authority has arrived ai decision that the appellants were involved in the activity 01 clandestine removal and manufacture of the goods. Therefore the demand of duty is sustainable and the impugned order is required to be confirmed. 14. Heard the parties and considered the submissions. 15. On careful consideration of the rival contentions made before us, we find that a case of clandestine removal/manufacture of the goods has been made out against the appellants on the basis of kaccha slips. The same were recovered during the course of investigation, various statements, namely, the statement of director, Shri Ajay Goyal, broker,....
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....ine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects: (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. 17. The issue came up before the jurisdictional High Court c Punjab and Haryana High in the case of Laxmi Engineering Work wherein the High Court has observed as under:- The Customs, Excise and Gold (Control) Appellate Tribunal has submitted the statement of facts without framing the question law. However, after going through the statement....
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....en made in this regard, thereby rendering the statements of such witnesses inadmissible in evidence. Insofar as the statements of transporters are concerned, the Tribunal upon scrutiny of the trip registers has found that the same do not support the case of the appellant that the goods were actually loaded from the premises of Sulekhram. The Tribunal has also found that despite the allegation of clandestine manufacture and clearance of goods, Revenue has not carried out any investigation to ascertain various factors which would indicate that Sulekhram had actually manufactured such large quantity of goods in its factory like discrepancies in the stock of raw material or final product, procurement of raw material, extra working hours of the factory, electricity consumption, payment of charges, payment of transportation bills etc. From the findings recorded by the Tribunal, it is apparent that the entire case of the Revenue as regards clandestine manufacture by Sulekhram is based upon dealings of M/s. A.S. Corporation. However, there is nothing to indicate that M/s. A.S. Corporation had actually purchased the goods from Sulekhram so as to indicate any connection between Sulekhram and....
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....ments of the appellants i.e. to determine the production, manufacture is not relevant factor to allege clandestine removal which has not been considered in this case. 21. We also observe that as the statements of the officers General Manager Works, Production Head, Engineers, Supervisors, Skilled and Semi-skilled Workers have not been considered by the adjudicating authority which are the core evidence to prove the fact of clandestine manufacture has not taken place in the factory or not. In fact these people have given exculpatory statements. Therefore, the Revenue's case is not sustainable on this ground also. 22. We also observe that there are 28 buyers of the finished goods and the adjudicating authority has relied upon the statements of 16 parties and these statements are typed ones and identically worded and cross examination of these buyers have not been granted to the appellants which was denied on flimsy ground i.e. their life and liberty will be in danger. Therefore, the statements of these persons cannot be relied upon. Moreover, 12 buyers who also made the statements during the course of adjudication have not been relied. Therefore, veracity of the statements ....