TaxTMI 
TaxTMI 
2002 (2) TMI 1333
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.... de novo consideration and to re-considerall the pleas in the light of the submissions made before theTribunal and also in the light of the settled law that a mereseizure of notebook without examining its scribe cannot be thecriteria for confirming the demands without any corroborativeevidence. The Commissioner has again re-confirmed the demands andon the point of scribe of the notebook not having been examinedand statements recorded at the time of seizure when he waspresent in the company at the time of raid, the Commissionernotes in para 16 of his order as follows :- 16. Now I proceed to discuss the above infirmities in the lightof the evidence on hand. Firstly, the Accountant who maintainedthe note books, could not be contacted by the investigatingofficers since he left service of the assessee. He also left thepremises in Sivakasi where he was staying earlier. Hiswhereabouts could not be traced. Hence it was not practical torecord his evidence. Secondly, in the retraction statement madeby Mr. Rajagopal after two months, anew interpretation wasintroduced that these note books were maintained for purpose ofdisbursement of salary and that "cases" as mentioned in thenoteboo....
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.... production, I find that the production as per notebooks relates to a long period i.e., January to August '95. Inrespect of some raw material invoices covering the quantityreceived have not been accounted for in the RG 23A Part I.Assessee claimed that since transporters copy was not availablethey were not taking credit in RG23A Part II. However it is to benoted that no form IV Register has been maintained. In such asituation assessee ought have taken into stock in the RG 23A PartI Register even if credit was not taken in Part 'II. Therefore itis not possible to assume that the assesses had retained allinvoices relating to purchase of raw materials. All these wouldlead to the inescapable conclusion that the assessee's accountingsystem was not reliable. 18. With reference to the issue of non examination of workers, Ihave to consider the following points. The Managing Partnerhimself was available in the factory on 1.9.95 and witnessed themahazar drawn in the presence of the two independent witnesses onthe same day. He had given a statement on the next day admittingshortages and the genuineness of magazine stock note hooks. Insuch a situation, there was no need for....
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.... regardingtheir removal for further manufacture. In the circumstances thereis strong ground for concluding that these notebook entriesrelate to finished which were not accounted in RG 1. 20. It is to be admitted that the investigations conducted at thetransporter's end, at the Insurance Companies did not produce anyevidence of clandestine removal. However, the veryword 'clandestine' connotes something done secretly, on the sly,stealthily etc. Obviously when a person is indulging inclandestine removal, he cannot be expected to insure such goodsor to leave evidence through transport documents. I thereforehold that the absence of such corroborative evidence does notweaken to the department's case. 21. As regards the plea that there was no sufficient manpower tomanufacture the impugned goods, it is to be noted that theunaccounted production as per the private records relate to along period (Jan.'95 to Aug.'95). Since for the manufacture ofdifferent variety of fireworks, the consumption of raw materialsand workmanship would also vary, it is not practical to arrive atany yardstick to show how much would have been manufactured withavailable man po....
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....removal ofExplosives like fireworks was not possible, as many authoritieslike Police, Explosive Act authorities, Sales Tax authorities andCentral Excise authorities exercise control, is not tenable sincethe removal of fireworks is under self removal procedure andcould be done by the assessee at his free will without thepermission or supervision of the above authorities. 27. The assessee has given an elaborate method of calculating thevalue of inputs required for manufacture of 1.26 Crores worth offireworks during the year 1994-95 onwards. The average ratioworks out to 70% for raw materials in value terms of the finishedproducts. It has been claimed that there was no dispute withreference to the raw materials and therefore excess production offinished goods as alleged was not possible. 28. However as already discussed by me earlier in paras 17 and 23of this order, the assessee, even when he had original copies ofinvoices for major raw materials purchased like aluminium powder,Dextrine and CC wire, failed to account for the same in RG 23APart-I. The claim of assessee that these invoices were notaccounted due to non availability of the transporter's copy isnothin....
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....ties are said to have acceptedthe records of the party after examination. I have alreadydiscussed in detail that the Managing partner in his statementbefore the investigating officers had admitted that he had notmaintained any record required under Explosives Act. As alreadydiscussed in my findings, the Central Excise statutory registerssuch as Form IV Register and RG 23A has not been properlymaintained by the assessee. In the system of Self Removal, agreat responsibility is cast on the assessee to maintain recordsproperly and discharge the appropriate duty in a responsiblemanner. When the assessee does not discharge the responsibilitycast on him by not even maintaining the statutory records, theabove claims based on maintenance of records and verification byother departmental authorities loses force. The same would alsohold for the argument that there was no instance of stopping ofclearance at the checkposts by the sales tax authorities examined by the Officers, does not weaken the department case, asManaging Partner, who was present during the search, signed the mahazar, admitted to the contents of the mahazar and detailscontained in the private notebook maintained by the foreman....
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.... be setaside. He submits that as the entries of the seized note book has not been proved, therefore the demands including penalties arerequired to be set aside. 4. In reply, Ld. SDR Shri G. Sreekumar Menon relied on thefindings which are extracted supra. He submits that authenticityof the notebook was not challenged by the Managing Partner andtherefore the entries made therein are deemed to have been provedas the same contained the various details of manufacture andremoval of each item of fire-work. Therefore, it could be easilypresumed that such production took place and the demands aretherefore required to be confirmed. 5. On a careful consideration of the submission from both thesides, we notice that the matter had come up for final hearing inthe previous round and by Final Order No. 567-568/99, the matterhad been remanded to Commissioner to examine the aspectpertaining to confirmation of demands on clandestine removal interms of the seized notebook. It was noted that the appellantshad referred to various evidences to show that such quantum ofinputs could not have been used by them as such inputs areregulated under the Explosives Act and that for manufacture andclearance, ....
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....inputs for manufacture of the fireworks. The said non-examinationof the supplier of raw material which is controlled and alicenced commodity is fatal to this case and it can be easilyconcurred that Revenue has not proved the case with regard to thepurchase of raw materials for manufacture of final product. 7. It is seen that the appellants have also brought to the noticeof the Revenue that fire works are required to be insuredmandatorily while removing the same and various authorities arerequired to be informed and permission obtained. Revenue has notexamined this point in the correct perspective. The danger ofremoval and penal consequence of non-insurance is a seriousmatter and the Commissioner ought to have relied on the someevidence to show as to how they could manufacture and remove suchcontrolled explosive commodity with out proper protection andinsurance. Merely to give finding that the such clandestineremoval is done secretly and stealthily and they do not followthe law is not acceptable in the peculiar facts and circumstancesof this case. There is no other corroborative evidence withregard to the sale and purchase by particular persons and asthere is no evidence of remov....