TaxTMI 
TaxTMI 
2016 (11) TMI 156
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.....3 The assessee was selling their goods mostly through one firm by name M/S. Pramod Trading Company (hereinafter referred to as 'PTC'). The Proprietor of the said firm was Sri Pramod Kumar Agarwal. 1.4 PTC in turn sells the said goods to different parties through their agents and sometimes, the said parties in turn sells it to different consumers/traders. 1.5 On intelligence gathered that the assessee is indulging in evasion of duty by clearing cotton yarn (in the form of cones/cheese) in the guise of PRHY also clearing the said cotton yarn without payment of duty, Central Excise authorities conducted simultaneous search operations at the factory, registered office, dealers' agents, residential premises and other related premises of the assessee and recovered certain records/documents for further verification, and also detained/seized certain quantities of cotton yarn at different premises. 1.6 Department as part of their investigation also obtained statements of various employees/agents and customers of the assessee. 1.7 Based on the above said investigations, a show cause notice bearing dated 01-11-2002 was issued to the assessee and others proposing to de....
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....nufactured and cleared by them during the relevant period of dispute. Further, the Assessment Order issued by the Commercial Tax Officers also certifies the fact of procurement of raw materials, stock of inputs, sale of final products shown in their records during the relevant period of dispute is in order, On the other hand, the department has failed to conduct further investigation into the procurement of raw materials, consumption of electricity etc. during the material period to prove that the assessee had actually manufactured and cleared the cotton cone yarn clandestinely, Further, stated by Mr. Pramod Agarwal and D. Ravinder during cross-examination plenty of un-accounted goods were available in the market and that various manufacturers indulged in large scale clandestine removal of cotton cone yarn and finally settled their cases before the Settlement Commission by paying huge amount of duty. Thus the clandestine removal cannot be alleged against the assessee especially when the buyer/dealer is receiving the cotton yarn from various other manufacturers and not only from the Appellants. 3.4 PTC purchased the goods from other manufacturers also and traders and there is no ....
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....plied by many manufacturers, hence non existence of LNE does not implicate assessee. Ld counsel adverted to para 17 of the impugned order, wehre the adjudicating authority himself has held that entire sales made by PTC cannot alleged to be cotton cone yarn and that too obtained from assessee, that no conclusive evidence is let in by department to substantiate that goods are entirely cone yarn. Ld counsel also adverted to para 18 of the impugned order wherein the authority has held that merely because certain entries are found in the private diaries /documents maintained by Sri D.Ravinder do not constitute irrefutable evidence either against assessee or against PTC:, that in absence of any linkage it simply cannot be alleged that the transactions pertain either to assessee or PTC. These very findings of the adjudicating authority based on which he has dropped proposed demands of Rs. 39,25,829/- related to 14 (b) of the impugned order. Rs. 14,32,902/ related to 14(c) of impugned order , are equally applicable to the facts and allegations related to 14(a) of the order, hence the same findings will hold good even for the last mentioned demand which therefore will have to dropped for th....
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.... buyers have stated that they have received cone yarn only. So also, adjudicating authority dropping demand of 14,32,902/- relating to allegation of clandestine clearances based on private records /private diaries recovered from D. Ravinder an agent] broker of assessee and PTC is also not correct, since as seen from show cause notice, assessee was selling all its cotton yarn to PTC and M.D of assessee is the brother of proprietor of PTC. 6. We have heard both sides and perused the appeal records carefully. 7. It is seen that the edifice of the entire case booked by the department rests on the statements obtained from various persons and private records / private diaries recovered from the alleged agent [broker of assessee and PTC Sri. D. Ravinder. It is seen that the adjudicating authority has dropped proceedings in respect of two of the charges based on the same evidence/statements /records/ documents relied upon by department. The relevant paras are extracted as under: 16. As regards to second charge, it was alleged in the SCN that RSPL has cleared Cotton Cone Yam under the guise of Plain Reel Hank Yarn (PRHY) in order to show that they are fulfilling with the conditions....
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.... verification. Hence conclusion raised by the investigating authority is baseless and without any support and should fall on its own. The consultant also cited and relied on the judgement in 2003 (153) ELT 437 (Tri-Chennai). 17. I find from records that RSPL has cleared to PTC certain quantities of cotton yarn in hank form. Thereafter, PTC has sold the said quantities to various customers. The department based its charge in this regard on the strength of the statement recorded from certain persons in Sircilla area who stated that they use only cotton cone yarn and also on the basis of addition of the words PRHY in the duplicate copy of the PTC invoice. It is on record that PTC, in addition to RSPL, is also buying and trading the goods from various other manufacturers, RSPL is not the sole supplier manufacturer of the goods to PTC. In such a situation, the entire sales made by PTC cannot be alleged to be cotton cone yarn and that too obtained from RSPL. In fact I find from the invoices of RSPL that 'PRHY' is written. The department has not directed its investigation at the manufacture's end as to whether such quantities of Cone Yarn were manufactured or not. If manufactur....
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....cer who admitted that except for four parties, no statement from other 102 parties were recorded. He has also found that department did not direct investigation at manufacturers end whether the alleged quantities if cone yarn were manufactured or not, if manufactured whether it was sold as such or converted it into PHRY and sold. Authority has concluded that no conclusive evidence is brought forth by department tom substantiate the allegation. 9. We therefore find ourselves in agreement with the Ld Counsel's argument that when the adjudicating authority has dropped two demands on the grounds of insufficient evidence, the very same conclusions will necessarily hold good for other allegations. It is also seen that during cross examination Sri. P.K.AgarwaI, Sri. D. Ravinder have admitted that other manufacturers had made large scale clandestine removals of cone yarn; Sri. D. Ravinder in his cross examination has not admitted to the transactions at page number 2, DR-4 as belonging to either assessee or PTC. The investigating officer during cross examination also admitted to certain facts. Further, demand of Rs. 69,06,624/ has been made only on statement of Shri B.Venkataswamy, t....