TaxTMI 
TaxTMI 
2017 (5) TMI 278
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....ugs and other violations, the officers of DGCEI conducted simultaneous search operations at the factory of SSOL, office premises of SSOL and factory premises of CDL on 22.03.2006. Documents/records were recovered and statements were recorded. It was concluded by the investigation that SSOL did not account the finished products in their RG-I registers and have suppressed the actual production. That they cleared the finished goods so manufactured to their associated company M/s CDL without raising invoice and without payment of duty. That the sale proceeds of such clearances was collected by cash through Sh. N. Gangi Reddy, who is the Director of CDL. They also cleared small quantities of finished products as marketing samples to customers in order to further their sales without proper accounting. Another allegation was that M/s SSOL indulged in fraudulent availment of CENVAT Credit without actual receipt of inputs. A show cause notice was issued against the appellants alleging clandestine removal of goods and fraudulent availment of CENVAT Credit. After adjudication, the original authority confirmed duty demand of Rs. 30,08,927/- along with interest and appropriated Rs. 15 lakhs alr....
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....es in the private records with the excise invoices issued by the appellant. It can be seen that the quantity cleared by the appellant by issuing excise invoices is higher than the quantity alleged to be cleared clandestinely i.e. seen recorded in the private records. (iv) These scribbling note pads/loose sheets were alleged to be maintained by Sh. B. Suresh and Sh. V. Subba Rao who were then employees of the company. They were in charge of quality control and not despatch of goods. That the scribbling made on the loose sheets by persons who have no connection with dispatch of goods has been made the basis for concluding that appellant has clandestinely removed goods without even comparing such entries with the central excise invoices and registers maintained by the appellant. (v) When the matter was remanded for denovo adjudication, the appellant had furnished a detailed reply with the explanation to each document alleged in the show cause notice. The said reply would establish that the allegation is totally false. (vi) There was a dispute between the Directors of the company during the relevant time. During the period 2002-03 to 2005-06 one of the Directors, Sh. Subba Red....
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....the invoices issued by the appellant, it can be seen that the private records/loose sheets contain entries which are inconsistent to the actual production and clearance of goods. These statutory records/invoices infact show more clearance of goods than the entries shown in the private records. The officers of the department have not made any enquiries with the Multi National Companies like Aurobindo, Lupin, Vettro, Cipla etc., to whom it is alleged that the appellants cleared the goods without duty. The entries in private records appear to have been made by staff from quality section while checking for quality etc., and these are not to be treated as figures for dispatch/clearance of goods. The department has tried to co-relate these figures with invoices without verifying the dispatch registers. Demand of duty on the basis of such in-consistent records is not correct. (ix). That the statements of various persons recorded by the department have been made by employees on the basis of the entries in such private records. The officers have not shown the invoices to them and did not provide any opportunity to such persons to check the details. (x). That the statement of Sh. Sunan....
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....pellants. The appellants had manufactured certain quantities of bulk drugs/intermediaries and did not account for the same in their RG-1 (daily stock account). They thus clandestinely cleared the goods without raising invoices and payment of duty. The basis of the entire case is the private records recovered from appellant's factory and factory of CDL apart from the statements of various officials of appellant company, CDL and also their buyers. Though appellants have come up with defence comparing the entries with the private note books and the Central Excise Invoices, the same does not serve any purpose. The appellants have not put forward any evidence of actual production during the period covered in the show cause notice with respect to the clearance found in the private records. These private records have been maintained by Sh. B. Suresh, Chemist, Sh. G. Rajashekar Reddy, Assistant in quality control department and Sh. S.V. Subba Rao, Chemist. These daily reports which are figures noted in the private records, would show that appellants have cleared goods without issuing invoices. The appellant has not been able to explain the reason for discrepancy found in the figures in loo....
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....In para 14 of the impugned order, the Commissioner(Appeals) has noted that the management of the company is under dispute and that litigations are pending before the Company Law Board. The present Director Shri Subba Reddy who filed this appeal alone replied to the show-cause notice at the first instance and other Directors sought further time to reply stating that there is a dispute pending with regard to management before the Company Law Board. Shri Subba Reddy who is the present Managing Director had filed reply to the show-cause notice stating that clandestine removal of goods as well as fraudulent availment of CENVAT credit was carried out by his rival Directors Shri V.N. Sunanda Reddy and Shri V. Gangi Reddy. In the said reply Shri Subba Reddy stated that Shri V.N. Sunanda Reddy is responsible for evasion and he could be called upon to pay the duty evaded. Thus while taking note of the fact that there exist dispute in the management, it has to be borne in mind that there is a chance that evidences may be shadowed by the collusion and rivalry between the two factions. 9. The Commissioner (Appeals) vide order dated 30.06.2009 while remanding the issue also has discussed the ....
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.... in the private record is tabulated and quantified as Annexure-D1 and D3 and duty is demanded on the basis of this data. The appellant has filed reply giving product wise analysis of the entries in the loose sheets/private records, comparing them with the Central Excise Invoice and also other records. Some of them are discussed below: • Record No.69(1/3) (Annexure-C-10) deals with the products Omeprazole:- The private records would show a quantity of 1113 kgms cleared by the appellants without central excise invoice/without payment of duty. The appellant has compared the quantity alleged to be cleared clandestinely on respective dates with the quantity cleared by appellant by issuing invoices. The total quantity cleared by issuing invoices and payment of duty by appellant would be 1515 kgms which is higher as against 1113 kgms for the period shown in the said private records. The appellant has also pointed out the errors committed in preparing table by department. That on 10.08.2005 as per private record 110 kgms was cleared to Indu and CDL. The CENVAT invoices show that on 10.08.2005, 50/60 kgms of omeprazole was cleared to Indu and CDL respectively on CENVAT invoices....
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....gh the appellant has cleared 266 kgms on payment of duty the private records show only a quantity of 166.5 kgms during the relevant period. That the quantity of 99.5 kgms (266-166.5) which has been cleared by the appellant by paying duty is not seen noted in the alleged private records. Further in the private record on 18.10.2005 there is clearance of 0.5 kgms of Lupin without invoice. The appellant submits that such nominal quantity is not usually cleared to a Multi National Company and that too without invoice. The department has not bothered to make any enquiry with regard to the buyers of the drugs/products. 11. From the explanation of each record/private entries made by the appellant comparing the entries with the CENVAT invoices leads to a probable conclusion that the private records do not reflect dispatch or clearance of goods per se. The consistant stand put forward by the appellant is that the figures scribbled in such loose sheets, note books are just some figures written down by the quality control department and that it has nothing to do with dispatch of goods. Same is the case with entries in other records also. The argument of the Ld. Counsel that the buyers of th....
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....e in quantity for several days and there was no entry in the private note book. This aspect cannot be overruled and the Commissioner cannot proceed on the basis of average figures of the entire note book to arrive at the conclusion that there was production of various chemicals. For production of various chemicals, appellants are required to purchase inputs and use electricity and labour. No such evidence has been proved by Revenue to discharge their burden. There is no evidence collected to show the persons to whom the goods were sold. Mere reliance on a tainted book in which the entries are also incomplete and also in view of clearances noted in R.G.1 were more than what is entered in the note book, therefore we have to hold that the private note book cannot be accepted as a complete and reliable document for confirming the huge demands on all the appellants. The Tribunal in the above case observed that note book maintained by chemist of firm cannot be relied to establish clandestine clearance, when such removal of goods is not supported by purchase of excess inputs, source of funds, sale and receipt of consideration. 12. In the present case, there is no evidence of receipt....
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....ed in the case of Haryana Acrylic Manufacturing Co. Pvt. Ltd. v. CCE as reported in 2001 (130) E.L.T. 562. On perusal of the judgment it is seen that there was shortage of inputs and the inputs had been removed from the stores and had been placed in a different place. They also found documents of removal supported by the transport documents from head office to factory and various other pieces of circumstantial evidence to establish the fact of receipt of inputs, manufacture of goods and sale of the same. In view of that Tribunal upheld the discharge of clandestine removal. In the present case, except the chits and the admissions which is based on the chits, revenue has not produced any other evidence like shortage of raw materials, purchase of inputs, excess power consumption, payment made to suppliers of raw materials, excess of profit and all other evidence which is required to establish clandestine manufacture removal and sale of the product. Therefore, Commissioner (Appeals) after due examination satisfied himself that the revenue did not establish clandestine removal. Even before us the revenue has not produced any document to support their charge of clandestine removal. They ....