TaxTMI 
TaxTMI 
2017 (12) TMI 74
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....and found that production records/RG-I register tallied with physical stock of CTD bars. However, on verification of raw material accounts i.e., showed 707.940 MTs of MS Ingots, whereas, only 83.085 MTs. of Ingots were physically available. Thus, there was apparent shortage of 624.855 MTs of MS Ingots [main raw material]. The Managing Director of the Company Shri Ramasamy admitted the shortage and that it was used for unaccounted production. He made payment of Rs. 40 lakhs on the same day as duty liability towards unaccounted production. Search was conducted in the premises of supplier of raw materials and incriminating documents were recovered which indicated raw materials were moved to M/s. DSRM's factory without issue of invoices. Search operations were conducted at M/s. New Hindustan Steels (NHS), M/s. Anand Steel Mart (Anand), M/s. Madurai Steel Syndicate, Dindigul (MSSD), M/s. MMS Steels Dindigul (MMSD), Sri Sithi Vinayagar Steel Madurai (SSVS) etc., which revealed that M/s. DSRM procured unaccounted raw materials and used for unaccounted manufacture and clandestine clearances. Statements were also recorded. Based upon such evidences show-cause notice dated 20.04.2005 was....
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....physical stock taking was conducted by the officers and ascertained shortage of 624.855 MTs of Ingots as on 29.07.2003, the demand of duty proposed in the above notice has been quantified as follows:- (Amt. in Rs.) Sl. No. Name of the party Period Duty demand 1 2 3 4 01. 1219.89 MTs of CTD Bars received by M/s. NHS on the basis of one notebook recovered from NHS 02.04.2003 to 31.07.2003 31,96,509/- 02. 615.28 MTs of CTD Bars received by M/s. MMSD on the basis of deposition made by various dealers 18.06.2001 to 03.10.2003 12,90,032/- 03. 445.17 MTs of CTD Bars received by M/s. Anand Steel Mart and other group companies on the basis of chits recovered from the residence of Shri M.C. Nagarathinam 01.04.2003 to 11.07.2003 11,48,044 TOTAL 56,34,858/- 3.3 In this case, except for the shortage of input material (ingot) of 624.855 MTs found there is no other evidence recovered from the M/s. DSRM. The department could have at the most demanded reversal of credit taken on such quantity of ingots, inasmuch as, ....
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.... existing in the addresses mentioned in the invoices issued in their name and there is no other evidence to substantiate that the M/s. DSRM have supplied their final products clandestinely to M/s. MMSD. It is also very much relevant that there is no other incriminating evidence recovered from the M/s. DSRM/M/s. MMSD in support nor there is any statement recorded from the key persons of M/s. MMSD also. None of the dealers from whom statements have been recorded have been examined by the adjudicating authority to admit such evidences. As such, the allegations made and demand proposed in this regard is clearly very bald and is not sustainable at all. 3.7 With regard to the demand of duty proposed on 445 MTs allegedly received by M/s. Anand Steel Mart and their group of Companies on the basis of chits seized from the residence of Shri M.C. Nagarathinam, Partner and statements were recorded from him immediately after seizure of such chits, but nothing was recorded from him with regard to such chits. Further, during the cross-examination also the above witness made contradictory observations and hence, the statement recorded from him cannot be relied upon in this proceedin....
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....ive, Shri B. Balamurugan reiterated the findings in the impugned order and made the following main submissions. 4.1 It is submitted that the clandestine removal in the name of M/s. MMSD in the show-cause notice and Order-in-Original) have been established in the investigation that M/s. MMSD had raised bogus bills in the name of various bogus suppliers and shown transportation through bogus vehicle numbers to off-set the clandestine purchase made from M/s.DSRM. Verifications made with the Commercial Tax Officers' had revealed that the trading companies (from whom M/s. MMSD accounted to have purchased the CTD bars) are not existing or are not regular traders. The verification reports received from the CTOs have been market as RUD under Sl.Nos.19, 20 35 & 36 of the Annexure-A to the show-cause notice. 4.2 Similarly, some of vehicle owners had denied having deployed their vehicles for transportation of goods, as discussed in para 14.6 of the show-cause notice and in para 50 (it) of the Order-in-Original. Further, verification with the Regional Transport Authorities (RTOs) had revealed that the vehicle registration numbers said to have been used by such....
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....on its basis believe in the existence of facts in issue." 4.6 In Annexures - 1, 1A & 1B of the show-cause notice: The details of quantity of 1219.89 MT and assessable value of Rs. 1,99,78,180/- involved in the clearances effected to M/s. NHS are as per the notebook maintained by them. The said notebook was recovered as per Sl. No.8 of the mahazar, dated 02.08.2003 drawn at M/S. NHS and have marked as RUD under Sl.No.7 (iv) the Annexure-A to the show-cause notice. The details of the amounts given to M/s. DSRM by M/s. NHS for unaccounted clearances are enumerated in Annexure 1A of the show-cause notice as per the file [containing chits with daily transaction details], recovered as per Sl.No.6 of the mahazar, dated 02.08.2003 and included as RUD Sl.No.7(ii) in the Annexure-A to the show-cause notice. The accounted bills as per RUD Sl.No.7 (iii) of (the Annexure-A to the show-cause notice) have been detailed in Annexure-IB to the show-cause notice. 4.6.1 In Annexure-II of the show-cause notice: The details of purchase bills for 2001-02 to 2003-04 were submitted by M/s. MMS as per their letter, dated 01.08.2003 (market as RUD Sl.no.11 in the Annexure-....
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....s upon the findings in the impugned order. 6. As narrated in the table in para 3.2, the demand of Rs. 31,96,509/- is on the basis of note book recovered from M/S. NHS. According to department as per this note book a quantity of 1219.890 of finished products/CTD bars was removed from M/s. DSRM to M/s NHS without payment of duty. Apart from the note book, the evidence relied by department is the statement of Shri Natarajan, Managing Partner of M/s. NHS. It is stated that unaccounted finished products after being cleared to M/s. NHS, the bills were collected back by the M/s. DSRM and only some bills were shown in the account. Along with bills most often chit was sent which contained the actual details. 6.1 We note that department has not obtained any further evidence to corroborate the authenticity of the said notebook or , for that matter, to support the allegations made on the basis of that notebook. The only other evidence on which the department heavily leans is on the statement of one Shri Natarajan, Managing Partner of M/s. NHS. It appears that Shri Natarajan in his statement had admitted that they received CTD bars' from M/s. DSRM as per the details ....
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....garettes Ltd. Vs Collector of Central Excise reported in 2009 (242) E.L.T.189 (Del.). In all other cases, clause (9) of section 9D, the person from whom statement have been recorded by the department during an investigation has to be examined by the adjudicating authority before admitting the statement recorded as evidenced against the notice-appellant. Merit is also found in the learned advocate's arguments relying upon the ratio laid down by Hon'ble High Court of Punjab and Haryana in Jindal Drugs Pvt. Ltd. Vs. Union of India reported in 2016 (340) E.L.T. 67 (P&H) Viewed in this light, we are of the considered opinion that the allegation concerning quantity of removal of 1219.80 MTS of CTD bars and the demand confirmed in the impugned order of Rs. 31,96,509/neither do have any sound basis or adequately supported by any corroboratory evidence. This being so, the demand of Rs. 31,96,509/will not sustain and will have to be set aside, which we hereby do. 7. An amount of Rs. 11,48,044/- is raised as duty demand for 445.17 MTs of CTD bars clandestiney cleared by M/s. DSRM to M/s. Anand. The evidence in this regard is the chits recovered from the residential prem....
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....s, he has stated that he used to check only the weight and noted the vehicle number as stated by the person. Similar retraction is seen to be done by other traders in their cross-examination. The other evidence which department relies upon to demand duty on this count is the electricity consumption pattern. This evidence of electricity consumption cannot be made the basis for establishing clandestine clearance and demand of duty. As the statements given by shri Jaiulabdeen, Shri M. Shajahan of M/s SSS, Trichy are retracted, we have to say that department has not been able to sufficiently establish the basis of duty demand to the tune of Rs. 12,90,032/-. However, we cannot ignore the fact that M/s. MMSD was a related Unit of M/s. DSRM. But merely being a related Unit cannot be the basis for the demand of duty. Thus, we are of the considered view that the issue in respect of Rs. 12,90,032/- has to be further looked into, which requires remand of the matter. 9. From the above discussion, we, therefore, hold:- • The demand of Rs. 31,96,509/- in respect of 1219.89 MTs of CTD Bars allegedly received by M/s. NHS, is set aside. • The demand of Rs. 1....