TaxTMI 
TaxTMI 
2018 (8) TMI 477
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....35/- stands imposed on the said appellant under Rule 25 of the Central Excise Rules, 2002. Further penalty of Rs. 90,09,676/- also stands imposed upon Shri Sanjeev Agarwal, Director of the company along with imposition of penalty of Rs. 15.00 Lakhs on Shri Durga Shankar Mishra, authorized signatory, in terms of the provisions of Rule 26 of the Central Excise Rules, 2002. 2. We are informed that Shri Durga Shankar Mishra, one of the appellant has since expired and his appeal would abate in terms of Rule 22 of CEGAT Procedure Rules. His death certificate stands placed on record. Accordingly the appeal filed by him is disposed of is abated. 3. As per facts on record M/s.Rimjhim Ispat Ltd. are engaged in the manufacture of billets, rounds as also coils/flats etc. falling under chapter 72 of the first schedule to the Central Excise Tariff Act, 1985. They are availing the facility of Cenvat credit of duty paid on various raw materials like iron scrap, sponge iron, ferro chrome, Silicon, imported nikel etc.. Their factory was visited by the Central Excise officers on 26.03.2011, who conducted various checks and verifications. As a result of stock-taking, certain finished goods like ....
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....0.09 Lakhs stand removed by the appellant clandestinely without issue of Central Excise invoices and without their accountal in the statutory records. Similarly as regards the excess found goods it was believed that the same were not entered in the records with an intent to clear the same without payment of duty. In the said background proceedings were initiated against all the appellants by way of show cause notice dated 21.09.2011 proposing to confirm the demands in respect of shortages detected by the officers and to confiscate the excess found seized goods. Notice also proposed imposition of penalties upon all the appellants. The said notice stands culminated into impugned order passed by the Commissioner confirming the demands, confiscating the goods and imposing penalties as detailed in the preceding paragraphs. 7. The said order of Commissioner is impugned before Tribunal by all the appellants. As already observed the appeal of Shri Durga Shankar Mishra stands abated in terms of Rule 22 of CEGAT Procedure Rules. 8. As regards the appeal of M/s.Rimjhim Ispat Ltd., ld.Advocate Shri A.K.Prasad has strongly contested the factum of stock-taking of the raw materials as also ....
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....lous and are required to be set aside. Ld.Advocate further contended that the adjudicating authority has strongly relied upon the statements of the Authorized Signatory as also of the Director of the company. Though the said statements are not confessional and have nowhere accepted the clandestine removal and are only to the effect of accepting the shortages and excesses, but they had requested for the cross-examination of the said deponents which stand rejected by the adjudicating authority on filmsy grounds. If the Revenue intended to rely upon the statements, it was obligatory on the part of the adjudicating authority to allow their cross-examination so as to test the veracity of the said statement. He submits that the latest decision of the Punjab & Haryana High Court in the case of Jindal Drugs has held that not only the cross-examination, but examination in chief is also required to be conducted by the adjudicating authority. In the absence of the same, the statements have to be kept out of consideration, in which case nothing survives with the Revenue to rely upon inasmuch as there is no evidence to substantiate the charges of clandestine removal. 9. He further submits....
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.... Revenue is based upon the alleged shortages, leading to demand of duty and the excesses, leading to confiscation of the goods, during the course of visit of the officers in the assessee's factory as on 26.03.2011. 11.1 The appellants have strongly challenged the method of stock taking by the officers on the day of their visit. It is seen that the excesses and the shortages found by the officers are much on the higher side and there is nothing on record to show as to how such huge stock of finished products and raw materials was weighed by the officers. There are no inventories prepared and no methodology adopted by the Revenue for weighing such a huge stock stands placed on record. As per the appellant they do not have any weighing scale in their factory and for verification of the stock, 360 trucks are required to be engaged. There is nothing on record to show as to whether the trucks were put into services for weighing the huge stock. Admittedly the iron and steel items are heavy items and cannot be weighed without engaging a proper procedure to weigh the same. Accordingly we hold that the stock-taking was not actually done by the visiting staff and the alleged shortages and ....
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....d in the factory. No source of raw material stands disclosed by the Revenue. In such a scenario mere shortages cannot lead to the allegations and findings of clandestine manufacture. 11.5 The Tribunal in the case of Hissar Pipes Pvt.Ltd. v. Commissioner of Central Excise, Rohtak [2015 (317) ELT 136 (Tri.Del.)], by taking note of the various earlier decisions have held that the stock-taking having been done on eye-estimation basis, the clandestine removal allegations cannot be upheld merely on the basis of the shortages so detected. Similarly in the case of Commissioner of C.Ex., Raipur v. Sidhi Vinayak Sponge Iron (P) Ltd. [2014 (308) E.L.T. 154 (Tri.-Del.)], charges of clandestine removal were not upheld by observing that the same are required to be established by tangible and corroborative evidence. The Tribunal further observed that in the absence of any weighing scale or the weighing bridge in the assessee's factory and in the absence of any evidence to show that the goods were taken outside the factory for weighment purposes and in the absence of any weighment slips the stock-taking have to be on eye-estimation basis and in the absence of any corroborative evidence, the fin....
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....the statements of the Directors as also of the appellant's authorized person. On going through the said statements we note that the same are not confessional statement and there is no admission of any clandestine activities in the said statements of the deponents. In fact it stands revealed by the said deponents that the shortages, if any, may be on account of the fact that the final product is entered in the records on eye-estimation basis whereas at the time of selling, the same is actually weighed. They have also submitted that the said shortages, if any, may be on account of the fact that the coils, which are being manufactured by the job-workers, are sometimes found detective and are scrapped and re-used in the factory without deleting the same from the records. In any case and in any view of the matter we note that even the statements, cannot be adopted for arriving at the finding of the clandestine removal in the absence of any other evidences to indicate clandestine removal. The Hon'ble Delhi High Court in the case of Commissioner of Income Tax v. Dhingra Metal Works [2010-TIOL-693 (HC-DEL.)] has observed that though an admission is extremely important piece of evidence,....