AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 746
X X X X Extracts X X X X
X X X X Extracts X X X X
....the manufacture of cotton yarn falling under Chapter 52 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as "the Act"). An inspection was conducted in the assessee's manufacturing unit on 18.09.1999 during which, verification of the stock of raw materials and finished goods were made, certain documents were recovered and statements were recorded from the employee and Managing Director of the assessee. Pursuant to such investigation, show cause notice, dated 10.03.2000, was issued. 4.It was alleged in the show cause notice that the assessee has contravened the provisions of Rules 9(1), 52A, 53, 173G and 226 of the Central Excise Rules, 1944 (in short, "the CER, 1944"), inasmuch as they have not accounted the production of 1,21,338.665 kgs of cotton yarn in cones in their RG1 during the period from 01.01.1999 to 17.09.1999 by suppressing the fact with an intent to evade payment of duty; they have cleared 1,19,043,665 kgs of cotton yarn valued at Rs. 1,05,05,505/- without payment of duty, without following the procedures under the Act and without accounting the same in their statutory records during the said period; and they have not entered the det....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... same was allowed and the penalty imposed on the Agent, which was reduced by the First Appellate Authority, was completely waived. 7. Mr. K. Jeyachandran, learned counsel appearing for the assessee, submitted that the entire demand was solely based on the diary notings maintained by the Manager and his statement recorded, which were retracted immediately, there was no investigation to the aspect of buyers of cotton yarn alleged to have been clandestinely removed by the assessee and the Department failed to note that there was no attempt to remove the goods, which were confiscated and there was no allegation that the assessee attempted to remove the goods clandestinely and therefore, the orders passed by the Adjudicating Authority, as confirmed by the First Appellate Authority and the Tribunal, are erroneous. Though in the grounds of appeal, the assessee has stated that denial of cross examination of the factory Manager by the Lower Authority is in violation of principles of natural justice, the learned counsel for the assessee, on instructions, would submit that he is not pressing the said point. 8.It is submitted that the assessee specifically raised the plea that the search and....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Court of Gujarat at Ahmedabad in Commissioner of Central Excise vs. Saakeen Alloys Pvt. Ltd. [2014 (308) E.L.T. 655 (Guj.)]. 12.Reliance was also placed on the decision of the High Court of Judicature at Allahabad in Continental Cement Company vs. Union of India [2014 (309) E.L.T. 411 (All.)]. 13.On the above grounds, the learned counsel sought for setting aside the order passed by the Tribunal and answering the substantial questions of law in favour of the assessee. 14.Shri V.Sundareswaran, learned Standing Counsel, appearing for the Revenue submitted that there is sufficient proof and material to show that the assessee contravened the provisions of the Central Excise Act and Rules, and the Adjudicating Authority as well as the First Appellate Authority made a thorough factual exercise and that recorded the finding, which has been affirmed by the Tribunal and as such, no question of law arises for consideration in the instant case. 15.Further, it is submitted that the assessee is a person, who is habitually engaged in such clandestine removal and their yet another case against the assessee regarding clandestine removal which order, passed by the Adjudicating Authority, has be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t there was nothing except a bare confessional statement, which was retracted immediately. Thus, the Court confirmed the order passed by the Tribunal holding that the appeal does not raise any question of law, much less substantial question of law. The appeal filed by the Revenue against the said order was dismissed by the Hon'ble Supreme Court reported in 2015 (319) E.L.T. A117 (SC). 21.We find from the said order, the appeal filed by the Revenue was filed with the delay and the delay was condoned and the Special Leave Petition was dismissed without a speaking order. In any event, in the said case, the Court held that the Tribunal made a thorough factual exercise and then came to conclusion that there was no positive proof. 22.The decision in the case of Saakeen Alloys Pvt. Ltd. (supra), can hardly come to the advantage of the assessee, as in the instant case, the two authorities and the Tribunal factually held that there has been proof to show that there is clandestine removal of goods without payment of duty. Therefore, the decision in Saakeen Alloys Pvt. Ltd. (supra) is distinguishable on facts. 23.So far as the decision in Continental Cement Company (supra) is concerned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ory Manager as true and correct. The retraction was an afterthought and no request was made by the Managing Director to record a further statement from him, apart from not denying the details mentioned in the statement given by the factory Manager. That apart, there was no denial of the allegation in respect of the production or clearances in the assessee's RG1 register, purchases of cotton made by the assessee, which were not accounted for in their Form IV register. Further, the assessee submitted no reply for the shortage of cotton to the tune of 129585.5 kgs while submitting their reply. Further, the Adjudicating Authority pointed out that a stock of 2295 kgs of cotton yarn in packed condition was found during surprise check, which was not accounted for in the RG1 register. Further, the packed stocks, which were in 45 bags, were found without any running serial number and therefore, the said quantity was seized. 26.Further, the Adjudicating Authority pointed out that the assessee was maintaining two sets of invoices; one with pre-printed running serial number and other without any serial number which fact was not denied by the assessee during the personal hearing. 27.The l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmed. Even before the Tribunal, the assessee did not have any explanation for the discrepancies in the quantity or for the matter with regard to the existence of parallel invoices. Thus, on facts, it was held that it is a case of clandestine removal and accordingly, the appeal filed by the assessee was dismissed. 30.The above facts will clearly show that the allegation is one of clandestine removal. It may be true that the burden of proving such an allegation is on the Department. However, clandestine removal with an intention to evade payment of duty is always done in a secrete manner and not as an open transaction for the Department to immediately detect the same. Therefore, in case of clandestine removal, where secrecies involved, there may be cases where direct documentary evidence will not be available. However, based on the seized records, if the Department is able to prima facie establish the case of clandestine removal and the assessee is not able to give any plausible explanation for the same, then the allegation of clandestine removal has to be held to be proved. In other words, the standard and degree of proof, which is required in such cases, may not be the same, as in....