TaxTMI 
TaxTMI 
2018 (10) TMI 893
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.... existing in the same premises; (iii) One notebook containing details of payments made to production contractor and maintenance contractor; (iv) One notebook containing details of despatch for the period 01.07.2006 to 11.07.2006; (v) A notebook containing details of cash transaction by the company; (vi) Notepads showing date-wise production in respect of M/s. PRPL and M/s. PAPL and partially used sales invoice without authentication. However, no discrepancy was noticed in the physical stock. Follow up search was conducted at the premises of M/s. Prince TMT Steels Pvt Ltd. (PTSPL) and M/s. Bee Path Castings Pvt Ltd (BPCPL) on 13.07.2006. 4.544 MT of M/s. ingots found to be excess were seized from M/s. PTSPL. Statements of various officers of the companies, contractors and transporters were recorded. On conclusion of the investigation, a SCN was issued seeking the following: (i) Demand of duty of Rs. 57,35,887 on the 2014.15 MT of ingots alleged to have been clandestinely manufactured and cleared by them during the period 16^th February, 2006 to 11^th July, 2006. (ii) Confiscation of 4.544 MT of M/s. ingots seized from M/s. PTS....
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....at registers show that they contained details of date of production, heat on time, electricity meter reading (starting and ending), tapping time, quantity of raw material, quantity of MS ingots produced and strap. However, Department did not rely on these even though their existence was confirmed in Para 101 of the SCN. The Ld. Commissioner confirmed the demand on the basis of notebooks allegedly written by the chemists which were neither authenticated nor were the contents therein proved. Moreover, Sh. Sibi Raj & Sh. Anbu retracted during cross examination on 06.11.2008. Thus, Ld. Commissioner has relied upon uncorroborated statements. Para 12 of the SCN acknowledges that Sh. Abdul Karim, MD, Sh. Ahmed Faizal Sha, Director, Sh. Anub Sha, Director, Sh. Sibi Raj, Chemist, Sh. C.K. Abdurahiman, GM and Sh. Premildeep, GM have moved Civil Petitions before Hon'ble Session Court, Palakkad on 14.07.2006, on various grounds including physical abuse, seeking bail. As observed by Hon'ble Supreme Court in the case of Suresh Synthetics 2016 (332) ELT 385 (SC) charge of clandestine manufacture and removal cannot be established on the uncorroborated statements of persons. They have also ....
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.... The Department has not appealed against the order. Similarly, the Department vide SCN no. 18/2007 dated 23.05.2007 issued by ACC, Palakkad alleged that they have received 140 nos. of MS ingots weighing 11.260 MT from the main appellant i.e. M/s. PRPL. The Commissioner while discussing the above SCN recorded his finding that the SCN did not rely on the statement of Sh. Anoof. A, Sales Manager. This finding is erroneous and perverse as it is clear that in Para 5 of SCN dated 23.05.2007 issued to M/s. BCPL relies on the statement of Sh. Anoof. A, Sales Manager. 2.4 The Ld. Counsel further submitted that it is obvious from the proceedings initiated by the Department against M/s. PTSPL and M/s. BPCL that there is no material evidence to substantiate the allegation of manufacture and clandestine removal of 2014.185 MT of MS ingots by PRPL to Prince TMT Steels and Beeptah Castings. The Department itself is not relying on the evidence contained in SCN dated 05.06.2007 by way of notebooks allegedly written by the Chemist in the present proceedings alleging clandestine removal of 2014.185 MT of MS ingots by PRPL while initiating proceedings subsequently against the buyer units. 2.5 Th....
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....¢ CCE vs. Velavan Spinning Mills 2004 (167) ELT 91 (T). • CCE, Chandigarh vs. Arsh Castings Pvt Ltd. 2006 (195) ELT 302 (T). • Ruby Chlorates (P) Ltd. vs. CCE 2006/9204) ELT 607 (T). • Gurpreet Rubber Industries vs. CCE 1996 /982) ELT 347 (T). 2.7 Ld. Counsel also submitted that the Commissioner has given a finding at Para 143 & 144 that the average power consumption for accounted and un-accounted production was 988.62 units per MT and 697.132 units per MT of MS ingots. However, Ld. Commissioner has selectively shown the power consumption from March 2006 to June 2006 which is differently given at Para no. 58 of the SCN. Commercial Taxes Department has issued a demand notice alleging that 800 units were required for 1 MT of ingot. The Appellate Tribunal of VAT directed the officers to determine power consumption practically. On a direction given by Kerala High Court in Writ Petition C. No. 2371/13(V) concluded on the basis of study got conducted that 1103.64 units were required for 1MT ingot. Accordingly, the adjudicating authority has dropped the proceedings. Therefore, the allegations in the SCN, on the basis of power consumption, are no....
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....2014 (310) ELT 904 (T-De1.) • Pawan Alloys & Castings Pvt Ltd. Vs CCE & ST, Meerut 2015 (318) ELT 267 (T). • Micro Forge (I) Pvt Limited Vs CCE, Rajkot 2004 (169) ELT 251 (T). • Unique International Ltd. Vs CCE 2016 (344) ELT 555 (T). • Dharmpal Premchand Ltd. Vs CCE, Delhi I 2011 (274) ELT 426 (T.-Del.). • Kashi Laminators (P) Ltd. Vs CCE, Lucknow 2014 (314) ELT 327 (T). 2.10 He lastly submitted that as there was no finding in the impugned order that the above persons have personally dealt with the excisable goods having reasons to believe that they are liable for confiscation, as per Rule 26 of Central Excise Rules, 2002, penalties cannot be imposed as held by Hon'ble High Court of Karnataka in the case of CCE, Bangalore Vs. Vijaya Steels Pvt Ltd. 2012 (282) ELT 215 (Kar.) 3. The Ld. AR for the Revenue has elaborately taken through the findings of the Ld. Commissioner in the OIO. He further submitted that the details of corroborative evidences relied in the original order that were not countered by the appellant are as follows: (i) Private Production Slip, showing heat-wise production, reflecting ....
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....of materials received without proper documents. Expectedly, all documents related to clearance of unaccounted ingots could not be recovered from PRPL; more so, because, the appellants with intent to evade duty cannot be expected to keep such incriminating documents for the entire period. It's anybody's guess that any of the records maintained, if any, could be destroyed. Therefore, the demand for duty at PRPL was made on actual documents and corroborative evidences, without any assumption or presumption, as brought out in original order. The demand of Sh. Aftab Alam was made on separate ground of non-payment of Service Tax for supply of manpower and the same was made by another investigating officer based on service charges received in his account from the appellant. Therefore, the submissions on non-consideration of the records of impugned case in other proceedings are irrelevant to this appeal. 3.3 Ld. AR has relied upon the following case laws: (i) CCE, Indore vs. Pithampur Alloys Castings Ltd.- 2014 (314) E.L.T. 113 (Tri.-Del.) wherein it was held that it was not necessary for the Revenue to identify each and every buyer of final product and establish case i....
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....ts is sustainable? Whether the Department relied on uncorroborated statements and documents whose ownership was not established? (ii) Whether seizure and confiscation of 4.544 MT of MS ingots in the factory of M/s. Prince TMT Steels Pvt. Ltd. is maintainable? 4.1 We find that the impugned order has mainly relied upon the following: (i) 3 Note books/pads allegedly maintained by Shri V.R. Sibiraj, Chemist and 4 Note books maintained by Shri Anbu, Cashier. (ii) Statements of various persons of the company and truck drivers. (iii) Electricity consumption. (iv) Alleged suppression of capacity of the furnace. 4.2 Coming to the note books maintained by the Chemist, it was alleged that they are relate to date-wise production of figures of MS ingots in different heats by M/s. PRPL and M/s. PAPL. It was alleged that Shri C.K. Abdurahiman, General Manager PRPL has accepted the same. On a comparison of the above records with statutory RG-I figures, the officers concluded that there was unaccounted production of 2014.185 MT of ingots. The Commissioner has given a finding that Shri Sibiraj, Chemist and Shri C.K. Abdurahiman, General Manager have....
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....ance was made to their sister concerns i.e. M/s. TMT Steels Pvt. Ltd. and M/s. Bee Path Castings Pvt Ltd. The appellants have brought to our notice that a show-cause notice 18/2007 dated 23.05.2007 to M/s. BPCPL was issued alleging that M/s. PRPL had removed 140 Ingots weighing 11.260 MT under invoice No. 409 on 11.07.2006 and that M/s. PAPL have cleared 275 Nos. of MS Ingots weighing 11.030 MT under invoice No. 362 on 11.07.2006. It is not understood as to how 275 Ingots and 140 Ingots would weigh approximately the same whereas in the mahazar dated 13.07.2006 drawn at M/s. PTSPL average weight of Ingot was taken to be 98 kg. 4.4 Show-cause notice No. 43/2007 dated 6.12.2007 issued to M/s. PTSPL alleges that M/s. PRPL have cleared 265.178 MT of MS Ingots to M/s. PTSPL. The confirmation of this show-cause notice has been set aside by Commissioner (Appeals) vide order 52-55/2010 dated 13.07.2010. 4.5 A combined look that all the show-cause notices issued to M/s. PRPL, PTSPL and BPCPL shows that the Department has taken the figures differently for different show-cause notices. While the impugned order alleges that M/s. PRPL have cleared 2014.185 MT of MS Ingots to their sister c....
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.... and as under: Month Amount April 2006 50,000 May 2006 78,000 June 2006 79,000 July 2006 60,000 The adjudicating authority has dropped the proceedings. Here also it is evident that the Department is not relying on the same set of records in two different proceedings thereby putting a question mark on the evidentiary value of the documents. 4.7 We find that Shri C.K. Abdurahiman, General Manager, Shri Anub Sha, Director, Prince TMT, Shri Sibiraj, Chemist and Sh. Anbu, Cashier have retracted their statements. They were again called for statements and their statements were recorded confirming the original statements. However, during the cross examination they have again retracted the statements. In fact issues raised and were not answered or attended. Shri Sibiraj, Chemist claimed that he did not maintain those records but one Armugham may have maintained. No efforts seem to have been made to find out if such Person existed. No findings contradicting the claim were also given in the impugned order on cross examination. We find that Ld. Commissioner has not given any findings on the cross-examination. Appellant's submission with regard to contrad....
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.... for the appellants submitted that the Commercial Taxes Department has issued a demand notice alleging that 800 units were required for 1 MT of ingot. The Appellate Tribunal of VAT directed the officers to determine power consumption practically. On a direction given by Kerala High Court in Writ Petition C. No. 2371/13(V) concluded on the basis of study got conducted that 1103.64 units were required for 1 MT ingot. Accordingly, the adjudicating authority has dropped the proceedings. In view of the above, evidentiary value of electricity consumption, appears not strong. 4.9 The impugned order alleges that the appellants have suppressed the capacity of the plant to be 6 MT whereas it was actually of 8 MT. Though the invoice mentioned the furnace to be 6 MT, it is evidenced by the drawings supplied by M/s. Inductotherm (India) Pvt. Ltd that the furnace was of 8 MT. The appellants submitted that the invoice No. 3618/21.10.2005 issued by Inductotherm (India) Pvt. Ltd was for 6 MT only. The furnace was of 6 MT only but with lining as applicable to 8 MT furnace. Heat registers maintained by them prove that the capacity was 6 MT only. The appellants contended that they were not provided....
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.... (d). Instances of sales of such goods to identified parties. (e). Receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him; (f). Use of electricity for in excess of what is necessary for manufacture of goods otherwise manufactured and validity cleared on payment of duty (g). Statements of buyers with some details of illicit manufacture and clearance; (h). Proof of actual transportation of goods, cleared without payment of duty (i). Links between the document recovered during the search and activities being carried on in the factory of production; etc......... 9. In view of the above legal position and facts available on record, we are constrained to reiterate that evidence of only one diary cannot be made the basis of establishing clandestine manufacture and removal of the fabrics. It has been repeatedly held by the Courts that clandestine manufacture and clearance cannot be readily inferred from few documents and statements unless the allegations are also corroborated and established on evidences, relatable to or linked with actual manufacturing operations. As far ....
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.... in to account. Purchase of any other raw material was not established. Electricity consumption was not established as discussed above. Statements of the drivers indicated that they have transported goods to their sister concerns and that they were given papers in an envelope which they showed to officers of whenever it was checked. Therefore, it cannot be alleged that all clearances were clandestine. Clearances to units other than sister concerns, if any, were not established. There was no investigation or record or findings in the impugned order about financial transactions. Under these conditions, allegation of clandestine removal only on the basis of production, allegedly evidenced by the records said to have been maintained by Chemist showing production and the records said to have been maintained by Cashier showing payments to production contractor cannot be relied upon. As a matter of fact, Revenue did not rely on these records while issuing SCNs to their sister concerns i.e. M/s PTSPL and M/s BCPL. Whereas the sister concerns M/s PTSPL and M/s BCPL were alleged to have received about 166 MT and 11 MT of MS ingots from the appellants respectively. Therefore, private records ....