TaxTMI 
TaxTMI 
2019 (1) TMI 1026
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....e notice demanding duty of Rs. 8,51,792/- (Rupees Eight Lakhs Fifty One Thousand Seven Hundred and Ninety Two only) and seeking to impose penalties thereunder. The Joint Commissioner of Central Excise, Bangalore vide order No. 11/2007 dated 23.07.2007 has confirmed the demand and has imposed equal penalty under Section 11AC of the Central Excise Act, 1944. He has also ordered confiscation of seized goods valued at Rs. 1.50 lakhs (Rupees One Lakh Fifty Thousand only) and has given an option to redeem them on payment of fine of Rs. 1,00,000/- (Rupees One Lakh only) in lieu of confiscation. The Joint Commissioner has also imposed a penalty of Rs. 5,000/- (Rupees Five Thousand only) on the partner Shri. Dhiraj Sipani. Commissioner (Appeals) vide Order 24 & 25/2008 dated 30/01/2008 has confirmed the duty and penalty of Rs. 8,41,674/- (Rupees Eight Lakhs Forty One Thousand Six Hundred and Seventy Four only). The present appeals are directed against this Order-in-Appeal. 2. Learned counsel for the appellants has submitted that the show-cause notice alleged shortage of 12,769 Kg of HDPE fabric. However, no physical stock of the goods was carried out by the investigating officer. He conten....
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....ook containing names and certain numbers which is said to be recovered from the shop floor whereas Mahazar dated 05.10.2005 states that apart from RG-1 Register nothing else was seized. The notebook and the contents have not been shown to have been recovered from the appellant's factory and the contents thereof also have not been proved by any evidence. Therefore, the notebook has no evidentiary value. The Revenue assumed that certain names appearing in the notebook were the employees and the figures therein were the quantity of HDPE fabric manufactured. The appellants submitted that the names in the diary were not of the employees in the factory as is evident from the Muster Roll and Half Yearly Return submitted to the Employees State Insurance Corporation for the relevant period. The Investigating Authority has not produced any evidence from the said workers or any other source to show that the entries in the handwritten notebook pertain to the production of HDPE fabric in the appellant's factory. It is not corroborated by any other evidence. 2.3. The show-cause notice has also relied upon a register maintained at the Security Gate showing transportation of goods. The sh....
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....hey have stored the same in the premises of sister concern i.e. M/s. Deepak Filaments. There was no shortage as per RG-1 and total goods are accounted for. The only fault on their part was not obtaining permission for storing the goods outside the factory due to shortage of space. This is only a procedural difficulty. Benefit of storage of facility is provided by CBEC Circular No. 610/1/2002 CX dated 1.1.2002. The confiscation of the same is bad in law in view of the ratio of the following cases: i. Purshottam Jajodia, Vs. DRI, New Delhi - 2014 (307) E.L.T. 837 (Del.) ii. A S Enterprises Vs. CC, Chennai - 2016-TIOL-1136-HC-MAD-CUS. iii. Jatin Ahuja Vs. UOI - 2013 (287) E.L.T. 3 (Del.) iv. Jain Irrigation Systems Limited Vs. CCE - 2006 (197) E.L.T 320 (SC) 3. Learned AR has reiterated the findings of Order-in-Original and Order-in-Appeal. He submitted that as held by the Supreme Court in Kalvert Foods India Pvt. Ltd. Central Excise officers are not Police officers statement by MD etc. not obtained by coercion or duress or threat are reliable. He submitted that Shri. Sipani was present during the entire proceedings of panchanama and has signed the panchanama. Therefore, it c....
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....n the clearance subsequently. Therefore, there is no reason to demand duty again on the stock alleged to have found short. Moreover, as held in a catena of judgment clandestine removal cannot be alleged merely on the basis of shortage found. We find that the case-law submitted by the appellant is in his favour. On both the counts, we find that the allegation does not survive. We find that the Tribunal in the case of Daya Sugar (cited supra) held that "the appellants have produced evidence before the Revenue that the recorded stock of sugar and molasses have been subsequently cleared on payment of appropriate Excise duty. So far the allegation of clandestine manufacture and removal of MS Ingots is concerned, we find that the show-cause notice is vague as it relies on a vague report based on vague data, based on further presumptions and assumptions ...... the allegation of clandestine manufacture and removal are vague and have got no legs to stand." We find that other than alleging that the goods were found shortage, the Revenue has not produced any evidence to show that the goods have been clandestinely manufactured and cleared. There is no evidence to the effect of purchase of raw-....
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....ted that the register alleged to have been maintained at the security gate showing transportation of the goods maintained by one Shri. Kannan, Security In-charge. As per the show-cause notice itself said Shri. Kannan could not be traced and therefore the investigation mechanism incomplete and inconclusive. Such being the averments in the show-cause notice, we fail to understand as to how the Department has concluded the allegation on the appellants. We are not in a position to appreciate the contention of the Department on this count. 4.5. So far as the seizure of 1.60 MT of finished goods in the adjoining premises of M/s. Deepak Filaments, we find that the appellants have submitted that the same were placed in the sister unit for shortage of space in their premises. It is not coming forth from the case records whether the same was accounted for in RG-1. There is no allegation by the Department that the same is removed without payment of duty. However there is certainly a procedural infraction. There was no reason as to what stopped the appellant from informing the authorities and obtaining the due permission. In such circumstances, Department in its right to seize such material a....
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....uld be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions; (ii) Evidence in support thereof should be of : (a) raw materials, in excess of that contained as per the statutory records; (b) Instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty. (c) Discovery of such finished goods outside the factory (d) Instances of sales of such goods to identified parties. (e) receipt of sale proceeds, whether by cheque o 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." 5. In view of the above discussion, we find that having made a serious allegation of clandestine removal, the Department has fail....