TaxTMI 
TaxTMI 
2019 (1) TMI 1162
X X X X Extracts X X X X
X X X X Extracts X X X X
.... other Appellants namely Shri Ramesh Manilal Shah and Kartik Ramesh Shah. In case of Order-in-appeal dt. 07.11.2017 a penalty of Rs. 4,62,986/-, in case of Order-in-appeal both dt. 29.09.2017 a penalty of Rs. 10,000/- and Rs. 1,00,000/- has been imposed upon M/s SFL in terms of Rule 26 (2) of the Central Excise Rules, 2002. The facts of the case are that the main Appellant M/s Shah Foils are engaged in manufacture of Stainless Steel Cold Rolled (SSCR) Coils falling under chapter 72 of the Central Excise Tariff Act, 1985. Based upon investigation they were issued show cause notice dt. 06.05.2014 alleging clandestine removal of goods. The demands were raised on the ground that investigation and searches were conducted at the factory and office premises of the Appellant concern and one trading firm M/s Sankalp Foils Pvt. Ltd (SFLP). Search proceedings was also conducted at premises of Lottery/ Icecream stall of one Shri Manoj Tanna situated opposite the office premises building of M/s Sankalp Foils Pvt. Ltd. (SFPL), a firm engaged in trading goods of M/s SFL at Mumbai. The search of said stall resulted into recovery of incriminating documents indicating clearances effected by SFL and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the ground that they have suppressed production of finished goods as detailed in ledger "Smi (Cash)" and cleared the same without payment of duty. (iv) A demand of Rs. 1,07,76,233/- was made on the ground that M/s SFL has undervalued their goods at the time of clearance as found from the ledger account "Direct Purchase (Value Diff.)" and "Direct Sales (Value Diff.)". (v) A demand of Rs. 31,40,087/- was made on the ground that M/s SFL has availed credit on the basis of invoice without actual receipt of goods. 2. It was also proposed to impose penalty on M/s SFL and other appellants. The adjudicating authority vide impugned order dt. 27.02.2018 confirmed the demand as proposed in the show cause notices and also imposed penalties against the Appellants. Resultantly Appeal No. E/12274/2018 by M/s SFL, Appeal No. E/11436/2018 by Shri Ramesh M Shah and Appeal No. E/114433/2018 have been filed. 3. Based on aforesaid investigation a Show Cause Notice dt. 30.04.2015 alleging that M/s Clayris Ceramics Pvt. Ltd., Morbi has availed credit on the basis of invoices without receipt of goods from M/s SFL through M/s Swastik Metals Distributors Pvt. Ltd. A Show Cause Notice dt. 12.02.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. The ledgers obtained from 3 Pen drives and 11 bundles of paper at Venilal Safety Vaults reflect the transactions of SFL and of M/s SFPL as it was admitted by Shri Ramesh Shah in statement dt. 10.07.2012 that the data contained in the pen drive, the hand written papers and hard copy of ledgers belong to SFL showing the sale and purchase transactions party wise. SFLP is a different and independent trading unit and has a godown at Vasai. Therefore it is not logically correct that both the units have a common ledger. Even Shri Ramesh Shah could not explain as to how the data of SFPL got integrated in the SFL ledger. As per simple accountancy principles, any single account reflecting opening balance, incoming, outgoing and closing balance can never reflect the transactions of two different firms at a time. Since some part of the details reflected are recorded transactions of SFL, the cash transactions referred to in "Bombay Sales" are also to be of SFL. Shri Ramesh Shah on one side has stated that due to his wife illness, he was unable to look after the affairs of the company and on the other side he has contended that he was maintaining the details of business transactions of the Sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ransactions show the name of the party in which the entries of cash receipts also indicate quantity of the goods sold in kgs and rate per kg. Scrutiny of ledger account "Smi (Cash) reveals cash purchases of inputs by SFL from various parties. The Particulars shown under entries like "cash" or sale against certain names do not match with the recorded sales. The receipt of regular huge amount of cash can only be on two accounts i.e. Sale proceeds of goods by SFL or receipt of cash loans from parties whose names are mentioned in the Smi (Cash) ledger account. The said ledger account nowhere reflects return of the amounts to said parties, the receipt of said cash amounts can only be against cash sale of goods. The sale shown in "Smi (Cash)" does not match with the recorded cash sales. Shri Kartik Shah admitted the fact of cash sale of goods and issuance of only sale invoice to the parties without sale of goods in his statement dt. 28.01.2014. His contention that SFPL was responsible for cash sales of the goods after clearance from SFL on payment of duty is afterthought. Shri Kartik Shah admitted in his statement dt. 29.01.2014 making cash payments to M/s Jindal Stainless Steel/ Ramesh ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....companied the goods when they themselves stated in the ledger entry as "only bills". 7. In case of impugned Order-in-Appeals, the Appellate authorities has upheld the penalties imposed upon M/s SFL under rule 26 (2) holding that the invoices were issued without actual delivery of goods by relying upon the same investigation. 8. Being aggrieved by the impugned orders the Appellants have filed the instant appeals. 9. Shri Anand Nainawati, Ld. Counsel appearing for the Appellants submits that in case of impugned order dt. 27.02.2018, the allegation have been made on the basis of statements of persons where all of them were shown the seized ledgers and data and all have accepted the clandestine clearance and other allegations. He submits that during the search at Appellant's premises no incriminatory document or evidence was found. They are selling goods through their dealer M/s Sankalp Foils Pvt. Ltd. (SFPL) or sales to buyers through brokers and direct sales. In case of sale made to buyers in and around Mumbai, the orders are placed through SFPL or through brokers, they clear the goods to Vasai Godown of M/s SFPL on payment of excise duty from where the goods are cleared to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... That they had also prayed for following the procedure under Section 9D of the Central Excise Act, but the same was also not followed. He submits that in absence of following the procedure under Section 9D and refusal of cross examination, the statements relied upon by the adjudicating authority has no evidentiary value. The Commissioner has relied upon only those portions of the statements which are in favour of the department and either ignored or summarily rejected the portions of the statements supporting the contention of the Appellants. The cross examination was sought as there was contradictions in the statements. Further many of the statements were recorded after the last statement of Shri Ramesh, Director of M/s SFL. Therefore there is no question of presenting all the statements at the time of recording of statement of director. The directors have categorically denied any clearance of finished goods by the Appellants without payment of duty and have stated that the diversion of goods, if any has taken place at the end of M/s Sankalp (SFLP). Inspite of such statements of director the adjudicating authority has relied upon the statement of brokers which is incorrect. The r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... who have purchased the goods through him as a broker in cash and from whom he stated to have collected payment. Statement of Shri Gajendra Purohit, broker was recorded on 13.09.2012 wherein he stated that the ledger "Bombay Sales" contains the goods purchased by him from M/s SFL and the payments were made by him in cash. Even though he stated that the goods were used by him for cutting circle and were also sold to parties in cash, yet he stated that he does not know the name and address of any person to whom the goods were allegedly sold. Similarly in case of alleged issue of invoice without delivery of goods, the statement of Shri Pravin Vasant Mehta of M/s Jigar Plast was recorded on 13.12.2013 wherein he has stated that sale invoices of the Appellant without delivery of goods has been reversed. However Shri Pravin Mehta has nowhere stated that they have purchased goods from M/s SFL and all the goods were procured by M/s Jigar Plast through broker Shri Atul Parekh. Shri Pravin Mehta also stated that Shri Atul Parekh has received goods and invoices from the SFL in the name of various parties including M/s Jigar Plast and whenever they received intimation from Shri Atul Parekh reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Appellants transactions. The impugned ledger pertains to the transaction of M/s SFPL. The adjudicating authority reached to such conclusion on the ground that the details contained in hand written sheets in Gujarati were compared with the details in pen drive and the date of transaction, name of party, quantity of goods, invoice no, of the Appellant, cheque no etc were matching and the same was admitted by Shri Rakesh Shah. He submits that such matching is of no consequence as both of them were seized from third party premises and were not maintained by the Appellants. Further Shri Rakesh Shah in his statement dt. 10.07.2012 has stated that the documents are of both i.e M/s SFL and M/s SFPL and was further clarified in his statement dt. 25.07.2013 wherein he stated that the ledger "Bombay sales" belongs to M/s SFPL and he was maintaining the same on behalf of Ms SFPL. 10. The demand of Rs. 13,22,68,484/- has been made on the ground that the "Bombay Sales" ledger in seized pen drive belong to the sales made by M/s SFL without payment of duty and which has not been reflected in direct sales and that particulars of such cash sales was shown in individual ledger of the brokers and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....quantity of goods and containing invoice number of invoices issued by the Appellants cannot be explained. Therefore it leads to conclusion that the demand of duty on "Bombay sales" is not sustainable. He also highlights entries which shows the receipt of goods from the Appellant issued under invoice in "Purchase-godown" during the impugned period corresponding with the subsequent entries in Bombay Sales ledger accounting during the said period and submits that the demand of duty on "Bombay sales" would lead to demand of duty twice on same goods. He also takes us through the list of invoices alongwith corresponding lorry receipts and Form No. 402 issued by the VAT department Gujarat showing transaction to Maharashtra. He submits that even though details of purchase godown register taken out from the seized pen drive were presented before the adjudicating authority, yet he did not give any findings on the same and held that the Appellant has failed to reconcile the "Bombay - sales" account with any invoice on payment of duty covered in the direct-sale account. The goods referred in the "Bombay sales" ledger account and correlating with the Purchase Godown ledger account of SFPL are a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty has not been challenged. The office premises held to be of M/s SFL is wrong as it is registered premises of M/s SFPL and no document pertaining to Appellants was found. Both M/s SFL and SFPL are separate legal entities. The contention of the adjudicating authority that there is no investment of Snehil R Shah in trial balance which shows account of Bombay Sales which means that trial balance belongs only to Appellant, is wrong as it is not mandatory that for a director to invest in the company in which he is a director. It is not mandatory for director to have investment. The absence of same does not render the trial balance as of M/s SFL. If the contention of Ld. Adjudicating authority that there was no connection between the invoice and its quantity destined for cash sale as the issue of invoice was done to give credit to certain parties without actual delivery of goods and to make cash sale to other party is accepted, it itself means that no goods were cleared by the Appellants without issue of invoice and without payment of duty. This clearly shows that both set of buyers were arranged by the brokers at the Vasai Godown without any involvement of Appellant and the respective ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s alleged that calculation shows that the Appellant has effected cash sales. Only for the reason that the "Smi (Cash)" ledger account do not match or tally with the recorded transactions of the Appellant cannot be a reason to assume that the "Smi (Cash)' ledger accounts reflects the transactions of the Appellants and that too clandestine. Shri Kartik Shah in his statement has clearly stated that M/s SFPL has diverted the goods and the goods were cleared by them on payment of duty. Though the details of sales were made by Shri Ramesh Shah but the same was maintained on behalf of Shri Snehil Shah, director of M/s SFPL. The Ld. Commissioner has contended that the ledger cannot be of two firms jointly and is of single firm. He submits that it is not a case of maintaining single ledger of two firms but the ledger accounts is of SFPL only of goods which were sold by them in cash. He submits that none of the brokers/ buyers has taken delivery from them, but from Vasai Godown of M/s SFPL which clearly shows that the sales at Vasai Godown was of SFPL. The Ld. Commissioner based on "Smi (Cash) has held that the Appellants have raised invoice no. SF-0482 to M/s Suraj Ltd. who admitted to have....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the relevant paragraph of the statement that the Appellants have purchased some of their raw material through M/s SFPL under the cover of proper invoices. However from a perusal of the ledger account "Smi (Cash)" it appears that cash purchases have been made by M/s SFPL from some parties and only invoices are procured by M/s SFPL from other parties and the cash purchased goods alongwith the invoice were sent by M/s SFPL to the Appellants and when the goods were received by the Appellants, they were received alongwith invoices. Nowhere Shri Kartik Shah has admitted cash purchase of any goods. 13. As regard demand of Rs. 1,07,76,323/- on the ground of undervaluation of finished goods, the Ld. Counsel submits that the pen drives seized on 10.07.2012 from the lockers also contained multiple ledger accounts belonging to the Appellants as well as belonging to SFPL. The ledger accounts "Direct Purchases (Value Diff.)" and "Direct Sales (Value Diff)" pertain to transactions of the Appellants. The Ld. Commissioner observed that the ledger accounts "Direct Purchases (Value Diff.)" and "Direct Sales (Value Diff)" are relating to some particular invoices of the Appellants where quantity of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions SFL used to purchase their raw material through SFPL under the cover of proper documents and on perusal of ledger it is seen that M/s SFPL procured the goods in cash from some parties and also procured invoices from some other parties and sent the cash purchased to SFL alongwith the invoices. Thus Shri Kartik agreed to the receipt of invoices from some suppliers without receiving goods from those suppliers instead as claimed by him, the goods were procured from a different person. Although Shri Kartik tried to prove that the entire job of procurement was done by M/s SFPL, the claim does not appear to be correct since the ledger accounts "Smi (Cash)" and "Golden (Only Bill)" categorically states the entry as "Only bills", no record evidencing the involvement of SFPL has been produced by the Appellants during the investigation or the adjudication and no evidence by the Appellants that the invoice accompanied the goods. It was their responsibility when they themselves stated in their ledger the entry as "Only bills". The onus is not on the department to prove that the goods are not received with invoice. When goods were purchased as inputs, strictly in the ledger "Purchase" word ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ollection". That the Appellants have charged only the CST amount payable with respect to invoices listed in these ledgers accounts. He submits that the findings in respect of ledger account "Sankalp Vat collection" are not sustainable against the Appellants in as much as said ledger account contains details of invoices of SFPL and not the Appellants. It is not disputed in the impugned order that the account "Sankalp Vat Collection" ledger accounts are invoices of M/s Sankalp Foils Pvt. Ltd. (SFPL) and not of the Appellants. Even though the said ledger account belong to M/s SFPL, the statement of Shri Kartik Shah was recorded instead of Shri Snehil R Shah, director of M/s SFPL. The statement of director of Appellant company for verifying the invoices of M/s SFPL is devoid of any reasoning and cannot be relied upon to make findings against the Appellant to allege that the Appellants have issued invoice without delivery of goods. He submits that Shri Kartik Shah in his statement dt. 28.01.2014 has clearly stated that the Appellants have always cleared under the cover of proper invoice and received payment directly from the parties through the cheques. Shri Kartik Shah further submitte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....), Shirly Dyers Vs. CCE 2013 (293) ELT 234 (T), Maruthi Tex Print & Processors P.Ltd. Vs CCE 2012 (281) ELT 509 (Mad), In On Creation Vs CCE 2012 (278) ELT 512 (T), Saravana Alloys Steels P.Ltd. Vs. CCE 2011(274)ELT 248(T), CCE Vs Saakeen Alloys P.Ltd.2014 (308) ELT 655 (Guj) Affirmed by Supreme Court in 2015 (319) ELT A117(SC), CCE Raipur Vs P.D. Industries P.Ltd. 2016 (340) ELT 249 (T-Del), CCE, Raipur Vs Heliwal Polypackers P.Ltd. 2016 (340) ELT 204 (Tri-Del), Davinder Snadhu Impex Ltd Vs CCE Ludhiana 2016 (337) ELT 99 (Tri-Del), CCE, Daman Vs Nissan Thermoware P.Ltd. 2011 (266) ELT 45 (Guj. HC), Hingora Industries P.Ltd. Vs CCE, Daman 2015 (325) ELT 116 (Tri.Ahd) to state that onus to prove clandestine removal is on the department which they have to prove by producing evidence as to clandestine manufacturing, unaccounted raw material receipt, transportation, electricity consumption an unaccounted cash receipts. 15. He submits that the allegation of clandestine removal is not supported by any evidence of commensurate inward of raw material or consumption of electricity, manufacture of goods alleged to have been removed clandestinely, plant capacity, flow of cash from the alle....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onal Vs CCE 2016 (332) ELT 416 (Guj), CCE Vs Renny Steel Casting (P) Ltd. 2012(283) ELT 563 (T), CCE Vs Akshay Roll Mills Pvt. Ltd. 2016 (342) ELT 277 (T), Industrial Filter & Fabrics Pvt. Ltd. Vs CCE 2014 (307) ELT 131 (T), CCE Vs Birla NGK Insulators Pvt. Ltd. 2016 (337) ELT 119 (T), CCE Vs Ganesh Agro Steel Industries 2012 (275) ELT 470 (T), UOI Vs MSS Foods Products Ltd. 2011 (264) ELT 165 (P & H), CCE Vs Sree Rajeswari Mills Ltd. 2009 (246) ELT 750 (T), CCE Vs Sree Rajeswari Mills Ltd. 2011 (272) ELT 49 (Mad.), Shardha Forge Pvt. Ltd., Vs CCE 2005 (179) ELT 336 (T), Arya Fibres Pvt. Ltd. Vs CCE 2014 (311) ELT 529 (T), TGL Poshak Corporation Vs CCE 2002 (140) ELT 187 (T) 16. On the other hand Shri T.G.Rathod, Ld. Joint Commissioner (AR) appearing for the revenue reiterates the findings of the adjudicating authority given in the impugned order. He submits that the ledgers in pen drive and the hand written sheets in gujarati belong to the Appellant clearances and hence the demand has been rightly confirmed. He submits that from the statements of the brokers and buyers, it is clear that the Appellant has cleared goods without payment of duty and also undervalued the goods. That....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... recording of statement though the brokers stated that the goods were purchased in cash and without any bills as per the details found in "Bombay Sales", however their statements seems to be self contradictory. Some of the brokers viz. Shri Chhail Singh Deora and Gajendra Purohit also stated that SFL has sold SSCR Coils without any invoice on cash basis of which some coils were used by them for circle cutting and some quantities were sold to some other parties in which case they acted as broker and the payment was collected in cash, but they were not able to provide even the single buyer's name and address who has purchased such goods from them which leads to doubt about the credibility of their statement. The department apart from the papers seized from the locker has not been able to give any independent evidence which can corroborate the charges. We find that the Appellant had requested for following the provisions of section 9D and cross examination of the persons whose statements were relied upon. It was more necessary in the circumstances that not a single documents was seized from these brokers to support their statement and it was only the pen drives and loose sheets on the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice. 9. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal. The Hon'ble Delhi High Court in case of JK Cigarettes Vs. Collector of Central Excise 2009 (242) E.L.T. 189 (Del.) held as under: 12. Bare reading of the above section manifests th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....provided. It held that - We therefore have no hesitation in holding that the impugned Order passed by the Commissioner as an adjudicating authority is appealable order in terms of section 129A of the Act, even as per the ratio laid down in the above binding precedent. Request for cross-examination has been denied and the witnesses have not been examined despite specific reliance by the appellant on section 138B without there being any objective formation of opinion based on any material on record to come to the conclusion that any specified circumstance mentioned in section 138B(1)(a) exists. These circumstances mentioned in section 138B(1)(a) are also contained in pari materia section 9D(1)(a) and were recorded as follows in J.K. Cigarettes Ltd, 2009 (242) ELT 353 (Del) Further the Tribunal in case of Kuber Tobacco India Limited Vs CCE Delhi - 2016 (338) E.L.T. 113 (Tri. - Del.) held that : 14. In view of above analysis, it is clear that during adjudication, the adjudicating Authority is required to first examine the witness in Chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and also relied upon; but these, statements were not put to test by way of cross-examination and analysis or supported by documentary evidence. The statements could be of help if they support evidences which exist and which requires re-affirmation. In the present case, the statements which deal with interpretation of data in pen drive have not thrown any substantial ground to the case built up by the Revenue. 33. Even though we agree with the argument put forward by the learned DR that the extent of proof required is not that as required in a criminal prosecution, but Revenue should be able at least to discharge the initial burden of establishing the charge which is totally absent in the present case. In appreciating the evidence placed before us we fully bear in mind that in clandestine clearance it will be humanly impossible to establish every link in the clandestine activity. Revenue in the present case has merely extrapolated and summarized figures without any evidentiary support. The list of cases which state that the findings of clandestine removal are to be required to be based upon strong evidences and not on assumptions and presumptions is un-ending. 34. In Suzuki Sy....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... manufacture/removal of excisable goods. 9. It is observed from the case records that in the present proceedings, there are few confessional statements of the persons which were later retracted by the persons concerned. The confessional statements subsequently retracted can be argued to be an afterthought under a proper legal advice but to observe the principles of natural justice, it becomes necessary to provide cross-examination of such witnesses, as held by various judicial courts including the Hon'ble Supreme Court relied upon by the appellants. In the case of CCE v. Omkar Textiles - 2010 (259) E.L.T. 687 (Guj.), it was held by the Jurisdictional Gujarat High Court that onus is on the Revenue to furnish the evidence to prove the charges of clandestine removal and it is not sufficient if some confessional statements have been given by the Director of the Company. Similarly, in the case of CCE v. Arsh Casting Pvt. Limited [2010 (252) E.L.T. 191 (H.P.)], the Hon'ble High Court of Himachal Pradesh held that the private records maintained by the staff of the company cannot be made as the sole evidence to hold that clandestine removal of the goods is established and accordingly, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said to have been cleared by the Appellant No. 1 without payment of duty on the basis of five transporter, we observe that in respect of two consignments, it has been mentioned by the Revenue that the same may not pertain to the Appellants. Further, only one transporter Shri Sanjay Garg of M/s. Balaji Transporter Co. was produced for cross-examination which accounts for only two consignments out of 19 consignments in question. Shri Garg, it is observed from the record of cross-examination, has deposed that they generally work as commission agent and provide transport to Appellant No. 1; the payment is used to be received directly by the drivers after delivery of the goods at the consignee's end and in case the driver did not report back for the next 3-4 days, it was presumed that the goods had reached the consignees end. Further, the name of the Applicant No. 1 on one GR No. 34 had been written not by Shri Sanjay Garg, but by his brother, whose statement has not been recorded and on GR 187, there is no mention of the name of the Appellant No. 1 at all. No statement of the drivers concerned has been recorded by the Revenue to establish that the finished goods manufactured by the App....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibunal that the statements of the witnesses, without allowing the assessee to test the correctness of the same by cross-examining those witnesses; cannot be made the basis for holding the allegation against the assessee. (Takshila Spinners v. CCE, supra). Similar views have been expressed by the Tribunal in the case of Haryana Petrochemicals Ltd., supra wherein the Tribunal has held that reliance cannot be placed on the documents maintained by a third party "who did not have the courage to come forward for cross-examination in order to test the veracity and correctness of the private record maintained by him." It has also been held by the Tribunal in the case of Kothari Synthetics Industries v. CCE, Jaipur - 2002 (141) E.L.T. 558 (T) that entries made in the transport Register of the transport company could not be accepted as a conclusive proof of clandestine receipt of goods from that transport company for want of corroboration from any tangible evidence. Following the ratio of these decision, the duty demand cannot be upheld solely on the basis of uncorroborated statements and records of transporter. The statements tendered by the labourers can also not be relied upon by the Reve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nterest." 11. From the above settled law, it is clear that in a clandestine removal case, the facts of clandestine removal of excisable goods cannot be established only on the basis of certain statements which are retracted later but there has to be positive evidences like purchase of excess raw materials, shortage/excess of raw materials/finished goods found in the stock/factory premises of the appellant, excess consumption of power like electricity, any seizure of cash during the investigation when huge transactions are made in cash. In the present case also, it is observed, from the annexures to the show cause notice dated 1-5-2009 issued to the appellants, that there were huge cash transactions to the tune of Rs. 11.23 Crores. When such large number of transactions involving huge amounts are being undertaken in clandestine removal activities, it is very likely that some cash would have been seized. There is not a single instance where either seizure of cash is made or any clandestinely removed goods are seized or raw materials/finished goods were found either short or in excess in the factory premises of the appellant or at any other place. As per the Panchnama drawn at the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uth. Even if the statements of director are considered inculpatory the same cannot be relied upon in absence of corroboration with material evidence as held in case of Tejwal Dyestuff Ind. Vs. 2007 (216) ELT 310 (TRI) and 2009 (234) ELT 242 (GUJ.). Thus the statement of directors cannot lead to inference that the goods stated in "Bombay Sales" ledgers are of Appellant. We also find that the brokers have even stated that they have taken the goods from Vasai Godown of M/s SFPL. In such case there is no reason to hold that the Appellant has dealt with M/s SFL. Thus in both cases i.e "Bombay Sales" and "Smi Cash Sales" apart from the statements which are even contradictory no corroborative evidence. The Appellant has placed reliance upon various judgments to canvas their point that in absence of corroborative evidence no demand can be made. We find that no corroborative evidence has been stated in show cause notice in the form of receipt of unaccounted raw material, transportation of unaccounted such raw material to SFL factory, consumption of unaccounted raw material, production of unaccounted finished goods, production record of unaccounted finished goods, use of consumables, extra l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion are appellant-company herein are manufacturers of HDPE/PP, woven fabrics, sacks. The appellant-company availed Cenvat credit of the duty paid on HDPE/PP granules purchased from various manufacturers like M/s. GAIL; M/s. Reliance Industries Ltd; M/s. HPCL etc. The officers of the DGCEI visited their factory and carried out various investigations. First show cause notice dated 4-7-2003 was issued directing one of the appellant-company herein to show cause as to why the 323 bags of plastic granules seized in the godown of M/s. Mahalakshmi Plastics be not confiscated. Further, investigations were carried out by the authorities and statements of various persons like the officers, directors of the company and also the suppliers of raw materials were recorded. Investigations culminated in issuance of show cause notices which summarises the contraventions, main allegation being, that the appellants had contravened the provisions of Rule 57A/57AB of the Central Excise Rules, 1944 and Rule 3(4) of the Cenvat Credit Rules, 2001-2002 inasmuch as they had not used Cenvat credit availed plastic granules in the manufacture of woven fabrics/sacks, but appear to have clandestinely removed them....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error in giving benefit of doubt to the assessee". and thereafter the Hon'ble Gujarat High Court has held that the confessional statement of an accused in criminal offence which cannot be par with the statement recorded during preventive checks, therefore, the Hon'ble High Court has set aside the charge of clandestine removal. 9. We also find that in the case of Mahavir Metals Industries v. CCE & Cus., Daman, Vapi (supra), this Tribunal further held as under :- "7. I further note that my learned brother has also recorded that in absence of any specific evidence to support the clandestine removal of the quantity, it is necessary that the details given by the appellant subsequently are considered and commented upon. While agreeing with my learned brother that there is no specific evidence to uphold the finding of clandestine removal, the remand of the matter for re-calculation of shortages would be only a theoretical exercise. It is settled law that such calculation of shortages arrived at on the basis of input-output calculation, cannot be mad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t aside the impugned order and appeals are allowed with consequential relief." 17. My view as regards there cannot be allegation of clandestine removal unless there is an evidence to indicate that there was clandestine manufacturing, is fortified by the judgment of Hon'ble High Court of Gujarat in the case of Nissan Thermoware Pvt. Ltd., wherein their Lordship have held as under : "7. Thus, on the basis of findings of fact recorded by the Tribunal upon appreciation of the evidence on record, it is apparent that except for the shortage in raw material viz., HD which was disputed by the assessee and the statement of the Director, there was no other evidence on record to indicate clandestine manufacture and removal of final products. On behalf of the revenue, except for placing reliance upon the statement of the Director recorded during the course of the search proceedings, no evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error in giving benefit of doubt to the assessee.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....borative evidence to the statement of Shri Baldev Singh, Managing Director. 12. In these circumstances, we set aside the impugned order and allow the appeals filed by the appellants with consequential relief. In case of TGL Poshak Corporation Vs. CCE 2002 (140) ELT 187 (TRI), the tribunal held as under : 5. Heard Ld. SDR, Shri G.S. Menon, who reiterates the departmental view. He contends that there are statements and several registers maintained by the party which clearly indicated that they had manufactured and cleared the goods. He refers to the evidence which was culled out by the investigating agencies which clearly showed the manufacture of 'vanaspati' during the period in question. He submits that the Commissioner has not given details on the evidence and therefore matter has to be readjudicated by taking into consideration the evidence which is already noted by him in his order. He also refers to the grounds of appeal which are reproduced below :- (A) The demand for Rs. 68,35,193/- was towards the duty on the clearance of vanaspati without payment of duty made during the period of 1990-91 & 1991-92 (upto 31-1-92). The demand was based on the excess clearances sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he allegation was with regard to removal of Vanaspati based on the inputs maintained. The Tribunal went in great detail and have clearly laid down that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly apply to the facts of this case. Hence, following the ratio of the cited judgments, the assessee's appeal is allowed. 7. Insofar as the Revenue's grievance on the Commissioner's dropping the proceedings is concerned, we notice from the extracted portion of the Commissioner's order that Commissioner has duly considered the note books relied upon by the department that they are not in the nature of purchase and removal of goods which was only certain balance sheets and certain private registers which does not prove the case of the department with regard to purchase of raw material, manufacture of final goods and clandestine removals. There is no seizure of goods or statements from the purchaser of goods who have paid money and the amoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Vs Birla NGK Insulators Pvt. Ltd. 2016 (337) ELT 119 (T), CCE Vs Ganesh Agro Steel Industries 2012 (275) ELT 470 (T), UOI Vs MSS Foods Products Ltd. 2011 (264) ELT 165 (P & H), CCE Vs Sree Rajeswari Mills Ltd. 2009 (246) ELT 750 (T), CCE Vs Sree Rajeswari Mills Ltd. 2011 (272) ELT 49 (Mad.), Shardha Forge Pvt. Ltd., Vs CCE 2005 (179) ELT 336 (T), Arya Fibres Pvt. Ltd. Vs CCE 2014 (311) ELT 529 (T), TGL Poshak Corporation Vs CCE 2002 (140) ELT 187 (T). In view of said judgments we find that the charges of clandestine removal on the basis of pen drive data and sheets are not sustainable. 21. As regard demand on the ground of undervaluation as found from the ledger account "Direct Purchase (Value Diff.)" and "Direct Sales (Value Diff.)" we find that no evidence apart from pen drive data and loose sheets is appearing to show that the Appellant has removed goods by making undervaluation. We have already held above that the pen drive data is not a substantial evidence. We also find that no evidence of extra receipt has been produced in the form of person from whom such extra consideration was given, how it was received by the Appellant and in what manner it came to the Appellant. It i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....receiving cash. Thus the allegations on this account are not sustainable. 23. The demand has also been made against Appellant on the ground that they issued invoices without delivery of goods, the statement of Shri Pravin Vasant Mehta of M/s Jigar Plast was recorded on 13.12.2013 wherein he has stated that sale invoices of the Appellant without delivery of goods has been reversed. However we find that Shri Pravin Mehta has nowhere stated that they have purchased goods from M/s SFL. He has stated that all the goods were procured by M/s Jigar Plast through broker Shri Atul Parekh. Shri Pravin Mehta also stated that Shri Atul Parekh has received goods and invoices from the SFL in the name of various parties including M/s Jigar Plast and whenever they received intimation from Shri Atul Parekh regarding receipt of goods from Appellant, M/s Jigar Plast prepared job work challan in the name of their job worker M/s Shree Ram Steels where the goods were unloaded directly. It is also appearing from the statement of brokers viz. Shri Chhail Singh Deora dt. 26.11.2013 that for purchase of goods they had to take invoice in name of any party. Same statement has been given by Shri Narendra Bha....