TaxTMI 
TaxTMI 
2019 (4) TMI 996
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....llant is engaged in manufacturing of Binding Wire out of HB Wire and also in trading of HB Wire. The appellant is availing the benefit of SSI Exemption Notification No. 8/2003-CE dated 01.03.2003, as amended. The appellant is mainly procuring raw material from M/s Deepak Industries, Raipur. The officers of DGCEI, Pune searched the premises of M/s Deepak Industries and M/s Prakash Industries Ltd. on 20.05.2003 and recovered certain incriminating documents. The department had also recorded statements of Sh. Ravindra Singh, Proprietor of M/s Deepak Industries and Sh. Ajay Kumar Singh, Service-Senior Assistant of M/s Prakash Industries Ltd. In the follow up action, the department after a gap of around 10 months, visited the factory premises of the appellant on 05.02.2014 and found all okay. The statement of the proprietor of the appellant was recorded wherein he stated that they had purchased goods from M/s Deepak Industries on bill and also submitted certain records. Based on the records recovered from the premises of M/s Deepak Industries, M/s Prakash Industries Ltd and the appellant, a show cause notice dated 04.07.2015 was issued to the appellant proposing duty demand for alleged c....
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.... 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department." However, in the present case, no such investigation has been conducted by the department qua capacity to manufacture alleged quantity of goods, when the appellant had categorically submitted during the investigation that they can produce 1.5 MT of Binding Wire per shift, which has also not been disputed by the department. If they work in two shifts, then per day production can be at the most 3 MT, and if a factory works for around 250 days in a year(104 days for Saturday and Sunday and 16 Gazetted Holidays) break down, maintenance, etc., then maximum production would come to 750 MT per year. Therefore, for the period in dispute, the maximum production would be 2625 MTs, which is much less than the production of 5125.933 MTs of Binding Wire as alleged in the show cause notice. Therefore, by no stretch of imagination it can be concluded that the appellant can produce 5125.933 MTs of Binding Wire during the period in dispute. It is, therefore submitted that the said records are not reliable. It is further subm....
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....gers were not maintained properly, therefore the said figures cannot be relied upon against the appellant. Fourthly, it is the department case that during July, 2010 to May, 2013, the appellant received 2572.62 MT of HB Wire from M/s Deepak Industries (Para 5.1 of SCN), therefore could have produced 2494.84 MT (allowing 3% loss) and during June, 13 to Feb, 2014, cleared 821.886 MT of finished goods (para 7.2 of SCN), totalling to 3315.886 MT. However, in para 9 of the SCN, the department alleged that appellant had cleared 4225.203 MT of Binding Wire, this clearly shows that the documents, on basis of which the demand has been booked is inconsistent and not reliable and the demand based on that cannot be sustained in the eyes of law. 3.3 It was submitted that the statements of Sh. Ajay Singh and Sh. Ravindra Singh recorded under Section 14 of the Central Excise Act, 1944, cannot be relied upon against the appellant as both the witnesses did not appear for cross-examination. It is pertinent to note that Sh. Ravindra Singh had also retracted his statements, thus loses its evidentiary value. It is well settled law that as held by Hon'ble Supreme Court of India in the case of Andaman....
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....has. It is also submitted that the department has not even tried to confront these documents to the appellant, therefore, this clearly shows that the alleged documents relied in the instant show cause notice are neither reliable nor authenticated. The appellant also submit that these records on which duty was calculated were never maintained by him. The department has also relied upon selected pages of alleged diaries and other documents. It is further submitted that without confrontation of these documents from the appellant, clearly raises a question that on what basis the department assumed that the said entry related to production or clearance or production order or anything else, hence the said records are not reliable. It is submitted that, these documents cannot be relied upon in absence of any other positive evidence. In the present case, no inquiry has been conducted at the end of the transporter and so called buyers. That, no cash of single rupee has been recovered when the department is alleging that the appellant had made sale of Rs. 23 Crores during the period in dispute. It is also submitted that no such question has been asked by the officers of DGCEI, Pune to the ap....
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....which has not been disputed by the department, therefore 750 MT per year approx. However, the department is alleging, that the appellant had manufactured approximately 1107 MT for the period July, 10 to March, 11; 1354 MT for the period April, 11 to March, 12; 941 MT for the period April, 12 to Nov, 12 (8 months) and 1723 MT (823 + 900) during the period Feb, 13 to Feb, 14. The aforesaid allegation is without any basis and liable to be set aside. It is also submitted that to manufacture approx. 1400 MT annually, the appellant would also require number of labourers and most importantly it does not have such capacity to manufacture, as alleged in the show cause notice. However, during the course of Panchnama, nobody was found except Sh. Vikas Taunk. It is submitted that, to produce, 1 MT i.e. 1000 Kgs of binding wire, the appellant would approximately, consumer electricity of Rs. 1200/-. On perusal of the electricity bills, the actual production of appellant month-wise in MTs is 25.14, 24.00, 27.24, 28.66, 33.80, 15.53, 36.04, 39.39, 39.48, 27.45, 39.50, 24.16, 27.82, 32.69, 33.94, 33.94, 37.30, 36.21, 35.03, 22.21, 22,46, 36.25 and 42.22 for the period April, 11 to March, 13. It is ....
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....re-VIII of SCN inasmuch as the case of the department is, the appellant had received 846.65 MT of HB Wire and manufactured 900.73 MT of binding wire, which is not possible, therefore the records from which Annexure-VIII is made is unreliable due to various inconsistency in the said records. Hence, clandestine removal cannot be alleged on that basis and hence, fit to be set aside. 3.10 It was submitted that the goods manufactured by the appellant on job work basis is liable to be excluded from the annual value of clearances as per clause (e) of para 3A of SSI Notification No. 8/2003 dated 1.3.2003. It is further submitted that the appellant is of the view that their clearance is within the SSI limit, therefore, they are not required to maintain any rigorous records, hence full procedure as per Notification No.214/86-CE dated 25.3.1986 were not followed. However, the said fact is not disputed by the learned Commissioner in its impugned order. It is settled law that substantive benefits cannot be denied due to procedural lapses. 3.11 It was also submitted that the assessable value of goods i.e. Binding Wire cleared by the appellant has been taken on the basis of identical goods ....
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..../s Deepak Industries. We also find that the department is also relying upon the statements of Sh. Ravindra Singh, Proprietor of M/s Deepak Industries and Sh. Ajay Kumar Singh, Service-Senior Assistant of M/s Prakash Industries Ltd., wherein they have explained the handwritten pencil ledgers. The appellant requested for cross-examination of these witnesses, however, we find that the department was not able to produce these witnesses, as evident from the impugned order passed by the learned Commissioner. We find that it is well settled law that if the department is not able to produce their witness for cross- examination, then the said statements of those witnesses cannot be relied upon as held by Hon'ble High Court of Madras in the case of Karan Traders Vs Joint Commissioner of C. Ex, Salem, 2016 (339) ELT 249 (Mad.) and Arsh Castings Pvt. Ltd. Vs CCE, Chandigarh, 1996 (81) ELT 276 (Tribunal). We, therefore, find that the statements of Sh. Ravindra Singh, Proprietor of M/s Deepak Industries and Sh. Ajay Kumar Singh, Service-Senior Assistant of M/s Prakash Industries Ltd, cannot be relied upon and has to be eschewed from evidence, in view of the law laid down by the Hon'ble High Cour....
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....ase were procured. Further, statement of Director Shri Subodh Chaurasia was recorded wherein he stated that they had purchased 9143.669 MT of H.B. wire from M/s Deepak Industries during the period 2010-11 to 20 May, 2013 which comprises both accounted and unaccounted clearances from M/s Deepak Industries of H.B. wire. Such wire was utilised for manufacture of accounted and unaccounted GI wire and the same was cleared. Based on such investigation at the end of M/s Deepak Industries and at the end of the appellant, read with the statement of the Director, show cause notice was issued as to why duty should not be confirmed and recovered on account of clandestine manufacture and removal of goods. The proposed demand was confirmed in part amounting to Rs. 2,67,04,792/- and the confirmed demand is mainly based on the third party evidences collected from M/s Deepak Industries and statement of Sh. Ajay Singh and Sh. Ravinder Singh and also the retracted statement of Director Sh. Subodh Chaurasia. 8. Learned Authorised Representative for the Revenue reiterated the impugned order and states that the Director Shri Subodh Chaurasia had retracted the statement with affidavit on 05.02.2014. F....