TaxTMI 
TaxTMI 
2019 (4) TMI 1334
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....found and accordingly, statements of the Director and various other persons were recorded. 2. The Adjudicating Authority confirmed the demand and imposed equal penalty under Section 11AC and also imposed penalty on the Directors of the Appellant Company. Hence, the present appeals before the Tribunal. 3. The Ld. Advocate appearing on behalf of the appellant Company submitted that, (i) in the course of search, few loose paper i.e. two/three sheets of papers were found from the pocket of an employee namely Mr. S. K. Baidya, which had no relationship with the appellant's affair. The pages are at page no. 11 of the order. (ii) the appellant's director viz. Sish Pal Solanki, was confronted with the document in which he stated that the document did not belong to the appellant and he contradicted the statement of Mr. Baidya and Manish Sharma in this regard. The statement of Sish Pal Solanki is set out in the show cause notice at page 18 (Q. No. 1 to 11). No exception is taken in the adjudication order to the statement of Mr. Sish Pal Solanki. Therefore, his statement stands accepted by the Department. Another statement was also taken from Mr. Amit Kumar Agarwal ....
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.... Amit Kumar Agarwal dated 26.2.2001 already stand rejected for the purpose of raising demand in the case of BRPL. The said statement of Mr. Amit Kumar Agarwal which was retracted on the next date i.e. 27.2.2001 cannot be relied upon in the appellant's case having been rejected in his case in BRPL. The adjudicating authority was not aware of the fact that retraction was made on the very next day and in the order, he holds that retraction was made after two and half years (paragraph 9.2 of the order). Therefore, the very basis of the order is erroneous. The adjudicating authority relies upon a list seized from BRPL which is at internal page 13 of the order. None of the names therein mentioned have any furnace or iron steel industries. They are not related to the appellant as a customer or otherwise. No enquiry was made in this regard. The case made out in the impugned order is almost improbable inasmuch as no case has been made out on procurement part of raw materials i. e. coal, iron ore, electricity, labour, etc. There is no material on the basis of which it can be said that the goods could have been manufactured by the appellant. Coal purchase, iron ore purchase are regul....
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....ock as entered in the stock register and other statutory records. However, at the premises of Bajrangbali Re-Rollers Pvt. Ltd., several documents were found which were seized by the DGCEI. A statement of Amit Kumar Agarwal was taken on 26th February 2009. Mr. Amit Kumar Agarwal retracted his statement on 27th February 2009, the very next day. On the basis of the document seized from Bajrangbali Re- Rollers Pvt. Ltd., a third party, a show cause notice was issued to the appellant on 22nd December 2010 and another show cause notice was issued to Bajrangbali Re-Rollers Pvt. Ltd. A demand of Rs. 3.39 Crores was made in the show cause notice against Bajrangbali Re-Rollers Pvt. Ltd. on the basis of documents seized from it and a demand of Rs. 4,44,21,924/- was made against the appellant on the basis of seized documents from Bajrangbali Re- Rollers Pvt. Ltd. alleging clandestine removal of goods between January 2008 to 24th February, 2009. The show cause notice of Bajrangbali Re-Rollers Pvt. Ltd. was first adjudicated by the Commissioner, Bhubaneswar upholding the demand without verifying the documents seized. Thereafter an appeal was preferred by Bajrangbali Re-Rollers Pvt. Ltd.....
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....agement of the purported contractors has been collected or produced. Corroborating statements from other persons of the factory like production Manager/ Factory Manager, authorized signatory and other persons were also not taken. In absence of other evidences, the seized hand written chits cannot be the basis for raising huge amount of demand on clandestine production and removal. These documents can at best be held as raising doubts indicating further investigation. No such investigation has been undertaken or any evidence has been produced. Hon'ble Supreme Court in the case of J. Naidu Vs. State of Maharashtra reported in 1983 (13) ELT-1611 (SC) inter alia held that suspicion however grave cannot take the place of proof. Similarly, in the case of State of Kerala Vs. M. M. Mathew and others reported in 1978 (42) STC-348 (SC) Hon'ble Apex Court has held that strong suspicion, strange co-incidences and grave doubts cannot take the place of legal proof. The adjudicating authority further held that no creditable evidence of authenticity of chits has been produced and therefore evidentiary value of chits stand rejected. Paragraph 6.14 of the order is set out herein below: 6....
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....in the subject case on the basis of one sheet which was not seized from the appellant's premises, but was allegedly found in the pocket of Mr. S. K. Baidya and the said document was not related to the appellant. This fact was stated and clarified by Mr. Shish Pal Solanki, the person looking after the Company's affairs. He, in his statement, clarified that those were not related to the appellant and in any event, were imaginary figures. These documents were seized from BRPL, which were rejected by the adjudicating authority as belonging to the different unknown persons and hence, could not be relied upon. The document seized from BRPL which has been referred to in the order, such as Jyoti Brand Note Book, seized from BRPL, were all found to be not reliable. There documents having been rejected in case of BRPL, could not be used against the appellant. On the basis of the documents seized from the third party, no liability can be fastened on the appellant. The receipt and dispatch of the file no. 06/DGCEI/RRU/BRPL/0/09 had already been rejected by the adjudicating authority as not reliable. Weighment slips were found to be not reliable as not corroborated by any material particular....
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....ue in the course of the proceedings- Physical Verification conducted at the factory premises of the appellant-company did not reveal any excess stock of raw-materials as such. In the entire records of proceedings, there is no evidence to indicate that there was clandestine manufacturing. There is no independent tangible evidence on record of any clandestine purchases or receipt of the raw materials required for the manufacturing of the alleged quantity of finished goods for its clandestine removal from the factory. In the entire notice and the order, there is no satisfactory and reliable independent evidence as regards the unaccounted manufacture and/or receipt of the huge quantities of raw materials. The quantities of the alleged bags dispatched from the factory would require some transportation arrangement for delivery from the factory. However, any reliable evidence about any vehicle coming in or going out of the factory without proper entries is not forthcoming. There is also no cogent evidence about any freight payment for any such movement. We do not find any cogent evidence of disproportionate and unaccounted receipt and consumption of the basic raw materials and packi....