TaxTMI 
TaxTMI 
2019 (8) TMI 958
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....ustries against Order-in-original No. RAJ-EXCUS-000-PR, COM33-15-16 dt. 04.04.2016 passed by the Commissioner, Central Excise, Rajkot. Vide the said impugned order a demand of Central Excise Duty of Rs. 6,91,03,160/- has been confirmed against M/s Gold Extrusion and equivalent amount of penalty has been imposed. Penalty upon partners Shri Bharatbhai Vasoya and Shri Rameshbhai Amarshibhai Viramgama and other co-appellants was also imposed. 2. The brief facts of the case are that during the visit to the factory of Appellant M/s Gold Metal Extrusion, the officers seized two note book showing production of Billet and use of raw material, Gate Pass Book showing dispatch of finished goods without bills, kaccha chits showing receipt of raw material. A Pen drive maintained by one Shri Vimalkumar Dilipkumar Bharvada, clerk cum general Supervisor was seized which is said to be containing day wise production and party wise records. The Note books were for the period 21.11.2011 to 01.08.2012 containing details of production. Statement of Shri Jagram Govardhan Varma, Production Incharge was recorded who stated that the details of Billets produced were being noted date wise in Note Book which ....
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....goods. 3. The demand as proposed was confirmed vide the impugned order along with penalty. Penalty was also imposed upon other Appellants, therefore these appeals are before us. 4. Ld. Counsel Shri P.V. Sheth, Ld. Counsel appearing for the Appellant submits that the show cause notice had relied upon the statement of alleged buyers to show that they had received goods cleared by Appellant unit without payment of duty. The statements were recorded at the back of Appellant, hence they had sought cross examination of the alleged buyers which was not allowed. The adjudicating authority refused to grant cross examination on the ground that they are co-noticee. He submits that the statements cannot be relied upon if the cross examinations of person making statement is not allowed and the impugned order is required to be set aside on this ground alone. He relies upon judgments in case of Andaman Timber Industries 2015 - 324-ELT-641 (SC), Jindal Drugs Pvt. Ltd. 2016 (340) ELT 67 (P&H), Vishwa Traders Pvt. Ltd. 2012 (278) ELT 362 (TRI) upheld by the Hon'ble High Court reported in 2013 (287) ELT 243 (SC) and Apex Court in 2014 (303) ELT A24, Batra Henley Cables 2015 (328) ELT 369, Rama Sh....
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....(151) ELT 170 (TRI), Utkal Galvanizers Ltd. 2003 (158) ELT 42 (TRI), Rishi Packers Ltd. 2003 (161) ELT 449 (TRI), Murugan Enterprises 2003 (162) ELT 233 (TRI), Shree Shyam Pipes Pvt. Ltd 2006 (201) ELT 34 (TRI), Resha Wires Pvt Ltd. 2006 (202) ELT 332 (TRI) as upheld by the Apex Court reported in 2003 (157) ELT A- 315, Paras Laminates P. Ltd. 2005 (180) ELT 73 (TRI) as upheld by the Apex Court 2006 (199) ELT A-182, Prem Industries 2009 (234) ELT 178 (TRI), Utility Alloys Pvt. Ltd. 2005 (184) ELT 80 as upheld by Hon'ble High Court reported in 2009 (236) ELT A19, Ganga Parameswari Spinners Pvt. Ltd. 2009 (239) ELT 196. He submits that merely on the basis of transporters document without any independent corroborative evidence, no clandestine removal can be alleged. The officers did not find any discrepancy in raw material or finished goods stock. No excess power consumption was found. No investigation of data shown in pen drive was undertaken and hence the demand is not sustainable. He submits that the Annexure - X of the show cause notice which is basis for demand was not prepared in presence of Appellant and thus there was no chance to explain about the same. There is no evidence of....
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....nds on the ground that the statements are not voluntary and that the data contained in pen drive cannot be relied upon as it contains the data of trading of scrap on high seas sales basis, clearance of job work goods under exemption and also not liable for duty and also castings used for captive consumption. We are of the view that in such circumstances the demand could have been made only in those cases where the goods were rods and profiles and if it was corroborated with receipt of such goods by the alleged buyers which is not the case here. However coming to the investigation conducted by the revenue we find that only few of the buyers were investigated only by way of recording their statements. These buyers only accepted the receipt of goods but could not produce any evidence of receipt of goods by them. There is not a single corroborative evidence except statement of such buyers. No goods cleared by the Appellant unit were found in their possession. Apart from the said buyers the show cause notice has alleged that the buyers of Delhi and Coimbatore were consigned goods. However even in such instance, the broker at Mumbai M/s Manibhadra could not be located and in case of buye....
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....der is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross....
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....be an element of doubt that these persons jointly or severally were working against appellant M/s. VTPL or otherwise. This could be ascertained only during the cross examination, by confronting the persons with the documents recovered from their possession. Be that it may be, documentary evidences recovered from the residential premises of the employees, the veracity of the same needs to be always checked and cross checked before relying upon such evidences. M/s. VTPL were well within their rights to ask for cross examination of these employees to bring on record that documents which were recovered and on which reliance has been placed by adjudicating authority for confirmation of demand of duty, could have been maintained by other persons or 3rd party for their own personal reasons or for the reasons best known to them. In our considered opinion, due to non-granting of the cross examination of above said persons, no reliance can be placed upon the evidences collected from residential or other premises and inculpatory statement of these persons cannot stand test of the law and said evidences needs to be discarded. We are fortified in our view by the judgment of Hon'ble Apex Court i....
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....f 3rd party were relied upon, it was incumbent on the adjudicating authority to conduct cross examination, therefore in absence of granting cross examination the demand cannot be sustainable. In case of Rowf Re-rollers 2015(317) ELT 499, this Tribunal held that oral statement of the persons including that of managing partner of firms not sufficient evidence to establish illicit removal of goods without cogent and corroborative evidence in form of incriminatory documents, statutory records, financial transaction etc. In the present case also no such evidence was produced on record, therefore, merely on the basis of pen drive data, the demand cannot be sustained. Thus in view of above position and judgments we are of the view that the demand cannot be confirmed on the basis of statements when no opportunity of cross examination has been afforded to the Appellant. 12. We find that Shri Verma who was maintaining the production record in notebook in his statement has stated that he used to handover the entries made in note book to Shri Bharatbhai. We find that it is not disputed that the two notebooks handed over by Shri Jagram did not contain the actual production figures. Also excep....
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....substantiated unless supported by corroborative evidences. Moreover, such statements were recorded on the basis of production note book, diaries but since the demand is not based on pen drive data as computation was done only on the basis of pen drive data that too containing intermediate product casting, the statements are of no help to revenue. In case of Vishwa Traders Pvt. Ltd. 2012 (278) E.L.T. 362 (Tri. - Ahmd.) the Tribunal while dealing with similar set of facts held as under: "8. We have considered the submissions made at length by both sides and perused the records. 9. The entire case of the Revenue in these cases is starting from the visit of various premises on 8-7-02. On that date, simultaneous visits were organized to the raw material suppliers and customers and residential premises of employees employed with M/s. VTPL. It is also undisputed that evidences which the department relies upon for confirmation of demand in the appellant M/s. VTPL's case is based upon the documentary evidences recovered from the premises of Accountant, Factory Manager and Plant Manager of the appellant. It is also undisputed that only statements of 2 customers were recorded indicating....
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....ve in one way or other has helped M/s. VTPL to evade payment of duty. It is also seen that the adjudicating authority had dismissed the request for cross examination only on the ground that M/s. VTPL has not given any reason and justification for cross examination of these persons. We find that this approach of the adjudicating authority is inconsistent with the settled law of evidence. It is undisputed that the persons who had given inculpatory statements (as indicated herein above) were 3rd party and were only employees of the assessee. There could be an element of doubt that these persons jointly or severally were working against appellant M/s. VTPL or otherwise. This could be ascertained only during the cross examination, by confronting the persons with the documents recovered from their possession. Be that it may be, documentary evidences recovered from the residential premises of the employees, the veracity of the same needs to be always checked and cross checked before relying upon such evidences. M/s. VTPL were well within their rights to ask for cross examination of these employees to bring on record that documents which were recovered and on which reliance has been placed....
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....tion is considered for setting aside the demand raised on them, which would mean that there is no inculpatory statement from M/s. Amar Ceramics Industries against the appellant. In the absence of any other statement of M/s. Amar Ceramics Industries which inculpates the current appellant M/s. VTPL, the statements relied upon by Department is to be discarded. As regards other statement of M/s. Excel, we have already recorded our finding that, having not produced the person who made the statements for cross examination, such statement cannot be relied upon by the Department for coming to the conclusion, that there was clandestine removal from the premises of M/s. VTPL. 12. Be that as it may be, it is to be noted that there is no dispute that to manufacture of said final product 'Frit' requires the use of Quartz, Feldspar, Zinc, Borax Powder, Calcium and Dolomite as inputs/raw material. On the date of visit of the officers to the factory premises of the appellant, it is undisputed that the stock of raw materials as well as finished goods was tallying with recorded balances. This conclusion can be reached from perusal of records, as there is nothing on record to indicate otherwise. ....
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.... Considering the above arguments of the appellant in the light of the various decisions of the Tribunal, it is seen that it has been consistently held by the Tribunal that entries in rough register cannot be made the sole basis for arriving at finding of clandestine manufacture. Reference in this regard be made to the Tribunal decision in the case of Essvee Polymers (P) Ltd. [2004 (165) E.L.T. 291 (Tri. - Chennai)], Krishna Bottlers (Vijayawada) Pvt. Ltd. v. Commissioner of Central Excise, Gantur [1999 (32) RLT 845 (CEGAT)], Ganga Rubber Industries v. Collector of Central Excise [1989 (39) E.L.T. 650 (Tribunal)]. The ratio of all the above decisions is that the allegations of clandestine manufacture and removal being quasi criminal in nature are required to established beyond doubt by producing evidence in the shape of procurement of raw materials, shortage, excess use of electricity, flow back of funds and purchase of final products by customers etc. Admittedly no such evidence has been produced on record by the Revenue, the evidentiary value of the statements relied upon by the Revenue already stands discussed by me in the proceedings paragraph. The said statements having been ma....
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....ite having engaged themselves in massive investigation, has not brought on record a single evidence of procurement of other major raw materials required for manufacture of Frit, either in the form of entries in the books of accounts or in the form of statements of supplier of the other major raw materials. It is undisputed that for manufacturing of Frit (the final product) major raw material is 'Quartz' which is approximately 45% of the total inputs going in the manufacturing of 'Frit'. We find from the records that Revenue has not produced a shred of evidence, to indicate that the appellant had been procuring Quartz without accounting them in books of account nor is there any evidence to indicate that other raw materials were also procured without recording them in books of accounts. In the absence of any such evidence, we are unable to persuade ourselves that the appellant M/s. VTPL had clandestinely manufactured the quantity of 'Frit' during the period 1998- 1999 to January 2002. If there is no clandestine manufacture, there cannot be any clandestine clearance. Further, we also find from the records that there is no investigation which has been carried out to indicate that there....
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....r submissions made by both sides. 19. Accordingly, all the appeals are allowed with consequential relief, if any. The above order of the Tribunal was upheld by the Hon'ble Gujarat High Court as reported in 2013 (287) E.L.T. 243 (Guj.) and by Hon'ble Apex Court as reported in Commissioner v. Vishwa Traders Pvt. Ltd. - 2014 (303) E.L.T. A24 (S.C.)]" In case of EMMTEX SYNTHETICS LTD.Vs. CCE, NEW DELHI the Tribunal held as under: "10. For want of any tangible evidence and in view of the facts, circumstances and evidence, referred to above, no presumption on the basis of uncorroborated, uncross-examined evidence of B.M. Gupta and the alleged entries made by him in his private diary, loose sheets/charts, packing slips could be drawn about the receipt of the polyester yarn by the appellants from the company, M/s. HPL, in a clandestine manner during the period in question. Similarly, no inference could be legally drawn against the appellants of having manufactured texturised yarn out of the said polyester yarn and the clearance thereof, in a clandestine manner without the payment of duty. The surmises and conjectures cannot take place of legal proof. The excise department was req....
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....rted by assessee without proper excise documents, the Revenue only seeking additions on basis of entries in notebook which were not corroborated by independent evidence and holding that action of department was based only on suspicion alone, whereas they were required to substantiate certain material attempt to evade excise duty, accordingly, Revenue's appeal was dismissed. 15. The Revenue could not produce any evidence regarding variation in consumption of electricity nor there is any allegation of disproportionate consumption of electricity. This Tribunal in case of Aum Aluminum Pvt. Ltd 2014 (311) ELT 354 (Tri.Ahmd.) held that when there is no evidence of clandestine manufacture, clandestine/dis-apropriate/unaccounted purchase/receipt and consumption of raw material and packing material, required for manufacturing alleged quantity of final product clandestinely removed from the factory. The freight payment for any such movement, un authorized payment for procuring unaccounted raw material and packing material, disproportionate power consumption, capacity utilization and labour employed, unaccounted sales proceeds in substantial cash from factory or other premises or any other ....