TaxTMI 
TaxTMI 
1998 (7) TMI 718
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....sses of M/s. Jindal Aluminium has been found to be incriminating. In fact except for the statement of Rajendran, an accountant, none of the persons from M/s. Jindal Aluminium has been examined, nor any incriminating evidence found. Thus, the case has been built against the alleged Lorry Challans on which Revenue contend that the said lorry challans has been used for clandestine removal of the goods. The evidence of Lorry challans of M/s. Arya Central Transport Ltd. cannot be used against M/s. Jindal Aluminium unless they had been made a party to this proceedings. The Revenue having not made them party to the appeal proceedings, this appeal is liable for dismissal, for non-joinder of the Transport Company. 2. We start at the outset by this observation and commence to examine the grounds made in this Revenue appeal, also to examine its validity and propriety. 3. It is stated in the appeal that M/s. Jindal Aluminium Ltd. (M/s. JAL) are manufacturers of Aluminium extrusions. Based on the information that M/s. JAL were removing goods from their factory without payment of CED, the officers of the Directorate General of Anti Evasion conducted searches at the premises of M/s. JAL and M/s....
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....eared that M/s. JAL had removed a quantity of 8977 Kgs of aluminum extruded sections without payment of duty. (v) There was a distinct pattern in that goods of M/s. JAL were transported by M/s. ACTL without making any entries in their registers. In many cases, M/s. JAL did not issue any Central Excise documents for the consignment in some cases they issued documents but these did not accompany consignment. The entries were deliberately kept open awaiting safe arrival of the consignment at its destination. If the consignment was checked en route the documents were produced as indicated above. If the consignment was not intercepted the documents could be used again. It is further seen that in many cases there is a gap between the Central Excise gate pass and its corresponding consignment note and the lorry manifest under which the goods were transported. The gap corresponded to the number of days taken by the lorry to reach the particular destination in the case of Delhi being about 3 to 4 days explaining the unusual gap between the Central Excise gate pass and the lorry manifest date. (vi) The consumption of raw materials to the finished goods show gradual decrease. While it was 9....
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....ntral Excise, Bangalore, before the commencement of the personal hearing and it is learnt that the letter of the Directorate was given to the Adjudicating Authority before the personal hearing. (d) No reply was received by the Directorate from the Adjudicating authority in response to the request for defending the case before him and also for postponement of the hearing. However, to the utter surprise of the DGAE it was learnt that the Commissioner of Central Excise dropping the entire proceedings initiated against M/s. ACTL vide show cause notice dated 24.4.1995 referred to above. (e) On going through the Order in Original, it appears that Commissioner of Central Excise, Bangalore has grossly erred in passing the Adjudication order and further has not also properly appreciated the evidence brought on record by the Department. It appears that the Adjudicating authority has merely relied on the party as submission in toto and dropped the proceedings ignoring substantial evidence produced by the department. (f) The Adjudicating Authority has also grossly violated the principles of natural justice inasmuch as he did not allow the Department to depute their officers to defend the....
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....Gaind, alone had knowledge of the manner of preparation of documents. His retraction was therefore, rejected. 7. The Adjudication Authority has accepted the contention of the parties that lorry challans are made only for the purpose of payment of lorry hire charges. He has also not accepted the original evidence tendered by Shri Kamalesh Gaind, but appears to have accepted his retraction without giving any valid reasons. That the lorry challan is prepared on the date of removal is substantiated by the fact that in several cases the challans have been prepared before the removal of the goods and the particulars are also found to tally with the particulars of actual removal. 8. Even assuming but not admitting that the lorry challans are made only for purpose of payment of lorry hire charges as contended by the parties, there is no reason why the lorry hire charges as contended by the parties, there is no reason why the lorry challans should indicate different date of removal, different lorry number and in some cases even different quantity of goods unless the removals represented in the challan are different than the removals represented in the gate-passes. That the contention of t....
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..... 11. As regards the evidence regarding clandestine production, the lorry challans being documents prepared by the transporting company may be relied as evidence complete in itself. 12. However, it appears from the order that M/s. JAL have submitted certain figures which differ from the figures alleged in the show cause notice. The company also supported it by a certificate of Chartered Accountant and a certificate authenticated by the Range Superintendent. It is not clear whether the figures produced by the party and that shown in the show cause notice were comparable. There is no finding to that effect by the Adjudicating Authority nor there is any irrefutable refutation of the figures alleged in the show cause notice by the party. Instead of specifically stating as to why the figures of production as alleged in the show cause notice could not be relied upon, the Adjudicating Authority has relied upon the party figure to reject the allegation of clandestine production. 13. The department had adduced the evidence in the form of a hand written note of Shri R.S. Bajaj Company Secretary, in which he remarked that the technical people contended that production for 1992-93 is 8443 M....
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....een violated. 16. The Adjudicating authority has also relied upon various affidavits filed by the employees of M/s. JAL in which they stated that they transported house-hold goods during the relevant period which may come to a full truck load and that they paid transportation charges in cash directly to the driver of the lorry. Again these affidavits were not made available to the Department and such evidence has been taken into records behind the back of the Department without giving an opportunity to cross-examine the witnesses. The Adjudicating authority has also ignored the evidence in form of statements of M/s. ACTL personnel as well as in the form of consignment note which showed that consignment notes were prepared indicating FOC/Free of charge for the transportation of household goods of M/s. JAL employees. 17. As regards the specific case of removal of 9061 Kgs of aluminum sections under challan No. 109-001 by a truck DL No. HNG 9601 at Delhi without documentation, the Commissioner has accepted the statement of the party that there was a gate pass No. 2401 for the same consignment. The order does not speak as to the reasons for accepting the gate pass as covering the con....
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....xure D1 which did not have the corresponding gate pass and as against the same Lorry challan, double transportation of goods has moved from the factory to the transportation point and onwards. He submitted that Annexure D2 challans indicated the goods were loaded in the factory on the date of earlier challan. There was difference in the dates of these duplicate challans with those challan in D1, hence it followed that another set of goods mentioned in D1 has been removed in D2 challans. The challans in Annexure D3 indicate clearly the removals whether there is difference in date of challans and difference in weight based on the statement of P.K. Jha godown keeper of M/s. ACTL. Challans in Annexure D4 are the clandestine removal in the guise of household goods of ex-employees. He submitted that the case rests heavily on the premise that the lorry challans evidence the movement of the goods. He submitted that in their reply both M/s. JAL and M/s. ACTL had argued that the lorry challans are issued for the purpose of payment to the driver of the car and can be issued on any date after the movement of the goods. He states that contention was accepted by the Commissioner in the order in ....
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....ion by the Collector unless it is shown that the discretion exercised by the Collector is manifestly wrong or perverse. He also relied upon the judgment rendered in the case of CCE v. Jayalakshmi Cotton & Oil Products reported in 1984 (18) ELT 331 (T) : 1984 ECR 1795 (T) and that of Shri Rajasthan Syntex Ltd., Udaipur & Another v. UOI and Others reported in 1986 (23) ELT 329 (Raj) : 1986 (9) ECR 14 (Raj) wherein it has been held that Assistant Collector as a quasi-judicial authority has to discharge functions and duties in a quasi-judicial manner and he is not bound by administrative instructions and the questions of law which may be raised before him by parties are required to be determined by him after full application of mind and in an objective manner without following in any way controlled by any administrative instructions and he will deal with clearly and expressly the reasoning which may be advanced on behalf of the petitioners. It has been held that it is only when the petitioners reasoning is dealt with, that would show that there is application of mind by him. Therefore, the apprehension that administrative instructions have been issued by the Collector of Central Excise....
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....portunity of hearing to the Revenue, proceeded to argue the case on merits. He pointed out that the Revenue had proceeded on the basis of two lorry challans and assumed that two consignments had been removed. He submitted that M/s. JAL was not at all concerned with the lorry challans prepared by M/s. ACTL. The same had been prepared by them for the purpose of accounting their freight charges and had nothing to do with the clearance made by M/s. JAL in terms of the consignment note and the gate pass. He submitted that M/s. JAL was totally unaware of any particular challan maintained by the transporter for any practical purposes to account for the receipt of lorry freight. They had made one challan at the time of clearance of the goods and another challan at the time of receipt of freight charges. He submitted that explanation of M/s. ACTL was called for and they had explained the matter and had also produced evidence to show that they had followed the same practice with other Companies for whom they were removing the similar goods. But the department did not proceed against other companies against whom similar challans existed. This clearly indicated that the department was unnecess....
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.... to the appeal. Therefore, the appeal is required to be dismissed. 25. On careful consideration of the submissions made and a thorough examination of the records of the case, we are thoroughly satisfied that the evidence against the assessee is totally non-credible and is required to be rejected on more than one count. The first reason for rejection is the Revenue has not made M/s. ACTL a party to the appellate proceedings. The evidence M/s. ACTL is being used to allege clandestine production and removal of goods by the assessee and that the quantum of their clearance has been dropped and the evidence of M/s. ACTL having been brought on record and by not making them a party, the appeal against the respondent is not maintainable and the appeal is required to be dismissed. 26. The main grievance of the Revenue is that there is gross violation of the principles of natural justice inasmuch as the Collector did not allow the department to depute some officers to defend their case nor had he given reasonable opportunity to them. This is a totally baseless and frivolous allegation against the Collector. The Revenue knew their case better. They had made thorough investigation in the resp....
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....rs or transferred the inputs without maintaining separate register and manufactured the goods, which flows out from the use of excess electricity bills and unaccounted production of finished product and removed such goods by way of sales to parties. In this case, it was strongly contended that the Revenue has not found any evidence to support their case nor have they recorded statement of any of the employees of the M/s. JAL or their dealers to the effect that there was manufacture or receipt of goods which are unaccounted and removed without payment of duty or without gate pass. On the other hand the respondents have produced enormous evidence in the nature of purchase of inputs from Public Sector Undertakings. The records have been duly certified and as per records, their production has been 98% which is totally accounted for and duly certified by the Chartered Accountant and further certified by the Supdt. of Central Excise. In the absence of any evidence worth the name that the appellants have manufactured and cleared goods clandestinely it is totally beyond comprehension that even if there is suspicion the same cannot be used as there was total and complete investigation by th....
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....on unsupported by any logical basis and it is beyond comprehension as to how the Revenue can build up cases of this nature without any semblance of evidence on record. The Collector has examined all these facts and each evidence of both the Revenue as well as the respondents including M/s. ACTL and have thoroughly examined and came to the conclusion in para 95 of his order that no evidence was available to prove that extra quantity of goods were transported from Bangalore to Delhi and hence he held that in terms of the evidence the charges levelled against the respondent has been un-substantiated. He also examined the discrepancy found in respect of charges of clandestine removal in subsequent paras and has found that there was no evidence to show that such allegation did exit. M/s. JAL had submitted that the figures furnished by the department itself showed that the actual output ratio was 95.48%, 97.21%, 96.66% and 98.23% for 90-91, 91-92, 92-93 and 93-94 respectively supported by the certificate issued by the Chartered Accountant and further certified by the Supdt. of Central Excise. Therefore, he held that the allegation in the show cause notice that the yield of M/s. JAL has s....