AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (2) TMI 13
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....6 RAJ-EXCUS-000-PR.COM-63-16-17 Dated. 15.12.2016 Rs. 3,20,30,376/- along with interest and penalty of Rs. 3,20,30,376/- under Section 11AC of CEX Act, 1994. Other Appellants SR. No Appeal No. Amt. of penalty Under Rule 26(1) of CEX Rules, 2002. Appellants/individuals 2 E/10492/2017 Rs.80,00,000/- Shri Jagdishbhai Parshottambhai Katariya (Managing Director of M/s. Krupalu Metals Pvt. Ltd):- 3 E/10496/2017 Rs.4,25,000/- Shri Rasiklal Kalyanjibhai Bhut (Partner of M/s. Deepak Products) 4 E/10491/2017 Rs.2,70,000/- Shri Malay Rajendra Mehta (Partner of M/s. Arihant Corporation) 5 E/10493/2017 Rs.11,000/- Shri Sunilbhai Durgeshbhai Bhatt (Partner of M/s. Shree Ambica Industries) 6 E/10494/2017 Rs.85,000/- Shri Vipul Dhirajlal Rupapara (Partner of M/s.Alakh Metal Product) 7 E/10489/2017 Rs1,75,000/- Shri Harshadbhai Pranlal Borsaniya (Proprietor of M/s. Alloy Components) 8 E/10497/2017 Rs.2,00,000/- Shri Rasikbhai Parshotambhai Kateshiya (Proprietor of M/s.Vadachi Products) 9 E/10495/2017 Rs.1,80,000/-. Shri Jenul Abedin Ebrahim Darjada (Authorized Person of M/s. Sanjari ....
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....wherein the Hon'ble High Court of Allahabad decided that; para 12 "Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence .On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects:- "To find out the excess production details. To find out whether the excess raw materials have been purchased. To find out the dispatch particulars from the regular transporters. To find out the realization of sale proceeds. To find out finished product receipt details from regular dealers/buyers. To find out the excess power consumptions" 2.3 He further submits that it is a settled legal position, substantial electricity consumption and other raw material consumption will have to be shown, which is not at all established by revenue. As such, the demand based on such records is unsubstantiated and cannot bring home the serious charge of clandestine removal as such. 2.4 He submits that the proceedings are vague inasmuch as it alleges that the entries of clandestin....
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....leged minor shortage of 1934 Kgs of copper Sheet and 617 kgs. is bald allegation as Panchnama dated 05.01.2015 does not even mention as to how this shortage was derived. There was no record of method of stock taking or weighment of the finished goods during panchnama proceedings. He submits that physical inspection cannot be used to determine any shortage of stock. Further, the miniscule shortage of 1934 kgs in brass sheet and 617 kgs of copper sheet can also occur due to weighment error. It is further submitted that in this regards, revenue has adopted self-contradictory approach inasmuch as on one hand, it is alleged that the Appellant used to procure scrap in cash, without entering in records, produce finished goods and sell the same in cash, without entering in records. The Director was made to admit, in forcible manner, that the alleged shortage of physical stock found was cleared by them in clandestine manner. When such clandestine removal was invariably such where the stock was never entered in physical record at all, in such circumstances, there would never be any physical stock shortage compared to statutory records at all. This itself shows that the revenue has created me....
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.... anyone present in factory used to enter details of clandestine transaction in the private records, which is rather vague. No entries are identified as being made by any specific person as such and the entire manner in which the evidences are created by investigating officers, raises serious suspicion regarding reliability of the same. The Director was also arrested and under great pressure to admit to the version which was far from truth and such uncorroborated statement as such cannot be relied upon at all in the present proceedings. The issue is otherwise covered in favour of the Appellant vide the above decisions. 2.10 He submits that statements of 8 alleged buyers cannot be relied upon because on the face of it the statements of the alleged buyers are recorded almost in cyclostyle identical manner, and were pre-dictated as such. The issue is well covered vide various case laws that such cyclostyled pre-dictated statements cannot be relied upon. Also, it is inconceivable that such huge quantity of Finished goods were clandestinely cleared and not a single transport evidence is on record. While most buyers were made to say that they arranged own vehicle to pick up the goods, ....
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....s that the investigation is silent regarding the wastage / consumption loss since the concocted theory is that the Appellant procured scrap, processed it and then obtained brass and copper patti/sheets. This surely would require astronomically higher quantum of scrap, which is not shown to have been procured as well, much less from Shri. Arjun Katarmal. He was simply shown some working and asked to confirm if he had supplied scrap in such manner to the Appellant, which he was made to affirm. This however does not advance the case of the revenue any further. 2.13 He further submits that the Panchnama drawn is also highly questionable since the manner of drawing it shows that it was as such prepared at Central Excise office at Rajkot itself where Panch witnesses remained present. The Panchnama is drawn by stating that it was signed on 5.1.15 which states that the proceedings concluded on 6.1.15, which per se shows gross irregularities therein. The Appellant also wishes to point out that the Panchnama quantified alleged clandestine removal value based on private records as Rs.22.58 crores whereas the eventual demand is based on clandestine removal income of Rs.25.91 crore. Such que....
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....Job work'. Thus the department too has no doubt regarding job work carried out by the Appellant but allegation is that they have not followed the procedure. Only on the basis of not following the prescribed procedure the benefit cannot be denied and duty cannot be demanded on goods cleared under job work. He rely upon the following case laws:- Inar Profiles vs. Commissioner of C.Ex Vishakhapatnam-II- 2014 (310) ELT 200 (Tri.- Bang) Suvikram Plastex versus CCE-2008 (225) ELT 282 ( CESTAT Affan Shoes versus CCE - 2000 ( 122) ELT 868 ( CESTAT) Moon Chemicals versus CCE - 2007 (215) ELT 434 3. Shri Ashok Thanvi, Learned Assistant Commissioner (AR) for department relied upon observations and findings made by the adjudicating authority in the impugned order. 4. Heard both the sides and perused the records. We find that the show cause notices was issued alleging clandestine removal of finished goods and on this account demand of central excise duty amounting to Rs. 3,20,30,376/- has been raised. Such demand is based mainly upon private records of appellant and the statements of few buyers of the goods who have allegedly purchased goods which is ve....
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....ppellant does not stand. 4.1. In case of Ruby Chlorates (P) Ltd. v. Commissioner of C. Ex., Tricky - 2006 (204) ELT 0607 (Tri.-Chennai), it has been held that;- "22. In a case of clandestine removal the Department should produce positive evidence to establish the same. In the absence of corroborative evidence, a finding cannot be based on the contents of loose chits of uncertain authorship. Department has not produced evidence of use of inputs to prove that there was manufacture of unaccounted finished product...." 4.2 In case of Vishva Traders Pvt. Ltd. & others v. CCE, Vadodara reported in 2012 (278) ELT 0362 (Tri. - Ahmd.), it is held that unless clandestine manufacturing is brought on record, there cannot be any allegation of clandestine clearances, uncorroborated with evidences. 4.3 The department has also not initiated inquiry for transportation of such an alleged huge quantity of goods i.e. 620198.480 kgs. of finished goods to different customers. Many of the buyers of the finished goods are from out of city and even out of state of Gujarat. 4.4. It is evident from the statements of Shri Rasiklal Kalayanjibhai Bhatt Prop. of Deepak Products, Shri Malay R....