TaxTMI 
TaxTMI 
2024 (5) TMI 375
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....n Shri Amit Agarwal, Director of the Appellant-company. 2. The facts of the case are that the appellant is a manufacturer of M.S. Rods, Flats, Angles, etc., falling under Chapter 72 of the Central Excise Tariff Act, 1985. The appellant had its registered office situated at Lal Building, Kachary Road, Rourkela. In the same premises, a trading firm viz. M/s. Bajrangbali Steel Industries Pvt. Ltd., which is registered under the Central Excise Act, was also functioning. Shri Amit Agarwal is a Director of the Appellant-company and also looked after the affairs of the trading firm. 2.1. On 26.02.2009, a search was conducted by Officers of the Directorate General of Central Excise Intelligence (DGCEI) at the office as well as factory premises of the appellant. Search was also conducted at the premises of the trading firm viz. M/s. Bajrangbali Steel Industries Pvt. Ltd. located in the same building. During the course of search certain loose sheets, papers and documents were seized from the premises of the trading firm M/s. Bajrangbali Steel Industries Pvt. Ltd. Some documents were also seized from the personal office of Shri Amit Kumar Agrawal. 3. On completion of the investigation and ....
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....] (b) Commr. of C.Ex. Vs. Lord's Chemicals Ltd.[2010(258) E.L.T. 48(Cal.)] iii. The Statement of Shri Agrawal is in very general terms not specific to each of the loose sheets, each of the transactions, purpose for which it was made and by whom it was made and at whose instructions. He also did neither state the facts verifying the correctness or otherwise of each loose sheet. It was humanly not possible for him to verify each of the more than 5000 pages shown to him in the limited time when he was under the influence of sleep. Also, Shri Agrawal was under the treatment of acute depression and advised to sleep at least eight hours daily. iv. In his statement Shri Agrawal never stated that the loose sheets are the testimony of the clandestine activities. v. In the facts and circumstances of this case, the burden is on the Department to bring home the charge of clandestine removal with positive, tangible, cogent and unimpeachable evidences that the excess purchase, production and clearances as appearing in the loose sheets relates to actual business transactions of the appellant. In this regard, the appellant relied upon the decision of Commissioner of C.Ex., Patna Vs. Un....
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....production and clearance are quite improbable. In support of this contention, the appellant relied on the decision in the case of Ruby Chlorates (P) Ltd. v. Commissioner of C. Ex., Trichy, [2006 (204) E.L.T. 607 (Tri.-Chennai)]. xi. The documents relied upon are vague, unsigned and of unknown authorship. Such documents cannot be termed affirmative and cogent evidence required to prove the charges of quasi criminal character. In support of this contention, they relied upon the following decisions: (a) Sunder Brothers vs. Commr. of C.Ex. [2007 (217)E.L.T 561 (Tri.)] (b) Shabroc Chemicals Vs. Commr. of C.Ex. [2002 (149) E.L.T. 1020(Tri.-Del.)] (c) Kedarnath Silk Mills vs. Commr. of C.Ex. [2006(195) E.L.T. 58(Tri.-Bang.)] (d) Chanda Tubes & Metals P. Ltd vs. Commr. of C.Ex. [2006(193) E.L.T. 48(Tri.)] (e) K.Harinath Gupta vs. Commr. of C.Ex. [1994(71) E.L.T. 980(Tri.)] (f) Rochees Watches Ltd vs. Commr. of C.Ex [2006(197) E.L.T 2018 (Tri.)] xii. The documents relied upon are of uncertain authorship who are neither identified nor examined. Hence, unless the maker of the documents are identified and examined, no adverse inference could be drawn on its basis against the ap....
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....idered the submissions made by the appellant and dropped part of the demand; the appellant could not give any valid document for the manufacture and clearance of the remaining quantity of 1365.257 MT and accordingly the demand has been confirmed only on the quantity which was not explained by the appellant. Accordingly, he supported the impugned order. 8. Heard both sides and perused the appeal documents. 9. We observe that the issue involved in the present appeals is regarding suppression of production and clandestine removal of excisable goods without payment of duty. The entire demand has been confirmed on the basis of certain loose sheets/documents recovered from the trading firm located in the same premises where the appellant-company is also located and the statements recorded from the Director Shri Amit Agrawal. 9.1. We observe that the Show Cause Notice was issued demanding Central Excise Duty amounting to Rs.3,39,76,566/- on the basis of documents / loose sheets recovered from the trading firm viz. M/s. Bajrangbali Steel Industries Pvt. Ltd. Upon adjudication, the Ld. Commissioner has dropped the demand of Rs.2,83,23,975/- and confirmed the demand of Rs.56,52,591/- alon....
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....stand. I find that the defense of the Party is acceptable and fully corroborated. I find that the noticee has produced evidences/invoices to substantiate their stand that a quantity of 7284.395 MT had been cleared by M/s. Bajrangbali Steel Industries (P) Ltd. during the material period which was not considered by the Department in the Show Cause Notice for allegation of clandestine removal. The Sale statement from 01/01/2009 to 24/02/2009 as found in Annexure 4A to the Show Cause Notice and sales invoices issued by M/s Bajrangbali Steel Industries (P) Ltd. as produced completely matches. ... . . . 6.6 I find that the most of the sales details as above are also reflected in the RG23D Register and invoices issued under Cenvat Credit Rules. The sales figures are also reflected in the Sales Ledgers, Bank Statements and periodical Returns filed with the State VAT Authorities and Central Excise Department. From the above facts it is clear that the demand has been raised without taking into consideration the sale particulars which have appeared in the combined sales register. Therefore, the sale made by both their firms has to be taken into consideration while computing the demand....
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....e findings in the impugned order, we observe that the Ld. Commissioner has given a clear-cut finding and held that the seized handwritten chits cannot be the basis for demanding duty on the allegation of clandestine production and clearance. Accordingly, the Ld. Commissioner has dropped the demand of Rs.2,83,23,975/-. 10.2. However, in spite of the above findings that the loose sheets cannot be relied upon to confirm the demands, the Ld. Commissioner has confirmed Central Excise duty of Rs. 56,52,591/- on the basis of the same documents. The findings of the Ld. Commissioner in the impugned order for confirmation of the demand of Rs.56,52,591/- is reproduced below:- "6.15 1 find that the assessee/noticee could not fully substantiate with corroborative evidences the entire quantity found excess cleared without payment of duty. I find that in the SCN it has been alleged that during the material period the assessee/noticee has cleared 14026.790 MTs of finished products out of which only 5377.140 MTs were cleared on payment of duty as per DSA/ER-1 Returns filed by them. Now it has been found that a quantity of 7284.395 MTs were cleared by M/s. Bajrangbali Steel Industries (P) Ltd., t....
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....onfirmed much beyond the installed capacity of the unit without adducing any evidence in support of clandestine manufacture and clearance. 11.2. We observe that the entire allegation is based on certain loose sheets / documents recovered during the course of search. The clandestine removal has not been corroborated with any other evidence. The burden of proving clandestine removal with positive, tangible and cogent evidence is on the Department, to establish that the appellant has manufactured and clandestinely cleared the goods. 11.3. For the purpose of establishing clandestine clearance, there must be documentary evidence, to support the said allegation. The entire demand in this case has been made only on the basis of some loose sheets and the statement of Shri Amit Kumar Agrawal. Oral statements being secondary evidence, cannot prevail over documentary evidences. We observe that there is no shortage or excess of raw material or finished goods found at the time of search in the factory of the appellant. No parallel invoice was found during the course of search operations. There is no verification done at the customer's end regarding receipt of the clandestinely manufactured an....
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.... 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...." 11.8. Thus, we observe that there is no corroborative evidence brought on record to substantiate the allegation of clandestine manufacture and clearance of finished goods by the appellant. In the absence of such corroborative evidence, the demand of central excise duty confirmed in the impugned order is not sustainable. In view of the above discussions and the decisions cited above, we hold that the demand of Rs.56,52,591/- confirmed in the impugned order, on the basis of the loose sheets/documents found in the trading firm is not sustainable. and hence we set aside the same. 12. As the demand itself is not sustainable, the question of demanding interest and imposing penalty on the appellant does not arise. 13. Regarding the penalty imposed on Shri Amit Agrawal, Director, we observe that a Statement dated 26.02.2009 was recorded from him b....