TaxTMI 
TaxTMI 
2024 (9) TMI 177
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..... [the appellant number 2 herein). This diary maintained for January, 2008 to July, 2008 contained therein name of the parties, registration number of vehicle, description and quantities of the goods etc. One writing pad with written pages from 1 to 48, was recovered from the factory premises of M/s Neha Galvaniser (India) Pvt. Ltd., which was found to contain entries similar to those in the aforesaid seized dairy. Some of the entries in the said purported writing pad tallied with the appellant's Central Excise invoices. The Revenue relied on these documents to allege clandestine removal. On physical verification of stock, it was also found that there were shortage of finished goods like Perforated Cable Tray, Ladder Type Cable Tray and G. I. Flat to the extent of 204.5 Mtr, 232.5 Mtr and 30.88 Mt respectively. Similar shortages were also detected in respect of the Second Appellant also. Statements were recorded from the Director Sri Daga on 18.07.2008, 04.01.2011 and 12.01.2011. A common show cause notice was issued on 28.03.2011 upon all the assesseesnotices, alleging that they have indulged in suppression of material facts by clandestinely removing finished goods from 01.01.....
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.... (380) ELT 351 (T) c) Hon'ble Tribunal vide Final Order No. 75556-75557/2024 dated 21.03.2024 in Mis Narsingh Ispat Ltd. v. Commissioner, d) Super Smelters Ltd. v. Commissioner of Cust ms, Excise & Service Tax, reported in 2020 (371) ELT 751 (1). 5. In respect of the alleged shortages found during the stock verification, he points out the following errors, making them legally not sustainable: (i) Stock taking report did not bear the signature of any witness, which is in total violation of Sections 12F and 18 of the Central Excise Act read with Section 100 of the Code of Criminal Procedure, 1973; (ii) More than 1000 Mtrs of various types of Cable Tray had been weighed within a span of few hours on18.07.2008, which was a physical impossibility. 6. The relevant records of physical stocks is not backed up by any proper backing like procedure adopted for stock verification like weighment slip, quantification process etc. Even during the Adjudication process, the Adjudicating authority did not seek the documentary evidence from the Revenue for their allegations towards the shortages. Therefore, the physical shortage of stock has not been prop....
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....tatement was recorded by the Director, no further investigation process was taken up during the next more than 2 years. The subsequent statements of the Director recorded on 4.1.2011 and 12.01.2011 were done only so as to justify the delay in issuing the Show Cause Notice. No new fact in view of any investigation / verification during the period July 2008 to March 2011 has been cited in the SCN so as to issue the same on 28.3.2011. When all the details including the alleged shortage was already available on the date of physical verification and subsequent collating of the data, there is absolutely no justification to invoke the extended period provisions, to fasten the present demand on the appellant. 11. Accordingly, he prays that the appeal may be allowed even on account the confirmed demands being barred by time. 12. He submits that since the facts are same/similar in respect of the both the appellants, the above arguments may be taken as common for both the appeals and prays that the appeals may be allowed on merits and on account of limitation. 13. In respect of the penalty imposed on the Director, it is submitted that no specifics have been....
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....nt of the clandestinely removed goods. No details in these areas have been gathered by the Revenue. The bare minimum requirement would be to verify the outward movement details by questioning the truck owners/transporters, when the vehicle numbers are purportedly been shown in the recovered diary/note sheets. Thus, the Revenue with the sole evidence coming in the form of the recorded Statements of the Director Mr Daga on three occasions. The first statement was recorded on 18.07.2008 and the next two statements have been recorded after more than two years from this date. This itself goes on to show that there was hardly any proper follow up investigation in the intervening period. Thus, we find that overall the Revenue has not discharged its onus to prove the clandestine manufacture and dispatch of the goods in question with proper corroborative evidence. 17. On the issue of allegation and demands under clandestine clearance, the following case laws cited by the appellant would be relevant : 2020 (371) E.L.T. 751 (Tri. - Kolkata) SUPER SMELTERS LTD. Vs CCE ST DURGAPUR The statement of Shri Ravi Bhushan Lal was obtained only after the Panchanama proceedings were....
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....s of the said two buyers. In their statements they have nowhere accepted payment of any amount over and above the invoice price to the assessee. In the case of Hunsur Plywood Works Pvt. Ltd. v. CCE cited supra, the Tribunal has held that in absence of flow back of additional consideration, the allegation of clearance of goods of higher value in the guise of lower value is not sustainable. In the case of Sharma Chemicals v. CCE cited supra, the Tribunal under Para 14 has held that entries in the private notebook may give rise to suspicion but that is not sufficient to uphold the allegations in absence of independent corroborative evidence. In the case of K. Rajagopal v. CCE cited supra, it is held that entries in the private notebook is not a conclusive evidence to prove clandestine transactions in absence of other corroborative evidences. In the case of Good Kare Medico Pvt. Ltd. v. CCE cited supra, it is held that order based on rough entries made in two sheets recovered from Director's residence in his own handwriting, when there is no other corroborative evidence, hence merely on the basis of such rough entries without corroborative evidence, clandestine activities cannot be all....
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....sis to uphold the serious charge of clandestine clearance. It is settled legal position that charge of clandestine clearance is a serious charge and the onus to prove the same is on the Revenue by adducing concrete and cogent evidence. In the absence of corroborative evidence, the issue of fact i.e. in the present case "the charge of clandestine clearance" cannot be eveled against the assessee. We find that in the entire proceedings, no evidence, much less corroborative evidence, has been adduced to show that input goods has been procured to manufacture goods for clandestine clearance. No efforts have been made by the investigating agencies to establish the existence of any unaccounted manufacturing activity in the form of unaccounted raw material, shortage of stock, shortage of raw material/finished goods, excess consumption of electricity, unaccounted labour payments, interrogation of buyers/transporters or any incriminating record/document to suggest any flow back of cash etc. The Revenue authorities in this case have failed to discharge the burden of proving the serious charge of clandestine clearance or undervaluation with cogent and clinching evidence. It has been co....
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....f such goods by the manufacturers or persons authorized by him; (f) use of electricity for in excess of what is necessary for manufacture of goods otherwise manufactured and validity cleared on payment of duty; (g) statements of buyers with some details of illicit manufacture and clearance; (h) proof of actual transportation of goods, cleared without payment of duty; and (i) links between the document recovered during the search and activities being carried on in the factory of production, etc. 40. In the decision of this Court in the case of Commissioner of Central Excise, Salem v. CESTAT, Chennai (supra), the Court held that the burden of proof, in a case of clandestine removal, is undoubtedly on the Department. However, at times, in such cases of clandestine removal, clinching documents will be available and if the Department is able to prima facie establish a case of clandestine removal, violation of excise procedure, the burden shifts on the assessee to prove that he is innocent. 43. It has been consistently held in various decisions some of which have been referred to by the Learned Counsel for the assessee in the case of Gopi Synthetics Pvt. Ltd. (supra), M....
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.... demands confirmed on account clandestine removal cannot survive. 20. Coming the allegation on shortages found during the stock verification, we find that the verification report is not corroborated by way of supporting documents like weighing slip, quantification method adopted etc. As the appellant has submitted, in some case, the stock taking process could not have been completed in the short time said to have been taken to arrive at the actual quantity of stocks. We do not subscribe to the appellant's arguments that the stock taking should have been taken in the presence of the Panchas. It would be sufficient if the same taken in the presence of the officials of the appellant, which has been done in this case. However, the details of the method adopted to quantify the stocks is not to be seen from the Revenue's investigation. 21. In respect of the shortages found in the course of stock-taking the Tribunals have held as under : 2021 (378) E.L.T. 674 (Tri. - Kolkata) JAI BALAJI INDUSTRIES LTD. Vs CCE&ST DURGAPUR 10. At best, therefore, this is simply a case of shortages detected during stocktaking. The next issue to be determined is whether the shortages d....
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....ny basis, such as, the details of the weighment slip, counting slip etc., as the case may be. It cannot be on the basis of eye estimation or otherwise. 22. The ratio laid down in the above decisions is squarely applicable to the facts of the present case. Accordingly, we hold that the confirmed demands towards the shortage found during the stock taking is legally not sustainable. 23. In view of the foregoing, we set aside the demands and allow the Appeals on merits. 24. Now coming the issue of time bar raised by the appellants, we find force in the same. Admittedly, the officials visited in July 2008, completed the stock taking. They recorded the statement of the Director on the same date. After this, there was no further action taken during the next more than 2 years. Nothing stopped the Dept. to issue the SCN in respect of the shortages, since no further investigation would be required. In respect of clandestine removal, there is nothing coming on record to the effect that attempts were made to record the statements of purported buyers or the transporters or any other corroborative evidence was being gathered. As submitted by the appellant, the second and third statement....