TaxTMI 
TaxTMI 
2024 (8) TMI 1654
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....y on 28.11.2014 and panchnama was drawn in the presence of director of the company Shri Dhirajlal Panara. During the course of search various incriminating records/ documents were found and recovered under the panchnama dated 28.11.2014 drawn at the factory premises of the appellant company. Thereafter statements of directors Shri Dhirajlal Panara and Kamlesh Bavjibhai Panara were recorded under Section 14 of the Central Excise Act, 1944 wherein they have admitted that a file bearing Sr No. 13 of Annexure A to panchnama includes the details of goods cleared clandestinely wherever the "W" mark is mentioned. Thereafter during investigation three buyers namely Mehulbhai Rasikbhai Raithatha, Shri Rahulbhai Kishorbhai Kotecha and Shri Sagar Karamshibhai Desai were interrogated and their statements were recorded wherein they had admitted the purchase of goods without invoice as well as with invoice. During the cross-examination they have not confirmed the purchase of goods without invoice. On the basis of above investigation, a show cause notice dated 30.11.2015 was issued wherein the demand of excise duty amounting to Rs. 40,53,588/- was proposed along with demand of interest and imposi....
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.... Pigment Pvt Ltd - 2018 (360) ELT 29 (All.) ● Parrot Power Ltd - 2024 (2) TMI 431 - CESTAT AHMEDABAD ● Poojan Decor Pvt Ltd - 2023 (9) TMI 722 - CESTAT AHMEDABAD ● Arya Fibres Pvt Ltd - 2014 (311) ELT 529 (Tri. Ahmd) ● T.G.L Poshak Corporation - 2002 (140) ELT 187 (Tri.Chennai) ● Acme Ceramics - 2014 (304) ELT 542 (Tri.Ahmd) 3. Shri Ajay Kumar Samota, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submission made by both sides and perused the records. We find that in the present case the revenue has confirmed the case of clandestine removal against the appellant on the basis of some loose papers/sheets and statements of directors of the appellant company with reference to those loose papers and the statements given by three buyers of the alleged clandestinely removed goods. We find that on the basis of loose papers alone, the clandestine removal cannot be established. 4.1 As regard the statements of directors, the adjudicating authority was legally bound to conduct the cross-examination of those witness....
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....o reliance can be placed on the statement of such witness who has not subjected himself to cross-examination by the affected party. Under the circumstances, the statement made by Shri Arjandas lost its efficacy and therefore, could not have been used against the assessee. Besides, the Tribunal has also found that M/s. Star Associates was regularly supplying goods to the assessee in the past and on no occasion, it was found that they had issued invoice without actually supplying the goods. It is in the light of the aforesaid facts that the Tribunal has deleted the disallowances of credit of Rs. 14,42,177/ -. Under the circumstances, it cannot be said that there is any infirmity in the view taken by the Tribunal while deleting the disallowance of credit of Rs. 14,42,177/ -. " ● Krishna Steel Industries 2010 (254) ELT 292 "6. I find that the statement of Shri Ganpat Shinde is most relevant in this case and the said Ganpat Shinde did not appear for cross-examination by the appellants, the statement of Shri Ganpat Shinde cannot be relied. Further, I find that the Assistant Commissioner had made enquiries in 1996 whereas transaction took place in 1994, the belated....
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....ring for Nova has taken us through these letters. We find, however, that by the order dated 10-10-2008 issued from the office of Adjudicating Authority, the request made in the aforesaid communication of Nova was rejected, holding that cross examination of the concerned persons did not appear to be justifiable and proper for reasons stated in the said letter. We have also been taken through the said order dated 10-10-2008. It was pointed out in the order that Nova had not furnished specific reasons for cross examination person-wise and that no tangible reasons or justification had been given for cross examination. The reasons for the conclusion of the Adjudicating Authority for the aforesaid order are also contained in the said letter. The main reason for rejection has been that the statements given by the persons concerned are only stated and confirmed on the basis of documentary facts, and some of them are employees of GSL or Nova and that, therefore, no new facts can be brought out during cross examination. It is also stated that statements of these persons have been corroborated by other evidences also which are in the form of documents or oral statements. In respect of some wi....
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....tnesses whose statements have been relied upon either in the show cause notice or in the Adjudication Order is quite well-settled. As could be seen from the facts stated hereinabove, the show cause notice proceeded on the basis of documents seized from different persons and from different premises, and statements thereon made by the persons concerned with the documents. It cannot be a ground for rejecting the cross examination to say that the documents clearly proved the case of the department and no purpose could be served by cross examining the witnesses whose statements in respect of the documents were relied upon. It is, further, submitted by the learned Senior Advocate in his written submission that the correctness of the statements made by witnesses vis-a- vis documents on record and correctness of the documents on record vis-a- vis statements made by the witnesses would be the subject matter for cross examination. We find merit in the said submission made by the learned Senior Advocate. In our opinion, there has been, in the present case, denial of natural justice to Nova by the rejection of the request of cross- examination of the persons whose statements have been relied u....
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.... appropriate. In D. Bhoormal's case (supra) what was being considered by the Hon'ble Supreme Court was the applicability of the provisions of the Evidence Act and the Code of Criminal Procedure to adjudication proceedings. In fact, this aspect has also specifically been adverted to by the Hon'ble Supreme Court in the Bareilly Electricity Supply case (supra), referred to by the learned Senior Advocate, particularly, the issue of applicability of Evidence Act to proceedings before the Courts and Tribunals. As held by the Hon'ble Supreme Court in that decision : If a letter or other document is produced to establish some fact which is relevant to the enquiry the writer must be produced or his affidavit in respect thereof be filed and opportunity afforded to the opposite party who challenges this fact. This is both in accord with principles of natural justice as also according to the procedure under Order XIX Civil Procedure Code and the Evidence Act both of which incorporate these general principles. 33. In K. Balan's case (supra), the Hon'ble Madras High Court states that the necessity of cross examination depends upon the facts and circumsta....
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....dication proceedings under the FERA and Adjudicating Rules framed thereunder. We have perused the said judgment of the Hon'ble Supreme Court and also heard the submissions of the Id. Senior Advocate. The Hon'ble Supreme Court held that it is evident from Rule 3 of the Adjudicating Rules framed under Section 79 of the FERA that Rules of Procedure do not apply to adjudication proceedings. At the same time, as pointed out by the Id. Senior Advocate, the Hon'ble Supreme Court proceeded to say as under : "That does not, however, mean that in a given situation, cross examination may not be permitted to test the veracity of a deposition sought to be issued against a party against whom action is proposed to be taken. It is only when a deposition goes through the fire of cross examination that a Court or Statutory Authority may be able to determine and assess its probative value. Using a deposition that is not so tested, may therefore amount to using evidence, which the party concerned has had no opportunity to question. Such refusal may in turn amount to violation of the rule of a fair hearing and opportunity implicit in any adjudicatory process, affecting the right of....
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....e 63 persons for reasons which had been broadly stated by them. One could not have expected Nova to outline the scope of the questions to be put to the witnesses, when their cross examination was sought. In the present case, as we would be dealing with later, de hors the documents and the statements, there was no material to establish the case made out against Nova, GSL or the EOUs. The decisions cited by the ld. Senior Advocate categorically reject the proposition that cross examination can be refused in cases like the present. We also agree with the ld. Senior Advocate that the decisions cited by the ld. Special Counsel for the Revenue do not lay down any law to the contrary. 35. We are, therefore, constrained to hold that the decision made by the Adjudicating Authority in his letter dated 10-10-2008 and in the impugned order, denying Nova's request for cross examination of witnesses, and subsequently recounted in the impugned order is clearly in violation of principles of natural justice in the matter of the need to permit cross examination of witnesses on whose statements reliance has been placed." 4.3 In view of the above judgments, statements of the two direct....
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.... ● Poojan Decor Pvt Limited and Anr. V/s. Commissioner of Central Excise & ST, Ahmedabad 2023 (9) TMI 722 - CESTAT AHMEDABAD ● Arya Fibres Pvt. Ltd. V/s. CCE, Ahmedbad 2014 (311) ELT 529 (Tri .- Ahmd.) ● T.G.L Poshak Corporation V/s. CCE, Hyderabad 2002 (140) ELT 187 (Tri .- Chennai) ● ACME Ceramics V/s. CCE, Rajkot 2014 (304) ELT 542 (Tri. - Ahmd.) In the case of Parrot Power Ltd (Supra), the Tribunal came to a conclusion that allegation of clandestine production and removal are required to be arrived at on the basis of positive and tangible evidence including the evidences relating to procurement of raw materials, conversion of the same to final products, clearances of the same, identity of the buyers and receipt of unaccounted cash etc. It was further observed that the ratio of various decisions of the High Courts, entries in the private record do not ipso facto lead to the allegation of clandestine removal unless there is corroborative evidence to that fact from independent source. Similarly in the case of Poojan Decor Pvt Ltd (Supra) this tribunal concluded that with merely pen drive data or excel sheets without ....
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....anufacturer or even of its Directors/partners who are not even permitted to be cross-examined, as in the present case, without one or more of the evidences referred to above being present. In fact, this Bench has considered some of the case-law on the subject in Centurian Laboratories v. CCE, Vadodara [2013 (293) E.L.T. 689]. It would appear that the decision, though rendered on 3-5-2013, was reported in the issue of the E.L.T., dated 29-7-2013, when the present case was being argued before us, perhaps, not available to the parties. However, we have, in that decision, applied the law, as laid down in the earlier cases, some of which now have been placed before us. The crux of the decision is that reliance on private/internal records maintained for internal control cannot be the sole basis for demand. There should be corroborative evidence by way of statements of purchasers, distributors or dealers, record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. A co- ordinate Bench of this Tribunal has, in another decision, reported in the E.L.T. issue of 5- 8-2013 (after hearings in the present appeals were concluded), once again r....
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....nts relied upon by the Revenue. He has further pointed out that A-21 does not even refer to the quantity of DTY produced by GSL. It is also difficult to establish that all the quantities of DTY were made out of 115/68 denier of POY. Annexure B-1 and B-2 have been prepared only on the basis of presumptions. He, further, submitted that the conclusion that A-19 and A-21 refer to the quantities being loaded in the crill is also without any evidence. There is no proof that GSL has used 100% of its capacity for production of DTY. Except for these entries, there is no substantial material to show that such a huge quantity of POY has been cleared to GSL without payment of duty and that the entire quantity has been used of production of DTY. There is no proof of purchase of such huge quantity of POY from Nova by GSL. No evidence has been led by the Revenue to show that GSL had actually produced DTY out of POY supplied by Nova. There is no evidence of transportation of POY from Nova to GSL factory. Undoubtedly, huge quantities of raw material would be required for manufacturing such a huge quantity of POY. No evidence has been brought either in the SCN or in the Adjudication Order to show th....
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....e of legal proof. To establish the charges against the respondents, it was, in our judgment, essential for the prosecution to establish that the secret books of account related to the business transactions carried on by the respondents and none else. This it could have established in a variety of ways viz. (1) by adducing satisfactory proof to the effect that the place from which the secret books of accounts were seized formed part of the place of business of the respondents or was in their exclusive possession and control, (2) that the secret books of account were maintained by or under the orders of the respondents, (3) that the said books of account were in the handwriting of either of the respondents or their accountant, or clerk or some other person employed by them". Admittedly none of the documents marked as A-19 to A-23 was recovered from the premises of Nova. It is not the case of the Revenue that these note books were maintained by V.N. Parab under the instructions of Nova. Further, these note books were not in the handwriting of any of the persons of Nova or its accountant or clerk or any employees of Nova. Applying the ratio of the decision of the Hon'ble S....
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.... from Nova to GSL or, even for that matter, from GSL to the buyers of DTY produced by GSL. No evidence has been forthcoming of purchase of raw materials by Nova for production of POY in such huge quantities, or of payments effected by GSL to Nova for the excess quantities of POY, clandestinely manufactured and cleared by Nova and sold to GSL, or even of payments made by the buyers of DTY from GSL made out of quantities alleged to have been purchased by GSL from Nova. The only basis of the demand is the figures contained in A/19 and A/21, seized from GSL premises, of which V.N. Parab is the author. Even if the figures in the seized documents tally (this is disputed by Nova, since V.N. Parab has not, when he was being examined during the investigation, stated that they tally), that by itself cannot prove clandestine manufacture and clearance, the tests for which have been adequately explained by this Tribunal in the decisions cited earlier, amongst several others. The documents in question, have not been resumed from Nova's premises, nor is the author of the documents (V.N. Parab), a person in Nova's employment or acting under Nova's instructions. Reliance by the Id. Seni....
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....tively consumed by Nova for further manufacture of POY which was further clandestinely cleared by them. According to the Revenue, the diaries were maintained by Ashok Chiripal in his own handwriting showing production and captive consumption of Polyester Chips. Excess production of Polyester Chips was recorded in these diaries. According to Nova, these diaries by themselves do not speak of any clandestine procurement of raw- materials, manufacture of Polyester Chips and excess production of Polyester Yarn. Inferences have been drawn from the entries made in these diaries without corroborating the same with any concrete evidence. Merely because Ashok Chiripal has stated that the entries mentioned in the diaries are true and pertains to the excess production of Polyester Yarn, would not be enough to fasten the liability upon Nova. There is no evidence of procurement of raw material i.e. Mono Ethylene Glycol (MEG) and Purified Terephtalic Acid (PTA) for the production of such a huge quantity of Polyester Chips in a period of less than 6 months. Not a single person has been identified by the Revenue who has supplied such a huge quantity of raw materials for the manufacture of Polyester....
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....case. No show cause notice has been issued to him. The question of his statement being regarded as "confession" does not, therefore, arise, because confession, by its very nature, has to be made by a person charged with breach of law. In fact, at the time of hearing, the Id. Special Counsel did not dispute the submissions made by the Id. Senior Advocate of Nova that there was no "confession" by Ashok Chiripal. It was only his statement that has been relied upon. According to the submission made by the ld. Senior Advocate, who, once again relied heavily on the tests laid down by the Tribunal regarding the nature of evidence required to affirm a finding of clandestine manufacture and clearance, a very important consideration which failed to be appreciated by the Adjudicating Authority was that, in respect of the instant demand, there was no evidence whatsoever of the procurement of the required raw materials (MEG & PTA) for production of the alleged 1910587.5 kgs of Polyester Chips in less than 6 months. Nor was there any evidence of actual production of such quantities by Nova. There is also no evidence of transportation of POY, if at all manufactured, to any buyer. No paym....
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....hile dealing with the earlier demand. In reply to the submissions made on behalf of Nova, the ld. Senior Special Counsel for the Revenue filed written submissions on 30-7-2013 and explained the same. The diaries had been maintained by Ashok Chiripal, showing production and consumption of polyester chips in Nova's factory from March, 2002 to August, 2002. The statement of Ashok Chiripal was not retracted by him, which stated that the figures were showing actual production of polyester chips by Nova and captive consumption thereof for manufacture of POY. A quantity of 17,69,298 kgs of polyester chips shown to have been transported were not entered in the Excise records. The statements of Vikram Oza and Nitin Patel, employees of Nova were to the effect that Nova was receiving PTA (one of the raw materials) which was not accounted for in the records. The ld. Special Counsel also showed us certain figures in the diaries about production on 31-3-2002 and submitted that the records and the statements cannot be belittled. We have considered the rival submissions. We are constrained to reiterate that it is one thing to make out the content of entries made in a document....
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....Waste took place, and they were consumed captively to manufacture POY which was cleared clandestinely. Reliance has been placed upon the statement of Pankaj Patel, Accounts Assistant and H.K. Jha. Again Ashok Chiripal's statement has been relied upon to conclude that Nova has never cleared degraded chips. According to the show cause notice, in order to maintain input-output ratio, bogus invoices were issued by Nova showing clearances of degraded chips and waste. What was cleared was POY in the guise of such degraded chips/waste. The ld. Senior Advocate for Nova submitted that the allegation being that 1396923 kgs of POY were manufactured and cleared clandestinely, it is inconceivable that there were no degraded chips or polymer waste arising during the manufacture of such a huge quantity of POY. The allegation is, itself, therefore, baseless. H.K. Jha had stated that degraded chips could be recycled. He had nowhere stated that degraded chips were actually recycled and issued for making POY. The stand of the Revenue that no degraded chips were ever manufactured and cleared, is without any basis as it is admitted in the show cause notice itself that 10 to 25% of the chips manufac....
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.... consignments referred to by the RTO, addresses were indicated in the invoices. Though the vehicle numbers were wrong, the Department made no efforts to verify from the addressee customers as to whether they received the goods or not. There is no evidence of consumption of degraded chips or polymer waste for actual production of 1396923 kgs of POY by Nova, nor of their removal from Nova or their buyers thereof. No monetary transactions dealing with such sale of POY by Nova have been found by the investigating agency or placed on record. The ld. Special Counsel for the Revenue has relied upon the statement of Ashok Chirpal made on 22-7-2004, that he had never received in the State any degraded chips. All chips mentioned in his diary were good quality chips used for manufacture of yarn. However, this is controverted by the ld. Senior Advocate for Nova who pointed out that in his first statement made on 14-9-2002, Ashok Chiripal had admitted the production of degraded chips during manufacture and their sale, and also produced two invoices evidencing their sale. Strangely enough, the first statement has been ignored by the Adjudicating Authority, though the statement figures i....
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....ent, this being a case of clandestine clearance, evidence thereof cannot be the mere incapacity of 9 vehicles (inferred from only the Vehicle No. indicated) out of 130 to carry the goods. Corroborative evidence of actual manufacture of POY and clearance to identified person or places and of payments made are some of the required conditions, which are not there in the case of the present demand, as in the earlier two demands. We, therefore, have no hesitation in holding that this demand has been made without any concrete or tangible evidence, and for the sole reason that no goods were sent out because the vehicle No. indicated was wrong. No attempt was made to find out from the parties to whom 130 consignments had been sent as to whether or not they received the goods. We accordingly, set aside the duty demand of Rs. 2,82,64,613/- confirmed against Nova, as being not substantiated. IV. The demand of duty of Rs. 10,07,06,323/- (of which a sum of Rs. 9,77,62,573/- has been confirmed by the Adjudicating Authority, is based on the allegation that POY was illicitly cleared by Nova to EOUs against CT-3 Certificates with intent to evade payment of duty. The allegation is ....
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....as not defective in demanding duty jointly and severally from Nova and the EOUs. He relied upon the definition of the term "manufacture" under Section 2(f) of the Act and usage of the word "person" in Section 11A thereof. In all the cases of EOUs, the demands have been confirmed on Nova, on the ground that no POY was transported/received by the EOUs. Though the show cause notice demanded duty jointly or severally from Nova and the EOUs, demands have been confirmed only as against Nova. There is no demand of duty against the EOUs. The demands have been confirmed merely for the following reasons :- (i) Some of the vehicles shown to have transported the goods were incapable of transporting the goods; (ii) The goods to the EOUs outside Gujarat (Malegaon/Dhulia) were not, in fact, transported from Nova to the respective EOUs but were unloaded in or around Surat, and sold in domestic market. (iii) Statutory documents like AR-3A, CT-3 and Re-warehousing certificates are not relevant because the officers did not have to physically verify receipt of goods by the EOUs, as per Board Circular 88/98-Cus., dated 2-12-1998; (iv) Only Delivery Challans ....
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....dealt with the issue, the Adjudicating Authority held that the ratio of the decisions is not "strictly" binding, since Famous Textiles decision was in a stay application under Section 35F of the Act and not a final order under Section 35 thereof. The decision in Arvindh Steels Ltd. is the subject matter of appeal filed by the Department which, according to the Adjudicating Authority, is pending before the Hon'ble High Court of Madras and is, therefore, not final in nature. The learned Senior Advocate submits that, while it is true that the decision in Famous Textiles case was passed in a stay application, the decision in Arvindh Steel Ltd. is a final order passed by this Tribunal and the filing of an appeal does not affect the finality of the said decision. It is well recognized that the filing of an appeal does not automatically render the decision inapplicable. He relies upon the decision of the Hon'ble Supreme Court in Madan Kumar Singh v. District Magistrate, (2009) 9 SCC 79 where it is held that mere filing of petition, appeal or suit would, by itself, not operate as stay until specific prayer in this regard is made and orders thereon are passed. It is, therefore, well....
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.... is no reference anywhere as to when they were sold in Surat, by which broker to which buyer. Significantly, enquiries were made with the brokers but it was found that no incriminating documents were available with them because the enquiries were twenty days after the search at Nova and the brokers anticipated the search of their premises. Strangely enough, the department did not consider it necessary to record any statement from the brokers whose names were found on the reverse of the Delivery Challans. The Id. Senior Advocate emphasized the fact that there is not even an iota of evidence of the goods having been sold in or around Surat as alleged in the show cause notice and as confirmed by the learned Adjudicating Authority. No transporter or broker has given evidence to this effect. Obviously, the unloading of the goods from the trucks cannot be on a public road. It has to be to some specified person at some premises of his. It is certainly not the case of the department that the goods were unloaded in the brokers premises or sold to the brokers. The entire matrix of the case on which the conclusion of the learned Adjudicating Authority is based, therefore, fails. More so, in c....
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.... with regard to in-bonding of such duty free goods, and based on the entries made therein and so far as it relates to other documents so submitted by the EOU to the Range under their signatures/certification, the Central Excise officer was signing the re-warehousing certificates on that basis viz., record/document basis only. At no time were the consignments of indigenous origin physically verified, as per the Board's Circular. Thereafter, re-warehousing certificates were being dispatched, either weekly or fortnightly basis, to the jurisdictional Central Excise Officer of the consignor end. On being shown seized records/files containing copies of AR-3As, in respect of clearances of Polyester Yarn made by Nova, and which have been duly re-warehoused by Central Excise Officers, in respect of the units falling under their charge, they confirmed their signatures appearing on the AR-3As (re-warehousing certificates). Copies of CT-3s, AR-3As and re-warehousing certificates and D-3 intimation were enclosed with the written submissions of the ld. Senior Advocate, which clearly show that the receipt of the goods is acknowledged by EOU in the D-3 intimation, which is one of the documents....
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....investigation have confirmed when their statements were recorded under Section 14 of the Act, that they have received the consignments of yarn from Nova which were warehoused in their premises and were used for further manufacturing purpose. The Adjudicating Authority has rejected these statements only on the ground that EOU customers had given details of the total quantity of yarn received and warehoused by them during the period but no specific information about the consignments received from Nova. This is a total mis- appreciation of evidence on the part of the Adjudicating Authority since the statements were recorded in the context of enquiry against Nova only. The total quantity shown as warehoused by some of the EOUs also included yarn received from Nova which were also duly recorded in the in-bond register as warehoused. Even in the proceedings before the Adjudicating Authority, some of the EOUs who had participated therein had contended that they had received the consignments of yarn from Nova and had duly accounted them in their register. The Adjudicating Authority has rejected this on the ground that the number of some of the vehicles written in the Delivery Challans were....
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....lso emphasized the fact that none of the aforesaid 7 EOUs participated in the adjudication proceedings. The learned Special Counsel has, while summing up his submissions, justified the order passed by the Adjudicating Authority in the present demand since, as per the report of the RTO, a number of vehicles shown to have been used to transport duty free goods under the CT-3 certificates were found to be incapable of carrying the same. It was corroborated by the statements of key persons of some of the EOUs. He further submitted that, in respect of some of the EOUs, enquiries reveal that they did not have enough plant and machinery to manufacture the final product from POY. He also submitted that the dealers of Nova were getting CT-3 certificates issued by the EOUs and giving them to the Surat office of Nova and goods were being sent by Nova without payment of duty against AR-3As. Such goods were off loaded at Surat and sold in the market. He further submitted that enquiries with transporters reveal that they never transported duty free goods to Malegaon and Dhulia (outside Gujarat) but off loaded the same in and around Surat. Some of the trucks did not have the permits to travel bey....
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....R3As and D-3 declarations are all mandatory prescriptions under the Central Excise Rules in respect of transactions occurring between manufacturers and EOUs. The Adjudicating Authority, while passing the impugned order, has in the light of the statements of Inspectors in- charge of EOUs that physical supervision of receipt of goods by the EOUs had been dispensed with in terms of the C.B.E. & C. Circular 88/98-Cus., dated 2-12-1998 in respect of clearance of goods made by the indigenous manufacturers as against importers, held that all the works relating to re-warehousing were based only on documents, and concluded that what would be relevant and conclusive in the present case would be the Delivery Challans. We have gone through the said Circular. The Circular is, no doubt, intended to liberalise the bonding procedures in respect of 100% EOUs by providing operational flexibility, by easing restrictions and removing practical difficulties being faced by such EOUs. It may be relevant, in this connection, to reproduce the said Circular in full, which is as under :- Export - Liberalisation of bonding procedure in respect of 100% EOUs The degree of supervision of the de....
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....t in-charge of the next unit to see whether the goods have been actually received in the unit or not. In case of non-receipt of re-warehousing certificate and similarly proof of export from the proper officer, within 90/180 days, the duty shall be demanded from the sending unit immediately. (iv) Audit of the unit: The presently sanctioned Cost Recovery Officers shall examine the records of the units and transactions undertaken by the unit at-least once in a month. The notification provides in regulation 11, that the Chief Commissioner may order special audit of the unit by a Cost Accountant (CA) nominated by him in this regard. Cost Auditor may be employed as a tool to check the correctness of raw material, quantity used, finished goods produced or other such situations. Before such approval, the Chief Commissioner may form a panel of CAs, fix the rate of the charges to be received by the said Cost Accountant. The names of the CAs and the details of the charges may be pre-notified at regular intervals. (v) It may be seen that while the latitude for manufacture and clearance and movement of raw materials and finished goods have been given to the EOUs, extr....
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....er the latter part of the Board Circular. A Board Circular is binding in its entirety and not in parts. If their duty is to inspect the units on periodic basis to verify the correctness of the records, their failure to do so would amount to a non-compliance with the Circular. The relevancy of statutory records cannot, therefore be minimized by the department itself and predominance be given to contractual documents like Delivery Challans issued by or between private parties. The reasoning of the Adjudicating Authority, that the Delivery Challan would outweigh the statutory records, is not sound. There is another vital fact, which is important to the present case. The Delivery challans according to the department did not show receipt of the goods in the EOUs. From this it is presumed that the goods were not received in the EOUs. According to the statements made by some transporters they were unloaded in or around Surat. This statement is as vague as it can ever be. There is no evidence that the goods were delivered to the dealer whose name was indicated on the reverse of the Delivery Challan. No transporter has stated this. Neither the dealer nor the person to whom it could have bee....
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....in such a case, at least in some of the Delivery Challans, it would be reasonable to expect that the dealer to whom the goods were delivered would have signed in token of having received the goods, whether it be for onward sale in Surat itself or on behalf of the EOU. We are not in a position to appreciate the inaction on the part of the Investigating Authority to get any clarification in this behalf from dealers, more so after having visited their premises and not found any incriminating materials. They have merely stated that no incriminating materials could be found because the dealers would have anticipated search of their premises since Nova had been searched 20 days earlier. Nothing precluded the authorities from recording the statements of dealers on how the transactions involved in the present case were handled by them, particularly in cases where their names figured on the reverse of the delivery challans. If the department's case is, as has been made out in the show cause notice and as presented before us, that the dealers whose names appeared on the reverse of the delivery challans were to deal with the consignment covered by it and sell it in the local market, and t....
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....n made in respect of 43,53,933.42 kgs as pointed out by Nova in their reply to show cause notice, and covers the period (FY-2001-02 & 2002-03). No evidence of any sort (not even a single instance) showing actual sale of goods in the domestic market has come on record. The textile industry being one of the predominant industries in Surat, it is difficult for us to conceive that clandestine activities of sales of such large magnitude could have taken place without coming to the notice of the Central Excise authorities. This is not a case where goods sent to an EOU were found being sold in the domestic market. There is no evidence of any sale and there has been no identification of even a single buyer. There being a conspicuous absence of evidence of actual diversion of the goods into the domestic market, transactions in such goods by named persons, and flow-back of funds, a demand as in the present case cannot be sustained on the basis of mere statements made by transporters of goods and that too, not of the drivers who transported the goods but of the owners of such company, who were not involved in the physical transport of the goods. To say the least, the impugned order i....
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....me of the EOUs for utilizing the goods. From our discussion above, it would be clear that none of these grounds is substantiated by concrete or credible evidence. Mere reliance on the statements not corroborated by tangible evidence cannot be the basis for confirmation of a demand of high demand as in the present case. On the basis of the aforesaid findings, we are constrained to set aside the demand of Rs. 9,77,62,573/ -. 43. The learned Senior Advocate has also in his written submission raised the ground of limitation against the 4 demands in the present case, and that the show cause notice dated 30-6-2006 was time-barred since the extended period of limitation could not apply in the facts of the present case. He had submitted that Nova had maintained all the statutory records wherein raw materials and inputs as well as finished products have been duly entered and final product, namely, POY has always been cleared on payment of duty under Central Excise Invoices as shown in the documents like RG-1, PLA and monthly returns which have all been examined and assessed by the Central Excise authorities. No specific finding has been recorded in the impugned order holding as to ....
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....d against Nova, which we have set aside. The Adjudicating Authority, in the impugned order, has imposed penalties on the said units. Imposition of penalty on these units has been justified by the Adjudicating Authority on the basis that there has been collusion between Nova and EOUs. Since we have allowed Nova's appeal and set aside the demand for duty, imposition of penalty on these units on the ground of collusion with Nova cannot arise. There appeals are allowed and the penalties set aside. We do not, therefore, have to deal with the other submissions made by the EOUs appearing before us. In the case of T.G.L Poshak Corporation (Supra) this tribunal on the identical issue passed the following order :- 6. We have carefully considered the submission and perused the impugned order. Insofar as the assessee's appeal is concerned, we notice from the extracted portion of the Commissioner's order that Revenue is solely relying on the exercise note books mainly balance steets. The Tribunal in large number of cases which have already been noted above in the tabulated list of citations furnished by the Counsel has held that unless there is clinching evidence on the ....