TaxTMI 
TaxTMI 
2001 (8) TMI 200
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....de fabrics namely, suiting shirting and 100% polyester knitted fabrics. The officers of the Anti-Evasion of the Central Excise visited their factory premises on 31-8-1990. Shri Ajay Kumar Jain, Director of the appellant company was present there and he presented the statutory records for checking before the officers. On physical verification of the stock with the balance recorded in the records, no discrepancy was found. However, during the course of checking the officers found one calendar diary lying on the table of C.M. Sharma, Dyeing Master working in the factory who himself was not present there at that time. On examination of the diary, the entries at pages 46, 47, 65 and 66 were found to contain datewise production of processed suiti....
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....f July, 1990. The statement of Ajay Kumar was also recorded wherein he deposed that on receipt of grey fabric from different traders/customers, lot numbers were noted and entries were made in the grey register, the grey fabrics received by them from the customers/traders were accompanied by challans which contained number of pieces, length, quantity and those were subjected to different processes. He regarding the entries in the entries in the diary and the register stated that he was not familiar on what basis the total production of manmade fabrics as entered at pages 46, 47, 65 and 66 of the diary and page 76 of the register by the Dyeing Master, Shri C.M. Sharma for the period May, 1990, June, 1990, April, 1990 and August, 1990. 4.On....
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....nd the number of hours taken in calandering grey knitted fabric and stentering other man-made fabric, was also mentioned. They also in their reply disclosed various steps undertaken by them in the process of stentering the fabric. Those steps according to them were - drying the fabric on stenter machine, heat setting on stenter, dry again to maintain width, dry after viscose dyeing on stenter and finishing on stenter. They denied of having evaded any Central Excise duty by making clandestine removal of the processed fabric. 5.The Commissioner, however, did not accept this version of the appellants and confirmed the duty demand of the amount mentioned in the show cause notice and imposed penalty of Rs. 30 lacs on them. 6.The learned co....
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....he said to have deposed that the entries related to the production of the goods datewise. But there is nothing on the file to suggest that the appellants were ever afforded any opportunity to cross-examine him. All his three statements were recorded during investigation at the back of the appellants. Therefore, his evidence under these circumstances could not be used against them. 10.Even otherwise, the alleged entries at pages 46, 47, 65 and 66 of the diary and at page 76 of the register allegedly maintained by Shri C.M. Sharma, Dyeing Master did not in any manner prove the allegations of clandestine processing and removal of the goods by the appellants. All these pages of the diary contained four columns - date, polyester, suiting and ....
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....calandering but did not enter in the statutory record. No document whatsoever in this regard was collected against them from the buyers or traders nor such record was found in their factory premises. 11.The alleged recovered diary and register were never maintained by the appellants. These were only found in the room of the Dyeing Master Shri C.M. Sharma and on what basis he made entries therein remains unestablished. Even in none of his statements recorded on three different dates, he (C.M. Sharma) had disclosed in detail the basis on which he made the entries. He did not disclose the names of different customers from whom the raw materials i.e. man-made fabrics was received and then clandestinely processed and cleared by the appellants....
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....ndestine removal was not established. To the same effect are the observations made by the Tribunal in CCE, Meerut v. Raman Ispat (P) Ltd. - 2000 (121) E.L.T. 46. In that case also the allegations of clandestine manufacture and removal of the goods were based against the assessee on private note book seized from the factory premises. But no evidence was collected in support of the receipt of the inputs and presumed manufacture of the goods. The traders to whom some scrap allegedly was transferred only on papers, were not examined. The Commissioner dropped the proceedings on the ground that the department had failed to collect material to prove the authenticity of the seized private books. That order of the Commissioner was upheld by the Trib....