TaxTMI 
TaxTMI 
TaxTMI 
2003 (1) TMI 213
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....p; M/s. City Developers, Calcutta; and Kharagpur; (ii) M/s. Arun Distributors, Calcutta; (iii) M/s. Vinod Kumar & Co. Calcutta; and (iv) Depot of the Appellant at Dimapur. 3.1Regarding the alleged dispatches to M/s. City Developers, the learned Advocate submitted that the said cement was neither manufactured nor cleared by them from their factory nor even purchased and sold by them; that the allegation in the show cause notice was made simply because these goods were covered by the Railway Receipt in their names; that this was so because the Appellants had permitted M/s. City Developers to utilize the available space in the Railway rake allotted to the Appellants; the learned Advocate explained that for movement of cement, manufacturers file an indent with the Railways and depending upon the availability, full rake consisting of 40 wagons are allotted by the Railways; that on several occasions, the manufacturer is not having sufficient goods of his own so as to make a full rake load; that in such situations, the manufacturer permits other man....
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....st serial Nos. 66 to 72 were dispatched by M/s. Kanak Cement Pvt. Ltd. who were permitted by the Appellants to use 38 container wagons out of 80 container wagons allotted to the Appellants by Container Corpn. of India Ltd. for transporting the goods from Rourkela to Cossipore Railway Goods Shed; that these goods were cleared by Kanak Cement from their factory on payment of duty and the freight was also borne by Kanak Cement; that the Appellants had filed commercial invoices dated 31-1-96 of M/s. Kanak Cement in respect of the said quantity and giving full details of connected Central Excise invoices; that the Appellants had also filed Certificate dated 6-1-2001 from M/s. Kanak Cement; that without making any enquiry, the Commissioner has held that it is difficult to co-relate the gate passes of Kanak Cement with RRs. 3.3Regarding dispatches to M/s. Vinod Kumar & Co. the learned Advocate mentioned that the allegation relates to 2,336 bags of cement mentioned against Serial No. 73; that these goods were cleared by M/s. Vedvyas Cement Works P. Ltd. from their factory to Vinod Kumar & Co. on payment of duty and under cover of appropriate Central Excise invoices; that the Appellants ha....
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....also admitted in the show cause notice itself (Para 5.1). He also contended that there is not even an iota of evidence in the notice to show the manufacture of the said cement in their factory, receipt of any raw materials and packing materials, consumption of power and removal/transportation of the cement; that there is also no evidence that they had received any payment in any manner. He also contended that the findings of the Commissioner in this regard are nothing but surmises as no presumption could be drawn from the fact that their factory is situated close to the Railway Station; that Appellants never knew about their name being used by anyone till it received the show cause notice as the allegation was never made during the investigation stage; that the demand cannot be confirmed on the ground that it is unlikely that their rivals would have indulged in the movement of goods in their name. The learned Advocate mentioned that there are about 20 other cement factories and some unscrupulous persons might have used their name while booking the consignments just to keep away the fact of dispatches from the authorities; that the legal maxim "lex non-cojit ad impossibillia" (the l....
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.... by them or were cleared from their factory. 5.Countering the arguments, Shri N.C. Roy Chaudhary, learned Senior Advocate, submitted that the Appellants have made two main submissions - firstly the other manufacturers/dealers were permitted to load their own cement in Railway rack or container wagons allotted to the Appellants and secondly they had no depot at Dimapur and except the Railway Receipts. There is no evidence against them; that the cement was cleared by them. The learned Counsel, further, submitted that in first situation, it has not been denied by the Appellants that cement was dispatched in their names; that they had brought no evidence on record to show the allotment of racks during the relevant period; that moreover such a practice was there for a limited period; that it is also very surprising that M/s. City Developers came from Calcutta to Rourkela for purchasing the cement and instead of purchasing the cement from various manufacturers, they purchased the same from traders; that this goes to show that in the period of eight months between issue of show cause notice on 27-6-2000 and submissions of reply dated 21-2-2001, the story had been fabricated by the Appell....
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....ere can be some overlapping; that if the entire period of five years is taken into account, there is almost no difference; that even the Commissioner, in the impugned Order has given his findings that "that the discrepancy noticed in the factory as regards empty bags and raw materials is not of any serious consequence. I do not like to draw any inferences." 7.We have considered the submissions of both the sides. We observe that the Appellants have categorically contended that the cement cleared to M/s. City Developers, M/s. Arun Distributors and M/s. Vinod Kumar and Co. was not manufactured by them at all and the same was dispatched by different persons who were permitted to load the goods in the available space of Railway Rack allotted to them by Railway or in container wagons allotted to them by Container Corporation of India. The Appellants had, besides given the Certificates of the persons who had, according to the Appellant, dispatched the cement, had also furnished the copies of commercial invoices and Central Excise Invoices and the proof regarding payment of freight. The Adjudicating Authority has brushed aside all the material/ documentary evidences submitted by the Appel....
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....pellants have also relied upon a number of decisions such as Beco Industries Ltd. v. CCE, 2000 (121) E.L.T. 650, wherein it has been held that there is no doubt about the legal position that the charge of clandestine removal should be proved beyond doubt by production of affirmative evidences and that the said charge cannot be made on mere doubts. We observe that the Adjudicating Authority has not considered the ratio of various decisions cited by the, Appellants by merely observing that a clear case of clandestine manufacture and evasion of duty has been established. As observed earlier, the impugned order is not a speaking and reasoned one, we are constrained to set aside the same and remand the matters to the Adjudicating Authority for re-examination and passing an order afresh which is reasoned as well as speaking one after affording a reasonable opportunity of hearing to the Appellants. Thus, all three appeals are allowed by way of remand. Dt. : 30-9-2002 Sd/- (V.K. Agrawal) Member (T) [Contra per : Archana Wadhwa, Member (J)].8. - After going through the order passed by the learned Brother, Shri V.K. Agrawal, Member (Technical), it is seen that the matter has been remand....
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....rd "A", Dimapur. Learned Advocate has also contended that when the appellants' Officers were examined by the Revenue, they were never put to any question about the purported endorsement or delivery instructions on the railway receipts and as such, on the face of denial by the appellants, the Revenue is moving in the arena of assumption and presumption. Their Officers have clearly deposed in their submissions by way of an affirmed affidavit that no such instructions were given to any of their buyers at Dimapur to take delivery of the cement in question. In fact, they do not have any buyer at Dimapur and no relation with any of the persons at Dimapur who had taken the deliveries at Dimapur Goods Shed. He submits that the Revenue has not made any investigations from their buyers to find out the correct position. 10.Shri Bagaria, learned Advocate also clarifies that they have a Credit Note Facility System with the South Eastern Railways for payment of railway freight on the consignments booked by it from Rourkela Railway Station to various destinations and all the freights are paid by the Credit Notes. No Credit Notes were issued by them for payment of freights relating to the c....
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....ng only and exclusively from different cement plants who also manufacture clinker. Another important raw material for manufacture of cement i.e. slag, is being purchased by them from Rourkela Steel Plant to the extent of 95% and 5% is being purchased from M/s. Kalinga Iron Works. The Revenue has not produced any evidence on record to show that the appellants procured the raw materials from these two Units to the higher extent than what is reflected in their statutory records. 12.Shri Bagaria, learned Advocate, also submits that when the above pleas were taken before the Commissioner, he has simply observed that since the appellants' factory is situated close to the Railway Station and the railway receipts relate to a period of about eight months and the goods were delivered to various parties at Dimapur, it is unlikely that any person would have used their name and if that be so, the appellants have to show as to why no police complaint was lodged by them. For these reasons, the Commissioner has concluded that there has been a clandestine removal. 13.Dealing with each and every reason given by the Commissioner, Shri Bagaria contends that the entire order is based upon mere surmis....
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....Act,(b) 1872, the signature or handwriting of the person alleged to have signed the whole or part of the documents has to be proved. Under Section 36A(a)(ii), the court shall be entitled to presume that the signature/handwriting is of the person concerned. Section 68 of the Evidence Act provides(c) that if a document is required by law to be attested, it cannot be used as evidence until at least one attesting witness has been called for the purpose of proving its execution. Under Section 36A(a)(ii), the court is entitled to presume that the document has been executed or attested by the person concerned. All the aforesaid presumptions under Section 36A of the 1944 Act are available and applicable only where the document in question is produced by the person concerned or has been seized from the custody or control of the person concerned. In the present case, however, admittedly, the railway receipts in question were seized and/or obtained by the Department from the Railway Authorities. None of the said railway receipts were produced by or seized from the appellants. In these circumstances, absolutely no presumption of any nature with regard to the said railway receipts can be made....
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....he Revenue rests upon the railway receipts recovered from the Railway Authorities. As per the appellants, these railway receipts do not belong to them and it is possible that some other persons have been mis-utilising their name. Though they have not been able to pinpoint the name of any such manufacturing company or the local dealers, they have referred to a number of other evidences to show that there was no clandestine removal from their factory under the cover of such railway receipts. Now the question is as to whether the demand can be confirmed against the appellants solely based upon the railway receipts which were neither recovered from the appellants' possession nor were produced by them without any other independent evidence corroborating the allegations. It is true that there is no other evidence in the shape of receipt of the raw materials or payment to the workers or in the shape of extra electricity charges or any other form. The Revenue has not, surprisingly, contacted the concerned person at Dimapur who had taken the delivery, to arrive at the correct factual position. No officers of the Railways have been examined so as to find out as to who was the person who book....
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.... appeal was allowed. In the present case also, I find that apart from the railway receipts issued by the Railways, which can be equated with GRs issued by the transport company, there is no independent evidence on record to corroborate the finding of clandestine removal. The Revenue has not shown any payment of any freight to the Railways or receipt of any payment. It was held by the Tribunal that the appellants have taken a consistent stand of denial in respect of the goods covered by the Octroi terms and in these circumstances, it was for the Department to have conducted the proper investigations and collected the corroborative evidence. As such, the Tribunal observed that though there is a room for suspicion, it cannot be said that the clearance by the appellants has been proved adequately. The demand was accordingly set aside. To the similar effect is the decision of the Tribunal in the case of C.C.Ex. v. Dashmesh Castings Pvt. Ltd. reported in 2000 (40) RLT 1077 which lays down that allegation about clandestine removal based on Octroi records showing movement of the assessee's truck is no evidence so as to arrive at the finding adverse to the appellants. In the case of Commiss....
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....mption of power, actual manufacture of Pan Masala, discrepancy in stock of final product, etc. to establish the charge of clandestine production and clearance by Appellant No. 1." From the above, it is clear that the Revenue is required to discharge the burden of proving the clandestine removal against the assessee based upon the tangible and positive evidence and not on the basis of the documents recovered from a third person, especially when the assessee has produced sufficient evidence on record to show that chances of his indulging in clandestine removal in the given set of facts and circumstances, are minimum. In the case of C.C.Ex. v. Jindal Aluminium Limited reported in 1998 (29) RLT 183, the Tribunal observed as under :- "The Revenue knew their case better. They had made thorough investigation in the respondents' factory and not an iota of evidence had been found against them. They had produced all the registers, records. They had filed affidavits. There was no examination of a single witness or seizure of goods to show clandestine removal of goods or sale of such goods. It is the duplicate challans of the transporter, on the basis of which the alleged clandestine remova....
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....ppellants. They can only by referring to the other evidences, reflect upon their clean hands, which they have tried to do and when viewed from the angle of the failure of the Revenue to further conduct the investigations, which they were capable of and were in a position to do, it only establishes the case in favour of the appellants. As such, I am of the view that the impugned order in respect of the alleged clearances made to the appellants' Dimapur Unit under the cover of the railway receipts, is required to be set aside. 16.The impugned Order also confirms the demand of duty against the appellants on the ground that they had cleared the goods to M/s. City Developers; M/s. Arun Distributors; and M/s. Vinod Kumar & Co. The appellants have explained that as per the practice, they used to get a complete rake consisting of forty wagons from the Railways and on some of the occasions, all the forty wagons were not being loaded by them for want of orders etc. The space left in the said wagons was being utilised by the other cement manufacturers or cement traders, who in any case, required lesser capacity than a full rake. The details of the defence of the appellants have been reproduc....
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....echnical) as regards remand. 18.After considering the matter and the submissions made, it is found :- (a) The material facts of the case have been incorporated in the two orders prepared by learned Member (Technical) and Member (Judicial) therefore benefit I am repeating the same. (b) Learned Member (Technical) has in Para 7 of the order has recorded, after considering the decisions, as follows - "The adjudicating authority has brushed aside all the material/ documentary evidences submitted by the appellants by observing that "why this aspect was not revealed by them at the time of investigation. It is not apparent from the show cause notice as to whether all these allegations were enquired from the appellants while recording the statements etc. It is required of the adjudicating authority to consider the submissions made by the assessee and to appreciate the material adduced by it and to record the findings. We agree with the learned Advocate that the material/evidence brought on record by the appellants cannot be brushed aside by merely branding it as "after thought" as they had produced conte....
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....ers. In support of their arguments they enclosed letters from M/s. City Developers, 9 Parsee Church Street, Calcutta, M/s. Kanak Cement Private Ltd. & M/s. Ved Vyas Cement Ltd. It is not understood if what is stated by them is factually correct, why this aspect was not revealed by them at the time of investigation. If they had any apprehension that the investigation team is not likely to consider their request during the investigation time the position as narrated by them now could have been brought to the notice of higher authorities of the department. It has been submitted by M/s. City Developers, 9 Parsee Church Street, Calcutta that all the goods were purchased by them from local dealers. It has not been indicated from where the local dealers purchased the cement so that it could be correlated with the producer. M/s. Kanak Cement Private Ltd. enclosed photocopies of few gate passes but it is difficult to correlate those with the goods covered under the RRs. Similar is the case in respect of goods said to have been cleared M/s. Ved Vyas Cement Ltd. Inasmuch as there is no direct correlation between what is stated by M/s. Ved Vyas Cement Ltd., M/s. Kanak Cement Pvt. Ltd. and by M....
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....ly it has to be construed that other than M/s. Chariot Cement Company it is unlikely that their rivals or any other person would have indulged in such transactions. If that be the case, it is not known why they could not pinpoint who has used their name and why no police complaint filed for misusing their name since the burden of denying such clearance have fallen on them. Therefore, the evidence available that the supplies were made by them to Dimapur clearly establish that it was with an intent to evade payment of central excise duty. It is worth to mention that dispatch of cement consignments from Railway Goods Shed Office, Rourkela to Dimapur, Nagaland and subsequent sale of those consignments as per the delivery instructions given on the reverse side of the RRs have neither been reflected in their books of account or in their statutory records. And thereafter a conclusion regarding the dispatch of cement to various parties at Calcutta and Dimapur, it has been arrived at, that when goods are manufactured illicitly and removed, such acts of surreptitious nature with intent to evade payment of duty would not be resulting in keeping all documentary evidence. It has been concluded....
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.... therefore rejected this claim. This only shows, a closed pre-determined approach of the adjudicator to confirm the investigations made by his Preventive Officers. That question should have been put to the investigators. In any case, it is not for the appellants to disclose his defence before a Notice is issued. They have disclosed the carriage of others goods, when so charged. Therefore no further purpose would be served by remanding this case to determine the nature, ownership of the goods being claimed, which are not in doubt. In any case, from these records as available, now before this Bench, it is apparent that the claims indicate that the goods are not manufactured by the appellant and therefore cannot be the responsibility of the appellant to prove their duty-paid nature. The Revenue was duty-bound to investigate this plea by questioning such persons as they deem fit and bringing on record the actual payment of freight for such goods. These have not been done. Now no further purpose would be served by remanding the case back to the adjudicator to fill in this serious lacunae in investigations. In any case remand cannot be for purpose of filling up the gaps in investigation.....