TaxTMI 
TaxTMI 
2003 (11) TMI 188
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....y of Rs. 15 lakhs on appellant, Chain Singh, Partner of M/s. New India Dyeing & Finishing Mills, Rs.15 lakhs on Devinder Singh, Manager of M/s. New India Printing Works, Batala and Rs. 2 lakhs on M/s. Vishnu Sahay Subhash Chand and of Rs. 3 lakhs on M/s. Dharam Pal Satish Kumar. 2. The allegations levelled against the manufacturing units is that as against the recorded quantities of processed man-made fabrics and processed man-made knitted fabrics, the appellants/manufacturers have removed clandestinely large quantities of fabrics from their manufacturing premises to various customers, without discharging central excise duty thereon. The thrust of the allegations is based on the documentary evidence unearthed through searches carried out at various places namely business premises of various customers. It is claimed by the appellants that, about 86 premises were searched covering various customers and no excess material was seized. The allegation is based solely on the basis of the statements of the buyers who have claimed that they have purchased processed fabrics from the appellant's manufacturing units. However, through raids conducted on the premises of the buyers no unac....
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....ve to be accepted, as the same have not been retracted. Therefore sale bills in question have to be considered as the ones pertaining to sale of processed man-made fabrics, liable to duty and should not be treated to be pertaining to grey fabrics, as claimed by the appellants. 6. We have given our anxious considerations to the various submissions canvassed before us. The allegation is basically of suppression of production. Consequently, the suppressed production is alleged to have been removed without payment of central excise duty leviable thereon. It is an admitted fact that, the manufacturing units do bring (i) man-made fabrics, (ii) cotton/woven fabrics, and (iii) man-made knitted fabrics in grey form in their factory for the purpose of processing. It is not in dispute that, they are required to pay duty only on the processed fabrics. It is also on record that, the manufacturers did pay central excise duty on processed man-made knitted fabrics, though now in the instant proceedings (as well as during the post 16-3-95 de novo adjudication proceedings before the Commissioner) it has been claimed that, the said payment was not required, in the absence of Chapter Note 4 under C....
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....s, though the nature of fabrics (whether grey or processed) is not amplied in the said bills. According to the department, the allegation is supported by the statements of various buyers who claimed that the purchased fabrics were "processed fabrics". The department has relied on the statements of the parties to claim that the sale was of processed fabrics only and, therefore, alleged duty evasion has been confirmed. However, the persons whose statements have been relied upon to level the said allegation, have not been made available to the appellants for cross-examination. Therefore, the statements have no evidential value being in the nature of one man's word against another. Even if the said persons were to confirm their version through the cross-examination even then, without a corroborative evidence of further sale from the premises of the said persons, showing the sale of "processed fabrics" would be necessary. None of the said persons have provided any documentary evidence to show that they actually sold the processed fabrics, nor did their records have been obtained to show receipt of "processed fabrics". The evidence generated through the said statements is therefore l....
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....e factory so as to eliminate all traces of clandestine removal. This was necessary because, in case, the quantity for eventual clandestine removal generated on a day-to-day basis was allowed to accumulate there was always a risk of accummulation of finished goods manufactured from the excess raw material or accummulation of stock of excess raw material itself, within the factory, leading to the risk of detection. So, in order to successfully execute the plan of evasion, the manufacturer had to also make surreptions arrangements for super efficient transportation of the excess raw material in the factory and removal of excess finished goods outside the factory and also a super efficient manufacturing process to produce, on priority basis, finished goods meant for clandestine removal, and at the same time, according low priority to undertaking manufacture and clearance of legal production. The statistics as appearing in the show cause notice and as analysed by us above shows that, roughly out of every 5 Sq. Mtrs. of processed fabrics cleared, 4 Sq. Mtrs. were allegedly removed in a clandestine manner. Summing up, the show cause notice claims that clandestine activity was predominant ....
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....re, must collapse and the conclusions drawn thereupon are accordingly set aside. 11. In the impugned order, there is also a reference to 2 hundies against which the customer has stated that he has not received the goods and he admitted that hundies have been signed in respect of sale bills presented by the Bank as these were only "accommodation" bills and that they have not made any payment against these bills to the Bank. Even the Bank Manager states that they had not received payment but he further stated that since hundies had been accepted by the consignee party, the goods covered by the outstanding bills should have been received by the consignee as normally acceptance of hundies is given only after they receive the goods. This is merely an interpretation of the Bank Manager of the transactions. However, there is clear admission of the party (appellants) that no payment has been received and admission also of the customers that no goods has been received. Hence there cannot be any duty liability based on the hundies in question. 12. In the Adjudication order, it has been mentioned that the department is not required to prove the case with mathematical precision (Collecto....