TaxTMI 
TaxTMI 
TaxTMI 
2004 (10) TMI 126
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....on the basis of information that they had removed the laminates without payment of duty; that simultaneous search and seizure operations were carried out on 2-8-1994 at the premises of Sharp Industries and of appellants; that there was no discrepancy in the finished goods at their premises; that some stock of duty paid laminates were seized from their premises on the ground that the same were unaccounted for; that the Officers did not find any raw material in excess at the appellant's factory or office, nor did they find any incriminating document in their premises; that there was also no seizure of stock from any of their customers nor was mere any seizure of their finished products in transit. 2.2. He, further, mentioned that a show cause notice dated 8-9-1995 was issued to the appellants for demanding duty on the finished goods allegedly removed by them clandestinely for the period 1991-1994 and for imposition of penalty, that the allegation in the show cause notice was that Sharp Industries had cleared non-duty paid laminates to some entities known as Shyam Sunder & Sons Pvt. Ltd., Delhi Zarda, Prakash Zarda and Ramlal Shyamlal which were allegedly delivered to the appellants ....
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....s of the appellants nor were any offending goods seized while they were in transit; that not a single statement has been recorded of any person who allegedly received any final product alleged to be clandestinely cleared by them. 3.2. Regarding seizure of packing material from the premises of the appellants, the learned Advocate submitted that due to paucity of space, the duty paid laminates received were entered in the R.G.23A register and the entire stock used to be issued on the same day, that the practice had been followed by them since the time Modvat was introduced and the Department was aware of the same; that Shri V.K. Singhal, Appellant No. 2, in his statement dated 2-8-1994, had explained the position to the officers. In support of the contention, the learned Advocate showed a photocopy of the R.G.23A Part-I register which showed the removal of entire quantity of laminates on the date of receipt itself. The learned Advocate also mentioned that the Department had started the investigation on the basis of excess stock of laminates on the shop floor vis-a-vis the records after the visit of the officers on 4-6-1991; that the practice of issuing the entire quantity of laminat....
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....learned Counsel emphasized that it is thus apparent from the cross-examination of these two high officials of Sharp Industries Ltd., that they were not aware of the recipients of the laminates said to be removed by Sharp Industries without payment of duty. 4.2. He mentioned that the entire demand has been confirmed against the appellant-company on the basis of statement of Shri Siddhartha Rattan, Regional Manager of Sharp Industries Ltd., and Amit Shah who have not been cross-examined and as such their statements along with the statements of those who have also not been produced for cross-examination have to be ignored. He relied upon the decision in the case of Arsh Castings Pvt. Ltd. v. CCE, Chandigarh - 1996 (81) E.L.T. 276 (T) wherein it has been held that "It is an elementary principle of natural justice and fair play that a person who is sought to be proceeded against and penalised in adjudication on the basis of third party statements should be afforded effective opportunity to challenge the correctness of the same as per law by cross-examination, if he so desired. If witnesses do not turn up for cross-examination, it is open to the adjudicating authority to proceed with th....
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....r that the appellants did not avail of the opportunity; that as these persons had not appeared for cross-examination, their statements cannot be relied upon by the Department. 5.1. The learned Counsel also contended that apart from bald assertion that the laminates cleared by Sharp Industries clandestinely were delivered to the appellants, there are no documents in support of the same; that the only documents relied in the show cause notice are couple of LRs and couple of RRs on which there is allegedly signatures of the erstwhile employees of the appellants; that mere presence of signature of their employees who were acting in concert with the employees of Sharp for ulterior motives cannot establish that all the clearances claimed by Sharp Industries were actually delivered to them; that in absence of any direct evidence or statement of any of the person who actually delivered the alleged clandestine material it cannot be alleged by the Department that the appellant received such material and used the same in the manufacture of final products which were cleared clandestinely; that though Shri Akhil Jain has identified the signature of Rajdev Maurya, he has never admitted the rece....
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....ocate finally contended that the charges in the show cause notice have not been established. He relied upon the following decisions :- (i) Gurpreet Rubber Industries v. CCE - 1996 (82) E.L.T. 347 (T) Note book maintained by a casual worker containing entries of production not to be relied upon to establish clandestine removal unless supported by other evidence such as installed capacity, raw material utilisation, labour employed, etc. (ii) Rhino Rubbers Pvt. Ltd. v. CCE, Bangalore - 1996 (85) E.L.T. 260 (T) wherein it has been held by the Tribunal that "it is not safe to rely on the third party's evidence, when no direct link has been established between the appellants and M/s. Chemtech Industries through cash transactions or any person". (iii) Padmanabh Dyeing & Finishing Work v. CCE, Vadodara - 1997 (90) E.L.T. 343 (T) wherein it has been held that electricity consumption to work out the probable production is not by itself sufficient to assess the production. (iv) Hans Castings Pvt. Ltd. v. CCE, Kanpur - 1998 (102) E.L.T. 139 (T). 6. Countering the arguments, Shri Kumar Santosh, learned SDR, reiterated the find....
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....and names of the appellants and the material was sent by Bombay factory directly to the appellants; that Siddharth Rattan admitted in the statement that the front firms and their addresses were bogus and were not in existence at all; that Mr. Mathur, Manager of the appellants used to make the cash payment for the purchases made by the front companies. The learned SDR also emphasized that after seeing two files seized from his Delhi office containing invoices in respect of Ramlal Shyamlal and Delhi Zarda, Siddharth Rattan has confirmed that all the material dispatched through these invoices was delivered to the appellants against cash payment. 7. The learned SDR submitted that Shri Vineet Dinesh Sharma of M/s. VIP Enterprises (Transporters), has deposed in his statement dated 2-8-1994 that materials of Tasty Gutkha and Superfit brands used to go in the name of the appellants, Ramlal Shyamlal, Shyam Sunder & Sons and Delhi Zarda; that he was informed by Shri Parab of Sharp Industries that such materials were to be delivered at the appellants premises; that Shri S.S. Parav, Partner of M/s. Bhagwati Roadways in his statements has deposed that particulars in the consignment note were f....
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....(73) E.L.T. 7 (S.C.) wherein the Supreme Court has upheld the demand arrived at by assessing normal production on the basis of electricity consumed. Finally the learned SDR submitted that in a case of clandestine manufacture and clearance of excisable goods, there cannot be any direct evidence; that as held by the Supreme Court in the case of Collector of Customs v. D. Dhoormull - 1983 (13) E.L.T. 1546 (S.C.), the Department is not required to prove its case with mathematical precision, but what is required is the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of the facts in issue. He contended that the Department has established its case on the basis of circumstantial evidence. Reliance has also been placed on the decision in the case of Shah Guman Mal v. State of Andhra Pradesh - 1983 (13) E.L.T. 1631 (S.C.). 8. In reply, the learned Advocate submitted that the Revenue has not established its case at all what to talk of mathematical precision; that Akhil Jain, Managing Director of the Appellant-company has nowhere in the statement dated 28-11-1994 admitted the signature of the company's employee on Lorry Receipt/Railwa....
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....duli Yusuff - 1977 35 CR 233 that "it can hardly be disputed that cross-examination is one of the most efficacious methods of establishing truth and exposing falsehood". The learned Advocate has relied upon many decisions in support of his contention that the statement of the witnesses who had not appeared for cross-examination cannot be relied upon and the same have to be disregarded. In the case of Arsh Castings Pvt. Ltd., the Tribunal has held that "failure of a witness to appear for cross-examination will not be a ground to penalise the appellants in law when the appellant is entitled to an opportunity of cross-examination of third party on whose statements reliance is placed". The finding of the Commissioner that Shri Siddharth Rattan and Amit Shah had appeared on 9-3-1999 and as Advocate for appellants did not appear on that day, and as such full opportunity had been extended to the appellants for cross-examination is without any substance. The Advocate for the appellant had sought adjournment as he had to appear before the Appellate Tribunal in a number of cases. There is no rebuttal of the factual position by the Revenue. Moreover the Adjudicating Authority himself has call....
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....y dealings with the appellants as he just knew that they were existing as customers and he had never met any person who represented Ram Lal Shamlal, Delhi Zarda and Shyam Sunder & Sons. The learned Advocate has emphasized that documentary evidence is in the form of only 3 RRs and 2 LRs and on the basis of these five receipts it cannot be alleged that clandestine supply of laminates were made to the appellants during 1991 to 1994. The contention of the Revenue is that these receipts bore the signature of the employees of the appellants. We, however, find force in the submissions of the learned Advocate that neither any statement of these persons was recorded by the Department nor any opinion of the hand writing expert had been obtained in support of the contention that the signature on those receipts were the signature of the employees of the appellants. There is also substantial force in the submission of the learned Advocate that Shri Akhil Jain, Managing Director of the appellant-company, has in his statement dated 28-11-1994, only mentioned that "apparently the signature of the photocopy of the LR and that of the bill do tally" but he has never admitted the receipt of the materi....
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..... In the present matter Revenue has not adduced any evidence to show that the appellants had procured any raw materials in excess of the quantities mentioned in their records. On the other hand, it has been contended by the appellants that the officers did cause investigations from supari suppliers and supari transporters, but they found nothing. There is no rebuttal also by the Revenue of the said contention. There is also no allegation from the Revenue side that when the officers visited the factory premises of the appellants on 2-8-1994, there was any excess stock of supari/katha/tobacco etc. Coupled with this is the fact that no excess stock of final product manufactured by the appellants was found by the visiting officers. This is evident from the show cause notice itself wherein it is mentioned in para 2 that "the officers verified the stock of finished goods however, no variation was noticed. The charge of clandestine removal of the goods has to be established by Department by adducing tangible, acceptable, cogent and convincing evidence as held by the Tribunal in the case of Emmtex Synthetics Ltd. v. CCE, New Delhi - 2003 (151) E.L.T. 170 (T). In this case the Tribunal has ....