TaxTMI 
TaxTMI 
2005 (12) TMI 150
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....eing with the SDR, we reject the request of the appellants for adjournment. 2. The learned DRs appearing for the Revenue reiterated the findings of the ld. Commissioner and stated that the Appeals need to be rejected since there were no merits in the Appeals filed by them. 3. We find that all these Appeals arise out of four Order-in-Originals Nos. 29, 30, 33 and 34, dated 17-11-2003, 25-11-2003, 17-12-2003 and 18-12-2003 respectively passed by the Commissioner, Central Excise, Thane II. 4. The main Appellants are M/s. Durian Industries Ltd. and M/s. Palghar Plywood Product Pvt. Ltd. (hereinafter referred to as the Main Appellants). The other Appellants are the co-appellants of the main appellants and are the dealers and employees of the main Appellants' factories. 5. It was alleged that main Appellants had manufactured and cleared decorated plywood bearing the brand of 'Durian' from the factory of the main Appellants without payment of duty and in the case of Palghar Plywood Product Pvt Ltd. i.e. second main Appellant it was submitted that they remain within the exemption limit provided under Notification 1/93, dated 28-2-1993, although they were undertaking....
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....private document and collected back the second copy of the private document left with them at the time of delivery of the material. The payments for all the trading bills issued by DIL by cheque no, Central Excise Invoices were issued covering such consignments though all these materials were cleared from the Main Appellants factory. These facts were confirmed by the dealers in their statements. The investigations also revealed that dealers had made payment in cash also for such consignment though all consignments were, where no trading bills were issued by Main Appellants to such dealers. Scrutiny of the seized records from the office premises of Main Appellants revealed that they issued such trading bills to the dealers giving the description as Veneer during the said period. This as per the notices were nothing but clearances of Durian brand decorative plywood manufactured and cleared from the factory of Main Appellants without payment of duty etc. Hence it was concluded that the amount mentioned in the bills represented the actual realisations by Main Appellants. Show cause notices were issued by the Commissioner to the Appellants hereinabove. SCN proposing confiscation was iss....
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....ellants only manufactured repressed plywood and did not manufacture decorative plywood. The dealers have tried to implicate the Appellant. No specific document has been relied upon by the department to prove that decorative plywood was manufactured by the Appellants. c. That, no investigations had been carried out to prove that the name, "Durian" appearing on the seized plywood was in the same style and fashion as that used by M/s. Durian Industries Ltd. The brand, 'Durian' was not registered and any one could have used it and the appellant could not have taken any action for infringement of trade mark. Therefore the order confirming the duty on goods that were never proved to be manufactured by them was bad in law. d. That, no evidence to prove excess purchase of raw material, use of labour, electricity, transportation etc. to manufacture decorative plywood as alleged in the notice was produced. e. That, no investigation or finding has been brought on record specifically proving that the seized goods had been manufactured by the appellants. f. In case of the appellants M/s. DIL, they denied the findings of the ld Commissioner at Para 36 ....
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....s of two such customers who had further sold the goods, namely M/s. Durian International, New Delhi, and M/s. Nakita Trade, that the customers themselves had sold the said goods bought and sold in the market as repressed plywood. It was therefore submitted that in the absence of any sample test, goods manufactured by the appellant cannot be held as Decorative Plywood. That with reference to the goods seized at the dealers end, no investigations were done to ascertain as to who are the manufacturers of the goods and she failed to appreciate that the goods were not manufactured by the appellant. The Commissioner did not offer her findings to the submissions made by the appellant of the applicability of the decision in the case of B.G. Plywood Ind. (Pvt.) Ltd. [(2001 (96) ECR 709 (Tri.)] to contend that the Hon'ble Tribunal in an almost identical circumstances, held that the samples were not sent for testing, advertising material alone cannot be the basis for the purpose of classification. i. Though the entire quantity of disputed goods were said to have been cleared to various dealers, during the search operations at these places, the officers did not find even a single ....
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....ct, the Respondent has set aside the charges of collection of any extra consideration therefore there was no reason to conclude that they would have issued bills and received values as per this bills by cheque and supplied costlier goods. m. The goods valued at Rs. 1,47,35,722.81 were not found in the dealer's premises nor were they seized. Reliance has been placed on the statements of nine dealers, in this connection, whereas, there were in all nineteen dealers who were visited and it is their submission that these nineteen dealers were not covered in investigation. n. Dealer's statement was not determinative of the classification of the goods. Reliance was placed on the decisions in the case of Blue Star Ltd. v. UOI [1980 (6) E.L.T. 280 (Bom.)] and Toshiba Anand Batteries Ltd. v. Commissioner [1987 (31) E.L.T. 150 (Tri.)]. o. The Commissioner ignored the submissions that the allegation was one where they had manufactured and cleared without payment of duty on Decorative plywood by passing it of as Veneer by issue of trading bills. They have denied this allegation and in support, they have pleaded that they have sold the goods to the dealers as d....
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....fiable and untenable in law. q. The Commissioner also did not offer her findings to the allegations of the discovery of delivery chits which were found and seized with various dealers during the course of stock taking at each of these dealer's premises. They have denied having issued any such delivery chits. These documents referred to in the show cause notice do not contain any signature or stamp and authentication of their company or any of their various representatives or officials. There is nothing to corroborate the statements of the dealers relied upon in Para 5 of the notice. Except for making bald and generalise the statements which are believed by the department itself. Namely, the so called delivery chits, there is no other evidence much less of the degree held by the Hon. Tribunal to prove the clandestine removal. They therefore, submitted that the allegation of clandestine removal is without any substance and devoid of merits. In the written submission dated 17-7-2004 submitted by the advocate it was further submitted that the total purchase and sales of "Veneer" by the appellant tally with the statement of veneer purchase and sale referred to above proves ....
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....ion has been denied by the Commissioner in her order, since this appellant had manufactured branded goods of brand not belonging to them. It is, however, their case that they had manufactured goods of the description, "plywood repressed" and cleared the same to their dealer. They were also engaged in trading of the product, Veneers. This trading was conducted outside their factory premises. 14. It is the case of the Department that they found branded goods in the dealers premises and also found labels/stickers on the said goods termed by them as decorative plywood which they allege were manufactured and cleared without payment of duty from the factory of the main appellants. We find that the main appellants have denied the allegations made by the Department and have cited several evidences as well as countered the statements of the dealers. We note that the factory and dealers premises were simultaneously visited by the officers and that the factory was in individual condition. It is seen that the Department did not come across any stock of the alleged branded goods in the factory nor did they draw any test samples. The Department has also ordered release of the seized goods unc....
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....s must be established right from the consumption of excess raw materials up to the transport of such unaccounted production might be established. In a very similar case, the Tribunal in the case of Sharon Veneers [2002 (146) E.L.T. 655 (Tri.)] wherein the Tribunal on a Third Member reference had discarded the evidences relied upon by the Department as insufficient. We accordingly are inclined to apply the ratio of these case laws and to hold that the chits have not been subjected to strict test of evidences and that these chits do not have evidentiary value and we accordingly discard the same. 18. The Commissioner has ordered confiscation of the seized goods without giving notice to the dealers who were the owners of the goods. Such confiscation is, therefore, bad in law and is required to be set aside. 19. We, therefore, set aside the impugned orders and allow the appeals with consequential relief, if any. (Pronounced in Court on_______________ ) Sd/- (Krishna Kumar) Member (J) C. Satapathy, Member (T) 20. I find that all these Appeals arise out of four Orders-in-Original Nos. 29, 30, 33 and 34 respectively dated 17-11-2003, 27-11-2003, 22-12-2003 and 24-12....
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....re confiscated and allowed redemption on payment of fine. Penalty was imposed on the manufacturer, their Director and employees, as well as the dealers under Rule 209A of the Act. II. Appeal Nos. E/698-704/04-Mum arising out of Order-in-Original No. 30, dated 27-11-2003 23. M/s. Palghar Plywood Products Pvt. Ltd. (hereinafter referred to as 'the manufacturer') is a manufacturer of Plywood of various grades falling under Chapter 44 of the Central Excise Tariff. Investigations were conducted with the dealers and the Company wherein some of the Decorative Plywood lying with one of the dealers was placed under Seizure. Subsequently, a Show Cause Notice dated 31-5-99 was issued on the ground that goods seized from the Dealer were those, which were cleared clandestinely by the Manufacturer and also demanded duty on goods lying in the factory premises of the manufacturer. Penalty was proposed to be imposed on the manufacturer and the dealer. The value of the goods allegedly removed was worked out to be Rs. 58,91,883/- and duty demand is Rs. 10,60,539/- was proposed in the notice. It was also proposed to confiscate the goods on the grounds that they have been clandestinely re....
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....g to Rs. 2,18,64,157/- was made on account of under-valuation of the goods in the notice. 26. Upon adjudication, the adjudicating authority has dropped the demand of duty demanded on the charge of under-valuation on the ground that there is no evidence to show that any testing was done on the goods to prove that the goods were other than repressed plywood and that proposal in the notice to value on the goods on the basis of the highest clearance prices had not basis in law and that plywood cannot be valued on the basis of thickness alone but on variety of factors determine the pricing. As regards Clandestine Clearance, the lower authority rejected the plea of the manufacturer that these were actually Veneers that were being traded by them. The lower authority relied on the admissions and the modus operandi explained by the dealers, some of the stock actually found at the premises of some dealers and the fact that Exhibit submitted by the manufacturers do not show the purchase/sale details nor any clearance documents of the veneers were submitted during the proceedings. It was held that since the manufacturer has manufactured branded goods and removed them clandestinely, the meri....
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....t that Exhibit submitted by the manufacturers do not show the purchase/sale details nor any clearance documents of the veneers were submitted during the proceedings. It was held that since the manufacturer has manufactured branded goods and removed them clandestinely, the merit rate of duty would be applicable. Therefore, the duty demand was confirmed on the manufacturer for having removed the same clandestinely without payment of duty and 100% penalty under Section 11AC of the Central Excise Act, 1944 was imposed. Interest under Section 11AB was also confirmed. Penalty was imposed on the manufacturer, their Director and employees, as well as the dealers under Rules 226, 52(A), 9(2), 173Q and 209A of the Act. 29. After examining the records, I find that while some tables of production and clearance have been submitted, no duty paying documents were submitted before the lower authority nor any duty paying documents were found during the search at any of the premises of the manufacturers or dealers. The learned DRs have relied on the judgments in the case of Royco Biscuit Co v. CCE [2000 (123) E.L.T. 1063 (Tri)] and Commissioner of Customs v. D Bhoormull [1983 (13) E.L.T. 1546 (S.....
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.... I have heard Shri M.H. Patil, ld. Advocate appearing for the appellants and Shri Hitesh Shah, ld. SDR appearing for the revenue and have gone through the order recorded by ld. brothers. The dispute in the present appeal relates to appreciation of evidence available on record for the purpose of arriving at finding of clandestine removal. Detailed facts have already been enumerated in the order recorded by the ld. Member (Judicial) as also in the order of the ld. Member (Technical) and, as such, the same are not being referred to again so as to avoid redundancy. 33. It is seen that the entire case of the revenue for the alleged clandestine removal is based upon the seizure of decorative plywood from the premises of the dealers and the statement of some of the dealers to the effect that such decorative plywood was received by them from the manufacturers i.e. M/s. Durian Industries Ltd., and M/s. Palghar Plywood Products Pvt. Ltd.", without payment of duty and under the trading bills for Veneer. The appellants have strongly contended that they are not manufacturing decorative plywood and the said goods found and seized from the dealer's premises are not manufactured by them. Me....
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....vely held that the decorative plywood in question was manufactured by the appellants and cleared by them without payment of duty. In fact, it is on record that during the course of visit of the appellant's factory not even a trace of decorative plywood or the raw materials required for manufacture of decorative plywood was found. If the appellants would have been engaged in the manufacture of decorative plywood, the officers would have definitely found some evidence to that effect. No investigations having been conducted by the revenue to ascertain as to who are the manufacturers of the plywood found at the dealers premises, the appellant's contention that it is not their product, has to be accepted. I find that the reliance on the Tribunal's decision in the case of B.G. Plywood Ind. (Pvt.) Ltd., by Member (Judicial) is appropriate, wherein under similar circumstances it was held that in the absence of the samples having been sent for testing, advertising materials in the shape of booklets does not have any evidentiary value. 36. It is well-settled law that the allegations of clandestine removal, which are quasi criminal in nature are required to be proved by the rev....