2013 (11) TMI 626 - AT - Central Excise

Clandestine manufacture and removal of goods - Request for cross examination rejected by the Adjudicatory authority - Witnesses whose statements have been relied upon in the Show Cause Notice – Held that:- Following Swadeshi Polytex Ltd v CCE, Meerut [2000 (7) TMI 85 - SUPREME COURT OF INDIA] if the Adjudicating Authority ‘intends to rely upon the statement of any such persons, the Adjudicating Authority should give an opportunity of cross examination to the appellant - The decision made by the Adjudicating Authority in his letter dated 10.10.08 and in the order, denying Nova’s request for cross examination of witnesses, and subsequently recounted in the order is clearly in violation of principles of natural justice in the matter of the need to permit cross examination of witnesses on whose statements reliance has been placed.

Establishment of Charge of Clandestine Removal of Goods – Held that:- Charge of clandestine manufacture of the dutiable goods and removal without discharging the duty liable by an assessee, cannot be established on assumptions and presumptions - Such a charge has to be based on concrete and tangible evidence - Relying upon Oudh Sugar Mills Ltd. v. Union of India [1962 (3) TMI 75 - SUPREME COURT OF INDIA ] - demand of duty cannot be raised on the strength of assumptions and presumptions - There should be sufficient evidence of the removal of the goods alleged to have been manufactured and cleared without payment of duty - The charge of clandestine removal must be based on tangible evidence and not on inferences involving unwarranted assumptions.

Duty demand on documents seized from premises – Held that:- Mere admission of a document in evidence does not amount to its proof - The demand which has been confirmed against Nova by the order is not based on evidence which, as the Tribunal has repeatedly emphasized in cases of clandestine manufacture and clearance, would justify a finding against the appellant - Inferential or conjectural conclusions cannot be arrived at in such cases as has been done in the present demand, merely based on what GSL did with the POY allegedly sold to them by Nova - there is no tangible evidence produced by the department to establish that Nova has clandestinely manufactured and cleared POY on which the present demand has been made - the demand set aside being illegal and unjustified.

Demand on the basis of statements made by the employees – Held that:- It is totally a different thing to assess the probative value of the contents of the document - They have to be established on evidence, relatable to or linked with actual manufacturing operations - there is no such evidence forthcoming in the record before us - Mere reliance on note books/diaries or statements cannot justify a finding of clandestine manufacture and/or clearance - Apparently, no efforts seem to have been made in this behalf by the investigating authorities - In the absence of all such evidence, a finding that excisable goods have been clandestinely manufactured and cleared by Nova cannot justifiably be arrived at - The present demand is unjustified.

Demand on Degraded Chips/Polymer Waste arising from factory - Held that:- There were 9 vehicles out of 130 but the entire duty in respect of all the 130 vehicles has been confirmed. In any event, this being a case of clandestine clearance, evidence thereof cannot be the mere incapacity of 9 vehicles (inferred from only the Vehicle No. indicated) out of 130 to carry the goods - Corroborative evidence of actual manufacture of POY and clearance to identified person or places and of payments made are some of the required conditions, which are not there in the case of the present demand, as in the earlier two demands - the demand has been made without any concrete or tangible evidence, and for the sole reason that no goods were sent out because the vehicle no. indicated was wrong - No attempt was made to find out from the parties to whom 130 consignments had been sent as to whether or not they received the goods - the duty demand confirmed against Nova, as being not substantiated is liable to be set aside – Decided in favour of Assessee.