TMI Blog2012 (6) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... sh clandestine activities of the appellants. In fact, Commissioner has himself observed that the demand is being confirmed on the basis of circumstantial evidence. Therefore, said duty confirmation cannot be upheld - Decided in favor of assessee. - Excise Appeal No.365-368 & 435 of 2009 - A/621-625/2012-EX(BR)(PB) - Dated:- 23-5-2012 - Ms. Archana Wadhwa, Mr. Rakesh Kumar, JJ. Shri K.K.Anand, Advocate for the Appellants Shri A.K.Raha, Advocate for the Respondent Per Ms. Archana Wadhwa: All the appeals are being disposed of by a common order as they arise out of a same impugned order passed by Commissioner in de-novo proceedings vide which he has held as follows :- S.No. Name of the Noticee Duty confirmed Penalty imposed 1. M/s KPL Rs.19.37 crores interest Rs.19.37 crore 2. M/s EKTA NIL Rs.1 crore 3. Shri Deepak Kothari NIL Rs.1 crore 4. Shri Mithesh Kothari NIL Rs.1 crore 5. Shri D.R.Arora NIL Rs.1 crore 2. The said impugned order stands passed by the Commissioner in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther investigation. Follow up investigation were conducted and statements of various persons were recorded. Assistance from various agencies/govt. departments was sought during the course of investigation. It is seen that during the course of investigation randomly selected sourced documents together with corresponding and contemporary accounted for documents (documents recorded in their books of accounts) and corresponding sample signatures of the signatories on sourced documents were sent to Govt. Examiner of Questioned Documents (GEQD, Shimla), for examination. As per the report of the said organisation, the signatures on these documents and the signatures appearing on the sourced documents are of the same person and have been made at the same time in all cases. According to the Revenue, during the course of investigation, the author of the sourced documents admitted that these sourced documents were written/prepared and duly signed by them only. 5. Further investigations were conducted at the raw materials suppliers end and it was found that the processed betel-nuts and Kattha supplied by M/s Ekta Flavours Ltd. to M/s Kothari Products Ltd. were far in excess of what has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admittedly, the facts are required to be placed before the Bench by the first party arguing the matter, Shri Raha took his own time to put-forth his arguments and there was no pressure or compulsion from the Bench on him to conclude his arguments. It is only after Shri Raha finally concluded his arguments on 03.02.12, the matter was closed and written submissions were required to be filed by both the sides by 12/16.03.12. The notesheet very clearly records that after the filing of written submissions, both the sides are free to advance arguments. As such when the matter was listed for filing of written submissions, both the sides were free to do so. However, it is noted by the Bench on 16.03.12 that written submissions were filed by the appellants but there were no written submissions filed by the Revenue, the same stands filed subsequently on 19.03.12. As such the deposition made in the written submissions that Revenue was constrained to conclude his arguments in a day, does not appear to be fair and correct reflection of the court proceedings. Senior counsel Shri Raha was free to continue his arguments on the next day of hearing and if we remember it correctly, Shri Raha submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of Cartage Slips (having the date wise details of nature of work done by the labours of contractors). Accordingly, the following two accounted for documents namely (1) Delivery Challans of Supari/Kattha/gutkha as reflected in their Raw Material Report etc. were compared with (2) the cartage slips attached to DCV of M/s Kothari Products Ltd., showing the details of unloading of Supari/Kattha/lamination/ tobacco/movement semi finished gutkha etc. Upon such comparison/tally, it was found that there was huge variation in respect of quantities in these two accounted for documents, on day to day basis. No explanation could be offered by the appellant for such wide variation and discrepancy, with two accounted for documents. This strongly suggested that for reason of wide scale and unrestrained manipulation of records, M/s Kothari Products Ltd. lost track of matching entries and timely reconciliation of various accounted for documents, thus resulting in mis-matches. 13. On the day of search, the officers got the proforma filled by all available labour present in M/s Kothari Products Ltd. and the same was duly verified by the labour supervisor and the General Manager of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny of the said data alongside the accounted for invoices of M/s KPL as also resumed photocopy of invoices, the following glaring discrepancies were noticed :- * There were many entries of KPL consignments in CTO data which did not have any corresponding accounted for invoices. This meant that M/s KPL had removed many consignments without issuing any accounted for invoices. * There were many entries in CTO data showing same invoice number for two consignments of the party delivered on different dates, thus smacking of double invoicing. In other words, the computerised CTO records suggested that KPL had been transporting two consignments to the southern states but accounting for only one in their statutory records as details of only one entry of such CTO data matched with the accounted for invoices issued by the party. * On comparison of the details of Transit Passes, corresponding CTO data and accounted for invoices issued by M/s KPL, it was found that against several Transit Passes, no corresponding accounted for invoices had been issued by the party. However, the Transit Passes clearly suggested physical movement of goods through the A.P. check post. * Quite a few re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his cross examination. As such he submits that the adjudicating authority has rightly rejected the opinion of Shri Junaid which is contrary to the opinion of GEQD. He places on record a table indicating the educational qualification of Shri L.Nato Singh, GEQD, Shimla as against the qualification of Shri Junaid. He also submits that whereas GEQD being a reputed organisation accredited by National Accreditation Board for Testing and Calibration Laboratories, Shri Junaid has been working privately as hand writing expert, finger prints document expert. He also submits that whereas the documents were examined in laboratory at GEQD, Shri Junaid had examined documents in his own laboratory. By referring to various discrepancies in the opinion of Shri Nato Singh and also opinion of Shri Junaid, he submits that his report cannot be referred to and relied upon and has been rightly discarded by the Commissioner. 19. Shri Raha further submits that there is sufficient corroboration of sourced documents with the accounted for documents of the appellants. By referring to Exhibit No.3 of the Show Cause Notice, he submits that there are 15 kinds of documents available with the Revenue, pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Guard on single sheet of paper on daily basis by using one side of the sheet for each of these entries whereas one part of the sheet was used for the goods purchased from the local market of Kanpur and received in M/s Kothari Products Ltd. The said sheet maintained by the Guard was recovered from the date of search also and it was being prepared in the same fashion as sourced documents. He submits that more than 84% of such entries in the said sourced documents were traced by the officers in the relevant records which have been accounted for by the appellants. As such this fact is sufficient to establish that the sourced documents were relatable to the appellants only. 22. Shri K.K.Anand, ld. Advocate appearing for the appellants has vehemently contested the confirmation of demand of duty on the findings of clandestine removal based upon some of documents, the source of acquisition of which is not available with the Revenue. He submits that these sourced documents, relied upon by the Revenue were nothing but fabricated documents by one Shri Anil Srivastava who was working with the appellants as Cashier till December, 2000. He submits that the above fact has come on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her law and such document is tendered by the prosecution in evidence against him or against him and any other person who is tried jointly with him, the Court shall, (a) Unless the contrary is proved by such person, presume (i) the truth of the contents of such document; (ii) that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the Court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person s handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested; (b) admit the document in evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence. He accordingly submits that it is only when such document is tendered in evidence against the person who produced the same or from whose custody or control it was seized that the presumption U/S 36-A is available. In the present case admittedly none of the source documents was produced by the Appellant or seized from the Appellant s custody or cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by the adjudicating authority. As such he submits that it is surprising as to how after destruction of the said loading slips, the same came into the possession of the Revenue. He submits that this fact itself strengthens the appellants stand that the loading slips along with other relevant documents stands fabricated by Shri Anil Srivastava and supplied to the Revenue. He also submits that the Revenue has nowhere examined the author of the said loading slips or the drivers and the transport authorities to substantiate the allegation of clandestine removal of the goods. It is also the contention of the ld. Advocate that their contractor Shri Yadav has nowhere accepted the fact of receipt of excess cash for doing the job of loading/unloading of their final manufactured goods. The appellants have also contested that they never used to prepare in/out documents at any of their premises. The said fact becomes clear from the statement of Shri Vinod Sharma, General Manager (Excise) Managing Director, M/s KPL. The so called in/out documents recovered by Revenue on the day of search itself is a fabricated document. Ld. Advocate also submitted that the demand is limited to around ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Shri Dharmendra Singh was to the effect that the said GRs although issued in his firm s name were not issued by him or his staff. During the course of cross examination on 17.10.02, he categorically stated that the transactions of five consignments were entered in his books of accounts. This Supari was also accounted for by their Baroda unit on 12.08.2000 and was used in manufacture of finished goods, cleared on payment of duty. The mistake in the vehicles nos. might have occurred on account of possibility of mistake in mentioning the correct vehicle number. He submits that as long as their Baroda Unit had received and accounted for the said Supari in their account and payments were made to Shri Dharmendra Singh vide account payee cheque , no adverse inference can be drawn that such Supari was not transferred to Baroda unit and the same was used in the manufacture of final product at the appellants unit at Kanpur. Dealing with the statements he submits that no reliance could be placed on the so called inculpatory statements which were retracted and un-corroborative. The fact that the same were recorded under coercion stands substantiated from the retraction of the same. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be dealing in our finding portion. It further stands contested that though the Revenue has alleged that M/s Ekta I II were grinding and crushing Supari and Kattha on the higher quantity, there is no allegation or evidence of payment of excess job charges to them. He submits that M/s KPL as also M/s Ekta I II were duly showing job charges paid and received respectively for the entire financial year in their Balance Sheet and the Revenue has not disputed the said accountal as reflected in the Balance Sheets. There is no evidence of extra flow of cash from M/s KPL to M/s Ekta. Further department has not made any efforts to find out as to whether M/s Ekta I II were able to crush and grind more Supari and Kattha than the quantity reflected in their records. No evidence in the shape of consumption of excess electricity, water, labour etc. to undertake job work stands produced by the Revenue. In the absence of such evidences, the Revenue s stand that M/s Ekta I II crushed excess Supari and Kattha and supplied the same to the appellants which was used in the manufacture of their final product cannot be sustained. He submits that the statement of Shri Deepak Kumar, Managing Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that said documents stand provided by Shri Srivastava. The appellants contention is that as the informer was in knowledge of the documents being prepared by the appellants in the ordinary course of their business, he had prepared the sourced documents in such a manner so as to resemble the original documents. 27. We find from the pages 1 to 44 appearing in Volume-84 of Paperbook that various RTI applications stands filed by Shri Anil Srivastava seeking information from the Revenue about the reward money. The proceedings conducted before CPIO, first Appellate Authority as also before Chief Information Commissioner, second appellate authority lead us to believe that the so called sourced documents were provided by Shri Anil Srivastava to the department. When the above stand was taken by the appellants before the Commissioner, he has nowhere denied that it was Shri Anil Srivastava who supplied the said documents to the department. 28. We find that the statements of various employees of the appellants, recorded during the course of investigation are also to the effect that the sourced documents were being prepared by them under the instructions of Shri Anil Srivastava. Ld. Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents being prepared by the appellants. Various witnesses at the time of recording of their statements as also subsequently at the time of their cross examination have deposed to the fact that such documents were being prepared by them under the instructions of Shri Anil Srivastava. In as much as the sourced documents came into the possession of Revenue after a period of 1 = years from the date of their alleged issuance, the credibility of the same becomes doubtful in view of the clear evidence on record that the same were tendered by the disgruntled employee of the appellants as is clear from the proceedings pursued by the said informer before the Central Information Commission. 30. We find that Tribunal in the case of Ashwin S.Mehta reported in 2006(197)ELT386(Tri.-Bom.) has observed as that the origin of seized documents on the basis of which under valuation is alleged was always questioned by the appellants and the Commissioner s order does not indicate how and where from they were recovered. The fact that the same were shown to the appellants when their statements were recorded, does not mean that the same were recovered from the office of the appellants. Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. In view of the above background, the sourced documents are required to be scrutinised very minutely and the evidences leading to the allegation of clandestine removal are required to be appreciated with a pinch of salt. At this stage, we may take into consideration latest majority decision of the Tribunal in the case of M/s Kuber Tobacco P.Ltd. and others vide Final order No.A-83/110/2012, dtd. 03.02.12. It is seen that the order of the then Hon ble President extending relief on the basis of doubt about the seizer of the documents stands agreed upon by the third member. As such the observation made by the Hon ble President stands reproduced below for better appreciation of the dispute and the evidentiary value of the documents seized from various places. 12. The credibility of the documentary evidence which is relied upon to hold that the appellants were involved in clandestine removal of the products is sought to be disputed on various grounds. Firstly, the seizure proceedings are themselves contended to be illegal, secondly, the author of those documents has not been identified and has neither been examined nor produced for cross examination, thirdly, the documents are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... linked with the activities of the concerned party. The panchnama and the proceedings in relation thereto should not leave any room to entertain any doubt as such and for the possibility of planting any article and/ or document by third person or of the scope for interference by strangers with the documents or contents thereof. Obviously, therefore, any article or document seized from any premises is required to be properly sealed after being packed with necessary wrapper or envelop or covering, as the case may be, so as to avoid any possibility of third party interference with such article or document. In the absence of such steps being taken in the course of seizure of the articles or documents, certainly the credibility of not only of the seizure and recovery but of the material seized and recovered can also be doubted. It is also necessary to record not only the description of the premises but also the movement of the officers and the panchas searching the premises and every relevant action of every such person has to be precisely recorded in the panchnama to avoid any doubt about the seizure proceedings. None of such precautions were taken in the cases in hand. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the documents has been identified nor examined and the documents are carbon copies and being private documents unless a link is established between the said documents and the activities of the appellants in their factory, no credibility can be given to the said documents, the Bench accordingly held as under :- 32. Being so, one wonders whether these were the very documents which were seized from the said premises? If not, how and from where these documents were recovered? We have no clue either from the records before us or from the impugned order in that regard. In the absence of this vital information, we fail to understand as to how these documents can be of any help to establish the charge of clandestine removal of the goods by the appellants, and that to by applying the curious methodology of two digit reduction theory applied by the department without disclosing any basis for such theory. By applying the ratio of the above majority decision to the facts of the present case, we note that there is no source of acquisition of the documents disclosed by the Revenue. Even in a case where there was a search and recovery of documents found from the various premises of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion of Shri Junaid was also being obtained by the Revenue in the past to support Revenue s views, does not stand disputed by Shri Raha but he submits that at that point of time, there was no doubt about his qualification and expertise. Without going into the technical qualification of both the experts, we note that when it is the appellants case that the documents which are in the possession of the Revenue were being fabricated by Shri Anil Srivastava and it has come on record that the same were being signed at the instructions or direction of Shri Anil Srivastava, we are of the view that the fact that signatures on the said documents might have matched with the signatures on the accepted statutory documents. In our views, in the backdrop of the above submissions, the fact of matching of the signatures by itself does not lead us to any specific finding of clandestine activities on the part of the appellants and the said facts also does not reflect upon the genuineness and the authenticity of the said documents. The GEQD has opined that all the above documents have been written/signed by one and the same person but there is no opinion to the extent that as to whether the said d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Rajesh Shah, employee of the appellants company in his statement, dtd. 17.01.03 deposed as under :- The cartage slip prepared by me on the basis of loading/unloading slip prepared by the guard at the factory gate is attached to the voucher and given to Shri Sunil Srivastava. Once the voucher is checked and approved by Shri Srivastava then I take the same to the director available in the factory (usually Shri Mithesh Kothari and occasionally Shri Deepak Kothari) personally. The director signs the voucher after going through the contents of voucher and that of the loading/unloading Slip. After this the loading / Un Loading Slips are destroyed by Shri Sunil Srivastava himself through paper shredding machine so that the said loading/unloading slips are destroyed completely. If Shri Srivastava is not available then I destroy the same personally through the said paper shredding machine. In/Out paper prepared by the guard are destroyed by me personally. The loading and Un Loading Slips, In/Out paper prepared by guards move only among myself, Shri Sunil Srivastava, Shri P.N. Mishra and the director available in the factory. These documents do not move through any other persons 36. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir written submissions that these documents were required to be destroyed but were not destroyed by the appellants and that is how they came into the hands of Revenue. We note that the above stand taken by the ld. Advocate appearing for the Revenue is contrary to the allegation made in the SCN and the Revenue s own stand that the appellants were destroying the said Loading slips. In fact we note that in the SCN, the Revenue has made allegation at various places that the appellants were not informing the Revenue about the generation of the loading slips and their subsequent destruction. All the deponents in their statements have clearly stated that said loading slips after being converted into DVC were being destroyed in the papershreded machines. Even during the course of cross examination, the said deponents have not changed their stand. If that be so, the physical presence of the said loading slips on the basis of which huge demand stands confirmed against the appellants is in grave doubt and keeping in view the appellants stand that the said loading slips were fabricated by their employee who had supplied the same to Revenue in the light of the evidences relating to the RTI ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made payment to him many times, did not match with the receipts of cheques but he also submitted that there was possibility that the amount disbursed to him and shown in the voucher could be more or less than shown in the said vouchers and it was not necessary that when he received the payment, he simultaneously signed the DVC. He clarifies that sometimes signature on DVCs are taken after a gap of days. Scrutiny of the above statement does not advance the Revenue s case in as much as there is no clear admission on the part of Shri Yadav that he has received the payment without signing the DVCs. There is also nothing in his statement to reflect upon the fact that some cash payments were being made to him over and above as reflected in the DVCs. The difference given in the DVCs and the actual payment made to the labour contractor, according to the appellants could be on account of various factors like non-production of loading slips, calculation mistakes, changing of cost rate and the same gets settled subsequently. We find that Shri Yadav was a star/prime witness for the Revenue and a direct question put to him as regards the excess receipt of payment than what was being paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 loading slips out of 719 loading bore only single signature of either the Supervisor of the appellants or the Guard. It is the appellants contention that as per the procedure adopted by them, the loading slips were signed either by the Supervisor or the Guard and subsequently signed by the Cashier. In the loading slips possessed by the Revenue, there are no signatures of the Cashier appearing on the same. In as much as the Cashier was Shri Anil Srivastava who used to sign all the loading slips, the absence of his signatures on the loading slips possessed by the Revenue indicate that the same were fabricated documents. Apart from that it is seen that 19 loading slips also bore the signatures of drivers along with truck nos. However, the Revenue did not bother to either record the statements of the drivers or conduct investigation at their ends. Further, the signatures of Shri Anil Srivastava appears on some of the loading slips belonging to M/s Ekta Flavours Ltd.. Admittedly Shri Anil Srivastava was an employee of M/s KPL and the appearance of his signatures on these loading/unloading slips of M/s Ekta I II without there being any explanation leads us to believe that the said do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... majority order of the Tribunal in the case of M/s Tejwal Dyestuff Industries reported in 2007(216)ELT310(Tri.Ahmd.) wherein it was observed that having obtained confessional statements, Revenue officers did not carry out the detailed investigations into the relevant aspects of the case, particularly the bank accounts and working of the assessee s factory. It was further observed by the then Hon ble President to whom the difference of opinion was referred that recording of a confessional statement would not put an end to investigation and the Revenue officers should be careful to ensure that they are not tricked out of a regular and detailed investigation. By observing so, the dispute was decided in favour of the appellant. The said decision stand confirmed by Hon ble Gujarat High Court when the appeal filed by Revenue stand rejected as reported in 2009(234)ELT242(Guj.) It is well settled law by catena of judgements (with which we shall be dealing with at appropriate place) that the demands cannot be raised on the basis of loose papers/loading slips even recovered from an assessee s place, unless the same are corroborated (admittedly not to the extent of 100%) in material particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o small period, the allegations of clandestine removal for the period in question cannot be established. The Revenue s contention based upon the said delivery challans to show that they have procured sufficient quantity of Supari and Kattha to manufacture the finished goods, cannot be appreciated in as much as their final product requires so many other raw materials for which there is no evidence of procurement. A perusal of the chart would show that on some days and even some weeks, the appellants did not receive any Kattha or supari and on some days, raw material received was much more in quantity then required for manufacture of final product in a particular day. 48. We find that there is no one to one co-relation of the delivery challans with the procurement of supari and Kattha by M/s Ekta I II and for delivery of the same to manufacturer M/s KPL. Admittedly in a running business, raw material keeps on arriving on various dates and there is no legal binding that raw material should be consumed either as soon as the same is received in the factory or the said raw material should be consumed on first receive basis or more raw material cannot be procured before exhausting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them at all. In any case, we find that reference to said documents which also involve movement of the goods other than the final product in the backdrop of our findings that loading slips cannot be made the basis for arriving at clandestine activities, would not further the Revenue s case. 50. During the course of arguments, a question arose as to whether the proceedings under the Central Excise Act are civil proceedings or quasi criminal/criminal proceedings, requiring a proof beyond reasonable doubt to establish the charge of clandestine removal. Ld. Advocate has submitted that the consequence of the relied upon documents without any explanation on the source of their acquisition and in the light of the Managing Director s statement, questioning genuineness of the same and indicating the fabricated nature is of serious nature and the burden to prove the genuineness and authenticity of the same lies very highly upon the Revenue. Admittedly, apart from placing financial burden on the manufacturer resulting in confirmation of demand of duty u/s 11A and imposition of penalties upon them, prosecution is also one of the consequences. Such prosecution is in the nature of criminal la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warranting our interference. It is the contention of the ld. Advocate that the legal proposition as laid down by Hon ble Supreme Court are equally applicable to the fact of the present case in as much as the Revenue has not brought proof beyond reasonable doubt to substantiate the allegation of clandestine removal based upon documents, the source of which is not disclosed. He submits that if these documents are accepted, the same would result in huge unwarranted financial liabilities on the appellants along with launching of criminal proceedings against the Directors. It is their contention that in the case of Tukaram, the issue is only setting aside the election of the candidate even than the Hon ble Supreme Court observed that standard of proof would not be preponderance of probabilities as in a civil action and evidence to proof beyond reasonable doubt is required as in the criminal trial. As such he submits that the present proceedings being quasi criminal, the standard of proof should be beyond reasonable doubt and not on preponderance of probabilities. Reliance also stands placed on Tribunal s decision in the case of Chandan Tobacco Co. reported in 2011(270)ELT87 observin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in various decisions which have to be followed, in as much as no two cases involving clandestine allegation can be of similar nature in respect of evidences. Meeting with Shri Raha s reliance on the Hon ble Supreme Court s decision, he submits that his contention that duty can be confirmed on the basis of circumstantial evidence, does not flow from the above decision. He submits that the said judgement stands considered by various courts and by holding that the same relates to the goods which were found to be of smuggled nature, the same was not followed. He draws our attention to various decision where the decision of the Apex Court in the case of D.Bhuramal stands distinguished on the ground that the same is not applicable to the legal issue that even where there is no admissible evidence available, demands can be confirmed on the basis of presumptions. We note that the Commissioner in various parts of his order has himself observed that there was no direct evidence of clandestine removal of the case. However, he proceeded to confirm the demand by observing that it was not necessary to link clandestine removal without any break and mathematical procedure of each entry was not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the appellants but cannot fasten duty liability on the same. We have already discussed the evidentiary value of loading slips as also the other documents used by the Revenue for corroborating the loading slips. When viewed in the light of the above decisions referred to by us, we note that the investigation in the present case do not lead to the logical end and do not result in the alleged clandestine activities on the part of the appellants. Apart from the loading slips which we have already held as not carrying much evidentiary value, there is virtually no evidence on record to establish clandestine activities of the appellants. The said loading slips along with other documents could have been the starting point of the investigation which have failed miserably at the hands of Revenue. They have failed to establish the source of acquisition of Kattha and Supari by M/s Ekta. Further as rightly contended by the appellants, the manufacturer of their final product required number of other raw materials. There is not even an iota of evidence to show procurement of such other raw materials. Admittedly in the absence of all the raw materials, the appellants could not have manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced by the Revenue. The onus to establish such clandestine activities, resulting in confirmation of demand is placed heavily on the Revenue and is required to be discharged by production of sufficient evidences. Again, it is to be proved by the Revenue that the raw materials required for production of huge quantity of final product were obtained by the assessee in a manner which is not in its regular course of its business. It stands held by the Tribunal in the case of Mohan Steels Ltd. reported in 2004(177)ELT668(Tri.), that duty demand cannot be confirmed unless it is shown that the manufacturer had procured all the raw materials required to manufacture the goods. There is a long list of decisions and reference to refer to all of them may not be necessary as it is a settled law. Similarly, the Tribunal in various cases, as detailed below, has held that charges of clandestine removal cannot be levelled or confirmed on the basis of private records, the authenticity of which was doubted by the manufacturer without any corroborative evidence and the private records/registers of third party cannot be the sole basis for arriving at the clandestine removal in the absence of corroborati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the entire cases of the Revenue is made on the basis of 719 invoices of doubtful nature, the trustworthiness of which do not stand established by the Revenue by any admissible independent evidences. Similarly in the case of Ratna Fire Works reported in 2005(192)ELT382(Tri.), it was observed that though mathematical procedure is not required to establish the clandestine removal but that does not mean a fact could be proved without sufficient evidence. The Hon ble Supreme Court in the case of Anjlus Dung Dung vs. State of Jharkhand reported in 2005(9)SCC765 observed that suspicious however strong cannot take place of proof. 53. Though, we find that there is a long list of precedent decisions of various courts to the above effect and instead of referring to all of them, we would like to refer to the latest majority decision of Tribunal in the case M/s Kuber Tobacco Products P.Ltd., Final Order No. A-83/110/2010-EX(Br.), dtd. 03.02.12. 26. It would be necessary to analyze whether the evidences, other than the retracted oral evidences, are credible for being used as corroborative evidence. The Hon ble Supreme Court in case of Sitaram Sao v. State of Jharkhand - (2007) 12 SCC 63 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esident that entire proceedings have lost credibility and serious doubt arises about the credibility of the materials stated to have been collected by Revenue in the course of proceedings. 29. In the entire records of proceedings, there is no evidence to indicate that there was clandestine manufacturing. There is no independent tangible evidence on record of any clandestine purchases or receipt of the raw materials required for the manufacturing of the alleged quantity of finished goods for its clandestine removal from the factory. In the entire notice and the order there is no satisfactory and reliable independent evidence as regards the unaccounted manufacture and or receipt of the huge quantities of raw materials. The quantities of the alleged bags dispatched from the factory would require some transportation arrangement for delivery from the factory. However, any reliable evidence about any vehicle coming to or going out of the factory without proper entries is not forthcoming. There is also no cogent evidence about any freight payment for any such movement. 30. I do not find cogent evidence of disproportionate and unaccounted receipt and consumption of the basic raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portion of the said order, which is fortifying my view in this case also. 15. We find that Hon'ble High Court of Gujarat, in the case of Nissan Thermoware Pvt.Ltd 2011 (266) ELT 45 (Guj), has specifically held as under: 7.?Thus, on the basis of findings of fact recorded by the Tribunal upon appreciation of the evidence on record, it is apparent that except for the shortage in raw material viz., HD which was disputed by the assessee and the statement of the Director, there was no other evidence on record to indicate clandestine manufacture and removal of final products. On behalf of the revenue, except for placing reliance upon the statement of the Director recorded during the course of the search proceedings, no evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error in giving benefit of doubt to the assessee. (Emphasis supplied) The above ratio, as laid down by Hon'ble High Court of Gujarat, would squarely cover the issue before us. 16. In the absence of any tangible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.1,03,26,220.00 along with imposition of penalty stands made on the basis of allegedly recovered photocopies of the invoices from the appellants factory during the course of search on 18.10.02. Though the appellants have strongly contended that such photocopies were not recovered from their place but were planted and signatures of their representatives were taken on the same forcibly by the officers. But without dealing with said submission, we find that the entire demand is solely based upon these photocopies. As discussed, clandestine removal allegations cannot be fastened against the manufacturer based upon recovery of photocopies of invoices from their premises. The same required material corroboration by an independent evidence. Their being none in the present case, we are of the view that confirmation of duty of demand cannot stand. We also note that the buyers names were available in the invoices and in fact, inquiries were conducted at their end, all the buyers denied having received any goods on the strength of the said invoices. In fact, we note that the Commissioner has himself observed that the demand is being confirmed on the basis of circumstantial evidence. In as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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