TMI Blog2017 (3) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... r retained and the same have to be cleared as per directions and discretion of the buyers namely Mirza Tanners - Further, no instance of any excess stock of raw material have been found nor any instance of any goods cleared without proper documents and/or without payment of duty have been detected - appeal allowed - decided in favor of appellant. - E/236/2007-EX[SM] - FINAL ORDER NO.70163/2017 - Dated:- 14-2-2017 - Mr. Anil Choudhary, Member (Judicial) Shri Rajesh Chibber, Advocate for the Applicant (s) Shri Pawan Kumar Singh, Supdt. (AR) for the Department (s) ORDER This appeal is filed by appellant, M/s EURO Footwear Ltd., against Order-in-Appeal No.621/CE/APPL/KNP/06 dated 22.12.2006, rejecting the appeal and confirming the Order-in-Original, thus, confirming the duty amount of ₹ 17,89,264/- along with equal amount of penalty under Section 11 AC with interest and also confirming amount of ₹ 11,346/- (appropriated from the amount already deposited at the time of inspection on 24.06.2005 involved on 75 pairs of sandals found short). 2. The brief facts are that the appellant is a registered manufacture of Leather Shoes and Sandals and cleared t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atory appeared on 11.07.2005 before the authority and tendered his written statement. He stated that he sends the stock report to Mr. Laiq Ahmad authorised person of the brand owners (Mirza Tanners) in which he mentions finished goods and also the goods in the process of manufacture which are likely to be ready in the near future. They have manufactured only 222 pairs of domestic Sandal as against 2931 pairs during 28.05.2005 to 04.06.2005 that is the date of submission to next sandal stock report to Shri Laiq Ahmad. The appellant was further directed to produce the desired sandal stock report for the last five years. In compliance to the summons, Shri Ashish Kumar Gupta, Authorized representative of the appellant appeared and stated in his statement recorded on 30.01.2006 under Section 14 that no such type of sandal stock reports are being maintained by the appellant. It appeared to Revenue that the statement of Shri Khan and Shri Gupta are contradictory as one employee is admitting the existence of the said document and another employee is saying that no such type of documents are being maintained. It appeared to Revenue that the appellant have manufactured and cleared 11,827 pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of sandals on the date of inspection, which was accepted by the appellant-assessee. Being aggrieved, the appellant-assessee is in appeal before this Tribunal. 4. The learned counsel urges that the nature of the activity of this appellant is in the nature of job worker. They manufactured shoes and sandals under the brand name red tape for the principal M/s Mirza Tanners. The show-cause-notice was issued without the relied upon documents, only giving the list of RUDs. Appellant had prayed for supply of all relied upon documents and also insisted on cross-examination of different persons from whom alleged inculpatory statement was taken and sought to be used against the appellant. Although, relied upon documents and copy of the statements recorded were subsequently provided, but cross-examination of all the persons, the statement of whom were relied upon by Revenue, was denied vide the impugned order which have been passed in clear violation of Rules of Natural Justice. The impugned order is vitiated as the plea of the appellant have been rejected without examining the same and without following the binding decisions cited by the appellant. Contradictions in the statement of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture and clearance and not merely inferences or unwarranted assumptions (ii) Evidence in support thereof should be of raw materials, in excess of that contained as per the records; instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty; discovery of such finished goods (non duty paid) outside the factory; instances of sale of such goods to identified parties; receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorised by him; use of electricity or power far in excess of what is necessary for manufacture of goods otherwise manufactured and validity cleared on payment of duty; statement of buyers with some details of illicit manufacture and clearance; proof of actual transportation of goods, cleared without payment of duty; links between the documents recovered during the search and activities being carried out in the factory of production; etc. In other words, adverse inferences cannot be drawn of clandestine clearances merely on the basis of notebooks or diaries or slips privately maintained or on mere statements of some persons, may even be responsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.05.2014. This ought to have been verified and reconciled by the Revenue prior to the issue of show-cause notice when all records of the appellant-assessee were seized and resumed by Revenue. The show-cause notice refers only to the RG-1 record in para-4 and the alleged difference in the stock as per stock report/private record and as per RG-1 Register and the apparent different to have been alleged clandestinely removed goods for which imaginary value at ₹ 1,545/- per pair have been taken for valuation, for raising the demand. 4.3 The statement of Shri Zafar Ali Khan dated 24.06.2005 and 11.07.2005 and the statement of Ashish Kumar Gupta dated 30.01.2006 have been relied upon to raise the unsustainable demand. Mr. Zafar Ali Khan had left the service of the company and thereafter Ashish Kumar Gupta had joined in his place. Shri Ashish Kumar Gupta have rightly stated that the alleged stock sheets were taken from Shri Satyendra Singh and his statement in favour of company was recorded but the same had not been relied upon. Therefore, the correct statement of Satyendra Singh and Ashish Kumar Gupta alone should have been taken as the basis instead of alleged statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inspection by the buyers. When the buyer accepted the goods which are produced and awaiting such verification and confirmation by the buyer would be nothing but semi-finished goods which are not to be entered in RG-1 at that stage because of the possibilities of rejection after inspection by the buyer. On such rejection, the goods will have to be discarded and cannot be sold to anyone save and except with the consent and direction of the buyer namely Mirza Tanners. 4.4 It is further urged that no evidence, whatsoever, of any alleged clandestine removal has been brought on record. Only based on the statements and the said four slips alleged to be stock records are sought to relied upon without verification and correlation. It is further urged that these stock records prepared on loose slips is actually the projected number of footwear of particular design and size, colour etc., which the appellant will be in a position to supply to their sole buyer in the near future on receipt of orders. Referring to the statement of Satyendar Singh, it is pointed out that he is only educated till High School and in the appellant firm used to look after the dispatch of domestic sandal. In respo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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