2013 (11) TMI 1521 - AT - Central Excise

Benefit of cum duty price - reduction of duty - penalty under Section 11AC - Held that - Even though the demands are based upon the worksheets and statements however the investigation does not show as to how the goods or what quantities of goods were cleared by the appellant and who are the buyers. When there is no evidence of clearance of goods from the factory of the appellant nor there is any buyer the demand cannot be sustained on the basis of mere bank statements of the owners of the alleged dummy concerns. - though the proprietor of the dummy concerns were called for cross-examination thrice but as their addresses shown in the bank statements were false hence they could not be found and that the Revenue has made all efforts to secure there availability for cross-examination. The adjudicating authority has also held that the appellant during personal hearing did not press for cross-examination. On this aspect I find that when the Revenue has recorded the statements of these alleged dummy concerns at the time of investigation in that case these persons could also be made available for cross-examination as they were Revenue s witness. Thus the statements of these persons cannot be sole basis for fastening demand on the appellant. The show cause notice or the orders passed by the adjudicating authority does nowhere shows as to how the said amounts pertain to clandestine clearance by the appellant. It is more so that not a single buyer s statement was recorded nor it is shown as to who are the buyer of said goods. The amounts received in the bank accounts of third party i.e. proprietors of alleged dummy concerns cannot be said to be pertain to alleged clearance of goods of appellant unless the buyers of the goods or any evidence in respect of clearance is produced. The Revenue has recorded the statements of many persons however not a single buyer of the goods was enquired. The duty demand can be sustained only when the goods are manufactured and cleared. However in the instant case there is not a single consignee of the goods no transporter of the goods. - since the demands are not sustainable as a consequence the penalties are also not sustainable and are thus set aside. I therefore allow the appeal filed by M/s. Shree Maruti Fabrics with consequential relief - Decided in favour of assessee.

Summary

Issues Involved:
1. Demand based on worksheets prepared from bank statements of alleged dummy concerns.
2. Demand based on the collection book of the appellant unit.
3. Demand based on the register containing details of clearances.
4. Grant of benefit of cum-duty price and reduced penalty under Section 11AC.

Issue-wise Detailed Analysis:

1. Demand Based on Worksheets Prepared from Bank Statements of Alleged Dummy Concerns:
The demand against M/s. Shree Maruti Fabrics was primarily based on worksheets derived from bank statements of trading firms alleged to be dummy concerns created by Shri Babubhai Patel. The appellant contended that these proprietary concerns were independent entities and not controlled by Shri Babu S. Patel. They argued that the statements from these entities were not reliable as the owners were not made available for cross-examination, and some statements were written under duress and subsequently retracted. The appellant further argued that there was no evidence of actual buyers or clearances of goods from their factory, nor any investigation into the consumption of raw materials or excess production. The Tribunal found that the demands were unsustainable as they were based on uncorroborated worksheets and statements without any concrete evidence of clandestine removal or identification of buyers.

2. Demand Based on the Collection Book of the Appellant Unit:
A demand of Rs. 42,000 was based on a collection book showing outstanding payments. The appellant contended that the collection book pertained to a blower unit of M/s. Shriram Enterprise, which was exempt from excise duty. The Tribunal found that there was no independent investigation to corroborate the entries in the collection book, making the demand unsustainable.

3. Demand Based on the Register Containing Details of Clearances:
A demand of Rs. 3,37,500 was based on a register detailing clearances of cotton yarn for the year 2002-03, while the demand was for 2003-04. The appellant argued that there was no evidence linking the register to clandestine clearances by the appellant unit. The Tribunal observed that the investigation did not establish any connection between the register entries and the appellant's clearances, nor did it investigate the buyers or the nature of transactions. Consequently, the demand was set aside.

4. Grant of Benefit of Cum-duty Price and Reduced Penalty under Section 11AC:
The Revenue appealed against the Order-in-Appeal that granted the benefit of cum-duty price and a reduced penalty under Section 11AC. Since the Tribunal found the demands and penalties themselves unsustainable, the Revenue's appeal regarding cum-duty price and penalty was also rejected.

Conclusion:
The Tribunal allowed the appeal filed by M/s. Shree Maruti Fabrics, setting aside the demands and penalties due to lack of corroborative evidence and proper investigation. The appeal filed by the Revenue was rejected, and the cross-objection was disposed of. The judgment emphasized the necessity of concrete evidence and thorough investigation to substantiate claims of clandestine removal.