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2015 (11) TMI 1032 - AT - Central ExciseDuty demand - Clandestine removal of goods - whether on the basis of the recovery of a private ledger book from the factory premises of SSSRM which contain entries regarding receipt of MS Ingots by SSSRM from the appellant company during the period from April 2005 to August 2005 allegation of clandestine removal can be made against the appellant - Held that:- In terms of the Apex Court judgment in the case of Kishin Chand Chella Ram vs. Commissioner of Income Tax reported in [1980 (9) TMI 3 - SUPREME Court] allegation of duty evasion cannot be made against an assessee on the basis of the entries in the records being maintained by some other person unless an opportunity for cross examination of that person had been allowed. In this case no such opportunity for cross examination of the writer of the private ledger book of SSSRM or their supervising officer had been given. Moreover, the entries in the private ledger book of SSSRM showing receipt of MS Ingots from the appellant during the period from April 2005 to August 2005 are not supported by any other independent evidence on record. Therefore, we hold that merely on the basis of the entries in the private ledger book of SSSRM, the allegation of duty evasion against the appellant company cannot be sustained. Merely because during 2003-2004 the appellant sold their finished goods on a small profit margin of ₹ 15 per MT and during 2005-2006 the appellant sold their products at the loss of 1278 per MT, no adverse conclusion can be drawn and merely on profit and loss data it cannot be concluded that the appellant were indulging in duty evasion by clandestine removal during this period. Though the Department alleges that during 2004-2005 and 2005-2006 the appellant had received the commission income of ₹ 1,16,25,916/- from commission agent certificate from parties which is an unrelated activity and thereby implying that the appellant were under reporting their production and showing their income from manufacturing activity as the income from commission agent service, no adverse conclusion can be drawn from this, as the appellant s claim that they had paid service tax on the commission income and also the income tax had been deducted at the source on the payments being received is not disputed. Moreover, no inquiry has been conducted to prove that these service transactions are bogus. When the Department does not dispute that till August 2004 the furnace installed in the appellant unit was 3 M.T. capacity and only in September 2004 this furnace was replaced by the furnace with 6 M.T. capacity and thus still August 2004 the capacity of production of the unit was only 6300 M.T. per annum and only w.e.f. September 2004 the installed capacity was enhanced to 12600 MT per annum and on this basis the maximum production during the period from April 2002 to September 2006 would be 40950 M.T. against which the production recorded in the statutory recorded during this period on which duty has been paid is 37478.94 M.T., merely based on the assumed power consumption norm of 689 units per MT for which there is no basis, the appellant unit cannot be alleged to have manufactured and cleared 64511 MT of MS Ingots during the same period. - Impugned order is unsustainable - Decided in favour of assessee.
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