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2016 (9) TMI 1099 - AT - Central ExciseClandestine manufacture - 7072.978 MT iron and steel products without payment of duty - private records recovered from the residence of the appellants - licit clearances made by the main Appellant also find mention in the private records, indicating the correctness of the private records - Held that:- argument made by appellant that the quantities at Sl.No.18,19,24,25 & 26 of the same page which show marked differences between quantities shown in the private records and the Central Excise invoices has force. Accordingly it is held that private records recovered from the residential premises by the investigation is not the correct representation of the manufacture and clearance of the main Appellant even if accepted to be admissible evidences. Appellants have also argued that maximum capacity of their furnace/month is 1200 MT. No efforts were made by the department to know whether the recipient of finished goods indicated in the private records or those claimed by the main Appellant in their reply were actually existing or not. Similarly for manufacturing such huge quantities of finished goods, as alleged to be clandestinely manufactured and cleared by the main Appellant, there must be procurement of substantial quantities of raw materials. The entire investigation conducted does not throw any light as to how main Appellant clandestinely procured huge quantities of raw materials for manufacturing finished goods. There are allegations of not receiving of the raw materials, but no evidence of excess procuring raw materials without duty paying documents has been brought on record by the department. It is difficult to appreciate that on one hand Appellant will clandestinely divert the duty paid raw materials and on the other hand procure non-duty paid raw materials for clandestine manufacturing and clearances of finished goods when no stock variation either in the raw material stock or finished goods stock was detected during the course of investigation. The maximum capacity of manufacture of 1200 MT/month was not refuted by the department by carrying out any study that actual production per month could be more than 1200 MT . It was clear during the investigation that Appellants were not giving the correct picture in explaining the private records recovered from their residence. Under the circumstances it was incumbent upon the department to find out evidences for corroborating private records with other independent evidences to pin down such smart operators and not resort to presumption and surmises. Clandestine removal - Held that:- in the present case there is no indicator of clandestine removal. Though in the present proceedings a seizure of ₹ 2.00 Lakh was made during the investigation but the same has not been confiscated as sale proceeds of the alleged clandestinely removed finished goods. Therefore, in view of the above observations and the settled proposition of law in the relied upon case law, offence of clandestine removal of finished goods and duty demand against the main Appellant, is not sustainable and Appeal filed by the main Appellant is required to be allowed on this account. Cenvat credit - allowabilty - cross-examination of certain persons was sought by the main Appellant who confirmed duty paid raw materials to have been received by them - Held that:- Adjudicating authority while framing issues of the Order-in-Original neither made cross-examination of witnesses as the issue nor gave any findings as to why cross-examination of witnesses can not be allowed. It is now a well accepted legal principle that cross-examination of the witnesses, whose statements etc. are relied upon, has to be provided to the aggrieved party. On this ground the issue of rejection of credit is remanded to the Adjudicating authority to make efforts to provide the cross-examination of the relevant relied upon witnesses and decide this aspect afresh in denovo proceedings. Imposition of penalties - no findings have been given at all in the Order-in-Original as to why penalties are required to be imposed - Held that:- in the absence of any findings by the Adjudicating authority in this regard penalties imposed upon the Appellants are set aside. - Appeal partly allowed and partly remanded back
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