2019 (1) TMI 1165 - CESTAT NEW DELHI

Clandestine removal - MS Ingots and MS TMT Bar - shortage of finished goods - comparison of figures in computer print outs and loose slips recovered from the guest house with the figures in the statutory records maintained by the appellant company - demand also based on electricity consumption - request of adjournment and cross-examination was denied - principles of natural justice - Held that:- The appellant had made request for adjournment on the dates fixed for personal hearing. The copy of such adjournment requests is available at page 240 to 242 of the appeal paper book. In addition we find that the appellant had also requested for cross examination, in their reply to show cause notice. There is no evidence on record to show that such requests were considered by the learned commissioner. Therefore, there appears to be violation of principle of Natural justice in the present case. However, since the matter is old and the relied upon documents are available on record, we proceed to decide the matter in view of submission made by both sides and evidence available on record, instead of remanding the matter back to the Adjudicating Authority.

Shortage detected in the stock of finished goods - Held that:- We have gone through the statement recorded by the officers and we find no mention of the method of physical verification. Nor any calculation chart is made part of panchnama. Thus, we agree with the appellant that verification of stock was by eye estimation only. More over there is no dispute to the fact stated by the appellant company in their reply, that the shortage in case of MS Ingots was 3.24 % and that of TMT bars was 1.4 % of the total production. Such difference in quantity is normal in case of eye estimation of the stock - the allegation of clandestine removal on the basis of the so called shortage in stock of final products is un-sustainable and demand in this regard is fit to be set aside.

Figures in Computer printout/loose slips - Held that:- There is nothing on record to suggest the manner in which such printouts were taken. There is also nothing on record to suggest fulfillment of the conditions stipulated in section 36 B of the Central Excise Act 1944 in order to treat computer printout as admissible piece of evidence. The fulfillment of the conditions stipulated in Section 36 B (2) of Central Excise Act 1944 is must for taking computer printout as evidence in the Adjudication proceeding - there can be no doubt that computer printout can be taken in evidence only if the parameters stipulated in section 35 B (2) of the Central Excise Act 1944 are fulfilled. In the present case, we are unable to find any evidence on record to show that the parameters have been fulfilled. In addition there is no corroborative evidence to prove correctness of the data/figure in the computer printout - it is not proper to take computer printout in evidence in the present case for holding appellant company guilty of suppression of production and clandestine removal of goods.

Production calculated on the basis of electricity consumption - Held that:- The issue of calculation of average production on the basis of electricity consumption and demand of duty on the production figure arrived at on the basis of electricity consumption had been subject matter of litigation for a long period of time - As a matter of fact, the demand in this case is also based on theoretical calculation taking into account the unauthenticated and uncorroborated figures of production as actual production. Once the allegation of suppression of production and clandestine removal of alleged unaccounted production is proved to be incorrect, the production calculated on the basis of such production figure must be treated as in correct and wrong. Under the circumstances demand of duty on the basis of average production calculated as per consumption of electricity is unsustainable.

Thus, the impugned order is vitiated for not allowing cross examination of the witness of Revenue, as required u/s 9D of the Act - In the present case, there is no reliable evidence to corroborate alleged clandestine manufacture and clearance. There is no evidence to show procurement of excess raw material, actual removal of unaccounted finished goods, receipt of sale proceeds of such clandestinely removed goods, transportation of excess raw material or of unaccounted goods produced. Therefore, we have no hesitation in holding that the allegation of clandestine removal of excisable goods is not proved in this case - demand is set aside - appeal allowed - decided in favor of appellant.