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2019 (8) TMI 127 - AT - Central ExciseClandestine manufacture and removal - Zarda - entire case of the Revenue is based upon the third party records and the statements of their representatives recorded by the officers during the course of investigations - denial of cross-examination of various deponents - HELD THAT:- It is well settled that the findings of clandestine removal are required to be upheld on the basis of positive, tangible and affirmative evidences and the same cannot be made on the basis of flimsy grounds leading to doubts - The Hon’ble Allahabad High Court in the case of M/S. CONTINENTAL CEMENT COMPANY VERSUS UNION OF INDIA & OTHERS [2014 (9) TMI 243 - ALLAHABAD HIGH COURT] observed that clinching evidence of purchase of raw materials, consumption of electricity, sale of final products, clandestine removal and transportation, realization of sale proceeds, mode and flow back of funds are required to be established before the findings of clandestine removal can be upheld. It is a serious charge and required to be proved beyond doubt by the Revenue and cannot be upheld merely on the basis of statements which are based on memories. In the present case, as already observed the Revenue’s entire case is based upon statements which in turn are as regards explanation of various entries in the records maintained by such deponent. In case of clandestine removal, the goods are first required to be manufactured for which purpose a manufacturer needs lot of raw materials - There is no evidence of procurement of excess raw materials. Admittedly the manufacture of Zarda requires a number of raw materials, the main being raw Zarda. Apart from that Glycerin and other chemicals like Benzyl Burate, Methyl Phenyl Acetate compounds, fragrances and packing materials in dibbies. Apart from alleging the procurement of excess raw tobacco, M/s.Niranjan Tobacco Company, which is also based upon the records maintained by the said raw material saler, Revenue has not made out any efforts to identify the supply of the other materials required for manufacture of such a huge quantity of Zarda. There is neither any allegation to the effect of unaccounted procurement of other raw materials. We really fail to understand as to how the appellant could have manufactured such huge quantity of Zarda without procurement of the said raw material. Further, no investigations stand made from the persons associated with the actual manufacture or the labourers appointed by the appellant so as to establish that such excess Zarda was manufactured by them. Further no incriminating documents stand recovered from the appellants’ factory or possession - Revenue having failed to discharge its onus as regards the manufacture of such a huge quantity of Zarda by the appellant, cannot allege clearance of the same. As such we find no merits in the Revenue’s stand. Appeal dismissed - decided against appellant.
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