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2017 (7) TMI 1027 - AT - Central ExciseClandestine manufacture and removal - undervaluation - shortages and excesses of raw material and finished goods - Held that: - the learned Commissioner has erred in his findings based on the submissions and admission made by the appellant-RPIL before Settlement Commission, which are wholly against Section 32 E(1) of the Act. The learned Commissioner has also erred in relying on the case made out by the investigation, in view of the glaring fact that Shri. S.G. Gupta has stated that the said private record contains entries relating to RPIL-appellant, Premier Polyfilm Ltd. and his personal affairs. No effort was made by investigation in segregating entries with respect to particular company and/or the appellant leading to erroneous conclusion by declaring all the transactions recorded in the said diary/private ledgers as attributable to appellant RPIL. Further, Shri. S.G. Gupta has categorically stated that no clearance have been made by RPIL without issuance of invoice. Further, during entire investigation or even till the adjudication, no person other than Shri S.G. Gupta had admitted the case of clandestine removal or under valuation by RPIL. There is no evidence produced to establish that there has been flow back of any funds to establish under valuation and therefore under valuation is also not established in the present case. Therefore, while setting aside the demand of duty raised on account of clandestine removal or under valuation, we also set aside the impugned order. As regard confiscation, we found that the Panchnama does not refer to any method of verification of stock, which was otherwise not possible in such a short span of time. Further, the show cause notice referred to statements of Shri Dwarika Dhish Sharma and Shri S.G. Gupta on the spot in this regard whereas no such statement was produced or found on record (RUD). The goods were very well in the factory and not even a single roll was found kept outside or in concealed manner or loaded on vehicle for removal without duty. Mere holding of the explanation as afterthought was not sufficient to confiscate the goods. As regard demand of duty on account of shortage during stock verification, we set aside the same also on the basis of observation made above. We also set aside the confiscation and we hold that the penalties as imposed under Rule 26 are erroneous. As regards under valuation, it is observed that but for the entries in the records of Shri S.G. Gupta, no other evidence is adduced by the Department. None of the customers or even any other employee of RPIL had accepted the same. Here again it is observed that when the personal records of Shri S.G. Gupta were having information mainly of PPL, no case otherwise could be made against the appellant, as no incriminating document or corroborating evidence of whatsoever nature was brought on record against RPIL. We also fail to understand as to why Department did not make enquiry against PPL in spite of having such information at the beginning of their investigation. Therefore, we hold that the department has miserably failed to make out case against the appellant. It is a well settled law that the charge of clandestine removal and under valuation being serious charge, the department is required to produce corroborative evidence, which the department has failed in the instant case. Accordingly, we allow all the appeals. The penalty under Rule 26 is not warranted against all co-appellants in view of there being no proposal of confiscation in the relevant show cause notice, apart from our findings given above that no case of demand of duty and penalty is otherwise made out. Appeal allowed - decided partly in favor of appellant.
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