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2018 (10) TMI 634 - AT - Central ExciseClandestine removal - removal of goods without cover of invoices - issuance of goodless invoices - fake invoices to avail excess credit - undervaluation - entire case has been built up against the appellants on the basis of data retrieved from pen drives, which were recovered from private persons - Section 36 B of Central Excise Act, 1944 and Section 65 B of Indian Evidence Act, 1872 - cross-examinations denied - demand based on production capacity also. Held that:- In this case during the course of investigation neither stock variations were found and nor any incriminating documents were recovered during the search of factory premises of appellants. Only two pen drives were recovered from the possession of Ms. Priyanka Jain in the joint office of the appellant and data has been retrieved and on that basis, the case has been made out against the appellant. Section 36B of the Central Excise Act, 1944 deals with the situation of admissibility of documents and computer print outs as evidence. The procedure has been prescribed under Section 36B of the Act - In this case, the procedure laid down under Sub-sections 2, 3 & 4 of section 36B, has not been followed, in that circumstances, the data gathered from pen drives relied in toto and some of the invoices, are not admissible evidence. Therefore, on this sole ground, the show cause notice is not sustainable. Production capacity - Held that:- As per ER-7 returns, the appellant has shown their production capacity during the impugned period and as per the ER-7 returns it is clear that the maximum production capacity of the appellant is 3500 MT without any break. Admittedly, no factory work on 100% production capacity due to wear and tear. The production capacity on which the impugned order is demanding duty works out to 6430.1705 MT during the impugned period. By no stretch of imagination, such quantity of clandestinely cleared goods by the appellants could be manufactured during the impugned period. Invoices - Held that:- On the one hand it has been alleged that the appellant is clearing goods without cover of invoices and on the other hand it is alleged that the appellant is issuing with goodless invoices. In fact, the duty has to be demanded on the goods manufactured by the appellants. If the appellant is an issuing goodless invoice which means no goods have been manufactured by the appellant. Therefore, on that account, no duty can be demanded against the appellants - the appellant has explained the issue of goodless invoices but the adjudicating authority has not considered the defense reply of the appellant, therefore, also the impugned order lacks merits. Cross-examination of persons, whose statements were relied upon, not provided - Held that:- No cross examination of the persons whose statements have been relied upon by the adjudicating authority during the course of adjudication has been granted, therefore, the said statements cannot be relied upon as admissible evidence - the statements recorded during the course of adjudication are not admissible evidence in terms of Section 9 (D) of the Act. Therefore, on that account also, the demand is not sustainable. Undervaluation - Held that:- As the appellant has shown invoices, the price of the goods and corresponding invoices has been recovered which is having higher price to the same party of the same quantity, in that circumstances, the issue of undervaluation has been proved, therefore, on account of undervaluation, the appellants are liable to pay duty alongwith interest - demand upheld. Appeal allowed in part.
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