Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2019 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 324 - AT - Central ExciseClandestine manufacture and removal - Zarda - Revenue’s entire case is based upon the shortages of the perfumery compound found in the assessee’s factory and the statements of various persons and the records maintained by the third parties - HELD THAT:- Mere shortages in one of the raw materials without there being any corresponding shortages in respect of the other raw materials cannot lead to the fact of the allegations of clandestine manufacture and clearance of the final product inasmuch as only one raw material cannot be held responsible for manufacture of the final product. Admittedly the main raw material for Zarda is raw tobacco in respect of which no discrepancies stand found by the Revenue. Further the appellants have explained that the perfumery compounds in question were Light Liquid Paraffin i.e. LLP and the stock of the same was not checked by the visiting officers - the fact of shortages of perfumery compounds would not lead to any corroborative evidence for the purpose of confirmation of balance amount of duty. Reliability on third party transactions - HELD THAT:- It is well settled law that the third party documents cannot be relied upon for concluding against the assessee unless the same are fully corroborated by sufficient positive and legal evidence. The entries made in the third party records are not conclusive and are primarily based upon the understanding of the person who has made those records. The same stands relatable to M/s.Sugandhi based upon the statements of owners of those records without even identifying and examining the scribe of those entries - Having held that statements are not admissible, the entries are also required to be ignored - in the absence of any evidence of actual manufacture of the goods or clearance of the same, the confirmation of demand based upon third parties documents cannot be upheld. In the absence of any direct corroborative evidence of clearance of ‘Jagat’ brand chewing tobacco to M/s.Om Prakash Zardawale it cannot be said that the same was cleared clandestinely. The requisite evidence to uphold the findings of clandestine removal has also been the subject matter of various decisions of the courts and it stands held that the findings of clandestine removal cannot be based upon the flimsy grounds leading to only doubts and the same require clear and clinching evidence establishing the doubts that such clandestine activities were being undertaken by the assessee. 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. Except for the shortage in one of the perfumery compounds, which the appellant has also explained, there is no evidence of procurement of excess other raw materials, which are required to be used in the manufacture - HELD THAT:- Admittedly the main raw material for the manufacture of guthka or Zarda is raw tobacco for which neither any investigation stands conducted by the Revenue, nor is there any evidence to show procurement of such excess raw tobacco. We really fail to understand as to how the appellant could have manufactured such huge quantity of Zarda without procurement of the main raw material as also the other raw materials. 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. Not only that the Revenue has not made any efforts during the course of investigations to identify the buyers to whom the said goods have been sold. To raise such a huge demand of duty, based solely on the statements, explaining the records maintained by such third parties, without identifying the buyers to whom the goods have been sold and without producing any evidence as regards the mode of realization of the consideration of such clandestinely removed goods, the allegations and findings of clandestine removal cannot be upheld against the assessee. Appeal allowed - decided in favor of appellant.
|