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2022 (5) TMI 7 - CESTAT AHMEDABADClandestine removal - Ceramic Tiles - clearance against parallel Invoices recovered from Labourer’s room in factory - demand based on statements relied upon - cross-examination of statements not done - levy of penalty on partner - HELD THAT:- Appellant’s Factory was searched on 01-01-2010 and some Invoices pink coloured [Duplicate for Transporter] were found. Inculpatory statements of partners were recorded. But, no variation in inventory of finished goods or raw materials was found during search. In follow up actions, business premises of the three dealers namely M/s Arbuda Marketing, Himatnagar, M/s Jain & Jain, Himatnagar and M/s Trimurti Enterprise, Himatnagar were searched and their relevant purchase & sales Bills were withdrawn for months August 2009 to December 2009. No offending goods were recovered from any of these premises or from any other premises. During Enquiries with Transporters, the document like bilty issued to Appellant for November 2009 and December 2009 were also withdrawn. During inquiry at Buyer’s end, Statements of 9 persons were recorded. SCN for the duty demand of Rs. 14,04,620/- was issued on 04-07-2013. Revenue has not produced any clinching positive evidence of receipt of goods by the buyers. Revenue has not proved their case in respect of 115 Invoices, where duty is confirmed by Order-In-Original dated 31-08-2018. There is no evidence either in the form of their statements or any other corroborative evidence in respect of those 115 Invoices and buyers who are shown in Annexure A-2 as buyers of goods in respect of Invoices. The Commissioner (Appeals) has also not examined these facts critically. There is no clear evidences of removal of goods from factory premises, except statements relied upon, whose examination/cross examination has not been allowed u/s 9D of Central Excise Act 1944. Invoices found are pink coloured [Duplicate for transporter], but it is not coming out from records that goods were actually transported out of factory against those Invoices relied upon. Invoices pink coloured [Duplicate for transporter] are found in factory, hence, it can also be inferred logically that goods were not transported out of factory against the said Invoices named as parallel Invoices in facts of this case. Duty demand of Rs.8,66,588/- is confirmed without ascertaining actual manufacture of goods and removal thereof from factory - Revenue has relied upon statements, without cogent evidence of receipt and consumption of quantity of basic raw materials and packing materials required for manufacture of goods cleared on parallel Invoices, payment for procuring excess raw materials and packing materials used for manufacture of goods cleared. There is no corroborative evidence of removal of goods twice on the same Invoice or on parallel Invoices and receiving payment twice for Invoices. It is found that except statements, there is nothing on record to establish Revenue’s case of clandestine manufacture or removal of goods from Appellant’s Factory, in the facts of this case. It is well settled by decisions of Tribunals and higher forums that for cases of such alleged clandestine manufacture and clearances, fundamental criteria have to be established by the Revenue and there should be tangible evidence of clandestine manufacture and clearance of such goods and not undue inferences or unwarranted assumptions. There should be clinching positive evidence on record in support of case of clandestine manufacture and clearances. Statements made under Section 14 of Central Excise Act, 1944 becomes admissible evidence, when person is examined and his/her cross examination is allowed under Section 9D of Central Excise Act 1944. Separate penalty is imposed on Shri Dineshbhai Patel - HELD THAT:- The penalty Separate penalty imposed is not justified following the decision of the Hon’ble Gujarat High Court in the case of PRAVIN N. SHAH VERSUS CESTAT [2012 (7) TMI 850 - GUJARAT HIGH COURT] and in RATHI RE-ROLLING MILLS VERSUS COMMISSIONER OF CENTRAL EXCISE [2015 (2) TMI 1125 - BOMBAY HIGH COURT], where it was held that Penalty has been imposed on the firm, no separate penalty can be imposed on its partner - Such penalty imposed on Shri Dineshbhai Patel deserves to be set aside. Demand do not sustain - appeal allowed - decided in favor of appellant.
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