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2022 (9) TMI 1056 - AT - Central ExciseClandestine Removal - unaccounted raw material, semi finished goods and finished goods in the premises - failure to produce any record to justify the legal possession of the said goods - Confiscation - penalty - HELD THAT:- The appellant admittedly is engaged in manufacture of diaries, calendars etc. All his final products are being manufactured at the same premises with common electricity, labour etc. Even the registrant for two different excise registrations ( one for diary and another for calendar) is same i.e. the appellant. The explanation given by the appellant about the raw materials, semi finished goods and finished goods found at their different premises at the time of search, has not been accepted by the department for want of job work challans for transferring the material by their diary division to calendar division. The transfer of raw material even to its unregistered units i.e. sales office / godown without any job work challan or proper invoices has been the basis for presuming that appellant in general have adopted the dubious method for organising their manufacture, procurement of raw material and clearance of finished /semi finished goods from their premises with the help /abatement of their Director and employees with an intent to evade central excise duty. The department presumed that appellant deliberately did not maintain proper accounts of raw material to prove their actual production and for facilitating the clandestine removal - The goods which have been ordered for confiscation were admittedly lying within the premises of appellants and those include raw material as well. It has been the main ground of the contention of the appellants that Rule 25 is only about confiscating excisable goods and not the raw material. Bare perusal makes it clear that the Rule pertains to excisable goods i.e. goods which are manufactured by the assessee. Since the raw material of assessee cannot be held to be goods manufactured by assessee, same is definitely beyond the scope of confiscation under Rule 25 of Excise Rules. Merely because raw material of an assessee is marketable as such, same can not be held to be the excisable goods. As per Section 2(d) of Central Excise Act, 1944, goods which are subjected to duty of excise are excisable. Hence, these are the goods manufactured for clearance from place of manufacture which are excisable and are thus covered under Rule 25 of Excise Rules. Confiscation of finished and semi -finished goods - HELD THAT:- The only evidence is departments’ presumption based upon the stock found lying in the premises that the goods were in excess and were not accounted. The onus was upon the department to prove the said presumption. It is observed that there is no evidence except the Relied upon documents in Annexure A to the show cause notice. Perusal thereof reveals that except the statements recorded during investigation and the Panchnamas drawn during search, there is no other evidence produced by the department - Otherwise also, it has been a settled law that shortage by itself cannot be held to be a sufficient evidence so as to lead to inevitable conclusion that assessee is involved in unaccounted procurement of raw material and manufacture of excisable goods with the sole intent to clear the same without payment of Central Excise duty leviable thereupon. The departmental investigating agencies as well as the adjudicating agencies have not yet started observing compliance of mandatory statutory provisions i.e. section 9D of Central Excise Act, 1944 and section 138 B of Customs Act, 1962 without which the statement recorded at the stage of inquiry / investigation will not be relevant for the purpose of proving the truth of requisite facts during prosecution. It is therefore desired that department may come with certain guidelines so that the efforts of investigating team may not be in vain only for the reason of noncompliance of aforesaid provisions. The order under challenge, as passed by Commissioner (Appeals) ordering confiscation of goods (raw material, finished and semi finished goods) recovered from various premises of appellants and imposing penalties on appellants is hereby set aside - Appeal allowed.
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