TMI Blog2009 (6) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... ember (J) REPRESENTED BY: Shri T. Ramesh, Advocate, for the Appellant. Shri V.P.C. Rao, SDR, for the Respondent. [Order per: M.V. Ravindran, Member (J)]. - Appeal Nos. 793 794/05. These two appeals are filed against Order-in-Original No. 11/05 dated 29-4-2005 Since these appeals are arising out of the same Order-in-Original, they are being disposed of by common order. 2. The relevant facts that arise for consideration are, on 13-10-96, officers of the Central Excise Anti-evasion wing Hyderabad conducted searches on many factory premises i.e. Anil Re-rolling Mills (ARM for short) and Lakhani Steels (LS for short). During the searches of these two premises, the officers found certain private records. When questioned by the officers during the course of proceedings, Shri Hameed Au Lakhani, the Proprietor of LS and the Managing partner of ARM stated that these records pertain to M/s. Sai Metal Industries (SMI) situated in Gandhi Nagar. It was also noted by the Officers that Mr. Sanjeev Kumar Mishra of Sai Metal Industries was supposed to be the friend of the proprietor Shri Hameed Ali Lakhani of Lakhani Steels. 3. On the preliminary scrutiny of the records it was fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ickness, etc., manufac tured and cleared to various dealers as evidenced from the state ments of the dealers. The fact of illicit manufacture and clearance is evidenced by the private records bearing Sl. No. 218 to 258, which inter-alia meticulously accounted for all the receipt of raw materials as well as clearance of finished goods, including those of accounted for clearances. The authenticity of these private records was sup ported by the statements of Shri Surender Roy and Chall Soma Sekhar wherein they have equivocally stated that these records were maintained by Shri Kukna Natar and Sharma as per the directions of Shri Sanjeev Kumar Misra and also by the fact that these records also reflect the duty paid clearances made by SMI. 4. In view of the above, the authorities issued a show cause notice to the appellant directing them to show cause as to why (a) An amount of Rs. 22,80,480/- (Rupees twenty two lakhs eighty thousand four hundred and eighty only) being the central excise duty payable on the finished goods of 1496.525 Mt. totally valued at Rs. 1,79,48,770/- manufactured and cleared during the period May, 1995 to November 1995 should not be paid by them under Rule 9(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules 9(2), 52A, 173Q and 226 of the Central Excise Rules 1944, for the contraventions cited supra. (c) I impose penalty of Rs. 5 lakhs (Rupees Five lakhs only) on Shri Sanjeev Kumar Misra, Managing, Partner, of M/s. Sai Metal Industries under Rule 209A, of the Central Excise Rules, 1944, for the contraventions cited supra. (d) Interest as applicable under Section 11AA of Central Excise Act, 1944, shall he paid by the assessee." 5. Aggrieved by such an order, the appellants are before us. 6. Learned counsel appearing for both the appellants would submit and draw our attention to the various documents annexed in appeal memoranda. He would also draw our attention to the statements recorded. The submission of the learned advocate are summarized as below: "It is submitted that when the persons who have maintained the alleged private records were not examined during the investigation and no statements were recorded from such persons, no reliance can be placed on such private records to allege removal of final products without accounting and without payment of duty. Nor, the said persons were produced for cross examination. Therefore, the only basis for demanding and confirming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden and the persons from whom the statement were recorded have ultimately retracted and denied their earlier statement during the cross examination. Further, many of the persons were not produced for cross examination. In this regard reliance is placed on the following decisions. (a) K. Harinath Gupta v. CCE reported in 1994 (71) E.L.T. Page 980 (Tri.) (b) M/s. Sakthi Chemical Industries v. CCE reported in 1995 (76) E.L.T. page. 410. (c) Thricahnkodu Velavan Spinning Mills v. CCE reported in 2003 (54) R.L.T. page 568. 4. It is submitted when the persons from whom the statements were recorded have subsequently retracted and some persons were not produced, the reliance cannot be placed by the adjudicating authority on such state ments to confirm the demand on the ground of clandestine removal. In this regard reliance is placed on the following decisions: (a)M/s. Ankaleshwar Paper Boards. v. CCE reported in 1996 (83) E.L.T. page 87 (b)CCE v. M/s. Dhanavilas Snuff Reported in 2003 (153) E.L.T. Page 437 (Tri.) (c) M/s. Meenambal Firewall v. CCE reported in 2002 (49) R.L.T. Page 832.(Tri.) (d) M/s. Ramashayama Papers Ltd. v. CCE reported in 2004 (168) E.L.T. Page 494. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted the demand is barred by limitation in as much as the factory premises of the appellants was periodically visited by the department officials and no discrepancy was found during their visit. Even during the investigation the records were verified and no excess or shortages of raw material or final products were found in the factory. Hence the benefit of doubt is in favour of the appellants and hence the demand is barred by limitation. 9. It is submitted the imposition of penalty is exorbitant. Further, the penalty imposed on Mr. Sanjeev Kumar Mishra in any case cannot be sustained in as much the penalty cannot be imposed both on partnership Firm and the Partner. Therefore, the penalty imposed on Sanjeev Kumar Sharma is not sustainable. Reliance is placed on the decision in the case of (a) Kamdeep Marketing Pvt. Ltd. v. CCE, 2004 (165) E.L.T. 206 (Tri). (b) B.C. Sharma v. CCE, 2000 (122) E.L.T. 158 (Tri.) In view of the for going submissions, it is prayed that this Hon'ble Bench, at Bangalore may be pleased to allow the appeals with consequential relief and thus render justice." 7. As against the these submissions, the learned SDR appearing on behalf of the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) That the clandestine removal cannot be based upon only on the evidences of the private records, further corroborative evidences has to be filed. (3) That the electricity consumption which has been relied upon by the learned adjudicating authority is for a period for January 1994 to April 1994 while demand is for the period May, 95 to November 1995. It was also urged that the annual capacity production of the appellant was subsequently determined which was much lower than the amounts sought to be demanded from the appellant as goods having been clandestinely removed. 9. It is seen from the records that the proceedings were-based upon the private note books which were recovered form the premises of ARM and LS. The Managing Partners of ARM and LS very clearly stated in their statements that the said note books belongs to their friend Mr. Sanjeev Mishra the proprietor/partner of Sai Metal Industries, appellants herein. It is on record that the said note book was maintained by S/Shri Poosaram Kukuna, Laluram Netar and Ashok Kumar Sharma. The main contention of the appellant that these people were not produced for the recording their. statements and hence the veracity of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was maintaining these private records in the absence of these three persons. In his statement Shri Challa Somashekar had categorically admitted that during the relevant period; he posted some of the entries and also identified the entries in such private records. This would very clearly indicate that the persons who made the entries in the private records were known to the appellants and they were very much aware of the transactions going on in the appellant factory. 18. Another piece of evidence which clearly indicates that there were unaccounted clearances by the appellant is the evidence of the weigh bridge operator of Gandhi Nagar Dharma Kata. The said person in his statement' dated 23-11-1996 clearly indicated that entries noted in their register denotes Sai metal industries and confirmed the details of payments, received for weighing the consignments. The reconciliation of the weigh bridge records and the records maintained by the appellants for the statutory purposes and private records clearly indicated that all these record reconciled with each other that is to say, even the statutory clearances made by the appellants on payment of duty were getting correlated with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom a study of the consumption during the period from January to April 1994, when Sai Metal industries by virtue of being exempt from duty, were not paying any duty on their clearances. As seen from the statutory records, the production during the months of January, 1994 to April 1994 was between 170 MT to 255 MT for electricity consumption of about, 50,000 units per month, which clearly indicates not only the production capacity but also the actual production commensurate to the given quantum of consumption of electricity, and as well as highlights the average electricity consumption required for production of one MT of finished products. I have perused statement of production as shown in the statutory records and receipt of raw materials, and production as reflected in 'the private records annexed to the show cause notice as Annexure 01,01, and 02 and the same clearly indicates the massive evasion of duty indulged by Sai Metal Industries, in fact Sai metal Industries has never made any attempt to counter/rebut statistical information and the evidences adduced by the Department to prove their case. In this connection, the Chartered Accountant's Certificate/findings dt. 10-12- 2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity showed a different pattern. 11. We find that the defence of the appellant as regards that seized records were not recovered from their possession/premises, have disowned them, has nothing to do with the facts that the clandestine removals had taken place. It can be noticed that though the note books were not recovered from the appellants premises, it is undisputed by the appellant, that the purported authors of the said note books were his employees at some point of time. It does not lie in the month of the appellant today to say that these people were not produced for cross examination. If they would have been so interested, since it is an accepted fact that they were employees of the appellants at some time, they could have produced them as defence witness for cross examination, 12. In view of the above reasoning we do not find any merits in the appeal filed by the appellants against the confirmation of the duty on, him. We are of the considered view that in this case, the impugned order is correct and legal and does not require any interference as regards the confirmation of the demand of the duty on clandestine removal of the goods and the penalty imposed on the main ..... X X X X Extracts X X X X X X X X Extracts X X X X
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