TMI Blog1992 (12) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... 16A of the Central Excise Tariff. The appellant had opened a Branch in the name of M/s. Nellore Factory at Kalamassery, Kerala and also a Branch at Vijayawada where a depot existed for the sale of tread rubber. Vijayawada depot is managed by one Gopal. The Central Excise officers visited the Nellore factory from 24-8-1982 to 25-8-1982 and recovered from the factory premises, the books of accounts relating to transaction made by the Company and found two books of accounts in two sets for the year 1981-82 and 1982-83; one set reflecting the transaction officially declared to the Department and the second set of accounts comprising day book, ledgers etc. pertaining to the transactions made clandestinely and referred to as Anamath account . The appellant set up the factory in 1981 and employed one Madhusudhana Rao as Manager and the other employees connected with the business activities are S/Shri P. Raja Rao, K. Penchil Reddy and Surendra who were entrusted with the job of sale of goods and collection of proceeds etc. The appellant also procured raw material i.e. sheet rubber and China clay from Kerala for manufacture of tread rubber and had business connection with one K.P. Menon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined entries relating to Anamath account done by him and the authorities also searched premises of several other persons connected with appellant s business transaction and one such person was K.P. Menon who assisted the appellant in procuring raw materials without invoice by arranging supply through K.C. Ahmed of M/s. Rubber Fillers and Accelerators and Shri Mohd. Hassan of M/s. Kerala Rubber Industries. The appellant had also opened a Branch Office at Kalamassery at the residential premises of Shri K.P. Menon. After investigation on the basis of recovery of account books, documents, invoice and letters and examination of various persons, proceedings were instituted against the appellant culminating in the above impugned order. 2. Shri Kasturi Rangan, the learned Counsel for the appellant submitted inter alia the following : In law the onus is on the Department to prove and establish the charge of clandestine removal against the appellant. Madhusudhana Rao and Raja Rao who are aggrieved against the appellant had falsified and fabricated accounts and both Shri Raja Rao and Penchil Reddy were also privy to the same. The appellant never had any business connection with the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of Raja Rao and not that of the appellant. Shri Gopal in whose letter dated 29-7-1982 reliance is placed in the impugned order, in his cross-examination admitted that he was instructed by Raja Rao and Madhusudhana Rao to send DD. Reliance on SB Account No. 1416 of Karur Vysya Bank in the name of Penchil Reddy against the appellant is also not correct and Shri K. Satyanarayana, who introduced this Penchil Reddy has explained the circumstances of such introduction. It is made clear that introduction was at the instance of Raja Rao. Penchil Reddy must have been a name lender for the account opened at the instance of Raja Rao and the DD evidently represented the sales effected by Raja Rao in his Mahalakshmi Rubber Complex . The appellant was not a permanent resident of Nellore and had left the factory in the hands of Madhusudhana Rao and he was aggrieved against the appellant. Clandestine removal has to be established by the Department by acceptable legal evidence on record and inference cannot be drawn merely on the basis of suspicion. The learned Counsel cited some authorities in support of his proposition that the onus is on the Department to prove and establish clandestine remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice. During the hearing it was seriously contended by the learned Counsel for the appellant that in respect of the charge of alleged clandestine removal of excisable goods without payment of duty the Departmental authorities during investigation examined a number of persons who were said to have purchased the goods and recorded their statements and those persons dealing in purchase and sale of tread rubber gave statements in favour of the appellant stating that they did not purchase any such goods from the appellant. In order to appreciate the correctness of this plea we directed the learned SDR to make available for us copies of those statements and also verify the correctness of the same and even after prolonged adjournments at the instance of the Department files were not forthcoming and later when the papers were produced, the learned SDR vouched for the correctness of the plea urged on behalf of the appellant. Anamath account also indicated a number of persons as alleged purchasers of the goods viz. Sunder Traders, Sunder Agencies etc. and it is not disputed that the buyers who were contacted during investigation in their statements denied purchase from the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 31,000/- and the search was conducted on 24-8-1982 and no such money was found. We are not able to appreciate the contention of the learned SDR that reliance can be placed on the alleged letter of the appellant dated 18-4-1981 to Menon for supply of 5 Tons of raw rubber without bills. Admittedly this letter does not contain signature of the appellant. This fact is also referred to in the impugned order. Apart from it K.P. Menon was examined by the officers of the Anti Evasion Directorate after about 2 years and he has admitted in his cross-examination that the statement given under fear and inducement and to save his skin . Menon is said to have arranged for supply of rubber but never supplied it and the supplier was one K.C. Ahmed who stated that in his examination as under : I have not arranged supply of raw rubber to Shri Gupta. The raw rubber was not transported camouflaged in lorries carrying China clay. No payments were made to me by Shri Gupta or by his representative. Questions relating to 17, 18 and 19 recorded in the statement of Shri K.P. Menon on 29-12-1983 were read out to Shri K.C. Ahmed. These questions and the replies given by Shri Menon relate to payments mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her hand in the transport documents, the consignor is Mahalakshmi Rubber Complex the proprietor of which is P. Raja Rao who admittedly was a dealer in tread rubber even prior to the appellant s business and who also continued his business even while in the employment under the appellant. This is also evidenced by the certificate issued by the Commercial Tax Department which reads as under : As verified from this Office records i.e. Registration file under A.P.G. ST Act, Shri Punganuru Raja Rao is the sole Proprietor for the business that run in the name and style of Mahalaxmi Rubber Complex, Subedarpet, Nellore with effect from 26-7-1978. Therefore, when the supply of tread rubber is not established by any invoice and when remittances have been made in the name of Penchil Reddy who admittedly had an account and when in the transport documents, the consignor has been shown as Mahalakshmi Rubber Complex of which admittedly P. Raja Rao is the Proprietor even prior to the appellant s business and continued to be so even during his employment under the appellant, it would be difficult in the above context to hold that DD represented remittance to the appellant. Findings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that it would have been possible for a party to transport systematically rubber sheets all the way from Kerala to Nellore in Andhra Pradesh without being intercepted by the authorities at any point of time. The adjudicating authority in giving a finding against the appellant in the impugned order by referring to appellant s letter dated 18-6-1983 recovered from M/s. Alwaye Rubber Trading Co. has stated that as per the letter, the appellant should have had an understanding with U.P. Joy of the said Co. for supply of rubber in contravention of law. In the present case, allegation against the appellant is in respect of alleged clandestine manufacture and removal between April 1981 and August 1982 and therefore, neither the letter dated 18-6-1983 nor the contents thereof would hardly have any relevance regarding the charge in the present case. Moreover when show cause notice has been issued against the appellant on 29-10-1982, it looks incredible that the appellant would have written a letter of the one dated 18-6-1983 incriminating himself. Adjudicating authority also referred to in the impugned order to the DRI Officers intercepting some packets from K.P. Menon s possession which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that these circumstances and evidence are not relatable to the charge set out in the show cause notice against the appellant. To reiterate the point once again, allegation is one of clandestine removal of excisable goods between April 1981 and August 1982 and the evidence or the circumstances against the appellant should be relatable to the period in question and the circumstances and evidence subsequent to the charge period which formed part of the later proceedings against the appellant which were also dropped subsequently cannot be relied upon to an anterior period. We also do not find any material on record in respect of the finding of the adjudicating authority that the appellant had procured raw rubber through clandestine source. Raw rubber is a controlled commodity coming within the mischief of Rubber Act, 1947 and procurement, possession and transport of raw rubber are covered by the provisions of the said Act coming within the superintendence of various authorities constituted under the said Act. No raw rubber was admittedly seized in this case nor any source of supply of raw rubber clearly established by evidence against the appellant. There are only vague circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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