TMI Blog1998 (12) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... tter of Annexure C and the Collector has confirmed demand in respect of 13 truck loads and dropped the demand for the remaining 26 trucks while the department seeks confirmation of demand on Pan Masala transported in all 39 trucks) and against Collector s dropping of demand in respect of 42 trucks covered by Annexture E (total number of consignments covered by Annexture E is 68 truck loads - the Collector has confirmed the demand in respect of 26 truck loads where the second consignment by the consignee was established by means of acknowledgement in the Lorry Receipt Registers maintained at the destination by M/s. EITA and dropped the demand in respect of the remaining 42 trucks (the Revenue seeks confirmation of demand on the total 68 truck loads of Pan Masala). 3. The facts of the case are that on receipt of intelligence gathered by the officers of Directorate General of Anti-Evasion that appellant No. 1 who is the manufacturer of Pan Parag brand of Pan Masala was engaged in large scale evasion of Central Excise duty by way of clandestine clearances mainly to consignment agents at Bombay and Hyderabad from where the pan masala was sold to different dealers, the officers of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmation of receipt of goods at the destination, another invoice/gate pass containing the same Sl. No. was drafted and goods were again transported on the same set of consignment notes but on a different Lorry challan. Thus by using same Sl. No. of gate passes/invoices and consignment notes, the Appellant No. 1 was alleged to have adopted the modus operandi of double transportation of pan masala. 5. From the above, the department alleged that Appellant No. 1 had transported 39 truck loads of Pan Masala on the cancelled consignment notes of M/s. EITA as per the details in Annexure C to the Show Cause Notice and evaded duty approximately of Rs. 2.17 crores. 68 truck loads of Pan Masala are alleged to have been transported on consignment notes of M/s. EITA without payment of duty by adopting the modus operandi on the strength of same consignment note, evading duty of Rs. 3.59 crores as per the details in Annexure E to the show cause notice. The Appellant No. 1 was alleged to have transported 12 truck loads of Pan Masala by adopting the same modus operandi on the strength of same set of consignment notes to M/s. RFC resulting in duty evasion of approximately Rs. 62 lakhs. One truck ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of these documents were not made available to the appellants and no such documents were recovered from the premises of appellant No. 1 (manufacturer of pan masala on whom duty has been confirmed). These documents do not link Appellant No. 1 with the alleged transportation and do not establish knowledge of Appellant No. 1 of clandestine removal of pan masala. The lorry challan, consignment note and despatch memo do not give any co-relation to show a contradiction between themselves as regards the name of the consignor, description of goods carried, etc. Para (ix) of the show cause notice sets out co-relation according to the department. The details in the said para of the show cause notice are as under : Date G.P. No. C.N. No. Lorry Challan Lorry No. Pre paid C.N. No. 30-5-94 STC 52 9501351 1247 MCY3597 30-5-94 STC 53 9501352 1247 MCY3597 4-6-94 9501351 1263 39516 30-5-94 4-6-94 9501352 1263 39516 30-5-94 10. The allegation in the show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved in the regular course of business or in the normal course of business. They contained interpolations and therefore, their credibility is doubtful. The details in the transporters documents also do not tally with each other which would show that the documents were not maintained in the normal course of business. The insufficiency or inadequacy of the evidence to charge the appellant No. 1 with alleged clandestine removal is evident from the findings recorded by the Commissioner for dropping the demand pertaining to 70 truck loads. The Commissioner s findings on transport of two consignments against same consignment note where he has dropped the charge in respect of some of the trucks, are reproduced below : 68 by EITA - Charge established in 26 cases (42 cases dropped) 12 by RFC - 11 established 1 dropped In respect of the cases in Annexure E, it is seen that there is no evidence regarding receipt of second consignment at the destination. As such it may at the most become a case of only presumption and without conclusive evidence it cannot be established that the party had actually cleared pan masala without p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both in their written reply and during the hearing, for cross examination of the transporters from whom statements were recorded, but the witnesses were not offered for cross examination and the impugned order does not contain any reason for denial of this opportunity; hence the testimony of the transporter has not stood the test of cross examination. 14. Let us now examine some of the statements. In the statement of Shri S.N. Tiwari, he has nowhere stated that the consignor who has cancelled the consignment note and instructed that the goods are not being despatched, is still despatching the goods and despatched the goods against such cancelled consignment notes. He has only suggested that the consignment may be of Appellant No. 1. Further his statement also stands un-tested by cross examination and in any case, he has disowned his statement of 11-8-94 at the first available opportunity on the next date i.e. 12-8-94. Regarding the statement of Shri Ashwin Thakker of M/s. K. Mahendrakumar Co., he has disowned his statement and filed a complaint alleging duress, and coercion in extracting the statement from him. Further the Department itself has not accepted the veracity of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at is that this aspect was thoroughly investigated and nothing adverse found. 15. We find that in the case of Gurpreet Rubber Industries v. Collector of Central Excise reported in 1996 (82) E.L.T. 347, the Tribunal has set aside the demand of duty based upon entries in a private note book (diary) by a honorary worker in the appellants firm, holding that admittedly in the instant case, except the said diary, no other evidence such as installed capacity of the factory, raw material utilisation, labour employed, power consumed, goods actually manufactured and packed etc. has been produced by the Department to prove the alleged clandestine production of the factory and the removal of the same. On the other hand, admittedly at the time of visit to the factory, no discrepancy in raw material account was found.... . The Tribunal observed that in the light of the foregoing, it cannot be concluded that the note book is a authenticated private record of production so as to raise a demand based on the figures indicated therein. At the most, it may raise a doubt but that cannot take place of proof. Even though there may be certain element of truth in the subsequent story, between may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es) relates to a case where it was an admission by the partner who had removed the goods. This was corroborated by the factory Manager, slips and the factory gate pass corroborated the evidence which also indicated removal of one consignment in the morning and another consignment later, which was intercepted. The Tribunal accordingly confirmed that there were two removals. In the present case, however, there is no statement from the partner, no admission by any of the employees of the Appellant No. 1 and there is no recovery of any slip or gate pass of factory of Appellant No. 1 and hence the decision relied upon by the DR is not applicable. (5) the ratio of the decision of the Supreme Court reported in [1993 (13) E.L.T. 1546 (S.C.)] (D. Bhoormull) that the prosecution is not required to furnish evidence with regard to each and every minute detail, when the acquisition/possession of the goods was established, is not applicable in the present case where the basic fact that pan masala was manufactured and clandestinely removed by Appellant No. 1 is itself in dispute and insufficient evidence has been adduced on this aspect. (6) in the case of K.I. Pavunny reported in 1997 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the entire operation of DGAE, no discrepancy in the stock of inputs or in the finished products in the manufactory of M/s. Kothari Products Ltd. was found by the officers; (2) no incriminating document relating to illicit receipt of inputs was found in their manufactory or in their office premises . (3) It is also a fact that no seizure was effected either in the factory or in other premises of M/s. KPL or in the premises of any transporters while the raids were conducted by the Department simultaneously in all the sensitive places relating to the manufacture of Pan masala, transportation and sale of pan masala of M/s. KPL. (4) But I find that the investigation officers have not thoroughly examined this important point and during their entire operation, they could not find any discrepancy with regard to the input and output in the manufactory of M/s. KPL. This fact could have been investigated thoroughly before proposing the demand of duty. (5) Further I find that where there is allegation of clandestine removal of pan masala, either against cancelled consignments or against double transportation the freight has been paid in cash, the transporters and their agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondents factory and not an iota of evidence had been found against them. They had produced all the registers, records. They had filed affidavits. There was no examination of a single witness or seizure of goods to show clandestine removal of goods or sale of such goods. It is the duplicate challans of the transporter, on the basis of which the alleged clandestine removal of the goods is being attempted to be proved. This is against the principles known in law. The aspect pertaining to clandestine removal has been laid down in the judgment rendered by the Tribunal in the case of Kashmir Vanaspati (P) Ltd. v. CCE, reported in 1989 (39) E.L.T. 655 (Tribunal) wherein it has been held that the Revenue cannot proceed even on the basis of private note book maintained by labourers containing unauthenticated entries and over writings has been held to be not dependable record to establish clandestine removals unless the same is supported by other evidence such as raw materials consumed, goods actually manufactured and packed. In the case of Sayaji Iron Engg. Co. Ltd. v. CCE, reported in 1990 (45) E.L.T. 104 (Tribunal) it has been held that irregularities in the maintenance of RG1 Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and complete investigation by the Revenue and they found nothing on record against the assessee. 14. The only ground on which the department proceeded is maintenance of duplicate challan by the transporter which has been explained in great detail by the transporter himself. Annexure D1 for example indicates challans 109-2095 dated 12-5-93 which corresponds consignment 109-8178 dated 5-5-93 and the corresponding GP is 282 dated 5-5-93. In respect of this challan No. the vehicle No. MED 2313 has been used for removal of goods from the factory gate to the godown of the transporter and at the godown the lorry transporter has indicated another lorry DL-1 GA 1487 and transported the same quantity of goods i.e. 9065 to New Delhi. He has provided another challan 109-2101. This duplicate challan has only indicated further transportation to Delhi. This lorry challan cannot be construed to mean that there was clandestine removal of goods without accountal. It is not understandable as to how the lorry can cross the many check post from Nelamangala to New Delhi without accountal. Further the Revenue has not examined the lorry driver 1 GA 1487 by which another quantity of 9065 Kg. is alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yield of M/s. JAL has suddenly dropped to 77% from a high of 96.7% is not correct. He held that the yield was never below 96.66% in any financial year. He has perused letter dated 25-10-94 of Bhoruka Aluminium Ltd. relied upon by the department as a piece of evidence against the respondent. In the said letter Bhoruka Aluminium Ltd. have stated as under : The whole process involves some returns in terms of process scrap and some losses in terms of melting and invisible loss. At melting unit, the melting loss is around 5% of the raw material consumed and invisible loss is around 1% of the total billets extruded, the rest of the quantity are recycled The Collector has noted that from the above letter it can be seen that the process loss is less than 1% and the allegation of the department that according to Bhoruka Aluminium Ltd. it is almost nil is misplaced. The above observation of the Collector is totally acceptable, especially the requirements that are required to substantiate the clandestine removal not having been brought on record by the Revenue, hence the charges made by Revenue is totally unsubstantiated. Further we note that the Collector has examined thoroughly the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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