TMI Blog2013 (7) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... here is not a single instance where either seizure of cash is made or any clandestinely removed goods are seized or raw materials/ finished goods were found either short or in excess in the factory premises of the appellant or at any other place - As per the Panchnama drawn at the factory premises, shown that there was no excess/ shortage of the raw materials or finished goods found - The documentary evidences collected from the business premises of M/s. Sunrise Enterprise and the statements recorded by investigation, can at the most raise a reasonable doubt that some clandestine removal activities being undertaken by the appellant. However, such a suspicion or doubt, to be strengthened by positive evidences which seem to be lacking in the case. Any suspicion whosoever cannot take the place of evidence regarding clandestine removal of excisable goods. Moreover, after having positive evidences, quantification of duty on clandestinely removed goods also becomes essential. As already mentioned above, the stock lying in the stock yard of M/s. Sunrise Enterprise, Mehsana was found containing the goods received from M/s. Sakeen Alloys Pvt. Limited under proper invoices. When the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned advocate Shri J.C. Patel appearing on behalf of the appellants submitted that during search at the business premises of M/s. Sunrise Enterprises, departmental officers found stock of goods in the stockyard of the M/s. Sunrise Enterprises. The goods found in the stockyard of M/s. Sunrise Enterprises were found embossed with the mark VARSANA belonging to M/s. Varsana Ispat Limited, Kutch and no goods were found to be manufactured by the appellant or bearing the mark of the appellant in the stock. It was argued by the learned advocate that the allegation of clandestine removal against the appellant cannot be based on the records or pen-drive recovered from the business premises of third party i.e. M/s. Sunrise Enterprises, Mehsana because of the following reasons:- (a) That cross-examination of the person in charge of M/s. Sunrise Enterprises, Mehsana was not allowed to them in respect of the repeated requests made to the adjudicating authority. He submitted that request for cross examination was rejected by the Commissioner Central Excise vide letter dated 12.04.2010 against which they filed an appeal before the Tribunal but their appeal was rejected as not maintainable becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler of the appellant. The case of clandestine removal is not only based on the statements of the appellants and registered dealer but also based on the records/pen-drive recovered from the business premises of M/s. Sunrise Enterprise. He therefore, reiterated the findings of the adjudicating authority. 5. We have carefully gone through the rival submissions and perused the records. In this case, the case of clandestine removal has been made out against the appellant M/s. Sakeen Alloys Pvt. Limited on the basis of records/ pen drive recovered from the business premises of M/s. Sunrise Enterprises. In the statements of Managing Director and the Excise persons of M/s. Sakeen Alloys Pvt. Limited and Shri Mukeshbhai V. Patel of M/s. Sunrise Enterprise it has been admitted that they have clandestinely manufactured and cleared CTD/ round bars but they have retracted their statements immediately after recording the statements. It is the case of the appellants that request for cross-examination of the persons whose statements were recorded has not been made available to them by the adjudicating authority. In view of the various judgments relied upon, it was also argued that no investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve confirmed to have received such goods. Appellants herein have filed affidavits from some of such buyers which the adjudicating authority has not accepted. It would have been in the interest of justice to call some of these purchasers for cross-examination so that true picture of the entire activities undertaken by the appellants was made clear. Appellants also requested for cross-examination of the Chartered Engineer who gave them the certificate regarding manufacturing capacity and consumption of electricity. 8. In the cases relating to clandestine removal of excisable goods, following are the indicators of clandestine removal activities by a manufacturer:- (i) Excess stock of raw materials found in the factory premises. (ii) Shortage of raw materials in the records of manufacturer (iii) Excess/ shortage of manufactured goods found in the factory premises . (iv) Excess consumption of electricity/ power used in the manufacture of finished goods. (v) Any transit seizure of clandestinely removed goods made by the investigating authority. (vi) Any cash amounts seized from the factory premises or dealers premises or residential premises searched during investigation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was clandestine removal. It is further observed that the Hon ble CESTAT in the case of Rama Shyama Papers Limited vs. CCE, Lucknow [2004 (160) ELE 494 (Tri. Del.)] came to the following conclusion in paras 9 and 10 of the judgment which are reproduced below:- 9. We have considered the submissions of both the sides. The Revenue has charged the Appellants with clandestine manufacture and removal of paper mainly on the basis of documents seized from the premises of Chitra Traders and Transporters and the various statements recorded from the Proprietor of Chitra Traders, transporters and labourers working in the factory of the Appellants and also the driver or cleaner of the Truck which was in the process of loading on 22-6-2001 when the Central Excise Officers visited their factory premises. The Appellants, on the other hand, have contended that most of the persons whose statements have been relied upon have not been produced for cross-examination and the documents seized from third parties premises have not been corroborated by adducing evidence of any of the customers though the enquiries were conducted at different places as deposed by Shri Anurag Sharma, Inspector, in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary, loose sheets, charts, packing slips could be drawn about the receipt of polyester yarn by the Appellants from the company, M/s. HPL, in a clandestine manner during the period in question. Similarly, no inference could be legally drawn against the Appellants of having manufactured texturised yarn out of the said polyester yarn and the clearance thereof, in a clandestine manner without the payment of duty. The Tribunal had also referred to the decision in Oudh Sugar Mills Ltd. v. Union of India, 1978 (2) E.L.T. (J172) wherein the Apex Court has observed that no show cause notice or an order can be based on assumptions and presumptions. The findings based on such assumptions and presumptions without any tangible evidence will be vitiated by an error of law. The Tribunal also took note of the decision in Kamal Biri Factory and Shri Khushnuden Rehman Khan v. CCE, Meerut - 2003 (161) E.L.T. 1197 (T) = 1997 (23) RLT 609 (CEGAT) wherein view has been taken that the allegations of clandestine removal of the goods will not stand established when based on the entries made by the assessee s employee in a diary or on the basis of third party s record in the absence of any corroborative ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not challenge the fact of their business association with M/s. Chitra Traders, Delhi, the enquiry further down the line was not considered necessary. The onus of proof that the goods were removed by the Appellants without payment of duty and without entering the same in their records is upon the Revenue which cannot be discharged merely on the strength of the entries made in the records of a third party without linking the removal of goods from the premises of the Appellant-company. The mere fact that the Appellant-company had business relation with Chitra Traders, does not mean that they will be liable to each and every entry made by Chitra Traders in their books of account. It is also noted that none of the transporters and none of the labourers whose statements have been relied upon by Revenue have mentioned that the goods in question were delivered to Chitra Traders from the premises of the Appellants. The material brought on record may at the most create a doubt only. But doubt cannot take the place of evidence. The Revenue has, thus, not proved its case against the Appellants in respect of 149 consignments. We, therefore, set aside the demand of duty and penalty imposed on A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the quantification undertaken by the investigation becomes doubtful and incorrect. For this purpose cross-examination of the person Incharge looking after the records of M/s. Sunrise Enterprise was must, which was not allowed by the adjudicating authority. In view of the above observations, the demand of duty of Rs. 1,85,10,861/- is not sustainable and is required to be set-aside. 12. However, so far as the duty demand of Rs. 8,25,277/- with respect to parallel invoices recovered from the transporter is concerned, it is observed that positive evidence in the form of parallel invoices issued by the appellant are available and the same have been confirmed by the proprietor of transporter M/s. Khodiyar Transport and the same have been affirmed by independent witness other than the manufacturer of the goods. Therefore, the duty demand of Rs. 8,25,277/- pertaining to clandestine removal of goods on parallel invoices is required to be upheld and the appellants are liable to penal action under the provisions of the Central Excise Act and Central Excise Rules. Accordingly, penalty of Rs. 8,25,277/- is imposed upon M/s. Sakeen Alloys Pvt. Limited under Section 11AC of the Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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