TMI Blog2013 (9) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... . Borax Powder, who indicated that the appellant had procured Borax Powder and not accounted the same in his record; and the said entries and information were deduced from the documents of the premises of Shri Anil Jadav and whose evidence has been discarded for having not been produced for cross examination; in the absence of any other tangible evidence to show that the appellant had been procuring the other major raw materials required for manufacture of Frit without recording in books of accounts, we are unable to accept the contentions of Revenue. Held that:- In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the factory premises, demand of duty along with penalty and interest is not sustainable - appellant has not made any clandestine manufacture, which he has removed clandestinely and on which the duty was payable – Relying upon the judgment of Tejal Dyestuff Industries [2008 (7) TMI 412 - HIGH COURT OF GUJARAT AT AHMEDABAD], wherein it is held that recording of confessional statements would not be an end to the investigation and Revenue officers should be careful to ensure that they are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, no manufacturing activity were found to be carried out in the premises and M/s AIMCO were conducting the manufacturing activity of finished goods at the premises of M/s CL. No records were found in the premise of M/s AIMCO. During the course of investigation, DGCEI officers recorded statements of persons who are concerned with the facts relevant to the goods. After scrutinizing the seized documents and the statements recorded of various persons, show cause notice was issued to M/s CL, demanding the duty on the goods which were purportedly clandestinely manufactured and cleared from their factory premises, interest thereof and penalties under the provisions of Central Excise law and M/s AMICO was also issued a show cause notice for imposition of penalty on him. Both the appellants herein contested the issue in de-novo proceedings, on merit and on violation of natural justice and on limitation. The adjudicating authority did not agree with the contentions raised by both the appellants and came to conclusion that the demand of duty as raised in the show cause notice needs to be confirmed along with interest and imposed penalties on both the appellants. 4. Ld. Sr. Advocate Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that, in fact, 80 to 90% of the suppliers to whom the final product has been cleared by the appellant, are the Government departments, for which he refer to Page No.49 of the paper book and submit that the percentage of total sale from the appellant to the Government departments is to the tune of 22% to 89% during the relevant period, which is a percentage of sale to the total sales as given in the balance sheet. It is his submission that them adjudicating authority has not controverted these submissions made by the appellant. He would also submit that the show cause notice and the impugned order placed heavy reliance on the various statements recorded during the course of investigation, but are un-reliable and not worthy of credence. He would submit that the statement recorded of Shri Mukesh Shantilal Shah, (Supervisor of Tablet department) has stated, has been relied upon by the Revenue to show that the registers/batch registers maintained by him were in respect of product manufactured by them. It is his submission that the Revenue has relied upon the said statement and the registers, to show that the appellant had clandestinely manufactured Verapamil 40 mg tablets and Chloroqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the various affidavit dt.03.07.2003, which are enclosed at Page No.84, 87, 88, 92, 93 or paper book No.1. It is also his submission that the statements which were recorded by DGCEI authorities were, in a way, retracted by letter dt.3.7.2003, 22.12.2003, 30.10.03, 6.1.04. It is also submitted that the adjudicating authority has just summarily discarded this evidence of retraction by stating that the appellant has not produced these affidavits before the adjudicating authority in first round of litigation and hence cannot be considered in second round of litigation. It is his submission that in first round of litigation itself, these papers were available on record. It is his further submission that no independent evidence has been gathered by the Revenue for corroboration of statement given by 3 individuals in as much as there are no statements of suppliers of raw materials, any statement of purchasers, no statement of any production personnel or dispatch personnel and hence the entire order is liable to be set aside as the statement given by Shri Shah, Shri A.D. Parmar and Shri A.V. Patel have been retracted. It is his submission that this proposition is now well settled by the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f RG-1 registers one maintained statutorily and another parallel register containing production and clearance details invoice-wise. It is his submission that M/s CL was availing SSI exemption for the first value of clearances of Rs.1 crore and it was found that M/s CL and M/s AIMCO were working under loan licencee agreement and M/s AIMCO has no machinery as recorded in the panchnama. It is his submission that various kachha books/sheets indicating clearance of goods to M/s AIMCO and various dealers both illicit as well as licit clearances indicating the amount collected/to be collected from various dealers were seized in the panchnama, is in itself is a corroborative evidence. It is his submission that Shri Shah Production Supervisor, Shri A.D. Parmar, Stores incharge and Shri A.V. Patel, Proprietor of M/s CL had confirmed that there was clandestine removal of the goods. It is his submission that the argument regarding no excess stores consumption, excess raw material, realization of amount in addition is allibi put forth and cannot be considered by this Bench, as the case of clandestine removal need not be established with mathetical decision. For this proposition, he would rely u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Shri A.D. Parmar, Shri Patel, Shri A.K. Shah, Shri Pillai all of them have in their affidavit dt.3.7.2003 have retracted all the statements made by them on 2nd/3rd July 2003. On perusal of the records, we find that the appellant herein M/s CL in their letter dt.3.7.2003, addressed to the DGCEI office, has specifically stated as under: Date: 03.07.2003 To The Directorate General of C. Excise Intelligence, Vadodara 390 203 Dear Sir, The officers from this branch had visited my factory premises on 02.07.2003 and had carried out detailed search, inquiries, etc. The officers have today (03.07.2003) recorded my statement also. The copy of statement is not given to me but read over to me. I filled that my statement is not recorded in the same sense or way as I stated. It is my humble request to kindly to supply me a copy of my statement and obliged. Thanking you, Yours faithfully, For Centurion Laboratories Sd/- (A.V. Patel), Proprietor. 8. It can be seen from the above said letter on 3.7.2003 itself Shri A.V. Patel, who was the Proprietor of M/s CL, has very clearly stated that his statement recorded is not in same way as he has stated. The subsequent corresp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tch card/note book maintained by Shri Shah, following details emerge. 11. It can be seen from the above reproduced details of note book which has been maintained by Shri Shah, it cannot be considered as batch card. It is also to be noted that the said note book only indicate about the quantity of materials consumed for manufacturing of batch number 426002 of batchsize of 1,75,000 tablets. It is common knowledge that the theoretical batchsize as indicated in the batch register need not necessarily give the same yield as there may be losses during the manufacturing activity. It is seen from the statutory RG-1 register maintained by the appellant for very same product, indicate that the tablets manufactured by them has given them a yield of 1,50,000 tablets, which is tallying with the quantity recorded in private RG-1 details also. In our view, the investigating authority has not taken the investigation to next level in as much as the appellant M/s CL being manufacturer of P P medicaments has necessarily, in law, required to be registered with Food Drugs Administration authorities. The appellant has to follow the stringent conditions of provision laid down by the Food and Drug Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower authorities that they have cleared the consignments to various distributors/dealers. The investigating authorities have not bothered to record the statements of those persons within their jurisdiction also nor they have sought help from their counterparts in various places where the goods were dispatched. In the absence of any corroborative evidence from the purchasers of the medicines, we are of the view that the Revenue has failed to prove their case. 13. We also find force in the contentions raised by the ld.Counsel as to the fact that the appellants products which are manufactured are pharmaceutical goods and these pharmaceutical goods are covered by the statutory records to be maintained for procurement of the raw material, which are also covered by drug licences issued by FDA authorities. It is to be noted that the raw materials which are consumed by the appellant are always conforming to specification given in the Indian Pharmacoepia, British Pharmacoepia or United States Pharmacoepia. It is imperative that the manufacturer and supplier of such raw materials are required to maintain the manufacturing records of such raw materials which are procured and consumed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 35-G of the Central Excise Act, 1944, challenging the order dated 1-11-2011 of the Customs Excise and Service Tax Appellate Tribunal (the Tribunal for short) passed in A/1846-1851/WZB/AHD/2011 [2012 (278) E.L.T. 362 (Tribunal)] on the following two proposed substantial questions of law, which are extracted below :- (i) Whether the order of the Hon ble Tribunal relying upon Tribunal s own order dated 29-3-2007 [2007 (213) E.L.T. 64 (Tribunal)] passed in respect of one of the parties involved in the matter viz. M/s. Amar Ceramics Ltd. holding the retracted statement cannot be relied upon for the purpose of present order is legal and proper as the same appears to be an after thought and not in consonance with the law of retraction? And whether retraction after a period of 9 months can be considered to be valid (ii)?Whether the Hon ble Tribunal has erred in holding that there were not sufficient evidence indicating clandestine manufacture, by ignoring the fact that the assessees themselves had admitted specifically in their application dated 5-10-2005 filed with the Settlement Commission ? 4. The main grounds of challenge of the appeal are that the findings recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of visit of the officers to the factory premises of the appellant, it is undisputed that the stock of raw materials as well as finished goods was tallying with recorded balances. This conclusion can be reached from perusal of records, as there is nothing on record to indicate otherwise. 13. On careful perusal of the entire records of the case, we find that there is nothing on record as to unrecorded purchases or consumption of various other raw material in the manufacture of Frit, there is also nothing on record to indicate that the appellant had purchased the Quartz, Feldspar, Zinc, Borax Powder, Calcium and Dolomite and without accounting them used for the manufacture of Frit for clandestine removal. There is also nothing on record nor there is any statement of the suppliers of other raw materials, which would indicate that the appellant had received unaccounted raw material from the suppliers of these raw materials. There is a solitary evidence in the form of statement of supplier of one of the raw material i.e. Borax Powder, who indicated that the appellant had procured Borax Powder and not accounted the same in his record; and the said entries and information were deduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties, we have taken the civil application along with the appeal for hearing, at the admission stage. 3. This Tax Appeal has been filed under Section 35-G of the Central Excise Act, 1944, challenging the order dated 1-11-2011 of the Customs Excise and Service Tax Appellate Tribunal (the Tribunal for short) passed in A/1846-1851/WZB/AHD/2011 [2012 (278) E.L.T. 362 (Tribunal)] on the following two proposed substantial questions of law, which are extracted below :- (i) Whether the order of the Hon ble Tribunal relying upon Tribunals own order dated 29-3-2007 [2007 (213) E.L.T. 64 (Tribunal)] passed in respect of one of the parties involved in the matter viz. M/s. Amar Ceramics Ltd. holding the retracted statement cannot be relied upon for the purpose of present order is legal and proper as the same appears to be an after thought and not in consonance with the law of retraction? And whether retraction after a period of 9 months can be considered to be valid (ii) Whether the Hon ble Tribunal has erred in holding that there were not sufficient evidence indicating clandestine manufacture, by ignoring the fact that the assessees themselves had admitted specifically in their applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said final product Frit requires the use of Quartz, Feldspar, Zinc, Borax Power, Calcium and Dolomite as inputs/raw material. On the date of visit of the officers to the factory premises of the appellant, it is undisputed that the stock of raw materials as well as finished goods was tallying with recorded balances. This conclusion can be reached from perusal of records, as there is nothing on record to indicate otherwise. 13. On careful perusal of the entire records of the case, we find that there is nothing on record as to unrecorded purchases or consumption of various other raw material in the manufacture of Frit, there is also nothing on record to indicate that the appellant had purchased the Quartz, Feldspar, Zinc, Borax Powder, Calcium and Dolomite and without accounting them used for the manufacture of Frit for clandestine removal. There is also nothing on record nor there is any statement of the suppliers of other raw materials, which would indicate that the appellant had received unaccounted raw material from the suppliers of these raw materials. There is a solitary evidence in the form of statement of supplier of one of the raw material i.e. Borax Powder, who indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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