TMI Blog2013 (11) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... k verification of entire stock was required to be carried out. -This having not been done, the department has not made out a case beyond doubt that there was shortage of particular MMF/CF and certain quantity of these fabrics was in excess. Apart from the loose papers which are held as not carrying much evidentiary value, there is virtually no evidence on record to establish clandestine activities of the respondents – Relying upon COMMR. OF C. EX., CUS. & SER. TAX, DAMAN Versus NISSAN THERMOWARE P. LTD. [2010 (12) TMI 487 - GUJARAT HIGH COURT] - A case of clandestine removal of goods has to be made out on facts which find corroboration from the material on record - In absence of any corroborative material, no demand could have been raised merely on the basis of a statement recorded under Section 14 of the Act, which had been subsequently retracted – Decided against Revenue. - Appeal No.E/287/2006 - Final Order No. A/11240/2013-WZB/AHD - Dated:- 27-9-2013 - MR.M.V. RAVINDRAN, J. For the Appellant : Shri Paritosh Gupta, Adv. For the Respondent : Shri K. Sivakumar, Addl.Commissioner (A.R.) JUDGEMENT Per: M.V. Ravindran Being aggrieved with the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicated whereby demand for central excise duty on clandestinely removed fabrics was confirmed by the adjudicating authority and seized MMF/CF were confiscated allowing to be redeemed on payment of redemption fine and penalty on the assessee firm and separate penalties on Shri Shambu Bhavsar broker and Shri Subhash Chandra Omkarmal Agrawal, Director were imposed. 3. The assessee and individuals preferred appeals before the Commissioner (Appeals), who fully allowed the appeals filed by all the 3 appellants there. The Commissioner (A) observed that there was o piece of evidence to prove the charges of clandestine removal or seizure in the factory premises of the said assessee. The Order of Commissioner (Appeals) is very exhaustive order where in before coming to a conclusion, he has discussed and analysed each and every piece of relied upon documents vis-`-vis the requirement of evidence under the law. 4. Heard both sides and perused the records. 5. The department being aggrieved by the Order of Commissioner (Appeals) and has filed appeal on the following main grounds which are reproduced in brief, contentions raised by the respondents and my findings on each ground are als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in excess. (ii) Regarding findings of the Commissioner (A) that department did not investigate the 12 buyers whose names were either in the loose papers (slips) recovered or were informed by the Director of the respondent firm, the department has countered this finding of the Commissioner (A) by stating that Shri Agrawal, Director had stated that wherever the name of M/s Ganesh Textile appeared in Annxure B and C to the panchnama dt.28/29..06.2004 is a dummy firm, hence, it is not understood to the department as to what investigations could have been conducted from the said buyer when the Director himself stated that it was a dummy firm. The department has also contended that at least in this country there is no data bank about the firms registered all over the country and it is just impossible to verify as to whether any firm in the name of M/s Ganesh Textiles is existing firm or fictitious firm. Respondents submit that there were 12 buyers and M/s Ganesh Textiles was one of them. The department has relied on the statement of Shri Agrawal, Director to hold M/s Ganesh Textiles considering it to be a fictitious firm. But there is no say about the remaining 11 buyers, no investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities have not disputed about the evidence of UPC submitted by the respondents. I find force in the contention of the respondents that Section 37C of the Central Excise Act, 1944 was not applicable to them. This section contains provisions relating to service of decisions, orders or summons, etc by the department. So far as the assessee is concerned, the assessee is free to send correspondence or any document by any mode including UPC (Under Postal Certificate). The fact whether the statement was retracted or not and if retracted, whether the same was delivered to the investigating officers or not is of secondary importance. The primary evidence which is required to demand central excise duty from the respondents on the allegation of clandestine removals made by it is to prove that there was clandestine removal. The method and manner in which the entire proceedings have been conducted by the investigating agency which has been discussed in detail in the show cause notice, Order-in-Original and Order-in-Appeal, there is no iota of doubt that there was no actual physical verification of stock of MMF/CF lying in the factory premises. Therefore, there remained all the possibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. In such cases, receipt of the fabrics at the buyers end is an important evidence to corroborate the evidence in the form of loose slips. I find it difficult to understand why the investigation was not carried out further. When the factory was visited by the officers on 28/29.06.2004 and all the annexures demanding central excise duty were also prepared on the same day. The show cause notice was issued on 22.12.2004 after almost 6 months. In these 6 months, the department has not undertaken any further investigation in this case except recording statement of Shri Agrawal, Director and Shri Shambu Bhavsar, Broker on 03.12.2004. These statements appear to have been recorded by the department to show that Shri Shambu Bhavsar was a broker and all these clandestinely removed fabrics were being sold by the respondents through Shri Bhavsar. Shri Agrawal has filed affidavit retracting his statement dt.3.12.2004 and deposed on oath that he introduced Shri Shambu Bhavsar to the department as Broker, who was otherwise their employee. This was done by Shri Agrawal on the insistence of the officers who wanted to conclude their investigation and could not have done so unless and until the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved that though mathematical procedure is not required to establish the clandestine removal but that does not mean a fact could be proved without sufficient evidence. The Hon ble Supreme Court in the case of Anjlus Dung Dung v. State of Jharkhand reported in 2005 (9) SCC 765 observed that suspicion however strong cannot take place of proof. 9. Though, I find that there is a long list of precedent decisions of various courts to the above effect and instead of referring to all of them, I would like to refer to the latest majority decision of Tribunal in the case M/s. Kuber Tobacco Products P. Ltd., Final Order No. A-83/110/2010-EX(Br.), dated 3-2-2012. 26. It would be necessary to analyze whether the evidences, other than the retracted oral evidences, are credible for being used as corroborative evidence. The Hon ble Supreme Court in case of Sitaram Sao v. State of Jharkhand - (2007) 12 SCC 630, pithily encapsulated the idea of corroborative evidence, in the following words: 34. The Word corroboration means not mere evidence tending to confirm other evidence. In DPP v. Hester - (1972) 3 All ER 10.16, Lord Morris said: The purpose of corroboration is not to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clandestine manufacturing. There is no independent tangible evidence on record of any clandestine purchases or receipt of the raw materials required for the manufacturing of the alleged quantity of finished goods for its clandestine removal from the factory. In the entire notice and the order there is no satisfactory and reliable independent evidence as regards the unaccounted manufacture and or receipt of the huge quantities of raw materials. The quantities of the alleged bags dispatched from the factory would require some transportation arrangement for delivery from the factory. However, any reliable evidence about any vehicle coming to or going out of the factory without proper entries is not forthcoming. There is also no cogent evidence about any freight payment for any such movement. 30. I do not find cogent evidence of disproportionate and unaccounted receipt and consumption of the basic raw materials and packing material, required for manufacturing alleged quantity of unaccounted finished goods. I do not find tangible proof of unauthorized payment for procuring such unaccounted raw material and packing material. I do not find cogent evidence of disproportionate power con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t recorded by the Tribunal upon appreciation of the evidence on record, it is apparent that except for the shortage in raw material viz., HD which was disputed by the assessee and the statement of the Director, there was no other evidence on record to indicate clandestine manufacture and removal of final products. On behalf of the revenue, except for placing reliance upon the statement of the Director recorded during the course of the search proceedings, no evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error in giving benefit of doubt to the assessee.(Emphasis supplied) The above ratio, as laid down by Hon ble High Court of Gujarat, would squarely cover the issue before us. 16. In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the factory premises of M/s. VTPL, in the peculiar facts and circumstances of this case, we hold that the impugned order which confirms the demand on the appellant M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter appreciation, I reproduce the relevant paragraph of the Commissioner (Appeals). Not only that if the prosecuting authority is relying solely on confessional statement then such statement must be voluntary i.e. it should not suffer and stand vitiated on account of exertion of pressure, on intimidation or be under duress and coercion. See : Orient Enterprise v. Collector - 1986 (23) E.L.T. 507 (Trib.). Only those statements or admissions are acceptable or admissible which are voluntarily spontaneous and doesn t suffer from any external pressure, inducement or allurement. I did find in this case that only a single statement of Mr. Pravinbhai Lallubhai Patel who was also as a Manager and Authorised Signatory of 8-12-01 had been relied on. The adjudicating authority had recorded on reasonable conclusion that from the facts and circumstances of the case it appears that the statement of Mr. Pravinbhai L. Patel was as if extracted under pressure, that it was not recorded in a peaceful and in conducive atmosphere. I have every reason to believe the findings of adjudicating authority to be true. It is quite surprising, rather amazing, as to how from units who processes huge quantity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng authority had every reason to believe that the shortages of the fabrics whether at grey stage or at process stage were got forcefully admitted from Mr. Patel for making a case as if it had reached to a dead end as far as further investigation were concerned. The learned Commissioner (Appeals) also found that there is no corroborative evidence and as such by taking note of the earlier decision, rejected the appeal. 4. I find no infirmity in the order passed by the Commissioner (Appeals). Revenue has not referred to or adduced any evidences to establish beyond doubt that the goods were clandestinely removed from the respondent s factory. Both the authorities below have examined the available evidences in detail and have rightly concluded that they do not establish the Revenue's case. I find no reason to interfere with the impugned order and accordingly the appeal filed by the Revenue is rejected. Similarly, the Revenue s appeal was dismissed by the Honorable Gujarat High Court in a case against Omkar Textile Mills Pvt. Ltd. reported in 2010 (259) ELT 0687 (Guj), the honorable High Court observed as under :- 9. Thus, all the authorities below viz., the adjudicating authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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