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TMI Blog2014 (12) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... search at factory premises of M/s Hingora Industries and seized records. Search was also conducted at the alleged secret office of M/s Hingora Industries located near Price Bar, Village Dabhel, Daman. Investigations conducted and statements were recorded which culminated into issuing of show cause notice dt. 30.09.2006 alleging/ contending as under: (i) That during investigation of the secret office, the said premises was found to be locked. The officers informed their counterparts present at the factory of M/s Hingora Industries to send some employee to the said premises. After sometime Shri K.M. Tripathi, the Plant in-charge reached the said premises who told the officers that he does not have keys to the said office. The lock had to be break open and the officers seized various documents i.e. invoice books, packing slips, challan etc. The officers also seized the five rubber stamps, partial burnt papers/ invoices and computer lying in the premises. Statement of Shri K.M. Tripathi was recorded wherein he has said to have stated that he was working with M/s Hingora Industries since last 4 months as Plant Incharge. That M/s Hingora has not undertaken job work for any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factured and illicitly cleared on the strength of fake/parallel invoices prepared at the secret premises and the secret office was managed by the personnel of the M/s Hingora. They have also illicitly cleared the goods to various parties in the guise of job work. During the period 01.04.2004 to 07.07.2004, the goods are shown to have manufactured on job work basis for M/s Star Synthetics and from 09.07.2004 M/s Hingora have shown their own production and clearances as mentioned in the said register. During the search of the factory no documents pertaining to the job work viz. job work register, job work challans etc were found. (iv) That on the basis of the parallel invoices recovered from the alleged secret premises, follow up action at the premises of the consignee, i.e. M/s Yogeshwar Textiles, Surat was conducted which resulted in recovery of some packing slips issued by M/s Hingora from their factory. The proprietor of M/s Yogeswar Textiles stated that the said packing slips were received inside the cartons of yarn received from M/s Hingora. The packing slips also tallied with the Packing Report Book seized from the factory premises of M/s Hingora. The proprietor of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther in some cases the parallel invoices of dispatches are also available. (vii) Based on the File No. A/11 containing daily dispatch reports, resumed from the alleged secret office, a work sheet A1 showing clandestine removal of Polyster texturised/Crimped yarn of 5,23,257.380 Kgs. valued at Rs. 2,61,62, 869/- during the period April 04 was prepared and duty of Rs. 62,79,089/- was demanded. (viii) Similarly, on the basis of File No. A/8, allegedly containing daily reports seized from the secret office, worksheet A2 was prepared showing clandestine removal of Polyster texturised/ Crimped yarn of 14,32,792.540 Kgs. valued at Rs. 7,16,39,627/- during the period May 04 to August 04 and duty of Rs. 1,71,93,510/- and cess Rs. 1,73,336/- was demanded. (ix) Based on File Nos. A/2, A/9 and A/12 allegedly containing daily reports and challans of dispatch said to be seized from the secret office work sheet A3 was prepared showing clandestine removal of Polyster texturised/Crimped yarn of 3,72,735.250 Kgs. valued at Rs. 1,86,36,763/- during the period September 04 is prepared and duty of Rs. 4472823/- and cess Rs. 89,456/- was demanded. (x) Further, based on File Nos. A/13 and from the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on Annexure A -1 to A3 of the SCN, which is summarized in Annexure A of SCN. All these work sheets have been prepared on the basis of documents seized from the alleged secret office of the Appellant. It is denied that Appellant maintained any secret office. (ii) That the entire proceedings based on the only premise that the documents/computer recovered from the premises near Prince Bar, village Dhabel, Daman belong to M/s Hingora. This is only a speculative surmise which is not supported by any cogent and clear evidence. According to the show cause notice and the impugned order, the so called one room premises located near prince bar belonged to one Shri Bhagu Bhai R. Patel. However it can be seen in his statement dated 25.02.2005 that Shri Bhagu Bhai had never taken the name of any person related with M/s Hingora or any of their director/ employee as the person to whom he had rented out the premises. (iii) That as mentioned and accepted in para 3.2 of the show cause notice itself, it was only on the instance of the raiding party that a person from the factory was sent to this alleged secret office, and this particular person, Shri K.M. Tripathi, who was the authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as rented this place did not point out that M/s Hingora or their employee or any person connected with them has taken these premises on rent. That the recovery of the alleged production/ clearances data records and rubber stamps is an attempt to implicate the Appellants in alleged act of Central Excise violations. That if five rubber stamps bearing Appellants name was found from the alleged secret office premises, it cannot be an evidence of clandestine removal of goods by Appellant. (vi) That the show cause notice and the impugned order relies upon the statement of Shri Tripathi, Plant Incharge and Shri I.C.Pipwala, Dispatch Clerk. However when the Appellant sought cross examination the same was denied on the ground that the same may be the compromised parties being employee of M/s Hingora and therefore in absence of opportunity of cross examination of Shri Tripathi and Shri I.C.Pipwala their statements cannot be relied upon. That Shri I.C.Pipwala in his statement has named Shri Jamunadas as the person who prepared the Central Excise Invoice and signed the same and also visits the office located near Prince Bar and that Shri Ramprasad also sits in the office. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be identified or interrogated. Not even a single transport document or statement of any of the transporter involved in transportation of alleged clandestinely cleared goods was recorded or found. Not even a single payment detail of clandestinely procured raw material used for manufacture of clandestine cleared goods was found. That inspite of the alleged clandestine dispatch records and alleged parallel invoices containing names of parties was available, no investigation was undertaken or even if undertaken no such buyer has been named to have received the goods. Not a single consignment of goods alleged to be have been cleared clandestinely by the Appellant was seized from buyers. No confessional statement of director or production/ dispatch person evidencing removal of goods without payment of duty is on record. (xi) That the entire case of the revenue is based on the presumption that the Appellant Company operated a secret office which is not substantiated by any corroborative evidence at all. The owner of the said secret office never ever connected the said office with the Appellant. The person who has allegedly rented the space for the alleged secret office of the Appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd data retrieved from the computer at such secret office. The said records and data said to have been containing the production details such as lot no., item grade, inward and outwards details of the goods at various dates as well as parties to whom the goods were cleared. It is also undisputed that statement of only two employees of M/s Hingora i.e Shri Tripathi, Plant Incharge and Shri I.C. Pipwala, Disptach clerk were recorded indicating the clearances of finished goods without payment of duty. We find that at the first instance the Appellant request for cross examination should have been allowed. It was especially so in the face of the facts that Shri I.C.Pipwala in his statement had named Shri Jamunadas and Shri Ramprasad as the persons visiting the secret office and allegedly undertaking activities of clearance of goods. The cross examination should not have been denied on the ground that the said persons being employee of M/s Hingora could have been compromising parties. We find that this approach of the adjudicating authority is inconsistent with the settled law of evidence. It is undisputed that the persons who had given inculpatory statements were only employees of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue. We find that though the officers visited one of the parties M/s Yogeshwar Textiles who have been alleged to have been received the clandestinely cleared goods, however except some packing slips, no other evidence has been adduced. The officers did not question any person of M/s Hingora in this context. We also find that during the visit to M/s Yogeshwar textiles except the packing slips the officers neither come across any Texturised yarn nor any parallel invoices used for the removals. Even the Proprietor of M/s Yogeshwar Textiles in his statement has stated that the goods were purchased through dalal Shri Jitendra Kapadia and had not made any payment to M/s Hingora Industries. It was confirmed by him that the goods in question were received through challans and not through any invoices. The officers also did not question Shri Jitendra Kapadia as to from where he has received the goods. Clearly it is an uncorroborated piece of evidence which cannot be relied upon to substantiate the charges of clandestine removal against the Appellant. 11. It is also contention of the revenue that during search of the factory premises of M/s Hingora Industries, no records of job work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learance records. In such case, it has to be held that the said evidence is uncorroborated. We find that following judgments cited by the Appellant are clearly applicable in such facts: (i) In the case of M/s Pan Parag India Ltd Vs CCE, Kanpur - 2013 (291) ELT 81 (Tri. - Del.), the Tribunal in Paragraph No.55 observed as under: Demand of duty of Rs. 1,03,26,220.00 along with imposition of penalty stands made on the basis of allegedly recovered photocopies of the invoices from the appellants factory during the course of search on 18.10.2002. Though the appellants have strongly contended that such photocopies were not recovered from their place but were planted and signatures of their representatives were taken on the same forcibly by the officers. But without dealing with said submission, we find that the entire demand is solely based upon these photocopies. As discussed, clandestine removal allegations cannot be fastened against the manufacturer based upon recovery of photocopies of invoices from their premises. The same required material corroboration by an independent evidence. Their bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent were not supported by any material and during the search by the officers of the department in the factory, office, residential premises of the Director and the authorized signatory, no incriminating documents were found. Therefore, the demand of duty on the basis of the said invoices in the present case is not sustainable. It is also not disputed that the respondent has also reversed the CENVAT credit on the shortage of inputs detected during the stock verification and therefore, demand of duty and imposition of penalty was rightly quashed by the Tribunal. Thus, we find no ground to interfere in the finding of fact recorded by the Tribunal and in our view no substantial question of law was arisen in the order of the Tribunal. 13. We further find that the owner of the place Shri Bhagu R. Patel who has rented the alleged secret office premises at monthly rent of Rs. 700/- did not name any person from M/s Hingora to whom he has rented the said premises. The show cause notice has failed to show that the said place was rented out to M/s Hingora Industries; except one single entry of factory expenses of Rs. 700/- to Mr. Jamuna no evidence has been brought on record to allege that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emovals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some workers. The facts in the case of Aswin Vanaspati Industries would be identical to the facts herein as in that case also the allegation was with regard to removal of Vanaspati based on the inputs maintained. The Tribunal went in great detail and have clearly laid down that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly apply to the facts of this case. Hence, following the ratio of the cited judgments, the assessee's appeal is allowed. (ii) Further in the case of M/s K. Rajagopal Vs CCE, Madurai - 2002 (142) ELT 128 (Tri-Che.), even in case of Private notebook retrieved from the premises of the asseesee, the tribunal observed as under : 6. We have perused the order of the Commissioner which is extracted supra. On a careful reading of the said order, we have to observe that the said finding recorded is totally b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be insured mandatorily while removing the same and various authorities are required to be informed and permission obtained. Revenue has not examined this point in the correct perspective. The danger of removal and penal consequence of non-insurance is a serious matter and the Commissioner ought to have relied on same evidence to show as to how they could manufacture and remove such controlled explosive commodity without proper protection and insurance. Merely to give finding that such clandestine removal is done secretly and stealthily and they do not follow the law is not acceptable in the peculiar facts and circumstances of this case. There is no other corroborative evidence with regard to the sale and purchase by particular persons and there is no evidence of removal through any transporter and the transporters have not been examined and statements recorded. Each link in the aspect of production and clandestine removal is required to be proved and since this has not been done, the demands are required to be set aside for lack of evidence in the matter. It has been laid down by the Tribunal, as in the case of Kashmir Vanaspati- 1989 (39) ELT 655. That a private notebo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at finding of clandestine manufacture. Reference in this regard be made to the Tribunal decision in the case of Essvee Polymers (P) Ltd. [2004 (165) E.L.T. 291 (Tri. - Chennai)], Krishna Bottlers (Vijayawada) Pvt. Ltd. v. Commissioner of Central Excise, Gantur [1999 (32) RLT 845 (CEGAT)], Ganga Rubber Industries v. Collector of Central Excise [1989 (39) E.L.T. 650 (Tribunal)]. The ratio of all the above decisions is that the allegations of clandestine manufacture and removal being quasi criminal in nature are required to established beyond doubt by producing evidence in the shape of procurement of raw materials, shortage, excess use of electricity, flow back of funds and purchase of final products by customers etc. Admittedly no such evidence has been produced on record by the Revenue, the evidentiary value of the statements relied upon by the Revenue already stands discussed by me in the proceedings paragraph. The said statements having been made under Section 108 of the Customs Act, 1962 are not comparable to the confession recorded under Section 164 of CRPC before Magistrate, and as such are required to be corroborated, by evidence of removal without payment of duty. As already ..... X X X X Extracts X X X X X X X X Extracts X X X X
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