TMI Blog2015 (2) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... sported. Only on the basis of statement, demand cannot be confirmed against M/s Shree Krishna. Since there is no consignee of the goods who has received any goods through M/s Shah Roadways. I am of the view that his statement cannot be a ground to make allegation against M/s Shri Krishna. Merely on the basis of the transporter statements, allegation of clandestine removal does not sustain. Except the alleged receipt of Borax Acid which is one of the material required for manufacturing of Fritz, there is no evidence appearing in the seized records or otherwise that the Appellant has received any other raw material clandestinely. Even no transportation of any of the other raw material required for manufacture of fritz is appearing nor alleged in show cause notice. The allegation of the clandestine removal needs to be established by showing receipt of major raw materials, atleast of some quantity, use of excess raw material, input output ratio, transportation of raw materials, use of such goods in manufacture of finished goods, excess utilization of power, fuel, transportation of finished goods, investigation at the buyer s end, receipt of money etc. However I find that none of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency Morbi. The Appeal No. E/1602/2009 has arisen out of Order-in-Appeal No. Commr. (A)/241/VDR-II/2009 dt. 29.09.2009 wherein a demand of duty of ₹ 16,00,000/- was confirmed against M/s Shri Krishna Industries Jambusar. Appeal No. E/1163 of 2007 is filed by M/s Himsun Ceramics. 3. The facts arising for consideration are that M/s Shri Krishna Industries Ltd. having units at Vadu and Jambusar are engaged in the manufacture of Ceramic Fritz falling under chapter 32.07 and Sodium Silicate falling under chapter No. 28.39 of the schedule to the Central Excise Tariff Act, 1985. On the basis of investigation conducted by the officers of DGCEI, Zonal Unit, Ahmedabad, the Jambusar Unit was issued show cause notice dt. 17.11.2004 and Vadu Unit was issued show cause notice dt. 16.12.2004 alleging that during the period 2002 03 and 2003 04 they were indulged in clandestine removal of Ceramic Fritz. Further for the period 2004 05, the Jambusar Unit was issued another Show cause notice dt. 22.08.2007 proposing to disallow SSI Exemption on the ground that as a result of the investigation of clandestine removal, it was observed that the clearances value in the year 2003 04 exceeded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or of M/s Patidar Silico Pvt. Ltd, and Dharamsingh of M/s Bhimani Ceramics in their statements has clearly stated that the goods were received on invoices which has not been contradicted by the revenue. That the remaining two buyers Shri Girishbhai Bhailalbhai Thakkar, Director of Jalaram Ceramics, and Shri Mansukhbhai, partner of M/s Maruti Silver Ceramics whose statements were relied upon in their cross examinations have denied the receipt of goods or has stated that the goods were received under cover of invoices. That apart from these four persons no other investigation at the buyers took place or even if undertaken was not stated in the SCN. He submits that apart from these buyers no investigation was made from any other alleged buyers and thus it cannot be said that the Appellant has cleared goods without payment of duty. (ii) That even though statement of raw material suppliers of Borax acid were recorded but these statements does not show clandestine receipt of Borax Acid. He dwells upon each statement, relied upon document, evidences adduced by the revenue and cross examination to put forth his point. He further submits that it is not appearing in SCN as to what quantit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no evidence of any goods stated in chittis to have been transported by M/s Shree Krishna. That even the chittis cannot be a ground for alleging any clandestine removal in absence of any enquiry from the persons who received the goods or to show that such goods were cleared without payment of duty. (iv) That similarly statement of Shri Chetan Shah, proprietor of M/s Shah Roadways was recorded on 16.10.2013 wherein he stated that the letter K in transport register stands for Shree Krishna Industries. He further stated that he does not maintain any LR or any Bills to M/s Shree Krishna. That they have given trucks for transportation but does not have any record. That no Lorry receipt or record of transportation was found from his possession. That only on the basis of statement of the transporter, demand cannot be confirmed against M/s Shree Krishna as no enquiry even from the single buyer was conducted nor statement of even a single truck owner was recorded. That there is no record of any payments made to him or any of the truck owner towards transportation of goods were made. (v) That statement of sales broker Shri Hitesh H Parekh, Manager of M/s Giriraj Sales Agency w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d which clearly shows that the allegation of the SCN and the impugned orders are not sustainable. Further Shri Hitesh Parekh in his cross examination himself stated that he does not know whether the material to parties was sold by Shree Krishna or Associated and whether the material was delivered or not. In such case no allegation of clandestine removal of goods by M/s Shree Krishna is proved. (viii) That the statement of the employees and Shri Sameer Parekh, proprietor of M/s Shree Krishna cannot be basis for demand as there are no corroborative evidence. The statement alone cannot be a ground and especially in view of the fact that the investigation made from the buyers of Fritz , raw material supplier, transporter fails to establish the receipt of all the raw material or even the processing of raw material for manufacture of finished goods and the removal of finished goods from the factory or even the receipt of the goods by the buyers. Thus when the facts does not supports the case of the revenue, merely on the basis of statements, clandestine removal cannot be alleged. He relies upon the judgment of the Hon ble High Court of Gujarat, in the case of Nissan Thermoware Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material and given to M/s Associated Industries for manufacture on job- work basis. It is by now a well established principle of law that supplier of raw material is not a manufacturer under Section 3 of the Act. The job-worker is the manufacturer, liable for payment of duty. He places reliance upon the decision of the Tribunal in the case of KERALA ELECTRICITY BOARD v. COLLECTOR OF CENTRAL EXCISE, reported at 1990 (47) ELT 62 (Tribunal) as upheld by the Hon'ble Supreme Court as reported at 1992 (62) ELT A52 (SC). That moreover during the course of cross-examination of Shri Dharamsibhai Patel, Partner of M/s. Bhimani Ceramics, conducted on 20.1.2006 it has come out that during this year he had received goods worth ₹ 1,59,000/- from M/s. Associated Industries and goods worth ₹ 4,34,000/- from M/s. Shree Krishna Industries. The goods sold by the appellant were manufactured by M/s. Associated Industries on job-work basis, for which, as already submitted M/s Shri Krishna cannot be considered as manufacturers. Similarly, Shri Hitesh S. Parekh of M/s. Giriraj Sales Agency has deposed on 21.3.2006 that 50 tons of ceramics fritz was received from M/s. Associated Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n does not support the revenue s case. (h) No evidence of any amount having been received by M/s Shree Krishna of goods alleged to have been cleared without payment of duty. (xv) He submits that in view of above submissions and judgments, the demands confirmed against M/s Shree Krishna Industries as well as penalties imposed upon them and other Appellants are not sustainable and are required to be set aside. (xvi) that in case of Appeal No. E/1603 1605/2009 related to M/s Shree Krishna Industries, Jambusar and othrs the adjudicating merely on the basis of investigation made in the show cause notice and on the basis of order passed order against M/s Shree Krishna Industries, Vadu has passed the order and since the orders are based upon the same investigation and the adjudication order in case of M/s Shree Krishna Industries, Vadu, therefore it is prayed to take the aforesaid submissions on records in case of Appeal No. E/1603 1605/2009 also. (xvii) that in case of appeal No. E/1602/2009, the demand has been made on the ground that during investigations in case of Appeal No. E/985/2007 and E/1603/2009, it was found that the turnover of M/s Shree Krishna in the year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Krishna and the statements of some buyers, supplier of raw material and transporter as well as employee and director of the firm. I find that out of the four buyers whose statements were recorded, two of the buyers Shri Jagdish of M/s Patidar Silico and Shri Dharamsingh of M/s Bhimani Ceramics in their statements has clearly stated that the purchases were made by them from M/s Shree Krishna under the cover of invoices. Shri Dharamsingh in his cross examination dt. 20.09.2003 also stated that during the year 2003 04 the goods were purchased from M/s Shri Krishna and M/s Associated under cover of invoice. The third buyer Shri Girishbhai Bhailal Thakkar, director of M/s Jalaram Ceramics in his statement has produced statement of accounts showing the purchase of goods under cover of invoice of M/s Shri Krishna which has not been disputed. Also in his cross examination he has denied buying of raw material from any other related concern of M/s Shri Krishna. I am of the view that from the investigation conducted at these three buyers and the statements, nowhere it appears that there has been any clandestine clearance by M/s Shri Krishna. In case of fourth buyer Shri Mansukh Bhai of M/s M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is correct. In such circumstances when he has not presented himself for the cross examination and except his statement there is no other evidence, I find that his statement is not sufficient evidence to hold charges of illicit receipt of raw material by M/s Shri Krishna. Even there is no evidence of receipt of such goods in the factory of M/s Shri Krishna as no evidence of transportation of goods is appearing on record. In case of other supplier M/s Sun Borax, I find from the submission of the Appellant and statement dt. 03.12.2003 of Partner, Shri Manharbhai, Partner of M/s Sun Borax, that his statement is based upon the notebooks shown to him after which he had given details of 13 consignments sold to M/s Shree Krishna Industries under the cover of invoices issued in the name of dummy parties and also submitted that the list was prepared by him to the best of his belief, knowledge and memory. However during his cross examination he has stated that the goods were sold to the parties in whose names the invoices were issued. I find that except relying upon his statement, no investigation was undertaken at the end of the parties whose name were appearing in the invoices. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artz which is 45%, Dolomite 12 to 20%, Feldspar, Calcium and Zinc, no evidence is appearing which can show that the other raw materials were also consigned to Appellant or were appearing in the seized documents. 11. I also find that the show cause notice has relied upon the investigation and statements of two transporters. The Statement Shri Sunderbhai Chotalal Shah, Partner of M/s Shree Siddheshwari Roadlines has been relied upon. However I find that neither he owns any trucks nor he has any records. Only on the basis of some chithis seized from Vadu factory he stated that the transportation took place whereas no investigation was carried out from the persons to whom the goods were appearing in such chitthis were appearing to have been transported. Investigation was also undertaken from Shri Chetan Shah, proprietor of M/s Shah Roadways who stated that in his Truck Booking register the letter K stands for M/s Shree Krishna Industries. That he does not maintain any LR or any Bills to M/s Shree Krishna. That they have given trucks for transportation but does not have any record and that on average basis have given 20 to 22 trucks monthly having capacity of 10 to 12 tons. I find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... z is appearing nor alleged in show cause notice. The allegation of the clandestine removal needs to be established by showing receipt of major raw materials, atleast of some quantity, use of excess raw material, input output ratio, transportation of raw materials, use of such goods in manufacture of finished goods, excess utilization of power, fuel, transportation of finished goods, investigation at the buyer s end, receipt of money etc. However I find that none of the above factors are taken into consideration during the investigation, which leads me to the conclusion that charges of clandestine removal are not established. 14. The investigation made from the buyers of Fritz, raw material supplier and transporters fails to establish the receipt of all the raw material, the processing of raw material for manufacture of finished goods, removal of finished goods from the factory or even the receipt of the goods by the buyers. In these facts merely on the basis of statements, clandestine removal cannot be alleged. I find that mere statements based upon some note books cannot be a basis of alleging clandestine removal when the investigation does not support the allegations. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the transporters end, no presumption could be drawn with regard to manufacture and removal of the final product. Presumptions and assumptions cannot take place of positive legal evidence, which are required for proving the charge. Even if, it is assumed that some raw materials were received at the factory of the respondent during the said period, the same cannot become conclusive proof of production and clandestine sale to different parties. Due to lack of positive evidence, benefit of doubt will always go in favour of the assesse. 16. In the case of Dhanvilas (Madras) Snuff Co. 2003 (153) ELT 437 (TRI) CHENNAI the Tribunal held - revenue is relying on the statement of the accountant and the entries. Revenue has only examined 5 customers out of 65 customers to whom the goods were supplied. Out of these 5 customers, two of them had given statements initially in favour of the Revenue. However, same has been resiled and they have clearly stated that they had received the goods under invoices. Likewise two other witnesses did not appear for cross examination and the one who appeared clearly stated that he had received the goods under invoices and against full payment. In a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue, we are of the considered view that even if some record recovered during the raid and corroborated by some supportable evidence holding that there was an attempt of clandestine production and removal of goods, then it is necessary to have the same positive evidence of clandestine production and removal of goods. 19. I further find that the statement of employees of M/s Shri Krishna and the proprietor Shri Sameer Parekh has been relied upon to allege the clandestine removal. It is alleged that they have authenticated the seized records/ note book and accepted that the contents mentioned therein. I find that when the statements and records relied upon by the revenue are not considered to be sufficient ground for clandestine removal, in that case merely on the basis of statements authenticating the said records cannot be a ground to allege clandestine removal. The investigation has not been able to substantiate the charges of clandestine removal. 20. I also find from the facts of the case and the show cause notice itself states that for the year 2003 04, M/s Shree Krishna, Vadu did not operate the factory and cleared the goods on their own invoice. During the said period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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