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CCE, Delhi-I Versus M/s Praveen Kumar & Co.

2015 (4) TMI 689 - CESTAT NEW DELHI (LB)

Clandestine clearance of goods - Removal of goods without issuance of proper invoices - Penalty u/s 11AC - Confessional statement by assessee - Whether duty could be demanded on the basis of confessional statement only as other evidences relating to manufacture, procurement of raw materials and transportation have not been produced by Revenue and such retraction of statement will have effect - Difference of opinion - Majority order - Held that:- statement dated 4.10.2001 had never been retracted .....

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ained under duress. - proprietor was repeatedly summoned on 7.1.2003, 26.3.2003 and 1.8.2003 but he appeared only on 1.8.2003 when he so claimed.

Difference between the quantities shown in the loose sheets and the RG-I register is precisely 500 pouches with respect of the pouches of ₹ 1 each and in full hundreds like 100, 200, 500 (save for one which is 150) for pouches of ₹ 2 each. Such neat differences are too neat to be really realistic in the given circumstances and ra .....

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o be present in the factory 24x7 and is required to be made available to Central Excise officers on demand for verification.

All of these facts, factors and circumstances are compelling to infer at least on the principle of preponderance of probability that the so called RG-I register produced on 1.8.2003 was nothing but a result of manipulation and fabrication. Further even at the time of recording statement dated 1.8.2003 Shri Praveen Kumar did not expressly retract his earlier inc .....

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[1996 (5) TMI 253 - CEGAT, MADRAS], it was held that the statement made by person to be considered voluntary and true even if retracted when circumstances not showing any use of threat or coercion and also when corroborated by statements of other persons. In the case of K.I. Pavunny Vs. Assistant Collector (HQRS), Central Excise Collectorate, Cochin - [1997 (2) TMI 97 - SUPREME COURT OF INDIA], the Supreme Court held that confessional statement under Section 108 of the Act, 1962 is admissible as .....

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ngh) Member (Technical), JJ. For the Appellant : Shri V.P. Batra, DR For the Respondent : Shri J.P. Koushik, Advocate ORDER Per : Ms. Archana Wadhwa: Being aggrieved with the order passed by Commissioner (Appeals), revenue has filed the present appeal. We have heard Shri V.P. Batra, learned DR appearing for the revenue, and Shri J.P. Kaushik learned advocate appearing for the respondent. 2. As per on record M/s Parveen Kumar & Co. were engaged in the manufacture of PARVEEN CHHAP unmanufactur .....

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to Shri Parveen Kumar, Proprietor of the Appellant s firm and statement dated 4.10.2001 was recorded under Section 14 of the Act ibid. Wherein he admitted the recovery of the loose sheets from his residential premises and stated that the same contained details of the clearances effected by him in a clandestine manner without discharge of Central Excise duty and without issue of proper document. He also handed over none cheques of ₹ 1,00,000/- each totaling ₹ 9,00,000/- towards Centr .....

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d. Wherein the furnished month wise details of production and details covered under the 14 loose sheets recovered from his residence on 4.10.2001. 3. A show cause notice dated 5.11.2003 was issued to the appellant wherein it was alleged that the loose sheets recovered contain the details of the receipt and use/utilization of small and big pouches of Parveen Chhap Tobacco which after being duly filed with unmanufactured Tobacco were cleared without accounting for the same in the daily stock accou .....

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(of different sizes) and lime tubes and the said statement appeared to be an after thought and has been tendered to mislead the investigation particularly when Shri Parveen Kumar in his earlier statement dated 4.01.2001 has categorically admitted having cleared the goods clandestinely, the details of which were given in 14 loose sheets. On the basis of above it was alleged that the appellant had removed excisable goods worth ₹ 58,74,033/- clandestinely without the issue of proper invoices .....

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eved with the said order of the adjudicating authority, the appellant filed the appeal before Commissioner (Appeals) on the following grounds:- i) That, the loose sheets contained the details of various sizes of pouches, which they had purchased and used in the packing of their finished goods. The sheets also contained the details of lime tubes purchased and issued for putting in the pouches. The pouches referred in the loose sheets relate to small/big pouches. Small pouch of 1/- or 2/- means on .....

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used relates to the quantity manufactured, which is duly entered in RG-1 account. However the Central Excise officers made Shri Parveen Kumar to write that the loose sheet contain the details of clearances effected by him in clandestine manner. He denied as the same was against evidence on records. ii) That, the whole case of the department is based on those 14 loose sheets which the department has assumed to contain the details of goods clandestinely removed by him. He denied the allegations c .....

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003 rendered under Section 14 of the Central Excise Act, 1944 on being specifically asked about the 14 loose sheets stated that those sheets contain the details of purchase/utilization of pouches of different sizes and lime tubes. The Central Excise Officers prepared a computerized list running into 19 pages. In those 19 pages, details of loose papers from Page No. 5 to 14 were tabulated by the officers on which appellant had put his signature on each page in token of its correctness. Another ye .....

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tatement which reflected the factual state of affairs was not brought out in the show cause notice. iv) That, the again prepared the chart in respect of each and every entry that appeared in the loose papers. He categorically submitted that those contained the details of purchase of pouches and quantity issued for production. He mentioned that in respect of each entry showing the purchases of pouches or lime tube on a particular date, the material was duly entered in the records as having been p .....

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cess of manufacture. He enclosed month wise comparative figures for ready reference. v) That, the statement of Shri Parveen Kumar wherein he is said to has stated that such loose sheets show the figures of removal of finished goods is not correct statement which is contrary to the documentary evidence on record which shows that statement was not recorded voluntarily. He submitted that the sheets contained the details of pouches used during a particular which correspond with each and every entry .....

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o be preferred. He submitted that in their case the oral evidence is uncorroborated by any material evidence whereas the documentary evidence submitted by them is clearly corroborative with the statutory records. He enclosed copies of the loose papers, corresponding purchase invoices, Copies of the RT-12 of the relevant period and comparative charts. He submitted that a bare perusal of those loose sheets it is clear that they are in conformity with the recorded entries in the statutory records a .....

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The allegation of clandestine removal of excisable goods alleged by the department is mainly based on recovery of 14 loose sheets recovered from the residential premises of the appellant wherein certain details of packing material i.e. pouches used to pack the unmanufactured branded chewing tobacco and lime tubes to be put along with tobacco, such as Balance as on 1st day of the each month . Quantity used in the said month , Quantity received during the said month with date of receipt have been .....

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by finding out the supplier of the raw material & packing material, the buyers of the finished goods and the mode of transport through which the goods were clandestinely removed to strengthen and establish the charge of clandestine removal. The show cause notice also does not indicates whether Shri Parveen Kumar was questioned by the Central Excise Officers and whether he disclosed any information regarding suppliers of the raw material and buyers of the finished goods alleged to has been re .....

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d utilization of pouches of different sizes and lime tubes and tally with its usage in RG-1 and there was very minor difference which is due to loss/wastage occurred during the manufacturing process. The appellant in the reply to the show cause notice relied on the statement dated 1.08.2003 and also submitted detailed comparative charts, copies of the RT-12 Returns and month wise extracts of the RG-1 register along with purchase bills of each and every entry receipt of pouches/lime tubes reflect .....

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nt also raised a question mark on the voluntary statement dated 4.10.2001 of Shri Parveen Kumar while defending the case before the adjudicating authority, but the adjudicating authority brushed aside the contentions of appellant as an after thought and confirmed the demand of duty and imposed penalty by relying on the statement dated 4.10.2001 and on the basis that goods worth ₹ 19,528/- were not entered in the RG-1 register on the day of visit of the officers to the appellant s factory a .....

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ppellant authority further observed that the month wise details of utilization of pouches mentioned in the loose papers relied upon in the show cause notice and comparative month wise chart submitted by the appellant stand compared by him. He accordingly observed that while comparing the two there is a minor difference of 500 pouches per month, which is on ground of loss/wastage etc. during the course of manufacture. As such he observed that from the comparative chart, utilization of the pouches .....

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then the Revenue s case. I find that finding of clandestine removal based on a bald and uncorroborated statement which is contrary to the facts on record is neither justified nor sustainable. There is no indication in the show cause notice that any attempt was made to identify the buyers of the excisable goods allegedly been removed clandestinely by the appellant continuously for a huge period of four years. On the contrary the appellant has explained the entries in 14 loose sheets vide his stat .....

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an incomplete and inconclusive piece of evidence and cannot be made sole basis for holding the appellant guilty of the manufacture and removal of the finished goods without payment of duty during the relevant period in the absence of any tangible evidence regarding the clandestine removal of finished goods. I further find that it is well settled that the statement which travel beyond the documentary evidence, same has to be discarded and in the event of conflict, the documentary evidence should .....

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ctional Central Excise Officers while offering comments on the appeal memorandum. In such a situation the comparative charts showing the figures of receipt and utilization of packing material i.e. pouches and lime tubes supplied along with branded chewing tobacco vis-vis production figures reflected in RG-1 Register and RT-12 Returns clearly establish that the loose sheets were not any way connected with any clandestine removal of excisable goods as alleged in the show cause notice and concluded .....

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shed goods duly entered in the statutory records such as RG-1 register and declared in RT-12 Returns. The charge of clandestine against the appellant therefore is not established in the light of above findings and consequently the demand of duty and imposition of penalty do not sustain. 7. The said order of Commissioner (Appeals) is impugned before us. 8. We have considered the submission made by both the sides and have gone through the impugned order of Commissioner (Appeals). The entire case o .....

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the raw materials. The quantities mentioned in the said loose sheets stand verified by him and compared with the recorded entries made in the statutory records. A detailed chart stands prepared which only show the difference of 500 pouches per month, which stands attributed to loss/wastage during the course of manufacture. The revenue in their grounds of appeal have not rebutted the above finding of fact by the appellant authority. There is no ground challenging the findings that the entries ma .....

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as rightly concluded that the statement which are against the documentary evidences have to be discarded. Inasmuch as the revenue is not disputing the finding of fact by the Commissioner (Appeals) that the entries as reflected in the said loose sheets are tallying with the entries made in this statutory record, we find no reason to deviate from the said finding of Commissioner (Appeals). 9. Otherwise also we find that there is no corroborative evidence advanced by the revenue to establish the al .....

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he view that there is no infirmity in the finding of Commissioner (Appeals), who has rightly set aside the order of original adjudicating authority confirming the demand. Accordingly, the revenue s appeal is rejected. (Pronounce in the open Court on …..) (Archana Wadhwa) Member (Judicial) (Manmohand Singh) Member (Technical) Praveen Kumar & Co. Appeal No. E/2198/2006-EX(DB) Per: Manmohan Singh 10. I have gone through the draft order prepared by learned Member (J). 11. Department has c .....

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001. During the course of search of residential premises, 14 loose sheets written on both sides papers pertaining to factory accounts were recovered and resumed for further investigations. 12. Shri Praveen kumar, Proprietor of the appellant s firm in his statement dated 4.10.01 admitted recovery of 14 loose sheets from his residential premises and admitted that the same contained details of clearances effected by him in clandestine manner without discharge of central excise duty and without issu .....

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on the voluntary statement before adjudicating authority. Commissioner (Appeals) held that findings of the adjudicating authority was based on probability and dropped proceedings. Leaned Member (J) after going through the facts of the case as well as findings of the Commissioner (Appeals) came to the same conclusion that the statements of Shri Praveeen Kumar and Shri Rajender Kumar, authorised signatory could not be made basis of confirmation of duty evaded because these statements were not sup .....

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resumed by the officers. Shri Praveen kumar, Proprietor of the appellant s firm in his statement dated 4.10.01 categorical admitted recovery of 14 loose sheets from his residential premises and admitted that the same contained details of clearances effected by him in clandestine manner without discharge of central excise duty and without support of proper documents. 9 Cheque of ₹ 1 lakh each totalling ₹ 9 lakh towards central excise duty evaded, was handed over. Statement of Shri Ra .....

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nmanufactured tobacco were cleared without accounting for the same in the daily stock account register and without payment of duty leviable thereon. These facts were admitted both by Shri Praveen Kumar and Shri Rajender Kumar in their statement dated 4.10.01 and 8.10.01. Interestingly when a subsequent statement of Shri Praveen Kumar was recorded on 1.8.2003, he denied his earlier confession after a gap of two years contending that loose paper contained details of purchase and utilization of pou .....

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fter two years and consequently confirmed duty amounting to ₹ 30,74,033/- under section 11A(1) alongwith interest on said duty and equivalent amount of penalty under section 11AC ibid and Rule 173Q of erstwhile Central Excise Rules,1944 and Rule 25 of erstwhile Central Excise (No.2) Rules, 2001. 15. From the SCN issued to the respondent, following evidences came before the adjudicating authority in addition to the points which have been stated in the preceding paragraphs. (a) The officers .....

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ms. Tobacco valued at ₹ 5,528/- and 20 bags of Praveen Chhap unmanufactured tobacco containing 1500 pouches each 8 gms. Tobacco valued at ₹ 14,000/- were found in excess of the recorded balance in the daily stock register after taking into account day s production. The stock of 33 bags in total was got entered by the visiting officers in the daily stock account register. This indicated that M/s.Praveen Kumar & Co.was indulinging in clandestine production and non accountal of such .....

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the recovery of the said loose sheets from his residential premises and stated that the same contained details of the clearances effected by him in a clandestine manner without discharge of duty and without issue of proper documents. On enquiry, he stated that the main raw material is cut tobacco, after packing the same in the laminated pouches having their brand name i.e. Praveen Chhap, were cleared by him earlier in a clandestine manner without payment of duty whose details were reflected in t .....

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mons dated 4.10.2001 were issued to Shri Praveen Kumar, Proprietor to appear on 5.10.2001 alongwith purchase file and balance sheet for the last five years. Shri Rajender Kumar Authorised signatory of the firm appeared on 5.10.2001 and vide his letter dated 5.10.2001 stated that Shri Praveen Kumar was unwell. However, Shri Rajender Kumar Authorised signatory of the firm in his voluntary statement recorded under section 14 admitted the contents of the statement dated 4.10.2001 of Shri Praveen Kum .....

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was in addition to the amount already deposited amoauant of ₹ 9,00,000/- This amount was promised to be deposited by Shri Praveen Kumar in his statement dated 4.10.2001. (e) Department has been asking for certain documents relating to income-tax returns of Shri Praveen Kumar, M/s.Rajender General Store and M/s.Mittal Trading Co. for the last five years or since inception but the respondent failed to supply the same. Later on, they only supplied the balance sheet on 14.1.2012. (f) It is al .....

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out that the statements tendered by Shri Praveen Kumar and Shri Rajender Kumar on 4.10.2001 were proper and statement of Sh.Praveen Kumar in para 9 of his statement dated 1.8.2003 was only retraction of his earlier statement of 4.10.2001 which was clearly an afterthought only with the motive to mislead the department and subsequently defraud the Revenue. He concluded that at the time of deposit of duty, party did not show any dissent or paid duty under protest. He further came to the conclusion .....

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r finished goods as such, to be cleared clandestinely without discharging duty. 17. The respondent s non-cooperative attitude in not providing necessary documents relating to income-tax returns to match the date with results obtained from investigation has played a major role in manifesting that such wilful avoidance was to stall furtehr progress of investigations. 18. Further retraction of statement after two years cannot have any validity or any reliability. Retraction, if any, has be very clo .....

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statement of proprietor and authorised signatory which were given during visit of officers in the business premises and residential premises requires further elaboration though clear confessional statements of proprietor and authorized signatory were made. Further these statements were duly supported with recovery of documents clearly indicating clandestine manufacture and removal without payment of duty. This is fact on record that retraction has been made after two years when deposit of duty o .....

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and admitted by both proprietor and authorised signatory clearly indicated that there was non accountal in the statutory records and later Praveen Chhap Tobacco have been cleared without payment of duty. It is very relevant to note that that once these documents were confronted to them, they readily agreed with production and clearance of Praveen Chhap Tobacco and their non accountal and clearance without payment of duty. They immediately gave cheques of ₹ 9 lakh and after a gap of six mon .....

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serve that his finding are solely dependent upon retracted statement of Shri Praveen Kumar which was given after gap of two years from the date of detection of irregularity/evasion and payment of duty through cheques as well as deposit of ₹ 4 lakh through TR-6 challan. His contention that no duty could be fastened on the proprietor based on his statement does not have any force as duty has not been calculated only on the basis of his statement but actually it has been on recovery of docume .....

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ounting to ₹ 9 lakh and ₹ 4 lakhs were voluntary paid. Apex Court in the case of Surjeet Singh Chhabra vs. UOI observed that a confession made before Customs Officer was held binding even if retracted later . In the present case, there is no cogent evidence to disbelieve the confessional statement since retracted statement is having no probative value when other circumstances and cogent evidences demolish the retraction. Further statements were relating to facts in their exclusive kn .....

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- (Rupees nine lakhs) and later on ₹ 4,00,000/- (Rupees Four lakhs) were deposited on their own volition without any duress and pressure. 22. Keeping in view the facts and circumstances relating to all the statements as well as deposit of duty through cheques as well as through cash and clear admittance of clandestine manufacture and clearance by the proprietor and authorised signatory that Pouches filled with Tobacco were cleared details of which were mentioned in seized papers, it is evi .....

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short levy was paid consequent upon confession not once but twice. Further confessional statement rendered by Shri Praveen Kumar was also satisfied by Shri Rajender Kumar authorised signatory. Contentions that resumed records were only referring to pouches and lime tubes and not to filled pouches of tobacco is clearly afterthought as pointing out to the fact that seized record are having reference to the pouches etc. has no force as those facts were on record and were not challenged and actually .....

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undertaken in the darkness of night, no evader shall leave proof of these activities. Once fraudulent intent to evade is manifested and later confessed, proving such evasion by other activities which are not recorded, will be giving a bonus to the evader. As per Supreme Court s judgement in D.Bhoormull-1983 (13) ELT 1546 (SC) case, Department is not required to prove its case with mathematical precision, but what is required is the establishment of such a degree of probability that a prudent man .....

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payment was also deposited after a gap of four months. Further, they private records of production and clearance were owned by them. Thus after two years, there could be no issue of retraction. Statement of Shri Praveen Kumar recorded on 9.8.2003 is merely an afterthought as he has already admitted in his statement dt.4.10.2001. The said statement of 4.10.2001 was voluntary in nature and it was never retracted on the plea that same was obtained by coercion or extortion. Actually facts were in th .....

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indings recorded by adjudicating authority. (Manmohan Singh) Member (Technical) Difference of Opinion Whether as per findings of Member (Judicial) that mere based on confessional statement, no duty could be demanded as other evidences relating to manufacture, procurement of raw materials and transportation have not been produced by Revenue and such retraction of statement will have effect. Or Whether as per findings of Member (Technical) that based on confessional statement containing facts in t .....

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er as per findings of Member (Judicial) that mere based on confessional statement, no duty could be demanded as other evidences relating to manufacture, procurement of raw materials and transportation have not been produced by Revenue and such retraction of statement will have effect. Or Whether as per findings of Member (Technical) that based on confessional statement containing facts in their exclusive knowledge and recovery of other evidence and subsequent deposit of short levy, demand was li .....

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-I Commissionerate visited the factory and residential premises of the appellant on 4.10.2001. During the course of search of the residential premises 14 loose sheets written on both sides papers pertaining to the factory accounts were recovered and resumed by the officers for further investigations. The said 14 loose sheets were shown to Shri Parveen Kumar, Proprietor of the Appellant s firm and statement dated 4.10.2001 was recorded under Section 14 of the Act ibid. wherein he admitted the rec .....

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the contents of the statement dated 4.10.2001 of Shri Praveen Kumar, Proprietor of the Appellant s firm. The appellant informed the department that he had deposited ₹ 4 lakhs vide TR-6 Challans dated 13.10.2001 and 8.11.2001. Statement of Shri Praveen Kumar, Proprietor was again recorded on 1.8.2003 under Section 14 of the Act ibid. wherein he furnished month wise details of production and details covered under the 14 loose sheets recovered from his residence on 4.10.2001 28. During the h .....

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However, it was stated that in a subsequent statement dated 1.8.2003, Shri Praveen Kumar explained that the entries in the loose sheets were a sort of RG-I register entries. The ld. Advocate further stated that the Commissioner (Appeals) has also taken note of the quantities mentioned in loose sheets and the quantities as per RG-I register which were very similar as the difference between the two for various months was hardly about 500 (for each month) which shows that the loose sheets contained .....

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dvocate also stated that in this case the Income Tax Appellate Tribunal has accepted these submissions and that the statement dated 4.10.2001 was actually dictated by Central Excise officers who made Shri Praveen Kumar sign the same. 29. The ld. AR contended that the case is not merely based on statement and the loose sheets are indeed corroborating evidence; the RG-I register was never produced at the time of the visit of Central Excise officers on 4.10.2001, the proprietor himself admitted tha .....

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ly tallied with their RG-I register. But for almost close to two years from 4.10.2001 there had been no representation alleging that the statement dated 4.10.2001 was obtained under duress. Indeed the statement dated 4.10.2001 was also confirmed by Shri Rajender Kumar, authorised signatory in his statement dated 8.10.2001 for which again there have been no allegations/representation that the same was obtained under duress. As regards the main contention of the Advocate that in the statement date .....

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mall ₹ 1/- Pouches Oct, 1998 255500 255000 500 25100 25000 100 Quantity of small ₹ 2/- Pouches Nov.,1998 254500 254000 500 26500 26000 500 Quantity as per loose papers Dec.,1998 255500 255000 500 26650 26500 150 Quantity as per RG-I Jan.,1999 259000 258500 500 26600 26500 100 Difference Quantity as per loose papers Feb.1999 254500 254000 500 29100 2900 100 Quantity as per RG-I Mar.,1999 265000 264500 500 32700 32500 200 Difference Even a cursory glance at the above chart reveals that .....

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duced by the appellants on the day of the visit/search and thereafter up to almost two years (i.e. up to 1.8.2003). The RG-I register was not recovered during search also. There was also no mention of the RG-I register in the statements of the proprietor or the authorised signatory; not even to the effect that it existed even if not found then, although RG-I register is required to be present in the factory 24x7 and is required to be made available to Central Excise officers on demand for verifi .....

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son and signed by him (i.e. Shri Praveen Kumar) and none of them in its immediate aftermath made any representation that the same was not voluntary. Indeed even the payment of duty has never been alleged by the proprietor or the authorised signatory to have been made involuntarily under duress or threat or inducement 31. Coming to the contention of the Respondents that documentary evidence should prevail over oral evidence and the judgement referred to by them in that regard, I would like to st .....

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signatory. Thus here is a case of oral evidence (confession) of proprietor as well as the authorised signatory recorded on two different dates and supported by the documentary evidence in the form of 14 loose sheets recovered from the residence of the proprietor. The details contained in these loose sheets were clearly admitted by the proprietor and the authorised signatory to be the details of clandestine clearances. Thus, it is not a case of mere oral evidence unsupported by documents. A much .....

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nd. 32. As far as the reference to the Income Tax assessment is concerned, it is to state that the Income Tax department had not investigated the case at their end and the CESTAT decision in this case is only to be based on the evidence found during investigation by Central Excise department. 33. It is pertinent to mention at this stage that a case is to be decided on the basis of the evidence collected and not on the basis of evidence which could have been collected but was not collected. It al .....

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and cleared without payment of duty. Similar view was taken by other judgements referred to the ld. Advocate to that effect. But these judgements do not come to the Respondent s rescue in the present case inasmuch as the statement of the proprietor himself as well as that of the authorised signatory clearly contain confession of clandestine removal of goods and the documentary evidence of such removal was found in the form of 14 loose sheets about which both these responsible persons, admitted t .....

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voluntary and true even if retracted when circumstances not showing any use of threat or coercion and also when corroborated by statements of other persons. In the case of K.I. Pavunny Vs. Assistant Collector (HQRS), Central Excise Collectorate, Cochin - 1997 (18) RLT 641 (SC), the Supreme Court held that confessional statement under Section 108 of the Act, 1962 is admissible as person giving statement is not an accused and voluntary statement is not to be a characterised to have been obtained b .....

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of confessions under Cr P.C. 1973 are not applicable to confessions made under Section 108 of the Customs Act. Incidental reference can also be made to the case of CCE, Chandigarh Vs. Nabha Steels Ltd. 2004 (169) ELT 345 (Tri.-Del.) where CESTAT held as under : 2. I have heard both the sides. The bare perusal of record shows that the factory premises of the the the Central Excise officers on?respondents was visited by 25-7-2000. On verification of the stock of the raw material and finished goods .....

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