TMI Blog2006 (9) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... puter floppies etc. Proceedings relating to physical stock inventory of grey fabrics resulted in shortages of processed fabrics totally valued at Rs. 74.63 lakhs (Approximately). Another quantity of processed MMF totally valued at Rs. 31.80 lakhs (Approximately) were found to be excess than the recorded balance, which was seized. Similarly search was conducted in the office premises of the said appellant resulting in seizure of documents/records. It is seen that Shri Kamal Singhania one of the Directors of the company accepted the shortages and excess and also deposited an amount of Rs. 10 lakhs (Rupees ten lakhs only) towards duty vide TR6 Challan dated 28-5-2002. 3. Apart from searches conducted at the factory and office premises of the said appellant, the office premises of the transporter M/s. S.P. Thakkar Transport Company (hereinafter referred to as M/s. SPTT), situated at Bhiwandi and Kalbadevi, were also put to search. The records maintained by the said transport company were taken into custody. Simultaneous searches were also made in the residential premises of M/s. Kamal Singhania Director of M/s. Indo Green Textiles Pvt. Ltd. as also in the factories of merchant manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters document appearing at page 529-530 of the Paper Book, the Ld. Advocate submits that a perusal of the said document would show that the same pertain to M/s. "S" One Tex' and there is no indication showing any connection with the appellant. It is the statement of the transporter of the said transport company indicating that the said "S One Tex/Dying" relates to the appellant. Ld. Advocate submits that the cross-examination of the said transporter has been denied by the Commissioner on the ground that the same amounts to delaying tactics on the part of the appellant. Ld. Advocate submits that inasmuch as the entire case of the Revenue is based upon the said statement of the Transporter, his cross-examination was vital to their case. Inasmuch as, the veracity of the said statement of the transporter has not been tested by the tool of cross-examination, his statement cannot be taken into consideration. If the said statement of Shri S.P. Thakkar is taken out of the records, there is no other evidence to show that the said code number belongs to the appellant. In any case, submits the Ld. Advocate that the said statement being in the nature of statement of co-accused cannot be made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the transporter, Commissioner was justified in confirming the same. Shri R.K. Pardeshi submits that the Commissioner has rightly observed that going by the settled position in law regarding presumptive evidences and burden of proof, the burden in the instant case, is first on the Department to prove that the code number "S" One Tex/Dying' were belonging to M/s. Indo Green. By observing so he has referred to the show cause notice, which has brought out the Modus Operandi adopted by the appellant. It has been clarified by the Commissioner that it is only w.e.f. April 2001 onwards, when the Compounded Levy Scheme was done away with, that the appellant started indulging in clearing the goods in their code name. The Commissioner has also referred to the fact that during the course of search of their appellant factory, one truck loaded with grey fabrics and carrying documents which indicated the name of the party as 'S One Tex/Dying', which show that the name 'S One Tex/ Dying' refers to the appellant only. 11. We have heard the submissions made by both the sides and have gone through the impugned order. The fact of search of the appellant's premises and seizure of the excess fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of the transporter in respect of the other persons. We find that law on the point is very clear the charge of clandestine manufacture and removal of the goods is required to be proved by the Revenue by product on of affirmative and tangible evidence and beyond doubt. The same cannot be sustained on the basis of surmises and conjectures. The Tribunal in number of decisions, has reiterated that entries in private records can at the most raise a doubt but cannot take the place of evidence in the absence of other corroborative evidences like raw material utilization, labour employed, power consumption and packing etc. As observed by the Tribunal in the case of Sharma Chemicals v. Commissioner of Central Excise, Calcutta-II [2001 (130) E.L.T. 271 (Tri.-Kolkata)], which discusses the law on the point, the distance between 'may be true' and 'must be true' is long distance which must be covered by legal and impeachable evidence. We find absence of such evidence in the present case. The corroboration, which the Commissioner has sought to achieve by referring to the presence of a truck loaded with grey fabrics sent by merchant manufacturers under the documents describing the processors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcess found goods were admittedly in the factory premises and there is nothing on record to show that they were in the process of being cleared clandestinely from the appellants factory. Accordingly we set aside the confiscation and redemption fine of Rs. 8,00,000/- (Rupees eight lakhs only) in respect of the same. 17. As regards the goods found at the Merchant Manufacturers premises and the transporter premises, we find that the appellant have admitted clandestine removal of the same and his duty liability. As such, the said goods are liable to confiscation. We note that the redemption fine imposed by the adjudicating authority in lieu of option to redeem the goods are not on the higher side keeping in view the value of the seized goods We accordingly uphold the confiscation and the quantum of redemption fines fixed by the Commissioner. Similarly, the penalties imposed upon the Merchant Manufacturers are also not on the higher side, the same are accordingly confirmed. The penalty of Rs. 3,00,000/- (Rupees three lakhs only) imposed on M/s. Indo Green Textile Pvt. Ltd. and penalty of Rs. 5 lakhs (Rupees five lakhs only) imposed on Mr. Kamal K. Singhania, Director of the said fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent recording was accordingly made. The processing of fabrics indicated in job card 'E' was done under open lot Nos. These open lot numbers were the one which were assigned for processing of fabrics intended to be cleared on payment of duty but were kept open as the whole lot has not been processed. Accordingly, the processing of fabrics indicated in job card 'D' 'E' was camouflaged under the lot Nos. assigned in respect of job card 'C' and were kept open. It is note worthy to mention. that every merchant manufacturer was allotted a code number and the job card 'D' 'E' invariably did not mention the name of the party but only the code number whereas, the job card 'C' carried the party's name. The transporter was also asked by the Director of M/s. Indo Green to show the clearance of processed fabrics in the code name "S One Dyeing/Tex" from 1-4-2001. The grey fabrics were delivered by the transporter under his own gate pass which alongwith it carried the delivery challans of the merchant manufacturers and these delivery challans were given a specific number by transporter for which he has maintained a book account in the usual course of his own business. The processe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 56) according to which 18655400 meters of grey fabric was delivered during the period 1-3-2001 to 21-5-2002 and as per trip sheets the processed fabrics delivered by the transporter was 19009887.45 meters, as reflected in para 126(ix) of Order-in-Original. Duty on the quantity of such fabrics determined from the records of the transporter came to Rs. 4,16,73,971/- while that on shortages found during the stock verification carried out in the premises of M/s. Indo Green came to Rs. 11,94,219.20 and that on fabric seized from the premises of the merchant manufacturer came to Rs. 2,17,004.64. 23. The above facts are supported by the statements of all the merchant manufacturers and in particular Shri Nilesh Patil, an employee of M/s. Indo Green In-charge of grey section. Mr. Nilesh Patil, working in the Grey Section of M/s. Indo Green, in his statement dated 22-5-2002, inter alia, deposed that he was working with M/s. Indo Green since the last three to four months; that he was working in the grey department, that he maintains a programme book that on receipt of grey delivery challans alongwith grey fabrics, he showed the challans to Mr. Sushil Raika, owner of M/s. Indo Green t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 'C' series card which were also entered in the Lot registers; that he interacted with Mr Dubey, excise in-charge only m respect of lot numbers with 'C' series card numbers and in turn Mr Dubey made entries in the Lot register that Mr Dubey had not made entries in respect of the lot nos. pertaining to 'E or 'D series card numbers m the lot registers, Seized record No 88 was similar to that of seized record No. 87, the only exception being that the entries made therein were pertaining to the card numbers starting with alphabet 'C' which on a comparison/co-relation with the statutory records was found to tally. 24. Records seized from the premises of M/s. Indo Green consisted of job cards and also party master code list of code numbers allotted to different merchant manufacturer for such clandestine transactions. The particulars in respect of card number, lot number, number of pieces, length of fabrics etc. mentioned in respect of cards under 'C' series tallied with the lot register whereas particulars of fabrics covered by 'D' 'E' series do not match with the relevant records. Further, whereas, in respect of 'C' series card, the actual name of the concerned merchant manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akes mention of the party as "S One Dyeing", all the delivery challans except one make a specific mentioned of delivery at Indo Green, Tarapur. In all these delivery challans the name of transporter is duly mentioned as SPTT there by linking these documents to M/s. SPTT's consolidated delivery gate pass/challans/slip for the total quantity transported. The driver in his statement has admitted of undertaken similar five transportations in the past. 26. The above fact shows that there is ample evidence against M/s. Indo Green, regarding their clandestine clearances. They have admitted the clandestine clearances in respect of the shortages found in there premises and is not contesting the same. He has also admitted that the fabrics found at merchant manufacture premises were cleared without payment of duty but states that this was out of the shortages found in his factory on which duty liability is not being contested. 27. As regards the shortages detected on the basis of the transporter records the same is not being admitted by the appellant on the ground that the same is based on the sole testimony of the transporter and on his records who is co-accused in the matter and who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablishes that the records maintained by M/s. SPTT are reliable. The goods cleared without payment of duty recovered at the premises of the merchant manufacturer were also delivered by M/s. SPTT which further shows that the records maintained by him can not be found fault with. On a specific query by the bench the learned advocate for the transporter Shri Pochkanwala after confirming from the transporter stated that they were paid for all the trips made by him for delivery of grey fabrics as well as processed fabrics which were entered in gate pass book daily trip sheets recovered from them and that he has paid income tax on such income which is duly reflected in his income tax return. I am told these record are in the form of bound gate pass book and daily trip sheet books and contains details of all merchant manufacturers whose fabric they were transporting. Every delivery challans of grey fabric was given a specific number starting with alphabet I, A, M etc. where the alphabet denoted the name of processor like I for Indo Green A for A one dyeing, M for Mandana Dyeing etc. These records have been recovered from the premises of M/s. SPTT for the period January, 2001 to May 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations in the case of Collector of Customs, Madras and Others v. Bhoormull - 1983 (13) E.L.T. 1546 (S.C.) 29. It is noticed that all the appellants except the transporter have reiterated their statement but these retracted statements are not available in the records of the investigating agency and as per the Commissioner's observation the appellants have managed to get an office seal stamp on the copy of the paper through some junior hand. It has further been observed that retractions are identical in nature and only say that the statements were recorded under duress or coercion. However, even after retracting the merchant manufacturer have not produced any proof regarding duty payment on fabrics lying in their premises and that the statement of the officers of the company are such which are based on the records and which can be in their own personal knowledge and cannot be tutored. 30. The other aspects is regarding confiscation of excess fabrics found in the premises of M/s. Indo Green. In the above order it has been said that no evidence has been found that M/s Indo Green had any intention to clear them without payment of duty and therefore the confiscation is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- Whether the demand of duty to Rs. 4,30,85,192/- is required to be (set aside on the ground of insufficient evidence to establish the clandestine removal as held by the Ld. Member (Judicial) or the same is required to be confirmed in terms of the order of Member (Technical). Whether the confiscation of the goods found in appellants premises in excess of the recorded balance in RG1 register is required to be set aside as held by Member (Judicial) or confiscation is to be upheld in terms of the order of Member (Technical). Whether penalty is to be set aside on the Director of the firm Shri Kamal K. Singhania as held by Member (Judicial) of the same is required to be imposed as opined by Member (Technical). Sd/- Sd/- (Archana Wadhwa) (K.K. Agarwal) Member (J) Member (T) 33. [Order per : Jyoti Balasundaram, Vice-President] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition to "S One Tex", the words MPX or MKT are also found. These are not sufficient to support the department's case of clandestine clearance by M/s. Usha Fashions. Seized record 39 only shows the name of "S One Tex" and there is no indication of any connection with M/s. Usha Fashions. Seized Record Nos. 40, 41 42 shows details of grey fabrics transported under code name "S One Dyeing". They show the name of the trader/merchant or the appellant. The destination is shown as Vapi in some of the documents. However, the appellants are located at Tarapur and not at Vapi. This further shows that the transporters' records are unreliable. 35. Shri Kamal Singhania has retracted his statement. His request for cross-examination of the partner of M/s. SPTT has been rejected and therefore such statement cannot be relied upon as it has not stood the test of cross- examination. Further the consolidated challan number No. 1871 dated 21-5-2002 of the transporter which has been relied upon by the Department does not show any name of the supplier but only shows the name of "S One Dyeing". In the absence of any suppliers name, this challan cannot be relied upon to prove clandestine clearance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. In Sunvijay Re-rolling Engineering Works, clearance was evidenced by existence of proof of payment by the assessee for removal of goods from the factory, while in the present case the records relied upon as evidence are not reliable to fasten the charge of clandestine clearance from the appellants. In the case of Dasani Electrodes, the department discharged the initial onus cast upon it by showing that some of the numbers given to the alternators were not reflected in the accounts of the appellants who were unable to prove that the goods, which were covered under the missing serial numbers, were not removed by them. In the instant case the records of the transporters cannot be relied upon. 38. On the question of penalty on the director, which has been imposed under Rule 26 of the Central Excise Rules 2002 on the ground that he was the person under whose instructions the goods, which have been held to be liable to confiscation were removed by the appellants without payment of duly and transported by M/s. SPTT under documents bearing the code name "S One Dyeing/S One Tex", I note that there is no finding that the Director had physically dealt with any excisable goods in any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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