TMI Blog2016 (2) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... not made the party to the case. In the light of the decision of this tribunal in the case of M/s. Aswani & Co. [2014 (12) TMI 1213 - CESTAT NEW DELHI] and the discussion herein above, the case of the revenue remains inconclusive. Therefore, we hold that investigation conducted by the Revenue having loopholes is not proper. Accordingly, the allegation of clandestine manufacture and removal of goods is not sustainable. Consequentially, the impugned order is not sustainable in the eyes of law. - Demand set aside - Decided in favor of assessee. - Excise Appeal No. 1441 - 1444 of 2008 - Final Order No. 50025-50028 /2016-EX(DB) - Dated:- 15-1-2016 - SHRI ASHOK JINDAL, MEMBER (JUDICIAL) AND MR. B RAVICHANDRAN, MEMBER (TECHNICAL) For the Petitioner : Shri K K Anand, Ms. Surabhi Sinha Ms. Priyanka Goel, Advocates For the Respondent : Shri Satbir Singh and Ms. Kanu Verma ORDER PER ASHOK JINDAL: M/s. Balajee Perfumes has filed an appeal against the impugned order confirming the demand of duty of ₹ 4,50,64,179/- along with interest and equivalent amount of penalty. Shri Avinash M Baliga, S Rao and Shri Pawan M Prabhu are also in appeal against the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion demand of ₹ 4,50,64,179/- was confirmed against M/s. BP along with interest and equivalent amount of penalty of ₹ 5 lakh each was imposed on co-appellants. Aggrieved from the said order, the appellants are before us. 3. Shri K K Anand, advocate learned Counsel for the appellants appeared before us and submits that the adjudicated authority has divided duty in two parts namely, for the period April, 2004 to October, 2004 on the basis of small books seized from the premises of M/s. Devakikrishna Traders of Hubli who was the distributors of M/s. BP. The second quantification is for the duty demand for the period October, 2001 to March, 2004 and duty of ₹ 1,03,94,055/- was also confirmed on the quantity of 4529 bags of Maruti Gutkha cleared to M/s. Damodar Traders as per the diary seized from proprietor thereof. 3.1 Against the allegations, learned Counsel submits that the entire demand has been confirmed on the basis of seized documents from third parties namely M/s. Devakikrishna Traders of Hubli and M/s. Damodar Traders, Belgaon. A reliance was also placed on inculpatory statement of Shri Pawan M Prabhu of M/s. Devakikrishna Traders of Hubli and Shri Avin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails furnished by Railways with regard to the description of goods and it was held that no records were available for the consignments and the Commissioner relied upon the number of bags entered in the diaries of Shri Pawan M Prabhu and Shri Avinash M Baliga. The learned Commissioner held that the evidence procured from the railway are only of corroborative nature though in the show cause notice, same has been treated as main evidence. As without the transportation of the goods, it could not be held that there was any clandestine removal of the finished goods, more specially when the other evidences which were seized from the third party and not from the premises of M/s. BP. Once the Commissioner found the evidence procured from the railway not to be reliable in nature, it was not open for her to confirm the duty demand only on uncorroborated evidence, more especially the same was third party evidence and did not show any sale and purchase of Maruti brand gutkha. The diaries recovered from Shri Pawan M Prabhu cannot be relied when Shri Pawan M Prabhu categorically stated that he was dealing with numerous items such as supari, gutkha, beedi, cigarettes stationary items sweets and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question No. 13, he was shown a diary marked as Sr. No.3 seized from the premises of Maruti Agency, Mangalore. In answer to both the questions, he gave identical answer that at this stage, I cannot exactly tell about this. However, I accept that we have cleared this quantity as also other quantities as entered dated wise in the diary seized as above. This answer itself is contradictory as once he stated that he could not exactly tell about the contents of the diaries and on the other hand he is accepting the contents of the diaries. The same thing has happened with the diaries seized from M/s. Devakikrishna Traders, Hubli. 3.6 The department has heavily relied on the statement of Shri Pawan M Prabhu dated 7.10.2004 which clearly state that he was making payments to and on behalf of Shri Ajay Gupta with regard to sale and purchase of the impguend goods. He was making all payments through Shri Ajay Gupta and placing orders to Shri Ajay Gupta. But Shri Ajay Gupta was never summoned to corroborate the statement of Shri Pawan M Prabhu and Shir Varun Gupta, Managing partner of M/s. BP was never asked about the relationship with Shri Ajay Gupta. Therefore, the statement of Shri Pawa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tals of supari to M/s. BP during the period April, 2004 to October, 2004. Therefore, the said evidence is not sustainable. 3.8 He further submits that M/s. BP is not able to manufacture such a huge quantity of gutkha during a short period of six months. Though it was alleged that on the date of search on 7.10.2004, 11 machines were installed but it is on record that M/s. BP were manufacturing three brands namely, Maruti, Ajeet and Kaveri and duty demand is only in respect of one brand Maruti . No evidence has been brought on record that how many machines were being used to manufacture Maruti brand Gutkha . Even this question has not been asked from Shri Varun Gupta to this effect. Therefore, the capacity to manufacture such a huge quantity has not been verified. He further submitted that the statement of Shri Pawan M Prabhu,Shri Avinash M Baliga, Shri Suresh Rao, cannot be relied upon in the absence of any corroborative evidence by independent evidences. This case has been made on the basis of diaries seized from the premises of co-noticees and their oral evidence but no independent evidence was brought on record to prove clandestine removal of goods. Therefore, impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndestine activity. The activity of clandestine removal of goods can be revealed from personal knowledge as held by Honble High Court of Gujarat in the case of Magan Lal Gulap Chand Shah vs. Union of India [1992 (59) ELT 235]. He further submits that in the case of Jagdish Shankar Trivedi vs. Commissioner of Customs, Kanpur [2006 (194) ELT 290 (Tri-Delhi)] denial of cross examination of inculpatory statement of dealers and owners is not breach of natural justice. In the facts and circumstances of the case, he also relied upon on the decision of Honble High Court of Delhi in the case of Sudhir Sharma vs. Commissioner of Customs [2015 (319) ELT 450 (Del)]. He further submits that as Shri Varun Gupta has admitted that the consignment were booked at railway station with the help of booking agent and the contents were shown as sweet supari /meethi supari / zarda suparai /kirana except choti and the correct description of the contents in the consignment were deciphered and admitted by Shri Pawan M Prabhu, Shri Avinash M Baliga and Shri Varun Gupta. Therefore these are corroborative evidence to clandestine manufacture and clearance of the goods. He submits that although the production ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n out of the preview of computation. This exercise was done by the adjudicating authority based on the submissions made by the defence Counsel and accordingly gave findings while quantifying the duty amount of ₹ 1,03,94,055/- in respect of only 4529 bags out of 6393 bags recorded in diary No. 9 of Shri Avinash M Baliga which were part of 33053 bags reflected in the statement forwarded by Railway authorities. (iii) The diaries recovered at Shri Avinash M Baliga cannot be relied as an authentic document, since it was evident from the entries made therein it relates to all goods that he was dealing. This fact can be proved if one had a look on the entries and will find that in form of a few entries CLASSIC, SJ had been written and at some places, Classic, to their knowledge it was also a brand of gutkha. They did not know anything about SJ, it could be anything. On the contrary there was no indication regarding the Maruti gutkha against these entries made in the diary. The allegation of the department based on railway record was baseless and absurd. For example RR No. 466209, 468639, related to classic, but included in serial No. 503 and 509 of Annexure C-HE-2, which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hu have been dealing with one Shri Ajay Gupta of M/s. BP. All the orders were placed to Shri Ajay Gupta and all the payments of the said goods were made to Shri Ajay Gupta or on the direction of Shri Ajay Gupta. Moreover, the payments were made to one M/s. Hostota Arecanuts Traders, Shimoga on behalf of Shri Ajay Gupta who deals in supari with M/s. Hostota Arecanuts Traders, Shimoga. 9. We have also gone through the extracts of the diary recovered from the premises of Shri Pawan M Prabhu. The extracts of the same are reproduced herein below: On perusal of the extract, we find that diary is having the named of Balajee on 18.7.04. But other entries are in the name of other persons. There is no co-relation of the entries given in the diary with the clearance made by M/s. BP. 9. We also find that Shri Ajay Gupta who was engaged in the activity of sale on behalf of M/s. BP to M/s. Devakikrishna Traders, distributor was not investigated to prove the case of the Revenue. In the absence of any investigation made to Shri Ajay Gupta, the truth of the case cannot be revealed. It is not the case of the Revenue that Shri Ajay Gupta and Shri Varun Gupta is the same person and it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Shri Varun Gupta itself is contradictory as one hand Shri Varun Gupta in his statement stated that he is not knowing the contents of the diaries and on the other hand, he accepts that the contents of entries made in the diaries. Therefore, the said statement lost its evidentiary value. Moreover, the contents of diaries are not self-explanatory. Therefore, in the absence of any corroboratory evidence to the contents of diaries, the diaries recovered during the course of investigation are not relatable evidence to allege M/s. BP for clandestine removal of goods or clandestine receipt of goods by the distributor / traders. 14. In the impugned order, the statement of appellants were relied upon by the adjudicating authority to allege clandestine manufacture and removal of goods. We find that all the appellants filed their affidavits and these affidavits have not been examined. Therefore, statements given at the time of investigation cannot be blindly relied, as affidavits supplied by the appellants have substantial evidentiary value. Moreover, no cross examination has been granted by the adjudicating authority to reveal the truth in the matter. Therefore, the statement of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise, Kochin 2002 (146) ELT, 248 Supreme Court; Aryan Abushan Bhandar vs. UOI 2002 (148) ELT 25 and Laxman Export Ltd. vs. Collector of Central Excise 2002, 143 ELT (21) Supreme Court. In all these decisions, it stands specifically observed by the Hon ble Apex Court that the oral statements of third party implicating the assessee for clandestine purchase of raw material, with the subsequent written denial, cannot be relied upon for establishing the charge of clandestine manufacture unless such person is either examined or cross examined. Infact, the Honble Supreme Court in the case of Arya Abhushan Bhandar has held that non production of the witness for cross examination results in breach of natural justice and can not be accepted on the ground that no prejudice would be caused to the appellant for reason of non production. In the case of Laxman Exports Ltd., the Honble Supreme Court observed that denial of cross examination of raw material supplier results in denial of the appellants right to contest the veracity of the statement made by the other person and accordingly the Honble Supreme Court set aside the majority order of the Tribunal vide which the denial of cross examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent finding, in a subsequent matter. It may not be out of place to observe here that findings in the present impugned order are against the findings arrived at the Tribunal in the appellants own earlier order, which stand accepted by the Revenue. Inasmuch as the same set of investigations and the evidences collected by the Revenue have been held to be not sufficient to uphold the charge of clandestine removal, the demand in the present case cannot be sustained, based upon the same set of evidences collected during the investigation period. 40.1 Further the Tribunal in the case of Mohan Steels vs. Commissioner of Central Excise Kanpur has held that charges of clandestine removal cannot be upheld based upon the consumption of one of the raw materials in the absence of evidences showing procurement of all the raw materials required for the manufacture of goods alleged to have been clandestinely manufactured and removed. In the present case Revenue has not even alleged procurement of the other raw materials, required for manufactured of such a high quantum of their final product. 40.2 In the case of NU Trend Business Machine Pvt Ltd vs. Commissioner of Central Excise Chenn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi) has observed that non-rebuttal of the said claim of the assessee as regards the capacity of production during the material period leads to weaken the Revenues Case. 43. At this stage we may also took note of the Tribunal majority order where the difference of opinion between two members was resolved. In the case of Kuber Tobacco Products Pvt. Ltd 2013 (290) ELT 545 Tribunal Delhi, the third member has taken into consideration the entire case law on the subject including the Tribunals decision in the case of RA casting which stands upheld by the Honble Allahabad High Court as also by the Honble Supreme Court and observed that the documentary evidences, even if recovered from the appellants premises, cannot be made the sole basis for confirmation of demand on the clandestine activities and the same are required to be substantiated in material particulars by independent evidences and not on the basis of assumptions and presumptions. The Honble Delhi High Court in the case of Commissioner of Income Tax vs Dhingra works vide their order dated 04.10.10 has observed that although an admission is extremely important piece of evidence, it cannot be said to be conclusive. The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Enterprises Calcutta : No statement has been recorded from one Shri Alok Kumar nor from Fatehpur Assam Roading and Pragati Transport. c) M/s Vijaya Agencies Wrangal : Shri Rajat Mishra and Shri Dinesh Mishra have appeared to play a big role in executing deals at Warangal but no statement has been obtained from them which could corroborate the statements given by the owners of M/s Vijaya agencies. Furthermore, it appears that they have been making payments for Gutkha to Shri Anoop Shau through Verma Transport Co. It is not known whether payments of freight are reflected in the accounts books. The show cause notice is also silent whether any payments which were received were the sale proceed of Gutkha. d) The role of Shri Kapil Dhawan of M/s Classic Pouches Ltd . There appears to be some truth in the partys representation that an attempt is being made to minimize the role played by Shri Kapil Dhawan in assisting. M/s Ashwani Co. in their attempt to evade duty. This appears to have been brought out even in the note sheet of the DD at page 10/ns. Shri Surendra Kumar Saxena and Shri Jagdish Kumar alias Ashok Kumar employee of Shri Kapil Dhawan stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the detailed investigation into the relevant aspects of the case, particularly, the Bank accounts of Bhimanis and the working of the assessees factory. Recording of the confessional statement would not put an end to the investigation and the Revenue Officers should be careful to ensure that they are not tricked out of a regular and detailed investigation by making strategic confessions which are retracted by preparing affidavits soon after they are made and which affidavits are again strategically withheld from the Revenue Officers, so that they become complacent and do not carry out a fuller victim to this type of strategic confessional statements which have been retracted soon after they were made in the affidavits which were withheld by the deponents till the proceedings came up before the Commissioner, by which time the damage of not making fuller investigation, thinking that the confessional statements are made and not retracted, was already done. The Revenue Officers have not even cared to investigate into the types of final products manufactured by the appellants despite detailed declarations. 46. As is seen from the above, the statements recorded by the Revenue during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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