TMI Blog2016 (4) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been conducted at the end of the alleged consignees whose name appear in the said Truck Destination Register. The actual receipt of the goods by the consignees is thus not established. No investigation was undertaken to bring on record the author of the said truck destination register. The said statement of Mr. Shakheel Khan shows that M/s Akola Transport Co was only acting as a commission agent and were merely arranging for transportation rather than actually transporting the goods themselves in their own trucks. No investigations have been conducted with the actual transporters engaged by M/s Akola Transport Co. The Books of Account of M/s Akola Transport Co have also not been examined to find out the names of the actual transporters. In any case it is settled law laid down by the Hon'ble High Court of Patna in CCE v. Brims Products (2008 (9) TMI 603 - PATNA HIGH COURT ), that allegation of clandestine removal cannot be sustained based merely on transporters records which are not corroborated by any other evidence. Even in regard to the smaller demand of ₹ 10.58 lakhs based on the alleged shortage of raw materials/finished goods, the explanation given by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,00,000/- 10. M/s. Akola Goods Transport 1,00,000/- 11. M/s. Shree Vyenkatesh Casting Pvt. Ltd. 5,00,000/- 12. Shri Anil Kansal 28,25,000/- 13. Shri K.K. Pandey 28,25,000/- 14. M/s. Dashmesh National Roadways 1,00,000/- 15. M/s. Bhagyalaxmi Steel Alloys P. Ltd. 5,00,000/- 16. M/s. Omco Steel Pvt Ltd. 5,00,000/- 17. M/s. Orange City Alloys Pvt. Ltd; 5,00,000/- 18. M/s. Shree Steel Casting Pvt. Ltd. 5,00,000/- 19. M/s. Kamboj Ispat Pvt. Ltd. 5,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Crores should not be demanded and recovered by invoking extended period, interest be not demanded and recovered and penalty not imposed on them under the provisions of Section 11AC of the Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002. Show-cause notices were also issued to other appellants for imposition of penalties under Rule 26 of the Central Excise Rules, 2002. The main appellant filed interim reply and sought cross examination of various persons whose submissions were relied upon by the department for working out the details as well as the allegation of clandestine removal. Various dates were given by the adjudicating authority for hearing of the matter. The adjudicating authority on 26.08.2011, finally heard the matter and on that day the main appellant was represented and made elaborate submissions and again insisted cross examination of persons whose statements were relied upon. The matter was adjourned to 28.09.2011 on which date the main appellant sought adjournment due to non-availability of Counsel due to pre-occupation before the Tribunal. The adjudicating authority did not fix any date for cross-examination or for the appellant to make further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission that though stock verification was undertaken on 24.07.2008, there also random sampling method was undertaken and the weight of three bundles of TMT were taken and extrapolated for arriving at the weight of other bundles of TMT which was totally incorrect as the length of TMT varies between 15-35 feet. It was informed by the Counsel for the main appellant that this panchanama was also contested by them. (e) It is the submission that the reason for difference in stock was not accepted by the lower authorities despite by the over all evidences in their favour and the shortage of stock cannot be alleged on estimation basis. (f) As regards the duty demand approximately of ₹ 83.09 lakhs for the period 14.01.2008 till 30.05.2008, on the allegation that there was clandestine removal of the goods based on the strength of Lorry Receipt of M/s Aishwarya Roadlines seized from the premises of Shri K.K. Pandey who was Vice President of the main appellant (panchanama dated 22.07.2008). It is the submission that the said demands are unsustainable as there was no evidence except photocopy of daily stock accounts. It is the submission that Lorry Receipt or the documents d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agents who had arranged for transportation and used to hand over blank LR copies to the actual transporters and no records were maintained. The statements of the transporters were neither corroborated nor were any cross examination granted to elicit the actual facts. He relies upon the judgement of the Tribunal in the case of Maya Mahal Industries v. CCE - 1995 (80) ELT 118 for the proposition that the co-noticee can refuse to be subjected to cross examination but the adjudicating authority has to put to co-noticee whether he would like to be cross-examined. He also relies upon the Hon ble Supreme Court in the case of Andaman Timber Industries - 2015-TIOL-255-SC-CX wherein it has been held that an opportunity to cross-examine the witness should be granted if it is sought for. It is his further submission that the statement of the co-noticee is not reliable at all and it was pointed out by the statements of various commissions and omissions. (h) As regards the demand of duty of approximately of ₹ 55.92 lakhs on the allegation of clandestine removal of finished goods, it is the submission that the said demand is unsustainable as no investigation was carried out at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions of these cases wherein penalties have been imposed that there is no question of penalty as there was clear-cut knowledge that the goods have been removed from the factory premises on documents. 5. Learned D.R. after taking us through the show-cause notice and the order-in-original would submit that (a) the main issue involved in this case is regarding the clandestine manufacturing and clearance of excisable goods through the parallel invoices by the main appellant. He would submit that there was no accounting for the excess manufactured goods in any of the statutory records. (b) During the search operation in the factory premises and of the stock was taken there was substantial shortage in the stock of finished goods and variations in the stock of inputs which were used for manufacturing of finished goods, various documents were recovered during the search of residential premises of K.K. Pandey, Vice President Commercial more specifically Central Excise invoices of the main appellant in the name of M/s. Ganraj Trading Co. and other documents like Lorry Receipt pertaining to Aishwarya Road Lines were recovered and during investigation it was confirmed that pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73 (S.C.). (ii) Dharampal Satyapal Ltd. v. CCE - 2015 (320) ELT 3 (S.C.). (iii) Maya Mahal Industries v. CCE - 1995 (80) ELT 118 (T) (iv) Arjandas Metal Industries Pvt. Ltd. v CCE - 2015 (324) ELT 381 (Bom). (h) It is his submission that the appellants claim as to they are unaware how the documents from Octroi department of Nagpur Municipal Corporation have been obtained and whether original of these documents are available or not, it is found from the show-cause notice that officers of the Central Excise department were deputed to collect the documents from Octroi department of Nagpur Municipal Corporation and these documents were received from Octroi authorities as recorded at para (C) of page 83 of order-in-original and this point was not raised by the main appellant after the issuance of show-cause notice. (i) It is his submission that the demands have not only been raised from the documents recovered from the transporter but the documents were corroborated by the transporters that the goods were loaded from the factory premises of the main appellant and delivered to various consignees and one of the major transport namely M/s. Aishwariya Roadlines is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigations have been slipshod in our view will only be an understatement. It appears that the vital and clinching evidence has not been brought on record for reasons beyond us. Some of the stark gaffes that we have noticed in the investigation are enumerated here-in-below. 9.1 The notice relies upon LRs of a transporter and claims that non duty paid goods were transported under cover of the said LRs. Surprisingly, however, the testimony of none of the consignees has been brought on record even though the LRs mentions the names and addresses of the consignees. The testimony of the consignees backed by their records would have clearly nailed the appellant, had it actually resorted to clandestine removal under the aid LRs. 9.2 The Daily Account Book Register of M/s. Aishwarya Road lines, one of the transporters, is one of the documents relied upon in the notice. It is an admitted position in the notice that the same was prepared and maintained by one Mr. Padmakar Wankhade, Supervisor. However, no statement of Mr. Wankhade has been recorded nor is there any explanation in the notice as to why such a statement could not be recorded. 9.3 Even in respect of statements which were r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized from the premises of Mr. K.K. Pandey, brother in law of Mr. Monu Pant -the proprietor of M/s Aishwarya Roadlines. The evidence relied upon in support of this demand appears to be, vague and unreliable in as much as, except for copies of 136 LRs for the period 14.1.2008 to 30.05.2008 and daily account book register for the period of 14.12.2007 to 13.1.2008 and for the day of 2.4.2008, there is absolutely no other evidence that has been relied upon. Admittedly, as per the Revenue the LRs/the daily account book Register were prepared by Mr. Padmakar Wankhede, however there is no testimony of Mr. Padmakar Wankhede on record. There does not appear to us any conceivable reason as to why the testimony of the author of the document has not been brought on record. Though such a testimony, by itself would not have been sufficient to nail the Appellant, However, absence of the same is clearly unexplainable. Further, from the testimony of Shree Monu Pant it comes out that M/s. Aishwarya Roadlines was acting only as booking agents and did not undertake the actual job of transportation, which was undertaken by different transporters named by Mr. Pant with in his testimony. No investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Silk Mills v. CCE, 2014 (304) ELT 703 (T), as affirmed by the Hon ble Gujarat High Court in CCE v. Mahesh Silk Mills, 2015 (319) ELT A52 (Guj.) (d) CCE v. Air Carrying Corporation, 2009 (248) ELT 175 (Bom.) 9.10 The only contrary evidence is statement of Shree Monu Pant which seeks to suggest that the goods were being clandestinely cleared by the Appellant. The statement does not inspire any confidence in the absence of the same having not been examined on the touchstone of cross-examination. Further, the impugned order has recorded that the clandestine clearances reflected in the LRs were corroborated in a few cases by the rahadari/transit pass, details of which were specified in Annexure B to the SCN, no such details appear in Annexure B to the SCN nor have any details in respect of the same been furnished in the SCN. Considering the lack evidence, it would serve no purpose to remand the matter back for seeking cross examination of Shree Monu Pant, the gaps and the lacunae in the investigation cannot be undone by his cross examination. 9.11 The second largest demand of ₹ 60.85 lakhs is based on the photocopies of 276 parallel invoices which are claimed, by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, also do not support the case of the revenue as much as a reading of their statements show that mostly all of them were commission agents who had only arranged for transportation and used to hand over blank LR copies to the actual transporters and did not maintain any records regarding actual transportation having been undertaken, as they were concerned only with the commission for arranging the transport. No testimony of the actual transporter, if any, has been recorded. The statements of the transporters in question are without reference to any documentary evidence/record maintained by them and are completely uncorroborated. The statement of the transporters clearly brings out the fact that they were handing over the blank copy of the LRs to the actual transporters. This factor by itself is sufficient to discard the testimony of the transporters as they had no knowledge whatsoever of whether or not goods had actually been carried under the cover of the LRs. 9.14 The statements of the transporters, though not relevant, the reasoning assigned by the respondent for rejecting the cross-examination of the transporters is completely untenable. The Respondent has placed reliance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he raw materials/finished goods. Such theoretical calculations cannot be the basis for foisting demand on account of shortages. 9.17 In these circumstances, we are left with no option but to draw an adverse inference against the investigation in all the aforesaid cases as the best evidence which was easily available and steering in the investigators on the face have been either not examined or, if examined, the results of such examination was not convenient or supporting the revenues case. The evidence relied upon in the notice, no doubt, create a lot of suspicion against the conduct of the appellant but as such these evidences all of which are recovered from third partys premises by themselves cannot prove the case of clandestine removal against the appellant unless their contents are corroborated by independent evidence. In this case, we find that such corroborative evidence is totally missing. There is no answer available, either in the Show Cause Notice, or in the impugned order, to explain the absence of statements of most relevant persons such as the consignees/buyers shown in the invoices/LRs/Truck Destination Register/Books of Accounts etc. The transporters, who actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on cannot be accepted. 9.21 Paragraph 21(I) of the impugned order refers to print out that were taken from the cloned hard disks and a statement prepared by comparing the closing balances that had been furnished to the banks, as appearing in the hard disks, vis-`-vis that appearing in the RG-1 register. This comparative statement cannot be used to draw any adverse inference as firstly the veracity of the cloned hard disk is in serious doubt and secondly it is an undisputed position that the actual stock statement furnished to the bank has been seized from the residential premises of Mr. D.D. Rathi. It is surprising as to why, no comparison has been made between the actual figures submitted to the bank and the RG-1 figures. In any case it is settled law laid down by the Apex Court in the case of CCE v. Synfab Sales 2015 (318) ELT 28 that clandestine removal cannot be alleged by merely by comparing the stock figures submitted to the bank and those in the RG-1. For the same reason the report regarding the valuation of the closing stock as on 30th June 2007 and 31st March 2007 reflecting therein the stock position of iron ore which was compared with the balance thereof in the statut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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