TMI Blog2016 (5) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... stine manufacture and clearance of dutiable goods. As already observed by the Courts any suspicion, however grave, can not take the place of an evidence. In the present proceeding certain documents recovered from the residence of Shri Sanatan Maity etc. are the only indicators to raise suspicion that certain goods might have been manufactured and cleared by the Appellants. In the case of Pan Parag India Ltd. vs. Commissioner of Central Excise, Kanpur (supra), relied upon by the Appellants, also there were 719 loading slips indicating clandestine clearance by that Appellant. Therefore, the appeals filed by Appellant No.1 and 2 are rejected with respect to demands of ₹ 28,53,835/- and ₹ 98,291/- , which shall be payable with interest and equivalent penalty. As no option to pay 25% of reduced penalty under sec. 11 AC has been extended in the Orders-in-Original, therefore, the same is extended to the Appellants if these amounts, alongwith interest and reduced penalty, stand paid within one month of the receipt of this order. In the interest of justice penalty upon Shri Ajay Bansal, Director of Appellant No.2 is reduced to ₹ 30,000/-. Also in view of Bombay High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant Shri Rajendra Agarwal is also a partner of Appellant No.1. On 11.08.2006 simultaneous searches were carried out by the officers of Directorate General of Central Excise Intelligence (DGCEI) in the premises of Appellant No.1, 2 and some residential premises. Another premises of one Shri Sanatan Maity was also searched on 11.08.2006 who was the Accountant of Appellant No.1. Officers of DGCEI recovered a private diary and certain documents from the residential premises of Shri Sanatan Maity. Shri Maity in his statements dated 11.08.2006, 04.09.2006 and 05.09.2006, inter alia, stated that papers recovered from his residential premises (Document No.11/DGCEI/SSC/SM ./06) reveal purchase of ingots, production of Rods, Sales of Rods, production and sale of scrap, purchase consumption of coal and furnace oil by appellant No.1 for the months of February, March and April, 2004. He also confirmed that these documents also reveal sale receipts of Rods from various parties and that these documents are rough working sheets. Statements of Shri Ajay Bansal (Director of appellant No.2 partner of appellant No.1) were recorded on 11.08.2006, 06.09.2006 26.09.2007 as partner of M/s. Shi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... says that the same were the sale proceeds of re-rolled products manufactured by appellant No.1 and that the same were manufactured out of ingots procured from appellant No.2. That nowhere in the statements of Shri Sanatan Maity is stated that these records were prepared at the instance of Shri Ajay Bansal. That statement dated 11.08.2006 of Shri Ajay Bansal nowhere says that Sunderlal was the pseudo name of appellant no.2. That Shri Sanatan Maity also did not state that Sunderlal was pseudo name of appellant No.2. (ii) That during the visit of DGCEI to the premises of appellant No.2 no variations in the raw material stock or finished goods could be detected. That if appellants were indulging in large scale clandestine manufacture and clearances of ingots of re-rolled materials then there were bound to be variations in raw materials and finished goods of Appellant No.2. (iii) That even if it is presumed that Ingots were clandestinely removed by appellant No.2 to appellant No.1 then only quantities equivalent to Ingots supplied by appellant No.2 could be manufactured by appellant No.1. That there is no evidence as to how much quantity of Ingots were supplied by appellant N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) Mahesh Silk Mills vs. CCE, Mumbai [2014 (304) ELT 703(Tri.Ahmd.) [ upheld by Gujarat High Court 2015(319)ELT A- 52(Guj.)] (vii) That entire statement of a relied upon document has to be considered as such and not a part of such statement. (viii) That the case of CC, Madras Others vs. D.Bhoormull [1983 (13) ELT 1546(SC)] relied upon by Revenue is an old case law and has been distinguished by Apex Court itself in the case of O.Konavalov vs. Commander, Coast Guard Region [2006 (197) ELT 3(SC)] and Ispat Industries Ltd. vs. Commissioner of Customs, Mumbai [2006 (202) ELT 561(SC)]. (ix) That duty amount of ₹ 98,291/- on 40.860 MT of MS Ingots as per Invoice No.505 dated 11.08.2006 of Appellant No.2 is not disputed as the said document was recovered from the premises of appellant No.1. 2.2 Learned Advocate further argued that out of total demand of ₹ 2,04,30,072/- issued to appellant No.1,Rs.28,17,957/-, pertaining to documents recovered from the premises of M/s.Bajrangbali Steel Industries Pvt.Ltd. drawn under Panchnama dated 11.08.2006, is not disputed. Similarly demand of ₹ 35,878/-, with respect to six parallel invoices recovered from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat for entries made against M/s.Bajrangbali Industries (P) Ltd. were actually confirmed to have been received by these recipients of goods from Appellant No.1. iii) That as per the documents recovered from the premises of Shri Sanatan Maity the closing balance of ingots for one month exactly matches with the opening stock balance of the next month which shows the correctness of the purchases made by Appellant No.1 and used in the manufacture of clandestinely removed re-rolled products. iv) That as per statement dt.11.08.2006 of Shri Sanatan Maity, the documents recovered from the residence of Shri Maity at Kalunga, revealed purchase of Ingots, production of rods (Saria), Sale of rods, etc. of M/s. Shivam Steel Corporation (Appellant No.1). Ld. A.R. made the bench go through para-25 of the Show Cause Notice dt.26.11.07 that the Director of M/s. Bajrangbali Steel Industries (P) Ltd. also confirmed that goods from Appellant No.1 were received sometimes without invoice for which payments were made in cash. That some documents were also recovered from this Customer for which duty liability is admitted by Appellant No.1. That looking to these documentary evidences Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nslated as documents as per para 2.4 of the Show Cause Notice dt.30.01.2009. Statement dt. 11.08.2006 of Shri Sanatan Maity, Accountant of Appellant No.1 does not say that the name Sunderlal mentioned in the documents recovered from his residence indicate payments made to Appellant No.2 on the purchase of M.S.Ingots and that the same are used for the manufacture of re-rolled products. In this statement Shri Maity only states that the documents recovered from his residence only show purchase of ingots but does not say that ingots are received from Appellant No.2. At the same time answer to Question No.6 of Sh. Maitys statement dt. 11.08.2006 also conveys that these documents are rough working sheets. By subsequent statement dt. 05.09.2006 Shri Sanatan Maity states that the data on the seized documents was only rough projected calculations done for bank loan purposes. It is not coming out from the Show Cause Notice and the Order-in-Original dt. 30.01.2009 as to from where the raw materials were procured by Appellant No.2 for the manufactured of M.S.Ingots for which duty is demanded. It is also not coming out as to how much quantity of M.S.Ingots were manufactured by Appellant No.2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affected either the record or the accuracy of its contents; and (iv)The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity. 14. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied: (a) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced; (c ) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned Under Section 65B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device. 15. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue are not admissible evidences as recorded in para-7.1 above. Further, in the case of Oudh Sugar Mills Ltd. vs. Union of India [1978(2) E.L.T. (J 172)(S.C.)] it is held by Apex Court in paras 7,11,13 to 15 that any demand calculations based on unwarranted assumptions can not be accepted. 8. Further a case of clandestine removal cannot be upheld on the basis of certain statements alone as held in the case of Commissioner of Central Excise vs. Saakeen Alloys Pvt. Ltd. [2014(308) E.L.T. 655 (Guj.)] wherein Gujarat High Court rejected the appeal of the Revenue by making following observations in para-10. 10. All the appeals are based predominantly and essentially on factual matrix. The Tribunal elaborately and very correctly dealt with the details furnished by both the sides and rightly not sustained the demand of ₹ 1.85 Crores, which had no evidences to bank upon. Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements. To the extent there existed substantiating material, Tribunal has sustained the levy. No perversity could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w materials for manufacturing of M.S. Ingots and Re-rollable products manufactured by appellants were procured. Alternately there is also weight in the argument of the Appellants that M.S.Ingots alleged to be clandestinely cleared by Aappellant No.2 are not sufficient to manufacture quantities alleged to have been manufactured and cleared by Appellant No.1. 8.4. The above factual matrix of the current proceedings only convey a strong suspicion against the appellants that they are undertaking clandestine manufacture and clearance of dutiable goods. As already observed by the Courts any suspicion, however grave, can not take the place of an evidence. In the present proceeding certain documents recovered from the residence of Shri Sanatan Maity etc. are the only indicators to raise suspicion that certain goods might have been manufactured and cleared by the Appellants. In the case of Pan Parag India Ltd. vs. Commissioner of Central Excise, Kanpur (supra), relied upon by the Appellants, also there were 719 loading slips indicating clandestine clearance by that Appellant. It was held , by CESTAT, interalia, that demands are not sustainable on the basis of loose papers/loading slips u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous cases, as detailed below, has held that charges of clandestine removal cannot be leveled or confirmed on the basis of private records, the authenticity of which was doubted by the manufacturer without any corroborative evidence and the private records/registers of third party cannot be the sole basis for arriving at the clandestine removal in the absence of corroborative evidences. (i) Dalmia Vinyls P. Ltd. - 2005 (192) E.L.T. 606 (Tri.-Bang.) (ii) Chemco Steels P. Ltd. - 2005 (191) E.L.T. 856 (Tri.-Bang.) (iii) C.M.Re-Rollers Fabricators - 2004 (168) E.L.T. 506 (Tri.-Del.) (iv) TGL Poshak Corpn- 2002 (140) E.L.T. 187 (Tri.-Che.) (v) Minakshi Steels - 2005 (190) E.L.T. 395 (Tri.-Kol.) (vi) Sri Jayajothi Co. Ltd. - 2002 (141) E.L.T. 676 (Tri.-Che.) (vii) Sharma Chemicals-2001 (130) E.L.T. 271 (Tri.-Kol) (viii) Opel Alloys P. Ltd. - 2005 (182) E.L.T. 64 (Tri.-Del.) Similarly in the case of Paras Laminates P. Ltd. reported in 2005 (180) E.L.T. 73(Tri.); as confirmed by Hon ble Supreme Court reported in 2006 (199) E.L.T. A.182 (S.C.); Ruby Chlorates P. Ltd. reported in 2006 (204) E.L.T. 607 (Tri.-Che.); D.P.Industries reported 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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