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TMI Blog2016 (9) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant M/s Shivalay Ispat is engaged in the manufacture of Sponge Iron and M.S. Ingots, falling under Chapter 72 of the Central Excise Tariff Act, 1985. The Appellant was issued show cause notice along with Shri Iqbal Razzak Hingora and Shri Sukumar Ghosh alleging as under :- 2.1 Based upon information that M/s Shivalay Ispat has been removing goods under the cover of parallel invoices, the officers visited the factory on 14.02.2007. Since no responsible person was found in the factory, the General Manager, Shri Sukumar Ghosh who was sitting at office of the firm was called upon to remain present at the factory, so that investigation can be conducted. During stock verification, the stock of Sponge Iron was found to be in order. However, a shortage of 517.280 MT was found in stock of MS Ingots. The officers recorded statement of Shri Sukuamar Ghosh, wherein he informed that he is responsible for liaisoning with the Sales Tax, Pollution control and Central excise department. That his dealing in central excise matter is in respect of submission of returns and he is an authorized signatory. He also named the persons who were authenticating and preparing the sales invoices. In res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M.S Ingots was found for the period 18.11.2006 to 08.01.2007. The quantity of 453.600 MT was not found to have been entered in RG-1 Account and alleged to have been cleared without payment of duty of Rs. 13,10,287/-. Also a slip pad and loose sheets were found and it was alleged that the same pertains to clearance of goods. When compared with the invoices issued by M/s Shivalay on relevant dates, it was found that no invoices were issued during the period 02.02.2007 to 12.02.2007 for such goods i.e. 89.580 MT of M.S. Ingots involving duty of Rs. 2,58,764/-. 3. The show cause notice dated 12.12.2008 issued to Appellant proposed demand of duty and imposition of penalty. During the course of personal hearing, the Appellant filed preliminary submission on 17.07.2009 and also sought cross examination of Shri Sukumar Ghosh and Mr. Nizzamuddin Sheikh. The adjudicating authority issued letter to the Appellant firm stating that since both the persons were employee of the Appellant firm, cross examination is not necessary. The Appellant thereafter filed final submission enclosing retraction affidavits of Shri Sukumar Ghosh and Shri Nizzamuddinh Sheikh, wherein they denied the contents of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons. 4. Feeling aggrieved with the impugned order, the appellants have filed the appeals before this Tribunal. 5. The Ld. Counsel for the Appellant Shri Rupender Singh filed written submission. He also submitted that the duty demand is based upon assumption/ presumptions. That the demand based upon the triplicate copies of invoices is not sustainable as the same were not found from the factory premises or possession of any employee or director of the firm. The revenue did not disclose the source of such invoice. That even though the name of the alleged buyers and transporters were appearing on the invoices, no investigation was done to ascertain whether any goods were removed by the Appellant. No statement of any author of such invoice was recorded in spite of the name stated by Shri Sukumar Ghosh. That Shri Sukumar Ghosh has only stated that from the invoices and chart shown to him, it indicates removal of goods which shows that even Shri Sukumar Ghosh was not sure as to whether any goods were removed. That Shri Sukumar Ghosh as may be seen from the panchnama dated 14.02.2007 was sitting at office of the company with no involvement in production, dispatch or clearance of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in absence of any indication therein as how clearances were made, cannot be basis to allege clandestine removal. 5.2 The ld. Advocate submitted that a demand of Rs. 34,86,045/- is based on process department log book and shift log sheet wherein details of temperature, feed ore analysis and other details are shown and it is alleged that the same pertains to production of goods. That on the basis of raw material consumption shown as RMC in said sheets and taking a yield of 60% on the basis of statement of Shri Hingora, it is assumed that the goods were manufactured and cleared on payment of duty. He submits that as may be seen from the statement of Shri Sukumar Ghosh and Shri Hingora, they have clearly denied the said papers. There is no admission or statement of any person owing such papers. Even though, it was alleged that the record pertains to Appellant firm but no author/ scribe of such documents has been identified. No person from the Appellant firm has signed such papers. That demand cannot be made against them merely on the basis of some loose papers showing some raw material and assuming that the goods were produced and removed without payment of duty. 5.3 He also submits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that shortages has occurred due to clandestine removal. 5.6 The Ld. Counsel further submits that even though the reliance has been placed upon statements of Shri Sukumar Ghosh, the fact remains that he was not at all concerned with the factory activities like procurement of raw material, production, removal or transportation of goods or receipt of sales consideration from buyers. His role in central excise was limited only to filing and signing of return. That as he is not associated with any excise related activities, the reliance placed upon his statements are wrong. That further in his statement dated 27.05.2008, he has clearly stated that his earlier statements were based upon documents shown to him. That when his statements has been made sole basis for demand whereas he is not concerned with any such activities, the adjudicating authority should have granted his cross examination. That in his affidavit he had clearly negated the contents of his earlier statements and therefore no reliance can be placed upon his statements. He states that section 9 D of the Central Excise Act, 1944 does not excludes the employee from its ambit and hence the reasoning of the Ld. Commissioner th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. 5.8 The ld. Counsel relied upon the Tribunal judgment in case of COMMISSIONER OF C. EX., TIRUCHIRAPALLI Vs. SREE RAJESWARI MILLS LTD. 2011 (272) E.L.T. 49 (Mad.), COMMR. OF C. EX.,AHMEDABAD Vs. SHREE LAXMI STEEL ROLLING MILLS 2008 (232) E.L.T. 695 (Tri. - Ahmd.), DALMIA VINYLS (P) LTD. Vs. COMMISSIONER OF C. EX., HYDERABAD 2005 (192) E.L.T. 606 (Tri. - Bang.) in support of his submission that demand based upon log book and other private records in absence of enquiry from buyers, identification of authors is not sustainable. 6. Per contra, the ld. D.R. Shri R.K. Manji appearing for the respondent reiterated the findings recorded in the impugned order. He also placed reliance upon the judgment of M/s Shalini Steels Pvt. Ltd. Vs. Commr. Of Cus & C.Ex, Hyderabad, 2011 (269) ELT 485 (A.P) to state that the statement of employee has to be accepted as the same has been accepted to be true by the Managing Director and therefore, cross examination has been rightly denied. 7. We have heard the ld. Counsel for both sides and examined the case records. 8. We find that in case of demand of Rs. 95,28,055/-, the same has arisen on account of 238 copies of parallel invoices. The revenue s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per month. We find that his statement is not supported by any evidence. No documents in the form of his production register or wage record or any production report are available on record for substantiating his statement. 8.1 We find that in case of the above demands, the show cause notice and the adjudication order have placed reliance on the statements of Shri Sukumar Ghosh. Similarly in case of demand of Rs. 96,29,789/-, reliance has also been placed upon statement dated 15.02.2007 of Labour contractor, Shri Nizzamuddin Sheikh who was manufacturing sponge iron on contract basis. We find from the panchnama dated 14.02.2007 that on said date when the officers visited the Appellant s factory, the peon Shri Raju Sahu had informed the visiting officers that Shri Sukumar Ghosh was sitting at office of the firm and used to visit the factory. Shri Sukumar Ghosh was called to factory for investigation purposes. In his statement dated 14.02.2007, he deposed that his activity in central excise are related to filing and signing of return and mainly his job is of liasioing in central excise, pollution and sales tax matters. In such case, when the investigation has not brought on his involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record such as investigation at the end of alleged buyers whose name were appearing in alleged parallel invoices, the transporters and the employee of the Appellant s firm who have collected amount on account of alleged clandestine removal of goods. Therefore, the ratio of judgment of Shalini Steels (supra) is not applicable in the present set of facts. The Hon'ble High Court of Delhi in the case of CCE, DELHI I Vs. VISHNU & CO., while dwelling upon the reliability of statement has held that Once it is shown that the maker of such statement has in fact resiled from it, even if it is after a period of time, then it is no longer safe to rely upon it as a substantive piece of evidence. The question is not so much as to admissibility of such statement as such as it is about its reliability. It is latter requirement that warrants a judicial authority to seek, as a rule of prudence, some corroboration of such retracted statement by some reliable independent material. This is approach adopted by the CESTAT and the Court finds it to be in consonance with the settled legal position in this regard. We are of the view that once Shri Sukumar Ghosh in his statement dated 27.05.2008 had stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods have been manufactured and cleared by the Appellant. We, thus hold that the duty demand is not sustainable. Our views are also based upon the judgment of the Tribunal in case of SHARADA FORGE PVT. LTD. Vs. CCE, RAJKOT 2005 (179) ELT 336 (TRI), BEARING MANUFACTURING COMPANY Vs. CCE, VADODARA 2000 (123) ELT 1148 (TRI) and CCE, SURAT Vs. GANDHI TEXTURISERS 2008 (230) ELT 186 (TRI-AHD). 8.4 The demand of Rs. 13,10,287/- and Rs. 2,58,764/- are against the Appellant firm on the basis of Despatch Advice and slip pad. Shri Sukumar Ghosh in his statement dated 27.05.2008 denied any knowledge about such papers. The adjudicating authority in his order has only held that the charges are established on the basis of documents. We find that no discussion has been done as to how the said records lead to inference of removal of goods. In absence of buyers of goods, transportation thereof and receipt of consideration, the charges of clandestine removal cannot be established. No effort has been undertaken to identify the author of said dispatch advice and slips pad. Thus the demands cannot be made. We hold that the demands are not sustainable. 8.5 A demand of Rs. 14,94, 236/- has been confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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