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TMI Blog2016 (9) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... cate Shri N.K.Choudhary submitted that Adjudicating authority under Order-in-Original dated 30.05.2007 has confirmed a demand of Rs. 1,08,05,030/-, along with interest and penalty, against the main Appellant on the grounds that huge quantities of goods manufactured, based on private records recovered from the residence of the Appellants, have been cleared clandestinely. That an amount of Rs. 17,50,694/- along with interest and penalty, has also been confirmed with respect to credit taken on inputs on the grounds that only documents were received by the main Appellant without receipt of inputs. Learned Advocate made the following submissions/arguments:- (i) That main Appellant is engaged in the manufacture and trading activities of iron and steel products and all the other three Appellants are Directors of the main Appellant. That Shri Ghanshyam Agarwal and Shri Mahesh Kumar Agarwal are also the Directors of M/s.Adhunik Ferro Alloys Ltd. (AFAL) engaged in trading of iron and steel products. That Shri Jugal Kishore Agarwal and Shri Manoj Kumar Agarwal are proprietors of M/s.Northers Industrial Corporation (NIC) and M/s.Pragati Ispat Udyog respectively, who are also trading in iron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the present proceedings there Is not even a confession by any of the relied upon witness. (v) That cross-examination of Shri K.K.Paliwal of M/s.Prahlad Steels Pvt.Ltd., M/s.Venus Udyog Ltd. and M/s.Ramshree Steels Pvt.Ltd. was not allowed to the Appellants. (vi) That no findings have been recorded by the Adjudicating authority regarding imposition of penalties upon the Appellants. (vii) That there is no evidence that inputs, on which credit is denied, have been sold by the main Appellant to the trading concerns. (viii) Learned Advocate relied upon the following case laws in support of his arguments.:- (i) Kranti Associates Pvt.Ltd. & Another - [(2010) 9 SCC 496] (ii) Kellogg India Pvt.Ltd. [2007 (8) STR 84] (iii) Laxmi Engineering Works [2010 (254) ELT 205(P & H)] (iv) Gopi Synthetics Pvt.Ltd. [2014 (302) ELT 435 (Tri.-Ahmd.)] Affirmed by Gujarat High Court [2014 (310) ELT 299 (Guj.)] (v) A.R. Sanmugha Sundaram [2016 (333) ELT 158(Tri.-Chen.)] (vi) Karnavati Synthetics [2014 (304)ELT 696] (vii) K.Rajagopal [2002 (142) ELT 128 (Chen)] (ix) Sakeen Alloys Pvt.Ltd. [2013 (296) ELT 392(Tri.Ahmd.)] Upheld by Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. As a counter to the arguments made by learned AR Shri N.K.Choudhary (Advocate) argued that private records are not accurately made and are not reliable. Learned Advocate made the Bench go through Sr.No.18,19,24,25 & 26 of the same page 487 (Volume-II) relied upon by the learned AR. It was argued that quantities indicated in the duty paid invoices and quantities shown in the private records recovered is not identical. That no evidence is brought on record by Revenue as to from where main Appellant got extra raw materials in making huge quantities of alleged clandestine removal and no investigation was done either from the truck drivers/truckowners or customers indicated in the private records. 5. Heard both sides and perused the case records. Following two issues are required to be deliberated in these Appeals.:- (i) Whether main Appellant has indulged in clandestine manufacture and removal of 7072.978 MT iron and steel products without payment of duty? (ii) Whether credit of Rs. 17,50,694/- has been correctly denied to the main Appellant? 6. So far as the issue at Para 5(i) above is concerned Revenue has made the case on certain private records recovered from the reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be procurement of substantial quantities of raw materials. The entire investigation conducted does not throw any light as to how main Appellant clandestinely procured huge quantities of raw materials for manufacturing finished goods. There are allegations of not receiving of the raw materials, but no evidence of excess procuring raw materials without duty paying documents has been brought on record by the department. It is difficult to appreciate that on one hand Appellant will clandestinely divert the duty paid raw materials and on the other hand procure non-duty paid raw materials for clandestine manufacturing and clearances of finished goods when no stock variation either in the raw material stock or finished goods stock was detected during the course of investigation. The maximum capacity of manufacture of 1200 MT/month was not refuted by the department by carrying out any study that actual production per month could be more than 1200 MT . It was clear during the investigation that Appellants were not giving the correct picture in explaining the private records recovered from their residence. Under the circumstances it was incumbent upon the department to find out evidences f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide cross-examination of such witnesses, as held by various judicial courts including the Hon'ble Supreme Court relied upon by the appellants. In the case of CCE v. Omkar Textiles - 2010 (259) E.L.T. 687 (Guj.), it was held by the Jurisdictional Gujarat High Court that onus is on the Revenue to furnish the evidence to prove the charges of clandestine removal and it is not sufficient if some confessional statements have been given by the Director of the Company. Similarly, in the case of CCE v. Arsh Casting Pvt. Limited [2010 (252) E.L.T. 191 (H.P.)], the Hon'ble High Court of Himachal Pradesh held that the private records maintained by the staff of the company cannot be made as the sole evidence to hold that clandestine removal of the goods is established and accordingly, the following point of law was decided in favour of the assessee:- "Whether on the basis of private records, the Central Excise duty can be demanded or not when these private records show higher production than that reflected in the statutory records resulting into removal of the excess stock clandestinely i.e. without issue of invoice and without making entries of production and clearance in the statutory r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecomes doubtful and incorrect. For this purpose cross-examination of the person Incharge looking after the records of M/s. Sunrise Enterprise was must, which was not allowed by the adjudicating authority. In view of the above observations, the demand of duty of Rs. 1,85,10,861/- is not sustainable and is required to be set aside." 6.1.1 In the above case relied upon by the main Appellant there were even confessional statements and also evidences of huge transactions made in cash. On the contrary in the present case there is no indicator of clandestine removal as mentioned in Para-8 of the above relied upon case law. Though in the present proceedings a seizure of Rs. 2.00 Lakh was made during the investigation but the same has not been confiscated as sale proceeds of the alleged clandestinely removed finished goods. 7. In view of the above observations and the settled proposition of law in the relied upon case law, offence of clandestine removal of finished goods and duty demand of Rs. 1,08,05,030/- against the main Appellant, is not sustainable and Appeal filed by the main Appellant is required to be allowed on this account. 8. So far as issue at Para 5(ii) above is concerned Re ..... 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