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2016 (10) TMI 567 - CESTAT KOLKATA

2016 (10) TMI 567 - CESTAT KOLKATA - TMI - Clandestine removal of excisable goods - demand of duty with interest - imposition of penalty - whether appellants are indulged in clandestine manufacture and clearance of Iron and Steel finished goods falling under Chapter-75 of the Central Excise Tariff Act, 1985? - A daily performance report of H R Strips prepared by the Quality Control in charge of GSCL - Held that: - clandestine removal is a serious charge and cannot be held on the basis of presump .....

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re not reflected in the statutory records of Appellant GSCL. Appellant also requested for the cross examination of Shri Pradip Chatterjee but the same has not been entertained by the Adjudicating authority. It is now a well accepted legal proposition that by virtue of Section 9D of the Central Excise Act, 1944 cross examination of the relied upon witness has to be extended when the same is sought for by the aggrieved party. If for any reasons the request cannot be entertained then the same has t .....

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said that GSCL has extended any concessions to the department in stock taking in whatever manner they want. Stock was required to be verified on actual weighment basis as per relied upon case laws and not on the basis adopted by the department while calculating shortages in stock of the appellant. Charge of the department regarding clandestine removal and demand on this ground is not sustainable and is required to be rejected. - Weighment slips of the Golden Weighbridge under the control of .....

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ted do suggest a strong suspicion about clandestine activities but a suspicion howsoever grave cannot take the place of proof of clandestine clearance like seizure of clandestinely removed goods, seizure of cash admitted by the concerned persons to be sale proceeds of the illicitly removed goods, excess procurement of raw materials, excess power utilization, confirmation by some of the transporters and recipients to indicate that such clandestined cleared goods have been transported/received by .....

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r ( Judicial ) Shri Biswajit Dutta, Advocate and Shri B.N.Chattopadhyay, Consultant for Appellant Shri S. S. Chattopadhyay, Supdt. (AR) for the Respondent ORDER Per Shri H. K. Thakur Appeal No.E/11/2007 has been filed by Appellant M/s.Golden Steel Corporation Ltd. (GSCL) and Appeal No.E/12/2007 has been filed by Shri Rajnish Gambhir who is the Director of GSCL. Appeal No.E/9/2007 has been filed by M/s.Hariana Iron Works (P) Ltd. for imposition of ₹ 1.00 Lakh penalty under same Order-in-Ori .....

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21,81,526/- along with interest and equivalent penalty has also been imposed. That the above demand is with respect to the following constituents:- (i) Demand of ₹ 9,86,411/- is calculated on the basis of one Daily Performance Report of HR Strips for the period 18.08.2005 to 31.08.2005 prepared by Shri Pradip Chatterjee who is the quality control in-charge of GSCL. (ii) Demand of ₹ 4,47,064/- pertains to duty on shortages of finished goods and waste and scrap calculated by the office .....

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control in-charge of GSCL. It was his case that this statement is only a quality check of HR Coils and nowhere indicates that it is the daily production/manufacture of H.R. Strips by GSCL. That cross-examination of Shri Pradip Chatterjee was asked by his client which was not allowed. That without cross-examination of the witness the evidentiary value of statement of Shri Pradip Chatterjee is lost as is an accepted legal position now. That no evidence is brought on record as to from where excess .....

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494 (Tri.-Del)] (iv) Nu-Trend Business Machines (P) Ltd. v. CCE, Chennai [2002 (141) ELT 119(Tri.-Chennai)] 2.2 With respect to demand of ₹ 4,47,064/- learned Advocate argued that stock-taking was not done as per actual weighment but was done only on average weight taken for same HR Strip and then multiplying that average weight with total pcs.. That stock taking method was not accepted by the Appellants and such calculated shortages in stock-taking cannot be made the basis for demand and .....

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) Commissioner of C.Ex., Raipur v. Sidhi Vinayak Sponge Iron (P) Ltd. [2014 (308) ELT 154 (Tri.-Del.)] 2.3 That demand of ₹ 7,11,407/- based on weighment slips is not sustainable as the same is entirely based upon the statements of Shri Ashim Kumar Pal (weighment clerk of M/s.Golden Weigh Bridge) and Shri Debdas Bhattacharjee (Office Assistant) of GSCL. That GSCL asked for cross-examination of Shri Pradip Chatterjee and Shri Sahaney as per Para-11 of the Order-in-Original dated 26.09.2006 .....

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ished against the Appellants. In addition to above case laws learned Advocate relied upon the case law of Durga Trading Company v. Commissioner of C.Ex., Lucknow [2002 (148) ELT 967 (Tri.-Del.)] which has been dismissed by Apex Court in an Appeal filed by Revenue. 4. Shri B.N.Chattopadhyay (Consultant) appearing on behalf of M/s.Hariana Iron Works (P) Ltd. argued that his client can not be held responsible for his name appearing in a third party weighment slips and penalized for abetment. That t .....

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omment on the said document. That Shri Pradip Chatterjee in his statement confirmed that the said document prepared by him indicate daily production of finished goods and that this information is handed over to Shri Rajnish Gambhir. Learned AR made the Bench go through statement dated 07.03.2003 of Shri Pradip Chatterjee to elaborate his points. That initial ignorance shown by Shri Rajnish Gambhir in his statement dated 08.03.2006 indicates that the said document was only for the manufactured fi .....

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by them is not acceptable. (iii) That duty demand of ₹ 7,11,407/- is based on the weighment slips of the Golden Weighbridge belonging to GSCL. That weighment clerk Shri Ashim Kumar Pal in his statement, inter alia, stated that in some of the weighment slips only vehicle number and weight is written by him and the other details are filled in by the office of GSCL. That statements of Shri Debdas Bhattacharjee, Office Assistant of GSCL and Shri Rakesh Shaney (Accountant of GSCL) were recorded .....

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lied upon the following case laws in support of his arguments:- (i) AC CEx, Rajamundry v. Duncan Agro Industries Ltd. [2000 (120) ELT 280 (SC)] (ii) Commr. of Central Excise v. International Cyilnders Pvt.Ltd. [2010 (255) ELT 68 (HP)] (iii) RHL Profiles Ltd. v. Commissioner of C.Ex., Kanpur [2016 (334) ELT 110(Tri.-Del.)] (iv) Umiya Chem Intermediate v. Commissioner of C.Ex. & Cus. [2009 (239) ELT 429(Guj.)] (v) Somani Iron & Steels Ltd. v. CESTAT [2011 (270) ELT 189(All.)] 6. Heard both .....

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stock taking held on 07.09.2005. iii) Weighment slips of the Golden Weighbridge under the control of appellant GSCL. Above elements at (i) and (iii) are also confirmed by the statements of the employees of GSCL. 6.1. So far point at 6(i) above is concerned the case of the Revenue is that the document prepared by Shri Pradip Chatterjee and his statement recorded clearly established that quantities shown in the said Daily Performance Report of H.R. Strips were manufactured during the period 18.08 .....

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utory records of Appellant GSCL. Appellant also requested for the cross examination of Shri Pradip Chatterjee but the same has not been entertained by the Adjudicating authority. It is now a well accepted legal proposition that by virtue of Section 9D of the Central Excise Act, 1944 cross examination of the relied upon witness has to be extended when the same is sought for by the aggrieved party. If for any reasons the request cannot be entertained then the same has to be rejected and informed t .....

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has to be blindly accepted without cross-examination of the concerned witness. It is relevant to note that in the case of AC CEx Rajamundry vs.-Duncan Agro Industries Ltd. (Supra) Apex Court was deliberating a situation where a statement under Section 108 of the Customs Act, 1962 was to be used against the accused. In the present case appellants have never confessed to the offence committed. No doubt Shri Rajnish Gambhir, Director of GSCL gave evasive/ambiguous version but never admitted to have .....

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re of 822 cylinders from the godown of International Cylinder Pvt. Ltd. and the concerned persons confessed to the clandestine activity. There were host of other statements indicating clandestine activity. There is no indication in this order of Himachal High Court that cross-examination was denied to the party. In the present proceedings investigation has only suggested to some clandestine activity but there is no positive evidence that any goods were clandestinely cleared. There is no statemen .....

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d upon witness was sought by appellants. In the case of Umiya Chem Intermediate vs. Commr. Of C.Ex & Cus. (supra) relied upon by the department the case before Gujarat High Court involved a situation where partner of the appellant admitted the clandestine clearances as per para-3 of this case law. Case law of Somani Iron & Steels Ltd. vs.-CESTAT (supra) relied upon the Revenue does not convey whether offence was admitted by that party or whether cross-examination was sought. 6.1.1. It is .....

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was sick and he has to leave during the search proceedings. Answer to Question No.13 of statement dated 25.01.2006 also makes it clear that Shri Rajnish Gambhir was not in agreement with the stock taking done and mentioned on the stock taking report as provisionally and it is required to be verified . It is observed from stock verification report dated 07.09.2005 that stock-taking is endorsed by his authorized representative but it is remarked that the same is required to be actually verified by .....

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the basis adopted by the department while calculating shortages in stock of the appellant. Charge of the department regarding clandestine removal and demand on this ground is not sustainable and is required to be rejected. 6.3. Demand of duty of ₹ 7,11,407/- is based on quantities of clandestine removal calculated on the basis of certain weighment slips recovered from the Golden Weighbridge under the control of GSCL and the statements recorded during the investigation. It was strongly arg .....

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ow cause notice were not the sole evidence in respect of framing the charges against the appellants in the show cause notice and that there could be browbeating the paid employees to retract them from their earlier admission. We are afraid that reasons given by learned Adjudicating authority are not correct as per the legal propositions on the issue. The statements of relied upon witnesses are the only evidences on record as they are only authenticating the documents recovered from the factory/o .....

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