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2017 (3) TMI 926

Clandestine removal - natural justice - the authorities failed to offer all the witnesses for cross examination by the appellants - Held that: - ld. Commissioner could not rely on the statements of these witnesses without providing them for cross-examination - reliance was placed in the decision of the case of G. Tech Industries vs. UOI [2016 (6) TMI 957 - PUNJAB & HARYANA HIGH COURT], where it was pointed out that Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of ev .....

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, clearance of finished products or even the capacity to manufacture such a huge quantity of finished products alleged to have been cleared. The evidence, at best, raises suspicion in the minds but is not sufficient to prove the charges of clandestine removal. - The evidences produced by the Revenue for sustaining the duty demand has not been corroborated by detailed investigation - The allegation of clandestine manufacture and clearance cannot be sustained on the basis of such flimsy eviden .....

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5,01,335.08 2,55,68,089.30 2 SHIVA 07.5.05 to 16.9.05 35,02,87,889.00 30,11,41,582.70 4,81,82, 653.23 9,63,653.07 4.91,46,306.30 3 ATM 17.9.05 to 21.9.05 77,80,242.00 66,88,653.71 10,70, 184.59 21,403.70 10,91,588.29 4 ATM 22.9.05 to 12.11.05 5,16,58, 179.00 4,44,10,401. 47 71,05, 664.25 1,42,113.28 72,47,777.53 TOTAL 59,19,61,613.30 50,89,07,851.88 8,14,25,256.29 16,28,505.13 8,30,53,761.42 Consequently the duty demand of ₹ 8,30,53,761/- has been confirmed for the period 02.3.2005 to 12.1 .....

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he appellant s factory was 5 tonnes and the factory was running in a single shift and working for about 10 - 15 days in a month. Considering the same, the calculations regarding the production in the appellants factory as disclosed in the above quoted chart, is totally fanciful and without any basis. They relied upon a number of decisions in support of his contention including the decision in the matters of Galaxi Indio Fab Limited vs. CCE, Lucknow as reported in [2010 (258) ELT 254 (TriDel)], D .....

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the certificate as stipulated in sub-section 4 of section 36B has not been produced. RUD- 8 and 9 are extracts of RUD-1 and 2 and this plea equally applies to RUD -8 and 9. Reliance in this regard is placed on the judgments in Shivani Steel Corporation -2016 (339) ELT 310 (Tri. Kol.) and Jindal Nickel & Alloys Limited - 2012 (279) ELT 134 (Tri. Del.). (b) Computer hard disk and pen drive were seized on 18.11.2005 from residence of Smt. Janski Sharma. Printouts were taken on 18.11.2005. But a .....

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Ld. Commissioner in Para 41 of his Order-in-Original (page 127 of Appeal) has found that the appellants could only produce 600MT of ingots during the period from March 2005 to November, 2005. As per RUD-1 and 2 the sale value of ingots is ₹ 25,23,192.30 (page 52 of Appeal). Taking the sale price of ₹ 1,70,000/- per MT the quantity of ingots produced as per RUD-1 and 2 comes to 3132MT as against the production of 600MT as per the production capacity found by the ld. Commissioner. It .....

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ntents of RUD-1, 2 and 3 could be easily verified by locating them and by making investigation at their end. No such effort was made by the investigating officer and as such the contents of RUD-1, 2 and 3 remained uncorroborated with independent evidence and rendered them inadmissible in evidence. (g) Not only the alleged production of such huge quantity of ingots, wire rods and wires allegedly sold by the appellants, is impossible keeping in view of the production capacity, but also is not corr .....

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e finished goods, there is no evidence about the transportation, statements of the appellants employees engaged in the alleged production and sale of the finished products, statements of the buyers, receipt of payment from the buyers and excess consumption of the power. (iv) Reliance in this regard is placed on the Hon'ble Tribunals judgment in the case of Essvee Polymers (P) Limited vs. CCE - 2004 (165) ELT 291 (Tri. ) and Hon'ble Allahabad High Court judgment in the case of Continental .....

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hought by the ld. Commissioner are misplaced and not proper. He ought to have kept her statements which were retracted and contradicted during cross-examination, out of the consideration. (v) The impugned order also relied on the statements of and S/Sh. Hrishikesh Dubey, Kashiram Puri, R.S. Aggarwal and Manish Sethi. The appellants had requested for their crossexamination vide letter dated 13.10.2008 (page 168 of Appeal). No reasons are given for not offering S/Sh. Manish Sethi, Hrishikesh Dubey .....

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clandestine manufacture and removal of the goods. The impugned order is based on inadmissible evidence, assumptions and presumptions and is not, therefore, sustainable. Reliance in this regard is placed on the judgments in Oudh Sugar Mills Ltd - 1978 (2) ELT (J172) (SC) and Universal Polythene Inds. - 2001 (130) ELT 228 (Tri.). (viii) Since the demand of duty is not sustainable the interest and penalty are also not leviable. 5. The ld. DR on the other hand, submitted that the appellants in fact .....

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ound. After about two months on 18.11.2005, the officers searched the residence of one Smt. Janki Sharma said to be an employee of M/s. Kaycee Electricals and following was recovered at the time of search:- (i) Several loose slips were found which were placed in a file and marked 1-56 - (RUD-I) (ii) One pen-drive of Kingston brand of 512MB, one Hard disk drive, Seagat brand of 80GB capacity. Printouts were taken of the contents from the above equipments. The data generated from the pen drive per .....

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e computer printouts, and which are the basis for confirming the demand, are not admissible since the conditions specified in section 36B of the Central Excise Act, 1944 have not been satisfied. The conditions specified under section 36B for admissibility of computer printouts are as follows:- Section 36B(2) - The conditions referred to in sub-section (1) in respect of a computer print out shall be the following, namely:- (a) the computer print out containing the statement was produced by the co .....

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the form of prints taken out from the pen-drive as well as from the hard-disk recovered at the residence of Smt. Janki Sharma. Smt. Janki Sharma in her initial statement dated 18.11.2005, at the time of search, admitted that these printouts are out of Kachchi Parchis given to her by proprietor Shri J.K. Aggarwal and are related to sale of goods made by the appellant clandestinely. However, it is on record that she has retracted her statement immediately thereafter on the next day. At the time o .....

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order has also been assailed on the ground of demand being impracticable and unreasonable, in relation to production capacity available in the appellant s factory. The ld. Commissioner in Para 41 of the impugned order has observed that the appellants had capacity to produce about 600MT during the period in dispute, March 2005 to November 2005. This has been estimated by him by considering the appellant to have capacity to manufacture about 50-75 MT per month. Taking the sale price of ₹ 1, .....

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is that the impugned order also relied on the statement of Shri Hrishikesh Dubey, Shri Kashiram Puri, Shri R.S. Aggarwal and Shri Manish Sethi. Though they had requested to the adjudicating authority for cross-examination of all these witnesses vide their letter dated 13.10.2008, the adjudicating authority has not made these witnesses available for cross-examination. The appellant has submitted that ld. Commissioner could not rely on the statements of these witnesses without providing them for .....

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has alleged that huge quantity of finished products have been manufactured and cleared clandestinely without payment of Central Excise duty. The computer printout of data recovered from the house of Smt. Janki Sharma, no doubt, gives rise to suspicion that these are details relating to clandestine clearance of the goods. However, clandestine manufacture and clearance alleged against the appellant is a very serious charge which needs to be proved by Revenue by producing tangible and reliable evi .....

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the transportation of raw materials as well as finished products. The total quantum of alleged clandestine production and clearance also show an over estimation, keeping in view the production capacity estimated by the Commissioner himself in the impugned order. 12. It is true that the evidence which is required to be produced in quasi judicial proceedings should be such that the charges get established on the basis of preponderance of probability. The standard of evidences need not be as high .....

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- 2004 (165) ELT 291 (Tri. Chennai.) and Hon'ble Allahabad High Court decision in the case of Continental Cement Company vs. UOI - 2014 (309) ELT 411 (All.). We have gone through the above case laws which support the arguments of the appellant. 14. In view of the discussions in above paragraphs, we find that the evidences produced by the Revenue for sustaining the duty demand has not been corroborated by detailed investigation. The allegation of clandestine manufacture and clearance cannot b .....

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