TMI Blog2017 (7) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... in building up the case against KLR have been retracted by the same persons in the subsequent depositions in cross examination. On the dispute concerning alleged suppression of value of drilling rigs, adjudicating authority has thoroughly analysed the controversy in paras 55.2 to 71 of the impugned order. Lower authority has observed that there is no mention in the show cause notice whether spares sent along with rigs termed as free replacement parts were manufactured by KLR or were bought out ones. He has also observed that while customers had paid extra amounts of cash over and above the invoice price, this could be attributed to the free replacement parts also supplied. We find that this observation of adjudicating authority has merit. From the facts on record, none of the customers from whom statements had been recorded have admitted to any connivance with KLR to suppress the value of the rigs in their mutual interest. Adjudicating authority is also correct in his finding that the department also has not been able to get any evidence of such alleged collusion between customers and KLR in the alleged suppression of value of rigs. Appeal allowed - decided partly in favor o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order No. 28/2005, dt. 28.11.2005 by Commissioner (Appeals). In respect of show cause notice dated 23.9.2003, the adjudicating authority ordered confiscation of excisable goods valued at ₹ 42,550/- under rule 25 of Central Excise Rules 2002 and imposed a redemption fine of ₹ 10,000/. In respect of show cause notice dated 25.03.2004, the adjudicating authority confirmed demand of differential duty of only ₹ 3,94,335/- on clandestinely cleared hammers, bits and spares valued of ₹ 24,64,593/- alongwith interest thereon, imposed equal penalty of ₹ 3,94,335/- on KLR under section 11 AC of Central Excise Act, 1944 as also a penalty of ₹ 50,000/- under Rule 25 of Central Excise Rules, 2002. Adjudicating authority however dropped further proceedings initiated in the two show cause notices viz; 23.09.2003 and 25.03.2004. 6. Department, aggrieved by this order of Commissioner, has filed appeal (listed as E/1076/2006). KLR has also come before this forum aggrieved with that portion of the impugned order confirming differential duty liability of ₹ 3,94,335/- with interest thereon and imposition of equal penalty and confiscation of goods va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons, setting aside of major part of the proceedings initiated by the department against KLR by the adjudicating authority is just and proper. 9.1 In respect of Appeal No.E/239/2006 filed by KLR, Ld. Advocate submits that the same has been filed against the decision of the adjudicating authority to confiscate goods valued at ₹ 42,550/- seized at their Bangalore branch, imposition of redemption fine of ₹ 10,000/- on them, demanding duty of ₹ 3,94,335/- on clearances of hammers, bits and spares valued at ₹ 24,64,593/- with interest thereon and imposition of equal penalty. Ld. Advocate submits that there is no clinching evidence to establish that impugned goods had been cleared without payment of duty and only the statement of one Mr.Ravi Thomas, Manager, who was looking after excise records has been relied upon. Considering that adjudicating authority has not found any merit in the other allegations, raised by department, there was no justification for the above order of confiscation and also duty demand of ₹ 3,94,335/- etc. 10. Heard both sides and have gone through the facts. 11. Undisputedly, the entire proceedings that have culminated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e replacement parts also supplied. We find that this observation of adjudicating authority has merit. From the facts on record, none of the customers from whom statements had been recorded have admitted to any connivance with KLR to suppress the value of the rigs in their mutual interest. Adjudicating authority is also correct in his finding that the department also has not been able to get any evidence of such alleged collusion between customers and KLR in the alleged suppression of value of rigs. We, therefore, do not find any infirmity in the following conclusions of the adjudicating authority, on this issue, in paras 69 71 of the impugned order: The manufacturer as well as the six customers in their statements had stated that the difference in amounts between the invoice price and the actual payments received/made are towards spares/parts supplied alongwith the rigs, other incidental charges etc. This version of the manufacturer and the customers has neither been rebutted with concrete evidence nor any evidence has been produced to show that the differential amounts related to the cost of the rig. It is also not on record whether there are any agreements with the custome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been countered by Revenue in the grounds of appeal. On the issue relied to unaccounted procurement of raw material, we find ourselves in agreement that the adjudicating authority's finding that the said charge has not been proved. It is seen that on the date of search, investigation did not find any evidence in the form of unaccounted stocks lying in the factory premises or in the records maintained by KLR. Though there is an allegation that amounts were deposited by employees of KLR in Eastern Steel Corporation account, no chain of evidence has been brought forth in the investigation to prove that those are nothing but excess amounts collected by KLR or that they were meant for procuring unaccounted raw material for KLR from Eastern Steel Corporation. 16. In investigations relating to alleged under valuation or clandestine removal of manufactured goods, it may always not be possible to get every bit of evidence to establish the modus operandi. Nonetheless, whatever evidence that has been unearthed, should be able to at least substantially corroborate the allegations made by the department. As repeatedly held by higher appellate Courts, reliance merely on stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 17. In appeal No. E/239/2006, KLR are aggrieved by that portion of impugned order confiscating excisable goods of KLR seized at their Bangalore Branch valued at ₹ 42,550/-, imposition of redemption fine of ₹ 10,000/-. They are also aggrieved by the confirmation of demand of ₹ 3,94,335/- on hammers, bits and spares allegedly removed clandestinely, along with interest liability thereon and imposition of penalties under various provisions. In this regard, we find that adjudicating authority has considered all sides of the issue with respect to goods valued at ₹ 42,550/- seized from Bangalore depot of KLR, in paras 48 to 51 of the impugned order. In response to explanation given by KLR that the differences in quantities as per stock transfer invoices vis-a-vis quantity indicated in luggage slips issued by M/s Kamat Tourist is on account of servicing of defective hammer assemblies, adjudicating authority has found that no records are maintained for the servicing activity undertaken by KLR. He has given credence to the allegation that excess quantities indicated in the luggage slips of the transporter are meant for clandestine clearances and therefore arrive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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