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M/s Sinhal Metal Industries Ltd., Pawan Sinhal Versus CCE, Delhi-I

2017 (10) TMI 494 - CESTAT NEW DELHI

Clandestine manufacture and removal - toothbrushes - average consumption of input that is bristles - appellant has purchased and consumed large quantity of filament yarn than what was required in the manufacture of tooth brushes as recorded in their account of production suggesting in the suppression of the actual quantity of brushes manufactured by them - Held that: - There is no any evidence has been brought on record to allege how the goods have been manufactured by the appellant and how much .....

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I], where it was held that the charge of clandestine removal is not sustainable merely on the basis of average consumption of inputs and inculpatory statement of the appellant. - Revenue has failed to come with any positive evidence on record to allege clandestine removal of goods - the charge of clandestine removal of goods is not sustainable - appeal allowed - decided in favor of appellant. - E/2897-2900/2009-SM - A/56767-56770/2017-SM[BR] - Dated:- 30-8-2017 - Mr. Ashok Jindal, Member (Ju .....

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al were found recorded as per the statutory records. The samples of bristles of tooth brushes were taken and average weight of bristles used in tooth brushes was taken after weighing the bristles used in five brushes. The average weight per brush was taken as 1.15 gm. Thereafter, the show cause notices were issued alleging to the appellant has purchased and consumed large quantity of filament yarn than what was required in the manufacture of tooth brushes as recorded in their account of producti .....

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t submits that no evidence has been produced by the Revenue on record and charge of clandestine has been confirmed against the appellant on standard input output norms which is not applicable to allege clandestine removal. It is his submission that appellant is manufacturer of various types of brushes and they have taken the average metal used is manufacture of brushes without actual ascertainment of uses of input, therefore, the charge of clandestine is not sustainable. He further submitted tha .....

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consideration of the submissions, I find that in this case the charges of clandestine removal has been alleged against the appellant on the basis of average consumption of input that is bristles in manufacturing of tooth brush. There is no any evidence has been brought on record to allege how the goods have been manufactured by the appellant and how much quantity of which type of brushes has been manufactured by the appellant and what is consumption thereof. Moreover, no evidence has been brough .....

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cturing the final product and it is also admitted by Shri Baldev Singh that they have cleared certain goods without payment of duty, but the said statement was retracted by Shri Baldev Singh who claims to be that same has been recorded under influence and duress, thereafter, another statement was recorded on 3rd May, 2005 which was also retracted on the same day, where also same statement recorded which is a typed one and it is the claim of the Revenue that same has been typed by Shri Dinesh Kum .....

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ear Club, Ludhiana which is an independent body have also stated in their letter dated 19 May, 2005 that in normal course, there is a wastage of around 40% same has also not been considered by the Adjudicating Authority but without bringing any corroborative evidence apart from statement of Shri Baldev Singh demand has been confirmed. Such a situation has been dealt by this Tribunal in the case of Klene Paks Ltd. v. CCE, Bangalore-I (supra), wherein the facts of the case are as under :- 2. The r .....

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as to why the 323 bags of plastic granules seized in the godown of M/s. Mahalakshmi Plastics be not confiscated. Further, investigations were carried out by the authorities and statements of various persons like the officers, directors of the company and also the suppliers of raw materials were recorded. Investigations culminated in issuance of show cause notices which summarises the contraventions, main allegation being, that the appellants had contravened the provisions of Rule 57A/57AB of th .....

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tput ratio in the Handbook of Procedures of the EXIM Policy and concluded that the reasonable wastage that could be allowed to the appellants is in the range of 7.5%, while the actual percentage of waste is more than that. Coming to such a conclusion, a demand was raised on all the appellants . 7. In these set of facts, this Tribunal has observed as under :- 5.1 As regards the merits of the case, we find that the impugned orders have proceeded on the ground that the appellants had shown excess p .....

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ard grades of HDPE granules. We cannot accept the proposition as mere assumptions and presumptions, cannot be the basis for coming to a conclusion that there was clandestine removal. It is now a well settled law that mere presumptions and assumptions cannot be the basis for fastening the charge of allegation of clandestine removal . 8. We further find that in the case of CCE, Cus. & Ser. Tax, Daman v. Nissan Thermoware P. Ltd. (supra), the Hon ble Gujarat High Court has observed as under :- .....

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o evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error in giving benefit of doubt to the assessee . and thereafter the Hon ble Gujarat High Court has held that the confessional statement of an accused in criminal offence which cannot be par with the statement recorded during preventive ch .....

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g with my learned brother that there is no specific evidence to uphold the finding of clandestine removal, the remand of the matter for re-calculation of shortages would be only a theoretical exercise. It is settled law that such calculation of shortages arrived at on the basis of input-output calculation, cannot be made the basis of clandestine removal. The appellants have also challenged that the statement of the authorized signatory as also by the partner do not stand corroborated with suffic .....

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y raises a doubt, but cannot take the place of an evidence. As such, I am of the view that the impugned order is required to be set aside in totality and the appeal is required to be allowed. 16. On perusal of the Order-in-Original and Order-inAppeal, I find that the appellant has taken a consistent stand before both the lower authorities that the burden of proof as regards allegation of clandestine removal is on the Department. It is seen from the records that the entire charge of clandestine r .....

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there was clandestine removal of the finished goods, there is nothing on record to indicate that the appellant assessee had, in fact, manufactured the final products out of the inputs detected short on the calculation of input-output ratio. I find that as correctly pointed out by the ld. Counsel that this Bench in the case of Suzlon Fibres Pvt. Ltd. (supra), in Para 3 has categorically stated as under : 3. We agree with the above contention of the ld. Advocate, apart from the input-output ratio, .....

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Gujarat in the case of Nissan Thermoware Pvt. Ltd., wherein their Lordship have held as under : 7. Thus, on the basis of findings of fact recorded by the Tribunal upon appreciation of the evidence on record, it is apparent that except for the shortage in raw material viz., HD which was disputed by the assessee and the statement of the Director, there was no other evidence on record to indicate clandestine manufacture and removal of final products. On behalf of the revenue, except for placing rel .....

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rs) of clandestine removal of the goods, the appeals are required to be allowed as held by Hon ble Member (Judicial). I have concurred with her views . 10. Further, we find that the Hon ble Gujarat High Court in the case of CCE v. Saakeen Alloys Pvt. Ltd. (supra), the Hon ble Gujarat High Court has observed as under :- 7. As can be noted from the decision of the Tribunal, it has extensively dealt with the entire factual matrix presented before it. The Tribunal rightly concluded that in the case .....

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