TMI Blog2017 (11) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... h circumstances merely on the basis of statement of employees it cannot be concluded that the imported raw material has not been used in manufacture by the Appellant. Reliance placed in the case of M/s Vikram Cement (P) Ltd. Vs CCE, [2012 (11) TMI 777 - CESTAT NEW DELHI] wherein it was held that the said statement alone cannot be made basis for arriving at the finding of clandestine removal in absence of other corroborative evidence on record. During the visit of officers no samples were withdrawn which could show the contents of raw material in finished goods which can support the allegation of revenue. The revenue has placed reliance upon the Opinion of Director of Laxminarayan Institute of Technology, Nagpur wherein it has been stated that P.P. Granules are the only raw material required for the manufacture of P.P. Fabrics and HDPE, LDPE and LLDPE granules have no role to play in the manufacture of polypropylene fabrics. That the addition of HDPE/LDPE/LLDPE can reduce the cost of Polypropylene fabrics as the polypropylene is around 30% costlier than HDPE/LDPE/LLDPE etc and their addition in propylene fabrics can affect the quality. We find that such opinion nowhere support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 11AC of the Central Excise Act and Rule 57 I (5) of the erstwhile Central Excise Rules, 1944. A penalty of ₹ 2,00,000/- under Rule 173Q (1) of Central Excise Rules, 1944 on M/s Spin Packaging Ltd. and a penalty of ₹ 1,00,000/- on Shri Ramawatar Jagmohandas Agrawal, Managing Director of Appellant Unit under Rule 209A of the Rules, 1944 has been imposed. Since both the appeals have arisen out of common order, therefore they are being taken up together for decision. 2. The Appellant M/s Spin Packaging are engaged in the manufacture of Woven Fabrics of Polypropylene or blend of Polypropylene with HDPE, LDPE or LLDPE. They were importing raw material from abroad and were availing MODVAT Credit of the duty paid on inputs in terms of Rule 57-A of the Central Excise Rules, 1944. A Show Cause Notice dt. 2.11.2001 was issued to them alleging that during the visit of the Central Excise Officers on 06.12.1997 and during verification, the shortage of 31.158 MT of finished goods namely cut pieces of woven fabrics was found involving Central Excise duty of ₹ 3,11,580/-. Also shortage of 106.034 M.T. of input P.P. Granules involving MODVAT Credit amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oraneous documentary evidences. The entire quantity of inputs were imported by the Appellant in their name under 68 bills of entry at different ports. The imported inputs were transported in trucks directly from the Ports to the factory premises of the Appellant. They had submitted copies of all Bills of Entry and Lorry Receipts along with their Reply to Show Cause Notice; the said documentary evidences had not been controverted by the Revenue by bringing any contrary material on record; the Revenue has not verified the facts of transportation from the truck owners/drivers though the details of Truck Numbers were provided to the Revenue. In absence of any evidence to show that the impugned inputs were not brought to the factory premises, the demand confirmed against them is not legal. The Adjudicating authority did not consider the documentary evidence and confirmed demand without conducting any verification on the ground that the information had been given for the first time after 3 years of issue of show cause notice. The evidentiary value of Bills of Entry towards import of inputs and Lorry Receipts of transport of the imported inputs from Ports to the factory premises does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabrics is made of material containing HDPE/LDPE/LLDPE/PP. The revenue has not disputed the quantity of finished products manufactured and removed by the Appellants during the material period. If the impugned inputs were not used by the Appellants in that case it has not been shown by the revenue as to from where the huge quantity of PP granules were procured, transported and payment was made for them. Moreover how and to whom the huge quantity of imported inputs were sold, transported and payment was received. He placed reliance on the decision in R.S. Enterprises V/s CCE, 2004 (177) ELT 473 wherein the MODVAT Credit was allowed as there was no evidence that the HDPE granules were either sold in the market as such or the Appellant had purchased some other granules which were allegedly used by the Appellant Company. He also relied upon the decision in the case of Brijmohan Sheokishan Vs CCE, 2003 (160) ELT 188. 4.2 As regard shortage he submitted that the demand of Central Excise duty was confirmed on the ground that the General Manager had accepted the shortage of fabrics. The Adjudicating authority did not appreciate the fact that the officers had taken stock only of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated on oath that the officers had not taken the stock of final products and inputs properly; the officers did not count the cut-fabrics lying loose and the quantity of fabrics removed on payment of duty on 05.12.1997. The officers had not counted the stock of PP granules kept in godown on ground floor and stock of PP, LLDPE, mix granules kept in the godown on ground floor. The ld. counsel submitted that the Affidavit has to be believed and cannot be brushed aside by merely saying it to be after thought. The Hon ble Supreme Court in case of M/s Parle Beverages Pvt. Ltd. - 1990 (98)ELT 585 (SC) held that it is not correct to totally brush aside the affidavit and the invoices without going into the question whether the invoices were genuine and if thought fit the deponent could be called for cross-examination. 4.4. He also submitted that the raw materials were stored at 5 different locations in the factory premises and it was physically impossible to verify the huge stock by counting only the visible rows. The actual stock of raw material was 183.175 MT as against 113.675 MT mentioned in Panchnama. In addition, a quantity of 36.400 MT raw materials had been dispatched under 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant has used any other raw material other than the imported goods nor any evidence of diversion of imported raw material has been brought on record. In such circumstances merely on the basis of statement of employees it cannot be concluded that the imported raw material has not been used in manufacture by the Appellant. Our view are based upon the judgment of Tribunal in case of M/s Vikram Cement (P) Ltd. Vs CCE, 2012 (286) ELT 615 as upheld by the Hon ble High Court supra wherein it was held that the said statement alone cannot be made basis for arriving at the finding of clandestine removal in absence of other corroborative evidence on record. The Appellants had submitted copies of bills of entry along with Truck Receipts to show the receipt of goods in their factory which has not been held to be false or fictitious. Further no record of disposal of the goods elsewhere is appearing on records. In case of M/s R.S. Enterprises Vs CCE, supra relies upon by the Appellant the allegation against the assessee was that they did not actually used the various grades of granules. The Tribunal while dwelling upon the issue held as under: 3. We have considered the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ics. That the addition of HDPE/LDPE/LLDPE can reduce the cost of Polypropylene fabrics as the polypropylene is around 30% costlier than HDPE/LDPE/LLDPE etc and their addition in propylene fabrics can affect the quality. We find that such opinion nowhere supports the revenue's allegation and is irrelevant to the case. Without testing the goods of the Appellant no meaningful conclusion could have been arrived at. Secondly the opinion nowhere shows that cut woven fabrics cannot be manufactured by blending PP granules with HDPE/LDPE/LLDPE granules. On the other hand the Opinion itself states that addition of these materials reduces the cost of PP fabrics as those materials are cheaper by 30% in comparison to P.P. This clearly shows that the manufacturer can blend any of these materials with P.P. granules at the time of manufacture of woven fabrics to reduce the cost. We are thus of the view that the Revenue has not been able to establish that the impugned inputs were not used by the Appellants in the manufacture of their finished products. 8. As regard demand of excise duty on finished goods and raw material, we find that mere admission of shortages cannot ipso facto lead to c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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