TMI Blog2017 (12) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... were procured, therefore, the charge of clandestine manufacture and removal of the goods is not sustainable. The department has considered that there is wastage of 22% to 25% in the manufacture of final products relying on the Standard Input Output Norms that the appellant has clandestinely manufactured goods. In respect of the said allegation, Shri Vikas Aggarwal during the cross examination has stated that the number of shifts was recorded in the hot press production sheets which were not relied on by the department. Therefore, the statement cannot be relied in-toto. Although the appellant is manufacturing three final products the demand has been made on average basis which is not sustainable in the eyes of the law. In the absence of any corroborative evidence produced by the Revenue on record merely on the basis of shortage of raw materials during the course of investigation, which has been contested by the appellant that there is no shortage of raw material and finished goods and without adducing any evidence on record for clandestine manufacture and removal of the goods, the demand confirmed on assumption and presumpiton is not sustainable against the appellants - ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice was issued to the appellant proposing the excise duty demand alleging that the raw materials allegedly found short have been issued to clandestinely manufacture and clear final goods based on the alleged shortage of raw materials and finished goods and based on the statement of Shri Vikas Aggawal. It was also alleged that the average wastage percentage had increased in the year 2006-07. Similar allegation was made relying upon the final products allegedly found short. During the adjudication, Shri Vikas Aggarwal and Shri Dharam Pal Singh were cross examined wherein Shri Vikas Aggarwal reiterated his earlier statement and stated that the factory has worked as per hot press production records. Further, Shri Dharam Pal stated during his cross examination that the stock taking was not done in his presence as he was on another floor showing the excise records to officers. Thereafter, the adjudication took place and the demand of duty alongwith interest was confirmed and equivalent penalty was imposed on the appellant as proposed in the show cause notice. Aggrieved with the said order, the appellant is before us. 3. Ld.Counsel for the appellant submits that there is no eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Allahabad High Court -2014 (306) ELT A68 (All) (iv) Chetak Mfg.Co. v.CCE-2012 (278) ELT 355 (Tri.-Ahmed.) (v) CCE v. Shyam Traders-2013 (290) ELT 478 (Tri.Del.) 6. Learned Counsel further submitted that the department has failed to specify breakup of the entire demand into three final products namely, plywood, plyboard and flush door allegedly manufactured out of short found raw materials and clandestine cleared by the appellant and has alleged that the appellant has clandestinely cleared all three final products. 7. Learned Counsel further submitted that the entire investigation is faulty and lackadaisical. It is also submitted that relying on the Standard Input Output Norms (SION) is of no relevance. To support this, learned Counsel relied on the following decisions: (a) Hindustan Coca Cola Beverages Pvt.Ltd. Vs.CCE-2006 (205) ELT 700 (Tri.-Mum) (b) Govind Rubber Vs. CCE-2005 (192) ELT 775 (Tri.-Del.) 8. In alternate, learned Counsel submitted that the calculation of demand is incorrect and the entire demand is barred by limitation. 9. On the other hand, learned AR opposed the contention of the learned Counsel and submitted that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found and the stock taking was done. There was shortage as prescribed in the show cause notice was found of the raw materials and the finished goods. The statement of Shri Vikas Aggarwal stated that there is process loss of 22% to 25% and SION prescribed there should be process loss of 17% in the manufacture of these goods. The appellant has controverted the allegation in the show cause notice stating that on 5.5.2007, no responsible person was present and there was no shortage of any of the raw materials and final products in the factory. The said goods were lying in shed No.2 of the factory which was left unchecked due to oversight. There was no shortage. It is a fact on record that the raw materials found during the course of investigation to manufacture final products other raw material required for manufacturing the, the Revenue has not produced any evidence from where other raw materials were procured or found shortage. It is essential to allege that clandestine manufacture and removal of the goods. 13. We take note of the fact that learned AR relied on the decision of the Tribunal in the case of Raghunath International Ltd. (supra) to say veracity of panchnama cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the said decisions are not having relevance to the facts of this case. 16. Further, we find the decision in the case of Surya Tyres Pvt.Ltd. (supra) is in the context of excess consumption of raw materials as high as 16% and the explanation was not found to be convincing. As in the said case, the appellant was submitting report to the Rubber Board regarding consumption of the raw materials for manufacturing final goods. There is no such boundation on the appellant to say consumption of raw materials, therefore, the case relied on by the learned AR have no relevance to the facts of this case. 17. Now we have proceeded the case law relied by the learned Counsel for denying the charge of clandestine removal. We find that in the case of Nexa Products (India) (supra), this Tribunal has observed as under: 8. The said submission is without any merit. Specific defence had been taken by the manufacturer that no effort had been made to segregate the nuts and bolts into various sizes and to find the shortage by comparing the same with the recorded balance and there was huge stock of 91 lacs pieces of various sizes of nuts and bolts and it was impossible for the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the clandestine activities of the assessee as the Revenue has not conducted further investigations to establish the identity of the buyers or the suppliers of the raw materials or the transporters. Further, it was held by the Tribunal that mere shortages detected at the time of visit of the officers cannot ipso facto lead to the allegations and findings of clandestine removal. The relevant findings recorded by the Tribunal read thus : - The Revenue has 7. again reiterated the same stand that as shortages detected at the time of visit of the officers, which has to be held that the respondents had cleared their final product in a clandestine manner. Admittedly, there is no other evidence on record so as to relate to the clandestine activities of the assessee. The Commissioner (Appeals) has rightly relied upon the various decisions of the Tribunal including the decision in the case of Jai Timber Company v. CCE C, Bhopal [2009 (234) E.L.T. 457 (Tri.-All.)] and has rightly concluded that mere shortages detected at the time of visit of the officers cannot ipso facto lead to the allegations and findings of clandestine removal. 7. No illegality or perversity could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector recorded during the course of the search proceedings, no 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. 21. On the basis of analysis and observation made by the various judicial pronouncements hereinabove in this case it has been alleged that there is shortage of raw materials. The same has been used in the manufacture of final products but no other evidence has been produced on record how the goods were manufactured, from where the other raw materials procured, to whom the goods sold, how the goods transported and no tangible evidence has been produced to confirm that the same has been cleared without payment of duty. Therefore the whole of the demand is based on assumption an presumptions, therefore, in the light of the above judicial pronouncements, the demand is not sustainable. 22. We further find that it is contended by the appellant that other raw materials were required for manufacturing allegedly clande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to show that these picture tubes are used in the manufacture of televisions as the TVs requires many other parts also such as cabinet, PCB etc. As the appellants were maintaining separate record regarding rejection which were for the year 1998-99 is only 269 out of the total picture tubes received by the appellant and for the year 1999-2000 it is only 3169 and such rejections are mentioned in the record maintained by the appellant. In these circumstances, we find that demand on the ground that these picture tubes are used in the manufacture of televisions which are cleared on payment of duty and not sustainable. The impugned order is set aside and the appeal is allowed. Which has been affirmed by the Hon ble Allahabad High Court. 25. In view of above observation, we hold that in the absence of evidence with regard to the procurement of the other raw materials, the allegation of the clandestine manufacture and removal of the goods is not sustainable. 26. We further find that the department has considered that there is wastage of 22% to 25% in the manufacture of final products relying on the Standard Input Output Norms that the appellant has clandestinely manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
