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Principal Commissioner of Central Excise, Chennai Versus M/s. Kanishk Steel Industries Ltd.

2018 (2) TMI 812 - CESTAT CHENNAI

Clandestine removal - allegation is that unaccounted raw materials, i.e. MS ingots were received by the respondent from DSML - Held that: - the main documentary evidence in this case is the loose sheets recovered from the respondent factory and hard disc recovered from the computer installed in the premises of DSML. According to department, the Director of respondent company Shri Ashok Bohra has identified the handwriting of the loose sheets is that of Christopher. But the department thereafter .....

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ducts manufactured during the relevant period as recorded in the registers do not show any discrepancy. So also there is no evidence to support the transportation of unaccounted receipt of raw materials or the unaccounted / clandestine clearance of finished products. - The main evidence which is the computer printout taken from the hard disc of the computer of DSML also does not relate to the accounts of the respondent. The department has no case that these in any manner deal with the accou .....

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terest and penalties. 2. Brief facts are that the respondents are engaged in manufacture of TMT bars and rods. The officers of DGCEI, Chennai conducted search operations in the premises of the respondent on 3.12.2004. Apart from this, they also conducted search operations in the factory premises of M/s. D.S. Metals Pvt. Ltd. (herein after referred to as DSML) situated at nearby place Gummidipoondi. The officers recovered hard discs from the computer installed in the office premises of DSML. Prin .....

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andestinely cleared 464.390 MT of CTD / TMT bars totally valued at ₹ 93,36,822/- involving duty amount of ₹ 11,42,827/-. It was also alleged that for such manufacture and clearances, the respondents had unaccounted raw material from DSML to the tune of 334.535 MT plus 105.995 MT of MS ingots. After adjudication, the original authority confirmed the duty demand along with interest and also imposed penalties. In appeal, Commissioner (Appeals) set aside the same. Hence this appeal. 3. O .....

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ied by the department. The fact that unaccounted raw material was received by the respondent admitted by Shri Ashok Bohra who is the Director of the respondent company. Thus, the evidences by way of loose sheets were corroborated by the statement of the Director. The said Director was able to explain the contents of the loose sheets and he has not retracted his statement. The validity of those loose sheets are the made up file was not disputed by the respondent and therefore they ought to have b .....

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voluntarily paid major portion of the duty involved, no new fact emerged to obtain further statements from the Director of the respondent company. When there are sufficient documentary evidence available to establish the clandestine removal of goods, the fact that only one statement was recorded from the Director and no further statements were recorded from Director of DSML is of no consequence. The contention of the respondent that further statements have been recorded from the Director of DSML .....

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iples of natural justice is incorrect. The first appellate authority has erred in observing that most of the documents relied by Revenue are the documents of DSML evidencing removal of unaccounted MS ingots. That such evidence being third party evidence cannot incriminate the respondent with unaccounted manufacture and clandestine removal of finished goods. This view taken by the Commissioner (Appeals) is against the position of law as the documents seized from DSML has been corroborated by the .....

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mitted by the respondent company. That the demand has been set aside without appreciating the facts fully. The observation of the Commissioner (Appeals) that the corroboration of documents of the supplier / computer printouts with other documents of the supplier pocket diary would incriminate the respondent who is not a party to the documents is not proper or legal. The said documents have been corroborated by the statement of the Director of DSML and therefore has been rightly relied by the ori .....

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y based on statements. These statements were recorded under threat and pressure and these statements contain contradictions. The statements have been relied by the investigation team as well as the original authority in piecemeal and portions of it were ignored by the department. Thus statements have not been corroborated by any documentary evidence. But statement of Shri Ashok Bohra was retracted in the first available opportunity. The respondent understands that the statement of Shri Suresh Ku .....

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rom the premises of DSML, the said company has not been made a party or co-noticee in the proceedings. The respondent thereby has been deprived of a chance to cross-examine them. Further, the documents recovered from the premises of DSML third party documents and cannot be relied against the respondent. The ld. counsel submitted that these statements were recorded from Shri Suresh Kumar Aggarwal, Managing Director of DSML on 3.12.2004, 6.12.2004, 30.12.2004, 30.10.2006, 5.9.2007 and 7.9.2007. It .....

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after 19 months from the date of search and seizure which was conducted on 3.12.2004. This clearly cast suspicion about the genuineness of the computer sheets relied in the show cause notice. No documents have been recovered from the premises of the respondent to prove unaccounted receipt of MS ingots. The department has compared the computer sheets obtained from DSML with the pocket diary maintained by DSML. The Commissioner (Appeals0 has rightly observed that comparing these documents cannot i .....

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oth sides. 6. From the facts narrated above as well as the contentions of both sides, it is seen that the main documentary evidence in this case is the loose sheets recovered from the respondent factory and hard disc recovered from the computer installed in the premises of DSML. According to department, the Director of respondent company Shri Ashok Bohra has identified the handwriting of the loose sheets is that of Christopher. But the department thereafter has not chosen to record any statement .....

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d manufacture and clandestine clearance of finished products. The use of the electricity consumption or the accounts of finished products manufactured during the relevant period as recorded in the registers do not show any discrepancy. So also there is no evidence to support the transportation of unaccounted receipt of raw materials or the unaccounted / clandestine clearance of finished products. Another ground discussed by the first appellate authority is that the statement from the Director of .....

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