TMI Blog2018 (2) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... hat circumstance, cross examination of Shri Y.K.Bhargava was required to ascertain the truth. During the adjudication, the statement of Shri Y.K.Bhargava was not examined in chief and thereafter no opportunity for of cross examination of Shri Y.K.Bhargava is afforded to the appellant, therefore, there is gross violation of principle of natural justice In terms of Section 9D of the Central Excise Act. The sole basis is the diary maintained by Shri Y.K.Bhargava and prior to June, 2005, Mr. Duggal was maintaining the diaries. Admittedly, the statement of Shri Duggal has not been recorded. Therefore, the contents of the diaries cannot be examined. Moreover, the contents of the diaries maintained by Shri Y.K.Bhargava which is the fact on record are not with the regard to the clandestine removal, in that circumstance, the statement of Shri Y.K.Bhargava cannot be the basis to allege clandestine removal. Te demands on the basis of diaries recovered and other documents recovered from the appellant cannot be the basis to allege clandestine manufacture of the goods - the demands are on the basis of assumptions and presumptions, the charge of clandestine removal of the goods is not susta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardhman Tower, Roop Nagar, Deljhi. Kacha slips from one supplier M/s. G.K. Pharma were recovered and thereby seized. On the basis of Katcha slips, the quantum of demand worked out. The demand is on the basis of chemist diary is ₹ 26,05,979/- for the period 2004-05 to 2005-06 and ₹ 3,25,292/- for the period 2005-06. During the course of investigation, various statements were recorded from the persons, namely, Shri Y.K. Bhargava, Chief Chemist on 5.3.2007, Shri Abhishek Bhargava, Director of M/s.Dynamic Laboratories on 14.3.2007, Shri Girish Sardana recorded on 13.1.2006, Shri Bharat Bhushan Jain, Proprietor of M/s. Jain Agencies, Shri Yogesh Kumar, Partner of M/s. Shakti Bottle Agencies recorded on 16.2.2007 and the statement of Shri Rakesh Bhargava was recorded on various dates i.e. 18.3.2006, 28.2.2007 and 15.3.2007. On the basis of seized records and the statements, two show cause notices were issued to the appellants to alleged clandestine removal of the goods without payment of duty. The matter was adjudicated, the demand of duty was confirmed and the goods were confiscated and the same were allowed to be redeemed on payment of redemption fine and various penalties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y.K.Bhargava, he started maintaining such diary from June, 2005 onwards and prior to that one Mr.Duggal was maintaining the same. No investigations have been conducted from Mr.Duggal in respect of such diaries. Further, as per the statement of Shri Y.K.Bhargava, some of the goods from such diaries were cleared in a clandestine manner and he was not in a position to find out the quantity or description of such goods. He stated that the goods produced in lots have to be completed subsequently by the process of packing, testing etc. 6. It is further submitted that there is nothing on record if the alleged photocopies of the chemist diary were confronted to Shri Rakesh Bhargava, partner of the main appellant does not show if it bears the signature of Shri Rakesh Bhargava in confirmation of such documents confronted to him for his explanation during investigation. Therefore no adverse inference can be drawn against the appellant. He further submits that during the course of investigation, it was never enquired from any person about the stage at which entries of alleged production of P P medicines have been recorded by the chemist in his diaries. Even if it is taken that Shri Y.K.Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oop Nagar, Delhi. 9. It is submitted that it pertains to loose papers and the panchnama is totally silent if the visiting officers took any reasonable steps for placing such record in any envelope with proper seal. In this regard, he has relied upon the decision of this Tribunal in the case of Kuber Tobacco Products Pvt. Ltd. Vs. CCE-2013 (290) ELT 545 (T) which has been affirmed by the Hon ble Apex Court in 2015 (317) ELT A150 (SC) wherein it has been held that where defiance of law and procedure leaves scope for tempering with the material seized, then certainly such material cannot be of any relevancy. On account of various legal and procedural infirmities in the panchnama, it is apparent that the entire proceedings have lost their credibility and serious doubts arises even about the credibility of the materials stated to have been collected in the course of proceedings. 10. It is further submitted that there is reference in the statements recorded about the katchha slips having the title Cooper recovered from Rajendra Vardhaman Tower, Roop Nagar, Delhi pertaining to the goods clandestinely manufactured and cleared by the main appellant. On perusal of such cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement has explained about the Lotus Notebook belonging to M/s. Daynamic Lab and written by Shri Krishna Singh. In such statement, in connection with the Lotus Notebook, he did not mention M/s. Coooper Pharma being the supplier of the said goods appearing therein. Therefore, there is no tangible evidence to raise and confirm the demand against the main appellant. Such record belonged to M/s.Dynamic Lab Pvt. Ltd. and was written by one Sh. Kishen Singh and the statement of Shri Kishen Singh was not recorded. In fact, such, Lotus Notebook pertained to the orders received by M/s. Dynamic Lab Pvt. Ltd. A perusal of such Lotus Book, by itself, reveals about there being no indication of any amount/price. Further, there has even no investigation conducted from the names appearing in such Lotus notebook for ascertaining if they purchased any goods from M/s.Dynamic Lab. In any case, on the basis of such Lotus Notebook, no demand can be raised against the main appellants. Further the finding of the lower authorities confirmed that even Shri Abhishek Bhargava also did not name M/s. Cooper Pharma for having received the goods covered under the Lotus notebook from the main appellants. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relied on the decision of the Tribunal in the case of Devender Sandhu Impext Limited Vs. CCE, Ludhiana2016 (337) ELT 99 (Tri.). 16. He further submitted that suspicion, however, so grave cannot substitute for evidence to support the charge of clandestine removal. It is submitted that the whole case is made out presumptions and surmises. Even suspicious circumstances existing cannot establish the charge of clandestine removal. To support his contention, he relied on the following decisions: (a) Belguim Glass and Ceramics Pvt. Ltd. Vs. CCE (MANU/CS/0054/2015) (b) P J Auromatic Vs. CCE, Delhi-2016 (334) ELT 675 (Tri.) (c) Arya Fibres Pvt. Ltd. Vs. CCE, Ahmedabad-2014 (311) ELT 529 (T). 17. With regard to the demand of ₹ 1,01,14,54/- on the goods lying with M/s.Dynamic Laboratories of ₹ 6,18,961/- and ₹ 4,436/- on goods of a value of ₹ 27,180/- lying as waste at 1/1, Shakti Nagar, Delhi, is it submitted that all the stocks were tallying with the Central Excise invoices issued from Serial No.301-350, which were part of the resumed records. These invoices were issued to M/s.Dynamic Laboratories, from whose possession the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELT 437 (Tri.), K.K. Saidalavi Vs. CC-2006 (199) ELT 813 (Tri.) and the decision of Hon ble Apex Court in the case of Shri Surjeet Singh Chhabra Vs. UOI-1997 (89) ELT 646 (SC). Since there is no retraction of the statements, the statements have evidentiary value. 23. With regard to the cross examination of Shri Y.K.Bhargava, the Chief Chemist of the appellant, it is submitted that Shri Rakesh Bhargava, Managing Partner of the appellant in his statement dated 15.3.2007 had been examined quo the diaries of the Chemist and also confronted with the statement of Shri Y.K.Bhargava tendered on 5.3.2007. Shri Rakesh Bhargava, Managing Partner of the appellant accepted the assertions made by Shri Y.K.Bhargava, the Chief Chemist. Therefore, no useful purpose would be served by allowing the cross examination of Shri Y.K.Bhargava. To support his contention he has relied on the judgments of the Hon ble Supreme Court in the case of Surjeet Singh Chhabra Vs. Union of India-1997 (89) ELT 646 (SC) and the decision of the Tribunal in the case of Suman Silk Mills Pvt. Ltd. Vs. CCE, Baroda-1993 (2002 (68) ELT 640 (Tri.-Mum.). He further submits that admitted facts need not be proved. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said finished goods even till the date of issue of show cause notice dated.15.09.2006. Shri Rakesh Bhargava, Partner and Manager of the appellant in his statement dated 19.07.2006, admitted that the said goods valued at ₹ 7,58,534/- seized at 12/12/, Shakti Nagar, Delhi were cleared by the appellant and that he would produce the bills. However, the bills were not produced till date. 25. With regard to the seized goods collectively valued at ₹ 4,73,180/-, he submits that it is fact that physical stock taking of the goods in the premises sat 1/1, Shakti Nagar, Delhi (Godown) was conducted and the goods found lying there. Also on demand, Shri M.P.Joshi, General Manager of the appellant failed to produce any bill/challan for the raw materials, finished goods and packing material stored in the said godown. There were 40 numbers of cartons which did not have any description/identification of the goods packed therein. There were three more cartons marked CLP and there were four packages of raw material, Cloxacilin Sodium (IP) packed in 2 drums, Cloxacillin Sodium Compact (IP) packed in one drum, Ampicillin Trihdrate Compacted (IP) packed in one drum. On opening and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lacs of measuring cups and 8.5 lacs of droppers to the appellant for which payment was received in cash and he failed to submit any bills. Moreover, Shri Abhishek Bhargava admitted that the payment in cash to M/s.Shakti Bottles. The same has been admitted in the statement of Shri Bharat Bhushan Jain, Proprietor M/s. Jain Agencies, who supplied the raw materials to the appellant without any bill. The above assertions made by the suppliers of the raw material are fortified by Shri Rakesh Bhargaa himself in his statement dated 18.3.2006 whereby he has admitted that they procured the raw material from the open market without any bill and the same was not accounted for in their books of accounts, used in the manufacture of goods and removed clandestinely without payment of duty. Therefore, the demand is sustainable. 28. Regarding investigation of M/s.Dynamic Laboratories Pvt. Ltd, a buyer of the appellant, it is submitted that Shri Abhishek Bhargava, Director of M/s.Dynamic Laboratories Pvt. Ltd, who admitted in his statement that the goods received from the appellant without payment of duty, were appearing note-pads; that the pads contained the details of dispatch of goods to their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chemist diaries showed that the raw material issued for manufacturing of the goods. The document does not reveal that the fact that the raw material issued for manufacturing has actually been manufactured whereas central excise duty to be paid by the assessee on manufacture of goods. Admittedly, the evidence of manufacturing of the goods has not been coming out from the diaries maintained by Shri Y.K.Bhargava. Moreover, Shri Y.K.Bhargava joined the appellant s firm in June, 2005 and prior to that one Shri Duggal as the Chief Chemist and the diaries were maintained by him without examination of the statement of Shri Duggal, the said diaries cannot be relied upon as piece of evidence. Moreover, the contents of the diaries, merely showing issuance of raw materials, in that circumstance, cross examination of Shri Y.K.Bhargava was required to ascertain the truth. During the adjudication, the statement of Shri Y.K.Bhargava was not examined in chief and thereafter no opportunity for of cross examination of Shri Y.K.Bhargava is afforded to the appellant, therefore, there is gross violation of principle of natural justice In terms of Section 9D of the Central Excise Act as held by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rential or assumed) from the factory without payment of duty; (c) discovery of such finished goods outside the factory; (d) instances of sale of such goods to identified parties; (e) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him; (f) use of electricity far in excess of what is necessary for manufacture of goods otherwise manufactured and validly cleared on payment of duty; (g) statements of buyers with some details of illicit manufacture and clearance; (h) proof of actual transportation of goods, cleared without payment of duty; (i) links between the documents recovered during the search and activities being carried on in the factory of production; etc. Needless to say, a precise enumeration of all situations in which one could hold with activity that there have been clandestine manufacture and clearances, would not be possible. As held by this Tribunal and Superior Courts, it would depend on the facts of each case. What one could, however, say with some certainty is that inferences cannot be drawn about such clearances merely on the basis of note books or diari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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