TMI Blog2018 (8) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... There is nothing on record to show as to whether the trucks were put into services for weighing the huge stock - Admittedly the iron and steel items are heavy items and cannot be weighed without engaging a proper procedure to weigh the same. The stock-taking was not actually done by the visiting staff and the alleged shortages and excesses are based upon eye-estimation. In such a scenario the allegations of shortages of the goods cannot be accepted. The stock-taking undertaken by the visiting officers was not actual, but based upon eye-estimation and as such the result of the same has to be ignored, in any case, the entire case of the Revenue is based upon such shortages leading to the allegations of clandestine removal - The question which arises is as to whether the shortages by themselves can lead to the findings of clandestine removal of the goods or not stands dealt with by the Tribunal in number of precedent decisions. It is well-settled law that the allegations of clandestine manufacture and removal are required to be proved by the Revenue by production of positive, tangible and legal evidences. The onus to prove so lies heavily on the Revenue and is required to be dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturing unit M/s.Rimjhim Ispat Ltd. along with imposition of identical amount of penalty under section 11AC of the Central Excise Act. In addition, the goods found in excess in the appellant s factory stands confiscated with an option to the appellant to redeem the same on payment of redemption fine of 20% of the value of the seized goods. Penalty of ₹ 14,20,335/- stands imposed on the said appellant under Rule 25 of the Central Excise Rules, 2002. Further penalty of ₹ 90,09,676/- also stands imposed upon Shri Sanjeev Agarwal, Director of the company along with imposition of penalty of ₹ 15.00 Lakhs on Shri Durga Shankar Mishra, authorized signatory, in terms of the provisions of Rule 26 of the Central Excise Rules, 2002. 2. We are informed that Shri Durga Shankar Mishra, one of the appellant has since expired and his appeal would abate in terms of Rule 22 of CEGAT Procedure Rules. His death certificate stands placed on record. Accordingly the appeal filed by him is disposed of is abated. 3. As per facts on record M/s.Rimjhim Ispat Ltd. are engaged in the manufacture of billets, rounds as also coils/flats etc. falling under chapter 72 of the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supervised by Shri Sanjeev Agarwal, Director of the unit. Further statement of Shri Sanjeev Agarwal, Director was recorded on 14.07.2011 wherein he agreed with the statement of the Managing Director. 6. From the foregoing facts, the Revenue entertained a view that the short found quantity of 1650.426 MT of SS Coils totally valued at ₹ 8.74 Crores (approx.) involving duty of ₹ 90.09 Lakhs stand removed by the appellant clandestinely without issue of Central Excise invoices and without their accountal in the statutory records. Similarly as regards the excess found goods it was believed that the same were not entered in the records with an intent to clear the same without payment of duty. In the said background proceedings were initiated against all the appellants by way of show cause notice dated 21.09.2011 proposing to confirm the demands in respect of shortages detected by the officers and to confiscate the excess found seized goods. Notice also proposed imposition of penalties upon all the appellants. The said notice stands culminated into impugned order passed by the Commissioner confirming the demands, confiscating the goods and imposing penalties as detailed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d entered in the records. The said position stands clarified by the Authorized Signatory Shri Durga Shankar Mishra as also by Shri Sanjay Agarwal in their on the spot statements. He also submits that there is no confession by the said two deponents as regards the clandestine removal of the said short found goods, in which case the conclusions arrived at by the adjudicating authority are frivolous and are required to be set aside. Ld.Advocate further contended that the adjudicating authority has strongly relied upon the statements of the Authorized Signatory as also of the Director of the company. Though the said statements are not confessional and have nowhere accepted the clandestine removal and are only to the effect of accepting the shortages and excesses, but they had requested for the cross-examination of the said deponents which stand rejected by the adjudicating authority on filmsy grounds. If the Revenue intended to rely upon the statements, it was obligatory on the part of the adjudicating authority to allow their cross-examination so as to test the veracity of the said statement. He submits that the latest decision of the Punjab Haryana High Court in the case of Jind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants cannot challenge the result of stock-taking. However, on being questioned as to whether any clandestine activities stand accepted in the said statement, he fairly agrees that there is no such deposition made by the said deponents. 11. On carefully going through the submissions made by both the sides and the impugned order of Commissioner, we note that the entire case of the Revenue is based upon the alleged shortages, leading to demand of duty and the excesses, leading to confiscation of the goods, during the course of visit of the officers in the assessee s factory as on 26.03.2011. 11.1 The appellants have strongly challenged the method of stock taking by the officers on the day of their visit. It is seen that the excesses and the shortages found by the officers are much on the higher side and there is nothing on record to show as to how such huge stock of finished products and raw materials was weighed by the officers. There are no inventories prepared and no methodology adopted by the Revenue for weighing such a huge stock stands placed on record. As per the appellant they do not have any weighing scale in their factory and for verification of the stock, 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue has not produced any evidence in the shape of actual manufacture of the goods, their removal by engaging transportation, the identity of the buyers and the receipt of consideration etc., to show that the goods have actually been sold by the assessee. No statement of any employee or the production manager of the company has been recorded to establish that the goods were actually manufactured in the factory. No source of raw material stands disclosed by the Revenue. In such a scenario mere shortages cannot lead to the allegations and findings of clandestine manufacture. 11.5 The Tribunal in the case of Hissar Pipes Pvt.Ltd. v. Commissioner of Central Excise, Rohtak [2015 (317) ELT 136 (Tri.Del.)], by taking note of the various earlier decisions have held that the stock-taking having been done on eye-estimation basis, the clandestine removal allegations cannot be upheld merely on the basis of the shortages so detected. Similarly in the case of Commissioner of C.Ex., Raipur v. Sidhi Vinayak Sponge Iron (P) Ltd. [2014 (308) E.L.T. 154 (Tri.-Del.)], charges of clandestine removal were not upheld by observing that the same are required to be established by tangible and corroborative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been sold. As such by applying the ratio of the various decisions, as referred in the preceding paragraph and by applying the ratio of the Hon ble Allahabad High Court as also by the Punjab Haryana High Court in the decisions referred above, we hold that the findings of clandestine removal arrived at by the lower authorities are un-sustainable. 11.7 Revenue has strongly relied upon the statements of the Directors as also of the appellant s authorized person. On going through the said statements we note that the same are not confessional statement and there is no admission of any clandestine activities in the said statements of the deponents. In fact it stands revealed by the said deponents that the shortages, if any, may be on account of the fact that the final product is entered in the records on eye-estimation basis whereas at the time of selling, the same is actually weighed. They have also submitted that the said shortages, if any, may be on account of the fact that the coils, which are being manufactured by the job-workers, are sometimes found detective and are scrapped and re-used in the factory without deleting the same from the records. In any case and in any v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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