TMI Blog2018 (8) TMI 1564X X X X Extracts X X X X X X X X Extracts X X X X ..... does not have any legs to stand on. Appeal allowed - decided in favor of appellant. - Appeal Nos. E/365 & 366/2010 - Final Order No. 41810-41811/2018 - Dated:- 27-3-2018 - Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri S. Jaikumar, Advocate for the Appellant Shri K.P. Muralidharan, AC (AR) for the Respondent ORDER Per Bench Facts of the case are that M/s. G.M.T. Alloys, the appellant herein, are registered manufacturers of various alloys ingots of lead, aluminum, tin and zinc. Based on intelligence that appellant procured duty paid aluminum, lead, zinc, however used only lead retrieved from rejected battery scrap, certain search and investigations and stock taking charges were carried out by the department officers. It appeared to the department that appellant were not able to properly account for shortage of 1291.875 MTs of raw materials noticed at the time of stock taking and also shortage of raw materials with respect to (tin ingots, zinc ingots). It also appeared that the quantity of purchase of raw materials is very high compared to the production and clearance. Show cause notice dated 21.1.2009 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se independent test reports without assigning any reason or countering with any other data in an arbitrary manner. 2.5 As per mahazar dated 24.1.2008, stock position of various goods was drawn. However, the department have ignored the stock position as to zinc scrap as well as lead scrap/ingots (RM). It is also mentioned in para 3 of the show cause notice that aluminum powder is dealt with separately , though that has not been dealt anywhere in the notice. The allegation contained in the show cause are mainly based on depositions of Shri P. Nallendra Kumar, the authorized signatory of the appellant and statements from view of the buyers of the finished goods of the appellant. However, the statement of Shri Nallendra Kumar was immediately retracted by him on 4.4.2008 by way of a letter addressed to the Superintendent, Headquarters, Preventive Unit, Chennai -II Commissionerate. During the course of cross-examination of witness, it appears that the statement given during the course of investigation regarding the composition of metals have stated that the said composition is not accurate but was given on a presumption/appropriation. 2.6 However, one Shri M.S. Ayyappan partner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the ingots had categorically stated that they have received the alloy ingots of 95 - 99% predominating in lead. The appellants have evidently conceived this modus operandi with the intention to gain illicit benefits from selling the raw materials as such without duty liability on them but at the same time after taking credit on the same. For these reasons, the impugned order is justified and do not require any interference. 4. Heard both sides. 5. Perusal of the show cause notice dated 21.01.2009 will indicate that the relied upon documents to the case are listed in Para 18 thereof. These include purchase of sales invoices for the period 11/2006 to 1/2008, RGI registers, certain worksheets, Mahazar dated 24.01.2008 and statements of a number of persons. There is no indication in the list of relied upon documents or, for that matter, in the body of the Show Cause Notice, to indicate that the department had got any of the samples of the purported lead ingots tested from a recognized authority. 5.1 Be that as it may be, we find that the main edifice of the notice rests on the statement of Shri P. Nallendra Kumar, the authorized signatory of the appellant. From the narration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the retractions in cross-examinations made by the suppliers of raw material and the buyers of lead ingots. Neither has the retraction made by Shri Nallendra Kumar in his second statement dated 4.4.2008 recorded by the same officer who recorded the earlier one dated 14.3.2008 been taken note of by the adjudicating authority. 5.6 We find that the appellants, in their reply to the Show Cause Notice, have pointed out that no tests have been conducted by the examination agency nor have any statements been taken from any technical person or authorized persons of the factory. The appellants, in their reply, had also given the composition of the lead ingots, aluminium ingots, zinc ingots and tin ingots manufactured by them. To substantiate their claim, they had requested for cross-examination of all the persons from whom statement has been recorded. The adjudicating authority has permitted cross-examination of only some of the persons, all of whom have retracted their earlier say. However, the cross-examination of M.S. Ayyappan, one of the buyers of the lead ingots, was not allowed by the adjudicating authority. The reason given for rejection of the cross-examination by the adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y well got them tested from an approved testing agency, for example, the National Metallurgical Laboratory. This certainly has not been done. On the contrary, the case against the appellant has been sought to be built up on the basis of the statements given by few of the buyers which, in any case, were retracted in cross-examination. The test reports submitted by the appellant, which are the only reports in this matter, have also been brushed aside by the adjudicating authority. From the discussions hereinabove, what emerges is that allegation of removal of a large quantity of raw materials as such, involving duty liability of as much as ₹ 2.46 crores, was made on the appellant, however, without even circumstantial evidence. No proof has been brought forth by the department in respect of the alleged clearances of the ingots/other raw materials as such by the appellant. There is also no sight of any money trail related to such alleged clandestine clearances. 5.10 The entire case thus has been largely up on the statements of the authorized signatory of the appellant, which was retracted by that person, proximate to the recording of his statements. The case is also buil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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