TMI Blog2018 (9) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... to prima facie establish the case of clandestine removal and the assessee is not able to give any plausible explanation for the same, then the allegation of clandestine removal has to be held to be proved - the assessee has not denied any of the allegations, which were put forth except for simple and flimsy retraction. If the assessee had sufficient records to establish their innocence, nothing prevented the Managing Director to say so while making the retraction. There was no attempt made by the assessee to state their case by coming forward to give a statement and producing records. The allegation of parallel invoicing has not been disproved in the manner known to law. Appeal dismissed - decided against assessee. - Civil Miscellaneous Appeal No.1011 of 2017 - - - Dated:- 4-9-2018 - Mr. T.S. Sivagnanam And Mrs. V. Bhavani Subbaroyan JJ. For the Appellant : Mr.K.Jayachandran For the Respondent : Mr.V.Sundareswaran, Standing Counsel JUDGMENT [Delivered by T.S.Sivagnanam, J.] This appeal, filed by the assessee, is directed against the order passed by the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as the Tribunal ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944 (hereinafter referred to as the CEA, 1944 ) should not be invoked to demand duty, as the assessee has suppressed the fact of production and clearance without accounting them in their statutory records, without payment of duty and without following the Central Excise procedures. The duty proposed to be demanded was quantified and there was a proposal to impose penalty under Section 11AC of the CEA, 1944. There was also a proposal to confiscate a quantity of 2,295 kgs of 30s cotton yarn (cones), which were seized under mahazar dated 17.09.1999. There was also a proposal to impose penalty on the Commission Agent under Rule 209A of the CER, 1944. The annexure to the show cause notice contained the facts, which formed the basis for issuing the notice. The assessee submitted their reply dated 11.09.2000, placing certain factual explanation, apart from relying upon various decisions. 6.The Adjudicating Authority, viz., the Joint Commissioner of Central Excise, Coimbatore, by order dated 27.09.2002, confirmed the proposals in the notice. Aggrieved by the same, the assessee preferred appeal before the Commissioner of Central Excise (Appeals), Salem. The Appellate Authority, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no evidenciary value. 9.Further, it is submitted that when there is an allegation of clandestine removal, the Department must prove with the evidence that the raw materials were purchased from particular persons with details and evidence of clandestinely selling the finished goods to the parties, with their names and addresses. In this regard, there was no investigation with regard to the sources from which the assessee procured the raw materials without payment of duty; the names of purchasers to whom the finished products were sold without invoices and removed by the assessee without payment of duty; and no details of such a huge quantity alleged to have been removed from the factory were furnished such as lorry number, other mode of transport etc. 10.Thus, it is the submission of learned counsel that to corroborate excess production, it must be substantiated with excess consumption of power, which has not been shown in the present case, which would establish that there was no excess production. Consequently, there was no possibility of clandestine removal. Thus, in the absence of contrary evidence about the removal and to whom it was sold and the period of sale, it has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is that the Department has not proved the allegation of clandestine removal. There has been no investigation into the material aspects, which are required to be proved for establishing an allegation of clandestine removal. Further, it is submitted that a case cannot be drawn against the assessee solely based upon uncorroborated diary notings without any independent records. 18.By referring to the decision in Saakeen Alloys Pvt. Ltd. (supra), it was contended that there should be positive evidences for establishing the evasion by the Department and the assessee cannot be charged for clandestine removal of goods without payment of duty solely based upon the confessional statements which in fact, were retracted. 19.In the case of Saakeen Alloys Pvt. Ltd. (supra), the said company was engaged in the manufacture of CTD/Round bars. Search and seizure operations were conducted in the factory premises and note-books and pendrive were recovered and there was an allegation of illicit clearance made by the said assessee. Based on the documents recovered, show cause notice was issued and ultimately, the Adjudicating Authority confirmed the proposal in the show cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, one can easily come to the conclusion that a thorough inspection has been conducted in the factory premises of the assessee, in the presence of the factory Manager and in the presence of two independent witnesses. Mahazar was drawn and sent by the factory Manager, who also gave a statement under Section 14 of the Act. During the relevant time, the Managing Director was away from India and upon arrival, furnished a statement and accepted the deposition of the factory Manager. It is thereafter, the factory Manager as well as the Managing Director sent letters stating that the statements were not voluntary. This aspect was considered by the Adjudicating Authority and was rejected holding that if the Managing Director had doubts about the statements of the factory Manager, he can very well point out the same while giving statements subsequently. Further, in the retraction, the Managing Director has not questioned the facts and figures, which were available on record. Thus, the Adjudicating Authority, in our view, rightly rejected the retraction as an afterthought. 25.Further, the assessee alleged that the entire seizure could not have been completed within 5 hours and the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposal in the show cause notice was confirmed. The Appellate Authority, while considering the grounds raised before him, passed a speaking order by framing a point for consideration viz., whether the assessee had indulged in manufacture of cotton yarn cones without accounting them in the statutory records and clandestinely removed them without payment of duty and without statutory documents during the said period. 28.The Appellate Authority took note of the fact that the assessee has been maintaining two sets of invoices one with pre-printed running serial number and the other without any serial number, which had not been denied by the assessee. Further, the Appellate Authority pointed out that the demand was raised for the difference in quantities between the private records and the RG1 entries and this has been corroborated with shortage noticed in the raw material account apart from the statement given by the factory Manager and the Managing Director. Thus, the Appellate Authority concluded that the assessee did not dispute that there was no such unaccounted production and clearance of cotton yarn and especially when they had maintained private records in the form of diar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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