TMI Blog2018 (10) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... decided in favor of appellant. - E/10601-10605/2018-SM - Final Order No. A/12233-12237/2018 - Dated:- 23-10-2018 - SHRI RAMESH NAIR, MEMBER (JUDICIAL) For Appellant: Shri S. Suriyanarayanan (Advocate) For Respondent: Shri S.N. Gohil (AR) ORDER Per: Ramesh Nair This appeals are directed against order in appeal dated 30.10.2017 passed by the commissioner (Appeals), Surat. By the impugned order, demand of excise duty amounting to ₹ 1,27,662/- was upheld which was confirmed by the adjudicating authority on the ground that there was excess stock of finished goods which was cleared without payment of duty. The entire case is based on investigation conducted by the Income Tax Authority. 2. Sh. S. Suriyanarayanan, Ld. Counsel appearing on behalf of the appellant at the outset submits that there is no independent investigation carried out by the Central Excise Officers. The entire case was made on the basis of investigation carried out by the Income Tax Authority wherein some excess stock was found, the appellant right from beginning made categorical submissions that there was no stock difference and no goods have been clandestinely removed. He submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppears that Shri Ramesh Kumar Agarwal, Director of M/s. Ravi Foods (P) Ltd., Sri Srinivas Agarwal, Director of M/s. Pahal Foods (P) Ltd. and Shri B. Vivekananda Rao, Financial Controller are responsible for the evasion of duty and suppression of production and clearance. The evidence also proves that there was a written plan about the execution of the evasion of duty by the companies, which was meticulously adopted as was detected by the Income Tax Department. The fact that the records and material were available at the residence premises proves that these three personnel fried to keep the records and evidence pertaining to production and clearances away from the regular checks of the officers who frequent their factories. It therefore appears these three personnel are liable for penal action under appropriate rules and relevant provisions of law. Thus it appears that both these companies have failed to maintain appropriate records and failed to assessee and pay appropriate duty on the goods cleared by them, which resulted in contravention of Rule 4, 6,8, 10, 11 and 12 of Central Excise (No.2) Rules, 2001. 25. The information of detection of clandestine removal and evasion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble as discussed above. In this case, there is no dispute on the evidentiary value of the documents as they stand admitted without any doubt before the Income Tax authorities, the Assessing Officer as well as the Commissioner (Appeals). 10. We find that though the show-cause notice charged the appellants with the allegation of clandestine manufacturing and removal of the goods with intention to evade Central Excise duty, the findings of the adjudicating authority has not supported the said charge. It is seen from para 55, 56 and 57 that the adjudicating authority has let go the charge of clandestine removal from the factory premises, obviously for the reason that there was no corroborative evidence as regards the clandestine manufacturing and removal of goods. The adjudicating authority having not given any positive findings as regards the clandestine manufacturing and clearance of the goods, in itself would indicate that the said charges as alleged against the appellants were not proved. If that be so, the show-cause notice which proceeded against the appellants on the charge of clandestine manufacturing and removal of final products with intention to evade duty, proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 25% penalty amounting to ₹ 7,791/- has not been challenged and made part of this appeal, hence this aspect does not require any discussion. Now, I come to the second aspect of the impugned order. It is seen that the department has made this case on the basis of declaration of cash from undeclared sources for the balance sheet for the year 2008-09 and 2010-11. The appellants have argued that the income was basically income of the Director who had other sources of income. The contention is factually as well as legally incorrect. The duty has been demanded on the miscellaneous income shown in the books of account of the appellant company and not recovered as unaccounted cash at the residence of the Directors. A company is a legal entity distinct from the directors and its income cannot be claimed to be income of the Directors. Moreover, once an income is recorded in the books of an assessee as miscellaneous income and that is accepted as income before the income tax department, the natural presumption would be to relate it with the core activity of the assessee which in this case was manufacture. It was for the appellants to discharge the onus of proving that the income did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture and clearance of goods have also not been verified. Further, there is no evidence regarding receipt of excess raw material/ input goods required for manufacture of the alleged clandestine removal of goods. I also find that no investigation has been taken place at the buyers end, to verify the particulars regarding receipt of unaccounted for goods, who are the reputed public sector oil companies. Since LPG cylinders are not general merchandise, capable of bought and sold in the common market place and is controlled under the stringent norms prescribed by BIS, I am of the considered opinion that the allegation of clandestine removal without proper verification of books cannot be a defensible ground for confirmation of duty demand and for imposition of penalty. I find that this Tribunal in the case of Zoloto Industries (Supra) has held that in absence of admission of clandestine manufacture and removal by the assessee, the allegation of clandestine removal cannot sustain and the duty demand cannot be confirmed. Further, this Tribunal in the case of Saini Industries (supra) has held that stock verification by the Income tax Department cannot be accepted on its face value i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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