TMI Blog2018 (12) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 9D have not been followed by the adjudicating authority, therefore, on this sole ground, the impugned order is not sustainable. The statements of various buyers and suppliers have been relied upon by the adjudicating authority and in their statements they have stated they have supplied the goods without cover of invoices or they have purchased the goods from the appellant without cover invoices which means they were involved in the evasion of payment of excise duty but they were not made party to the show cause notice which shows that investigating team adopted pick and choose method as the persons who were involved in evasion of duty were not made party to the show cause notice creates doubt on the statements of these witnesses. Therefore, the statements of these witnesses cannot be relied upon to allege clandestine manufacture and clearance of the goods. Clubbing of clearances - Held that:- Both units are located at a distance of about 60 KM having independent ownership and infrastructure. Each units have its own manufacturing set up and machinery to manufacture heir finished goods independently. In that instant case, their clearances cannot be clubb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not account for their actual production of final products in their records. On the basis the said intelligence, searches were conducted on 9.1.2006 on the following premises:- (i) the factory premises of M/s.SSP at Sampla, Haryana (ii) the factory premises of M/s.JKP, Najafgarh, Delhi (iii) the residences of Shri Amrit Goyal, Proprietor of M/s/. SSP and his brother Shri Mohan Lal Goyal, Rohini, Delhi. (iv) The residence of Shri Mahadev Goyal, the main associate of M/s. SSP, Rohini, Delhi. 5. During the course of search, certain records, namely, cash book, ledger, challan book and file were recovered. The stock taking was done and various statements were recorded. On the basis of thorough investigation, it was alleged against the appellants that they were engaged in the activity of clandestine manufacture and clearance of goods during the period 1.4.2005 to 9.11.2006. Consequently, the show cause notice was issued to the appellant to demand duty from both the appellants and to impose penalties on M/s. SSP and M/s. JKP and other coappellants. The matter was adjudicated and the following the order has been passed:- (i) I confirm the demand of Central Excise Duty inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest at the appropriate rate from M/s Shiv Shandkar Plywood, Sampla, Dist. Rohtak and M/s Jai Krishna Plywood, Nazafgarh, Delhi jointly and severally on the amount of demand confirmed at (vi) above under Section AB of the Central Excise Act, 1944. (viii) I impose a penalty of ₹ 75,21,297/- (Rupees Seventy Five Lacs Twenty One Thousand Two Hundred Ninety Seven only) jointly and severally against M/s Shiv Shandkar Plywood, Sampla, Dist. Rohtak and M/s Jai Krishna Plywood, Nazafgarh, Delhi under Section 11AC of the Central Excise Act, 1944. They could, however, avail of the benefit of clause (c) of Section 11AC wherein it had been laid down that where any duty as determined under sub section (10) of Section 11A and the interest payable thereon under Section 11AB in respect of transactions referred to in clause (b) is paid within thirty days of the date of communication of order of the Central Excise Officer who has determined such duty, the amount of penalty liable to be paid by such person shall be twenty five percent of the duty so determined only in a case where the penalty is paid within the period so specified. (ix) I retain from imposing any penalty on Sh. Moha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03. The challans resumed from residential premises of Shri Goel alleged show the description and quantity of goods cleared. The goods shown in challan were in mm (thickness) and length and width was shown in feet and it was sold in square feet. Shri Mahadev Goel stated that in invoices less quantity and less value was shown but actual quantity indicated on challans were dispatched and the actual value written in cash book. The cash book was recovered from Shri Mahadev Goel were written by him. The cash book was maintained in party-wise ledger format. The total sale value ascertained by adding total sale value reflected in the cash book. The transaction on account of purchases of raw material was shown supplier wise matches with cash book. 9. It is his submission that Shri Mahadev Goel retracted his statement on 22.6.2007 being recorded under pressure vide letter dt.22.6.2007. He lodged complaint at R.K. Puram Police Station, New Delhi. The department responded to retraction dt.22.6.2007 vide letter dt. 20.7.2007. Thereafter no statement of Shri Goel Mahadev Goel was recorded. Shri Mahadev Goel during the course of investigation, stated that he was doing trading in impugned goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption (2006- 07). The value of purchase of ₹ 64,08,271/-, which is also within the threshold limit of exemption under Notification No.8/03-CE dt.1.3.2003. 14. He further submits that the statements of two buyers were relied upon by the adjudicating authority, namely, Shri M.M. Kuershi and Shri Narinder Pahwa. Shri M.M. Qureshi Industries stated that they received ₹ 58,69,768/- from SSP during the period 13.10.2005 to 14.4.2006 towards sale of total value from M/s. Quershi Industries allegedly was ₹ 99,76,478/- during the impugned period. There is no reference of discreption and quantity of goods cleared by M/s. Quershi Industries to M/s.JKP. The computerized records maintained by appellant No.1 shows purchase core from M/s. Quershi Industries valued ta ₹ 3,57,367/- and ₹ 1,95,356/- during the year 2005-06 to 2006-07 respectively. Further, Shri Narinder Pahwa in his statement stated that they were supplying formaldehyde/resin to appellant and admitted that they have received payment for supply of formaldehyde as mentioned in the notebook recovered from residential premises of Shri Mahadev Goel. There is no reference of description and quantity of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and could not be sole basis for deciding against assessee in absence of other evidence indicating clandestine removal like transportation. He also relied upon the decision of this Tribunal in the case of Kamar Ali Sons- 2006 (200) ELT 104 (T) to say that no evidence other than entries in private records produced register alone not sufficient to establish clandestine removal. He also relied upon the decision of this Tribunal in the case of Annapurna Industries Ltd.-2003 (153) ELT 586 (T) to say that clandestine removal not supported by any evidence regarding actual consumption of inputs, the demand is not sustainable. 17. He further submits that the documents recovered were third party evidence and cannot be relied upon to allege that clandestine manufacture and clearance of the goods. To support this, he relied upon the decision of this Tribunal in the case of R.A. Castings Pvt.Ltd. vs. CCE-2009 (237) ELT 674 (T) to say that burden to prove clandestine removal with positive and concrete evidence is on department. The appeal filed by the Revenue dismissed by Hon ble Allahabad High Court-2011 (269) ELT 337 (All) which has been affirmed by the Hon ble Supreme Court 2011 (269 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 321) ELT 313(T) to say that the demand cannot be confirmed against both the appellants and penalties cannot be imposed on them. He also relied on the decision of this Tribunal in the case of Arya Fibres Pvt.Ltd.-2014 (311) ELT 529 (Tri.-Ahmd.). Therefore, the impugned order is to be set aside and the appeals by the appellants are to be allowed. 21. On the other hand, ld. AR supported the impugned order and submits that it is a case of clandestine manufacture and clearance of the goods which has been made on the basis of records recovered from the possession of Shri Mahadev Goel, who was maintaining the records of both the units and cash book maintained by Shri Goel. The transactions entered in cash book compared with the statutory records wherein the discrepancy found, therefore the demand has been confirmed against the appellants. 22. Heard both sides and considered the submissions of both sides. 23. We find that in this case, the case of clandestine manufacture and clearance of goods and undervaluation and clubbing of clearances has been made out against M/s. SSP and M/s.JKP. The evidence brought on record recovered from Shri Mahadev Goel in the nature of private records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke note of the fact that the statements of various buyers and suppliers have been relied upon by the adjudicating authority and in their statements they have stated they have supplied the goods without cover of invoices or they have purchased the goods from the appellant without cover invoices which means they were involved in the evasion of payment of excise duty but they were not made party to the show cause notice which shows that investigating team adopted pick and choose method as the persons who were involved in evasion of duty were not made party to the show cause notice creates doubt on the statements of these witnesses. Therefore, the statements of these witnesses cannot be relied upon to allege clandestine manufacture and clearance of the goods. We take note of the fact that during the course of investigation, no variation of stock of SSP and JKP found which supports the case of the appellants that they were maintaining proper records. 27. We take note of the fact that both units are located at a distance of about 60 KM having independent ownership and infrastructure. Each units have its own manufacturing set up and machinery to manufacture heir finished goods independ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 diaries privately maintained or on mere statements of some persons, may even be responsible officials of the manufacturer or even of its Directors/partners who are not even permitted to be cross-examined, as in the present case, without one or more of the evidences referred to above being present. In fact, this Bench has considered some of the case-law on the subject in Centurian Laboratories v. CCE, Vadodara [ 2013 (293) E.L.T. 689 ]. It would appear that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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