TMI Blog2019 (1) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... ents are available on record, we proceed to decide the matter in view of submission made by both sides and evidence available on record, instead of remanding the matter back to the Adjudicating Authority. Shortage detected in the stock of finished goods - Held that:- We have gone through the statement recorded by the officers and we find no mention of the method of physical verification. Nor any calculation chart is made part of panchnama. Thus, we agree with the appellant that verification of stock was by eye estimation only. More over there is no dispute to the fact stated by the appellant company in their reply, that the shortage in case of MS Ingots was 3.24 % and that of TMT bars was 1.4 % of the total production. Such difference in quantity is normal in case of eye estimation of the stock - the allegation of clandestine removal on the basis of the so called shortage in stock of final products is un-sustainable and demand in this regard is fit to be set aside. Figures in Computer printout/loose slips - Held that:- There is nothing on record to suggest the manner in which such printouts were taken. There is also nothing on record to suggest fulfillment of the conditions s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is set aside - appeal allowed - decided in favor of appellant. - Appeal No. E/53606-53611/2014-EX [DB] - FINAL ORDER NO. 50073-50078/2019 - Dated:- 22-1-2019 - Shri Anil Choudhary, Member (Judicial) And Shri Bijay Kumar, Member (Technical) Shri Bipin Garg, Advocate for the Appellants Shri R.K. Mishra, AR for the Respondent ORDER Per Anil Choudhary: 1. These appeals have been filed by M/s Kamal Sponge Steel Pvt Ltd. (herein after referred to as Appellant Company ) and its officials namely Kamal Jeet Singh-Director, Karan pal Singh- Director, Pawan Jeet Singh-Director, Anil Sharma-General Manager and Rakesh Bhatnagar- Ex. General Manager against common Order in Original No. JAI-EXCUS-001-COM-136-13-14 dt.31.03.2014 passed by Commissioner of Central Excise, Jaipur-I. The appellant company has filed appeal against confirmation of duty demand and imposition of penalty as well as levy of interest. The officials of the appellant company have filed appeal against imposition of penalty on them u/r 26 of Central Excise Rules 2002. 2. The facts, in brief, of the matter is that the appellant company is manufacturer of excisable goods namely, MS ingots, MS TMT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r statutory records and quantity of clandestine production shown in the computer printout and slips recovered. The production figure so calculated was divided by numbers of units of electricity consumed by the assessee and the actual production was calculated by applying the average production per unit of electricity consumption. The investigating officers came to the conclusion that the excess production arrived at by using average production on the basis of electricity consumption had been removed by the appellant company clandestinely without payment of duty. In course of investigation the officers recorded statement of Shri Rakesh Bhatnagar, GM on 21.09.2011, 23.09.2011, 24.09.2011, 07.03.2012 and 12.03.2012; statement of Anil Kumar Sharma-Authorised Signatory on 21.09.2011, 23.09.2011, 24.09.2011, 07.03.2012 and 12.03.2012; statement of Dinesh Kumar Goswami-Excise Executive, on 21.09.2011 and 23.09.2011; and statement of Chirag Sharma- Marketing Manager, on 15.03.2012 under section 14 of Central Excise Act 1944. During investigation the appellant company deposited amount of ₹ 1,40,93,564/- on various date(s) as per direction of the investigating officers. After scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence available on record. After considering the defence reply, the Learned Adjudicating Authority was pleased to Adjudicate the aforementioned three show cause notices vide the impugned Order-in-Original No. JAI-EXCUS-001-COM-136-13-14 dt.31.03.2014, by which he has been pleased to confirm the proposed duty demand and have appropriated the amount deposited by the appellant company in course of investigation, against the demand of duty so confirmed by him. He was also pleased to levy interest on the amount of duty confirmed and also to impose penalty under section 11AC of Central Excise Act 1944/Rule 25 of Central Excise Rules 2002. He was also pleased to impose penalty on other appellants under rule 26 of the Central Excise Rules 2002. The operative portion of the order in original in tabular form is given below:- SCN Dt. Duty Demand on Appellant Co. Penalty on Appellant Co. Penalty on Kamal Jeet Singh Penalty on Karan Pal Singh Penalty on Pawan Jeet Singh Penalty on Rakesh Bhatnagar SCN dt. 03.05.2012 8,91,72,830/- 8,91 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the co-noticees. It is settled law that the allegation of clandestine removal must be based on tangible evidence. He submitted that the allegation solely on the basis of unauthenticated slips and confessional statements of co-noticees is unsustainable. 8. As regards physical verification of stock, the learned counsel submitted that the method of physical verification has not been stated either in the panchanama or in the show cause notice. He took us through the panchnama dt.21.09.2011 drawn at the time of search of the factory premises, available at page 76 of the appeal paper book to demonstrate absence of method of physical verification in the panchnama. Therefore, as per learned advocate, the quantity of stock is calculated by the officers on eye estimation only, which cannot be taken as a valid evidence for alleging clandestine removal. It is settled law that clandestine removal cannot be based on presumption and assumptions. 9. The learned advocate further stated that the panchnama in the present case has not been drawn properly in as much as the places of recovery of computer print outs and loose slips is not indicated in the panchnama. In addition it appears that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement in support of his submissions. The list of case laws relied upon by the learned advocate is given below:- Sr. Nos. Title of the Case Citation 1. Gupta Synthetics Ltd. Vs CCE [2014 (312) ELT 225 (Tri.)] 2. Aum Aluminum Pvt Ltd. Vs CCE [2014 (311) ELT 354 (Tri.)] 3. CCE Vs Laxmi Engineering Works [2010 (254) ELT 205 (P H)] 4. Everest Rolling Mills Pvt Ltd. Vs CCE [2013 (292) ELT 397 (Tri.)] 5. Vikram Cement (P) Ltd. Vs CCE [2012 (286) ELT 615 (Tri.)] 6 Commissioner Vs Vikram Cement (P) Ltd. [2014 (303) ELT A82 (All.)] 7. CCE Vs Lord s Chemicals Ltd. [2009 (245) ELT 695 (Tri.)] 8. CCE Vs Lord s Chemicals Ltd. [2010 (258) ELT 48 (Cal.)] 9. CCE Vs Arsh Casting Pvt Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 (163) ELT 510 (Tri.)] 26. Andaman Timber Industries Vs CCE [2015 (324) ELT 641 (S.C.)] 27. CCE Vs Parmarth Iron Pvt Ltd. [2010 (260) ELT 514 (All.)] 28. Jindal Drugs Pvt Ltd. Vs UOI [2016 (340) ELT 67 (P H)] 29. Century Metal Recycling Pvt Ltd. Vs CCE [2016 (333) ELT 483 (Tri.)] 30. CCE Vs Gopi Synthetics Pvt Ltd. [2014 (302) ELT 435 (Tri.)] 31. CCE Vs Heliwal Polypackers Pvt Ltd. [2016 (340) ELT 204 (Tri.)] 32. Balajee Structurals (India) Pvt Ltd. Vs CCE [2016 (341) ELT 457 (Tri.)] 33. CCE Vs Star Steels [2015 (315) ELT 495 (All.)] 34. Mahendra Steel Industries Vs CCE [2016 (339) ELT 623 (Tri.)] 35. Kuber Tobacco Products Ltd. Vs CCE [2013 (290) ELT 545 (Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said search admitted that the recovered documents belonged to thecompany and that that they pertain to the production, sale, debtor, creditors of the company, that these documents were authored by Sh. Dinesh Goswami and Sh. Chirag Sharma, Purchase Officer. 15.4. Sh. Rakesh Bhatnagar, GM admitted the alleged clandestine sales/clearances arrived by officers at on the basis of recovered documents and paid ₹ 80,00,000/- vide Cheque dtd. 28.09.2011 against recoverable duty of ₹ 1,10, 25,351/- for the months of April, 2011, May, 2011 and June, 2011. He also paid ₹ 30,25,351/- vide Cheque dated 05.10.2011. Sh. Bhatnagar also paid Rs,10,49,669/- in lieu duty evaded on clearances in March, 2011. 15.5. The whole case is based on the unaccounted production and clearances as also on consumption of electricity. The corroborative evidences are in the form of documents computer print outs, loose papers (Kacchi Parchi), slip pads recovered from the factory and its guest house and admissions by the stake holders. The officers of the company could not explain the reason for shortage and accepted the same and later on paid tax as calculated by Revenue. Sh. Rakesh Bhatna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation here. Some more citations favoring Revenue: Bajrang Petrolchemicals (P) Ltd. Vs. CCE, Kanpur [ 2015 (317) ELT 243 All]. Collector Vs. D. Bhoormal [1983 (13) ELT 1546 SC] Shiv Shakti Steel Tubes Vs. Commissioner [2008 (227) ELT A 122 (SC)] Fathima Panels Vs. CCE, Mangalore [2014 (213) ELT 641 (Tri. Bangalore) 16. In rejoinder the learned advocate submitted that the judgement in Shiv Shakti Steel Tubes stands distinguished by the Hon ble High Court in the case of CCE Vs Saron Mechanical Works Pvt. Ltd. reported in 2016 (332) ELT 80 (P H). He also submitted that law laid down in Bajrang Petro Chemicals (P) Ltd., case is no more a good law in view of contrary judgement of the same High Court in the case of Continental Cement Company Vs UOI reported in 2014 (309) ELT 411 (All.). 17. Heard both sides and perused the records. In this case the demand of duty is on the basis of allegation of clandestine removal of excisable goods without payment of duty. Such allegation has been levelled against the appellant company primarily on the basis of shortage in the stock of finished goods detected by the officers, comparison of figures in computer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the statement recorded by the officers and we find no mention of the method of physical verification. Nor any calculation chart is made part of panchnama. Thus, we agree with the appellant that verification of stock was by eye estimation only. More over there is no dispute to the fact stated by the appellant company in their reply, that the shortage in case of MS Ingots was 3.24 % and that of TMT bars was 1.4 % of the total production. Such difference in quantity is normal in case of eye estimation of the stock. Therefore, we hold that the allegation of clandestine removal on the basis of the so called shortage in stock of final products is un-sustainable and demand in this regard is fit to be set aside. (ii) Demand based on figures/data in computer printout/loose slips The computer printout and loose slips relied upon by the department for alleging clandestine removal had been recovered from the guest house and from factory premises also. As regards computer printouts, there is nothing on record to suggest the manner in which such printouts were taken. There is also nothing on record to suggest fulfillment of the conditions stipulated in section 36 B of the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t period by the person having lawful control over the use of the computer; (b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement of the kind from which the information so contained is derived; (c) throughout the material part of the said period, the computer was operation properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of the contents; and (d) the information contained in the statement reproduced or is derived from information supplied to the computer in the ordinary course of the said activities. 19. Ld. Sr. Counsel has argued that the above mentioned conditions were not fulfilled. The computer was not shown to have been used regularly to store or process information for the purposes of any activities regularly carried on by the company. It was also not shown that information of the kind contained in the computer print-out was regularly supplied by the Company to the computer of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. In view of the above orders, there can be no doubt that computer printout can be taken in evidence only if the parameters stipulated in section 35 B (2) of the Central Excise Act 1944 are fulfilled. In the present case, we are unable to find any evidence on record to show that the parameters have been fulfilled. In addition there is no corroborative evidence to prove correctness of the data/figure in the computer printout. Under the circumstances, we are of the view that it is not proper to take computer printout in evidence in the present case for holding appellant company guilty of suppression of production and clandestine removal of goods. 22. As regard demand on the basis of figures in the loose slips, it is admitted that the loose slips were found in the guest house and not in the factory premises. On perusal of the panchnama at page 77 of the appeal memo, it is observed that the place from which such loose slips were recovered is not stated therein. The author/scribe of the said loose slips is not identified. The loose slips are therefore unauthenticated and it is hard to place reliance on such unauthenticated piece of documents recovered from a place other than factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT A108 (S.C) by way of dismissal of SLP filed by the department against the said judgment of Hon ble Allahabad High Court. Thus the issue is finally settled in favour of the assessee. The learned Commissioner has not taken cognizance of the Hon ble Allahabad High Court judgment and has erroneously distinguished this Tribunal s order in the case of R.A. Casting Ltd. [Supra]. As a matter of fact, the demand in this case is also based on theoretical calculation taking into account the unauthenticated and uncorroborated figures of production as actual production. Once the allegation of suppression of production and clandestine removal of alleged unaccounted production is proved to be incorrect, the production calculated on the basis of such production figure must be treated as in correct and wrong. Under the circumstances demand of duty on the basis of average production calculated as per consumption of electricity is unsustainable. 24. Before concluding our observations as regard allegation of clandestine removal in the present case, we find that the impugned order is vitiated for not allowing cross examination of the witness of Revenue, as required u/s 9D of the Act. It have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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