TMI Blog2019 (4) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... ier’s end in spite of having complete address with them. The Hon’ble Tribunal in the case of Central Cables Ltd. Vs. CCE, Nagpur [2011 (1) TMI 1011 - CESTAT, MUMBAI] held that stock taking by Revenue officers not considering inputs for manufacture and clearance not entered in statutory records before the stock taking. In this case, though the assessee failed to explain the shortage during the visit of Revenue officers, but they did not admit the same and submitted all information along with reconciliation statement. In absence of corroborative evidence, allegation of clandestine removal was not sustainable assessee was only liable for non-maintenance of statutory record. The allegation of clandestine removal is very serious charge and required to be proved with a tangible evidence and supported by corroborative facts - in the present case, Revenue has failed to conduct the investigation in a full proof manner so as to sustain charge against appellant. Demand not sustainable - appeal allowed - decided in favor of appellant. - Appeal No. E/75654/2015-DB, E/75653/2015 - FO/A/75023-75024/2019 - Dated:- 2-1-2019 - Mr. P.K. Choudhary, Member (Judicial) And Mr. Bijay Kumar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also the various inputs as indicated above. The show cause notice culminated into the impugned order, which is under challenge in the proceeding in this proceeding. 4. Ld. Advocate on behalf of the appellant submits that during the search and the process of investigation all the record were resumed and perused by the departmental officer and statements of the key persons were also recorded by the department. However, no evidence whatsoever were collected regarding clearance of the finished goods as well as input, alleged to have been found short at the time of joint stock taking. It is also submitted that such a huge amount of shortage of inputs and raw material and the conclusion thereafter that the same has been removed without payment of appropriate Central Excise duty required large number of rounds of trucks for the transportation. The department has not laid any evidence about such movement of finished goods/input alleged to have been clandestinely removed without payment of duty. No documents relating to transportation of alleged finished goods/raw material from the factory was found to be removed to any of the buyer. During the investigation, department has got the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, the details thereof could be obtained from the Authorised Representative. He also submitted that the stock entry of the raw material and finished goods in their books of accounts are entered on the basis of eye estimation and therefore, there could be reason of the variation in the stock of inputs and finished goods. Thus, he never accepted. 7. It was also submitted by the ld. Advocate that the adjudicating authority failed to appreciate that in the present case, there is no evidence regarding : (i) About clearance or sale of transportation of extra quantity of raw material; (ii) About receipt of price for any extra quantity; (iii) About any buyer having received any extra quantity; (iv) No extra quantity of finished goods or raw material was found at the factory or any other place; (v) There was no seizure of goods. (vi) The appellant was never found clearing any goods without Central Excise invoice in a clandestine manner. 8. Further ld. Advocate submits that the ld. Adjudicating authority has failed to appreciate that the allegation of clandestine removal of finished goods and raw materials are purely based on the assumption and presumption and sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident from the adjudication order that the Commissioner has presumed the clandestine removal of the shortage found on the basis of a statements of authorised signatory and Director of the appellant noticee. However, the Commissioner has failed to appreciate that none of these two authorities have accepted the clandestine clearance of finished goods or raw material but for the alleged shortage. 12. Ld. Adjudicating authority also failed to appreciate that the appellant has taken the credit on the service tax paid on the goods transport agency services on the basis of reverse charge which were used in relation to manufacture of final goods. The department has adduced no evidence whatsoever to allege that the said inputs were not used in relation to manufacture of finished product. In the last, it was submitted that along with a reply the appellant has submitted a large number of cases in support of the claim that no clandestine removal of the finished/raw materials who were undertaken. However, none of these decisions were considered by the ld. Adjudicating authority. These cases are reproduced as under : (1) Sarin Sarin Ors. Vs. CCE 2014 (202) ECR 163 (T); (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andestine removal of finished goods and cenvatable input. 15. Ld. AR also submits that the ld. Adjudicating authority has rightly relied upon the decision of Columbia Electronics Vs. CCE - 2002 (143) ELT 635 16. Ld. AR also submitted the following case law: (i) Decision of Hon ble High Court in the case of Bajrang Petro Chemicals (P) Ltd. Vs. CCE, Kanpur- 2015 (317) ELT 243, wherein it is held that huge shortage of finished goods for which no explanation was offered by the appellant at the time of stock taking and accordingly the appellant admitted that the goods found short has been removed without payment of duty. Clandestine removal are not required to be explained. (ii) Further, ld. AR also relied upon the decision of Shivam Smelters Pvt. Ltd. Vs. CCE - 2015 (325) ELT 362 (T). (iii) Usman Suleiman Darvesh Vs. CCE - 2017 (358) ELT 1014, wherein it is held that in case of clandestine removal pre-ponderance of probabilities are required. Relying on the apex court decision in the case of CC Vs. D. Bhoormull - 1983 (13) ELT 1546 (SC), wherein it is held that law does not require prosecution to prove impossible but requires establishment of such dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. Vs. CCE, Daman, Vapi 2009 (246) ELT 191 (Tri.-Ahmd.) it is held that a shortage of one of the material and the Director admitting manufacture using said input and clearance of final product. Para 6 of the order is reproduced as under : 6. I find in the instant case that, apart from the disputed shortage detected by the officers in one of the raw materials (other being in accordance with the recorded balance in the statutory records) and the statement of the Director, there is no independent evidence available on the record, indicating any clandestine manufacture and removal of final products. As such, by extending the benefit of doubt to the appellants, I set aside the impugned order and allow all the two appeals with consequential relief to the appellants. The decision of Hon ble Tribunal was upheld by Hon ble High Court of Gujarat in the case of CCE, Cus. Ser. Tax, Daman Vs. Nissan thermoware P. Ltd. 2011 (266) ELT 45 (Guj.): In this appeal under Section 35G of the Central Excise Act, 1944 (the Act), the Commissioner, Central Excise, Customs and Service Tax, Daman has challenged order dated 25th March, 2009 [ 2009 (246) E.L.T. 191 (Tribunal)] made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stine manufacture and removal of final products. On behalf of the revenue, except for placing reliance upon the statement of the Director recorded during the course of the search proceedings, no evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error in giving benefit of doubt to the assessee 9. In the circumstances, there being no infirmity in the impugned order of the Tribunal, the same does not give rise to any question of law so as to warrant interference. The appeal is, therefore, dismissed. In the case of M/s Sakeen Alloys Pvt. Ltd. Vs. CCE, Ahmedabad 2013 (196) ELT 392 (Tri.-Ahmd.), in para 9 and 11, it is held as under 9. It is observed from the case records that in the present proceedings, there are few confessional statements of the persons which were later retracted by the persons concerned. The confessional statements subsequently retracted can be argued to be an afterthought under a proper legal advice but to observe the principles of natural jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er place. As per the Panchnama drawn at the factory premises it is shown that there was no excess/shortage of the raw materials or finished goods found. The documentary evidences collected from the business premises of M/s. Sunrise Enterprise and the statements recorded by investigation, can at the most raise a reasonable doubt that some clandestine removal activities are undertaken by the appellant. However, such a suspicion or doubt has to be strengthened by positive evidences which seem to be lacking in this case. Any suspicion whosoever cannot take the place of evidence regarding clandestine removal of excisable goods. Moreover, after having positive evidences, quantification of duty on clandestinely removed goods also becomes essential. As already mentioned above, the stock lying in the stock yard of M/s. Sunrise Enterprise, Mehsana was found containing the goods received from M/s. Sakeen Alloys Pvt. Limited under proper invoices. When the goods received under proper invoices are found in the stock yard of M/s. Sunrise Enterprise, then it is possible that out of such goods certain quantities were sold to various customers by accepting payment in cash. In such a situation, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts properly by the appellants, the penalty under Rule 27 of the Central Excise Rules, 2002 is confirmed to the tune of ₹ 5,000/-, otherwise the appeals of the appellants are allowed as discussed here-in-above. In the case of RHL Profiles Ltd. Vs. CCE, Kanpur 2013 (298) ELT 552(Tri.-Del.), this Bench of this Tribunal held that the demand cannot be made only on account of shortage of some of the inputs. The relevant para is reproduced as under : 6. In the present case, as there is no dispute that shortage arrived at by counting size wise of goods and by taking average weight of one of each category. The Tribunal in above decisions relied upon by appellant held that the demand cannot be made on the quantities found short which was arrived at on average weight. Further, in the case of shortage of input, in the absence of any evidence on record to show that the same was used in the manufacture of finished goods and cleared without payment of duty, the demand cannot be made on these goods. 7. In view of confiscation of amount of ₹ 8.30 lakhs, I find that same has been confiscated on the ground that the same is sale proceeds as clandestinely removed g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For establishing such a charge either direct physical evidence by way of seizure of goods or document was required or there must be sufficient circumstantial evidence to show preponderance of probability. 20. We further observe that in view of the Explosives Act and the contracts, the goods are required to be manufactured according to prescribed specification and the process of manufacture is itself subject to inspection. We note that the cylinders can be issued only after tests and inspection records regarding receipt and issue of valves and ISI certificates were also required to be maintained. We find that a co-relation between serial numbers and these documents was possible, as accepted by both the sides. We therefore consider that it was open to the department to have probed these aspects in order to ascertain the facts. 21. As this has not been done by the authorities and both the sides have submitted that it could be even now done, the orders of the lower authorities are set aside and the matter is remanded to the Asstt. Collector with the directions that he should allow an opportunity to the appellants to submit evidence in support of their contention and show, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L.T. 411(All.) wherein it was held that clandestine removal is required to be proved by clinching evidence in the nature of purchase of raw materials, use of electricity, sale of final products, transportation, the mode and flow back of funds. Such charge being a serious charge is required to be proved by Revenue by tangible and sufficient evidences and mere statements of some of the buyers (which were available in that case, whereas there is none in the present case) given on the basis of their memory are insufficient without support of any documentary evidences. Reference was also made to various other decisions which for the sake of ready reference are reproduced below:- 1. M/s Continental Cement Company V/s Union of India reported as 2014 (309) E.L.T. 411(All.) 2 Commissioner of Central Excise, Ludhiana V/s Renny Steel Castings (P) Ltd. reported as 2013 (288) E.L.T. 45 (P H). 17. Similarly in the case of M/s Popular Paints and Chemicals and others V/s Commissioner of Central Excise and Customs vide its Final Order No.52716-52718/2018 dated 06.08.2018, the Tribunal lead down the various points required to be referred to for establishing clandestine removal. For better ..... X X X X Extracts X X X X X X X X Extracts X X X X
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