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2019 (4) TMI 931

d goods were seized for want of production of finished goods records, despite the admitted fact that the said records were under resumption by the search team. On perusal and comparing the physical balance of finished goods stocks with the recorded balances in the resumed manually prepared and also soft copies of stocks registers, we do not find any variation - the order justifying the confiscation of the finished goods is not consistent with the facts on records and against the provisions of law. Discrepancy in the raw-material stock - HELD THAT:- To arrive at the total quantity and value of procured raw materials, the Revenue had erroneously resorted to double accounting of details of some consignments of raw materials received from two parallel sources, the manufacturing company and its dealer. The data supplied by manufacturer also included the purchases through its dealer. This has resulted in artificial escalation in value of raw material to ₹ 5,06,46,859/- instead of correct amount of ₹ 3,09,08,423/- there is no force in the findings of procurement and receipt of unaccounted or additional raw materials and use thereof in clandestine manufacture of the finished .....

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ant. - Excise Appeal No. 70816 of 2018 - Final Order No. 70760/2019 - 12-4-2019 - Mr. Anil Choudhary, Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical) Sh. S. K. Pandey, Advocate for the appellant Sh. Rajeev Ranjan, Authorised Representative for the Respondent ORDER Per: Anil Choudhary: The issue in this appeal is whether the appellant has been rightly denied the facility of SSI exemption and further, they have been rightly demanded duty for alleged clandestine manufacture and clearance, duty of ₹ 95,69,074/- including cess, along with equal amount of penalty along with confiscation of seized goods valued at ₹ 37,98,636/- with option to redeem the goods on payment of fine of ₹ 5 lakhs, with further penalty of ₹ 1 lakh on the appellant under Rule 25 of Central Excise Rules. 2. The brief facts are that the appellant is engaged in the manufacture of PP disposable glasses since December, 2009. They also have another unit of rice-mill. They were availing SSI exemption and were not registered with the Department. The premises of the appellant was inspected/searched on 24th July, 2012 including their office premises. The following premises were sea .....

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s) C.Ex. duty demandable (including cess) (1) (2) (3) (4) (5) (6) (7) 2009-10 31.12.09 to 31.03.10 79,73,455 150,00,000 NIL - NIL 2010-11 01.04.10 to 31.10.10 93,42,171 150,00,000 176,06,047 10.30% 18,13,423 01.11.10 to 31.03.11 232,63,876 2011-12 01.04.11 to 16.03.12 552,61,568 150,00,000 40261568 10.30% 4146942 17.03.12 to 31.03.12 34,41,858 3441858 12.36 425414 2012-13 01.04.12 to 22.07.12 257,54,817 0 25754817 12.36% 31,83,295 Grand Total 125037745 - 87064290 - 9569074 3. Further, on the date of search, raw materials /P.P. Granules valued at ₹ 21,82,500/- / packing materials valued at ₹ 3,31,000/- and finished goods valued at ₹ 37,98,636/-, were seized and proposed to be confiscated along with penalty under Rule 25 of the CER, vide separate show cause notice dated 16.1.2013 and duty demand along with penalty was raised vide show cause notice dt. 1.5.2015. 4. Both the show cause notices were adjudicated on contest by common order-in-original and the proposed demand was confirmed, as well as confiscation along with penalties. Penalty was also imposed under Rule 26 on the partner - Shri Bal Krishna Omer. 5. Being aggrieved, the appellant had filed appeal before t .....

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eep Plastic, Delhi; M/s Standard Surfactants, Kanpur; M/s K. G. Polymers, Kanpur; M/s Rishabh Polypack, Kanpur, M/s Jai Ganesh Packing Ind., Firozabad; M/s Bajrang Packaging Industries, Firozabad and M/s Katyani Paper Products, Kanpur (Total 37 pages); 17. Statement dated 22.01.2013 of Shri Nirmaljeet Singh, Proprietor of M/s Krishna Road Lines, 67-B, Dada Nagar, Kanpur (03 pages); 18. Registrar showing ledger of M/s Krishna Road Lines, 67-B, Dada Nagar, Kanpur in respect of M/s Jai Hanuman Rice Industries, Pukhrayan since January, 2010 (Written from page 1 to 11) (Total 63 pages) 19. Letter C. NO. CM/12-13/371 dated 04.02.2013 of Chief Manager of SBI, Industries Estate Branch, Kanpur enclosing statement of Account n respect of account No. 31035626006 of M/s Jai Hanuman Rice Industies, Pukhrayan for the period from 01.11.2009 to 31.07.2012 (Total 32 pages); 20. Statement dated 21.03.2013 of Shri Bal Krishna Omer, Partner of the party s firm (03 pages); 21. Statement dated 07.10.2013 of Shri Bal Krishna Omer, Partner of the party s firm (03 pages); 22. Details of sales as per resumed loading slips:- Annexure-A(i) - Total 12 pages, Annexure-A(ii) (a) - Total 29 pages; Annexure A(ii) .....

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the period from 01.04.10 to 31.10.10 (iii) Manual Sales Register- For the period from 10.11.10 to 22.07.12(Written upto page 54) 30. Annexure-E - Duty calculation chart 31. (i) Declaration for the year 2010-11 filed by the party on 11.04.2011 with Central Excise Division-II, Kanpur; (ii) Declaration for the year 2011-12 filed by the party on 13.04.2012 with Central Excise Division-II, Kanpur 7. Heard both the learned Advocates Shri S. K. Pandey appearing on behalf of the appellant and the learned DR Shri Rajeev Ranjan, Additional Commissioner, for Revenue. 8. As regards to order of confiscation of finished goods valued at ₹ 37,98,636/-, it is noticed that the same were seized for want of production of finished goods records, despite the admitted fact that the said records were under resumption by the search team. On perusal and comparing the physical balance of finished goods stocks with the recorded balances in the resumed manually prepared and also soft copies of stocks registers, we do not find any variation. This fact is also discernible from the following table: Sl. No. Description of goods Qty. found as per physical verification found by the officers (in cartons) Qty. .....

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t the appellant s annual turnover, during 2012-13 (upto 24.07.2012) was ₹ 1,28,45,923/- and thus they were eligible for SSI exemption till the date of search. Under the circumstances, we further hold that, the appellant were not required to discharge duty. 11. We also agree to the contention of learned Advocate of the appellant that in view of the decisions in the case of Gujarat Agro Chem Ltd. vs. CCE, Surat [2012 (280) ELT 435 (Tri. Ahmd.) and Dodsal Pvt. Ltd. vs. CCE {2006 (193) ELT 518] that the debit of duty and statements at the time of visit of Revenue Officer, without there being corroborative evidence to reflect upon the clandestine removal, is not sufficient for holding against the assessee. Therefore, the pre-deposit of ₹ 20 lakhs by the appellant was inconsequential to establish case as alleged against them, under the facts and circumstances of the case. 12.0 The next issue for consideration is of rejection of the request of Cross-examination on the ground that the appellant s request appeared more like a ploy to protract the proceedings and is nothing but a dilatory tactic, by making sweeping observations that the documents clearly proved the case of the de .....

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misplaced. Hon ble Allahabad High Court in the case of CCE, Meerut vs. Parmarth Iron Pvt. Ltd. [2010 (260) ELT 514 (Alld.) have held- Evidence -Cross-examination - Revenue if chooses not to examine any witnesses in adjudication, their statements are not considerable as evidence - Statements if relied, then persons whose statements relied upon have to be made available for cross-examination for evidence to be considered. 12.4 We are, therefore, constrained to hold that the impugned order denying request for cross-examination, is clearly in violation of principles of natural justice and as a consequence, the relied upon statements and the records referred therein have to be eschewed from the proceedings. 13. Coming to the other issue of interrogation/ cross-examination of the known authors of Sale Enquiry/ Loading slips and the Sale registers, Ledgers, Cash Book, Bank Book documents, namely S/Shri Ramchandra and Umang Kumar, both employees of the appellant. The learned Advocate pointed out that Shri Umang Kumar had voluntarily made determinative disclosure through written communication dated 11.10.2013, addressed to the Investigator / Supdt. With a copy to the appellant (Annexure -9 .....

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ed order, the first Appellate Authority had maintained the confirmation of demand. The findings are based on the conception that there was evidence of out of books/ unaccounted purchases of raw material and clandestine manufacture. Besides that the details recorded in all the resumed Loading/ Enquiry Slips and manually prepared Sale registers and ledgers, authored by one Shri Ramchandra and Shri Umang Kumar respectively represented actual, and that the copies of some GR s which have no origin and a Freight Register obtained from Shri Nirmaljeet Singh under his statement recorded on 22.01.2013, further supports the clandestine clearances, The Court below have also drawn support from the retracted statements of Shri Bal Krishna Omer, Partner of the appellant, to claim that all the Loading/ Enquiry Slips were prepared for sale and the sale values shown in the loading slips and ledger were correct. 15. The learned Advocate, countering the findings, demonstrated that the actual sales are represented by invoices only and that the Enquiry/ Loading Slips are unconfirmed offer to sale / purchase. That only few of those Loading/ Enquiry Slips are transformed into potential sales, which after .....

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however observe that the appellant had conducted verification at the end of buyers through the annual reconciliation of accounts, with most of them, including the aforesaid seven buyers. The reconciliation of accounts did not reveal any discrepancy, thereby demolishing the authenticity and reliance of the Loading/ Enquiry Slips as document of clearance of goods. 20. We also agree with the contention of the learned Advocate that the Enquiry/ Loading Slips being order booking documents cannot form basis of confirmation of demand. The finished product of appellant, being manufactured by several persons, there is cut throat competition in the market. 21. We have also glanced through letter dated 11.10.2013 of Shri Umang Kumar, (to the Supdt. (Prev.), to notice his reasoned denial of linkage of entries in sale register and party ledgers with the appellant s activities (page 356-357 of the appeal paper book). We also notice that the entries in party ledgers, are all supported by backup documents like resumed cash book etc. in as much as the entries of receipt of cash as reflected in the Cash Book, did not tally with those shown in the party ledger. 22. In light of the aforesaid facts on .....

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d on the impugned order. We having decided against the credibility of Sale Enquiry/ loading slips, sale register and party ledgers, the statement of Sh. Bal Krishna Omar, Partner of the appellant is inconsequential. That even otherwise mere reliance on incredible Sale Enquiry/ loading slips sale register and party ledgers or statements, cannot justify a finding of clandestine manufacture and/ or clearance. 26. After considering the documents referred by the learned Advocate and submissions made by him we are of the considered view that under the facts and circumstances the said documents adduced by the Revenue are not credible and inadmissible as evidence to substantiate the charges of clandestine manufacture and removal. 27. Learned Advocate further urged that the charge of clandestine removal is required to be proved beyond doubt by the revenue and that entries in private records at the most, may raise a doubt, but that cannot take the place of proof. In support reliance was placed on decisions in the case of Sharma Chemicals v. CCE, Kolkatta-II [2001 (130) ELT 271 (T) and CCE Trichy vs. Ravishanker Industries -2002 (150) ELT 1317 (Tri.). 28. We further find that the Revenue have .....

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