TMI Blog2019 (4) TMI 1334X X X X Extracts X X X X X X X X Extracts X X X X ..... t forthcoming. There is also no cogent evidence about any freight payment for any such movement. There is no cogent evidence of disproportionate and unaccounted receipt and consumption of the basic raw materials and packing material, required for manufacturing alleged quantity of unaccounted finished goods - also, unaccounted production in the factory of the appellant-company has not been established. There is no dispute on the fact that in adjudication proceedings, the charge of clandestine removal and undervaluation is definitely to be established on the basis of preponderance of probabilities. However, it cannot be merely on the basis of presumptions and assumptions - Revenue failed to substantiate the findings recorded in the impugned Order regarding production capacity to persuade us to reject the contention of the appellant that there is failure on the part of respondent to collect any evidence in relation to either procurement of raw materials by the appellant or production of huge quantity of final goods alleged as removed clandestinely to sustain the charge of clandestine removal. Once unaccounted production is not established, even otherwise, there can be no clandes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idya and Manish Sharma in this regard. The statement of Sish Pal Solanki is set out in the show cause notice at page 18 (Q. No. 1 to 11). No exception is taken in the adjudication order to the statement of Mr. Sish Pal Solanki. Therefore, his statement stands accepted by the Department. Another statement was also taken from Mr. Amit Kumar Agarwal on 26th February 2009, in respect of documents seized from Bajrangbali Re-Rollers Pvt. Ltd., wherein he stated that certain documents belonged to Bajrangbali Re-Rollers Pvt. Ltd. Amit Kumar Agarwal retracted the statement made by him on 26th February 2009 on the very next day i.e. 27th February 2009 on which no exception is taken. Therefore, retraction of Mr. Amit Kumar Agarwal stands accepted. The appellant s Director viz. Sis Pal Solanki was also confronted with those documents in which he denied those documents to be related to the appellant company. The question no. 11, 13, 20 of the statement of Mr. Solanki at page 19 and 20 of the show cause notice may be referred to. Statement of Mr. Sish Pal Solanki contradicting the statement of Mr. Baidya and Mr. Manish Kumar and Mr. Amit Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They are not related to the appellant as a customer or otherwise. No enquiry was made in this regard. The case made out in the impugned order is almost improbable inasmuch as no case has been made out on procurement part of raw materials i. e. coal, iron ore, electricity, labour, etc. There is no material on the basis of which it can be said that the goods could have been manufactured by the appellant. Coal purchase, iron ore purchase are regulated by State, and the same stood matched with production and stock. The demand was made on conjecture and surmise. 12.370 M.T. of sponge iron is alleged to be clandestinely manufactured for which 50,000 MT of iron ore and coal would be required and 10,000 trucks would be required for movement of goods. Neither the appellant had any capacity nor any infrastructure to manufacture it. There is no material evidencing movement of goods by transporter or otherwise to the purchaser of sponge iron. No purchaser has been identified. Sponge iron is used by large industries who use it as a input on which they can claim CENVAT Credit. There is no purpose of any clandestine removal for clearance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the show cause notice against Bajrangbali Re-Rollers Pvt. Ltd. on the basis of documents seized from it and a demand of ₹ 4,44,21,924/- was made against the appellant on the basis of seized documents from Bajrangbali Re- Rollers Pvt. Ltd. alleging clandestine removal of goods between January 2008 to 24th February, 2009. The show cause notice of Bajrangbali Re-Rollers Pvt. Ltd. was first adjudicated by the Commissioner, Bhubaneswar upholding the demand without verifying the documents seized. Thereafter an appeal was preferred by Bajrangbali Re-Rollers Pvt. Ltd. to this Tribunal which set aside the order dated 20th July 2016 and remanded the matter to the adjudicating authority to decide after looking into the seized materials. In the readjudication proceeding, the Commissioner found that the documents seized from Bajrangbali Re-Rollers Pvt. Ltd. comprised of several trading documents of other companies including a trading company viz. Bajrangbali Steel Industries Pvt. Ltd. and other Trading units of Mr. Amit Kumar Agarwal. In the adjudication proceeding, when documents were scanned, it was found that out of the demand of about 8649.65 M.T. of the goods alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Maharashtra reported in 1983 (13) ELT-1611 (SC) inter alia held that suspicion however grave cannot take the place of proof. Similarly, in the case of State of Kerala Vs. M. M. Mathew and others reported in 1978 (42) STC-348 (SC) Hon ble Apex Court has held that strong suspicion, strange co-incidences and grave doubts cannot take the place of legal proof. The adjudicating authority further held that no creditable evidence of authenticity of chits has been produced and therefore evidentiary value of chits stand rejected. Paragraph 6.14 of the order is set out herein below: 6.14 In this case the department has not provided any other credible evidence other than hand written chits to support clandestine production and clearance as per the aforesaid laid down principles of the CESTAT, Supra. On the contrary, I found that the Assessee/ Noticee has produced invoices of both their firms namely M/s. Bajrangbali Re- Rollers (P) Ltd. and M/s Bajrangbali Steel Industries (P) Ltd, periodical Returns filed with Central Excise authorities and VAT authorities, bank ledgers, sales ledgers for the relevant period to support their stand that they have cleared the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belonging to the different unknown persons and hence, could not be relied upon. The document seized from BRPL which has been referred to in the order, such as Jyoti Brand Note Book, seized from BRPL, were all found to be not reliable. There documents having been rejected in case of BRPL, could not be used against the appellant. On the basis of the documents seized from the third party, no liability can be fastened on the appellant. The receipt and dispatch of the file no. 06/DGCEI/RRU/BRPL/0/09 had already been rejected by the adjudicating authority as not reliable. Weighment slips were found to be not reliable as not corroborated by any material particular. Weighment slips relied upon were not related to the appellant and it were personal documents of Mr. Amit Kumar Agarwal, relating to his other various businesses, where name of the company was used or the stationary of the company were used. There is no corroboration of weighment slips. Therefore, no inference could have been drawn from any of the documents seized from BRPL. We observe that it would be necessary to analyze whether the evidences, other than the retracted oral evidences, are capable of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finished goods for its clandestine removal from the factory. In the entire notice and the order, there is no satisfactory and reliable independent evidence as regards the unaccounted manufacture and/or receipt of the huge quantities of raw materials. The quantities of the alleged bags dispatched from the factory would require some transportation arrangement for delivery from the factory. However, any reliable evidence about any vehicle coming in or going out of the factory without proper entries is not forthcoming. There is also no cogent evidence about any freight payment for any such movement. We do not find any cogent evidence of disproportionate and unaccounted receipt and consumption of the basic raw materials and packing material, required for manufacturing alleged quantity of unaccounted finished goods. We do not find any tangible proof of unauthorized payment for procuring such unaccounted raw material and packing material. We do not find cogent evidence of disproportionate power consumption, capacity utilization and labour employed, or any cogent evidence of clandestine manufacture of unaccounted quantity alleged as clandestinely removed. We find that unaccou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the documents recovered in search and the activities of the appellants in their factory is required to be proved. However, we find that due to various reasons as recorded above, the Revenue has failed to prove the same. We find that the Revenue failed to substantiate the findings recorded in the impugned Order regarding production capacity to persuade us to reject the contention of the appellant that there is failure on the part of respondent to collect any evidence in relation to either procurement of raw materials by the appellant or production of huge quantity of final goods alleged as removed clandestinely to sustain the charge of clandestine removal. Once unaccounted production is not established, even otherwise, there can be no clandestine removal thereof. Unaccounted removals have in any case not been established on the basis of the evidence available on record. The ratio laid down by the Hon ble Apex Court in Oudh Sugar Mills Ltd. v. Union of India, 1978 (2) E.L.T. J172 (S.C.), is clearly applicable in the peculiar facts of the instant case inasmuch as the demand cannot be sustained without any tangible evidence, based only on inferences invol ..... 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