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2019 (5) TMI 1015

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..... and clearance of the goods, therefore, the impugned demand is not sustainable in the absence of any evidence. Demand set aside - penalty also set aside - appeal allowed - decided in favor of appellant. - Excise Appeal No. 60344-60347 of 2019 - Final Order No. 60477-60480/2019 - Dated:- 15-5-2019 - Shri Ashok Jindal, Member (Judicial) And Shri C.L. Mahar, Member (Technical) Dr. Seema Jain, Shri A. Kumar, Advocates and Shri R.K. Yadav, Consultant - for the appellants. Shri Tarun Kumar, Authorized Representative (DR) - for the Respondent. C L MAHAR :- The appellants are in appeal against the impugned order. 2. The facts of the case are that an intelligence was received that M/s Som Sugandh Industries Ltd. (hereinafter referred to as M/s Som) was evading Central Excise duty by way of suppression of production and clandestine removal of their finished goods. The information also indicated that the documents evidencing suppressed production and clandestine clearances were secreted at the residence of one Shri Manoj Rajouria located at 525, village, Kundli, Sonepat. Searches were conducted simultaneously at the factory premises of M/s Som and at the residence of Shri Manoj Rajouria on 20 .....

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..... med demand the demand of duty of ₹ 8,25,00,000/- against M/s Som which was to be paid alongwith interest and imposed penalty of ₹ 8,28,45,474/- under Rule 25 and various penalties on the co-appellants. Aggrieved with the said order, M/s Som and its directors and authorized signatory filed appeal before this Tribunal. The said matter was remanded back by this Tribunal vide order dated 08/11/2016 with certain directions. In remand proceedings, impugned order has been passed as under :- 1. I confirm the demand for Central Excise duty of ₹ 13,41,65,685/- (Rupees Thirteen Crore Forty One Lakhs Sixty Five Thousand Six Hundred Eighty Five only) under first proviso to Section 11A (1) of the Central Excise Act, 1944, readwith Section 174 (2) of CGST Act, 2017 against M/s Som Sugandh Industries Limited, Sonepat. I order for appropriation and adjustment of an amount of ₹ 8.00 crores already voluntarily paid by them against this demand of duty. 2. I confirm the recovery of interest on (1) above payable from due date of payment to the actual date of payment at the rate prescribed under notification issued from time to time under Section 11AB of the Central Excise Act, 19 .....

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..... 2007 and 15/10/2007 and each time 4 to 4.5 tonnes of supari was transported. He stated that Shri Gyan Chand Sharma used to book vehicle telephonically wherein he stated that he did not issue any transport document and he received payment in cash and he does not maintain any record. On being asked, he specified the dates on which supari was transported by him. He is stated on the basis of money which driver gave him after delivery of goods he also stated that he did not know anyone from M/s Som, therefore, the statement of Shri Pitamber Sharma cannot be relied upon and he is only the owner of the vehicle, the vehicles were driven by the drivers, and no statement of driver who allegedly transported the supari to M/s Som was recorded. Also no employee/director of appellant was confronted with the statement of Shri Pitamber Sharma. It is her submission that to manufacture Gutkha/pan masala apart from supari other ingredients i.e. tobacco, katha, lime, flavours, masala etc. are required and no evidence has been produced with regard to procurement of other materials/packing materials. 5. During the course of investigation, statement of Shri Satish Seth dated 13/11/2007 was recorded and w .....

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..... he statement of Shri Satish Seth, transporters were also relied upon by the Adjudicating Authority in the impugned order and the same are the basis of confirmation of demand against the appellants, therefore, demand has rightly was confirmed against the appellants, penalties were also correctly imposed on the appellants. 9. Heard the parties, considered the submissions. 10. On careful consideration submissions made by both sides, we find that in this case, the impugned order has been passed in the remand proceedings on the directions of this Tribunal vide final order No. 61619-61623 of 2016 dated 08/11/2016. 11. In this case after remand proceedings, the appellant filed an application for refund of the amount paid during the course of investigation and the said refund claims have been rejected. Against that order also, the appellant approach this Tribunal and this Tribunal has directed to Revenue to refund the amount paid during the course of investigation as there is no demand is pending against the appellant. The said order was challenged by the Revenue before the Hon ble High Court of Punjab & Haryana and the Hon ble High Court of Punjab & Haryana asked the Revenue to fi .....

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..... evidence. Therefore, the duty cannot be demanded on the basis of the documents recovered from Shri Manoj Rajouria and the documents recovered from Shri Manoj Rajouria cannot be taken as evidence . 14. Further this Tribunal observed as :- 26. The charts have been prepared for dispatch as per resumed documents and actual production through the railways and various transporters . and on going through those documents, we find that the entries do not correspond with each other as the documents recovered from the premises of Shri Manoj Rajouria has date-wise of dispatch through various railway stations and various transporters. The department procured. PWB s from the railway station during the said period showing transport of gutkha through railways. On comparison of railways receipts and the resumed documents it is clear that there is no record of transport of goods through railways to many destinations mentioned in dispatch slips. Moreover, the department has clubbed together several railway receipts, sometimes of different dates to correspond with the quantity of Gutkha shown as transported in the resumed documents. It is not correct as there are several gutkha manufacturers in and a .....

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..... to the Adjudicating Authority while remanding the matter by this Tribunal there was a clear cut finding that the duty cannot be demanded on the basis of document recovered from Shri Manoj Rajouria and the statement of Shri Manoj Rajouria recorded under Section 14 of the Act. But in the impugned order, the learned Adjudicating Authority has made basis the documents recovered from Shri Manoj Rajouria and statement of Shri Manoj Rajouria recorded under Section 14 of the Central Excise Act, 1944 was relied but no reliance has been placed by the Adjudicating Authority of cross examination of Shri Manoj Rajouria. The statement of Shri Manoj Rajouria recorded during the course of investigation cannot be relied as he stated that due to enmity with M/s Som, and its Directors, he fabricated these documents. As a person from whose custody the documents were recovered which are the basis to allege clandestine manufacture and clearance of goods by the appellants have been fabricated and the said person has admitted that he has fabricated these fake documents, therefore, how can be these documents can be the basis to rely and alleged clandestine manufacture and clearance of the goods by the app .....

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..... e said order of this Tribunal has attained finality as the same has not been challenged by the Revenue before any higher forum. 20. It is settled principal that no demand can be confirmed on the basis of third party evidences as has been the case in the impugned order. This Tribunal in following decision has categorically held that the third party record can be the sole evidence to confirm the evasion of central excise duty. (i) In case of M/s Jai Mata Industries Ltd. vs. Commissioner of Central Excise, Rohtak reported in 2013 (293) E.L.T. 539 (Tri. - Del.). The relevant extract of the decision is reproduced here below :- 5. We have considered the submissions from both the sides and perused the records. The point of dispute in this case is as to whether during the period of dispute the cotton yarn cleared to Laxmi Trading Company/M/s. Laxmi Industries was in cone form only, which is not exempt from duty or whether the same was in form of plain reel hanks which is fully exempt from duty under Notification No. 8/96-C.E. The department s allegation is that this yarn was in cone form and not in form of plain reel hanks and this allegation is purely based on the documents recovered from .....

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..... Delhi, the enquiry further down the line was not considered necessary. The onus of proof that the goods were removed by the Appellants without payment of duty and without entering the same in their records is upon the Revenue which cannot be discharged merely on the strength of the entries made in the records of a third party without linking the removal of goods from the premises of the Appellant-company. The mere fact that the Appellant-company had business relation with Chitra Traders, does not mean that they will be liable to each and every entry made by Chitra Traders in their books of account. It is also noted that none of the transporters and none of the labourers whose statements have been relied upon by Revenue have mentioned that the goods in question were delivered to Chitra Traders from the premises of the Appellants. The material brought on record may at the most create a doubt only. But doubt cannot take the place of evidence. The Revenue has, thus, not proved its case against the Appellants in respect of 149 consignments. We, therefore, set aside the demand of duty and penalty imposed on Appellant-company and consequently the demand of interest . 21. In view of the ab .....

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