TMI Blog2019 (7) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... ance. If these were recorded, they will no longer be clandestine. By their very nature, unrecorded production and clearance of goods can only be found based on evidence gathered during investigation such as stock taking, private records, private notebooks, statements of persons concerned, their examination and cross-examination which will lead to conclusion whether there was a clandestine removal of goods and if so, to what extent. Private note books seized from the factory under panchanama during the course of investigation and their analysis, as supported by the statements of various persons in the factory, form a fairly sound basis for demanding duty on such clearance. These statements can be supported by the statements of alleged recipients of the clandestinely removed goods. Such statements were recorded in this case. After a gap of eight years, during cross-examination, four of them have retracted their statements. However, this can, at best, be said to be an afterthought. Any person who makes statement under duress or coercion will, at the earliest opportunity, retract the statement so made. The conduct of these persons does not instil confidence that they have not volunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes to ₹ 28,567/-. Further, they conducted detailed investigation and recorded statements of various persons and seized private records which showed removal of goods without showing them in the Central Excise records and paying Central Excise duty. After analysing all these records, they issued a Show Cause Notice OR No. 54/99-Adjn. dated 10.04.2000 demanding the following duty from VCL. Annexure Product Quantity (MT) Period Duty A SBML 33.555 4/1997 to 6/1998 2,16,007 B SB as YSS 59.5 7/1997 to 6/1998 3,87,351 C SB as BCS 12.95 SB 12.5 of BCS 3, 9 10/1997 1,36,750 D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) Imposed a penalty equal to the amount of duty under section 11AC upon M/s VCL. c) Imposed penalty of ₹ 10,00,000/- under Rule 173Q upon M/s VCL. d) Imposed penalty of ₹ 1,00,000/- under Rule 209A on Shri CH. Krishna Murthy, Managing Director of M/s VCL. e) Imposed penalty of ₹ 10,000/- on Shri Murali Krishna, Marketing Manager of M/s VCL. f) Imposed penalty of ₹ 5,000/- on Shri M.V. Ramana Murthy, Central Excise Incharge of M/s VCL. 5. Aggrieved by this impugned order the present appeals have been filed by M/s VCL, Shri M.V. Ramana Murthy and Shri CH. Krishna Murthy. Learned Consultant for the appellants takes the bench through the chronology of events and summary of demands raised. He submits that the SCN has raised a demand of ₹ 28,567/- on shortage of SBML found during the stock taking as recorded in the panchanama. He submits that the remaining amount of the demand is based on the analysis of various documents which have been summarized in Annexures A to E attached to the SCN. These are as follows. 1) Annexure-A - the details of SBML cleared in excess over the invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment and various notes and other records recovered from the factory by the departmental officers. These have been collated into five annexures to the SCN as indicated above. When questioned, the company officers have confirmed in their statements that the clearances in Annexure-A, B C were unrecorded clearanes. These statements have not been retracted by the officers of the company so far. However, as far as Annexure-D and E are concerned, he argued that Annexure-D is based on the difference between RG-1 quantity and the quantity recorded in a private note book maintained in the factory and the differential duty has been demanded. On this issue, he submits that even if it is presumed that there was excess production which was not shown in the RG-1, there is no evidence that goods so manufactured have been removed and in the absence of evidence of removal the demand does not sustain. He, further, argues that this demand of goods based on the presumption that there was excess unrecorded production, must be set off against any alleged unrecorded clearances in Annexure-A, B C. The logic for this is simple. If there is allegation that there was unrecorded clearance of goods, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e differences noticed in these documents and statutory documents such as RG-1 returns and invoices. Further, the Chartered Engineer s report submitted by the appellant was also considered by the adjudicating authority and a detailed perusal of the said report was made in Para 7.5 of the OIO. The efficiency of the plant at 92.5% was also taken into consideration while arriving at the different products manufactured by the assessee. Even after taking the Chartered Engineer s certificate into account, there were still differences between the production particulars and the records in RG-1 which could not be explained by the assessee and hence the demands were confirmed. He would submit that production figures were reckoned by taking the molecular weights of the raw materials and final products through stoichiometric calculations. These calculations show what should be the production based on pure chemical equations. The actual production would be less depending upon the efficiency of the plant which factory has been brought out by the Chartered Engineer whose certificate was produced by the appellants themselves. Accordingly, the difference in production was worked out and the duty has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.9.98 and 12.12.98 of Shri Kamleshbhai Manibhai Patel, Partner M/s Rubi Red (I), Vapi. xix. A Notebook recovered vide Sl.No.5 of the Panchanama dt.16.6.98 drawn at the factory premises. xx. Scribbling pads in 11 Nos. recovered vide Sl.No.38 to 48 of the Annexure to the Panchanama dt.16.6.98 drawn at the Regd./Admn. Office of M/s Vishnu Chemicals Pvt Ltd, Hyderabad. xxi. Files recovered vide Sl.No. 4, 8 10 of the Annexure to the Panchanama dt.16.6.98 drawn at the Regd./Admn. Office, M/s Vishnu Chemicals Pvt Ltd, Hyderabad. xxii. Made up file recovered vide Sl.No.6 of the Annexure to the Panchanama dt.16.6.98 drawn at the factory premises. xxiii. RG-1 registers for the period 1196-97, 1997-98 1198-99. xxiv. Invoices raised during the relevant period. 9. As can be seen, the demand was raised based on the Panchanama, statements and the private records seized from the premises of the appellant as well as statements of the alleged buyers of the clandestinely removed products. All these have been summarized into Annexures-A to E enclosed to the SCN giving cross reference to Pg.N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learance. These statements can be supported by the statements of alleged recipients of the clandestinely removed goods. Such statements were recorded in this case. After a gap of eight years, during cross-examination, four of them have retracted their statements. However, this can, at best, be said to be an afterthought. Any person who makes statement under duress or coercion will, at the earliest opportunity, retract the statement so made. The conduct of these persons does not instil confidence that they have not voluntarily given the statements. Nevertheless, even if the statements of the alleged recipients are ignored, as far as Annexure-A, B C are concerned, the statements of the factory employees themselves also support the evidence of clandestine removal of the goods. Therefore, the demand to that extent needs to be sustained. 12. As far as the alleged clandestine production of goods is concerned, this is listed in Annexure-D and E of the SCN. Annexure-D deals with the differential production arrived at from the differences between the RG-1 and the private notebooks also seized from the factory of the manufacturer. Learned Counsel for the appellants submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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