TMI Blog2019 (8) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... of pen drive data that too containing intermediate product casting, the statements are of no help to revenue. The Revenue could not produce any evidence regarding variation in consumption of electricity nor there is any allegation of disproportionate consumption of electricity - This Tribunal in case of AUM ALUMINUM PVT. LTD. VERSUS COMMISSIONER OF C. EX., VADODARA [ 2012 (4) TMI 557 - CESTAT AHMEDABAD] held that when there is no evidence of clandestine manufacture, clandestine/dis-apropriate/unaccounted purchase/receipt and consumption of raw material and packing material, required for manufacturing alleged quantity of final product clandestinely removed from the factory. The freight payment for any such movement, un authorized payment for procuring unaccounted raw material and packing material, disproportionate power consumption, capacity utilization and labour employed, unaccounted sales proceeds in substantial cash from factory or other premises or any other else in direct control of assesses, backed by any confirmation oral or written from person giving such cash against goods removed in clandestine manner without payment of duty from the factory, there cannot be case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries against Order-in-original No. RAJ-EXCUS-000-PR, COM33-15-16 dt. 04.04.2016 passed by the Commissioner, Central Excise, Rajkot. Vide the said impugned order a demand of Central Excise Duty of ₹ 6,91,03,160/- has been confirmed against M/s Gold Extrusion and equivalent amount of penalty has been imposed. Penalty upon partners Shri Bharatbhai Vasoya and Shri Rameshbhai Amarshibhai Viramgama and other co-appellants was also imposed. 2. The brief facts of the case are that during the visit to the factory of Appellant M/s Gold Metal Extrusion, the officers seized two note book showing production of Billet and use of raw material, Gate Pass Book showing dispatch of finished goods without bills, kaccha chits showing receipt of raw material. A Pen drive maintained by one Shri Vimalkumar Dilipkumar Bharvada, clerk cum general Supervisor was seized which is said to be containing day wise production and party wise records. The Note books were for the period 21.11.2011 to 01.08.2012 containing details of production. Statement of Shri Jagram Govardhan Varma, Production Incharge was recorded who stated that the details of Billets produced were being noted date wis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and alleged recipient of goods. 3. The demand as proposed was confirmed vide the impugned order along with penalty. Penalty was also imposed upon other Appellants, therefore these appeals are before us. 4. Ld. Counsel Shri P.V. Sheth, Ld. Counsel appearing for the Appellant submits that the show cause notice had relied upon the statement of alleged buyers to show that they had received goods cleared by Appellant unit without payment of duty. The statements were recorded at the back of Appellant, hence they had sought cross examination of the alleged buyers which was not allowed. The adjudicating authority refused to grant cross examination on the ground that they are co-noticee. He submits that the statements cannot be relied upon if the cross examinations of person making statement is not allowed and the impugned order is required to be set aside on this ground alone. He relies upon judgments in case of Andaman Timber Industries 2015 324-ELT-641 (SC), Jindal Drugs Pvt. Ltd. 2016 (340) ELT 67 (P H), Vishwa Traders Pvt. Ltd. 2012 (278) ELT 362 (TRI) upheld by the Hon ble High Court reported in 2013 (287) ELT 243 (SC) and Apex Court in 2014 (303) ELT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Trading Co. 2002 (148) ELT 967 (TRI), Emtex Synthetics Ltd. 2003 (151) ELT 170 (TRI), Utkal Galvanizers Ltd. 2003 (158) ELT 42 (TRI), Rishi Packers Ltd. 2003 (161) ELT 449 (TRI), Murugan Enterprises 2003 (162) ELT 233 (TRI), Shree Shyam Pipes Pvt. Ltd 2006 (201) ELT 34 (TRI), Resha Wires Pvt Ltd. 2006 (202) ELT 332 (TRI) as upheld by the Apex Court reported in 2003 (157) ELT A- 315, Paras Laminates P. Ltd. 2005 (180) ELT 73 (TRI) as upheld by the Apex Court 2006 (199) ELT A-182, Prem Industries 2009 (234) ELT 178 (TRI), Utility Alloys Pvt. Ltd. 2005 (184) ELT 80 as upheld by Hon ble High Court reported in 2009 (236) ELT A19, Ganga Parameswari Spinners Pvt. Ltd. 2009 (239) ELT 196. He submits that merely on the basis of transporters document without any independent corroborative evidence, no clandestine removal can be alleged. The officers did not find any discrepancy in raw material or finished goods stock. No excess power consumption was found. No investigation of data shown in pen drive was undertaken and hence the demand is not sustainable. He submits that the Annexure X of the show cause notice which is basis for demand was not prepared in presence of Appellant and thus the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te passes but could not produce any record showing receipt of goods by them. The Appellant unit had also contested the demands on the ground that the statements are not voluntary and that the data contained in pen drive cannot be relied upon as it contains the data of trading of scrap on high seas sales basis, clearance of job work goods under exemption and also not liable for duty and also castings used for captive consumption. We are of the view that in such circumstances the demand could have been made only in those cases where the goods were rods and profiles and if it was corroborated with receipt of such goods by the alleged buyers which is not the case here. However coming to the investigation conducted by the revenue we find that only few of the buyers were investigated only by way of recording their statements. These buyers only accepted the receipt of goods but could not produce any evidence of receipt of goods by them. There is not a single corroborative evidence except statement of such buyers. No goods cleared by the Appellant unit were found in their possession. Apart from the said buyers the show cause notice has alleged that the buyers of Delhi and Coimbatore were c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeared for the Revenue. 6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not given any reason and justification for cross examination of these persons. We find that this approach of the adjudicating authority is inconsistent with the settled law of evidence. It is undisputed that the persons who had given inculpatory statements (as indicated herein above) were 3rd party and were only employees of the assessee. There could be an element of doubt that these persons jointly or severally were working against appellant M/s. VTPL or otherwise. This could be ascertained only during the cross examination, by confronting the persons with the documents recovered from their possession. Be that it may be, documentary evidences recovered from the residential premises of the employees, the veracity of the same needs to be always checked and cross checked before relying upon such evidences. M/s. VTPL were well within their rights to ask for cross examination of these employees to bring on record that documents which were recovered and on which reliance has been placed by adjudicating authority for confirmation of demand of duty, could have been maintained by other persons or 3rd party for their own personal reasons or for the reasons best known to them. In our consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal held that in case of clandestine removal when evidence was relied upon such as private ledger, account of 3rd party, the same can be used against the assessee only after allowing cross examination of such 3rd party. When cross examination of such 3rd party not allowed by adjudicating authority, allegation of clandestine removal in absence of any other evidence not sustainable. Similarly in the present case when statement of 3rd party were relied upon, it was incumbent on the adjudicating authority to conduct cross examination, therefore in absence of granting cross examination the demand cannot be sustainable. In case of Rowf Re-rollers 2015(317) ELT 499, this Tribunal held that oral statement of the persons including that of managing partner of firms not sufficient evidence to establish illicit removal of goods without cogent and corroborative evidence in form of incriminatory documents, statutory records, financial transaction etc. In the present case also no such evidence was produced on record, therefore, merely on the basis of pen drive data, the demand cannot be sustained. Thus in view of above position and judgments we are of the view that the demand cannot be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , cannot sustain. We also find that at the time of the visit of the officers, no discrepancy in raw material or finished goods were found. There is no evidence of any excess raw material purchased by the Appellant and the correlation of production and clearance is not appearing with such procurement of raw material. The statements of Partners though relied upon, but only on the basis of such statements, the charges of clandestine removal cannot be substantiated unless supported by corroborative evidences. Moreover, such statements were recorded on the basis of production note book, diaries but since the demand is not based on pen drive data as computation was done only on the basis of pen drive data that too containing intermediate product casting, the statements are of no help to revenue. In case of Vishwa Traders Pvt. Ltd. 2012 (278) E.L.T. 362 (Tri. - Ahmd.) the Tribunal while dealing with similar set of facts held as under: 8. We have considered the submissions made at length by both sides and perused the records. 9. The entire case of the Revenue in these cases is starting from the visit of various premises on 8-7-02. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing persons, as recorded by the adjudicating authority in Order-in-Original. (i) Shri Anil Jadav, Employee (ii) Shri Vipul P. Mehta, Buyer (iii) Shri Bipin H. Mehta, Buyer (iv) Shri Ashok Kumar Ranjan, Employee (v) Shri Manhar J. Patel, Buyer (vi) Shri Dharmendra V. Patel, Transporter (vii) Shri Ashok J. Patel, Buyer (viii) Shri Mundakathil Joseph Devasia, (ix) Shri Chetanbhai Shah, (x) Shri B.M. Patel, Factory Manager 10.3 The adjudicating authority, in his findings in Para 9.2.5, had not granted cross examination of the above said people only on the ground that they are co-accused and they have in one way or other has helped M/s. VTPL to evade payment of duty. It is also seen that the adjudicating authority had dismissed the request for cross examination only on the ground that M/s. VTPL has not given any reason and justification for cross examination of these persons. We find that this approach of the adjudicating authority is inconsistent with the settled law of evidence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were cleared without payment of duty. This is to indicate that the authorized person of M/s. Amar Ceramics Industries had stated that they had cleared their final product i.e. glazed tiles manufactured by using unaccounted purchases of Frit from M/s. VTPL. This Bench vide Final Order No. A/698/WZB/AHD/2007, dated 29-3-07 had clearly held that there is no tangible evidence to lead to a inevitable conclusion of clandestine manufacture of the glazed tiles in the factory of M/s. Amar Ceramics Industries and coming to such a conclusion the impugned order was set aside in that case, indicating therein that confessional statements of the partner/authorized person was retracted. If that be so, statement of Shri Patel, Partner of M/s. Amar Ceramics Industries cannot be relied upon as it is a retracted statement and such retraction is considered for setting aside the demand raised on them, which would mean that there is no inculpatory statement from M/s. Amar Ceramics Industries against the appellant. In the absence of any other statement of M/s. Amar Ceramics Industries which inculpates the current appellant M/s. VTPL, the statements relied upon by Department is to be discarded. As r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d unaccounted purchases of all the raw materials required for manufacturing of Frit . 14. In the case of Dhanavilas (Madras) Snuff Co. - 2003 (153) E.L.T. 437 (Tri-Chennai), we find that in Para 6, the Tribunal has recorded as under : 6 ..Revenue ought to have produced the evidence of purchase of raw material, manufacture and clearance of goods clandestinely by examining the workers and also those who have received the goods without payment of duty. In view of lack of evidence, the Commissioner has rightly dropped the proceedings with regard to the charge pertaining to clandestine removal. However, he has upheld the charge pertaining to certain other charges and has confirmed duty and penalties In yet another case in the case of S.T. Texturisers - 2006 (200) E.L.T. 234 , this Bench, in respect of clandestine removal, very clearly held as under : 6. Considering the above arguments of the appellant in the light of the various decisions of the Tribunal, it is seen that it has been consistently held by the Tribunal that entries in rough register cannot be made the sole basis for arriving at find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in great detail and have clearly laid down that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly apply to the facts of this case. Hence, following the ratio of the cited Judgments, the assessee s appeal is allowed. All the above reproduced ratio would lead to a conclusion that the charge of clandestine manufacture and removal has to be proved beyond doubt and in the case before us, as already discussed, there is nothing on record that instils confidence in our mind that the appellant had clandestinely manufactured and cleared the final product. Further, it is settled law that for the purpose of clandestine removal, there has to be clandestine manufacture. We find on perusal of the record, that the Revenue authority, despite having engaged themselves in massive investigation, has not brought on record a single evidence of procurement of other major raw materials required for manufacture of Frit, eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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. (Emphasis supplied) The above ratio, as laid down by Hon ble High Court of Gujarat, would squarely cover the issue before us. 16. In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the factory premises of M/s. VTPL, in the peculiar facts and circumstances of this case, we hold that the impugned order which confirms the demand on the appellant M/s. VTPL and imposes penalty on them is not sustainable and is liable to be set aside and we do so. 17. Since we have held that there is no sustainable demand, consequential penalties on various other appellants, who are in appeal before us, would also automatically be set aside. 18. As we have disposed the appeals on merits of the evidences on record, we are not recording any findings on various other submissions made by both sides. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 707, M.T.K. Gurusamy v. CCE, Madurai - 2001 (130) E.L.T. 344 (T) = 2001 (42) RLT 552 and Rhino Rubbers Pvt. Ltd. v. CC, Bangalore - 1996 (85) E.L.T. 260 . The ratio of the law laid down in these cases very aptly applies to the present case. 13. The above analogy has also been taken by the Tribunal in case of Utkal Galvanizers Ltd. 2003 (158) ELT 42 (TRI), Rishi Packers Ltd. 2003 (161) ELT 449 (TRI), Murugan Enterprises 2003 (162) ELT 233 (TRI), Shree Shyam Pipes Pvt. Ltd 2006 (201) ELT 34 (TRI), Resha Wires Pvt Ltd. 2006 (202) ELT 332 (TRI) as upheld by the Apex Court reported in 2003 (157) ELT A- 315, Paras Laminates P. Ltd. 2005 (180) ELT 73 (TRI) as upheld by the Apex Court 2006 (199) ELT A-182, Prem Industries 2009 (234) ELT 178 (TRI), Utility Alloys Pvt. Ltd. 2005 (184) ELT 80 as upheld by Hon ble High Court reported in 2009 (236) ELT A19, Ganga Parameswari Spinners Pvt. Ltd. 2009 (239) ELT 196. 14. It is also observed that during the visit of officers, no discrepancy in the stock of finished goods was found. Hon ble Punjab and Hariyana High Court in case of Renny Steel Plastic Pvt. Ltd 2013 (288) ELT 45 (H P) observed that during the vis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta contained the quantity of job work goods carried out by the appellant which is otherwise not liable to duty but department has not bothered to verify the same despite a categorical submission made by the appellant before the lower authority. It is also fact that appellant could not have been produced such huge quantity during the relevant period. 17. Sh. Bharatbhai Dharamshibhai Vasoya, partner also stated about doing job work. Even if the job work formalities like filing of intimation was not complied with the job work goods would remained exempted. For example, Sh. Kaushik Rajubhai Meghani as referred in para 17 of SCN stated of getting conversion on job work from the appellant unit. As per the statement dated 05.06.2013 of Bharatbhai Dharamshibhai Vasoya, the pen drive data includes trading in scrap on high sea sales basis. However, the same was not also verified and hence demand is not sustainable. 18. Regarding penalty on partners, we find that as per our above discussions, when demand itself not sustainable, penalties are also not maintainable. Moreover, as of now, it is settled law in the judgments of Jurisdiction High Court in case of Prav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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