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TMI Blog2019 (12) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner (Appeals) has upheld the duty demand of Rs. 7,92,680/-, penalty of Rs. 792680/- under section 11AC, fine of Rs. 5000/- u/r 27, redemption fine of Rs. 18450/- on confiscated Girder wheels valued at Rs. 18450/-. The question to be decided in the present appeals is that whether the Appellant M/s Om Synthetics are entitled for the benefit of SSI notification No. 8/2003 - CE dt. 01.03.2003 where the goods bearing brand name "Bhayani" was cleared by them and also whether demand of duty against both the Appellant is sustainable on alleged removal of goods without payment of duty. 2. Brief facts of the case are that search was conducted at factory and office premises of M/s Bhayani Engineering Co. by the officers. It was found that M/s Om Syntheticswere running a factory whereas M/s Thakar traders were operating office in said building. It was found that M/s Bhayani Engineering is partnership firm having two partners viz. Shri Kishorbhai Shambhubhai Bhayani and Shri Thakarshibhai Bhagwanbhai Kukadiya in equal ratio. The firm is engaged in manufacture and after sales service of roundish machine used for giving round shape to diamond after bruiting process. M/s Om Synthetics is partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spective impugned orders passed against them. 3. Shri Anand Mishra, Learned Counsel appearing for the Appellant M/s Om Synthetics takes us through the demand calculation Annexure - 'A', 'B', 'C' and 'D' of the show cause notice. He submits that Annexure - 'A' has been prepared on the basis of challans seized from the residential premises of Shri Kishorebhai Bhayani. Annexure - 'B' has been prepared on the basis of records seized from the factory premises of M/s Om Synthetics. Annexure - 'C' has been prepared on the basis of Retail/ Tax Invoices issued by M/s Om Synthetics for sale of machines details of which does not tally with the delivery challans seized from factory premises of M/s Om Synthetics/ M/s Bhayani Engineering and residential premises of Shri Kishorbhai Bhayani. Annexure - 'D' has been prepared on the basis of record No. 54 seized from the factory premises of Om Synthetics/ Bhayani Engineering and record no. 20 seized from residential premises of Shri Kishorbhai Bhayani of those machinery details, which do not reflect in Annexure - 'A', 'B' & 'C'. 4. The Ld. Counsel submits that the clearance alleged to have been made by Appellant in Annexure - 'A' are erroneous. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also points out that there are contradictions in statement of Shri Kishorbhai and employee of Thakar Traders Shri Prabhakarbhai. Whereas Shri Kishorbhai has stated that the delivery challan were either prepared by him or Shri Prabhakarbhai whereas on the contrary Shri Prabhakar bhai stated that he is working as a supervisor at M/s Bhayani Engineering and working as per direction of partners of Bhayani Engineering. Thus the statement of Shri Kishorbhai Bhayani cannot be relied upon. 6. The Ld. Counsel submits that all the seized records forming part of Annexure - 'A', 'B' & 'D' do not pertain to Appellant unit as they bear name of Bhayani Engineering and are signed on behalf of M/s Bhayani Engineering Co. Only two delivery challans of Appellant Unit were shown in impugned order which show description of goods as "On and Off Switch as well as service charge" and "Motor service charge, nuts and switch". This does not show any removal of machine. Further there is no evidence of Appellant's name in any manner hence the seized records cannot be alleged to be of Appellant. The seized records clearly bear the name of M/s Bhayani Engineering Co and the same cannot be used against Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f machines were recorded which does not reveal anything substantial except two customers. That even out of these two customers show cause notice was issued only to Khodiyar Diamond and no SCN was issued to Jalpa Diamond. That the allegation of show cause notice is clandestine removal to around 400 customers out of which only 15 were investigated which couldn't bring any corroborative evidences from any of the buyer . No corroborative evidences of receipt of raw material or unaccounted production has been found. He relies upon orders in case of Saakeen Alloys Pvt. Ltd. 2015 (10) TMI 558 (SC), Mahesh Silk Mills 2015 (319) ELT A52 (GUJ.), Diamond Scaffolding Co. 2011 (274) ELT 10 (Cal.), TGL Poshak Corporation 2001 (99) ECR 424 (TRI), Jay AjitCharia 2015 (40) STR 1139 (TRI). He also submits that statement of Third Partner was not recorded which was crucial to ascertain the facts. No show cause notice was issued to M/s Bhayani Engineering Co. inspite of the fact that the seized records contained name of said firm and who were manufacturing same machinery and the same is violation of the settled law by straight away adding the values of those documents in the clearance of Appellant. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has stated that they brought the goods from Appellant Unit and also produced ledger and tax invoice which clearly shows that there is no evasion of duty. Further the retraction affidavits were filed by Shri Thakarshibhai Kukadiya and Shri Kishorbhai that they were not well versed in English and the statements were pre-compiled by the officers. No investigation was conducted from any raw material supplier. There is no corroborative evidence to show the clandestine manufacture and removal of goods. He relies upon judgments of Saakeen Alloys Pvt. Ltd 2015 (10) TMI 558 (SC), TGL Poshak Corp. 2001 (99) ECR 424 (TRI), Rigicut Tools Pvt. Ltd. 2001 (134) ELT 64 (TRI). He thus prays to set aside the impugned order. 8. Shri S.K. Shukla Learned Superintendent (Authorized Representative) appearing for the revenue reiterates the findings of the impugned order. He submits that from the statements of Shri Kishorebhai Bhayani and employees in respect of seized records from residential premises of Shri Kishorebhai and factory premises, it is clear that the Appellant unit has made clearances without payment of duty. He also submits that the clearances made under the trade name "Bhayani" by Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers that all the delivery books and the papers in which the debit/ credit note are written are of M/s Bhayani Engineering. We find that though the show cause has conducted investigation of all the three units and the units had common partners. The documents/ records were maintained at common factory building/ premises and the same were seized. However no investigation seemed to have conducted in case of M/s Bhayani Engineering. If the delivery challans contained name of M/s Bhayani Engineering or the person has signed as being related with M/s Bhayani Engineering, in that case it was imperative to include M/s Bhayani Engineering in investigation and issue show cause notice for their involvement. Merely on the basis of statement of Partner or the supervisor, it cannot be concluded that the clearances were of M/s Om Synthetics when the seized records show otherwise. No value of clearances has been shown to have been made by M/s Bhayani Engineering Co. When the documents/ records relied upon for making demand has been seized from residence of partner of M/s Bhayani Engineering, in that case, the first presumption will be that such documents belong to clearances of M/s Bhayani Engineer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued only to Khodiyar Diamond. We note that the show cause notice alleges around 400 clearances and out of the same only 15 were investigated. Even out of these 15 alleged buyers, the investigation could not bring out any corroborative evidences. In case of M/s Khodiyar Diamond also no corroborative evidence is appearing which can show that the goods were cleared clandestinely. It is also found that no investigation was made at raw material supplier except some very meagre quantity supplied. During investigation no excess raw material was found or shortage of raw material was detected. No unrecorded finished goods were found. In case of M/s Sakeen Alloys 2013 (296) E.L.T. 392 (Tri. - Ahmd.), the tribunal held as under : "8. In the cases relating to clandestine removal of excisable goods, following are the indicators of clandestine removal activities by a manufacturer :- (i) Excess stock of raw materials found in the factory premises. (ii) Shortage of raw materials in the records of manufacturer. (iii) Excess/shortage of manufactured goods found in the factory premises. (iv) Excess consumption of electricity/power used in the manufacture of finished goods. (v) Any tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. 248 (S.C.)] has also held that once the statement is retracted and the assessee asked for cross-examination then if such cross-examination is denied, the department cannot make such statements as the basis for concluding that there was clandestine removal. It is further observed that the Hon'ble CESTAT in the case of Rama Shyama Papers Limited v. CCE, Lucknow [2004 (160) E.L.T. 494 (Tri.-Del.)] came to the following conclusion in Paras 9 and 10 of the judgment which are reproduced below :-'' "9. We have considered the submissions of both the sides. The Revenue has charged the Appellants with clandestine manufacture and removal of paper mainly on the basis of documents seized from the premises of Chitra Traders and Transporters and the various statements recorded from the Proprietor of Chitra Traders, transporters and labourers working in the factory of the Appellants and also the driver or cleaner of the Truck which was in the process of loading on 22-6-2001 when the Central Excise Officers visited their factory premises. The Appellants, on the other hand, have contended that most of the persons whose statements have been relied upon have not been produced for cross-examinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s allegedly recovered from Shri B.M. Gupta, Vice President of the Supplier Company, held that "no presumption on the basis of uncorroborated, uncross-examined evidence of B.M. Gupta and the alleged entries made by him in the private diary, loose sheets, charts, packing slips could be drawn about the receipt of polyester yarn by the Appellants from the company, M/s. HPL, in a clandestine manner during the period in question. Similarly, no inference could be legally drawn against the Appellants of having manufactured texturised yarn out of the said polyester yarn and the clearance thereof, in a clandestine manner without the payment of duty." The Tribunal had also referred to the decision in Oudh Sugar Mills Ltd. v. Union of India, 1978 (2) E.LT. (J172) wherein "the Apex Court has observed that no show cause notice or an order can be based on assumptions and presumptions. The findings based on such assumptions and presumptions without any tangible evidence will be vitiated by an error of law". The Tribunal also took note of the decision in Kamal Biri Factory and Shri Khushnuden Rehman Khan v. CCE, Meerut - 2003 (161) E.L.T. 1197 (T) = 1997 (23) RLT 609 (CEGAT) wherein view has been t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction of Chitra Traders. No inquiry has also been made into these Customers who ultimately received the goods. There is no substance in the reasoning given by the Commissioner in the impugned order to the effect that "as the party did not challenge the fact of their business association with M/s. Chitra Traders, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods received under proper invoices are found in the stock yard of M/s. Sunrise Enterprise, then it is possible that out of such goods certain quantities were sold to various customers by accepting payment in cash. In such a situation, the quantification undertaken by the investigation becomes doubtful and incorrect. For this purpose cross-examination of the person Incharge looking after the records of M/s. Sunrise Enterprise was must, which was not allowed by the adjudicating authority. In view of the above observations, the demand of duty of Rs. 1,85,10,861/- is not sustainable and is required to be set aside. 11. The above order of the Tribunal was upheld by the Hon'ble High Court as reported in 2014 (308) E.L.T. 655 (Guj.) and was maintained by the Apex Court as reported in Commissioner v. Saakeen Alloys Pvt. Ltd. - 2015 (319) E.L.T. A117 (S.C.). 12 In case of T.G.L. POSHAK CORPORATION 2002 (140) E.L.T. 187 (Tri. - Chennai), the tribunal while dealing with similar set of evidence held as under : 6. We have carefully considered the submission and perused the impugned order. Insofar as the assessee's appeal is concerned, we notice from the extracted portion of the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the case of Ogesh Industries cited supra, it has been held that when a demand is raised by clubbing of the value of clearances of two units, and show cause notice has been issued only to one unit and not to the other, when the separate existence of both Units was projected, the notice is bad in law and the proceedings have been set aside by the Tribunal on this basis. The above decision has been followed in the case of M/s. Dawn Fire Works Factory and Others and both these decisions have been followed in the recent decision in the case of M/s. S.K.N. Gas Appliances v. Commissioner of Central Excise, New Delhi reported in 2000 (120) E.L.T. 732 (Tribunal). Learned DR Shri Dube seeks to distinguish the decisions in the case of Ogesh Industries and Dawn Fire Factory Works cited supra by submitting that the present case is not one of clubbing of clearances; however, we find from the impugned order that the Department has proceeded on the basis that the aggregate value of clearances of excisable goods effected by the appellants and all the units of M/s. Shree BaidyanathAyurved Bhawan taken together exceeds the ceiling limit on value of clearances prescribed in the SSI exemption Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o existence after the jobworker under took the process of grinding. In such case when the procedure as contemplated under Exemption Notification No. 214/86 - CE dt. 01.03.86 was not followed the jobworker of the goods become liable for duty and the duty cannot be demanded from M/s Thakar Traders. We have also gone through the Annexure - 'A'. The goods detailed therein were for testing as appearing in seized record. No investigation was made as to why this record was maintained. In absence of any investigation it cannot be concluded that the record pertains to clandestine clearances. Even the author of such record was not questioned. The investigations at two buyers Shri Madanlal Dhanrajji Nagar and Mrs. Dolly Shah who brought goods from Appellant revealed that the goods were brought under invoices which shows that the goods were not cleared clandestinely Further Shri Kishorbhai Bhayani and Shri Thakarshibhai Kukadiya in their affidavit stated that they were not in conversent in English and the statements were pre-complied by the officers. In such case the demands cannot be confirmed without corroborative evidence. No independent and corroborative evidence has been brought to show a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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