TMI Blog1998 (7) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of the statements of witnesses of M/s. Jindal Aluminium has been found to be incriminating. In fact except for the statement of Rajendran, an accountant, none of the persons from M/s. Jindal Aluminium has been examined, nor any incriminating evidence found. Thus, the case has been built against the alleged Lorry Challans on which Revenue contend that the said lorry challans has been used for clandestine removal of the goods. The evidence of Lorry challans of M/s. Arya Central Transport Ltd. cannot be used against M/s. Jindal Aluminium unless they had been made a party to this proceedings. The Revenue having not made them party to the appeal proceedings, this appeal is liable for dismissal, for non-joinder of the Transport Company. 2. We start at the outset by this observation and commence to examine the grounds made in this Revenue appeal, also to examine its validity and propriety. 3. It is stated in the appeal that M/s. Jindal Aluminium Ltd. (M/s. JAL) are manufacturers of Aluminium extrusions. Based on the information that M/s. JAL were removing goods from their factory without payment of CED, the officers of the Directorate General of Anti Evasion conducted sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t note and its related gate pass exist for the goods. Thus it appeared that M/s. JAL had removed a quantity of 8977 Kgs of aluminum extruded sections without payment of duty. (v) There was a distinct pattern in that goods of M/s. JAL were transported by M/s. ACTL without making any entries in their registers. In many cases, M/s. JAL did not issue any Central Excise documents for the consignment in some cases they issued documents but these did not accompany consignment. The entries were deliberately kept open awaiting safe arrival of the consignment at its destination. If the consignment was checked en route the documents were produced as indicated above. If the consignment was not intercepted the documents could be used again. It is further seen that in many cases there is a gap between the Central Excise gate pass and its corresponding consignment note and the lorry manifest under which the goods were transported. The gap corresponded to the number of days taken by the lorry to reach the particular destination in the case of Delhi being about 3 to 4 days explaining the unusual gap between the Central Excise gate pass and the lorry manifest date. (vi) The consumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate after submission of written reply by this Directorate. A copy of this letter was faxed to the Commissioner of Central Excise, Bangalore, before the commencement of the personal hearing and it is learnt that the letter of the Directorate was given to the Adjudicating Authority before the personal hearing. (d) No reply was received by the Directorate from the Adjudicating authority in response to the request for defending the case before him and also for postponement of the hearing. However, to the utter surprise of the DGAE it was learnt that the Commissioner of Central Excise dropping the entire proceedings initiated against M/s. ACTL vide show cause notice dated 24.4.1995 referred to above. (e) On going through the Order in Original, it appears that Commissioner of Central Excise, Bangalore has grossly erred in passing the Adjudication order and further has not also properly appreciated the evidence brought on record by the Department. It appears that the Adjudicating authority has merely relied on the party as submission in toto and dropped the proceedings ignoring substantial evidence produced by the department. (f) The Adjudicating Authority has also gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded the statement and it was found that his retraction was baseless. Being a person associated with the transport of documents Shri Kamalesh Gaind, alone had knowledge of the manner of preparation of documents. His retraction was therefore, rejected. 7. The Adjudication Authority has accepted the contention of the parties that lorry challans are made only for the purpose of payment of lorry hire charges. He has also not accepted the original evidence tendered by Shri Kamalesh Gaind, but appears to have accepted his retraction without giving any valid reasons. That the lorry challan is prepared on the date of removal is substantiated by the fact that in several cases the challans have been prepared before the removal of the goods and the particulars are also found to tally with the particulars of actual removal. 8. Even assuming but not admitting that the lorry challans are made only for purpose of payment of lorry hire charges as contended by the parties, there is no reason why the lorry hire charges as contended by the parties, there is no reason why the lorry challans should indicate different date of removal, different lorry number and in some cases even differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f taking weight but actually represents removal of a totally different quantity. Hence, the order of the Adjudicating authority suffers on non-application of reasoning. 11. As regards the evidence regarding clandestine production, the lorry challans being documents prepared by the transporting company may be relied as evidence complete in itself. 12. However, it appears from the order that M/s. JAL have submitted certain figures which differ from the figures alleged in the show cause notice. The company also supported it by a certificate of Chartered Accountant and a certificate authenticated by the Range Superintendent. It is not clear whether the figures produced by the party and that shown in the show cause notice were comparable. There is no finding to that effect by the Adjudicating Authority nor there is any irrefutable refutation of the figures alleged in the show cause notice by the party. Instead of specifically stating as to why the figures of production as alleged in the show cause notice could not be relied upon, the Adjudicating Authority has relied upon the party figure to reject the allegation of clandestine production. 13. The department had add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He has also not allowed any opportunity for the Department to cross-examine the persons concerned with the said document and here again the principles of natural justice has been violated. 16. The Adjudicating authority has also relied upon various affidavits filed by the employees of M/s. JAL in which they stated that they transported house-hold goods during the relevant period which may come to a full truck load and that they paid transportation charges in cash directly to the driver of the lorry. Again these affidavits were not made available to the Department and such evidence has been taken into records behind the back of the Department without giving an opportunity to cross-examine the witnesses. The Adjudicating authority has also ignored the evidence in form of statements of M/s. ACTL personnel as well as in the form of consignment note which showed that consignment notes were prepared indicating FOC/Free of charge for the transportation of household goods of M/s. JAL employees. 17. As regards the specific case of removal of 9061 Kgs of aluminum sections under challan No. 109-001 by a truck DL No. HNG 9601 at Delhi without documentation, the Commissioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d fit. 21. M/s. JAL have also filed cross appeal which was also heard along with the appeal. 22. Arguing for the Revenue Shri V. Thyagaraj, the learned SDR submitted that the case involved 120 lorry challans in Annexure D1 which did not have the corresponding gate pass and as against the same Lorry challan, double transportation of goods has moved from the factory to the transportation point and onwards. He submitted that Annexure D2 challans indicated the goods were loaded in the factory on the date of earlier challan. There was difference in the dates of these duplicate challans with those challan in D1, hence it followed that another set of goods mentioned in D1 has been removed in D2 challans. The challans in Annexure D3 indicate clearly the removals whether there is difference in date of challans and difference in weight based on the statement of P.K. Jha godown keeper of M/s. ACTL. Challans in Annexure D4 are the clandestine removal in the guise of household goods of ex-employees. He submitted that the case rests heavily on the premise that the lorry challans evidence the movement of the goods. He submitted that in their reply both M/s. JAL and M/s. ACTL had arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in terms of law laid down in the case of Lalubhai Amichand Ltd., Bombay v. CCE, Bombay reported in 1984 (18) ELT 319 : 1984 ECR 1824 (T) wherein it has been held that Tribunal would be slow to interfere with exercise of such discretion by the Collector unless it is shown that the discretion exercised by the Collector is manifestly wrong or perverse. He also relied upon the judgment rendered in the case of CCE v. Jayalakshmi Cotton Oil Products reported in 1984 (18) ELT 331 (T) : 1984 ECR 1795 (T) and that of Shri Rajasthan Syntex Ltd., Udaipur Another v. UOI and Others reported in 1986 (23) ELT 329 (Raj) : 1986 (9) ECR 14 (Raj) wherein it has been held that Assistant Collector as a quasi-judicial authority has to discharge functions and duties in a quasi-judicial manner and he is not bound by administrative instructions and the questions of law which may be raised before him by parties are required to be determined by him after full application of mind and in an objective manner without following in any way controlled by any administrative instructions and he will deal with clearly and expressly the reasoning which may be advanced on behalf of the petitioners. It has been he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the order judiciously the same should not be interfered with. 24. The learned Counsel after defending the order, on the grounds made by the Revenue that there was violation of principles of natural justice in not affording full opportunity of hearing to the Revenue, proceeded to argue the case on merits. He pointed out that the Revenue had proceeded on the basis of two lorry challans and assumed that two consignments had been removed. He submitted that M/s. JAL was not at all concerned with the lorry challans prepared by M/s. ACTL. The same had been prepared by them for the purpose of accounting their freight charges and had nothing to do with the clearance made by M/s. JAL in terms of the consignment note and the gate pass. He submitted that M/s. JAL was totally unaware of any particular challan maintained by the transporter for any practical purposes to account for the receipt of lorry freight. They had made one challan at the time of clearance of the goods and another challan at the time of receipt of freight charges. He submitted that explanation of M/s. ACTL was called for and they had explained the matter and had also produced evidence to show that they had followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no question of any clandestine removal of the goods. There is not an iota of evidence worth the name to allege clandestine removal and hence proceedings initiated against M/s. JAL are not sustainable without making the transporter as a party to the appeal. Therefore, the appeal is required to be dismissed. 25. On careful consideration of the submissions made and a thorough examination of the records of the case, we are thoroughly satisfied that the evidence against the assessee is totally non-credible and is required to be rejected on more than one count. The first reason for rejection is the Revenue has not made M/s. ACTL a party to the appellate proceedings. The evidence M/s. ACTL is being used to allege clandestine production and removal of goods by the assessee and that the quantum of their clearance has been dropped and the evidence of M/s. ACTL having been brought on record and by not making them a party, the appeal against the respondent is not maintainable and the appeal is required to be dismissed. 26. The main grievance of the Revenue is that there is gross violation of the principles of natural justice inasmuch as the Collector did not allow the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Calcutta). 27. Therefore, the Tribunal has laid down the law in regard to clandestine removal and it is well settled that for the purpose of clandestine removal the burden is very heavy on the Revenue to show that the assessee had unaccounted balance in the input registers or transferred the inputs without maintaining separate register and manufactured the goods, which flows out from the use of excess electricity bills and unaccounted production of finished product and removed such goods by way of sales to parties. In this case, it was strongly contended that the Revenue has not found any evidence to support their case nor have they recorded statement of any of the employees of the M/s. JAL or their dealers to the effect that there was manufacture or receipt of goods which are unaccounted and removed without payment of duty or without gate pass. On the other hand the respondents have produced enormous evidence in the nature of purchase of inputs from Public Sector Undertakings. The records have been duly certified and as per records, their production has been 98% which is totally accounted for and duly certified by the Chartered Accountant and further certified by the Supdt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the department has presumed that there is another clearance on this challan No. It is difficult to understand as to how there can be two clearances on the same day in respect of same lorry No. and the same quantity the same change is restored on other challan Nos. It is an imagination unsupported by any logical basis and it is beyond comprehension as to how the Revenue can build up cases of this nature without any semblance of evidence on record. The Collector has examined all these facts and each evidence of both the Revenue as well as the respondents including M/s. ACTL and have thoroughly examined and came to the conclusion in para 95 of his order that no evidence was available to prove that extra quantity of goods were transported from Bangalore to Delhi and hence he held that in terms of the evidence the charges levelled against the respondent has been un-substantiated. He also examined the discrepancy found in respect of charges of clandestine removal in subsequent paras and has found that there was no evidence to show that such allegation did exit. M/s. JAL had submitted that the figures furnished by the department itself showed that the actual output ratio was 95.48%, 97. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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