TMI Blog2021 (7) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... n has to be drawn on established facts and probable facts and not on presumption of facts. In grave cases of forgery, fraud, conspiracy etc. seldom direct evidence would be available. In a case of fraud there is always an intention to hide / delete / eliminate or cover up the acts of fraud. Such violations of law go undetected for a long period by tactful ways of hiding, deleting or covering up the fraud. For the same reason, the process of investigation and collecting evidence also become humongous and challenging. This would equally apply to the requirement to prove and establish such evidence in court. While applying the standard of proof of preponderance of probability, in the present case though some of the witnesses have negated their original statements in the cross-examination, the statement of Shri Kalyan Chakravarthy, Shri Duraga Prasad, the misdeclaration of the goods seized from the premises of transporter SRMT, Chennai, discrepancies / reconciliations in accountsmaintained by V. Srinivas Mahesh and others would sufficiently prove the allegations raised in the Show Cause Notice. In para 100 of the Order in Original, the adjudicating authority has discussed the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods were indeed the resins manufactured by the appellant/assessee and were misdeclared as orthoxylene and booked in the name of M/s Kalyan Chemicals. Chemical analysis of the samples confirmed that the goods were indeed resins. 3. After completing their investigations two show cause notices were issued by the officers of the DGCEI, Chennai OR No.57/2003 dt.19.04.2004 and OR No.54/2005 dt.31.10.2005 for ₹ 1,00,000/- and ₹ 67,47,513/- respectively. These, on adjudication, culminated in an Order-in-Original passed by the Commissioner of Central Excise which on appeal was remanded to the original authority by CESTAT Bangalore by Final Order No.1397-1404/2009 and S.O. 1649-1656/2009 dt.24.11.2009. The specific direction given while remanding the matter was to provide to the appellants copies of all the relied upon documents and allow cross examination of various witnesses sought by the appellant and pass an order after following principles of natural justice. 4. In compliance of these directions, the impugned adjudication order (denovo) has been passed which is under challenge in these cases. During the denovo proceedings cross examination was conducted in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch and formerly Proprietor of M/s Raja Paints, Old Washermanpet, Chennai 15. 14.07.2005 25.08.2005 Smt S. Shanti, W/o Late Sri P. Sekhar, Proprietrix of M/s Vivek Paints, Muthugounderpalayam, Erode 16. 18.07.2005 T. Kalyanasundaram, Managing Director, M/s Veena Paints Pvt Ltd, Solaialagupuram Street, Madurai 17. 29.08.2005 K. Nagaraj, Partner, M/s Nirma Paints Chemicals, Bellary 18. 10.07.2005 Sri Rajesh Mehta, Partner of M/s Oilchem India, Indore 5. Of the above, cross examination of S.No.1, 3, 8, 11, 15 18 could not be completed. S.No.11 above had died and therefore, could not be cross examined, while, S.No.15 has expressed her inability to come because of her severe lower back pain. Thus only 12 of the 18 witnesses could be cross examined. 6. As far as the relied upon documents are concerned, it is the case of the revenue that all relied upon documents were already supplied along with the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required : Provided that the exemptions under Sections 132 and 133 of the Code of Civil Procedure, 1908 (5 of 1908) shall be applicable to requisitions for attendance under this section. (3) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of Section 193 and Section 228 of the Indian Penal Code, 1860 (45 of 1860). Section 9D. Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a Gazette rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before Respondent No 2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the makers of any of the statements on which the Revenue chooses to rely, would have to be made available to the assessee, i.e. to Ambika and Jay Ambey in this case. (iii) Statements recorded during investigation, under Section 14 of the Act, whose makers are not examined in chief before the adjudicating authority, i.e. before Respondent No 2, would have to be eschewed from evidence, and it would not be permissible for Respondent No 2 to rely on the said evidence while adjudicating the matter. Neither, needless to say, would be open to the Revenue to rely on the said statements to support the case sought to be made out in the Show Cause Notice. (iv) Once examination-in-chief, of the makers of the statements, on whom the Revenue seeks to rely in adjudication proceedings, takes place, and a copy thereof is made available to the assessee, it would be open to the assessee to seek permission to cross-examine the persons who have made the said statements, should it choose to do so. In case any such request is made by the assessee, it would be incumbent on the adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of accounts maintained by the employees of the appellant contained references to the consignment notes, quantities and actual quality/grade of the goods and the realisation actually done. In some cases, the books contained entries other than those transported by the above two transporters viz., M/s SRMT and M/s Inter City Cargo Movers. These entries were explained by the authors of the books in their statements under section 14 of the Central Excise Act. The two authors who made the entries were Shri V. Srinivas Mahesh, Marketing Representative of the appellant and Shri V.B.S. Durga Prasad, Sales Executive of the appellant. Shri Srinivas Mahesh was not cross examined. Shri Durga Prasad reaffirmed his original statement during the cross examination. (e) Corroborative evidence taken in the form of statements by the buyers as follows: i. Statement dt.18.07.2005 of Shri T. Kalyana Sundaram, Managing Director of M/s Veena Paints, Madurai. ii. Statements dt.21.10.2003 and 31.12.2003 of Shri V. Veera Raghavan, Proprietor of M/s Vee Kay Jay Paints Chemicals, Chennai. iii. Statement dt.21.10.2003 of Shri N. Nagarajan, Proprietor, M/s Balaji Enterprises, Chennai. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. All documents showed that they pertain to M/s Kalyan Chemicals. Therefore, clearance of these barrels cannot be attributed to them. 13. He would argue that although the seizure was with respect to these barrels, the case was made out to be much larger and this case was built on the basis of statements of 18 persons and several relied upon documents. Of the 18 persons, 6 were not examined/cross examined by the adjudicating authority even during the denovo proceedings and hence their statements cannot be relied upon. As far as the remaining 12 are concerned, the alleged buyers of the goods, whose statements were relied upon, have negated their statements during the cross examination and affirmed that they only purchased resin from the assessee/appellant under the cover of proper documents and made payments accordingly. Thus, their statements do not support the contention of the department that goods were cleared in the name of M/s Kalyan Chemicals, M/s Prasad Chemicals etc., describing the goods as orthoxylene, xylene etc., while the actual goods were resins manufactured by the assessee/appellant clandestinely and sold to them. The department could not also establish that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it does not have any independent business. Only documents are signed in the name of Prasad Chemicals. Similarly, Shri Kalyana Chakravarthy, another employee of the assessee has confirmed that Kalyan Chemicals was a unit opened in his name and he was actually only an employee of the assessee and only papers are drawn in the name of M/s Kalyan Chemicals. Both Shri Kalyana Chakravarthy and Shri V.B.S. Durga Prasad have affirmed their statements during the cross examination. Learned counsel would submit that these statements, per se, would not be sufficient to assert that M/s Kalyan Chemicals and M/s Prasad Chemicals are fictitious firms created as front for assessee. He would submit that separate VAT registrations have been obtained for each of these companies and have been filing returns also. v. The statements of the buyers taken by the revenue as evidence are no longer relevant because of the buyers who have been cross examined have negated their statements made before the officers. vi. As far as the evidence in the forms of sale proceedings flowing back to the assessee by way of cash/DD are concerned, he would submit that these allegations are based on the statement of Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urers were also recorded. None of these people have retracted their statements. The buyers as well as Shri S.S. Abrar have negated their statements during the cross examination which was conducted after several years. The learned adjudicating authority has correctly held that such negation during cross examination without having retracted their statements made several years ago cannot be accepted and their original statements must be relied upon. Therefore, it must be held that appellant has cleared goods clandestinely in the name of three dummy firms. 17. He would further submit that not only has the clearance of goods been established but the flow back of money has also been established by producing evidence of cash deposits and DDs being made in the favour of the assessee. In view of the above, he would submit that the case is fully established and the impugned order is correct and balanced and needs to be upheld and the appeals may be rejected. 18. We have considered arguments of both sides and perused the records. At the outset, we observe that the evidentiary value of any statement made before the Central Excise officer under section 14 of Central Excise Act is subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of Shri S.S. Abrar, Proprietor of M/s Inter City Cargo Movers also has been negated by him during the cross examination. Thus, the evidence, as far as the transportation of the goods alleged to be clandestinely manufactured and removed as well as their sale to the prospective buyers has not been established to a reasonable degree of certainty in this case. As far as the manufacture and clearance are concerned, the alleged owners of M/s Kalyan Chemicals and M/s Prasad Chemicals have confirmed that they have set up dummy units at the behest of Shri Sama Rajasekhar, Managing Director of the assessee only to make paper entries. They have affirmed this position during the cross examination by the assessee s advocate. The assessee s advocate could not establish during the cross examination that their statements were false. 20. As far as the flow back of cash is concerned, we find that there is some evidence of the accounts being opened and cash being deposited and counterfoils of DDs present but we find it not sufficient to establish with a reasonable degree of certainty that the money has flown back to the assessee. 21. To sum up, in this factual matrix, we find as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separate order as follows:- Revenue had intelligence of evasion of duty by the appellant company and accordingly parallel search was organised in the premises of the appellant and also in the premises of some of the suppliers as well as buyers of finished goods, as well as transporters. Search was also conducted at the residential premises of employees / sales agent. From all these places incriminating documents were seized and the concerned persons admitted to the removal of excisable goods clandestinely by the appellant, which is morefully discussed in the following paragraphs. 25. The Managing Director - Shri S. Rajsekhar of M/s Harika on being confronted with the documents and statements of other connected person(s), admitted clandestine removal in his statement recorded on 22.10.2003 and also on other dates. He categorically admitted that he was clearing part of his finished goods in the name of M/s Kalyan Chemicals, a trading concern the proprietor of which was Shri N. Kalyan Chakraworty (employee). The plot where the trading premises of M/s Kalyan Chemicals was situated is owned by Managing Director Shri S. Rajsekhar. Shri N. Kalyan Chakraworty was working as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 08.12.2010, and he stood by his earlier statement given during investigation. He also filed written submission being reply to the show cause notice, wherein he also reiterated the facts as aforementioned and affirmed his statement. 27. Further, ten barrels of goods described as orthozylene were seized by the Revenue from the godown of transporter SRMT at Chennai, consignor - M/s Kalyan Chemicals. On the test being done of the samples drawn, the goods were found to be resin and not orthozylene . M/s Kalyan Chemicals has not purchased resin nor have the manufacturing facility to manufacture resin. Thus, evidently the ten barrels of resin were despatched clandestinely by M/s HRPL, in the name of M/s Kalyan Chemicals misdeclared as orthozylene to evade payment of duty. 28. Similarly, appellant has created another proprietorship concern in the name of style of M/s Prasad Chemicals, Prop. Shri C.S. Durga Prasad, an employee Accountant, working for HRPL and M/s Priya Chemicals. Under similar modus operandi finished goods of M/s HRPL has been cleared through M/s Prasad Chemicals. 29. Further, from the documents seized, simultaneous despatch on the same date was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me/ similar manner as in the name of M/s Kalyan Chemicals. He also stated that the address of M/s Prasad Chemicals is indicated as Kabela area, Vijayawada, but the goods were actually loaded and booked for transport at M/s HRPL factory only. The aforementioned facts are further corroborated from letter dated 15.10.2003 written by M/s Kalyan Chemicals on its letterhead to M/s SRMT, with regard to claim for damage of goods suffered during transit. As per the letter, the consignments were booked in the name of M/s Kalyan Chemicals vide LR Nos. 1218202 and 1218203 both dated 04.09.2003 and consigned to parties at Chennai were stated to be paints/ resin and the value of damaged or leaked quantity was required to be settled @ ₹ 49/- per kg. Further, as evident from M/s SRMT booking register and also from the copy of LR, these two consignments were originally booked by describing the goods as orthozylene with value at ₹ 10/- per kg. Thus, this fact also corroborates the clandestine despatch of resin (finished goods) by M/s HRPL by resorting to misdeclaration and under the invoice of M/s Kalyan Chemicals. 32. Similar dispatches in the name of M/s Kalyan Chemicals w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h record of the transporter. The dates of entry in the diary by and large correlated to the date on which the consignments were booked for transport at Vijayawada (as per the transporter records), or were either of immediately preceding or following dates. While the description and value as per the available transport record of the consignment were those of orthozylene / zylene /MTO etc. having value approximately ₹ 10/- per kg., the particulars denoted at Sl. No. (d) and (f) as mentioned above pertain to the actual description of the goods as resin of different variety as indicated in short or code form, as RML, RMD, etc. having value/ price in the range of ₹ 50 per kg. The following representative examples found in the Diary would illustrate the above deductions:- (a) In page of the date of 24th March, 2003 two handwritten entries read as follows: (i) Raja Paints (C), 5 RMD 951413 5- RMD 5 x 190 @ 49 PAID (ii) Bhagwan Paints (C), 951414 5 RMD 5 x 190 @ 49 PAID The above date (24 march, 2003), party-names and the numbers 951413 and 951414 were correlatable to the date, consignee names and LR Numbers in the SRMT s booking Registers, pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oating, Bangalore through SRMT vide LR No. 767607. This transaction in the said diary was recorded on dated 18.01.2003 as Durga Coating LR No. 767607 (5) and RMD @ ₹ 45/-. Similarly other trading invoices of M/s HRPL for purportedly sale of MTO were corelatable to the entries in the diary wherein the actual description and value recorded shows the goods were actually resin. 36. Further, small diaries Dolphin , Vajawat ledgers were recovered vide Mahazar Sl. No. 2 and 3 maintained as pocket ledger containing partywise account for the period January, 2003 onwards. Such parties accounts were maintained containing name or short name of the party such as Master for Master Paints, Chennai , Archana for Archana Colour coatings, Chennai etc.. Each such account contained datewise particulars and amounts posted accordingly as debit and credit and also the balance after each transaction/ entry. The particulars of debit included description of the goods i.e. resin RML/RMD /RDCO/ Soya etc. followed by a number in brackets such as (2) or (5) etc. The particulars of credit amount were indicated as by chq or cash also with cheque /DD number. On verification the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to consignments booked under the name Kalyan Chemicals to various parties at Chennai, bills No. 1/98 of Kalyan Chemicals (corresponding to the LR dated 04.08.03 of ICCM) and No. 2/11 dated 20.08.03 and a letter on the letterhead of Kalyan Chemicals dated 04.08.03, addressed to Check-post authorities requesting clearance, in the absence of Way-bills. The said letter contained the signature of M. Kalyan, as proprietor of Kalyan Chemicals . The said name and signature were identical to those appearing in a letter on the letterhead of HRPL containing C-Form reminder dated 30.07.2003, signed by M. Kalyan as Manager, HRPL, available at page 327 of the same file. (b) Pages 279 to 283, 319, 321, 323, 351, 365 411 of the said file Sl. No. 5 were handwritten statements (including faxcopies and originals at page 351, 411) showing the details of Resin consignments supplied during June and July, 2003 to various parties. The particulars of each consignment in these statements include date, party-name, LR number, transport name, the actual description/ coded name of the Resin, quantity in no. of barrels, price per kg. etc. On verification, the particulars of consignments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical or matching with the entries in the Executive Diary-2003 vide Mahazar Sl. No. 1 and the ledgers, vide Mahazar Sl. No. 2 3 detailed above, and thus, the later records appeared to be maintained as a regular/ consolidated record of the transactions and basing on the entries noted down in loose sheets, slips, etc. The aforementioned details and record were identified and explained by Shri V. B. Durga Prasad in his statement under Section 14 of the Act. 39. One Shri V. Srinivas Mahesh was the Marketing representative of the HRPL at Chennai from 1997 till about June, 2003. In the course of search at his residence, certain privately maintained account notebooks and other documents were found. These were similar to those recovered from the room of Shri V. B. Durga Prasad and discussed hereinabove relating to the period 2000-2001 to 20022003. In the pocket / small ledger notebooks recovered vide Mahazar Sl. No. 4 and 5, the accounts were maintained in the name / short name such as Master for Master Paints , Chennai, Archana for Archana Colour Coatings , Chennai etc. These accounts contained details of debit and credit and the balance amount after each transaction/ en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties to whom resin were supplied. Further, from the copy of demand draft application, it was found that these are obtained in favour of firms like Oswal Traders, Oilchem India etc. and also in the name of employees of HRPL at Vijayawada namely Shri C. Durga Prasad, Shri M. K. Chakraworty, Shri V. Durga Prasad, Shri T. Sharma, Saroj Rani etc., Copy of counterfoil at page 44 showing demand draft for ₹ 46,859/- was obtained on 17.01.2001 out of ₹ 47,090/- received from Sujatha Paints. The entry in the ledger book vide Mahazar Sl. No. 5 maintained by Shri V. S. Mahesh, on verification was found to be to the date, party name and amount as appearing on the bank deposit / demand draft application counterfoil. Similarly, folio No. 69 of ledger vide Mahazar Sl. No. 5 seized from V.S. Mahesh relates to Surya Chemicals containing details of receipt of cash amounting to ₹ 14,785/- on 04.04.2002. On comparing the same bill entry and report of Shri V.S. Mahesh dated 04.04.2002 available at sheet No. 389 and 391 of made up file seized from the room of Shri V. Durga Prasad, it is evident that ₹ 14,790/- was collected in cash by Shri V.S. Mahesh from Surya Chemical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in slips denotes from whom the sale proceeds were received and the name of such buyers and the amount realised. He further admitted that the private records were maintained as per the instruction of Shri S. Rajsekhar in order to closely monitor the outstanding amount from the various customers. Shri V. Mahesh also identified the documents recovered from the room of Shri V. Durga Prasad which were in his handwriting, such as collection daily report, partywise account, amount etc. 44. The department also obtained copy of account statement from Canara Bank, Chennai relating to saving account Nos. 2273, 1834 and 2034 opened and operated by Shri V. S. Mahesh. Account statement of account No. 2273 showed various deposits of relatively larger amount during the period 2001-02, also from which amounts were drawn in cash or demand draft obtained. These deposits correlated to the sale proceeds collected from the parties as per the entries in privately maintained ledger by Mahesh. The total amounts thus deposited in the bank account of Shri V. Mahesh amounted to ₹ 39.04 lakhs. The said practice of collecting the flow back or amount of clandestinely removed goods is also evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relatable to the payment/ realisation details available in the privately maintained ledgers/ records of Shri Srinivas Mahesh and Sri V. Durga Prasad, as detailed above and also the DDs/ deposits remitted by Sri Srinivas Mahesh / Sri Durga Prasad, as evident from the documents seized from their respective residential premises. Apart from this, amounts pertaining to deposits/ remittances made at other places such as Bangalore, Trichy, Madurai, Nagapattinam etc. and also those at Chennai - Kilpauk (in the period not covered in the above records), were also found to be credited into the above accounts. The withdrawals/ debits in these accounts were broadly in the form of (i) cash/ ATM withdrawals, (ii) Demand drafts obtained payable at Mumbai, Hyderabad etc., and (iii) cheques issued in the names of different parties. 46. Shri S. Rajsekhar, the Managing Director of M/s HRPL in his statement dated 22.10.2003 inter alia admitted that the bills of M/s Kalyan Chemicals were used for covering the transport of resin clandestinely cleared by M/s HRPL. He also submitted certain records of M/s Kalyan Chemicals which included sale - bill books and other files containing purchase documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L, in his statement dated 09.08.2004 stated that he had joined M/s HRPL sometime in the year 2000 as a Typist-cum-Clerk and his duty included typing, correspondence, maintaining various records of M/s HRPL, M/s Priya Chemicals, and some other firms belonging to Shri S. Rajsekhar. On being questioned regarding the large amounts regularly transacted in the two bank accounts with Global Trust Bank, Vijayawada, he stated that the said two accounts were opened at the instruction of Shri S. Rajsekhar and he had nothing to do with the amount deposited in or paid from the said account(s). He had signed on the account opening form and other form / enclosures and given his certificates, etc. He had also signed the cheques, withdrawal/ deposit slips as and when asked by Shri S. Rajsekhar. That the cheque books and passbooks to these accounts were kept by Shri S. Rajsekhar. He further identified various bills of M/s Kalyan Chemicals with the corresponding slips, forming part of the seized records as written and prepared by him on the instructions of Shri S. Rajsekhar. He further stated that as instructed by Shri S. Rajsekhar, he used to prepare the bills of M/s Kalyan Chemicals and these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containing the details of resin supplied from M/s HRPL to the customers (both accounted clandestine), and the balance of payment due from them. He also identified the other ledger book recovered vide Sl. No. 3, wherein entries were mostly written by Shri V. S. Mahesh the former Sales Executive of M/s HRPL and explained the contents therein. He also explained the contents as queried in respect of various pages in the made up File No. 5 including the details of actual description and value of resin supplied from M/s HRPL to various customers and the collections/ realisation against such supplies. He also admitted that bank account No. 29011 -01075 with Global Trust Bank, Vijayawada in his name was opened at the instance of Shri S. Rajsekhar who operated the said account till its closure in May, 2003. The said account was used to deposit the unaccounted money realised out of the unaccounted / clandestinely sale of resin, under the bills of M/s Kalyan Chemicals. He has no personal interest in the transactions in the said account as the same was operated as per the direction of Shri S. Rajsekhar. He had signed blank cheque books and handed over the same to Shri S. Rajsekhar. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hakraworty. In the account opening forms of these two accounts Phone No. 24557077 appeared which belongs to M/s Sandhya Trading Company who are brokers in oils, oilseeds etc and find mention also in certain acknowledged courier receipts available in made up File No. 77/2, recovered from the factory of M/s HRPL. In his statement recorded under Section 14, Shri K. Prabhuraj, Prop. M/s Sandhya Trading Co., on perusing the bank documents, confirmed that Shri K. Rajeshwar Rao and Shri K. Rajnikant were his two sons and the amount credited in their account in Global Trust Bank were received from M/s HRPL towards payment of supplies of castor oil, soya oil and cotton oil etc. which were arranged by him. He also stated that as per request of Shri S. Rajsekhar the supplies were arranged by him on commission, without any bills. He also confirmed that the payment for such clandestine supplies to M/s HRPL were received by him in the bank account of his sons, as aforementioned. He further stated that the documents of the transactions with M/s HRPL were not available with him as he has periodically destroyed on completion of the transaction. 53. Further, several buyers of the clandest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d dismiss both the appeals filed by the appellant company and its Managing Director Shri S. Rajsekhar. (Anil Choudhary) Member (Judicial) DIFFERENCE OF OPINION: In view of the difference of opinion, the following questions arise for consideration by learned third Member:- 1. There is lack of sufficient evidence, as evidence being the statement of some of the persons given in the course of investigation is not reliable, as such persons have not stood by their earlier statement at the time of cross examination or not appeared for crossexamination, as held by learned Member (Technical) Or The statements of the persons recorded at the time of investigation is based or co-relatable with documentary evidence. Such documentary evidence having not been denied, the denial of clandestinely removed goods in cross-examination is of no avail to the appellant and such evidence is reliable for the purpose of adjudication as held by Member (Judicial). 2. The case of Revenue is not proved on the principle of preponderance of probability and accordingly the appeals are fit to be allowed as held by learned Member (Technical) Or In view of the documentary evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransportation of clandestinely manufactured goods for sale to the buyers. It is his view that the transporter and buyers have all negated their statements during cross-examination and therefore original statement recorded cannot be relied. So also with the allegation of flow back of money in sub-clause (c) of the said paragraph, Member (Technical) has concluded that there is some evidence regarding cash deposits and counterfoils of demand drafts but it is not sufficient to establish flow back of money to the appellant. Whereas, after explaining the evidence in the case, Member (Judicial) in paragraph 55 held that there is sufficient evidence for clandestine purchase of raw materials, clandestine removal of finished goods, evidence of transports and flow back of sale proceedings of clandestinely cleared goods. He is also of the view that the retraction to the statement by some of the persons at a later stage as well as non-appearance of some of the witnesses in the proceedings is of no consequence in view of the voluminous documentary evidence. 60. At the outset, it has to be stated that there is consensus by both Members on the fact that M/s. Kalyan Chemicals and M/s. Prasad Che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cross-examination of ShriKalyanChankravarthy and Siva Durga Prasad done on 8.12.2010 is as under:- RECORD OF CROSS-EXAMINATION Shri S. Venkatachalam, Learned Advocate posed questions to M. Kalyan Chakravarthy, Dr. No. 21-10-2, 2nd Floor, Lakshmi Nilayam beside of Dwaraka Nag Apartment, Sri Nagar, 3rd Line, SN Puram, Vijayawada 11. Ques.) Advocate: Please explain your nature of Business? Ans.) M. Kalyan Chakravarthy: Replied that I was joined in 2000 as clerk-cum-typist at M/s. Harika Resins 1) Ques.) Advocate: Did you start a unit in the name of M/s. Kalyan Chemicals? Ans.) M. Kalyan Chakravarthy: Replied that Yes, as per instructions of Shri Raja Sekhar, MD. 2) Ques.) Advocate: Did you do your business? Ans.) M. Kalyan Chakravarthy: No 3) Ques.) Advocate: Did M/s. Harika Resins remove resins without invoice? Ans.) M. Kalyan Chakravarthy: No 4) Ques.) Advocate: Did you file Sale Tax Returns and Income Tax Returns during that period for M/s. Kalyan Chemicals? Ans.) M. Kalyan Chakravarthy: The Auditor was looking after all those and M/s. Prasad Chemicals and M/s. Kalyan Chemicals are sister concerns of M/s. Harika Resins. RECORD OF CROS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re cross-examined in the denovo adjudication proceedings. All of them stated in cross-examination that they purchased only resin from appellant-company under proper invoices. Though such statements may be against their earlier statements recorded under section 14 of Central Excise Act, 1944, the same has to be examined and appreciated on the background of other evidences produced and proved. 64. The learned Member (Technical) has concluded that indeed there is some evidence for flow back of money and that this is not sufficient evidence to establish flow back of sales proceeds from clandestine clearances. Documents in the nature of counterfoils of deposit slips pertaining to deposits by cash and cheques into the savings bank account of Shri V. Srinivas Mahesh, who is an employee of the company were recovered. Some of the counterfoils issued for demand drafts were obtained favouring the appellant and M/s. Priya Chemicals. The proceedings relating to M/s. Priya Chemicals have been completely dropped. The amount collected as cash as well as chequesfrom customers were deposited in the personal savings bank account of ShriV. Srinivas Mahesh. In his statement dated 21.10.2003, V. Srin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by tactful ways of hiding, deleting or covering up the fraud. For the same reason, the process of investigation and collecting evidence also become humongous and challenging. This would equally apply to the requirement to prove and establish such evidence in court. While applying the standard of proof of preponderance of probability, in the present case though some of the witnesses have negated their original statements in the cross-examination, the statement ofShriKalyanChakravarthy, ShriDuraga Prasad, the misdeclaration of the goods seized from the premises of transporter SRMT, Chennai, discrepancies / reconciliations in accountsmaintained by V. Srinivas Mahesh and others would sufficiently prove the allegations raised in the Show Cause Notice. 67. In para 100 of the Order in Original, the adjudicating authority has discussed the defect of non-supply of relied upon documents. Even without considering the evidence of such documents there is enough evidence to establish the case put forth by department. The role of the Managing Director in such activity is also clear. 68. In the result, I agree with the findings of Member (Judicial) and hold that the appeals have to be dism ..... X X X X Extracts X X X X X X X X Extracts X X X X
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