TMI Blog2005 (7) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... s are partners, employees and dealers of the main appellant, who have been aggrieved by the confirmation of the demand of duty and imposition of penalty in the impugned order. Some of the appellants are cleaners and drivers concerned in transporting excisable goods on whom penalties have been imposed under Rule 209A of the Central Excise Rules, 1944. 3. M/s. R.K. Patel Co., Tobacco Manufacturers, (RKPTM), (main appellant), are the manufactures of branded chewing tobacco, commonly known as Jarda, falling under sub-heading No. 2404.41 of the Central Excise Tariff Act, 1985. 4. The case of Revenue is that on specific information that M/s. RKPTM are engaged in the clandestine removal of branded chewing tobacco and to camouflage this illicit activity, firms under fictitious names have been floated, therefore, the officers of Central Excise, Special Preventive Cell, stationed at Nashik kept surveillance at Dhule from 5-9-97 onwards. On 6-9-97, the officers spotted vehicle No. MH-19-5159, which was regularly used for removal of Jarda, plying towards Malegaon. The officers intercepted the vehicle near Zodge village on Dhule-Malegaon Road. On checking, the vehicle was found carryi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing into account manufacturing loss @ 22.76% and the value of goods on comparable basis of similar goods, under the provisions of Section 11A of the Central Excise Act, 1944, covering the period between 1994-95 to 1997-98. Penalty and recovery of interest was also proposed on partners of M/s. RKFTM and other persons, including suppliers of raw materials, dealers of Jarda, drivers, cleaners and other employees, who had abetted M/s. RKFFM and its partners to remove excisable goods without payment of Central Excise duty. 8. The Commissioner, Central Excise Customs, Aurangabad, decided the issue vide Order-in-Original No. 49/CEX/2000, confirming the duty demand up to February 1997 on the quantity of Jarda removed clandestinely of Rs. 3,76,49.018/- and imposed equal penalty under Section 11AC on the assessee and ordered recovery of interest on total demand under Section 11AB of the Act. The seized goods of 90 cartons containing Jarda and the vehicle were confiscated, but allowed release of the same on payment of redemption fine of Rs. 16,000/- and Rs. 50,000/- respectively. Personal penalties were also imposed on other Noticees. 9. The assessee had filed an appeal before CEGAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dt. 6-9-97 of M/s. Ganesh Trading Co., Navalnagar. The persons namery Shri Dilip Devidas Patil, Driver, Shri Sanjay Bhimrao Patel, Cleaner and Shri Ratilal Bhavsar, Salesman, were found in the said tempo carrying the branded Jarda manufactured by M/s. RKPTM. Statements of all these persons were immediately recorded on 6-9-97, wherein they have admitted that the consignment of Jarda has been cleared from the factory premises of M/s. R.K. Patel Co. Tobacco Manufacturers, Amalner, Unit No.1 at 15.30 Mrs., without cover of Central Excise Invoice and without payment of Central Excise duty". 13. In para 199, the ld. Commissioner observed the modus operandi adopted by M/s. RKPTM, Amalner, for suppression of production of Jarda and its disposal/sale without payment of duty has come to the notice on 6-9-97, when vehicle No. MH-19-5159 was intercepted with 90 cartons of Gai Chaap Patel Jarda. It was found that Jarda cartons were removed clandestinely without payment of duty from the factory of M/s. RKPTM, Amalner, and cleared from the trading firm, M/s. Ganesh Trading Co., Navalnagar. Therefore, the same were seized along with vehicle No. MH-19-5189. 14. Lastly, in the concluding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Bhagwant Singh Shakya. (v) Letter dated 16-5-2003 of Shri Brijesh Kumar Gupta, Partner of M/s. Baldeoprasad Badriprasad of Kayamganj, explaining the events that took place and demand made against the appellants on 23-8-2003. (vi) The verification of counter-foils for purchase of demand drafts from the banks concerned by Shri Himmat Patel. (vii) The modus operandi adopted by the appellants to evade Central Excise duty as per the statement given by Shri Madhukar Hari Patil. (viii) The statement of Shri Ravjibhai Ashabhai Patel with regard to the consignments made to the appellants, (ix) Handing over documents by Shri Birjeshkumar Gupta and Shri Sunilkumar Gupta. (x) The details of clearance of clandestine removal of Jarda were not available and therefore, demand was calculated on the basis of unaccounted raw tobacco received by the appellants and lastly the deviation from the original stand by the appellants in respect of duty liability on their part and admission of liability to the extent of 59 trucks of Jarda manufactured out of the consignment of raw tobacco received by them. 16. We have heard both sides in detail and at length. We have also considered the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but no discrepancy was found. This is also found from the statement of Shri S.K. Patel, Partner of the appellants, recorded on 7-9-97. The factory premises was under physical control up to 30-4-94 and nothing irregularity and illegal activities noticed. 19. In the light of the aforesaid background and the circumstances, the case on hand is to be adjudged as there is serious charge of clandestine removal of the goods by the appellants, the Department is required to prove the same by positive and cogent evidence. Equally it has to prove in satisfactory manner, the receipt of raw materials and unaccounted production. The ld. Commissioner appears to have mainly relied upon the statements recorded from the transporters and suppliers of raw materials and others. As seen from the record, many of them have retracted their submissions immediately. The raw material suppliers from Gujarat have given their statements first to the Gujarat Central Excise Officers in Gujarathi not known to them. Their statements were also recorded on second time. Again after long gap, the Central Excise Officers of Nashik have recorded their statements in English language. These statements are the improved v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Processors, who is other manufacturer than the appellants in Amalner. He was shown goods challan No. 332 (relied upon document in Annexure B(2), Sr. No. 1) against which demand has been raised on the appellants but the witness states that such challan does not pertain to his transaction. (d) Shri Brishkumar Gupta, Partner of M/s. Baideoprasad Badriprasad. His first statement was recorded on 10-3-98 at Farukhabad in Hindi. He stated that he has sent 26 consignments. In his second statement recorded on 24-6-98 by Nashik Preventive at Dhulia, he stated that he has supplied 35 to 40 trucks. During the cross examination held on 18-6-2003, it is stated that he has supplied raw tobacco to three firms in Amalner. Further he confirmed that during the search, the Central Excise Officers took photocopies of the relevant documents and that he was detained by them for 72 hours continuously and he had sent a police complaint by registered post at Amalner and also to the Commissioner of Central Excise, Aurangabad and Additional Commissioner of Central Excise, Nashik. Further it is stated that his signature was obtained on the statement without reading and explaining the same to him. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Trading Co. has sold excess material than what has been cleared to them by the appellants on. payment of duty. M/s. Ganesh Trading Co. has accounted for 90 cartons of Jarda against supplies made by the appellants on payment of excise duty. On the contrary, the appellants and M/s. Ganesh Trading Co. had given a detailed account about the duty paid clearances of chewing tobacco to M/s. Ganesh Trading Co., including identification marks indicated on the cartons. It is pointed out by the ld, Jt. CDR that there was a gap of six months during the clearance under the invoice and the subsequent dispatch by M/s. Ganesh Trading Co. However, he admits that no exercise was done during the course of investigation with regard to the goods cleared from the appellants' factory on payment of duty to M/s. Ganesh Trading Co. and the quantum of sale by M/s. Ganesh Trading Co., to establish any excess sale by it. In this context, it is to be observed that the reliance placed by the Commissioner on some statements, which have been retracted subsequently, without there being any corroborative evidence, is not proper and it cannot establish clandestine removal of the goods. 24. The impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the goods at the destination point. However, no acknowledgement receipt is given for such transport receipt. The transport receipt is supposed to contain all the details of the consignee with regard to the quantum of material, name of the firm, address, etc. This is also admitted by him in his cross-examination. Shri Ramanbhai Maganbhai Rajput, Manager of M/s. Ambika Roadways, Borsad, had also admitted these facts. 26. The cross-examination of Shri Purshottamdas Rambhai Patel reveals that he had supplied 31 trucks of raw tobacco to the appellants after verifying the receipts prepared by him. Earlier, in his statement recorded by the Officials concerned, it is stated that he supplied 17 trucks. It is pertinent to note that the demand was raised basing on the entries in the diary allegedly maintained by him, but witness denied of having maintained such a diary. Therefore, demand was dropped ultimately. The effect is that it disproves the receipt of unaccounted raw tobacco. 27. Shri Sunil Kumar Varma in his cross-examination said that he purchased six drafts and the material was sold to Shri Desaie and Shri Pawar and that they could have sold 4 trucks to others for profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i permits may raise a suspicion but cannot be an adequate proof for receiving raw materials and used for clandestine processing. 31. The ld. Commissioner has heavily relied on the statement of Shri Madhukar H. Patil in providing information with regard to evading Central Excise duty by the appellants. But the ld. Commissioner did not take note of his cross-examination wherein it is revealed that he became hostile to the appellants. No credit can be attached to such a statement. At one stage, he reveals no personal knowledge about the evasion of duty by the appellants. Before officials, he gave statement basing on his personal knowledge. His entry to the company was restricted from 1993 onwards. Shri S.K. Patil was suspecting that his other brothers were obtaining information from Shri Madhukar H. Patil and he was not taken into confidence by the appellants. Therefore, it is quite unsafe to rely on his version. His attending to excise work was very rare. After September 1996, he took employment with M/s. R.K. Patel Co. Tobacco Processors the competitors of appellants. 32. The ld. Commissioner has also relied upon the statement of Shri Premsingh R. Mahajan, Accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en no investigation has been done to co-relate the sales made by these firms with the purchase of Jarda from the appellants. 34. The ld. Commissioner points out that there is deviation from the original stand of the appellants regarding the duty liability on their part as in the present proceedings they have agreed that their liability is restricted to Jarda manufactured out of the consignments of raw tobacco received in 59 trucks. However, we find that the appellants in their letter dated 20-6-2000 and written submission dated 23-8-2003 have unambiguously qualified their submission "Without prejudice" and thus the appellants plea to restrict the demand to only 59 trucks as the consignment in their name and the transport challans and the same is alternative argument. If is not a deviation from their stand. 35. The ld. Commissioner has referred to a letter dated 23-8-2003 submitted by Shri Brijeshkumar Gupta after his cross-examination, which was over on 18-6-2003. It is strongly contended on behalf of the appellants that the Commissioner is not justified in relying this document, which was obtained from him subsequently, and the appellants had no opportunity to traverse the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we find that in most the cases D/Ds are not in the names of the suppliers given in Annexure B(18) as it will be seen from the names in whose favour D/Ds were taken from Amalner as indicated above. We further find as per annexure B(a) D/Ds in the name of Surajpal Gupta was taken during the period 5-3-94 to 9-9-95 are for Rs. 2,74,500/- whereas as per Annexure B(26), the appellants are supposed to have received 10 vehicles of raw tobacco costing Rs. 12,97,500/-, which is based only on the statement of Shri Surajpal Gupta dated 30-7-98. Thus, we find that there is no co-relation between the D/D amount indicated in Annexure B(a) and the value of tobacco, which is supposed to have been received by the appellants. Explanation for this major discrepancy is not forthcoming from the records, If the basis for issuing Show Cause Notice is that U.P. suppliers, were converting cash into D/D at Amalner for raw tobacco supplied by the appellants, how can there be such a vast difference between value of raw tobacco supposed to have been supplied and the amount of D/Ds n those, cases where names of the D/Ds and names of the suppliers of raw tobacco tallies. We have seen the statement of Shri Sura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... caution contained in law is that such a statement should be scrutinized by the Court in the same manner as confession made by an accused person to any non-police personnel. The Court has to be satisfied in such cases, that any inculpatory statement made by an accused person to a Gazetted Officer must also pass test prescribed in Section 24 of the Evidence Act. If such statement is impaired by any of the procedure enumerated in Section 24 that statement becomes useless in any criminal proceedings". (2) Further, he relied upon the judgment reported in 1996 (83) E.L.T. 258 (S.C.) in the case of Shri Naresh J. Sukawani v. Union of India, to stress on the proposition that a statement before a Customs Officer is a material piece of evidence and certainly can be used as substantive evidence. As stated supra, all the statements given by the witnesses have been retracted and there is no corroborative documentary evidence to substantiate such statements. Therefore, in the absence of any link document to establish a fact, it is not proper to rely upon such statements to come to conclusion in cases of this nature where clandestine removal is alleged. This view is supported by the judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1999 (113) E.L.T. 1000 (Tri.). (v) M/s. Gurpreet Ruber Industries v. Collector of C. Ex., Cochin - 2002 (146) E.L.T. 248 (S.C.). In all the above cases, it is settled legal position that for establishing clandestine clearance, there has to be a very strong evidence. In the instant case, the evidence let in by the Dept. do not even raise suspicion particularly in the background of the circumstances that number of visits/checks made by the various agencies prior to booking of the present case, at no time the officials did not find any unaccounted raw tobacco or any unaccounted production or clandestine clearance. While these checks were going on, the appellants themselves have cautioned about the possible apprehension of misuse of their name by their competitors and create problems to them. In order to prove supply of raw materials, there shall be positive evidence such as acknowledgements of consignee and the records maintained by them showing receipt of the goods. Nothing has beers found in the instant case. In normal course, driver's statements would be helpful in proving and fact as to the supply of raw tobacco at a particular destination. But the authorities co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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