TMI Blog2024 (5) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... installed capacity of the unit during the material period. There is no evidence available regarding excess consumption of electricity or procurement of raw material or utilization of labour to produce excess goods clandestinely. If the excess production of 1365.257 M.T. is added, then that would amount to production of 6742.397 M.T. (5377.140 M.T. + 1365.257 M.T.) by the appellant during a period of 11 months, whereas the installed capacity of the unit itself is only 6,000 M.T. per annum. The adjudicating authority has not given any finding as to how it is possible to produce excess quantity beyond the installed capacity. Thus, the demand has been confirmed much beyond the installed capacity of the unit without adducing any evidence in support of clandestine manufacture and clearance. The entire allegation is based on certain loose sheets / documents recovered during the course of search. The clandestine removal has not been corroborated with any other evidence. The burden of proving clandestine removal with positive, tangible and cogent evidence is on the Department, to establish that the appellant has manufactured and clandestinely cleared the goods. For the purpose of establishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion of search operation at 9.15 pm on 26.02.2009. and it cannot be considered as a certificate of correctness of each and every transaction appearing in loose sheets. Hence, the statement given by him cannot be considered as an admission of his guilt. Since the offence alleged to have been committed by the appellant company is not established, it is held that imposition of penalty on the basis of the same allegation is not sustainable. In the absence of any evidence to show specific role played by a Director and his active involvement, in the commission of the offence, penalty cannot be imposed under Rule 26 of the Central Excise Rules, 2002. The allegations of clandestine removal and clearance of goods without payment of duty has not been established - the role of the Director in the alleged clandestine manufacture and clearance of the goods is not established - no penalty is imposable on him under Rule 26 of the Central Excise Rules, 2002. Accordingly, the same is set aside. The impugned order is set aside - appeal allowed. - HON BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL) And HON BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL) Shri Sudhir Mehta, Advocate for the Appellant Shri S.S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.1,00,000/- was also imposed on Shri Amit Kumar Agrawal, Director of the appellant-company under Rule 26 of the Central Excise Act, 2002. 5. Aggrieved against the said order, the present appeals have been filed. 6. In their appeal, the appellant contended that the adjudicating authority has given a finding in the impugned order that there is no evidence to substantiate the allegation of clandestine clearance of the goods without payment of duty. However, contrary to his own findings, he has confirmed part of the demand made in the Notice without any corroborative evidence. Hence, the demands confirmed in the impugned order is not sustainable. The contentions of the appellant-company are summarized as under: - i. The entire allegations are framed on the basis of loose sheets/ documents seized during search operation which did not belong to them and there is no concrete evidence to substantiate the charge of clandestine removal. The loose sheets were seized from the trading firm and they do not relate to the business of the appellant, who is a manufacturer of excisable goods. ii. The allegation of clandestine removal has not been corroborated to establish that the contents of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moval is entirely based on 'loose sheets' and statement dated 26-02-2009 of Shri Agarawal. There is not a single material brought on record to corroborate the contents of the loose sheets and the charge of clandestine removal. viii. The documentary evidences must be proved by other primary or secondary documentary evidences. Oral statements being secondary evidence cannot prevail over documentary evidences which are primary evidences and in case of conflict between the documentary evidences and oral evidence, the documentary evidences shall prevail. In the instant case there is absolutely no corroborations of the loose sheets in material particulars, therefore, the contents of books of accounts, statutory records cannot be rejected. ix. Their installed capacity was only 6000 TPA as certified by the Project Manager, District Industries Centre whereas as per the allegations in the Notice, they have manufactured 14026.792 MTs of re-rolled products in a period of 11 months during 24.03.208 to 24.02.09 which is 270% of the installed capacity. In the above background of the case the charges of clandestine removal is quite improbable and entirely based on assumptions and presumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Laxmi Engineering Works [2010(254) E.L.T. 205 (P H)] 6.1. With respect to imposition of penalty on Shri Amit Kumar Agrawal, Director of the appellant-company, he made the following submissions: - i. His statement on 26.02.2009 was recorded between 09.30 pm on 26.02.2009 to 2am on 27.02.2009 by showing 5000 pages of loose sheets after conclusion of search operation at 9.15 pm on 26.02.2009. ii. The statement was in general terms as correctness of each and every transaction appearing in loose sheets was not verified since he was suffering from acute depression. iii. When the exact nature of offences has not been specified, imposition of penalty is not sustainable. In the absence of evidence to show specific roles played by a Director and his active involvement, such Director cannot be visited with penalty under Rule 26. iv. Reliance has been placed upon the following decisions: - (a) Amrit foods vs Commr. of C.Ex., U.P. [2005 (190) E.L.T. 443 (S.C.)] (b) Commr. of Cus., ICD v. Cyber Express P. Ltd. [2004 (172) E.L.T. 388 (Tri. Del.)] 6.2. He further submits that on the same set of facts, proceedings initiated against the appellant was dropped by the Tribunal in the case of M/s. Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndestinely removed by the appellant without payment of duty. 10. We observe that the Ld. Commissioner has accepted the above argument put forth by the appellant and reduced the demand raised in the Show Cause Notice and confirmed only Rs.56,52,591/-. The Ld. Commissioner s observation in the impugned order is reproduced below: - 6.5 I find that the demand has been based on the private register and some loose hand written chits seized from the office of the Director at Lal Building,Kachery Road, Rourkela. From the copies of the documents seized and appended with the Show Cause Notice details of the purported sales effected from 01/01/2009 to 31/01/2009 and 01/02/2009 to 24/02/2009 taken from the Sales Register with details of the Party Name, Lorry No. and weight of the materials has been mentioned whereas for the period from 24/03/2008 to 31/12/2008, purported Sales figure has been notionally arrived from the loose chits seized from the office. The Assessee/Noticee defended the case that the sales figure are inclusive of both their firms i.e. M/s Bajrangbali Re-rollers (P) Ltd. and M/s Bajrangbali Steel Industries (P) Ltd. The authorities have only taken the figures of sale of M/s B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e figures. Neither the sale chits could tell anything about the actual quantity of production or clearances. Further, the author of the hand written chits has not been identified and his statements recorded to find out the truth. No attempt has been made to identify these three aforesaid persons purported to have been engaged as contractors for production and dispatch of goods and their statements recorded. Actual payment particulars made to these persons has not been collected or any Ledger or Bank Statement to that effect have been collected or adduced as evidences. No contract papers about the engagement of the purported contractors has been collected or produced. Corroborating statements from other persons of the factory like Production Manager/ Factory Manager, authorized signatory and other persons were also not taken. In absence of other evidences, the seized hand written chits cannot be the basis for raising huge amount of demand on clandestine production and removal. These documents can at best be held as raising doubts indicating further investigation. No such investigation has been undertaken or any evidence has been produced. Hon'ble Supreme Court in the case of J.N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en cleared without payment of duty and he has agreed to pay the differential duty. They have also deposited Rs.25,00,000/-(Rupees Twenty five Lakhs) only at the time of investigation towards their potential duty liability. Accordingly, the entire demand is to be re-calculated after taking into account the sales figures made by M/s. Bajrangbali Steel Industries Pvt .. 11. From the above finding, we observe that the Ld. Commissioner has relied upon the details available in the loose sheets only to confirm the demand, contrary to his own findings in paragraph 6.9 of the impugned order, as reproduced hereinabove. 11.1. From the submissions of the appellant, we observe that the installed capacity of the unit was 6,000 M.T. only. As per the records, the appellant has produced 5377.140 M.T. of the goods and cleared the same on payment of duty. There is no evidence brought on record to show any increase in the installed capacity of the unit during the material period. There is no evidence available regarding excess consumption of electricity or procurement of raw material or utilization of labour to produce excess goods clandestinely. If the excess production of 1365.257 M.T. is added, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als required for the manufacturing of the alleged quantity of finished goods for its clandestine removal from the factory. In the entire notice and the order, there is no satisfactory and reliable independent evidence as regards the unaccounted manufacture and/or receipt of the huge quantities of raw materials. The quantities of the clandestinely manufactured goods dispatched from the factory would require some transportation arrangement for delivery from the factory. 11.6. There is also no cogent evidence of disproportionate and unaccounted receipt and consumption of the basic raw materials and packing material, required for manufacturing alleged quantity of unaccounted finished goods. We do not find any tangible proof of unauthorized payment for procuring such unaccounted raw material and packing material. We do not find cogent evidence of disproportionate power consumption, capacity utilization and labour employed, or any cogent evidence of clandestine manufacture of unaccounted quantity alleged as clandestinely removed. We find that unaccounted production in the factory of the appellant-company has not been established. 11.7. In the case of Ruby Chlorates (P) Ltd. v. Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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