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TMI Blog2024 (5) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... has also been imposed under Section 11AC of the Act read with Rule 25 of the Central Excise Rules, 2002 and Rule 15 of the CENVAT Credit Rules,2004. Further, penalty of Rs.10,00,000/- each has been imposed on the Managing Director of the company, Shri Ramjilal Agarwal and the Director, Shri Vijay Kumar Agarwal, under Rule 26 of the Central Excise Rules, 2002 read with Rule 15 of the CENVAT Credit Rules,2004. Aggrieved against the impugned order, all the three appellants have filed these appeals. 2. The facts of the case are that the appellants are manufacturers of C.I. Ingots moulds and unmachined C.I. Castings. A search operation was conducted by DGCEI officials at the factory and office premises of the appellant simultaneously on 23.08.2008. During search of the factory premises, physical stock of the input and finished materials was taken in presence of Shri Vijay Kumar Agarwal, Director of M/s. Mittal Iron Foundry (P) Ltd. During the joint physical stock taking, the following shortage of finished goods and inputs were found in comparison to Stock register maintained by the appellant : - (i) Shortage of C.I. Ingot Moulds : 495.960 MT (ii) Shortage of C.I. Castings : 137.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch less than what was ascertained by the visiting officers. They requested to appropriate Rs. 15 Lakh from the amount of Rs.50 Lakh towards the duty liability attributable to this quantity of shortage. 4. Regarding the Central Excise duty liability of Rs.48,41,515/- and the disallowance of CENVAT Credit amounting to Rs.7,86,930/-, the appellants submits that the stock was not properly taken at the time of search of the factory premises and the confirmation thereof by the Directors who were present at the spot was obtained under coercion and duress; the weight of the finished goods was taken on the basis of a rough estimate provided by the Directors. They have two weigh bridges - one for weighment 1 MT and another for 0.5 MT inside the factory. The appellant submits that the weight of the moulds were admittedly more than 1 MT and as such it cannot be doubted that the stock was not physically taken and it was on the basis of eye estimate only. It was also submitted that after the search on 23.08.2008, the appellant-assessee undertook physical stock taking of the goods lying in the factory and vide his letter dated 31.10.2008 addressed to the ADDGCI, Kolkata, it was informed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity, actual clandestine removal of finished goods without payment of duty, mode of removal, evidence of transporters and buyers of the clandestinely removed goods and flow back of funds pertaining to clandestine removals. They stated that the demands confirmed in the impugned order without any of the above mentioned evidences are not sustainable. 4.3. In support of their contentions, the appellants relied upon the following decisions: (i) Commissioner of C.Ex., Tiruchirapalli v. Sree Rajeswari Mills Ltd. [2011 (272) E.L.T. 49 (Mad.)] (ii) Commr. Of C. Ex., Ahmedabad v. Shree Laxmi Steel Rolling Mills [2008 (232) E.L.T. 695 (Tri.-Ahmd.)] (iii) Dalmia Vinyls (P) Ltd. v. Commissioiner of C.Ex., Hyderabad [2005 (192) E.L.T 606 (Tri. - Bang.)] 4.4. In support of their submission that demand based upon computer print outs without any corroboration is not sustainable, the appellant relied on the following decisions: (i) Shivam Steel Corporation Vs CCE, BBSR-II [2016 (339) E.L.T. 310 (Tri. - Kolkata)] (ii) Super Smelters v. Commissioner of C.Ex., Durgapur 2020(371) E.L.T. 751 (Tri. - Kolkata)] 4.5. In view of the above, the appellant prayed for setting aside the demands o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The weighment sheet is prepared on the basis of weight of each article as provided by the Director multiplied by number of such articles. Counting numbers of the articles was noted down in the rough sheets at the time of stock taking which has been authenticated by the Director on the spot and he has confirmed the shortage in his statement dated 23.08.2008. Subsequent retraction of the statement and alleging that the stock taking was not done properly, seems to be an afterthought. We observe that shortage of stock was ascertained on comparison of the stock so found with the stock recorded in the books of accounts maintained by the appellant-assessee. The shortage of pig iron as on date was declared by the Director on the same date. 7.3. We observe that there is no dispute that the quantification of the goods was done in the factory and office premises of the appellant-assessee and the Director himself had provided with the quantity of each article and pig Iron. Subsequent retraction that the statement was taken under duress does not prove that the piecewise weight of the goods and that of pig iron provided by the Director in his own premises would have been obtained under duress. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to identify the person who entered the data in the computer. We also observe that the author of the computer printout recovered from the Appellant's office has not been established in this case. Without identifying the author who entered the data, the information available in the pen drive cannot be relied upon to demand duty. This view has been held in the case of Super Smelters v. Commissioner of C.Ex., Durgapur [2020 (371) E.L.T. 751 (Tri. - Kolkata)]. The relevant paragraph of the decision in the said case is reproduced below: "22. Further, we find that an similar issue has come up for consideration of this Tribunal in case of Bihar Foundary and Casting Limited v. Commissioner of Central Excise and Service Tax, Ranchi, Appeal Nos. 75819 and 75822 of 2015. The Tribunal vide its Final Order Nos. 75994-75995 of 2013 ha held tht in view of non-compliance of mandatory requirement of 36B of the Act case the clandestine removal cannot be made applicable merely based on the printouts taken from the laptop, computer obtained during the search. And the appeals were allowed by setting aside the order passed by the Adjudicating Authority. The ratio of this case is squarely applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification of person from whom the invoices were recovered and in absence of investigation from the buyers of the goods, no demand can be made on account of clandestine removal. We find merit in the argument of the appellant. Clandestine removal cannot be substantiated without any corroborative evidence. We observe that the investigation has not brought in any corroborative evidence to substantiate the allegation of clandestine removal. 8.7. Accordingly, we hold that the charges of clandestine removal against the appellant assessee M/s. Mittal Iron Foundry Pvt. Ltd. in the impugned order is not sustainable. Thus, we set aside the demand confirmed in the impugned order on account of clandestine removals. 9. Regarding the penalties of Rs.10 Lakh each that have been imposed on the Managing Director Shri Ramjilal Agarwal and the Director Shri Vijay Kumar Agarwal, under Rule 26 of the Central Excise Rules,2002 read with Rule 15 of the CENVAT Credit Rules, 2004, we observe that they were in charge of the day-to-day affairs of the company. They admitted the shortage noticed during the joint stock verification. Thus, they are liable for penalty for the shortages noticed during joint stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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