2024 (6) TMI 1262
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....ty of the key management personnel of the Appellant company. This is the second round of litigation. In the first round of litigation before this Tribunal, the matter was remanded to the file of the Ld. Commissioner for fresh adjudication as the earlier Order dated 30.12.2004 was passed in gross violation of the principles of natural justice. 2. Briefly stated, the facts of the case are that the Appellant Company is a manufacturer of glass sheets having four plants which undertake the manufacture of Sheet Glass, Plain Glass, Figures Wired and Coloured Glass, Tinted and Non-Tinted Glass. A surprise visit was made by the Central Excise Officers on 16.07.1994 wherein the officers found that several trucks were loaded and stationed in the factory premises but the details of the removal of loose glass sheets loaded in one of the trucks was not recorded in RG-1 register and the excise invoice was also not available and thus they confiscated such truck. Since there was stock of huge quantity of glass sheets, the physical verification of which would take considerable amount of time, a detention memo dated 17.07.1994 was issued and later, on 20.07.1994, the physical verification of stock o....
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....which are used in the required proportion for the manufacture of final product in required size and thickness. A batch mix of the raw materials, determined on the basis of the quality of the glass to be produced, is fed into the furnace. The resultant molten mixture is then passed through a number of rolling machines and thereafter glass sheet is pulled out vertically. The glass sheets pulled through the rolling machine are then cut into the maximum possible sizes, which are then trimmed (to size out the irregular edges) and then the glass sheet in standard size are taken as initial production and accounted for in a private record called as "Daily Production Record" (hereinafter referred to as "DPR"). The DPR shows the daily PULL production in MT and the quality, thickness, the production in the morning, evening and the night shifts and the final production on a daily basis. It also shows the daily, monthly average and yearly average of the production, packing, packing in sq. meters and despatch. The trimming of irregular edges results in waste/breakage at the very production stage are the first type of breakage. The glass sheet so accounted for in the DPR are then visually inspect....
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....and the details of such loading slips are also entered in the log book. After the completion of loading, on the basis of the loading slips and the corresponding entry in the log book, the relevant invoices are prepared for the quantity of goods so cleared. The actual RG-1 stage of the finished product manufactured is only after packing. Such practice has been approved by the departmental authorities. B. That the method of recording of the loose glass sheets in RG-1 Register was in accordance with the instructions issued by the Department. Reliance was placed on the following: i. Letter issued by the Superintendent, Range V, Central Excise, Allahabad bearing C. No.1- Misc/Corr/R-V/85/117 dated 01.10.1985. ii. Letter issued by Superintendent, Range-Naini- Rural -I, Div-A, Allahabad bearing C. No 20CE/NRI/TSGW/Misc/Corr/17/93/594 dated 02.08.1994. iii. Letter issued by the Assistant Collector, Central Excise, Division -I bearing C. No.V (17)Val.64/94/2705 dated 09.09.1994 iv. Copy of the letter of Appellant dated 01.10.1994. v. Statement of employees Shri D.D. Dubey, Excise In-charge on 20.07.1994, Shri M.P. Srivastava, Loading Supervisor, on 27.07.1994, Shri Raees Ahmed S....
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....removal of glass sheets. J. That the determination of Production based solely on the Installed Capacity as deposed by one of the employees without any application of mind is bad in law. K. That no corroborative evidence has been brought on record to show that the Appellant has made any unaccounted purchase of input/raw materials. Further there is nothing on record to show that there has been excess consumption of electricity or any unaccounted labour payment. No statement from buyers have been obtained to whom the goods which have been allegedly removed clandestinely. There is no evidence of any cash sales or flow back of fund. 5. The Ld. Authorized Representative of the Revenue has reiterated the findings made by the Ld. Commissioner in the impugned Order. He submitted that the Appellants have recorded the loose glass sheets in the RG-1 register only on the subsequent day of their clearance. He further submitted that the production quantity and sale quantity as derived from the audited financial statements do not match with the statutory records which show that the Appellants had clandestinely removed loose glass sheets and therefore the Ld. Commissioner was justified in comp....
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....nt cannot be sustained as no enquiries have been made from the buyers. 6.2 The second observation is w. r. t. two parallel set of Daily Production Report (DRP) being maintained by the Appellant. The Appellant had submitted in response to the SCN that sometimes DPR is prepared manually when the computer system is not operating. It was also submitted that the computerised DPR is upto four decimals whereas manual DPR is only upto 2 decimals. We find that this submission of the Appellant has neither been controverted nor any other corroborative evidence is brought on record. 6.3 The third observation is w.r.t. the reliance based on the report of M/s S.R. Batliboi Consultants (P) Ltd. wherein the actual production for all four plants for the year 1992-93 has been stated at 1,53,35,550 sq meters on 2mm basis whereas total production as per RT-12 is 1,46,77,184,505 sq. m. on 2mm basis. The Appellant in its response to SCN has duly explained the reason for such difference by submitting that the report of the said Consultant has been prepared on the basis of Monthly Production Report (MPR) without deducting breakage. The Ld. Advocate of the Appellant while explaining the manufacturing p....
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....apacity. It states that the Appellants are competent to manufacture and obtain much higher production than the installed capacity, the records regarding production and dispatches are not reliable, collections being higher than sales volume and excess consumption of raw materials than normally required shows that to determine the duty liability on the basis of single line of documents does not appear to be authentic. It further states that the determination of suppressed quantities can best be determined on the basis of maximum production quantities. 7.3 We find that at the time of visit of the Central Excise Officers, no entry in RG-1 register was found for one of the many trucks loaded with loose glass sheets and also no excise invoice for such loading was issued. This was the starting point for the presumption that the Appellants had clandestinely removed loose glass sheets. We also find that, when the Appellants were confronted as to why no entries have been made in the RG-1 Register, the employees of the Appellants in their deposition categorically submitted that the Appellant company does not maintain the account of loose sheets in RG-1 on a continuous basis but enter the qua....
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....Rural -I) dated 24.09.1992. The said report specifically reflects the packed quantity and loose quantity and categorically records that "there is no discrepancy in the account book and the balance shown in the RG-1 is correct and tallies with the actual balance lying on the floor of the Ware House". 7.6 The Ld. Advocates of the Appellants have placed reliance on the judgments in the case of Patidar Products vs. Commissioner of Central Excise & Service Tax, Bhavnagar (2023) 9 Centax 231 (Tri.-Ahmd.) and Commissioner of C. Ex, Ahmedabad-III vs. Ronak Laminex P. Ltd. 2008 (232) E.L.T. 861 (Tri.-Ahmd.) wherein the coordinate Bench of this Tribunal noted that since the goods were still within the factory and there was no evidence to show that the same were to be cleared clandestine without payment of duty, the same was not liable for confiscation. 7.7 In the light of the discussion made supra, we find no plausible reason to disagree with the contention of the Ld. Advocates that the practice of recording the loose glass sheets was consistently done at the stage of clearance and this very fact was known to the Department. We also find that such loose sheets were duly recorded at the tim....
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....10 One reason for rejecting the statutory excise records is the significant variation observed in such records vis-a-vis the production and sales quantity derived by mathematical formula from the cumulative production and sales figures as reported in audited financial statements. Such figures were derived by the employee of the Appellants company, Shri M.K. Chattopadhyay, Company Secretary cum Chief Accountant, at the directions of the investigating Officers. The Ld. Advocates have strongly contested such action and submitted that the production quantity has been derived, on certain assumptions, based on mathematical formula i.e. Total Cost of production (Figures as per audited financial statements less selling expenses) divided by weighted average cost of Opening and Closing Stock is not sustainable in law to fasten the serious charge of clandestine removal against the Appellants in absence of any corroborative evidence. With regard to the sales quantity, the Ld. Advocates have submitted that the same has been derived by dividing the stock value by unit sale value without appreciating the two basic facts, stock value represents the closing stock as on the last date and is values a....
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....ance of probabilities and relied on various judicial precedents to emphasize that clandestine activity can be established with circumstantial evidence. However, we find that no corroborative evidence has been brought on record. The demand has been confirmed on assumptions and presumptions without making necessary enquiries to bring out the charge against the Appellants. The Ld. Advocates of the Appellants have relied on the judgment of the Hon'ble jurisdictional High Court in Commr. of Cus. C.E. & S.T., Ghaziabad vs. Auto Gollon Industries Limited, 2018 (360) E.L.T. 29 (All.) wherein it held that: "13. Upon examining the matter, the Tribunal has recorded a clear finding of fact that the revenue failed to establish the case of clandestine removal. The only thing, the revenue produced was a rough work progress register, which was admittedly not a statutory register. 14. The revenue failed to produce any cogent evidence in respect of raw materials, which was required for production of Starter Motors. Also, the revenue did not allege anywhere that the assessee was buying any unaccounted for copper wire, yolk, bearings, brakes, slot insulators, laminations and commutators, which are....
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....ing evidence of the nature of purchase of raw- materials used in the manufacture of the final product clandestine removal cannot be presumed against the manufacturer. Clandestine removal it may be stated is a serious charge and the burden is upon the revenue to establish such a charge on the basis of cogent and real evidence. 19. The department it may be stated here in the present case has not been able to discharge the burden of proof by way of any real evidence of any kind of clandestine removal. It has not even made an attempt to make a search and investigation in the matter. 20. In view of the above established facts in this particular case, it is the opinion of this Court that the Tribunal has rightly come to the conclusion that there was no case of clandestine removal." 9. In conclusion, we observe that none of the reasoning advanced in the SCN and confirmed in the impugned Order for rejecting the statutory records are sustainable. In coming to this conclusion, we have noted that no evidence of unaccounted purchases of inputs have been brought on record by making enquiries from the suppliers of such material. There is no evidence of any unaccounted sales which has been b....