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TMI Blog2025 (5) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... s MS Ingots, MS Flats, HR Strips, MS Tubes, Galvanized Pipes & Scaffolding equipments of wide varieties falling under chapters 72 or 73 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986). During the course of galvanizing steel tubes and scaffolding equipments with zinc metal zinc dross & zinc dross & zinc gets generated as by-products (excisable goods) falling under chapters 79 & 26 respectively of the Central Excise Tariff Act, 1985. 1.1 Acting upon an intelligence that Noticee No. 1 was engaged in receipt of unaccounted raw materials and clandestine removal of finished goods, search operations at factory & office premises and the residential premises of Shri Abhinav Agrawal, Director (Noticee No. 3) were conducted simultaneously by the officers of the DGCEI, Zonal Unit, Mumbai on 07.07.2011. During the course of search operation at the factory premises certain records/documents and a Computer Processing Unit ("CPU") containing a Hard Disk Drive ("HDD") were recovered and, being relevant for the investigation, the same were seized by the officers under the cover of a Panchnama dated 07.07.2011. Besides the above, soft copies of RG-1 (Daily Stock Register), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwal, Managing Director ("MD") of the Noticee No. 1 07.07.2011 08.07.2011 In the statements, Shri Bhivlal Pardhi, Accountant & Shri Sunil Agarwal, MD, both confirmed that Noticee No. 1 was engaged in clandestine manufacture and removal of excisable goods without cover of Central Excise Invoices and without payment of duty of excise. Shri Sunil Agarwal, MD, also worked out the liability of duty of excise amounting to Rs. 68,08,978/- payable on clandestine removals of the excisable goods based on the daily sheets recovered from Krishna-Kunj office premises, as shown in Annexure - „A‟ to his statement dated 08.07.2011 and stated that they would make cash payment of Rs. 49,08,978/- as duty of excise, and requested to appropriate rest of the amount of duty of excise, i.e. Rs. 19 lakh against the seized currencies. Later on, the Noticee No. 1 informed vide letter dated 09.07.2011 and 25.07.2011 that it had paid a sum of Rs. 25,00,000/- & Rs. 24,08,978/- vide GAR - 7 Challan ID Nos. - 02204110907201100009 & 022041 125072011000010 on 07.07.2011 & 25.07.2011 respectively. On being pointed out that it was not possible to appropriate the said amount aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orroborative evidences. No investigation was conducted from the customers whose names has been found in the documents seized and the electronic documents are not admissible evidence clandestinely removal of goods without testifying the same under Section 36B of the Central Excise Act, 1944. No investigation was conducted at the end of transporter to investigate clandestine removal of goods. Moreover, the partywise details were submitted which shows that in some cases, the appellant has cleared more quantity under the cover of invoice which has been alleged clandestine removal by the appellant. Various statements which were recorded during the course of adjudication have not been verified in terms of Section 9D of Central Excise Act, 1944, therefore, the said statements are not reliable piece of evidence and in the absence of any corroborative evidence placed on record, the demand against the appellant are not sustainable. Consequently, penalty on the appellant are not imposable. 7. In support of their contention, the learned counsel relied on the following decisions :- (1) Durga Trading Company versus Commissioner of Central Excise, Lucknow reported as 2002 (148) E.L.T. 967 (Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of C.E., Aurangabad reported as 2013 (4) ECS (23) Tri. - Mumbai. 9. Heard the parties considered the submissions. 10. We find in this case the case of clandestine removal has been booked against the appellant on the basis of certain loose papers recovered during the course of investigation, on the basis of certain hard disk containing in the Computer Process Unit were recovered during the course of investigation and various statements cannot be recorded during the course of investigation. The charge of clandestine removal of goods is a serious charge and to prove clandestine removal of goods, this Tribunal in the case of Arya Fibres Pvt. Ltd. versus Commissioner of Central Excise, Ahmedabad - II reported as 2014 (311) E.L.T. 529 (Tri. - Ahmd.) has laid down the test to verify the alleged clandestine removal of goods, which is as follows :- "40. After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well-settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenue w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... internal control cannot be the sole basis for demand. There should be corroborative evidence by way of statements of purchasers, distributors or dealers, record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. A co-ordinate Bench of this Tribunal has, in another decision, reported in the E.L.T. issue of 5-8- 2013 (after hearings in the present appeals were concluded), once again reiterated the same principles, after considering the entire case-law on the subject [Hindustan Machines v. CCE [2013 (294) E.L.T. 43]. Members of Bench having hearing initially differed, the matter was referred to a third Member, who held that clandestine manufacture and clearances were not established by the Revenue. We are not going into it in detail, since the learned Counsels on either side may not have had the opportunity of examining the decision in the light of the facts of the present case. Suffice it to say that the said decision has also tabulated the entire case-law, including most of the decisions cited before us now, considered them, and come to the above conclusion. In yet another decision of a co-ordinate Bench of the Tribunal [Pan Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted to the appellant which has not been done in this case. The statements recorded during the course of investigation are not admissible evidence to allege clandestine removal of goods. We further take note of the fact that the appellant has claimed that they have cleared goods on payment of duty and to that effect a chart has been produced by the learned counsel for the appellant which is as under : - 13. No effort has been made by the Revenue to ascertain the correct facts in this case. In view of the various judicial pronouncement, we hold that the charge of clandestine removal of goods on the basis of documents recovered during the course of investigation without corroboration are not relied upon documents. 14. Moreover the statements recorded during the course of investigation have not been verified under Section 9D of the Central Excise Act, therefore, the said statements are not reliable evidence. 15. In the absence of any corroborative evidence to allege clandestine removal of goods, we find that charge of clandestine removal of goods is not sustainable against the appellant and the same is on the assumption and presumptions, therefore, the duty cannot be demanded o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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