TMI Blog2002 (1) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... law that a mere seizure of notebook without examining its scribe cannot be the criteria for confirming the demands without any corroborative evidence. The Commissioner has again re-confirmed the demands and on the point of scribe of the notebook not having been examined and statements recorded at the time of seizure when he was present in the company at the time of raid, the Commissioner notes in Para 16 of his order as follows : 16. Now I proceed to discuss the above infirmities in the light of the evidence on hand. Firstly, the Accountant who maintained the notebooks, could not be contacted by the investigating officers since he left service of the assessee. He also left the premises in Sivakasi where he was staying earlier. His whereabouts could not be traced. Hence it was not practical to record his evidence. Secondly, in the retraction statement made by Mr. Rajagopal after two months, a new interpretation was introduced that these notebooks were maintained for purpose of disbursement of salary and that "cases" as mentioned in the notebooks may contain semi finished and finished goods. On perusal of the notebook, I find that this interpretation has not much force becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me raw material invoices covering the quantity received have not been accounted for in the RG23A Part I. Assessee claimed that since transporters copy was not available they were not taking credit in RG23A Part II. However it is to be noted that no form IV Register has been maintained. In such a situation assessee ought to have taken into stock in the RG 23A Part I Register even if credit was not taken in Part II. Therefore, it is not possible to assume that the assessee had retained all invoices relating to purchase of raw materials. All these would lead to the inescapable conclusion that the assessee's accounting system was not reliable. 18. With reference to the issue of non-examination of workers, I have to consider the following points. The Managing Partner himself was available in the factory on 1-9-1995 and witnessed the mahazar drawn in the presence of the two independent witnesses on the same day. He had given a statement on the next day admitting shortages and the genuineness of magazine stock notebooks. In such a situation, there was no need for recording any statement from the labourers. With reference to the plea that no evidence has been adduced by the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that these notebook entries relate to finished goods which were not accounted in RG 1. 20 It is to be admitted that the investigations conducted at the transporter's end, the insurance Companies did not produce any evidence of clandestine removal. However, the very word 'clandestine' connotes something done secretly, on the sly, stealthily etc. Obviously when a person is indulging in clandestine removal, he cannot be expected to insure such goods or to leave evidence through transport documents. I therefore hold that the absence of such corroborative evidence does not weaken the department's case. 21. As regards the plea that there was no sufficient manpower to manufacture the impugned goods, it is to be noted that the unaccounted production as per the private records relate to a long period (Jan. '95 to Aug. '95). Since for the manufacture of different varieties of fireworks, the consumption of raw materials and workmanship would also vary, it is not practical to arrive at any yardstick to show how much would have been manufactured with available manpower. 22. With reference to the claim that the Factory was under the control of the Explosives Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ike Police. Explosive Act authorities, Sales Tax authorities and Central Excise authorities exercise control, is not tenable since the removal of fireworks is under self removal procedure and could be done by the assessee at his free will without the permission or supervision of the above authorities. 27. The assessee has given an elaborate method of calculating the value of inputs required for manufacture of 1.26 Crores worth of fireworks during the year 1994-95 onwards. The average ratio works out to 70% for raw materials in value terms of the finished products. It has been claimed that there was no dispute with reference to the raw materials and therefore excess production of finished goods as alleged was not possible. 28. However as already discussed by me earlier in Paras 17 and 23 of this order, the assessee, even when he had original copies of invoices for major raw materials purchased like aluminium powder, Dextrine and CC wire, failed to account for the same in RG 23A part I. The claim of assessee that these invoices were not accounted due to non-availability of the transporter's copy is nothing but an after thought as that copy is not relevant for accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have accepted the records of the party after examination. I have already discussed in detail that the managing partner in his statement before the investigating officers had admitted that he had not maintained any record required under Explosives Act. As already discussed in my findings, the Central Excise statutory registers such as Form IV Register and RG 23A has not been properly maintained by the assessee. In the system of Self Removal, a great responsibility is cast on the assessee to maintain records properly and discharge the appropriate duty in a responsible manner. When the assessee does not discharge the responsibility cast on him by not even maintaining the statutory records, the above claims based on maintenance of records and verification by other departmental authorities loses force. The same would also hold for the argument that there was no instance of stopping of clearance at the checkposts by the sales tax authorities. Examination by the Officers, does not weaken the department's case, as managing partner, who was present during the search, signed the mahazar, admitted to the contents of the mahazar and details contained in the private notebook maintained by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demands including penalties are required to be set aside. 4. In reply, ld. SDR Shri G. Sreekumar Menon relied on the findings which are extracted supra. He submits that authenticity of the notebook was not challenged by the Managing Partner and therefore the entries made therein are deemed to have been proved as the same contained the various details of manufacture and removal of each item of fire-work. Therefore, it could be easily presumed that such production took place and the demands are therefore required to be confirmed. 5. On a careful consideration of the submission from both the sides, we notice that the matter had come up for final hearing in the previous round and by final order No. 567-568/99, the matter had been remanded to Commissioner to examine the aspect pertaining to confirmation of demands on clandestine removal in terms of the seized notebook. It was noted that the appellants had referred to various evidences to show that such quantum of inputs could not have been used by them as such inputs are regulated under the Explosives Act and that for manufacture and clearance, huge sums are required, for which the appellants did not have the means. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fireworks. The said non-examination of the supplier of raw material which is controlled and a licensed commodity is fatal to this case and it can be easily concurred that Revenue has not proved the case with regard to the purchase of raw materials for manufacture of final product. 7. It is seen that the appellants have also brought to the notice of the Revenue that fireworks are required to be insured mandatorily while removing the same and various authorities are required to be informed and permission obtained. Revenue has not examined this point in the correct perspective. The danger of removal and penal consequence of non-insurance is a serious matter and the Commissioner ought to have relied on same evidence to show as to how they could manufacture and remove such controlled explosive commodity without proper protection and insurance. Merely to give finding that such clandestine removal is done secretly and stealthily and they do not follow the law is not acceptable in the peculiar facts and circumstances of this case. There is no other corroborative evidence with regard to the sale and purchase by particular persons and there is no evidence of removal through any tran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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