TMI Blog2004 (8) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... wn, taken to Bhiwadi factory and tested there; that in view of such trading activity, they obtained necessary sales tax registration; that the laminated sheets have been procured against S.T.1 form and the sales tax returns have all been assessed; that S.T.1 is for re-sale under the Delhi Sales Tax Act, 1975 and there is no tax on the dealers if S.T.1 is given to them; that "D" Form is given by Railways on sale of traded goods to them for concessional rate of Central Sales Tax @ 4% instead of 10%, normal rate; that in Delhi the sales tax is levied on first point sale and "D" forms are only for Government suppliers; that "D" forms of Delhi supplies to Railways show Delhi address. He also mentioned that on acceptance of the lots offered from Delhi procured from the market, the goods were despatched directly from the Delhi godown to the respective railway destinations; that the procurement of laminated sheets are paid by cheque and transactions are duly recorded; that sometimes where the supply from Delhi slightly fell short of the lot requirement sheets, then such shortage was made good by sending the material to Delhi from factory at Bhiwadi on payment of duty; that the goods were s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the Tribunal that to allege and establish clandestine removals, it has to be supported by evidence with regard to purchase of inputs, production, source of funds, sale and receipt of consideration [Ambica Chemicals v. C.C.E, 2002 (148) E.L.T. 101 (T)]; that they had requested the cross-examination of all the dealers and Sh. Gairola, Ex-General Manager of their company; that only Shri I.C. Khanna, Deputy Director, Quality Assurance, DGS D, New Delhi turned up for cross-examination; that thus reliance on the statements of all the persons who did not turn up for cross-examination is totally uncalled for since the same have not been tested by cross-examination and hence the Order is liable to be set aside. Reliance has been placed on the following decisions : (i) Takshila Spinners v. C.C.E., 2001 (131) E.L.T. 568. (ii) Laxmi Engg. Works v. C.C.E. [2002 (139) E.L.T. 573 (T)] = 2001 (47) RLT 1302. (iii) Swadeshi Polytex Ltd. v. CCE., 2000 (122) E.L.T. 641 (S.C.). 3.2He mentioned that Shri I.C. Khanna had earlier mentioned in his letter dated 9-9-96 that the inspection staff carried out the inspection at the firm's work at Bhiwadi only and an inferenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffixed; that "Paras" brand is affixed in the factory on the laminated sheets manufactured as also in the Delhi godown on the laminated sheets procured from the market through screen printing (Pages 1052 and 1053 of the Paper Book); that thus the traded goods bore the brand name of "Paras" and the term specifying "Paras" brand cannot be the basis to infer that there was manufacture and clandestine removal of laminated sheets from factory over and above the actual products in R.G.I. 4.4 He said that the Commissioner has contended that the DGS D contracts were not awarded for supply of goods manufactured by others from the market and submitted that there is no such restriction in the Rate Contracts; that thus it cannot bring home the charge that there was clandestine removal; that in the case of two dealers namely M/s. Kumar Industries and M/s. Vardhana Industries the department had alleged that their sale invoices were fake; that they had shown that they had paid the money by cheque and the dealers had themselves not disputed the supply and invoices raised by them on the Appellants; that all sales were assessed under Sales Tax and the amount thus paid has not been refunded to them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoices; that such quantity of traded sheets was duly assessed under Sales Tax which conclusively prove that the sheets were of 3 mm thickness; that further they have been paying for the purchases by cheques. He contended that if the Department's version is to be believed, they would require to purchase raw-materials of such a magnitude to manufacture the so-called clandestine removal of 3 mm sheets; that not a single transport document of procurement of such a huge quantity of raw-material, source of procurement, sellers, payment in cash has been led in. He emphasised that the statements of dealers are not reliable and cross-examination should have been offered. He also contended that the Appellants do not have the capacity to produce the quantity of laminated sheets alleged to have been manufactured by them; that in this regard they have submitted a certificate from Sh. A.K. Khanna, Chartered Engineer. 5.1 The learned Counsel mentioned, about demand based on entries in spiral pad maintained by Sh. R.K. Gairola, Ex. General Manager; that the Commissioner has inferred from the odd figure mentioned therein that these were figures of actual production and not production planning; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 (S.C.), the laminated sheet is classifiable under Heading 39.20 of the Tariff; that, therefore, the demand is liable to be set aside for this reason alone, that penalty is not imposable on any of the Appellants as the demands have been confirmed on inferences which are factually incorrect; that further as ingredients of Rule 209A of the Central Excise Rules, 1944 have not been satisfied being there no material to suggest that Ravi Bansal knew or had the reason to believe that the goods were liable for confiscation. 6.1 Countering the arguments, Sh. O.P. Arora, learned S.D.R. submitted that the Rate Contract awarded by DGS D to the Appellants for supply of laminated sheets of 1.5 mm thickness and 3.0 mm thickness of "Paras" brand contained the conditions that the goods would be supplied Ex-factory Bhiwadi (Distt. Alwar, Rajasthan)" and source of manufacturing would be indigenous and that "for all supply against the R/C inspection will be carried out at your works at Plot No. B-492/RIICO Industrial Area P.O., Bhiwadi, Distt. Alwar (Rajasthan)"; that the scrutiny of the Misc. file recovered from factory premises of the Appellants has revealed that the joint inspection was carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me quantity of 2.00 mm thickness and they had not sold laminated sheets of thickness more than 2.00 mm to the Appellants and that they had never sold 'Paras' brand laminated sheets and sheets of 3 mm thickness to the Appellants; that similarly other dealers had also deposed that they had not sold 3.0 mm thickness laminated sheets to the Appellants as they mainly traded in laminated sheets of thickness 0.8 mm, 1.0 mm and 1.5 mm. 6.3 He, further, mentioned that M/s. Kumar Industries, whom the Appellants had shown purchase of laminated sheets from, were not found in existence on the given address; that enquiry from Sales Tax Department revealed that the Registration Certificate had been surrendered and cancelled with effect from 10-3-89; that scrutiny of the application of M/s. Kumar Industries for registration with Sales Tax Department showed that they had applied for registration as dealer to deal in commodities, namely, 'Plastic Dana', Plastic Powder and Tractor Parts; that the invoices recovered had been issued in 1992-93 which is after more than 3 years of closure of the firm; that thus the invoices are fake; that similarly M/s. Vardhana Industries (India) was not found in exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -96, has confirmed the fact besides stating that he was fully satisfied with the manner of stock taking; that the Appellants had kept the raw-material unaccounted for using the same in the manufacture and clandestine removal of the finished goods and accordingly the same is liable for confiscation. 7.3 He mentioned that 2109 numbers and 1988 Kgs. of laminated sheets were found short vis-a-vis the balance recorded in R.G.-I at the time of physical verification on 12-6-96; that their defence that shortage had occurred on account of the fact that in some category there was excess stock which had happened on account of mix-up is an after thought since the stock verification report was prepared by showing not only the size of the sheets but also the gradation/marks/quality and the stock verification report was prepared by Applicant's own employee in the presence of Panchas; that Shri M.L. Sharma, Supervisor of the Appellant Co. was fully satisfied with the manner of stock taking; that, therefore, duty is demandable from the Appellants. 7.4 Regarding Mini Spiral Pad recovered from the room of Sh. R.K. Gairola the learned S.D.R. reiterated the findings as contained in the impugned Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Contract awarded to them contained the conditions that goods should be of their own make - PARAS brand and these were to be inspected at factory and the dealers, besides some of them being non-existent, were not dealing in laminated sheets of 3 mm thickness. The Revenue has thus presumed that the goods sold under DGS D Rate Contract under the cover of Delhi Godown bills were clandestinely manufactured in their factory at Bhiwadi and removed without payment of duty. On the other hand, the Appellants have contended that the laminated sheets were purchased at Delhi from various dealers, Paras Brand name was printed on these purchased goods through the process of screen printing, samples were taken to Bhiwadi factory for quality test and afterwards goods were despatched directly from Delhi godown to various destinations. The appellants have brought on record the transport documents in support of their contention that the goods against Rate Contract were despatched from Delhi godown. The Revenue has not brought out any material on record to contradict the said documents evidencing transport of the goods from Delhi Godown. They have also brought on record the certificate given by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Staff could not be accepted as gospel truth by the Commissioner". The Tribunal has also held that "legally the statements of those witnesses could not be accepted or taken into evidence, for having failed to submit themselves for cross-examination, by the Appellants." We also observe that the thickness of the laminated sheets sold by the dealers was not mentioned in the Sale Bills issued by them. In view of this fact, the only evidence against the Appellants is the statements of dealers who have not been subjected to cross-examination by the Appellants. Accordingly these statements which have not been tested in cross-examination cannot be relied upon against the Appellants. Moreover the Appellants had produced an Affidavit of Sh. Kapil Dev Pandit of Bakelite Home wherein he has averred that decorative laminated sheets of 3 mm thickness had been supplied by them to the Appellants. Thus, the Revenue has not succeeded in proving that the dealers had not supplied the laminated sheets of 3 mm thickness. 10.2 The learned Advocate has also contended that the charge of clandestine removal of the excisable goods has to be supported by evidence with regard to purchase of inputs produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso relied upon the decision in the case of T.G.L. Poshak Corporation v C.C.E., Hyderabad, 2002 (140) E.L.T. 187 (T) wherein it has been held by the Tribunal that unless Department produces evidence, which should be clinching, in nature of purchase of inputs and sale of the final product, demand cannot be confirmed based on some notebooks. Similar views have been expressed by the Tribunal in the case of Bearing Manufacturing Co. v. C.C.E., Vadodara, 2000 (123) E.L.T. 1148 (T). Accordingly, we set aside the said demand of duty. As the laminated sheets procured and sold from Delhi has been held not to have been manufactured by the Appellants, the aggregate value of clearances for the financial year 1992-93 will remain within the eligible limit of value of clearance for the purpose of availing the benefit of SSI exemption Notification during the following financial year i.e. 1993-94. In view of this, duty demanded by denying exemption under Notification No. 1/93-C.E., is set aside. 12.In respect of demand of duty on account of shortage of finished goods, the Appellants have not succeeded in controverting the findings recorded by the Commissioner in the Adjudication Order. The duty i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
