TMI Blog2005 (3) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... urden was not discharged. Instead of the duplicate, only the original copy of the invoice accompanied the goods. The goods in the two godowns of M/s. GSML valued at Rs. 9,86,343/- were detained. A search of the Registered Office of M/s. GSML resulted in recovery of certain private records. Further the residences of Shri Kamal Kumar Agarwal, Proprietor of M/s. Hanuman Textile Distributors (HTD in short) and Shri Subash Agarwal, Proprietor of M/s. S.N. Textiles (SNT in short) were searched resulting in recovery of unaccounted goods and certain incriminating records. The business premises of M/s. Kunchal Textiles (KT in short) and M/s. Vishnu Cloth Stores (VCS in short) were searched resulting in the detention of unaccounted goods. In the course of investigation, the statements of the following persons were recorded: (i) Shri Gopal Gupta, MD of M/s. GSML (ii) Shri Bhavani Kishore, Accountant, M/s. GSM (iii) Shri Ashok Kumar Agarwal, Director, M/s. GSML (iv) Shri Kamal Kumar Agarwal, Proprietor of M/s. HTD(v) Shri Subhash Agarwal, Proprietor of M/s. SNT (vi) Shri Nirmal Kumar Gupta, Proprietor of M/s. KT (vii) Shri Mamillalalli Sattaiah, Driv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The statement has not been corroborated by any other evidences. (ii) The Adjudicating Authority relies on the statements of Shri Bhavani Kishore and Shri Gouri Shanker Gupta. But their cross examination was not allowed. This vitiates the entire proceedings. (iii) The statements of the Noticees were taken under duress. They were coerced and threatened into giving statements as per the liking of the Revenue officers. (iv) The statements were later retracted. Hence, the demand made based on the statements, is not sustainable. (v) As per the records, the stock taking took nearly 6½ hours. Considering the magnitude of the stock supposed to have been verified, it could nearly take two days when 20 persons were employed. Hence, the shortages and the excesses have not been properly arrived at and only have been assumed. (vi) The adjudicating authority erred in assuming that the kutcha slips, which were seized from the premises of the dealers, indicate that the grey fabrics present were for the purposes of process into M/s. GSML. These slips, on which the entire case has been built, do not even bear the signature of any of the employees of the dealers or the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandra Dey v. CEGAT - 1992 (58) E.L.T. 192 (Cal.) - Suresh Chandra Bahri v. State of Bihar - AIR 1994 SC 2420 - M/s. Rhino Rubbers (P) Ltd. v. CCE - 1996 (85) E.L.T. 260 (T) - K. Harinath Gupta v. CCE, Hyderabad - 1994 (71) E.L.T. 980 (T) - M/s. Ganga Rubber Industries v. CCE - 1989 (39) E.L.T. 650 (T) - CBI v. V.C. Shukla Others - 1998 (75) ECR 484 (SC) - Pit Ram Singh v. Vimala Devi - AIR 1992 Rajasthan 149 (C) (xiii) The Tribunal, in the case of T.G.L. Poshak Corporation v. CCE, Hyderabad - 2002 (140) E.L.T. 187 (T), has held that to establish clandestine removal, it is necessary to ascertain and prove that factors like sources of raw materials, utilization of such raw materials, consumption of electricity, receipt of sale proceeds, labour employed, etc. are required to be proved. The burden is on the department. However, in the present case, the adjudicating authority failed to discharge the burden of proof. In view of the above submissions, the demand is not sustainable and the mandatory penalty under Section 11AC also cannot be imposed. In the absence of justification as to how the material ingredients contained in Rule 209A, have been satisfied, penalties o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by or under their orders. (3) that the said books of account were in the handwriting of either of the accused or their accountant, or clerk or some other person employed by them. The third method indicated above could have been adopted by following one or more of the ordinary modes provided in the Evidence Act for proving the handwriting i.e., (i) by calling the Accountant or Clerk or some other employee of the accused who is supposed to have posted the entries in the account books, (ii) by calling a person in whose presence the account books were written, (iii) by calling a handwriting expert to testify that the entries in the secret books of account tallied with the admitted specimen writing of the accused or any of their employees, (iv) by calling a person acquainted with the handwriting of the person by whom the secret books of account were supposed to have been written, (v) by having the comparison done in the court of the secret books of account with some admitted writing as provided in S. 73 of the Evidence Act, (vi) by proof of an admission made by any one of the accused that the secret books of account related to the business transactions carried on by their firm or that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at the factory there were discrepancies. When the vehicle was intercepted, the same was carrying non-duty paid goods. The duplicate copy of invoice did not accompany the goods. Both Shri Gopal Gupta and his Accountant Shri Bhavani Kishore clearly explained the modus operandi of manipulating the figures in the invoice which resulted in payment of duty only on one-tenth of the goods cleared. The statements of Shri Gopal Gupta and Bhavani Kishore provide a wealth of details which in our opinion could not have been dictated or taken under duress. In fact Gopal Gupta has given his statement in his own handwriting. His retraction was also not immediate. Even in the dealer's premises, unaccounted non-duty paid goods were found and the dealers also gave statements to the effect that M/s. GSML supplied goods with bills and without bills. Many kutcha slips were found in the dealers' premises and the dealers have given incriminating statements. The brain behind the nefarious deeds appears to be Shri Gopal Gupta. The electricity consumption is also an indication that things were not above board in the appellant's factory. On 15-5-1997, a duplicate copy of the invoice was found in the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statements of the various persons, but also the incriminating documents. In any type of clandestine activity, the persons try their best not to leave any evidence. We cannot expect persons indulging in clandestine clearance to faithfully put the details of all such clearances in some register and append their signature. This is never done. Hence, clandestine activity at best can be established only by circumstantial evidence. It should also be borne in mind that it will be humanly impossible to establish every link in the chain of clandestine activity. For example, in this case, the recovery of unaccounted goods, the admissions of the persons involved, the recovery of goods/incriminating documents in the dealers' premises, the statement of the dealers' etc., all indicate that M/s. GSML were in the habit of suppressing production and clearing the goods without payment of duty. It would be too much to expect that the Investigating Officers should establish by what transport on which dates and where the supposed non-duty paid goods were sent and who received them, when and how they were distributed and all the financial dealings etc. We are very sure that humanly it would be impos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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