2007 (10) TMI 483 - AT - Central Excise

Demand - Clandestine removal - Appreciation of Evidence - job-work - man-made fabrics - Held that - sufficient evidence exists on record to lead us to only one and inevitable conclusion that the appellant was indulging in the clandestine activity and has cleared processed man-made fabrics without payment of duty - appeal rejected.

Issues Involved:
1. Allegations of clandestine removal of goods.
2. Shortages of grey fabrics.
3. Recovery of incriminating documents.
4. Statements of directors and other individuals.
5. Cross-examination of witnesses.
6. Ownership and authorship of recovered documents.
7. Reliance on previous Tribunal judgments.

Detailed Analysis:

1. Allegations of Clandestine Removal of Goods:
The central issue revolves around the clandestine removal of man-made fabrics by M/s. Lucky Dyeing Mills (P) Ltd. without payment of Central Excise duty. The demand of duty amounting to Rs. 1,82,13,824/- was confirmed along with an equal amount of personal penalty under Section 11AC of the Central Excise Act, 1944. Additionally, a personal penalty of Rs. 20,000/- was imposed on the director under Rule 209A of the erstwhile Central Excise Rules, 1944.

2. Shortages of Grey Fabrics:
During a visit by Central Excise officers on 6-2-98, a shortage of 360 pieces of grey fabrics was detected. The director, Shri O.I. Baluwala, admitted that these fabrics were processed and cleared without payment of duty. This admission was recorded in his statement on 7-2-98.

3. Recovery of Incriminating Documents:
Incriminating documents such as job cards, delivery challans, and computer printouts were recovered from the premises of M/s. Lucky Steel and M/s. Goodluck Trading Co., both associated with the appellant. These documents indicated details of production and illicit clearances. The director, Shri Sadik Ismail Baluwala, admitted that these documents were kept in other premises to avoid detection by Central Excise officers.

4. Statements of Directors and Other Individuals:
Statements from various individuals, including the directors Shri Onibhai Baluwala and Shri Sadik Ismail Baluwala, corroborated the illicit activities. Shri Onibhai admitted the clandestine removal in statements recorded on 7-2-98, 10-2-98, and 19-5-01. Merchant-manufacturers also confirmed receiving processed fabrics without Central Excise invoices and making cash payments.

5. Cross-Examination of Witnesses:
The appellants contended that the denial of cross-examination of Panchas witnesses, Shri Manoj Patil, and various traders resulted in a breach of natural justice. However, the Commissioner justified the rejection, noting that the panchnama was undisputed and signed by the directors, and the statements of Shri Manoj Patil were not central to the Revenue's case, which was based on recovered documents.

6. Ownership and Authorship of Recovered Documents:
The appellants argued that the documents did not belong to them. However, the Commissioner observed that the documents bore the mill's stamp and were admitted by the directors, including Shri Onibhai, who stated that their excise clerk, Shri Brij Kishore, authored the documents. The documents' presence in external premises was seen as an attempt to evade detection.

7. Reliance on Previous Tribunal Judgments:
The appellants cited previous Tribunal judgments, such as Parshuram Cement Ltd. v. CCE and CCE, Chennai v. Murugan Enterprises, to argue against the findings of clandestine removal. However, the Tribunal noted that each case must be judged on its evidence. The ample evidence in the present case, including statements and recovered documents, supported the conclusion of clandestine removal.

Conclusion:
The Tribunal concluded that sufficient evidence existed to confirm the clandestine removal of processed man-made fabrics by M/s. Lucky Dyeing Mills (P) Ltd. without payment of duty. The appeals were rejected, and the impugned order was upheld, confirming the demand of duty and imposition of penalties.

Pronouncement:
The judgment was pronounced in court on 22-10-2007.

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