2010 (4) TMI 890 - AT - Central Excise

Search clandestine removal of goods DIL (manufacturer) were engaged in procuring raw materials without accounting them and were engaged in the manufacture of Manikchand Gutkha illicitly and selling them without payment of duty etc. - allegation was that the assessee used to bring back the transit documents viz. LR Invoice and Waybill and send the same along with subsequent consignments Held that - Department had to produce evidence such as procurement of excess material excess electricity consumption purchase of basic packing materials such as Plastic Laminate Rolls (PLR) which is used for manufacture of the pouches etc. and no such evidence is forthcoming - Department raided the Respondent s factory in May 2001 and again on 20-6-2002 on both the occasions the department verified stock of raw materials and finished goods and found no discrepancy - there is no evidence to prove clandestine manufacture and clearance by DIL - allegation of clandestine removal based upon the repeated use of LRs will not be applicable in this case as there is no concrete evidence of clandestine removal - revenue is not able to substantiate by any evidence to corroborate the clandestine manufacturing and clearances of the goods in favor of assessee

Issues Involved:

1. Transport of Gutkha through Shri Ramakrishna Road Lines (SRLT)
2. Clearance effected to Good Luck Marketing Agency (GMA) Pondicherry
3. Sales of Tamil Nadu Enterprises (TNE) to Jeetendra Agencies
4. Clearance through Shri Kaleshwari Lorry Service (SKLS) in the name of "Swamy and Chandy"

Issue-wise Detailed Analysis:

1. Transport of Gutkha through Shri Ramakrishna Road Lines (SRLT):

The revenue alleged that consignments of Manikchand Gutkha were cleared without invoices and without payment of duty from DIL to TNE and transported through SRLT. The transit documents like invoice, LR, and waybill of the consignments delivered earlier were reused to accompany subsequent consignments to prevent detection. The inward register of SRLT showed repeated LR numbers for different consignments, which the revenue interpreted as evidence of clandestine removal. However, the adjudicating authority found that there was no corroborative evidence to support the allegations. Statements from DIL and TNE representatives denied receiving goods without invoices, and no discrepancies were found in the stock registers or commercial tax check post records.

2. Clearance effected to Good Luck Marketing Agency (GMA) Pondicherry:

The revenue's allegations were based on memos issued by SRLT, which were not correlatable to invoices issued by DIL. The memos indicated transportation of goods to GMA without proper documentation. However, the adjudicating authority concluded that there was no evidence of clandestine removal, as the statements from DIL and GMA representatives consistently denied receiving goods without invoices. The investigation did not provide concrete evidence linking the alleged transactions to DIL.

3. Sales of Tamil Nadu Enterprises (TNE) to Jeetendra Agencies:

The revenue presented evidence from private records recovered from Jeetendra Agencies, showing unaccounted purchases of Manikchand Gutkha. However, neither TNE nor Jeetendra Agencies could produce purchase documents from any source other than DIL. The adjudicating authority noted that the evidence was insufficient to prove clandestine removal by DIL, as there was no corroboration of the alleged unaccounted transactions with DIL's records.

4. Clearance through Shri Kaleshwari Lorry Service (SKLS) in the name of "Swamy and Chandy":

The revenue relied on "Ara Patties" from SKLS, which contained entries correlating to sales invoices issued by Rafiq Brothers. The adjudicating authority found that the authenticity of the Ara Patties was not disputed, but there was no evidence proving that the goods transported were non-duty paid or clandestinely manufactured by DIL. The investigation did not verify the receipt of raw materials or other inputs required for manufacturing the alleged quantities of gutkha.

Conclusion:

The adjudicating authority concluded that the evidence provided by the revenue was insufficient to prove the allegations of clandestine removal by DIL. The statements from transporters and other parties were not corroborated by concrete evidence such as unaccounted raw material receipts, excess electricity consumption, or discrepancies in stock records. The authority emphasized the need for tangible and concrete evidence to support charges of clandestine removal, which was lacking in this case. Consequently, the proceedings initiated by the show cause notice were dropped, and the appeal filed by the revenue was rejected.

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