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2022 (1) TMI 1302 - AT - Central ExciseClandestine manufacture and removal of goods - the demand has been made based on the booking registers by the transporter supported by the statements of the transporter - Section 9 - Relevancy of statement - HELD THAT - Every booking may not result in the goods actually being received and dispatched. Whenever the goods are received he makes the entry in the GR register and he would also make a corresponding entry of invoice number, etc. in the booking registers. It is for this reason that is in the booking register, against some entries there are invoice numbers while against others they are not. So far as the GR register is concerned, it matches with the GR issued by the transporter and the corresponding invoices. Even in cases, where the entries in the booking registers show corresponding invoice numbers (evidencing payment of duty), a demand has been made. We find it impermissible to allege clandestine manufacture and removal and demand duty from the assessee merely because there are entries in the booking register made by the transporter who, during cross-examination has confirmed that these are merely tentative entries and do not reflect actual transportation of the goods. Reliance upon the electricity consumption - HELD THAT - The next submission of the Revenue is that electricity consumption by the assessee on Sundays was the same as on the other days which implies that there was, indeed, clandestine manufacture because no production was recorded on their registers on Sundays. Learned Counsel for the appellant is correct in pointing out the readings of AVVNL, Ajmer pertain to May, June and July 2012 whereas the booking registers on the basis of which this part of the demand is raised pertains to a period of almost two years earlier. Therefore, the report from the AVVNL does not substantiate the allegation of clandestine removal based on the booking registers of the transporter. No prudent man can on the basis of these pieces of evidence, assume that the assessee has manufactured goods valued at about Rs. 50 crores and cleared them clandestinely. Appeal of the revenue rejected.
Issues Involved:
1. Dropping of demand of Rs. 5,70,44,458/-. 2. Confirmation of demand of Rs. 20,12,479/-. 3. Confirmation of demand of Rs. 2,92,846/-. 4. Confirmation of demand of Rs. 7,85,596/-. 5. Confirmation of demand of Rs. 37,476/-. 6. Confirmation of demand of Rs. 87,778/-. 7. Confirmation of demand of Rs. 6,68,786/-. 8. Imposition of penalties under Rule 26 of the Central Excise Rules, 2002. Detailed Analysis: A. Demand of Rs. 5,70,44,458/- The demand was based on booking registers recovered from a transporter and statements of its proprietor. The Commissioner dropped this demand, noting that the registers were booking records and not actual transport logs. The proprietor's cross-examination revealed that not all bookings resulted in actual dispatches. The Revenue's appeal was dismissed as it relied on uncorroborated statements and failed to provide substantial evidence of clandestine removal. B. Demand of Rs. 20,12,479/- This demand was based on discrepancies in 42 triplicate copies of GRs. The Commissioner upheld the demand, citing statements from a labour contractor and part-time accountant about Sunday production. However, the Tribunal found that the primary evidence was the triplicate GRs, which the transporter clarified during cross-examination as prone to clerical errors. The Tribunal set aside this demand, finding the explanations plausible and the evidence insufficient. C. Demand of Rs. 2,92,846/- The demand was based on discrepancies between seven invoices and original GRs. The Commissioner upheld the demand, relying on initial statements of consignees. However, the Tribunal found that these statements did not survive cross-examination and the discrepancies were likely typographical errors. The Tribunal set aside this demand, noting the lack of substantial evidence. D. Demand of Rs. 7,85,596/- This demand was based on a handwritten slip recovered from a third party and supported by a statement from the third party's proprietor. During cross-examination, the proprietor provided invoices showing the goods were from another supplier. The Tribunal found the invoices credible and set aside the demand, noting the lack of corroborative evidence against the assessee. E. Demand of Rs. 37,476/- The demand was based on the seizure of excess stock from a dealer. The Tribunal found the stock-taking method acceptable and noted that the dealer's statement was written in Hindi. However, the Tribunal found the evidence insufficient as the truck allegedly used for transport did not pass the relevant toll nakas. The demand was set aside. F. Demand of Rs. 87,778/- The demand was based on the sale of goods without corresponding purchase entries. The assessee claimed the goods were returned by a buyer and resold. The Tribunal found the explanation implausible due to the delay in accounting and lack of storage evidence. This demand was upheld. G. Demand of Rs. 6,68,786/- The demand was based on shortages found by Commercial Tax officers and unsigned slips. The Tribunal noted that VAT is paid on both manufactured and traded goods, and the evidence did not establish clandestine manufacture. This demand was set aside. Penalties: Since most demands were set aside, the penalties under Rule 26 were also set aside. The penalty on the assessee was reduced to Rs. 87,778/- corresponding to the confirmed demand. Conclusion: - Revenue's appeal was rejected. - Assessee's appeal was partly allowed, with only Rs. 87,778/- demand and penalty upheld. - All personal penalties under Rule 26 were set aside.
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