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2016 (9) TMI 1177 - AT - Central ExciseClandestine removal of goods - Whether appellant was manufacturing Zinc Ingots for the entire period from 1996-1997 to 2000-2001 or started such Zinc Ingot manufacturing few days before the search - Held that - the case of the Revenue is that appellant was manufacturing Zinc Ingots right from 1996-1997 as appellant had the Zinc Ingot making Bhattis all through. Appellant has taken a plea that Zinc Ingots cannot be manufactured from Zinc Ash/Dross. However, scientific literature produced by the Revenue during hearing before us do indicate that Zinc Ingots can be made out of Zinc Ash/Dross (Gaad). Statement of Shri Sunil Kumar Gupta partner of the appellant, clearly stated that he did not know the names and addresses of the persons who send them the material for processing. The challans under which materials are received indicate the processes of grinding and melting were required to be done and other processes of casting and sieving are scored off. The statement of Shri Deb Nath Bhattacharya (Accountant) of the appellant confirmed the rate of processing to be ₹ 1.50 per Kg. of material received and that ingot manufacturing started in the last few days. Shri Prabir Hazra, Proprietor of M/s. Super Galvanizing Works in his statement dt. 31.08.2000 stated that he is getting Zinc Ingots manufactured out of Zinc Dross supplied from M/s. Sylvan Chemicals and also produced two challans dt. 22.07.2000 and 05.08.2000. However it is observed from copies of these challans that none of these were signed by Sri Prabir Hazra but have been signed by one Shri P.Samanta. Cross-examination of Shri Prabir Hazra was asked by appellant and the same was allowed by the Adjudicating Authority. Efforts were made by the Adjudicating Authority to call Shri Prabir Hazra but he did not turn up. A finding is given by the Adjudicating Authority that Shri Rohit Gupta, on behalf of the appellant during personal hearing on 06.01.2006, submitted that appellant would not make further request to call the cross examinees. However, it is observed from the record of personal hearing in Revenue s paper book that there is no concessions to the effect that cross-examination of witnesses will not be insisted. Rather the plea of Shri Rohit Gupta was to call Shri Hazra and Shri Bansal again which was accordingly ordered by the Adjudicating Authority in the record of the personal hearing. In view of the above statements of Shri Prabir Hazra and Shri Bansal cannot be relied upon against the appellant. It is a well accepted legal proposition now that a statement has to be accepted as a whole and Revenue cannot pick and choose the portions of a statement favourable to them. It the entire statement of Shri Deb Nath Bhattacharya is accepted then Zinc Ingot manufacturing was started by the appellant in the last few days of seizure of Zinc Ingots. There is no other evidence indicating manufacture of Zinc Ingots from 1996-1997 to 1999-2000. Documentary evidences gathered by the investigating agency do raise suspicion but a suspicion howsoever grave cannot take the place of proof. Accordingly department s argument that all processing done by the appellant, for the relevant period, was only manufacturing of ingots, is not acceptable and is rejected. Further a case of clandestine removal cannot be based only on statements unless corroborated by other positive evidences. Further even if it is assumed that appellant was manufacturing Zinc Ingots all through the period from 1996-1997 to 2000-2001 then also 100% yield cannot be obtained from Zinc Ash/Dross received by the appellant. Yield of Zinc Ingots will depend upon the percentage of metal content contained in Zinc Ash/Dross. It is also observed from the show cause notice that for the entire period 1996-1997 to 2000-2001 value of Zinc Ingots has been taken at a uniform rate of ₹ 65 per Kg. as per calculations made in Annexure I to the show cause notice. The method adopted is not reliable and logical in view of the fluctuating nature of market forces. Accordingly duty calculated and demanded in the show cause notice is not correct and legally not sustainable. Therefore, clandestine removal is not proved against the appellant. Confiscation in lieu of redemption fine - 20.44 M.Ts of Zinc Ingots - Demand alongwith interest and penalty - Held that - it was argued by the appellant that this quantity seized/confiscated will be eligible to small scale exemption. We are of the opinion that this aspect is required to be deliberated by the Adjudicating Authority in the light of this order as this claim was not made before the Adjudicating Authority. This issue regarding confiscation/duty payment with respect to 20.440 MT of seized Zinc Ingots is thus remanded to the Adjudicating Authority by setting aside order portion (i) of the OIO for denovo consideration after affording an opportunity of personal hearing to the appellant. - Appeal partly allowed and partly remanded
Issues Involved:
- Confiscation and duty demand of Zinc Ingots - Allegations of clandestine removal and manufacturing of Zinc Ingots - Evidence regarding manufacturing process and suppliers - Calculation of duty and redemption fine - Eligibility for small scale exemption Confiscation and Duty Demand of Zinc Ingots: The appeal was filed against an Order-In-Original that confiscated 20.44 M.Ts of Zinc Ingots and imposed duty demand of ?53,70,918 along with penalties. The appellant argued that they were a small-scale unit engaged in grinding/sieving Zinc Ash for making Zinc Sulphate. They claimed that the quantity manufactured was not feasible with their limited infrastructure. The Revenue contended that the appellant had the capability to manufacture Zinc Ingots as evidenced by the seized ingots. Allegations of Clandestine Removal and Manufacturing of Zinc Ingots: The main issue was whether the appellant was manufacturing Zinc Ingots from 1996-1997 to 2000-2001 or started shortly before the search. The Revenue alleged continuous manufacturing based on the appellant's setup. Scientific literature presented indicated the possibility of making Zinc Ingots from Zinc Ash/Dross. However, the appellant argued against this and questioned the reliability of statements and evidence provided by the Revenue. Evidence Regarding Manufacturing Process and Suppliers: The appellant's defense included statements from various individuals and discrepancies in the evidence presented by the Revenue. The Revenue pointed to challans and statements suggesting ongoing Zinc Ingot manufacturing by the appellant. The Tribunal analyzed the statements, cross-examination efforts, and the reliability of the evidence provided by both parties. Calculation of Duty and Redemption Fine: The Tribunal found flaws in the calculation of duty based on a uniform rate for Zinc Ingots without considering market fluctuations. The argument of clandestine removal was rejected due to lack of concrete proof. The Tribunal emphasized the need for reliable evidence to support duty demands and confiscations. Eligibility for Small Scale Exemption: Regarding the confiscated Zinc Ingots, the Tribunal remanded the issue to the Adjudicating Authority for further consideration regarding small-scale exemption eligibility. The appellant's claim for exemption and the duty payment related to the seized ingots were to be reviewed based on the findings of the Tribunal. In conclusion, the Tribunal allowed the appeal to the extent that the case of clandestine removal was not proven against the appellant. The issue of confiscation and duty payment for the seized Zinc Ingots was remanded for further assessment. The judgment highlighted the importance of reliable evidence and proper calculation methods in determining duty demands and confiscations.
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