2018 (12) TMI 370 - AT - Central Excise

Clandestine manufacture and removal - demand is based on the diary recovered from the premises - admissible evidence or not - Section 36A of the Central Excise Act - quantification of demand - benefit of Notification No. 3/2001-CE denied - time limitation. Held that - The appellant have sought to disown the content of the diary recovered from their premises. It is seen that before the original adjudicating authority, the appellant had admitted their guilt and the data given in the diary and paid the duty. It is only before Commissioner (A) and in the Tribunals stage that the appellant are contesting the diary. In these circumstances Section 36A of the Central Excise Act is applicable. In the instant case the diary was recovered from the premises of the appellant and therefore unless contrary is proved by the appellant themselves, the said diary is an admissible evidence. Since no evidence to the contrary has been produced by the appellant, the diary can be relied as an admissible evidence. Quantification of demand - appellants have sought to assert that demand should be restricted to only the illicit clearance of textured yarn recovered from 03.12.2001 to 01.01.2002 - Held that - It is seen that the production recorded in the said diary is only from 11.12.2001 to 31.12.2001. Obviously the clearances before 11.12.2001 recorded in the diary need to be factored in the calculation of total illicit clearances. In these circumstances, we cannot find fault with the impugned order as regard the quantification of the quantity illicitly removed is concerned. Benefit of Notification No. 3/2001-CE denied - Held that - It is seen that the benefit of said notification is available only if the goods are manufactured by using textured or draw twisted yarn on which appropriated duty has been paid in terms of condition No.22 to the said notification - In the instant case, the appellant did not have any evidence of purchase the goods from the market. The only other conclusion can be that goods were obtained from grey market. In these circumstances the goods cannot be deemed to be duty paid goods - benefit of Notification 3/2001 rightly denied. Time Limitation - case of appellant is that the issue came to knowledge of Revenue in the year 2002 and hence period of limitation should be considered from the date when the issue came to the knowledge of Revenue - Held that - It is seen that in the case of Neminath Fabrics (P) Ltd. 2010 (4) TMI 631 - GUJARAT HIGH COURT , where it was held that suppression stands admitted by the respondent assessee and established by evidence on record and as a natural corollary, the proviso to sub-section (1) of section 11A would stand attracted - the benefit of limitation cannot be extended to the appellant. The appeal of M/s Vanita Texturisers (P) Ltd. is accordingly dismissed - The appeal of Shri G.M. Solanki (Director) is abated since he is expired and a Death Certificate is already produced.

Summary

Issues:
1. Abatement of appeal due to death of a party.
2. Allegations of clandestine clearance based on recovered diary.
3. Challenges to the impugned order.
4. Identification of the author of the diary.
5. Quantification of clandestine clearances.
6. Benefit of Notification No. 3/2001.
7. Limitation period for issuing Show Cause Notice (SCN).

Analysis:
1. The judgment addressed the abatement of the appeal of a deceased party, as acknowledged by the production of a Death Certificate. Consequently, the appeal of the deceased party was abated.

2. The case involved allegations of clandestine clearance based on a recovered diary containing records of illicit production and clearances. The appellant contested the diary's authenticity, arguing against its admissibility as evidence. However, the Tribunal applied Section 36A of the Central Excise Act, which presumes the truth of document contents unless proven otherwise. As the appellant failed to provide contrary evidence, the diary was deemed admissible.

3. Challenges to the impugned order included disputing the quantification of clandestine clearances and claiming the benefit of Notification No. 3/2001. The appellant's arguments regarding the identification of the diary's author, quantification, and benefit eligibility were examined in detail.

4. The identification of the author of the diary was a crucial aspect of the case, with the appellant contesting its validity. However, the Tribunal upheld the diary's admissibility as evidence due to the lack of contrary proof provided by the appellant.

5. Regarding the quantification of clandestine clearances, the Tribunal reviewed the diary's entries and determined that the impugned order's quantification was appropriate, considering the recorded production and clearances within the specified period.

6. The issue of claiming the benefit of Notification No. 3/2001 was analyzed concerning the appellant's failure to provide evidence of purchasing duty-paid goods. The absence of invoices or proof of legitimate market purchases led to the denial of the benefit under the notification.

7. The limitation period for issuing the SCN was also discussed, with reference to relevant case law. The Tribunal concluded that the period of limitation could not be extended based on the date of Revenue's knowledge, upholding the impugned order due to the appellant's failure to establish grounds for extension.

This comprehensive analysis highlights the key legal aspects and decisions made in the judgment by the Appellate Tribunal CESTAT AHMEDABAD.