2023 (6) TMI 452 - AT - Central Excise

Clandestine Removal - removal of fully manufactured snuff in the guise of clearance of semi-processed snuff to various Job-workers, from their registered factory premises - entire case of the Revenue is totally based on318 chits recovered from the premises of the Appellant on the day of the Visit of the Officers of DGCEI - retraction of statements - HELD THAT - There is no independent corroboration to the said statement. The appellant have strongly contested that inasmuch as the said statement was retracted, subsequently, the same cannot be made the basis for arriving at a finding against them. Similarly, the entries made in disputed chits, cannot be held to be adverse to the appellant s case in the absence of any evidence to show that the same reflected clandestine activities. Shri Vimalbhai Mawani, the Appellant s Accounts clerk, prepared these disputed Chits and categorically in his statement dated. 14.06.2006 stated that no raw materials were delivered under the above Chits to any Jobworker. On going through the statements of Shri Navinchnadra Dholakia dated. 14.06.2006 wherein he stated that snuff mentioned in the Chits found from their factory premises were cleared without payment of central excise duty. During the search excess qty. of finished goods viz. snuff also seized by the department from the premises of Appellant and their Job Workers.During the investigation Appellant also paid the duty amount of Rs. 40,00,000 towards their liability. As such, it is seen that there is enough evidence on record to sustain the charge of clandestine removal against the appellant. It is on records that when the officers of revenue searched the premises of the Appellant and recovered the said chits under Panchnama, Shri Vimalbhai Mavani, Accounts Clerk of the Appellant, who have prepared these Chits, stated that these were prepared as per the direction of the Shri Navinchandra Dholakia, Partner of the Appellant and that no goods were delivered under these Chits to their factory. if the contention of the Appellant has to be held true then these chits should have been prepared by the Job-workers returning the semi-finished goods back to the Appellant and copy of the same should have been also available with the said Job-workers. Also no Job-worker has in their statement stated that they had delivered goods to the Appellant as mentioned in the chits. Co-relation with payment made to Job-workers has no basis as the Appellant had regular business dealings with the Job-workers and which included payment being made to them. If the transactions were over the board then the Appellant should have cleared goods to the Job-workers under proper Job-work challans and received back the same from the Job-workers under said challans. However no such challans were there to support the contention of the Appellant that the said Chits reflected semi-finished goods received back from the Job Worker. Admittedly, on sending of goods for Job work and receipt of processed goods from Job-workers, the goods are required to be entered in the statutory records i.e Job Work records, Job Work Challans, raw material accounts, finished goods accounts etc. Non-entry of the same in the statutory documents would admittedly lead to appellant s mala fide that same were meant for clandestine clearance. Though it is well settled law and does not require the support of any decision of the judicial or quasi-judicial courts to observe that the activities of clandestine nature are required to be proved by sufficient, tangible and positive evidence. However, the facts present in each and every case are required to be scrutinized and examined independently - in the present case, the department has not simplicitor relied upon the 381 Chits recovered from the factory premises of Appellant. Statements of various persons stand recorded. No doubt the outcome of cross examination has to be given due importance but keeping in view the overall facts and circumstances of the case including the fact of seizure of cash and snuff at the time of visit of officers, and the fact of deposit of duty, has to be taken into consideration which lead only to one and one fact of clandestine removal of the appellant s final product. There are no merits in the appeals of Appellants. Accordingly, all three appeals are rejected.

Issues Involved:
1. Alleged evasion of Central Excise Duty by clandestine removal of snuff.
2. Validity and interpretation of 318 chits found at the appellant's premises.
3. Retraction of statements and its evidentiary value.
4. Corroborative evidence and burden of proof in cases of alleged clandestine removal.

Summary:

1. Alleged Evasion of Central Excise Duty:
The appellant was accused of evading Central Excise Duty by clearing snuff without payment of duty, as per the Order-in-Original dated 31.03.2009. The Commissioner confirmed the demand of Rs. 1,19,92,836/- as excise duty, confiscated cash and snuff, and imposed penalties on the appellant firm and its partners.

2. Validity and Interpretation of 318 Chits:
The appellant contended that the 318 chits recovered from their premises were related to the payment for job work and not for clandestine removal of snuff. They argued that these chits contained details of finished goods snuff received back from the job workers, not clearances from the factory. However, the Tribunal found no merit in this contention, noting that the appellant's accounts clerk, Shri Vimalbhai Mavani, stated that no raw materials were delivered under these chits to any job worker.

3. Retraction of Statements and Its Evidentiary Value:
The appellant argued that the statements of Shri Navinbhai P. Dholakia, recorded on 14.06.2006, were retracted and thus should not be used as the basis for the findings. The Tribunal, however, held that the retraction was not made to the authority who recorded the original statement and considered it an afterthought. The Tribunal cited several judgments to support the view that retracted statements, if made voluntarily, hold evidentiary value.

4. Corroborative Evidence and Burden of Proof:
The Tribunal emphasized that the entire case was based on the 318 chits and the statements recorded during the investigation. They noted that the appellant failed to provide corroborative evidence to substantiate their claim that the chits were for job work payments. The Tribunal highlighted the lack of job work challans and the absence of entries in statutory records as indicative of clandestine activities. The Tribunal also considered the seizure of cash and excess stock of snuff as supporting evidence for the charge of clandestine removal.

Conclusion:
The Tribunal rejected the appeals, finding sufficient evidence to sustain the charge of clandestine removal against the appellant, including the statements, seizure of cash, and excess stock of snuff. The Tribunal upheld the Order-in-Original, confirming the demand for duty and penalties imposed on the appellant and its partners.

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