2004 (2) TMI 103 - AT - Central Excise

Demand - Clandestine manufacture and clearance of cotton yarn - Demand can be sustained on the basis of private note books? - No Evidence - HELD THAT - On a careful consideration of the submission made by the DR and ground urged by the Revenue and they are relying on the entries in the seized private note books and some of the statements. The same has been effectively dealt with by the Commissioner (Appeals) in the impugned order. He has clearly noted the discrepancy arising in the seized private note books. He has noted that the figures do not tally and that there is no systematic method of maintaining the records and each documents seized reflect a different picture and which document reflect correct picture has not been mentioned. He feels that the investigating authority has not properly investigated and have not brought forth the corroborative evidence on record to prove purchase of raw materials, manufacture of goods, payment made to the labourer, use of electricity and sale of the final product. The Commissioner has noted that none of the ingredients have been brought forth by the investigating officers. The department satisfied itself with the entries in the seized records and the statements. As has been held by the judgments cited by the Commissioner and the one relied by the Counsel that there should be corroborative evidence, that the seized records are in the nature of private note books, in the absence of all relevant evidence, therefore the Commissioner has not committed any fault in setting aside the order-in-original. Even before the Bench the Revenue does not state that any clinching evidence was over looked by the Commissioner. In view of the Commissioner's correct finding there is no merit in the Revenue appeal and the same is rejected.

Summary

Issues involved: Revenue's appeal against Commissioner (Appeals) order regarding clandestine manufacture and clearance of cotton yarn.

Summary:
1. The Commissioner (Appeals) found that the Revenue did not provide sufficient evidence to prove the manufacturing and clearance of cotton yarn by the assessee. The private note books seized did not corroborate the allegations, and there was no mention of labor charges in the records. The Commissioner cited previous judgments emphasizing the need for affirmative evidence to prove clandestine removal. The demand based solely on the note books without additional evidence was deemed unsustainable. Various records, including weigh bridge slips and job work charges, did not align, leading to doubts about the accuracy of the seized documents.

2. The Revenue, represented by DR Shri A. Jayachandran, relied on the seized records and statements to support the charge of clandestine manufacture and clearance of goods. However, the Commissioner's findings highlighted discrepancies in the seized private note books and the lack of systematic record-keeping, leading to different representations in each document.

3. Counsel Shri S. Gokarnesan supported the Commissioner's findings, emphasizing that the seized records did not present an accurate depiction of the situation. He referenced specific judgments to strengthen his argument.

4. Upon careful consideration, the Tribunal noted that the Revenue's case was based on the entries in the seized private note books and statements, which were effectively addressed by the Commissioner (Appeals). The Commissioner highlighted the discrepancies in the records and the absence of corroborative evidence regarding raw material purchase, manufacturing, labor payments, electricity usage, and product sales. The lack of essential evidence led to the Commissioner setting aside the original order. The Tribunal agreed with the Commissioner's decision, stating that without sufficient corroborative evidence, the appeal lacked merit and was rejected.