1998 (3) TMI 417 - AT - Central Excise

Summary

Issues Involved:
1. Allegation of non-accountal of production of various quantities of plastic coated textile fabrics.
2. Alleged clandestine removal of various quantities of finished goods.
3. Non-maintenance of relevant records relating to receipt of raw material and non-filing of requisite returns.

Detailed Analysis:

1. Allegation of Non-Accountal of Production
The appellants, M/s. Shivam Leatherite Private Limited, were accused of not accounting for the production of plastic coated textile fabrics under Tariff Heading No. 5903.19. The Department based its allegations on investigations by the Income Tax Department and documents provided by them. The appellants argued that the Income Tax Authorities had dropped their proceedings, concluding no manufacturing activity was engaged by the appellants. The appellants contended that the same evidence should not be used in the Central Excise proceedings. They highlighted that statements from suppliers like M/s. Ambika Textiles and M/s. Subham Textiles were not credible as these suppliers had later denied the transactions.

2. Alleged Clandestine Removal of Finished Goods
The Department alleged that the appellants had clandestinely removed finished goods without payment of duty. Statements from various suppliers and the appellants' directors were used to substantiate these claims. The appellants countered that these statements were either retracted or given under duress. They pointed to the cross-examination of officers, which revealed inconsistencies in the Department's case, such as the non-recovery of finished goods and lack of seizure of relevant documents.

3. Non-Maintenance of Relevant Records
The appellants were also accused of not maintaining proper records of raw material receipts and not filing necessary returns. The Department relied on statements from the appellants' directors and documents seized during the investigation. The appellants argued that these statements were coerced and highlighted the lack of corroborative evidence. They emphasized that the Income Tax proceedings had found no substantial evidence of unaccounted manufacturing expenses.

Conclusion:
The Tribunal found that the appellants' arguments lacked merit. The statements from the appellants' directors, despite claims of coercion, were detailed and specific about the receipt of raw materials and the clandestine removal of goods. The Tribunal noted that the statements were given over several months and contained specific details about transactions, which did not appear to be made under duress. The Tribunal also found that the corroborative material, such as the statements from Shri M.C. Bhardwaj and the discrepancies in the appellants' records, supported the Department's case. The Tribunal concluded that the failure of Shri I.K. Agarwal to appear for cross-examination did not invalidate the evidence provided by him. The appeals were rejected, and the impugned orders were upheld.