2015 (10) TMI 2140 - AT - Central Excise

Duty demand - Clandestine removal of goods - pages / records seized during search - onus to prove - Held that - Merely on the basis of these papers allegedly containing the production and dispatch and in absence of any corroborative evidence or statement of any employee/ director of Appellant company accepting such clandestine removal, it cannot be concluded that M/s SUPTL has removed these goods without payment of duty. I also find that no evidence has been shown that these goods were cleared to some person and how such alleged clandestine removal has been suppressed. Further I find that Shri Sunil Gandhi in his statement dt. 21.11.2006 refused those papers to be pertaining to any accounting. I am thus of the view that duty demand of ₹ 1,91,552/- is not sustainable. - charges of clandestine removal based merely note books maintained by the workers and other private accounts not sustainable unless supported by corroborative evidence with regard to purchase of raw material, manufacture of final goods, flow back of money or any seizure of statements from purchasers. - Decision in the case of M/s T.G.L.Poshak Corporation (2001 (9) TMI 683 - CEGAT, CHENNAI), followed. Only for the reason that M/s Arhat an unregistered unit issued few invoices under same serial number cannot be interpreted to the extent that the goods manufactured by M/s SUTPL were cleared under the invoice of M/s Arhat. No modus operandi has been brought on record. Further as regard second portion of demand that in the sheet prepared on the basis of papers allegedly containing details of raw material, production and dispatch wherever remarks no invoice issued was given are clearance of goods manufactured by SUTPL by M/s Arhat, I find that in absence of any evidence of any of the units, the allegation cannot sustain. There are no evidence that any of the units has forged their documents to show that the goods were manufactured by M/s Arhat. Thus it is only a farfetched assumption without any evidence and cannot be accepted. In the show cause notice it is nowhere coming as to from which place these documents were seized. No panchnama has been relied upon in the show cause notice. Further it is not known as to who is the author of such documents. I find from the stock statement that nowhere the statement shows as to which concern such statement belong. It is alleged that stock statement belong to M/s G.M.Trading company. However I find that the officers did not investigated about such stock statement from M/s G.M.Trading Co. Although the statement of Shri G.M. Mathur was recorded, however no question were asked to him regarding such statement. He was only asked question regarding sales register to which he refused. In absence of any corroboration of the said stock statement with the records of the M/s SUTPL and any other corroborative evidence, I am of the view that the demand cannot survive. Revenue did not bring any corroborative evidence such as excess receipt of raw material, employment of labour, receipt of goods by any consignee, transportation of goods to the buyers, receipt of sales proceedings by M/s Sunultra which can support the case of the revenue. Further Shri Sunil Gandhi or any employee of M/s SUTPL was neither questioned about removal of goods without payment of duty neither they accepted any clandestine removal - demand and penalty against M/s SUTPL is not sustainable. I further hold that penalty against Shri Sunil Gandhi and Shri Girish Mathur is also not sustainable. In view of my observations and findings, I thus set aside the impugned order - Decided in favour of assessee.

Summary

Issues Involved:
1. Demand of Rs. 1,91,552/- against M/s SUTPL based on seized documents.
2. Demand of Rs. 3,16,139/- against M/s SUTPL for alleged clearance under invoices of M/s Arhat.
3. Demand of Rs. 8,78,276/- against M/s SUTPL based on stock statements and sales registers of M/s GM Trading Co.
4. Imposition of penalties on M/s SUTPL, Shri Sunil Gandhi, and Shri Girish Mathur.

Detailed Analysis:

1. Demand of Rs. 1,91,552/- against M/s SUTPL:
The demand was based on pages seized from the residence of Shri Sunil Gandhi, which allegedly contained production and dispatch details. The lower authorities concluded that goods were clandestinely cleared without payment of duty wherever remarks "No invoice was issued" were mentioned. However, the tribunal found that merely relying on these papers without any corroborative evidence or statements from employees or directors confirming clandestine removal was insufficient to uphold the demand. There was no evidence showing the goods were cleared to any person or how the alleged clandestine removal was suppressed. The tribunal referenced the judgment in T.G.L. Poshak Corporation Vs. CCE, Hyderabad, emphasizing that charges of clandestine removal based on private accounts are not sustainable without corroborative evidence. Consequently, the demand of Rs. 1,91,552/- was deemed unsustainable.

2. Demand of Rs. 3,16,139/- against M/s SUTPL:
This demand was based on two grounds: issuance of multiple invoices with the same serial number by M/s Arhat and the clearance of goods under M/s Arhat's invoices when "No invoice issued" was mentioned in the seized papers. The tribunal found that the issuance of multiple invoices by M/s Arhat could not be interpreted as clearance of goods manufactured by M/s SUTPL. There was no evidence of any modus operandi or forgery of documents by any unit. The tribunal concluded that the allegations were based on assumptions without evidence, and hence, the demand was not sustainable.

3. Demand of Rs. 8,78,276/- against M/s SUTPL:
This demand was based on stock statements and sales registers allegedly belonging to M/s GM Trading Co. The tribunal noted that the show cause notice did not specify the origin of these documents, and no panchnama was relied upon. There was no indication of the author of these documents, and the stock statement did not specify the concerned entity. The officers did not investigate the stock statement with M/s GM Trading Co. or corroborate it with M/s SUTPL's records. The tribunal referenced the judgment in Suzuki Synthetics Pvt. Ltd. Vs. CCE, Ahmedabad, which held that demands cannot be made based on uncorroborated private records. Consequently, the demand of Rs. 8,78,276/- was deemed unsustainable.

4. Imposition of Penalties:
The tribunal found that the revenue did not provide any corroborative evidence such as excess receipt of raw materials, employment of labor, transportation of goods, or receipt of sales proceeds by M/s SUTPL to support the case. Neither Shri Sunil Gandhi nor any employee of M/s SUTPL accepted any clandestine removal. Therefore, the penalties imposed on M/s SUTPL, Shri Sunil Gandhi, and Shri Girish Mathur were not sustainable.

Conclusion:
The tribunal set aside the impugned order and allowed all the appeals with consequential relief to the appellants, concluding that the demands and penalties against M/s SUTPL, Shri Sunil Gandhi, and Shri Girish Mathur were not sustainable.