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TMI Blog2004 (4) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... s. RI, further investigations were conducted. On investigation, it was found that the principal raw material used in manufacture of acid slurry is LAB mostly purchased from M/s. Tamil Nadu Petro Products Ltd., Madras (hereinafter referred to as M/s. TPL). The LAB purchased was accounted for by them in their Form-IV register from February 1990 onwards. For manufacture of 220 Kgs of acid slurry, 149 Kgs of LAB is mixed with 178 Kgs of Oleum and 40 Kgs of water. LAB and Oleum are received and stored in separate storage tanks, which are connected to the plant by means of pipelines. LAB and Oleum are pumped by motors and water in required quantities supplied through diluter. All these pumps are caliberated as per formula. Thus, raw materials are intermixed in the pipeline system and pass through the heat exchanger. Finally the end product is collected in separate storage tank where acid slurry and spent acid get separated. Acid slurry is tapped and collected into the drums. M/s. RI were purchasing LAB from M/s TPL, Madras. M/s TPL are having agents for distribution for LAB throughout the country. M/s Maurya Agencies, Bangalore are agent of M/s TPL for Andhra Pradesh and Karnataka States ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of M/s RI. They manufactured acid slurry with this accounted LAB and part of it was cleared in the guise of soap oil and rest without accounting for in their statutory records and without payment of duty. Thus, it was found that from January 1990 to March 1994, M/s RI had manufactured and cleared 140155 Kgs of acid slurry in the guise of soap oil from the quantity of LAB, which was purchased by them from M/s TPL in the name of different fictitious customers. On investigation from the customers of soap oil it was found that they actually received the acid slurry and made the payment partly in cash and partly by DD. Thus, the investigation had led to evasion of CED of Rs. 53,73,428/- during the period from January 1990 to March 1994, which was demanded from M/s RI in the show cause notice and penalty was also proposed on them. Penalty was also proposed on Shri C. Ramachander Rao, Partner, Shri B. Damodar Rao, General Power of Attorney of M/s RI and Shri M. Narasing Rao, Manager and General Power of Attorney holder of M/s RI under Rule 209A. The case was adjudicated by the Commissioner of Central Excise, Hyderabad-I under the impugned order wherein he confirmed the duty of Rs. 53,73 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s through bank pay orders/drafts drawn by them in the name of different customers and such draft has been either in the hand writing or under the signature of Shri M. Narasing Rao/P. Damodara Rao. All quantities of the LAB received from TPL in the name of their clients are not accounted for by them in their statutory records and the same are used in the manufacture of acid slurry which is cleared in the guise of soap oil on payment of excise duty on the suppressed assessable values and rest without accountal and without payment of CED during the period January 1990 to March 1994. The entire case in the notice stress only on the allegation of receipt of unaccounted LAB from the stock point of the sellers. He stated that for manufacture of 250 Kgs of acid slurry, 149 Kgs of LAB and 178 Kgs of Oleum and 40 litres of water is required. According to this ratio, to manufacture acid slurry out of 546 tonnes of LAB the manufacturer is required to mix 652 tonnes of Oleum to obtain the alleged clandestine removal of 856 tonnes of acid slurry. The Oleum is required in greater quantity than LAB for manufacture of acid slurry. There is no allegation that the appellants have received Oleum cland ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey had removed Shri Narasing Rao from their services in May 1994 and he was not their Power of Attorney Holder thereafter. His statement dtd. 7-12-94 when he was not in service cannot be relied upon. Shri Narasing Rao on whose statement the Department has relied upon was not produced for cross-examination. Shri Aswathnarayana of M/s Maurya Agency was also not produced for cross examination. Therefore, the evidence that 27 persons were fictitious can also not be taken against them. They were clearing soap oils right from 1990 classifying it under sub-heading 34.01 and they had filed classification list for the same. Therefore, it cannot be said that they have cleared the acid slurry in the garb of soap oil. He therefore, pleaded that the case against them has been made only on suspicion and not on any solid ground and therefore the order of Commissioner may be set aside as neither it proves that they have received Oleum for manufacture of acid slurry nor they have produced the 27 persons who are said to be fictitious to establish that LAB was not cleared to them but received by the appellant. 4. The ld. Advocate relied on the following decisions : - (a) T.G.L. Poshak Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rry instead of soap oil then it is not necessary to go into the details of other raw material. It is then for the appellants to establish that they have not manufactured acid slurry or they have accounted for the entire quantity of acid slurry manufactured by them. Since they failed to show what has happened to that LAB which they received, in their factory in the name of fictitious persons, then the only obvious conclusion is that they manufactured acid slurry out of that. He also drew our attention to statement of Shri M. Narasing Rao, Manager (who looks after the production) recorded on 13-4-94 wherein he clearly admitted that unaccounted LAB was used by them in the manufacture and clearance of acid slurry without payment of duty and they have cleared that acid slurry in the guise of soap oil as per instructions of Shri B. Damodar Rao. Shri B. Damodar Rao, General Power of Attorney holder, in his statement dtd. 7-4-94 stated that the unaccounted LAB received by them, was used in the manufacture of acid slurry cleared without payment of duty and he was aware of the clearance of acid slurry in the guise of soap oil. He also referred to the statement of Shri I. Veera Raju, Plant Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d water are the three raw materials. Once from the documents and from the source of storage till the receipt in the factory and the payment for purchase of LAB has been established by the Department then it is for the appellants to establish the use of such LAB. The appellants have themselves accepted in the form of their statements that the LAB has been used in the manufacture of acid slurry and it was clandestinely removed, then it is not necessary for the Department to establish the same fact from the other raw materials. We find that in his statement dtd. 13-4-1994, Shri M. Narasing Rao and in his statement dtd. 7-12-1994, Shri B. Damodar Rao, both General Power of Attorney holders of M/s RI and in-charge of the production have clearly accepted that they have received the quantities of the LAB which was in the name of fictitious customers and that LAB was not accounted by them in their records and they manufactured acid slurry out of this unaccounted quantity and it was cleared without payment of duty. They have also cleared acid slurry in the guise of soap oil. This clearly establishes that the findings of the Commissioner are based on the facts and are correct in law. We also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants could themselves have brought those persons as their defence witness. The statements of these persons were recorded under Section 14 of the Act and are corroborated in material particulars by other documentary evidence. Therefore their statements were correctly relied upon. The various case laws relied upon are not relevant to the facts and circumstances of the present case. The Department has clearly established that they have received the required raw material for manufacture of unaccounted acid slurry. They have made payment for that LAB. Their production in-charge and General Power of Attorney holder and other concerned persons have clearly accepted that acid slurry was produced from unaccounted clandestinely and partly cleared without payment of duty and partly in the garb of soap oil. Therefore, we do not see that any of these decisions help the appellants in any way. 8. On the plea of the appellant that they were clearing soap oil right from 1990 classifying it under sub-heading 34.02, we find that this part is not being disputed by the Department. What has been alleged by the Department is that the acid slurry which was manufactured by the appellants out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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