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TMI Blog2006 (3) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... ndestine production and removal of plywood and veneer. There was also a proposal to club the clearances of M/s. Evergreen Veeners (P) Ltd., M/s. Tirupati Veneers (P) Ltd., M/s. Tirumala Timbers. The case is based on certain documents recovered during the search of the premises of M/s. Evergreen, M/s. Bothra Shipping Services, C F Agent and M/s. Sarath Chatterjee Co., CHA for M/s. Evergreen. The factory premises of M/s. Tirupati Veneers Pvt. Ltd. (TVPL) and M/s. Tirumala Timbers were also searched for documents and certain documents were seized. Prima facie, there was irregular maintenance of accounts by M/s. Evergreen. The statement of Shri B. K. Biswal, Production Manager of M/s. Evergreen was recorded under Section 14 of the CE Act. He accepted the discrepancies in stocks. It was alleged that M/s. Evergreen imported timbers logs in the name of M/s. Rashmi Plywoods, M/s. Omega Traders (I), etc., and in their own name, received them into their factory but did not account for the same in the logs consumption register, used for in the manufacture of veneer, which was either cleared clandestinely without payment of duty or was used in the manufacture of plywood which were cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is settled position of law that demands cannot be made on assumptions and presumptions. (Relied case law: Oudh Sugar Mills Ltd. v. UOI - 1978 (2) E.L.T. (J 172). (iv) The quantity of veneer held by the Commissioner to have manufactured and removed by the appellant is beyond their capacity. There is no material evidence to show that the appellant had consumed excess electricity or had the installed capacity to manufacture finished goods beyond the one shown in RG-I. There was nothing on record to show that any excess raw material was purchased over and above the one shown in the records and cleared without payment of duty. (v) The demand is based on incorrect inferences drawn from various documents and without any basis. (vi) There is not even a single piece of evidence to prove that such a huge quantity of goods was manufactured and cleared without payment of duty. (vii) There is no evidence tracing at least one single purchaser/customer with whom the appellant had such clandestine transaction. (viii) There is no evidence on the usage of raw materials, electricity flow back of such a huge sum towards sale proceeds. (ix) There has been no seizure of goods from any purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35,876/-is not sustainable. (xv) In respect of a demand of Rs. 50,52,366/- for the year 1997-98, the Commissioner has relied on the records of Clearing and Handling Agent (CHA), the Surveyor s report. The Commissioner failed to see that the records of the CHA/Surveyor are incorrect and incomplete in several aspects and several mistakes have thereafter crept in the Annexures to the show cause notice. (xvi) The Commissioner has held that 327.00 Cu. M have been received by the appellant as per the forest permits recovered from the appellant. The timber in question has actually been received and paid for by M/s. Andhra Wood Products Pvt. Ltd. A letter from them stating that they have purchased and consumed the said consignment has been filed. The reason why the said forest permit was available with the appellant has been mentioned below. The ship in which the timber was imported carried logs of different parties. The clearing agent/surveyor obtained the forest permit in one name and utilizes the same permit to clear logs from the port and despatch to different parties to avoid demurrage especially when further Transit Pass obtaining takes time when a forest officer is out of statio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise. As could be seen from the books of accounts of the above importers, they have made payments for these logs and the sale proceeds have also been accounted by them. The Commissioner has not properly appreciated this factual position. (xix) The report of the surveyor with regard to the quantity of logs, name of the consignee, etc., is not dependable as it contains several mistakes and the same was pointed out to the Commissioner. Several instances of mistakes committed by the Surveyor were brought out in the reply to the show cause notice. The Commissioner has not properly appreciated the same and therefore, the order is erroneous. (xx) The Commissioner failed to see that the appellant had maintained Log Register during the relevant period. Failure to consider the same has resulted in gross injustice to the appellant. (xxi) The demand for the period 1999-2000 is also based on Surveyor report and the same is liable to be set aside as the Surveyor s report is not a reliable piece of evidence in view of the facts already stated. (xxii) As regards confirmation of demand by Commissioner based on transporters documents, it is submitted that the transport challans appear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant. The consignment sale is specially scrutinized by excise audit party every year and whenever duty is demanded, it was paid accordingly. Therefore, the differential duty on this ground is not sustainable. (xxvii) If the allegations in the show cause notice were true, the appellant would have required almost 632 truck loads to transport such a huge quantity @ 30,000 sq. m/truck and such an operation should have been a continuous one spreading over a long period of time. Not a single sq. m of alleged veneer/plywood manufactured and cleared without payment of duty has been intercepted during the entire span of three years or thereafter. This is all the more than significant since there has been continuous audit of the appellant s factory by the Central Excise department year after year. In view of the above, the demands beyond six months from the date of the show cause notice are not sustainable. (xxviii) Surprisingly, the Commissioner has demanded duty on captively consumed veneers. It is submitted that the appellant has paid duty on plywood which have been manufactured out of veneers. In terms of the Notification No. 67/95 captively consumed goods are exempted fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is not a reasoned decision. (v) It was alleged in the show cause notice that 832.6496 Cu. M of timber was imported in the name of M/s. TVBL has actually been used in the factory of the assessee without account. The Commissioner has held that as per log receipt register maintained by TVPL, a quantity of 831.517 Cu. M was entered on 10-2-1999 and the production of M/s. TVPL during the period from 10-2-99 to 31-3-1990 is found to be out of this receipt. The Commissioner has held that the submission of the assessee that the logs were actually used by M/s. TVPL is acceptable. It may be seen that while the allegation in the show cause notice is with regard to the quantity of 832.6496 Cu. M. M/s. TVPL has accounted for a quantity of 831.517 Cu. M and this has been accepted by the Commissioner. The order does not establish that the quantity of 832.6496 Cu. M is actually the same goods, which have been accounted for by M/s. TVPL. The Commissioner should have given a clear finding based on Survey reports that the said goods in question were actually received by M/s. TVPL and have been used by them. 8. The learned SDR reiterated the grounds of appeal and the Revenue and requested that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and while sending these goods, the transport documents indicated the destination to be M/s. Evergreen Yard as the area was well known. In other words, it does not mean that all the timber received in the year adjacent to the yard of the appellants was on account of the appellant and they had used the same for manufacture and clandestine clearance. He said that the Revenue has gone by these assumptions and slapped up a huge demand on the appellants. It was further pointed out that the appellants do not have the capacity to manufacture such a huge quantity of plywood and veneers, as assumed by Revenue. He also pointed out to the above observations of the Adjudicating Authority and his conclusions, which are quite contrary to his observations. It was further pointed out that there is not even a single evidence to show that the goods cleared clandestinely have been received by any buyer. There is no evidence of excess electricity consumption. Moreover, the Commissioner has ignored certain evidence of sale of timber by the appellants and assumed that all the timber received had been utilized in the manufacture of plywood and veneer for clandestine clearances. We find that the entire d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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