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TMI Blog2010 (4) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... rithmetic calculation and without any scientific process, is fraught with inconsistencies. In the absence of any statement of the General Manager, who was present during the recording of panchnama, is definitely as shoddy piece of investigation, which is detrimental to the Revenue’s case. - E/325-327/2004 - 694-696/2010 - Dated:- 5-4-2010 - S/Shri M.V. Ravindran, P. Karthikeyan, JJ. REPRESENTED BY : S/Shri V.J. Sankaram and B.V. Kumar, Advocates, for the Appellant. Shri M.M. Ravi Rajendran, JDR, for the Respondent. [Order per : M.V. Ravindran, Member (J)]. These three appeals are directed against the Order-in-Original No. 61/2003-Commr. dated 15-12-2003. Since all these 3 appeals are directed against the same Order-in-Original and also inter-connected, they are being disposed by a common order. 2. For brevity sake, it is indicated that appeal No. E/325/04 is filed by the appellant company M/s. Alladi Drilling Equipment Pvt. Ltd. (ADEPL) and other two appeals i.e. E/326-327/04 are filed by the Managing Director and Director (Technical) of the appellant company against the imposition of penalty under Rule 209A of the Central Excise Rules, 1944. 3. Rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsing the Modvat credit thereon during the period August, 1995 to August 1996 should not be paid by them under Rule 57-I of Central Excise Rules, 1944. (e) penalty equivalent to the amount of Modvat credit mentioned at (d) above should not be imposed on them in terms of Rule 57-I(4) of Central Excise Rules, 1944. (f) interest @ 20% per annum on the amount of Modvat credit mentioned at (d) above should not be paid by them under Rule 57-I(5) of Central Excise Rules, 1944 read with Section 11AA of Central Excise Act, 1944 and Notification No. 21/95-Central Excise (NBT), dated 29-5-1995. (g) penalties should not be imposed on them under Rules 9(2), 52A(8), 173Q and 226 of the Central Excise. Rules, 1944 for the contraventions alleged supra. (h) land building, plant and machinery of M/s. ADEPL which are used in connection with manufacture and clandestine clearances of the excisable goods aforementioned should not be confiscated to the Government of India under Rule 173Q(2) of Central Excise Rules, 1944. 25. Shri Alladi Sreenivasulu, Managing Director and Shri GVN Rao, Director (Technical) respectively of M/s. ADEPL are hereby required to show cause to the Commissioner of Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, plant and Machinery of ADEPL to the Government of India under Rule 173Q(2) of Central Excise Rules, 1944 as the same are used in the manufacture and clandestine clearance of the excisable goods. However, I give option to ADEPL to redeem the same on payment of fine of Rs. 5,00,000/- (Rupees five lakhs only) under Section 34 of Central Excise Act, 1944; (ix) I impose penalty of Rs. 1,00,000/- (Rupees one lakh only) on Sri Alladi Sreenivasulu, Managing Director of ADEPL under Rule 209A of Central Excise Rules, 1944 for his involvement in the clandestine clearance of finished goods; and (x) I impose penalty of Rs. 25,000/- (Rupees twenty five thousand only) on Sri GVN Rao, Director (Technical) of ADEPL under Rule 209A of Central Excise Rules, 1944 for his involvement in the clandestine activity of ADEPL. 5. Aggrieved by such an order, the appellants are before us. 6.1 Ld. Counsel appearing on behalf of the appellants submits as under :- Submissions issue-wise : A. Violation of Principles of Natural Justice : A.1. In the instant case, personal hearing was fixed for 4-7-02. However, all the letters dtd. 26-6-02 sent to the witnesses were returned by the Postal Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . G.V.N. Rao retracted his statement on 21-4-97. The Statement of K. Ranganath, G.M. was not recorded, though reportedly he was present at the time when the Panchanama was recorded on 10-4-97. [Para 51 of OIO]. There is nothing adverse in the statement of K.V. Nagababu. A.7. In this connection, ADEPL would refer to and rely upon the following cases : Gyan Chand Sant Lal Jain v. Union of India - 2001 (136) E.L.T. 9 (Bom.). The Hon ble High Court of Bombay, inter alia observed as follows : Mere assertion that the information received by the Tribunal is false or that the informant is a liar and an unreliable person may not satisfy the Tribunal about the truth or veracity of the assertion and it must be open to such party to demonstrate the truth or veracity of his assertion by cross-examining the informant. In fact the party against whom such information or material is intended to be used may adopt cross-examination as the only mode of explaining or commenting or demolishing the information or material collected against him CC, Ahmedabad v. Amrutbhai Vasudevbhai Patel - 2003 (156) E.L.T. 222 (Tri.-Mumbai) Arsh Castings Pvt. Ltd. v. CCE, Chandigarh - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.490 Mts. is questionable. G.V.N. Rao, Director (Tech) has retracted his statement dtd. 10-4-97 vide his letter dtd. 21-4-97. The statement of K. Ranganath, G.M. of ADEPL who reportedly was present and signed the Panchanama, has not been recorded. Under the circumstances, it is submitted that no credence can be given to the Panchanama regarding the alleged shortage. C. The private records alleged to have been seized on 10-4-97 at the factory and marked as Annexure 5F, 14F and 36F : C.1 In the instant case, the Appellants submitted before the Ld. Commissioner that the author of the said records have not been identified nor the said documents were sent to the Govt. Examiner of Questioned Documents to identify the author. Further, the Dept. have not verified the contents of the documents with any alleged buyer of the said goods or recorded the statements of the said buyers or transporters, who transported the said goods. In the absence of such corroborative evidence, no reliance can be placed on the said documents and such documents do not have evidentiary value and are required to be discarded. Further no evidence has been placed on record to show that excess raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries in the secret books of account tallied with the admitted specimen writing of the respondents or any of their employees, (iv) by calling a person acquainted with the handwriting of the person by whom the secret books of accounts were supposed to have been written, (v) by having the comparison done in court of the secret books of account with some admitted writing as provided in made by any one of the respondents that the secret books of accounts related to the business transactions carried on by their firm or that any one of them had written the same, (vii) by adducing, other unimpeachable circumstantial evidence. D. The Ld. Commissioner did not take into consideration the submissions made before him and as such there was total non-application of mind on his part : The Ld. Commissioner did not take into consideration the submissions made before him and as such there was total non-application of mind on his part. The Hon ble Supreme Court in the case of Dhirajlal Girdharilal v. Commissioner of Income-Tax, Bombay - 1954-(026)-ITR-0736-S.C. and Omar Salay Mohammed Sait v. Commissioner of Income Tax, Madras - 1959 (037) ITR - 0151, inter alia, hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E, Goa - 2002 (146) E.L.T. 173 (Tri. - Mumbai) - Affirmed by Supreme Court Commissioner v. Gammon India Ltd. - 2002 (146) E.L.T. A313 J.S.L. Industries Ltd. v. CCE, Ahmedabad - 1999 (109) E.L.T. 316 (Tribunal). 6.2 It was also submitted by the ld. Counsel that the author of the miscellaneous outward register was not at all ascertained and hence even if the miscellaneous outward register is seized from the factory premises, it was for the Revenue to bring on record who wrote the entries therein. It is his submission that by non-granting the cross-examination of the persons, there is a violation of principles of natural justice. It was also submitted that the adjudicating authority has not considered their pleas regarding the incorrect evaluation of the stocks which were found short. It was submitted that when the stocks were taken, the General Manager of the company was present and has signed the mahazar but crucially, his statements were not recorded nor were the statements of any security personnel recorded. It is his submission that the entire demand confirmed by the authorities is inappropriate and needs to be set aside. 7. Ld. DR on the other hand would submit th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon the statement of monthly production report and entries of removal of finished goods based upon the documents recovered from the office of the Director (Technical) of the appellant company? (c) Whether there was double invoicing of the goods under invoice No. 576 dated 17-2-1996 and whether there was shortage of 37.490 Mts. of duty paid inputs valued at Rs. 69,87,050/-? (d) Whether consequent penalties are imposable on all the appellants? 9.1 We take up the case for recording of findings. (a) Allegations regarding the clandestine removal of the goods based upon the miscellaneous outward register :- On perusal of the records and the submissions made by both sides, we find that the Revenue s case is that this miscellaneous outward register which was seized in the factory of the appellant company was recovered under panchnama dated 10-4-1997. We find that this recovery is not disputed by the appellants counsel. Appellants counsel s defence is that the Revenue has not brought on record as to who maintained this miscellaneous outward register. We find that the appellant has been taking this plea before the adjudicating authority from the day they filed re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account were seized formed part of the place of business of the respondents or was in their exclusive possession and control, (2) that the secret books of account were maintained by or under the orders of the respondents, (3) that the said books of account were in the handwriting of either of the respondents or their accountant, or clerk or some other person employed by them. The third method indicated above could have been adopted by following one or more of the ordinary modes provided in the Evidence Act for proving the handwriting i.e. (i) by calling the Accountant or clerk or some other employee of the respondents who is supposed to have posted the entries in the account books, (ii) by calling a person in whose presence the account books were written (iii) by calling a handwriting expert to testify that the entries in the secret books of account tallied with the admitted specimen writing of the respondents or any of their employees, (iv) by calling a person acquainted with the handwriting of the person by whom the secret books of account were supposed to have been written, (v) by having the comparison done in Court of the Secret books of account with some admitted writi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37.490 Mts. of duty paid inputs valued at Rs. 69,87,050/-? As regards the two set of invoices bearing No. 576 on perusal of the records, we find the said invoice was issued from the office of the appellant company. The said invoice does not relate to the invoices which have been issued from the factory premises. We find that the demand confirmed by the lower authorities on this point cannot stand and we set aside the said demand. (d) As regards the shortage in stock noticed by the officers on their visit to the factory premises on 10-4-1997, we find that the findings of the adjudicating authority on this count is as under :- 49. The contention that the panchanama does not show evidence that any verification was done and that it is not correct to say that there was a shortage of 37.49 tonnes of Alloy Steel Rods (raw material), is not acceptable. The operation of search and verification of materials was conducted before two independent witnesses and also before Sri K. Ranganath, GM of the company who has signed on the panchanama with the remark in my presence . It is recorded in panchanama that both Sri K. Ranganath, GM and Sri GVN Rao, Director (Technical) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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