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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 ..... t the appellant company herein is the manufacturer of parts of drilling rigs such as Tungsten Carbide Button Bits and 'Down the Hole' Hammer assemblies and parts thereof and were availing exemption under the Small Scale Exemption Notification No. 1/93, dated 28-2-1993. The period involved in this case is between April, 1995 to March, 1997. On the basis of intelligence that the appellant company were indulging in evasion of Central Excise duty, the officers of DGAE conducted searches simultaneously on 10-4-1997 on the factory premises of the appellant and office premises and recovered records under panchnama. During the physical stock verification conducted at the factory premises on the very same day, officers noticed a shortage of 37.490 Mts. of Alloy Steel Rods (Raw material). After scrutiny of various records and further recording of the statements of various persons, it was noticed that the appellant had evaded Central Excise duty by clandestinely removing the goods from the factory premises. A show cause notice dated 11-1-2000 was issued to the appellant company and others directing them to show cause as to why; (a) an amount of Rs. 27,57,825/- (Rs. 12,30,7291- + Rs. 15, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudication), 121, Uttamar Gandhi Salai, Nungambakkam, Chennai-600034, within 30 (Thirty) days from the date of receipt of this notice as to why penalty should not be imposed on them under Rule 209A of the Central Excise Rules, 1944 for their involvement as detailed in the foregoing paras. 4. On receipt of the above said show cause notice, all the three appellants herein furnished detailed replies and inter alia, denied all the allegations and sought for cross-examination of the persons on whose statements the Revenue authorities were relying upon to fix the demand of the duty on the appellant company. Adjudicating authority, after granting personal hearing and recording the submissions made by the appellants' counsel before him, came to the conclusion that there was indeed an evasion of duty and coming to such conclusion passed the following order :- (i) I confirm demand of Rs. 27,57,825/- (Rupees twenty seven lakhs fifty seven thousand eight hundred and twenty five only) being the Central Excise duty payable on the finished goods valued Rs. 1,54,80,436/- manufactured and cleared by ADEPL without payment of duty during the period June, 1995 to March, 1997 under Rule 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-02 sent to the witnesses were returned by the Postal Authorities. ADEPL requested that the PH may be postponed by one month vide their letter dtd. 1-7-02. [Para 31 of 010]. A.2. The next date of personal hearing was fixed for 5-8-02 and letters dtd. 15-7-02 were sent to all the witnesses. However, the letters were returned by the Postal Authorities with remarks 'left' and 'incomplete address' 'no such person in that address' etc. ADEPL requested that the personal hearing may be fixed for 7-8-02 since their Counsel was engaged in CESTAT, Bangalore. Intimations were accordingly sent to all persons concerned. K.C. Prakash Kumar and I. Balakrishna (Panch Witnesses) appeared before the Commissioner on 5-8-02 and they were informed that the personal hearing will be on 7-8-02. Both pleaded that the personal hearing may be held after 25-9-02, since they were going to Kerala. [Para 32 of 010], A.3. The Counsel for ADEPL appeared before the Commissioner on 7-8-02. However, no witnesses who were called to appear for cross-examination turned up. The Counsel requested that one more chance be given to all the parties, which was acceded to, and 1-10-02 was fixed as the next date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahmedabad v. Amrutbhai Vasudevbhai Patel - 2003 (156) E.L.T. 222 (Tri.-Mumbai) * Arsh Castings Pvt. Ltd. v. CCE, Chandigarh - 1996 (81) E.L.T. 276. In this decision, the Hon'ble Tribunal observed as follows : "If witnesses do not turn up for cross-examination, it is open to the adjudicating authority to proceed with the adjudication without relying on these statements against the person so charged. Failure of a witness to appear for cross-examination will not be a ground to penalize the appellants in law when the appellant is entitled to an opportunity of cross-examination of third party on whose statements reliance is placed." * Beaver Engineering Corporation v. CCE, Hyd. - 2002 (148) E.L.T. 1102 (Tri. - Chennai) In this decision, the Hon'ble Tribunal observed as follows : 'The Commissioner should compel the witnesses to appear and face the cross-examination. The law has given powers to the Commissioner to summon them by all means as no witness can stay away from the quasi-judicial forum. The Commissioner should take all proper steps to get the witnesses so that the Appellants can cross-examine them'. Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 materials were purchased or there was excess power consumption to corroborate the fact that there was clandestine clearance. In this connection, the Appellants would like to and rely upon the following decisions, in which it was, inter alia, held that the charge of clandestine manufacture and removal solely based on private records and registers, is not sustainable in the absence of corroborative evidence : * Arti Steel Ltd. v. CCE, Chandigarh - 1999 (114) E.L.T. 537 (Tri.) * CCE, Coimbatore v. Velavan Spinning Mills - 2004 (167) E.L.T. 91 (Tri. - Chennai) * CCE, Chennai-II v. Murugan Enterprises - 2003 (162) E.L.T. 233 (Tri - Chennai) * CDC Carbolic (I) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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, held that : "...... but if the court of fact, whose decision on a question of fact is final, arrives at this decision by considering material which is irrelevant to the enquiry, or by considering material which is partly relevant and partly irrelevant, or bases its decision partly on conjectures, surmises and suspicions, and partly on evidence, then in such a situation clearly an issue of law arise." In the instant case, ADEPL submits with great respect that, it is apparent from the impugned Order t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 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 that the Director (Technical) of the appellant company i.e. Mr. GVN Rao had categorically stated that their company has been indulging in clandestine removal of the goods. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reply to the show cause notice. The findings of the adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 writing as provided in S.73 of the Evidence Act, (vi) by p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether there was shortage of 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 recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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