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TMI Blog2011 (2) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... S.N. Enterprises, M/s. Bhatia Colour Co., M/s. S.E. Corporation, and M/s. Shreeji Dyestuff, are the group companies of M/s. Shree Nathjee Industries, being proprietary concerns of Shri Ramesh Bhatia, Shri Brijlal C. Bhatia, and Shri Krishna Kumar N. Bhatia. The said companies are engaged in trading of chemicals. Shri Krishna Kumar N. Bhatia and Shri Brijlal C. Bhatia are partners of M/s. Shree Nathjee Industries. The premises of M/s. S.N. Enterprises were searched by the officers on 8-3-06. Shri Ramesh Bhatia, Proprietor of the said trading company informed that they along with other proprietary concerns are engaged in trading activities of disperse dyes, powder, binders etc. Three stirrers fitted with electric motor were found installed in the said premises. Shri Ramesh Bhatia stated that the said stirrers were used to manufacture zari, binders, silver paste, gold paste and pearl paste etc. He also clarified that the said goods were manufactured by adding binders, thinner, pearl powder and water in the stirrer and by stirring them with the help of electric stirrer and then these are packed in 50, 100 kgs. Plastic drums. One laboratory for testing the various chemicals was also fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inting Mills, mentioning their description like dyeing and textile chemicals. The said truck was brought back to the above premises and investigations conducted. Shri Brijlal C. Bhatia, Proprietor of M/s. Bhatia Colour Co. and Shri Ramesh Bhatia, proprietor of M/s. S.N. Enterprises stated that aforesaid goods mentioned in the delivery challans were manufactured by one of their sister concern M/s. Shreeji Dyestuff, who had started manufacturing activity at the said premises since 1-3-06. They also revealed that the goods like white khadi, paste, were manufactured by M/s. Shreeji Dyestuff. The officers also found 3 mechanical stirrers installed in the said premises. Shri Brijlal C. Bhatia, Shri Ramesh Bhatia produced two bills showing purchase of six stirrers and clarified that other 3 stirrers are installed in the adjacent plot. They also produced stock statement of raw materials and finished goods of M/s. Shreeji Dyestuff which were found to be tallying with physical stock of raw materials and finished goods. 7. Scrutiny of the documents revealed that majority of the raw materials was received by M/s. Bhatia Colour Co. through Surat-Ahmedabad Transport Company. Statement of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arsha Traders, to simply prove that they were also manufacturing khadi/paste at Udhna, but so-called supplier denied that they are the manufacturer of said goods. (d) From the statement dated 22-2-07 of Shri Krishna Kumar N. Bhatia, proprietor of M/s. Shreeji Dyestuff and other evidences, it is seen that M/s. Shreeji Dyestuff was a dormant inactive firm and was not doing any activity till search was conducted. The said firm was shown to be a manufacturing unit w.e.f. March 06 only to cover clandestine activities of M/s. Shree Nathjee Industries. (e) M/s. Shree Nathjee Industries is using various raw materials for the manufacture of binders and adhesives and are having different machineries for the manufacture of the said goods. The raw materials for manufacture of binders by the process of polymerization in the various reactor vessels installed at Pandesara are Ethyl Acrylate, Butyl Acrylate and Vinyl Acetate, Monomers, Acrylic Acid etc. Various binders manufactured at Pandesara unit, in turn, are main raw materials for manufacture of white khadi and various types of pigment pastes by mixing in mechanical stirrers with thickening agent and emulsifier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is added to the clearance value of dyestuff, the same would exceed small scale exemption limit, requiring the said appellant to pay Central Excise duty. 10. On the above basis, proceedings were initiated against the appellant by way of issuance of show cause notice, which resulted in passing of impugned order by Commissioner. 11. After hearing both sides, we find that Revenue's case is that M/s. Shree Nathjee Industries who are engaged in manufacture of binders, khadi, adhesives, have manufactured and cleared the said product clandestinely in excess of clearances reflected in their record. For the above proposition, they have relied upon the fact that four trading units showing trading in chemicals, were, in fact, clearing the final product manufactured by M/s. Shree Nathjee Industries. The department has got the opinion of MANTRA and Prof. M.A. Shenoy, Mumbai University to show that such chemicals cannot be used directly in the dyeing and printing textile industries. 12. Statements of some of the buyers also stands recorded. 13. It is seen that during the course of adjudication, the appellant took a categorical stand that M/s. Bhatia Colour Co. is a regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trading unit, can be used for in-house manufacturing by the said unit. They also filed all the documents of the trading unit showing purchase of materials, sales invoices, LR transport receipt and octroi receipt. As such, they contended that inasmuch as the documentary evidence showing purchase and sales of chemicals does not stand rebutted by the Revenue by production of any other documentary evidence, the same has to be given preference over the doubt being entertained by the Revenue. 14. The appellant also contended before original adjudicating authority that statement of one of the employees of M/s. Surat Ahmedabad Transport Co. cannot take a shade of evidence inasmuch as there were 12 more transporters engaged during the relevant period and the said statement recorded showing one of the invoices in the last 5 years, cannot be held to be of any evidentiary value, especially where the said transporter has dealt with number of consignments and statement was recorded after a gap. It is humanly impossible to remember the fact of delivery at a particular place. The adjudicating authority's attention was drawn to the statement of Shri Brijlal C. Bhatia submitting that chemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the quantity of any product so cleared stands specified by him. The value, quantity and description on which the duty is being demanded is the sum total of the value of chemicals traded by all the 4 trading houses. 20. It is further seen that trader's stand that all the purchases and sales of chemicals are supported by item to item purchase/sale bill/lorry receipt, octroi receipt etc. does not stand rebutted by the adjudicating authority. Further, their stand that payment for the value of the goods stand made by the buyers directly to the 4 trading concerns by way of cheque also does not stand disputed. There is virtually no evidence much less any allegation that the money further floated back from the traders to the manufacturing unit. The transportation and octroi payment were being made by the buyers directly to the transporter. There is also no evidence of movement of raw materials i.e. chemicals traded by the 4 trading units either to the factory premises of M/s. Shree Nathjee Industries or any evidence showing movement of final product from the factory premises of M/s. Shree Nathjee Industries to the trading unit or directly to the processing houses. It is further se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference can be made to statement of director of M/s. Suprabhat Prints Pvt. Ltd., wherein some quantities of white khadi, silver paste were recovered. Other two buyers M/s. Bhavin Textiles and M/s. Payal Dyeing and Printing Mills stated that the goods were received by them from trading units and not from M/s. Shree Nathjee Industries. In any case, we find no details of such statement as to what was the final product received by them and how much was the quantity. Further, presence of paste/khadi in the premises of said buyers in the year 2006 does not lead us to conclude that the same was manufactured in the premises of M/s. Shree Nathjee Industries, in the absence of any evidence to the contrary. Further, to arrive at a finding that M/s. Shree Nathjee Industries was indulging into the clandestine manufacturing and removal, for the last 5 years on the basis of above evidences is against the settled law of appreciation of evidences as per precedent decisions of the Tribunal. The Commissioner is silent about the statement of 12 process houses admitting receipt of chemicals instead of final product. The records seized from the trading units as also records maintained at the processi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, which are exculpatory, Revenue's reliance of distant possibility of use of chemicals either as such or after processing, cannot be made the basis for arriving at the finding of clandestine removal. 23. Similarly, statement of one of the drivers of the transport company in respect of lorry receipts shown to him cannot be accepted as a conclusive evidence of clandestine manufacture and removal of goods by M/s. Shree Nathjee Industries inasmuch as the said statement stand given by the deponents without examining the records and one cannot expect him to remember the details of past, where there were 3000 odd consignments involved. Statement was in respect of 7 bills of M/s. Sameer Industries indicating that the raw materials were off-loaded in the factory of M/s. Shree Nathjee Industries, whereas the documentary evidence in the shape of octroi receipt, LR and sale bills in the name of processor clearly show that the goods have been received directly by process house and even octroi and freight payment have been made by them. Such documentary evidences have to be given preference over to the statement of driver or a manager etc. 24. It is further seen that the appellants, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering production on every alternate day after cleaning the vessel, the actual production days of the year works out to 130. (d) It is significant to note that the learned Commissioner has held that the content of binders in printing paste is around 25% and accordingly, he has come to a conclusion that production of printing paste would be 4 times the production of binders. However, in making this assumption, he has made a major error of failing to take into consideration the fact that the production of printing paste to the extent of 4 times of binders, would require 4 times the vessels than the installed capacity, otherwise where would be the printing paste be laid for mixing purpose. Hence, the learned Commissioner has grossly erred in estimating the production of printing paste to be 4 times of the production of binders, which is not possible with the vessels of 1.8 Tons, because 4 times the quantity of 1.8 Tons i.e. 7.2 Tons cannot be prepared in vessels of 1.8 Tons. (e) Therefore, the yearly production of printing paste would be : 130 days x 1.8 Tons = 234 Tons. (f) Moreover, the sales price of printing paste of Rs. 83 per kg has also been wrongly taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegations and findings of clandestine removal are required to be proved beyond doubt by Revenue. The present order seems to have been passed on the basis of doubts being entertained by the Revenue. The evidence required for arriving at finding of clandestine removal, should not be the one which raises the doubt against an assessee, but should be one which prove the Revenue's case beyond doubt. In the present case, we find that there is not an iota of evidence justifying the inferences drawn by the adjudicating authority. There being no evidence to show movement of raw material or final product to and from the factory of M/s. Shree Nathjee Industries; there being no inculpatory statement of the proprietors of trading units or partners of M/s. Shree Nathjee Industries; there being no statement of any of the worker of M/s. Shree Nathjee Industries indicating excess huge manufacture of final product to the extent of more than 1000%; there being no evidence to show use of more electricity, water, labour; there being no evidence of any flow back of money from the process house to M/s. Shree Nathjee Industries, we are of the view that the finding of clandestine removal arrived at by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estine removal. To the similar effect are the Tribunal's decisions in case of M/s. Chemco Steels Pvt. Ltd. v. CCE, Hyderabad-I as reported in 2005 (191) E.L.T. 856 (Tri.-Bang.), M/s. Andra Cements Ltd. v. CCE, Guntur as reported in 2005 (191) E.L.T. 1046 (Tri-Bang.), M/s. Ruby Chlorates (P) Ltd. v. CCE, Trichy as reported in 2006 (204) E.L.T. 607 (Tri.-Chennai), laying down that in the absence of any evidence showing excess consumption of raw materials or of electricity or receipt of sale consideration, the charges of clandestine removal cannot be upheld. Hon'ble High Court of Gujarat in the case of CCE v. M/s. Vidya Laminates Pvt. Ltd. as reported in 2007 (211) E.L.T. 382 upheld the findings of the Tribunal as arrived at in the case of M/s. Vidya Lamintes Pvt. Ltd. as reported in 2006 (197) E.L.T. 260 (Tri.-Mumbai), laying down that the burden to prove the clandestine removal lies solely and exclusively on the Department and is required to be discharged by concrete and clear evidence. The list is un-ending and we do not intend to multiply the same. However, a special reference may be made to the majority decision in the case of M/s. Tejal Dyestuffs Industries v. CCE, Ahmedabad as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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