9911796707
TMI Blog2012 (6) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... Products Ltd.(KPL)] are engaged in the manufacture of Sada Pan Masala, Gutka and Mawa. The appellants have four factories at different places but the present appeal relates to their Kanpur factory. Supari and Kattha are main raw materials for the manufacture of the appellants final product. After purchase of the said raw materials, Supari was being sent by the appellants to M/s Ekta Flavours Ltd., Unit-I for cutting on job work basis and Kattha was being sent to M/s Ekta Flavours Ltd., Unit-II for crushing/grinding. It may be mentioned here that the said two units of M/s Ekta Flavours Ltd. are subsidiary of the main manufacturer of M/s Kothari Products Ltd. in as much as the Managing Director and Director of the three units were common. The said units were also situated adjacent to the factory of M/s Kothari Products Ltd. The raw materials after being purchased from various suppliers were being offloaded directly at the units of M/s Ekta Flavours Ltd., Unit-I and M/s Ekta Flavours Ltd., Unit-II and after cutting the Supari and grinding the Kattha, the same were being sent by the said job worker to the factory of M/s Kothari Products Ltd. 4. As per facts on record, Revenue conducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancies in the stocks of betel-nuts and Kattha were also found on the day of search at M/s Ekta Flavours Ltd. 6. Based upon the sourced documents and the inquiries conducted thereafter and follow up investigation made by the Revenue, demand of duty was raised against the appellants, which stands confirmed by the Commissioner vide his impugned order. 7. It may be mentioned here that total demand confirmed against the appellants can be bifurcated into two different portions in as much as the reasons for confirmation of the same are different. The details are as follows :- a. Rs.18,33,83,943.00 This demand of duty has been confirmed solely on the basis of Sourced documents. (Mainly & solely on 719 loading slips) Other documents have been used for corroboration. b. Rs.1,03,26,220.00 This demand of duty has been confirmed based on alleged photocopies of invoices said to have been recovered from the appellants factory premises. 8. We have heard both the sides duly represented by Shri K.K.Anand, Advocate for the appellants and Shri A.K.Raha, Advocate for the Revenue. The matter was heard on various dates when Shri K.K.Anand appeared for the appellants and advanced arguments. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, Revenue s contention that owing to time constrain, they have to conclude their argument in a day, is not true. 9. Dealing with the merits of the case, we find that the Revenue s case as projected through their special counsel Shri A.K.Raha, is based upon the documents which came into possession of the Revenue through unknown sources. Even on repeated questioning, Shri Raha has not been able to place on record the source of possession of the said documents. These sourced documents are the starting point of investigation against the appellants. 10. It is seen that during the course of investigation, the said documents, randomly selected, were sent to GEQD, Shimla for examination. As per the report of the GEQD, the said documents are related with the documents maintained by the appellants in the normal course of their business. Revenue also conducted investigations as regards the receipt of quantity of raw materials, which were purchased by the two units of M/s Ekta Flavours Ltd. Further investigations were conducted at the Packing Material Godown maintained by the appellants and comparison of the same with the documents prepared at the appellants factory revealed excess rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manipulation of records was exposed during the investigation. As for instance, the quantities of semi finished Gutkha shown as shifted in the DVC/cartage slip were much more than the corresponding quantities of semi finished gutkha shown in their Raw Material Report, thus revealing an attempt to suppress the actual quantity of production of semi finished gutkha and consequently, their finished products. On the basis of the number of pouch packing machines installed/working during the relevant period at the factory of M/s Kothari Products Ltd., the appellant was found to have the capacity to produce finished goods out of the unaccounted raw materials over and above the accounted for production. 14. M/s Kothari Products Ltd. were preparing miscellaneous packing slips at the time of packing of the finished goods. They were also preparing loading slips, (quite a few of which were supplied in original by the informer, which are referred to as source documents) for the despatch of finished goods. The department compared all those source loading slips with the accounted for invoices of the corresponding dates. On comparison it was found that in respect of many entries the above two docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. To put in a nutshell M/s KPL had resorted to clandestine removal of their finished products by adopting the modus operandi of well orchestrated manipulation/forgery of records at all stages and levels, starting from raw materials upto the stage of removal of finished products. In the process, their total duty evasion has been estimated as amounting to Rs.19,37,10,163.00 17. In terms of Hon ble Allahabad High Court s order dtd. 11.07.06, appellant was allowed to seek opinion of their own hand writing expert in respect of sourced documents. The appellants produced the opinion of one Shri Qazi M.Junaid, a hand writing expert, whose opinion was contradicting the opinion of GEQD. It is Revenue s contention that opinion of Shri Junaid produced by the appellants cannot be accepted primarily on the ground that the later was not technically qualified and the certificate issued by Lucknow Document Expert Bureau, Khare & Company, Nazirabad, Lucknow, was not proper in as much as on inquiry from the Circle Officer (Police), Kesarbagh, Lucknow as also from Senior Superintendent, Post Office, Lucknow, it transpired that said institute was never in existence at Nazirabad. The department in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Ltd. and Guards posted at various premises of the appellants. He also referred to the documents recovered on 18.10.02 from the residence of Shri Rajesh Sharma, employee of the appellants, which were in the nature of delivery challans of Supari and delivery challans of Kattha. When these documents were compared with corresponding accounted for documents namely delivery challans of Supara and Kattha, it was found that the corresponding accounted for documents were different than the one recovered. He also referred to the cross examination of Shri Rajesh Sharma wherein he admitted that the peon of the company used to keep the records related to company at his residence as his residence was close to the Head Office. He also clarified that the records were kept at his residence on the direction of Shri Rajeev Porwal, Head of Audit. He was also inquired about the said documents to which he replied on 01.04.03 that I have gone through the files and have signed at ten different places in every file. These documents pertain to M/s Kothari Products Ltd. and its related units . From the above, Shri Raha submits that documents recovered from Shri Rajesh Sharma were third copy of challan whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts in as much as the Revenue has not disclosed the source of acquisition of the same thus denying the appellants an opportunity to contest the same. 23. Elaborating on his arguments, Shri Anand draws our attention to the various statements of employees recorded by Revenue during the course of investigation. Specific attention stands drawn to the statement of Shri Ashok Soni, Supervisor, M/s KPL; Shri Prashant Dutta, Supervisor, M/s Ekta Flavours Ltd.; Shri Chandrabhan Pande, Supervisor, M/s Ekta Flavours Ltd.; Shri G.S. Sachan, Guard of Kothari Products Limited; Shri Manish Chauhan Data Entery Operator of M/s Kothari Products Limited; Shri Rajesh Shah, Cashier of Kothari Products Limited; and Shri Suresh Rai-Supervisor of Ekta Flavours Limited. The statements of all the said employees reveal that more than one challan was prepared under the instructions of Shri Anil Srivastava. It is his submission that inspite of the fact that many employees of the appellants disclosed the fact in their recorded statements that they have prepared more than one delivery challan (which are part of the sourced documents) under the directions of Shri Anil Srivastava, the said Anil Srivastava was nev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf in Para 2.0 at Page-1 of Volume-1. In view of the above, he submits that when the presumption under Section 36A is not available, the burden of proof is squarely on the Department to prove that the source documents related to the Appellants factory and that any goods under the source documents were actually manufactured at and cleared from the Appellants factory. This burden has not at all been discharged in the present case. The investigating officers could not have simply accepted the source documents from the informer on its face value and the same needed strict corroboration which is completely absent in the present case. They were required to satisfy themselves about its genuineness and the motive behind providing the same to them after more than one year and ten months. It is the strong contention of the appellant, any documents which has been handed over long after the relevant period does not command any evidentiary value. He further submits that the Commissioner is totally wrong in relying upon the source documents merely on the ground that since the GEQD had established its authenticity the same become admissible in law and duty can be demanded from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be some evidences available for the period prior to November, 1999 or subsequent to December, 2000. In fact there is none. The officers also did not find any unaccounted raw material or finished goods in the factory at the time of their visit. The appellants submitts that in the manufacture of their final product, they need number of raw materials apart from the main raw material, i.e., Supari and Kattha. He gives details of such raw materials/ inputs/ packing materials required by them to manufacture their final product. (a) Supari, (b) kattha, (c) perfume, (d) cardamom (e) Lime (f) Menthol (g) Lamination (h) Tins (i) Inner Polly/Inner Cartons and (j) HDPE Bags/Cartons There is neither any allegation nor any evidence to reflect upon the fact of procurement of other raw materials required for manufacture of huge quantity of Pan Masala/Gutka as alleged by the Revenue. In the absence of any such evidence, the reliance by the Revenue on the sourced documents without any corroboration is not in accordance with the principles of evidence enunciated by the courts in various decisions. He has also placed on record a chart showing break up of various quantities of receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department. Many of the employees have admitted that such documents were being fabricated by them at the instance of Shri Anil Srivastava. He submits that the above fact clearly establishes the role of Shri Anil Srivastava who was getting the documents fabricated from these employees. He has also drawn our attention to the result of cross examination conducted before the adjudicating authority. He submits that the Commissioner while passing the impugned order in de-novo proceedings should have independently applied his mind to the various evidences on record instead of repeating the earlier order which was already set aside by the Tribunal. He also submits that some of the evidences which has come on record during the course of investigation and were against the Revenue have not been taken into consideration by the adjudicating authority and as such impugned order passed by the Commissioner is highly perverse in as much as he has not accepted the averment made by various witnesses during their cross examination without according any reason for discarding the same. He submits that such cross examination was allowed by the Hon ble High Court with a prima-facie view that the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in their factory premises and expressed his doubt that the documents shown to him might be fake. Shri Anand further submitted that the charges of clandestine removal are serious charges and are in the nature of quasi criminal proceedings. In support of his contention that the proceedings under Central Excise Act are quasi criminal, he drew our attention to various decisions as also the Rules and Acts. Both sides relied upon various decisions of quasi judicial as also judicial authorities in support their contentions. We shall be dealing with said judgements in the subsequent parts of our order. 25. After appreciating the submissions made by both the sides, we find that the demand of an amount of Rs.18.33 cores (approximately) stands confirmed against the appellants on the basis of 719 loading slips which came to the possession of Revenue from uninformed and undisclosed sources. Shri Raha, ld. Advocate appearing for the Revenue during the course of hearing of the appeal has not been able to disclose or clarify the source of acquisition or the possession of the said loading slips inspite of being queried by the Bench repeatedly. On the other hand, it is the appellants conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f documents supplied by an informer u/s 36A was not available to the department as stated above. - Even otherwise informer is a person who is very much an interested party and goes to any extent in fabricating the documents. - It has clearly come on record that it was Sri Anil Srivastava who as cashier of the appellant was systematically getting the documents forged. - This fact has clearly come on record from the statements of the various persons. - Various witnesses stated in their respective cross examinations that they had fabricated the various documents such as delivery challans, in/out documents and loading slips under the instructions of Sri Anil Srivastava. - Hence it must be held that the source documents have no credibility as they were tendered by the informer one year and ten months from the date of their fabrication. If that be so, no demand of duty can be confirmed against them, based upon the said 719 sourced invoices. 29. In terms of the provisions of Section 36A, the presumption in respect of documents as regards their correctness is available only when such documents stands in evidence against the person who produced the same or from whose custody or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to support clandestine removal. In the case of Chandrakant H.Sanghvi reported in 2000(121)ELT788(Tri.) while dealing with the case of under valuation of the imported goods observed that the procured documents supplied by an informer does not legally constitute an acceptable evidence and has to be viewed with utmost caution. The informer is obviously a person very much interested in the outcome of the proceedings either for his reward or other factors which motivated his tendering information. To the similar effect was the observation of the Tribunal in the case of Farooq Desai reported in 2000(118)ELT641 observing that the statement of informer is hardly an evidence of credible nature. We find that the fact of recovery of the documents is very important and the silence on the part of the Revenue to disclose the source of acquisition and possession of the same is fatal to the Revenue s case especially when the same do not stands corroborated in material particular. We, further, note that serious allegations has been made by the appellants as regards supply of these documents to the Revenue by submitting that the same is the brainwork of Shri Anil Srivastava, resulting in fabrica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. It is well settled law that the seizure of documents from any premises in support of any serious charge must be established to have been done by following the procedure known to law, minor lapses being condonable. However, the mandatory rules of procedure to ensure the authenticity of such seizure and of the seized materials must be established to have been complied with. It requires to take proper care to ensure that the documents seized in the course of such proceedings are properly kept in an envelop or cover and duly sealed and due care is taken to protect the same from any third party interference. Panchanama should disclose the steps taken by the seizing authority to ensure the absence of any opportunity to any stranger to interfere with such documents. The panchanama should also disclose proper description of the documents. When such document is very vital in nature, it should refer to the important aspects of the documents so that there can be no room to doubt about the genuineness of the document or about the genuineness of the contents of such document, and of course, the seizure thereof. After having observed as above, the order points out to various discrep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that rules of evidence as they are in force do not expose relevant material on the ground that it was obtained by illegal search and seizure. If the recovery is of relevant material and the department is able to establish the link between such material and the charge against the assessee, certainly such material cannot be discarded for having found in the course of illegal search and seizure. By referring to various decisions of the Hon ble Supreme Court, it was observed that if the material found is otherwise admissible as evidence than the court is not concerned about how it was obtained. As such by taking into account the subsequent decision of the Hon ble Supreme Court, it was observed as under :- 25. In Khet Singh vs. Union of India reported in 2002 (142) ELT 13, the Apex Court while reiterating its earlier view in Pooran Mal s case had held that Court has consistently refused to exclude relevant fact merely on the ground that it was obtained by illegal search or seizure. It was further ruled that even if there is any sort of procedural illegality in conducting the search and seizure, the evidence collected thereby would not become inadmissible and the Court would consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho were present in the premises when the officers entered, the details of the documents recovered and seized, placing of the documents in the sealed cover etc. The Bench had observed in the absence of such detailed recording of the procedure at the time of drawing of Panchnama, there is a chance of tampering with the said documents. In the present case apart from the fact that the these documents came into the possession of Revenue from non-disclosed sources, we are of the view that the evidentiary value of the same is required to be adjudged strictly specifically in the light of the appellants claim that the same were fabricated documents supplied by their disgruntled employee to the Revenue with an intent to put the appellants in difficulty and to win reward. 32. Revenue has in support of their plea that the said documents are authenticated documents, has relied upon the report of GEQD, Shimla. On the other hand, the expert opinions of hand writing expert Shri Qazi M.Junaid obtained by the appellants, which is in their favour stand discarded by the adjudicating authority on the ground that he was not technically qualified in as much as the certificate issued by Lucknow Document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icated at the instance of Shri Anil Srivastava who was having control over the employees of the appellants company, the signatures on these documents are bound to be same. Without further adverting to detail on the said issue, we proceed to decide the evidentiary value of the said documents. 33. Having observed as above, we proceed to discuss the evidences on the basis of which the demands stands confirmed against the appellants. It is seen that various documents which came into the possession of the Revenue, are in the nature of delivery challans, loading slips, in-out marketing documents, raw material reports and some Xerox copies of the invoices pertaining to the period November, 1999 to December, 2000. It is seen that the demand of Rs.18.33 crores (approximately) stands confirmed only on the basis of 719 loading slips which is a part of the said sourced documents. The other sourced documents which are in the nature of delivery challans, in-out marketing documents, raw material reports etc. stands considered by the Commissioner for corroborating the allegations of clandestine removal of goods covered by 719 leading slips. 34. The appellants have taken a categorical stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this slip to Sri Rajesh Shah, (Cashier) after checking. Sri Shah destroys the slip after making payment to the labour contractor . I have sent 100 bags of 2 gm Gutkha to M/s Safexpress through UP-78AN-0205. Loading Slips comes in my hand and I send the same to Rajesh Shah for payment to contractor after verification. I have sent this consignment at 13.40. Later on this slip is destroyed . 37. Based on the above investigation and the statements recorded, it was Revenue s own case in the SCN that the sourced documents were being destroyed by the appellants in a systematic manner once they were perused by the senior staff / Director of the company. It is seen that Shri P.N.Mishra, authorised signatory of the company, in his various statements has repeatedly deposed that the loading slips on the basis of which payments were being made to the contractor were being destroyed subsequently. There was an allegation to the same effect in the SCN in respect of loading slips as also in respect of destruction of delivery challans. The appellants contention is that if such loading slips were being destroyed by the appellants after payments were being made to the contractor in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.N.Mishra in his statement had very clearly stated that the said loading slips were destroyed as soon as the same were converted into cartage slips, they were never confronted with these loading slips and was never questioned on the fact of availability of the same with the Revenue. When the Revenue has these 719 loading slips in their possession and when the employees of the appellants have in very categorical and unambiguous language stated that no loading slip is preserved after cartage slips are made, the least expected from the Revenue was to confront the said deponents with the loading slips available with them and to seek their clarification. Not only that the said deponents were not confronted with the loading slips but no question on availability of the same with the Revenue was put to them so as to seek their clarification. We also find favour in the appellants contention that the same very statement of Shri Rajesh Shah and Shri P.N.Mishra stands relied upon by the Revenue but part of the same where they have deposed that the loading slips were being completely destroyed in all cases, is not being referred to and relied upon by the Revenue. It is well settled legal princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. The fact that Shri Yadav was signing the DVCs subsequently or in some cases a fact that the payment was being made to him on different dates than reflected in the DVCs cannot be held to be a factor sufficient so as to arrive at a finding that the payments were being made in excess than what was being reflected in the DVCs, to such a large extent as relatable to the loading slips. 41. However, it is the contention of Shri Raha that in answer to a question Shri Yadav had stated that he got Rs.1.30 per Jhal for stitching and he used to receive payment for the same in cash. As such he contends that some payments were being made to Shri Yadav in cash. The said plea of the Revenue stands strongly contested by the ld. advocate appearing for the appellants by submitting that stitching of Jhal is admittedly different than loading/unloading of goods and such stitching was being done by Shri Yadav only in respect of goods which were meant for export. In as much as there was no duty on the exports, no manufacturer would show cash payment in respect of such goods. He also submits that even the payments made in terms of DVCs were being made to Shri Yadav in cash and not by cheque or bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate fabricated character of the same. 45. It is also seen that out of 719 loading slips, 415 were prepared by Shri Umesh Pal, Supervisor of the appellants company. Inspite of the fact that his signatures are appearing on the said loading slips, he was never summoned by the Revenue for recording his statement or to further investigate at his end. Further truck numbers were mentioned on 147 slips. As per the appellants 50% trucks are owned by them and 50% of the trucks of the transporters are used. Revenue neither approached the transporters nor recorded statements of drivers to establish the fact that the goods were actually loaded and transported. We note that the names of the drivers were available at least on 20 slips. Inspite of that the statements of said drivers were not recorded for the reasons best known to the Revenue. It is also seen that out of the total loading slips, 132 slips did not even mention the name of the appellants, i.e., M/s KPL. They simply says - Bora load hua . Some of the loading slips were on old stationery, like VAT of GP1, refund sanctioned document etc. It is well settled principle of law that charges of clandestine removal are serious charges and can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of various discrepancies and shortcomings, as discussed by us in the preceding paragraphs. 46. At this stage, we discuss the other corroborative evidences relied upon by the Revenue. As per Shri Raha, Revenue came to possess 15 kinds of various documents. The same are in the shape of delivery challans, in/out documents, raw materials reports and Xerox copies of invoices issued by M/s KPL pertaining to 7 premises of the appellants. Though we have already observed that the entire case of the Revenue is based upon the loading slips and other documents are only in support of the said loading slips and having held that such loading slips cannot be made the basis for arriving at the clandestine activities of the appellants, nevertheless we proceed to decide the evidentiary value of the said documents. 47. The delivery challans of supari issued by M/s Ekta-I and delivery challans for Kattha issued by M/s Ekta-II stands relied upon by the Revenue along with some delivery challans recovered from the premises of Shri Rajesh Shah, one of the employee of M/s KPL. It is the Revenue s case that the number of bags as also the weight of the goods mentioned in the delivery challans was cut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuineness of these documents does not stand established and in view of our observations that the same are fabricated, the evidentiary value of the said delivery challan cannot be accepted on the wider ground without Revenue establishing the authenticity of the same by co-relating with the receipt of so much unaccounted raw materials. We find that there is no evidence on record to show that for M/s Ekta I & II have been given more job charges for grinding/crushing raw material at their end. Similarly, procurement of Kattha/supari by M/s Ekta more than what is reflected in their records has not been established. Job charges tallied in the Balance Sheet of both the companies. It is also seen that in some cases, Kattha and Supari was supplied by M/s Ekta to their Baroda unit who have accounted the same in their records. As such we find that in absence of any clarity on the said delivery challans and their association with the actual delivery of Kattha and supari, the said delivery challans cannot be held to be corroborative evidence. According to the adjudicating authority such delivery challans issued by Ekta I & II reflect upon the delivery of unaccounted for grounded and crus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in 2009(233)ELT157 wherein while dealing with various provisions of Foreign Exchange Regulation Act, 1973, it was observed in para 17 that proceedings under the said Act are quasi criminal in nature. Particular support from above observations stands drawn by us as the proceedings under the Central Excise Act are similar in nature to the proceedings under FERA Act, 1973 resulting in confirmation of demand and imposition of penalties to the extent of 100% as also for launching of prosecution against the manufacturer in terms of provisions of section 9 and 9AA, 9B & 9C of Central Excise Act. The offence if proved are punishable with a imprisonment or a term which may be extended to seven years with fine. Similarly the Hon ble Supreme Court in the case of Tukaram Dighole reported in 210(4)SCC329 while dealing with the issue of election petition and the evidentiary value of documents placed on record laid down the following precedent law:- (a) A mere production of VHS cassettes was not sufficient. Further evidence was required to be adduced to prove as to how the said cassettes were obtained by the appellant. (b) In that case the charge of corrupt practices is equated with a cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2004(167)ELT536; Devidas Garg reported in 2010(257)ELT289 and in the case of D.Bhuramal reported in 1983(13)ELT1546(SC) in support of his contention that Revenue is not expected to proof its case with 100% mathematical calculation and preponderance and probabilities should be adopted as criteria for establishing the case of clandestine removal. As such by referring to the various sourced documents and the result of investigation, he submits that going by the reasonable prudent man s view, it can be safely concluded that the appellant had been indulging in clandestine activities. In rejoinder Shri Anand submits that the reliance of Shri Raha in case of Buta Steels P.Ltd. is misplaced in as much as the facts are not identical. In the case of Buta Steels P.Ltd., GEQD report was not disputed by the appellants and it was in these circumstances, the duty demand was upheld against them whereas in the present case, the genuineness of the source documents stands disputed by the appellants along with the contest to GEQD report. The Hon ble Supreme Court in the case of Shri Bhagwan Das reported in 1974(4)SCC46 has held that evidence of a hand writing expert, unlike that of finger print exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... theory cannot be adopted in cases of weak evidences of doubtful nature. Admittedly Revenue cannot be accepted to prove its case upto the last degree but the least accepted is that the evidences brought on record should be logical and inspiring confidence in the Revenue s case. The decision cannot be arrived on the basis of figment of imagination and unwarranted assumptions in as much as the distance between may be and must be is a long distance required to be travelled by production of at least acceptable positive evidences. We also note that the Hon ble Supreme Court in the case of D.Bhuramal were taken note by the Hon ble Supreme Court in another decision in the case of O.Konavalov reported in 2006(197)ELT3(SC) involving the issue of seamen wages under the maritime law. By dealing with the contention of applicability of D.Bhuramal judgement, it was observed that in as much as that decision related to goods which were found to be of smuggled nature, the said ratio of law cannot be invoked for confiscating the vessel. The said decision was also considered by the Tribunal in the case of R.A.Castings P.Ltd. reported in 2009(237)ELT674 wherein the judgement was distinguished and it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue. To manufacture such huge quantity of final product, the appellants required all the raw materials to the same extent. There is no whisper of procurement of such huge raw materials. Apart from above, we note that the final product allegedly cleared clandestinely is for further sale in the market. As such there need to be certain buyers for the same. There is no evidence on record as to whom the said alleged clandestinely manufactured final product stands sold by the appellants. Further, there is no evidence showing as to how the consideration for the same stands received by them from various buyers. In the absence of all these details, confirmation of demand based upon procurement of loading slips from unknown sources cannot be upheld. At this stage, we may proceed to refer to some of the decisions dealing with the issue of clandestine activities of the assessee and laying down that such charges connotes accusations of serious nature and are required to be established with cogent evidences and while the evidence cannot be discarded totally, the same should be scrutinised and examined carefully. 51. It has been constantly held by various decisions that the charges of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls 2005(190)ELT395(Tri.-Kol.) vi. Sri Jayajothi & Co.Ltd.-2002(141)ELT676(Tri.-Che.) vii. Sharma Chemicals 2001(130)ELT271(Tri.-Kol.) viii. Opel Alloys P.Ltd. 2005(182)ELT64(Tri.-Del.) Similarly in the case of Paras Laminates P.Ltd. reported in 2005(180)ELT73(Tri.); as confirmed by Hon ble Supreme Court reported in 2006(199)ELT-A182(SC); Ruby Chlorates P.Ltd. reported in 2006(204)ELT607(Tri.-Che.); D.P.Industries reported 2007(218)ELT242(Tri.-Del.); Durga Trading Co. reported in 2002(148)ELT967(Tri.-Del.); Durga Trading Co. reported in 2003(157)ELTA315(SC) and Laxmi Engineering Works reported in 2010(254)ELT205(P&H), it was held that charge of clandestine removal must be corroborated by independent and un-impeachable evidences such as purchase of excess raw material, excess consumption of electricity, transport and delivery of goods to consignees mentioned in invoices/ payment to the manufacturers; that the charge of clandestine removal is a serious charge which must be proved by the department by a adducing sufficient and tangible evidences and demand of duty cannot be confirmed on the basis of assumptions and presumptions and surmises & conjectures. 52. At this stage, we may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of corroboration is not to give validity or credence to evidence which is deficient or suspect or incredible but only to confirm and support that which as evidence is sufficient and satisfactory and credible; and corroborative evidence will only fill its role if it itself is completely credible....... There can be, therefore, no corroboration of evidence, which is itself unworthy of credence. 27. That, apart from these retracted oral evidence, the main evidence on which reliance is placed by the Revenue are the loose sheets, Hisaba books and Kaccha Challans. It is undisputed facts that any author of these records was not traced and made available for cross-examination. Moreover, these documentary evidence were not recovered from the office or factory premises of the appellant manufacturer company, and there is no tangible evidence on record to conclusively relate the same with the appellant manufacturer company, except the retracted oral evidence. There isn t any untainted, undisputed admission by the concerned Director of the company that these records relied by the department were of company s unaccounted production and removal thereof. The entire accounted pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find cogent evidence of disproportionate power consumption, capacity utilization and labour employed, or any cogent evidence of clandestine manufacture of unaccounted quantity alleged as clandestinely removed. I find that unaccounted production in the factory of the appellant company has not been established. In Ruby Chlorates (P) Ltd. Versus Commissioner Of C. Ex., Trichy, 2006 (204) E.L.T. 607 (Tri. - Chennai), it was held that:- 21 ..The settled legal position is that when several raw materials are involved, when a case of clandestine production and clearance is built on clandestine use of raw materials, the same should be proven with reference to unaccounted use of all such major raw materials . 22. In a case of clandestine removal the department should produce positive evidence to establish the same. In the absence of corroborative evidence, a finding cannot be based on the contents of loose chits of uncertain authorship. Department has not produced evidence of use of inputs to prove that there was manufacture of unaccounted finished product. ... Moreover, in the case of Atlas Conductors (supra), this Tribunal has taken a clear view that the demand cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firms the demand on the appellant M/s VTPL and imposes penalty on them is not sustainable and is liable to be set aside and we do so. 32. I also do not find tangible evidence of removal from factory, of unaccounted goods so manufactured, by loading from factory and transportation therefrom, of alleged clandestinely removed goods. I do not find any reliable evidence of the actual customer/recipient of the clandestinely removed goods with their confirmation of unauthorized payment towards unaccounted purchase of goods allegedly manufactured and removed in a clandestine manner from the factory of the appellant. There was no recovery of any unaccounted sales proceeds in substantial cash in the factory or office premises or anywhere else in the control of the appellant company, backed by any confirmation oral or written from the person giving such cash against goods removed in clandestine manner without payment of duty from the factory of appellant company. 54. By taking note of the legal positions as enunciated in the above referred decisions, we note that the confirmation of demand of duty against the assessee based upon the allegations of clandestine removal leading to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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