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TMI Blog2013 (5) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... mixer grinders w.e.f. 1975 onwards. M/s Dynamic Engineers were engaged in the manufacture of mixer grinder of different models and came into existence in the year 1986. M/s Dynamic Engineers-II was a manufacturing unit set up by Dynamic Engineers-I for the manufacture of triple jar mixers for supply to manufacturers of mixer grinders etc. and came into existence in 1990. M/s Konark Industries was manufacturing juicer mixer, grinders and jar attachments w.e.f. 1988. M/s Asiatic Engineers were set up in 1988 for manufacture of washing machine and centrifugal dryers. Demand of duties stands confirmed against the manufacturing units by denying them the benefit of Notification No.175/86-CE, dtd. 01.03.86 in respect of the excisable goods manufactured by them for the period upto 31.03.90 as also on the charges of clandestine removal of the goods by the said manufacturing units. The said findings stands arrived at by the Commissioner based upon the documents seized from various premises and the investigation made at various levels. We shall be dealing with the facts, statements, evidences and the submissions made by the both the sides duly represented by Shri K. K. Anand, and Shri Bipin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K.Arora, which was formed to market the household appliances. It is seen that the allegations of excess clandestine clearances and the consequent denial of small scale Notification are primarily based upon the recovery of one document titled as sale statement and some other documents recovered from the business premises of M/s Technocrat Marketing P. Ltd. and the residential premises of Shri H.O. Bhatia read with the statements of various persons and the other evidences collected during the course of investigation. 5. In as much as M/s Hindustan Machines, was availing the benefit of SSI exemption Notification, all other manufacturing units, manufacturing the goods under brand name of Maharaja, were also availing the benefit of Notification No.175/86-CE. It may be observed here that in terms of para 7 of the said Notification, use of brand name of another person debarred availment of SSI Notification in case the brand name owner was not entitled to the benefit of SSI Notification No.175/86-CE. However, if the brand name owner was availing the benefit of SSI exemption in terms of the said Notification, other manufacturers manufacturing the goods with the brand name of such owners wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflects upon the clandestine clearances of the said goods from the factory of M/s Hindustan Machines, without reflecting in any statutory documents. Another documents being a letter dtd. 30.08.89 addressed to Shri R. K. Arora was recovered wherein the sales figures for the first 6 months were reflected. In another communication addressed to Shri Satish Bhatia dtd. 29.01.86 recovered from the residence of Shri Hari Om Bhatia communication about the despatch of the goods was made. 9. Based upon the above seized documents, the Revenue calculated the clandestine removal made by the said Maharaja Group of Companies. In para 8.5 of the impugned order of the Commissioner, it stands recorded that in as much as the said sales statement recovered from the premises of marketing company reflected only the quantity of triple jar mixers sold in the Southern States, which region formed for about 50% of the total sales effected and allowing the margin of 4,721 mixers sold from January to March, 1987, the Revenue believed that the total number of mixer grinders that appeared to have been sold during the period April to December, 1987 works out to be 18,988. By taking the price of the said produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July, 1987 in respect of 18,988 pieces. The appellants contention that when company itself was not in existence, any document recovered from its premises pertaining to past period would have no bearing, seems to carry weight. There is no denial of the fact that the said sale statement showing the clearance of goods was recovered from the premises of M/s Technocrat Marketing P. Ltd. Apart from above, we have seen said statement appearing at page 1104-1105 and form Annexure-IV of paper book filed by the appellants. In this document, there is no description of the goods and no name of the manufacture is appearing. The said statement only shows some figures of clearances made in 1987. We really fail to understand as to how the Revenue has connected the figures as available in the statement to the clearances effected by M/s Hindustan Machines. There is virtually no evidence on record to show that the said document relates to sale of finished goods manufactured by M/s Hindustan Machines. There is no indication in the said statement to show that the goods were toasters, irons or mixer grinders which are manufactured by M/s Hidustan Machines. There is also nothing on record to reveal the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of enhanced value of Rs.900 per piece is admitted on the higher side and without any basis in the absence of any indication of the description of the goods. As we have already held that the sale statement recovered from M/s Technocrat Marketing P. Ltd. cannot be related to M/s Hindustan Machines for reasons recorded in the relevant paragraphs, we find that the said plea of the appellants as regards adoption of higher value of the goods become redundant. 15. Further, it is seen that M/s Hindustan Machines have taken a stand before the adjudicating authority that they do not have capacity to manufacture such huge quantity of finished goods. The said plea of the appellants does not stand either considered or rebutted by the lower authorities. There is also nothing on record to show that the said appellants were in a position to manufacture such excess quantity of finished goods than what stands reflected in their statutory records. Tribunal in the case of Chandan Tobacco Co. reported in 2011 (270) ELT 87(Tri.-Ahmd.) as also in the case of Jindal Nical & Alloys Ltd. vide final order No.904-908/2011 has held that when the appellants do not have installed capacity to manufacture the all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has relied upon the Hon'ble Supreme Court's judgement in the case of Modi Alkalies & Chemicals Ltd. reported in 2004 (95) ELT 617(SC) as also in the case of Rukmani Packwel Traders reported in 2004 (165) ELT 481 (SC). However, we are of the view that the ratio of law declared in the said judgements are not applicable to the facts of the instant case. In the case of Modi Alkalies, the clearances of various units were to be clubbed by the Revenue when there was evidence showing creation of front companies by the Directors of Modi Group of Companies by appointing their employees as Directors of front companies. The fact that the profit earned by these front companies loans was going back to M/s Modi Alkalies was also taken into consideration. It was in these circumstances, clearance made by all the companies were clubbed and the benefit of SSI exemption was denied. In the present case, there is no clubbing of clearance sought to be done by Revenue. All the units are enjoying the benefit of SSI exemption Notification independently, and it is not even the Revenue's case that they are facade companies. As such they have to be held as independent units. Even the SCN does not propose club ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has not dealt with the various issues raised by the appellants, as also the various evidences relied upon in the SCN stands. He has, in a very generic term observed that documents recovered from the marketing company M/s Technocrat Marketing P.Ltd. and the role of Shri Hariom Bhatia in the affairs of the company have specifically established the fact of clandestine removal and lead to the indication of clandestine clearances of the manufacturing units. 23. After hearing both the sides, we find that the charges of clandestine removal are based upon the sale statement of 1986-87 recovered from the premises of M/s Technocrat Marketing P. Ltd. In addition a letter dtd. 30.08.88 stands recovered from the said premises. The letter was addressed to Shri R.K. Arora who was Partner/Director of the marketing company along with Smt. Sunita Bhatia, w/o Shri Hari Om Bhatia. In addition, some papers were recovered from the marketing company wherein sale of the goods was shown under the code name OGL or 091. In addition, some documents were recovered from the residential premises of Shri Hari Om Bhatia, h/o Smt. Sunita Bhatia, Partner of the marketing company. 24. It is seen that the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the sale statement recovered from marketing company, a reference stands made to a letter dtd. 30.08.88 recovered from the marketing company. The said letter is addressed to Shri R.K.Arora, Director of the company and refers to sale figures from January to June, 1988. 26. M/s Technocrat Marketing P. Ltd. came into existence in May, 1988, the document referring to the sale figures prior to date of birth cannot be taken into account for upholding the finding of clandestine clearance of manufacturing units. The identity of the person who has authored the said letter is not available. There is no reference to the goods manufactured by the manufacturing unit in as much as the same only mentions the sale figures without any reference to any goods or manufacturer. There is nothing in the said letter to indicate that the same relate to clearance figures of Maharaja Appliances. No authorised representative of any of the manufacturing units stands confronted with the said letter during the course of investigation. Shri R. K. Arora to whom the said letter is addressed has also denied the knowledge of the same. As such we note that said letter cannot be considered to be piece of evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id jars. 29. The appellants have also contended that they never had the facility to manufacture such huge quantity of goods. Their factory was located in a residential area operating in two shifts and was working from first floor of the building measuring around 990 sq.ft. Total number of workers were 20 and electricity bill was only Rs.1,013/- He also produced a certificate of Shri S.K.Bansal, Engineer who studied the installed capacity of the noticee with the available finance. After studying the process of manufacture, he certified that during the relevant time, the appellants were not having the production capacity to produce the alleged manufactured clearance of goods. 30. Apart from above, we note that M/s Hindustan Machines have made a police complaint as regards some scrupulous manufacturers making goods with their brand name. As a result, 32 units manufacturing household appliances were put to search and it was found that they were manufacturing goods under the brand name of Maharaja. The appellants have produced copies of FIR lodged and facts covering it. An order was also obtained from the Honble Delhi High Court directing Police to arrest the people dealing with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were differences which have been held to be on account of clandestine clearances. We find that the said documents were signed by one Shri N. S. Sohal whose statement was recorded on 05.02.91 and 07.02.91. On being queried about these documents, he deposed that no records for maintaining day-to-day production are being maintained by them. The various documents seized from the premises were the only records which were being made by him in his personal capacity so as to exercise some sort of control over the workers. Shri Sohal clearly deposed that such figures in the documents do not reflect the actual production of the goods but the same refers to the number of pieces handled by the workers at various stages of manufacture. The documents are for internal use and do not reflect upon a day's production. As regards production target, he clarified that the same are only targets and has no relevance or relation to the actual production. In fact, he felt sorry that these targets could never been achieved by the appellants. 33. It is seen that the said statement of Shri Sohal does not stands controverted or rebutted by the adjudicating authority. Apart from the statement of Shri Sohal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the figures appearing in the said documents with the entries made in the RGI-I register revealed that the excess figure in the documents related to centrifugal dryers and washing machine manufactured by M/s AEPL. The security register also seized showed clearances of these products. The appellants have contended that the duty of Rs.14,97,576/- stands confirmed against the said unit on the ground that they have clandestinely removed 1674 number of washing machines and 67 number of centrifugal dryers during the period 1989-90 and 1990-91. Our attention stands drawn to a chart appended as annexure-A to the SCN. According to the ld. Advocate, perusal of the said chart show, a difference of 42 number of products whereas the duty stands confirmed on much higher number of washing machines and centrifugal dryers. Even this 42 number of goods, there is no clarity as to whether the same relates to the clearances of washing machines or centrifugal dryers. On going through the said chart, we find that the same relates to details of clearances effected by M/s AEPL as reflected in Challans, internal gate passes, daily performance report and security register for which central excisable passes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Such documents cannot be held as the basis for concluding the allegation of clandestine removal against the appellants. 37. While dealing with the various contentions raised by the appellants, we find that Commissioner has dismissed the same by making very general observations that there is no rebuttal or proof submitted by the assessee by which they can negate the department's allegation of clandestine clearances by the manufacturing units. He has simplicitor observed that the recovery of incriminating documents showing clearances of Maharaja brand goods from the persons/premises concerned with the manufacturing units is sufficient to hold that the appellants have been engaged in actually manufacturing the goods in excess of recorded and clearing the same clandestinely. 38. It is a well settled law that charges of clandestine removal are required to be arrived at by production of positive and sufficient tangible evidences. It does not need the authority of judicial pronouncement to support the above legal issue. It is the Revenue who is making the allegation. Such allegations are being made only on the basis of some documents recovered from third person's premises. Even the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir end and to record their statements. In the absence of investigation said conducted from the buyers end, even though their names are available in the documents relied upon by the department, the charges of clandestine removal cannot be upheld. There has to be some corroboration to the allegations of clandestine removal. Admittedly, onus of proof is on the Revenue and can be shifted to assessee only when the assessee is confronted with such documentary evidences which indicate the clandestine activities on his part. We note that even the theory of preponderance of probability is not applicable in the present case in as much as we have virtually not found any document reflecting upon any clandestine activity on the part of the manufacturing unit. This has been the ratio of the various decisions relied upon by the appellants. In as much as it is established legal issue, we are not referring to such precedent decisions. In as much as in the present case, entire evidences relied upon by the Revenue is in the nature of unreliable documents not corroborative by any evidence material, we hold that the findings of clandestine removal cannot be upheld against the appellants. 40. The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department were of companys unaccounted production and removal thereof. The entire accounted production of the appellant manufacturer for the relevant period is not recorded in these Kachha records besides the alleged unaccounted production. The Hon'ble Member (Technical) was persuaded to assume that Shri Bothra would have keys to premises at 4130, Gali Barna, Sadar Bazar, Delhi, and although Panchnama drawn at this premises nowhere records the name of the appellant company, he was persuaded to further assume that it was a guest house of the appellant company. Although the names of the consignors on GR/RR were found fictitious, the Hon'ble Member (Technical) was persuaded to assume that the same related to the Appellant company. As rightly observed by the Hon'ble President, even the panchnama did not describe or identifies in its annexure which enlists the documents stated to have been recovered from the premises, recovery of any hisaba book or Kachha Challans or loose sheets with written pages. I agree with the findings of the Hon'ble President that entire proceedings have lost credibility and serious doubt arises about the credibility of the materials stated to have been co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Moreover, in the case of Atlas Conductors (supra), this Tribunal has taken a clear view that the demand cannot be on presumption of manufacture but on the basis of actual manufacture which is the basis to come to conclusion as recorded by Hon'ble President in para 47 onwards that the findings of the adjudicating authority are without any evidence and is not correct view and is liable to be set aside. 31. My above views are fortified by a recent case in the case of Viswa Traders Pvt.Ltd. & others Vs. CCE Vadodara being Final Order No. A/1846-1851/WZB/AHD/2011, dt.01.11.2011, a similar issue of clandestine removal was decided by co-ordinate Bench of Tribunal in Ahmedabad, wherein it is held that unless clandestine manufacturing is brought on record, there cannot be any allegation of clandestine clearances, un-corroborated with evidences. I was one of the Members in that Bench and while coming to the conclusion, the Bench had relied upon the judgment of Hon'ble High Court of Gujarat in the case of Nissan Thermoware Pvt. 2011 (266) ELT 45 (Guj.) I am reproducing the relevant portion of the said order, which is fortifying my view in this case also. 15. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the above paragraphs and it stands concluded that charges of clandestine removal cannot be made on the basis of assumptions and presumptions and on the basis of documents recovered from third person's premises, without their being any evidence of actual manufacture of the excess quantity, which required corroboration of procurement of raw material, the labour as also electricity consumption etc. No efforts stands made by the Revenue to establish the excess manufacture of the goods in the present case. Having already discussed the various evidences relied upon by the Revenue as not being relevant and sufficient for the purpose of upholding the findings of clandestine removal and by following the above majority decision of the Tribunal in the case of M/s Kuber Tobacco Products P. Ltd., we hold that the confirmation of demand against the appellants on the allegation of clandestine removal is unsustainable. UNDER VALUATION 43. Another issue required to be decided is as to whether the advertisement and publicity expenses incurred by M/s Technocrat Marketing are required to be added in the assessable value of the appellants final product or not? We find that though the issue stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re only detained and not seized. We find while dealing with the said issue, the adjudicating authority has not dealt with the above plea of the appellants. He has accordingly confiscated the said goods seized from the premises of various manufacturers with an option to them redeem the same on payment of redemption fine. We find that the order of the Commissioner is very cryptic and does not taken into consideration the various pleas raised by the appellants. It seems that the order has been passed with pre-determined mind to confiscate the goods. The statements of various authorised representatives of the manufacturing units are only to the effect that the said goods were in excess than the recorded balance in the RG-I register. There is no statement appearing that the same were meant for clandestine removal. As such, we are of the view that the confiscation of the said goods is not warranted. PENALTY 46. As we have held in favour of the manufacturing units on the ground of availability of benefit of Notification No. 175/86-CE as also on the allegation and findings of clandestine removal and the inclusion of advertisement expenses in the assessable value, we set aside the demands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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