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TMI Blog2014 (4) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... on under Rule 173 Q of the Central Excise Rules, 1944 - Following decision of M/s Arya Fibres Pvt. Ltd., M/s Nova Petrochemicals Ltd. and others Versus CCE Ahmedabad-II [2013 (11) TMI 626 - CESTAT AHMEDABAD] - Decided in favour of assessee. - Appeal No. : E/2172, 2317/99 - ORDER No. A/10467-10468/2014 - Dated:- 31-3-2014 - MR.M.V. RAVINDRAN AND MR. H.K. THAKUR, JJ. For the Appellant : Shri P M Dave (Adv.) For the Respondent : Shri J Nair (AR) JUDGEMENT Per : Mr. H.K. Thakur; Appeal No. E/ 2172/ 99-MUM, filed by M/s Mahesh Silk Mills, Surat, and Appeal No. E/ 2317/ 99 filed by M/s Chandan Prints, Surat are directed against the same Order in Original No. 06 of 1999 dated 26.02.1999, passed by the Commissioner (Adjudication), Central Excise, Mumbai. As the issues involved in both the appeals are interconnected and arise out of the same impugned Order, both these appeals are being disposed by this common order. 2. Briefly stated the facts of the case are that the appellant M/s Mahesh Silk Mills is engaged in the processing of man-made fabrics (belonging to various cloth merchants/ traders) on job work basis attracting Additional Duty under the Additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with interest against Mahesh Silk Mills, imposed penalty of Rs. 30 lakhs on them under Rule 173 Q (1), and confiscated land, building, plant and machinery of Mahesh Silk Mills under Rule 173 (Q) (2) of the Central Excise Rules 1944 by giving an option to the appellant to redeem the same on payment of redemption fine of five lakh rupees within one month of receipt of the impugned Order in Original. A penalty of Rs. 30,000/- was also imposed on Chandan Prints under Rule 209A of the Central Excise Rules, 1944. 3.1. Learned Advocate Shri Paresh M. Dave arguing on behalf of the appellants made the following submissions: (a) that the demand of duty had been worked out only on the basis of a diary containing rough jottings, but no one from the appellant s side had admitted that the diary belonged to them, nor the contents of the diary were admitted by any one from the appellants side. It is also not proved who maintained the diary and under whose directions the same was maintained. (b) that statement of only one of the parties, out of many detailed in the diary, was relied upon and this statement of Shri Ramesh Chhipa of Chandan Prints was only for 24,555 linear meters against d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the following case laws in this regard: (a) Abdul Kadar Gulam Mohd. Mulla Vs. Commissioner of Customs, Ahmedabad [2008 (230) ELT 439 (Tri. Ahmd.)]; (b) Hasan Ali Vs. Commissioner of Customs, Patna - [2001 (138) ELT 197 (Tri. Kolkata)]; (c) Rajendra Prasad Vs. Commissioner of Customs, Patna. - [2001 (136) ELT 925 (Tri. Kolkata)]; and (d) Om Parkash Kulthia Vs. Commissioner of Customs (Prev.), W. B. - [1997 (91) ELT 684 (Tribunal)] 3.4 Shri Dave also argued that the appellants request for cross examination was rejected while passing the impugned Order in Original, and thus there was a violation of the principles of natural justice inasmuch as the appellants could have filed affidavits or any other proof of the concerned persons if the Commissioner had informed the appellants before passing the order that request for cross examination was denied. When statement of a third party is relied upon against an assessee, the assessee has a right to cross examine such witness. Otherwise, statement of the concerned person, and in any case, statement of a co-accused, could not have been relied upon for holding anything against the appellant. He cited the case law of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (83) ELT 258 (SC)]. 4.3. On the point of limitation, the Ld. AR argued that the extended period of time under proviso to Section 11A (1) of the Central Excise Act 1944 has been rightly invoked in the case. It was his case that the first show cause notice dated 17.04.1996 was issued in respect of excess quantities of processed/ semi-finished man-made fabrics detected seized from the factory of Mahesh Silk Mills as well as shortages of processed/ semi-finished/ grey man-made fabrics detected in the appellants factory on 19/20.10.1995 keeping in view the fact that show cause notice in respect of seized goods had to be issued within six months from the date of seizure of goods in terms of sub section (2) of section 110 of the Customs Act, 1962, as made applicable to central excise cases. The second show cause notice was issued on 31.03.1998 on the grounds of non-accountal of man-made fabrics and suppression of production of processed man-made fabrics during the year 1994-95 by invoking the proviso to sub-section 1 of section 11A, as the period of demand of duty was within a period of five years from 31.03.1998. He cited the following case laws in support of his arguments: (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here clandestinely removed goods were seized by the revenue. Cross examination of the third party witness was also not provided to the appellants. 7. Appellants have relied upon several case laws on the issue of establishing case of clandestine manufacturing and clearance of excisable goods. We find that in the matter of Rajasthan Foils Pvt. Ltd. Vs. Commissioner of Central Excise, Jaipur [2005 (183) ELT 101 (Tri. Del.)], relied upon by the appellant, CESTAT held as under: 6. From the record, we find that the company is engaged in the manufacture of aluminium foils/sheets. The factory premises of the company was inspected by the Central Excise officers on 19-2-2000 and certain notebooks detailed at Sl. Nos. 1 to 5 of the resumption memo prepared on the date, at the spot, were seized. The entries contained in these notebooks had been tabulated in chart marked Annexure A, to the show cause notice which according to the Revenue, depicted details of clearances in condensed manner during the period in dispute to various buyers and also of the material sent for weighment and the raw material received for the manufacture of the goods during that period by the company. All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenues which mainly are the following: (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions; (ii) Evidence in support thereof should be of: (a) raw materials, in excess of that contained as per the statutory records; (b) Instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty. (c) Discovery of such finished goods outside the factory (d) Instances of sales of such goods to identified parties. (e) receipt of sale proceeds, whether by cheque o by cash, of such goods by the manufacturers or persons authorized by him; (f) use of electricity for in excess of what is necessary for manufacture of goods otherwise manufactured and validity cleared on payment of duty (g) statements of buyers with some details of illicit manufacture and clearance; (h) proof of actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said decision has also tabulated the entire case law, including most of the decisions cite before us now, considered them and come to the above conclusion. In yet another decision of a co-ordinate Bench of the Tribunal [Pan Parag Indiia v CCE, 2013 (201) ELT 81] it has been held that the theory of preponderance of probability would be applicable only when there were strong evidence heading only to one and only one conclusion of clandestine activities. The said theory, cannot be adopted in case of weak evidences of a doubtful nature. Where to manufacture huge quantities of final products the assessee require all the art materials, there should be some evidence of huge quantities of raw materials being purchased. The demand was set aide in that case by this Tribunal. 9. In view of the above legal position and facts available on record, we are constrained to reiterate that evidence of only one diary cannot be made the basis of establishing clandestine manufacture and removal of the fabrics. It has been repeatedly held by the courts that clandestine manufacture and clearance cannot be readily inferred from few documents and statements unless the allegations are also corrobora ..... X X X X Extracts X X X X X X X X Extracts X X X X
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