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TMI Blog2014 (8) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ird parties can create a strong presumption that appellants were indulging in the clandestine manufacture and clearance of excisable goods. However, creation of a strong suspicion does not establish the charge of clandestine manufacture and clearance of excisable goods. In the present appeals also there is no such evidence on record that appellant JBMI procured extra raw materials or used extra power etc. because on the date of visit of the officers of DGCEI the stocks of raw materials and the finished goods were found tallying. The theory of preponderance of probability would be applicable only when there are strong evidences heading only to one and only one conclusion of clandestine activities. The said theory, cannot be adopted in cases of weak evidences of a doubtful nature. Where to manufacture huge quantities of final products the assessee require all the raw materials, there should be some evidence of huge quantities of raw materials being purchased. The demand was set aside in that case by this Tribunal. - Decided in favor of assessee. - Appeal No. : E/775,776,777/2011-DB - ORDER No. A/11434-11436/2014 - Dated:- 31-7-2014 - Mr. M.V. Ravindran and Mr. H.K. Thakur, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises of JBMI. Show cause notice issued was confirmed by the adjudicating authority against all the appellants against which the present appeals have been filed. 3. Shri Willingdon Christian (Advocate) appearing on behalf of the appellants argued that the challans / proforma invoice book of JBMC was found in the factory premises of JBMI as the trading goods of JBMC were required to be temporarily stored near the factory of JBMI. That the retrieved articles sold under delivery challans / proforma invoices, bearing sr. no. 2 and 3, both dtd. 23.04.2007, were purchased from M/s. Mahalaxmi Metals, Ahmedabad vide bill no.5, dt. 21.04.2007 which were brought by truck no.GJ-17 T 4865. It was his case that the premises of JBMC were heavily damaged due to torrential rains in Surat, therefore, temporarily the goods were stored near the factory premises of JBMI. That the bill book of JBMC was found from the JBMI shop only and not from the factory premises of JBMI. That as per the Panchnama dt. 26.04.2007 (sr. no.14) of the annexure to the Panchnama. That the trading goods under challan no.2 and 3 were supplied to the customers in surat only but no verifications were made by the investigatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and scrap purchased. That no question has been raised in the investigation with respect to capability of JBMC to retrieve wire rods, wire bars and strips of metals like lead, tin and zinc. That no investigation worth the name was carried out with respect to the manufacturing activity done by the JBMI and no inquiries were conducted from any suppliers of the manufacturing unit to indicate as to from where the excess raw materials were procured by JBMI for the manufacturing activity and how consumption of extra raw materials, electricity, transportation of finished goods and money adjustments were achieved. He relied upon the following case laws in support of his argument that in the absence of any other corroborative evidences no case can be made against the appellant JBMI for clandestine manufacture and clearance of goods: (i) Jai Mata Industries Ltd. Vs. CCE, Rohtak [2013 (293) ELT 539 (Tri. Del.), (ii) Centurian Laboratories Vs. CCE, Vadodara [2013 (293) ELT 689 (Tri. Ahmd.), (iii) Arya Fibers Pvt. Ltd. Ors. Vs. CCE [2014-TIOL-15-Cestat], (iv) CCE Vs. Vishwa Traders P. Ltd. [2013 (287) ELT 243 (Guj.), [2014 (303) ELT 68 (SC), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he raw materials who gave the opinion that no copper articles can be retrieved from the waste and scrap and that such waste and scrap can be used only as melting scrap. Appellants also requested for the cross verification of the customers of JBMC to whom they have sold that retrieved material as traded goods. However, it is observed from the case records that no cross examinations of such witnesses were provided by the adjudicating authority and no investigations were carried with respect to the buyers of the traded goods from JBMC. It is also observed from the sale invoices / bills of JBMC that even truck numbers are also mentioned but no statements of such transporters were recorded to establish the truth as to from where the goods originated and whether these goods were prime or out of retrieved materials. 10. Appellants have clearly argued before the adjudicating authority that JBMC were retrieving articles of metals like tin, lead, nickel and copper from the waste and scrap purchased. Revenue has only questioned the capability of JBMC for retrieving copper articles but no doubt has been expressed with respect to retrieving of articles of tin, lead and nickel. It is not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, which reads as under :- 12. Be that as it may be, it is to be noted that there is no dispute that to manufacture of said final product Frit requires the use of Quartz, Feldspar, Zinc, Borax Power, Calcium and Dolomite as inputs/raw material. On the date of visit of the officers to the factory premises of the appellant, it is undisputed that the stock of raw materials as well as finished goods was tallying with recorded balances. This conclusion can be reached from perusal of records, as there is nothing on record to indicate otherwise. 13. On careful perusal of the entire records of the case, we find that there is nothing on record as to unrecorded purchases or consumption of various other raw material in the manufacture of Frit, there is also nothing on record to indicate that the appellant had purchased the Quartz, Feldspar, Zinc, Borax Powder, Calcium and Dolomite and without accounting them used for the manufacture of Frit for clandestine removal. There is also nothing on record nor there is any statement of the suppliers of other raw materials, which would indicate that the appellant had received unaccounted raw material from the suppliers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40. After having very carefully considered the law laid down by this Tribunal 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 Revenue 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 sale of such goods to identified parties; (e) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him; (f) use of electricity far in excess of what is necessary for manufacture of goods otherwise manufactured and validly cleared on payment of duty; (g) statements of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity of examining the decision in the light of the facts of the present case. Suffice it to say that the said decision has also tabulated the entire case-law, including most of the decisions cited 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 India v CCE, 2013 (291) ELT 81), it has been held that the theory of preponderance of probability would be applicable only when there are strong evidences heading only to one and only one conclusion of clandestine activities. The said theory, cannot be adopted in cases of weak evidences of a doubtful nature. Where to manufacture huge quantities of final products the assessee require all the raw materials, there should be some evidence of huge quantities of raw materials being purchased. The demand was set aside in that case by this Tribunal. 13. In view of the above observations, the facts available on record and the case laws relied upon by the appellants, OIO dt. 29.04.2011 issued against the appellants does not survive and is required to be set aside. Accordingly, appeals filed by the appellants are allowed, with consequential relief, if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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