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TMI Blog2006 (9) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... 002, which resulted in seizure of documents/records/computer floppies etc. Proceedings relating to physical stock inventory of grey fabrics resulted in shortages of processed fabrics totally valued at Rs. 74.63 lakhs (Approximately). Another quantity of processed MMF totally valued at Rs. 31.80 lakhs (Approximately) were found to be excess than the recorded balance, which was seized. Similarly search was conducted in the office premises of the said appellant resulting in seizure of documents/records. It is seen that Shri Kamal Singhania one of the Directors of the company accepted the shortages and excess and also deposited an amount of Rs. 10 lakhs (Rupees ten lakhs only) towards duty vide TR6 Challan dated 28-5-2002. 3. Apart from searches conducted at the factory and office premises of the said appellant, the office premises of the transporter M/s. S.P. Thakkar Transport Company (hereinafter referred to as M/s. SPTT), situated at Bhiwandi and Kalbadevi, were also put to search. The records maintained by the said transport company were taken into custody. Simultaneous searches were also made in the residential premises of M/s. Kamal Singhania Director of M/s. Indo Green Textiles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawing our attention to the. transporters document appearing at page 529-530 of the Paper Book, the Ld. Advocate submits that a perusal of the said document would show that the same pertain to M/s. "S" One Tex' and there is no indication showing any connection with the appellant. It is the statement of the transporter of the said transport company indicating that the said "S One Tex/Dying" relates to the appellant. Ld. Advocate submits that the cross-examination of the said transporter has been denied by the Commissioner on the ground that the same amounts to delaying tactics on the part of the appellant. Ld. Advocate submits that inasmuch as the entire case of the Revenue is based upon the said statement of the Transporter, his cross-examination was vital to their case. Inasmuch as, the veracity of the said statement of the transporter has not been tested by the tool of cross-examination, his statement cannot be taken into consideration. If the said statement of Shri S.P. Thakkar is taken out of the records, there is no other evidence to show that the said code number belongs to the appellant. In any case, submits the Ld. Advocate that the said statement being in the nature of sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of the statements made by the transporter, Commissioner was justified in confirming the same. Shri R.K. Pardeshi submits that the Commissioner has rightly observed that going by the settled position in law regarding presumptive evidences and burden of proof, the burden in the instant case, is first on the Department to prove that the code number "S" One Tex/Dying' were belonging to M/s. Indo Green. By observing so he has referred to the show cause notice, which has brought out the Modus Operandi adopted by the appellant. It has been clarified by the Commissioner that it is only w.e.f. April 2001 onwards, when the Compounded Levy Scheme was done away with, that the appellant started indulging in clearing the goods in their code name. The Commissioner has also referred to the fact that during the course of search of their appellant factory, one truck loaded with grey fabrics and carrying documents which indicated the name of the party as 'S One Tex/Dying', which show that the name 'S One Tex/ Dying' refers to the appellant only. 11. We have heard the submissions made by both the sides and have gone through the impugned order. The fact of search of the appellant's premises and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd there is no statement of the transporter in respect of the other persons. We find that law on the point is very clear the charge of clandestine manufacture and removal of the goods is required to be proved by the Revenue by product on of affirmative and tangible evidence and beyond doubt. The same cannot be sustained on the basis of surmises and conjectures. The Tribunal in number of decisions, has reiterated that entries in private records can at the most raise a doubt but cannot take the place of evidence in the absence of other corroborative evidences like raw material utilization, labour employed, power consumption and packing etc. As observed by the Tribunal in the case of Sharma Chemicals v. Commissioner of Central Excise, Calcutta-II [2001 (130) E.L.T. 271 (Tri.-Kolkata)], which discusses the law on the point, the distance between 'may be true' and 'must be true' is long distance which must be covered by legal and impeachable evidence. We find absence of such evidence in the present case. The corroboration, which the Commissioner has sought to achieve by referring to the presence of a truck loaded with grey fabrics sent by merchant manufacturers under the documents descri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the excess found goods were admittedly in the factory premises and there is nothing on record to show that they were in the process of being cleared clandestinely from the appellants factory. Accordingly we set aside the confiscation and redemption fine of Rs. 8,00,000/- (Rupees eight lakhs only) in respect of the same. 17. As regards the goods found at the Merchant Manufacturers premises and the transporter premises, we find that the appellant have admitted clandestine removal of the same and his duty liability. As such, the said goods are liable to confiscation. We note that the redemption fine imposed by the adjudicating authority in lieu of option to redeem the goods are not on the higher side keeping in view the value of the seized goods We accordingly uphold the confiscation and the quantum of redemption fines fixed by the Commissioner. Similarly, the penalties imposed upon the Merchant Manufacturers are also not on the higher side, the same are accordingly confirmed. The penalty of Rs. 3,00,000/- (Rupees three lakhs only) imposed on M/s. Indo Green Textile Pvt. Ltd. and penalty of Rs. 5 lakhs (Rupees five lakhs only) imposed on Mr. Kamal K. Singhania, Director of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of fabrics indicated in job card 'D' & 'E' was camouflaged under the lot Nos. assigned in respect of job card 'C' and were kept open. It is note worthy to mention. that every merchant manufacturer was allotted a code number and the job card 'D' & 'E' invariably did not mention the name of the party but only the code number whereas, the job card 'C' carried the party's name. The transporter was also asked by the Director of M/s. Indo Green to show the clearance of processed fabrics in the code name "S One Dyeing/Tex" from 1-4-2001. The grey fabrics were delivered by the transporter under his own gate pass which alongwith it carried the delivery challans of the merchant manufacturers and these delivery challans were given a specific number by transporter for which he has maintained a book account in the usual course of his own business. The processed fabrics after clearance were accompanied by an invoice as per say of the transporter and were delivered to the merchant manufacturer as per directions of M/s Indo Green. For this purpose the transporter was maintaining a daily Trip sheet in which all the delivery of processed fabrics in respect of all the manufacturer including Indo Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame to Rs. 4,16,73,971/- while that on shortages found during the stock verification carried out in the premises of M/s. Indo Green came to Rs. 11,94,219.20 and that on fabric seized from the premises of the merchant manufacturer came to Rs. 2,17,004.64. 23. The above facts are supported by the statements of all the merchant manufacturers and in particular Shri Nilesh Patil, an employee of M/s. Indo Green & In-charge of grey section. Mr. Nilesh Patil, working in the Grey Section of M/s. Indo Green, in his statement dated 22-5-2002, inter alia, deposed that he was working with M/s. Indo Green since the last three to four months; that he was working in the grey department, that he maintains a programme book that on receipt of grey delivery challans alongwith grey fabrics, he showed the challans to Mr. Sushil Raika, owner of M/s. Indo Green that Mr. Sushil Raika gave him the party code number & the party card number and he made entries in the programme book such as party's grey delivery challan number, programme number, number of prices, L. Meters of grey fabrics and the card number; that after getting the programme from Mr. Sushil Raika he noted down the same in the card book and ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isters, Seized record No 88 was similar to that of seized record No. 87, the only exception being that the entries made therein were pertaining to the card numbers starting with alphabet 'C' which on a comparison/co-relation with the statutory records was found to tally. 24. Records seized from the premises of M/s. Indo Green consisted of job cards and also party master code list of code numbers allotted to different merchant manufacturer for such clandestine transactions. The particulars in respect of card number, lot number, number of pieces, length of fabrics etc. mentioned in respect of cards under 'C' series tallied with the lot register whereas particulars of fabrics covered by 'D' & 'E' series do not match with the relevant records. Further, whereas, in respect of 'C' series card, the actual name of the concerned merchant manufacturer was mentioned (in abbreviated initials) the same was not at all mentioned but shown under secret code number allotted to the party in respect of transaction entered in 'D' & 'E' series card (para 123 (ii) of the order-in-original). 25. Records seized from the merchant manufacturer also showed that the quantity send by them for processing and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The driver in his statement has admitted of undertaken similar five transportations in the past. 26. The above fact shows that there is ample evidence against M/s. Indo Green, regarding their clandestine clearances. They have admitted the clandestine clearances in respect of the shortages found in there premises and is not contesting the same. He has also admitted that the fabrics found at merchant manufacture premises were cleared without payment of duty but states that this was out of the shortages found in his factory on which duty liability is not being contested. 27. As regards the shortages detected on the basis of the transporter records the same is not being admitted by the appellant on the ground that the same is based on the sole testimony of the transporter and on his records who is co-accused in the matter and whose cross-examination has not been allowed & that the records maintained by him were incorrect. The learned Judicial Member the has agreed with this view and did not find sufficient evidence in respect of the shortages determined on the basis of records of the transporter whose cross- to examination was not allowed. It has been observed that entries made in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kanwala after confirming from the transporter stated that they were paid for all the trips made by him for delivery of grey fabrics as well as processed fabrics which were entered in gate pass book & daily trip sheets recovered from them and that he has paid income tax on such income which is duly reflected in his income tax return. I am told these record are in the form of bound gate pass book and daily trip sheet books and contains details of all merchant manufacturers whose fabric they were transporting. Every delivery challans of grey fabric was given a specific number starting with alphabet I, A, M etc. where the alphabet denoted the name of processor like I for Indo Green A for A one dyeing, M for Mandana Dyeing etc. These records have been recovered from the premises of M/s. SPTT for the period January, 2001 to May 2002 & therefore, can not be tutored, manipulated and were not in the form of loose papers/sheets etc. but in bound books and therefore, have to be taken as records maintained in the usual course of business & deemed to be correct & reliable. Evidence of such records can not be discarded merely on the fact that the cross- examination of the transporter was not all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... managed to get an office seal stamp on the copy of the paper through some junior hand. It has further been observed that retractions are identical in nature and only say that the statements were recorded under duress or coercion. However, even after retracting the merchant manufacturer have not produced any proof regarding duty payment on fabrics lying in their premises and that the statement of the officers of the company are such which are based on the records and which can be in their own personal knowledge and cannot be tutored. 30. The other aspects is regarding confiscation of excess fabrics found in the premises of M/s. Indo Green. In the above order it has been said that no evidence has been found that M/s Indo Green had any intention to clear them without payment of duty and therefore the confiscation is not justifiable I however find from the Commissioner s order that in para 131 (2) he has observed that the goods in question are not one produced just on the previous date and remained to be accounted as the search team visited the factory on the very next day. In this case the goods in question were not intended to be accounted for in the prescribed production record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balasundaram, Vice-President]. - I have heard both sides on the points of difference referred to me. Out of the total duty demand of Rs. 4,30,85,195/- confirmed against M/s. Usha Fashions Pvt. Ltd., the bulk demand "of Rs. 4,16,73,971/- is account of clandestine clearance of processed fabrics; Rs. 11,94,219/- is on shortage of processed fabrics detected during stock verification on 21/22-5-2002 and Rs. 2,17,005/- is on processed fabrics seized from the premises of Merchant Manufacturers and the transporter. Both the members of the original Bench have upheld duty to the extent of Rs. 11,94,219/- and hence no difference arises regarding confirmation of this amount. Duty demand of Rs. 2,17,005/- has open accepted by Ld. Member (Judicial) as forming part of the duty demand of Rs. 11,94,219/- and therefore set aside, while Ld. Member (Technical) has upheld this demand. The bulk duty demand has been set aside by Ld. Member (Judicial) but upheld by Ld. Member (Technical). I am therefore required to only consider whether the demands of Rs. 4,16,73,971/- and Rs. 2,17,005/- are required to be set aside or sustained. 34. The main duty demand is for the period 1-3-2001 to 23-5-2002, and is ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clandestine clearance by the appellants. The delivery challans of the various traders/suppliers evidencing dispatch of grey fabrics to the appellants clearly shows the name "Indo Green" and it also shows the code name "S One Dyeing". The transporter was maintaining similar records in respect of number of manufacturers also under various code names but no investigation has been carried out into those cases. The Balance Taka Report of the Transporter shows that he was using code numbers like "P One Group'. 'A One Group', 'Y One Group' etc. No merchant manufacturer has corroborated the transporters stand that the code name "S One Tex/S One Dyeing" was the code name of the appellants. 36. Ld. Member (Technical) has relied upon the fact that the appellants were maintaining job cards with the alphabets 'D' & 'E' and not entered the fabrics shown in the job card 'D' & 'E' in the lot register, since they were meant to be cleared without payment of duty. However, this job card have no co-relation with the demand of Rs. 4,16,73,971/-. The job cards are the evidence for the allegation and finding of shortages of 3,73,193.50 Mtrs. of processed fabrics at the appellants factory premises and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods in any manner specified or contemplated under the Rule 26, and therefore penalty cannot be sustained, in the light of the Tribunal's decision in Kamdeep Marketing Pvt. Ltd. v. Commissioner of Central Excise, Indore [2004 (165) E.L.T. 206 (Tri.- Del.)]. 39. To sum up, I hold that :- (I) Duty demand of Rs. 4,16,73,971/- & Rs. 2,17,005/- cannot be sustained. (II) Confiscation of goods found in excess of recorded balance in RG-1 register is liable to be set aside. (III) Penalty on the Director of the firm is also liable to be set aside. 40. I, therefore concur with the order recorded by Ld. Member (Judicial). 41. The file is now returned to the original bench for passing the majority order. Sd/- (Jyoti Balasundaram) Vice-President FINAL ORDER 42. In view of the majority order, the following order is being passed :- (i) Duty of Rs. 4,16,73,971/- and Rs. 2,17,005/- is set aside. (ii) Duty of Rs. 11,94,219.20 is upheld. (iii) Penalty imposed upon M/s. Indo Green Textiles Pvt. Ltd. under Section 11AC is reduced to Rs. 3 lakhs (Rupees three lakhs only). (iv) Penalty imposed upon the said appellant under Rule 25 and Rule 173Q is set aside. (v) Penalty of Rs. 40 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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