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TMI Blog2016 (1) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... voices or any payment particulars of sale and receipt of goods. No evidence advanced by Revenue to connect these weighment slips with either supplier / buyer or to the assessees or to the transporter or to sale proceeds etc. Therefore the burden of proof is on the Revenue to discharge onus and as already discussed in the preceeding paragraphs the revenue has not proved in this case. Further, mere electricity consumption cannot be the only basis for determining duty liability. The demand of central excise duty proposed in then SCN's on clandestine manufacturer and removal has been made only based on assumption and theoretical calculation without any corroborative evidence. - Central Excise duty demanded in the 3 SCNs on excisable goods clandestinely manufactured and cleared by the respondents is not sustainable. - Decided in favor of assessee. - Appeal Nos. E/380/2005 & E/CO/11/2006, E/436/2005 & E/CO/40996/2013 , E/483/2005 & E/CO/40991/2013 - Final Order No.40097-40099/2016 - Dated:- 27-1-2016 - Hon ble Shri R. Periasami, Technical Member And Hon ble Shri P.K. Choudhary, Judicial Member For the Appellant : Shri N. Rajagopalan, Special Counsel For the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigating officer has searched the premises of brokers and bill traders on 7.8.96 and recovered voluminous records and documents relating to various manufactures and after detailed scrutiny of records of each of the manufactures recovered on 24.7.97 when the officers visited the factory of the respondent and searched and recovered records and documents and unearthed bill traders invoices. He further submits that respondent chose nearest two weigh bridges at Manali and Tirupati Weigh Bridge to weigh finished goods as well as scrap. Entire transaction towards purchase of scrap as well as clearance of removal of finished goods were carried out onlyby cash transactions and they received the raw materials i.e. scrap without bills only on payment of cash but same was not accounted in the Form-4 register.The recovery of slip from the weighbridge and verification of the weighment records available in Form-4 register and whatever weighments recorded in Form-4 register was accounted and the same were excluded and weighment receipts were taken into account. The goods were removed clandestinely through second sales. 3.2 Regarding power consumption, he submits that there is sharp increa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an average 280 units per MT. He submits that adjudicating authority should have followed the same principles for the power consumption above for other periods by going by preponderance of probability. 3.6 He drew our attention to page 138 of paper book (Red Book) wherein the Superintendent (Adjudication) addressed a letter dt.10.11.2003 to Mr.Raffic Ahamed, employee of the appellant-company wherein it was found that he filed affidavit without perusing the original weighment certificates. Therefore, he was asked to appear and peruse the documents and file the affidavit in that regard. Therefore, he was allowed by the adjudicating authority to go through the weighment slips and again asked him to file affidavit. Itwas clearly brought out in the letter dt.10.11.2003 that Raffic Ahamed filed the affidavit without perusing the required documents.It is clearly shown by filing second affidavit retracting his original statement stating that signature does not belong to him without verifying the document and the same ought to have been considered by the authorities. 3.7 He relied copy of bill trader details at page 133 and page 134 of paper book issued by R.S. Steel. He submits tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of the witnesses were not available due to time lag between first mahazar drawn on 7.8.96 to 24.7.1996. Therefore, preponderance of probability should be applied. 4.1 On the other hand, Shri S.Sankaravadivelu, Ld. Advocate appearing for the respondents submitted a written synopsis and also submitted a paper book containing case laws. He submits that cross objections filed in Volume I, III IV should be taken into consideration. He reiterates the synopsis filed and reply to SCN filed before the adjudicating authority. He reiterates the findings of the adjudicating authority where the findings from OIO from page 13 onwards wherein the adjudicating authority clearly brought out in detail and dropped the proceedings. On the grounds of appeal filed by Revenue, he submits that (i) the department has relied the weighbridge document recorded from the Tirupati Weighbridge and not a single document recorded from the assessee (ii) Similar records were also recovered only from the bill traders and no documents were recorded from the respondent's premises. (iii) on the preponderance of probability, he submits that preponderance of probability is not applicable to clandestine removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any link of movement of vehicle number first bill linking to the second sale to show how the bill trader accounted the payment received from demand draft as they have to pay sales tax. 4.5 On the grounds of appeal related to power consumption, he submits that the adjudicating authority has rightly given a finding and he submits that power consumption varies depending on the quality of the scrap and age of the machine. To support this, he relied Tribunal s decisionin the case of R.A. Casting Pvt. Ltd.Vs CCE Meerut - 2009 (237) ELT 674 (Tri.-Del.). Though they have not filed appeal against confirmed demand based on the power consumption they have contested in their cross objection filed in Vol-I. He countered all the case laws relied by Revenue and submits that the adjudicating authority has rightly dropped the proceedings and also relied case of CCE Vs Rawf Re-Rollers - 2015 (317) ELT 499 (Tri-Chennai) wherein on an identical case, the Division Bench of this Tribunal has rejected Revenue s appeal. He submits that statement Mr.Murali dt. 8.8.96 at page 7 of the paper book confirms that he has not maintained regular accounts. 5. In rejoinder, learned special counsel countered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bill trader's writing pad and statement of G.P.V.Rajasekaran of Srinivasa Trading Co. who confirmed the transactions. Further, he relied the statement of Shri Ram Goyal, M.D. dt. 13.9.96 of Goyal Ispat at page Volume III wherein he clearly admitted that during the period 1994-95, 1995-96 and 1996-97 they have removed the goods from the factory under the cover of bill trader's invoice and so admitted cash transactions and also identified the details of bill traders recorded in the tabular statement pertaining to the appellant. He relied copy of extract of bills dt. 31.7.95 at page 136 137 of Department's paper book wherein on the right hand top corner the inscription in Tamil Goyal Mill clearly shows that the goods received pertaining to appellant. He relied statement at page 95 and the tabulation at page 97 wherein at sl.No.4,6,10 appellant Goyal Ispat Udyog and sl.No.6 10appellant's name Indira Ispat are mentioned. and also relied statement of Chander Shekhar Sharma, bill trader in the list at page 102, identified the appellant Goyal Ispat Udyog and also confirmed certain transactions pertaining to the appellant. E/483/2005 E/CO/40991/2013 9. As regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was signed whereas 4574 is of Madhu Nanda. He relied para-25 of OIO in respect of Indira Ispat. Entire quantity has been based on weighment slip of GoyalIspat. Advocate also relied all the case laws in Vol-II. 11. We have carefully considered the submissions of both sides and examined the records and grounds of appeals of the Revenue and the cross objection filed by the respondents. All the 3 different adjudication orders are all dated 27.4.2004 passed by the Commissioner of Central Excise, Chennai-I on 3 different assesses on identical issue of clandestine removal of iron and steel items ie. MS rounds. MS bars etc. The adjudicating authority after examining the records and investigation reports of DGCEI and allegation made in the respective SCNs, dropped the demand proceedings and held that investigation failed to prove any clear evidences of manufacture and removal of excisable goods without payment of duty. In respect of Indian Steel Allied Products, he confirmed the demand of ₹ 1,96,425/- and imposed penalty of ₹ 20,000/- and dropped the major demand. Aggrieved by the said OIOs the revenue is before us in these appeals. 12. The adjudicating authority discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 32 and 33 of respective OIOs has clearly discussed this issues in detail. Though these weighment documents printed as weighment certificate it is not certificate per se but only weighment slips. The weighment slip of weighbridge owner is only an abstract document to show the quantity weighed for the purpose of collecting weighment charges it is not a statutory document. In the absence of any details of manufacturer and supplier details in the weighment slip the burden of proof heavily lies on the revenue to link this weighment slips to receipt and accountal of raw materials or to the finished goods. As rightly discussed by the adjudicating authority, we find that no verification been done on the vehicle/transport which carried the goods and the transporter/owner nor any statements recorded and no statements recorded from the persons in charge of weigh bridge etc. no recovery of any weighment slips from assessees premises nor any statements recorded from the persons who signed the weighment slips. It is pertinent to state that in order to establish clandestine removal of excisable goods it has to be proved with corroborative evidence linking the weighmentslips. The preponderance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords; (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 transportation of goods, cleared without payment of duty (i) links between the document recovered during the search and activities being carried on in the factory of production; etc. Needless to say, a precise enumeration of all situations in which one could hold with activity that there have been clandestine manufacture and clearances, would not be possible. As held by this Tribunal and Superior Courts, it would depend on the facts of each case. What once could, however, say with some certainty is that inferences cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Roxy Enterprises (P) Ltd. v. Collector of Central Excise [1991 (53) E.L.T. 585 (Tribunal)]. It is the case of the appellant that the department need not prove actual clearance with mathematical precision. According to them, it is enough, if there is evidence indicating a high degree of probability of the respondents having clandestinely removed cone yarn from their factory during the period of dispute. The pieces of evidence cited by the appellant to establish this probability include: (a) the despatch register recovered from their premises; (b) the doff notes recovered from the premises of traders/buyers; (c) the statement of the respondent s accountant; (d) the statement of one Shri C. Sanjeevi Perumal of M/s. Ganapathy Sankaran Traders which was to the effect that they had sold the cone yarn received from the respondents to two parties stationed at Samisigapuram and Chatrapatti; and (e) record of cross-examination of traders/buyers etc. We wanted to examine these evidentiary materials, but none is available on record, nor is the SDR possessed of any. In the circumstances, we are not in a position to assess any probability. 6. None of the citations given by SDR can support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the duty liability, that too on imaginary basis, especially when Rules 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. The Tribunal further observed that no experiment have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing on MT of steel ingots. Tribunal also observed that the electricity consumption varies from one heat to another and from one date to another and even from one heat to another within the same date. Therefore, no universal and uniformly acceptable standard of electricity consumption can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the Revenue with no other supporting record, evidence or document to justify its allegations. The Tribunal has also considered the report of Dr. Batra, which has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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