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TMI Blog2016 (9) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed by the main Appellant in their reply were actually existing or not. Similarly for manufacturing such huge quantities of finished goods, as alleged to be clandestinely manufactured and cleared by the main Appellant, there must be procurement of substantial quantities of raw materials. The entire investigation conducted does not throw any light as to how main Appellant clandestinely procured huge quantities of raw materials for manufacturing finished goods. There are allegations of not receiving of the raw materials, but no evidence of excess procuring raw materials without duty paying documents has been brought on record by the department. It is difficult to appreciate that on one hand Appellant will clandestinely divert the duty paid raw materials and on the other hand procure non-duty paid raw materials for clandestine manufacturing and clearances of finished goods when no stock variation either in the raw material stock or finished goods stock was detected during the course of investigation. The maximum capacity of manufacture of 1200 MT/month was not refuted by the department by carrying out any study that actual production per month could be more than 1200 MT . It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue ORDER Per Shri H. K. Thakur Appeal No.E/545/07 has been filed by the main Appellant M/s.Adhunik Steels (P) Ltd.(ASPL) against Order-in-Original No.118/Commissioner/CE/KOL-IV/2007 dated 30.05.2007 passed by the Commissioner of Central Excise, Kolkata-IV as Adjudicating authority. Other three Appellants are the three brothers, who are the Directors of ASPL, upon whom penalty of ₹ 10.00 Lakh each has been imposed by the Adjudicating authority under Rule 209A of the Central Excise Act, 1944. 2. Shri N.K.Choudhary (Advocate) and Shri Partha Banerjee (Advocate) appeared on behalf of the Appellants. Learned Advocate Shri N.K.Choudhary submitted that Adjudicating authority under Order-in-Original dated 30.05.2007 has confirmed a demand of ₹ 1,08,05,030/-, along with interest and penalty, against the main Appellant on the grounds that huge quantities of goods manufactured, based on private records recovered from the residence of the Appellants, have been cleared clandestinely. That an amount of ₹ 17,50,694/- along with interest and penalty, has also been confirmed with respect to credit taken on inputs on the grounds that only documents were receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of duty during the relevant period was 4558.115 MT and not 2049.655 MT as taken by the Adjudicating authority. Learned Advocate made the Bench go through page 81 to 89 of (Valume-I of the Appeal Memo) to argue that these documents, inter alia, gives the names of their buyers to whom duty paid goods were sold. That no observations have been made by the Adjudicating authority on this issue and no investigation to rebut the stand of the Appellants was made by the department. (iv) It is the case of the main Appellant that demands cannot be based on some private records recovered by the investigation in the absence of any corroborating evidences. That in the present proceedings there Is not even a confession by any of the relied upon witness. (v) That cross-examination of Shri K.K.Paliwal of M/s.Prahlad Steels Pvt.Ltd., M/s.Venus Udyog Ltd. and M/s.Ramshree Steels Pvt.Ltd. was not allowed to the Appellants. (vi) That no findings have been recorded by the Adjudicating authority regarding imposition of penalties upon the Appellants. (vii) That there is no evidence that inputs, on which credit is denied, have been sold by the main Appellant to the trading concerns. (viii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t explain these documents. He relied upon Section-36A of the Central Excise Act, 1944 and the following case laws in support of his arguments:- (i) ACCE Rajamundry vs. Duncan Agro Industries Ltd. [2000 (120) ELT 280 (SC)] (ii) CCE vs. International Cylinders Pvt.Ltd. [2010 (255) ELT 68 (HP)] 3.1 On the diversion of raw materials learned AR made the Bench go through para 3.7.5 of the show cause notice dated 10.02.2003 to argue that raw material in certain cases were diverted to other concerns on the invoice of NIC and only duty paying invoices issued by the scrap manufacturer were received by main Appellant for taking credit. 4. As a counter to the arguments made by learned AR Shri N.K.Choudhary (Advocate) argued that private records are not accurately made and are not reliable. Learned Advocate made the Bench go through Sr.No.18,19,24,25 26 of the same page 487 (Volume-II) relied upon by the learned AR. It was argued that quantities indicated in the duty paid invoices and quantities shown in the private records recovered is not identical. That no evidence is brought on record by Revenue as to from where main Appellant got extra raw materials in making huge quantities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such sales were also furnished by the Appellants before the Adjudicating authority showing, inter alia, the names of the customers. Similarly the details of parties and vehicles numbers were also available in the private records recovered from the residential premises of the Appellants. No efforts were made by the department to know whether the recipient of finished goods indicated in the private records or those claimed by the main Appellant in their reply were actually existing or not. Similarly for manufacturing such huge quantities of finished goods, as alleged to be clandestinely manufactured and cleared by the main Appellant, there must be procurement of substantial quantities of raw materials. The entire investigation conducted does not throw any light as to how main Appellant clandestinely procured huge quantities of raw materials for manufacturing finished goods. There are allegations of not receiving of the raw materials, but no evidence of excess procuring raw materials without duty paying documents has been brought on record by the department. It is difficult to appreciate that on one hand Appellant will clandestinely divert the duty paid raw materials and on the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moved goods made by the investigating authority. (vi) Any cash amounts seized from the factory premises or dealer s premises or residential premises searched during investigation. (vii) Confessionary statements of the persons concerned with the clandestine manufacture/removal of excisable goods. 9.It is observed from the case records that in the present proceedings, there are few confessional statements of the persons which were later retracted by the persons concerned. The confessional statements subsequently retracted can be argued to be an afterthought under a proper legal advice but to observe the principles of natural justice, it becomes necessary to provide cross-examination of such witnesses, as held by various judicial courts including the Hon ble Supreme Court relied upon by the appellants. In the case of CCE v. Omkar Textiles - 2010 (259) E.L.T. 687 (Guj.), it was held by the Jurisdictional Gujarat High Court that onus is on the Revenue to furnish the evidence to prove the charges of clandestine removal and it is not sufficient if some confessional statements have been given by the Director of the Company. Similarly, in the case of CCE v. Arsh Casting Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the place of evidence regarding clandestine removal of excisable goods. Moreover, after having positive evidences, quantification of duty on clandestinely removed goods also becomes essential. As already mentioned above, the stock lying in the stock yard of M/s. Sunrise Enterprise, Mehsana was found containing the goods received from M/s. Sakeen Alloys Pvt. Limited under proper invoices. When the goods received under proper invoices are found in the stock yard of M/s. Sunrise Enterprise, then it is possible that out of such goods certain quantities were sold to various customers by accepting payment in cash. In such a situation, the quantification undertaken by the investigation becomes doubtful and incorrect. For this purpose cross-examination of the person Incharge looking after the records of M/s. Sunrise Enterprise was must, which was not allowed by the adjudicating authority. In view of the above observations, the demand of duty of ₹ 1,85,10,861/- is not sustainable and is required to be set aside. 6.1.1 In the above case relied upon by the main Appellant there were even confessional statements and also evidences of huge transactions made in cash. On the contrary i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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