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TMI Blog2016 (11) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... G.Prahlad, Advocates for the Appellant Shri Arun Kumar, AR for the Respondent [Order per: Madhu Mohan Damodhar.] 1. All the above appeals emanate out of the same Order-in Original and were heard together and are disposed by this common order. The parties are referred to as per their status before the adjudicating authority for sake of convenience. 1.1 Rama Spinners Private Limited (hereinafter referred to as assessee) are manufacturers of Cotton Yarn falling under Chapter Sub-Heading 5205.11 of the First Schedule of the Central Excise Tariff Act, 1985. 1.2 The assessee also manufacture cotton yarn in the form of Plain Reel Hanks Yarn (PRHY) by using the cotton yarn manufactured within the factory. 1.3 The assessee was selling their goods mostly through one firm by name M/S. Pramod Trading Company (hereinafter referred to as 'PTC'). The Proprietor of the said firm was Sri Pramod Kumar Agarwal. 1.4 PTC in turn sells the said goods to different parties through their agents and sometimes, the said parties in turn sells it to different consumers/traders. 1.5 On intelligence gathered that the assessee is indulging in evasion of duty by clearing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal E/607/2006, Other noticees on whom penalties have been imposed in the impugned order have also filed appeals; Shri. Gopal Agarwal (E.614/2005), Shri. D. Ravinder (3613/2005 Shri. P. K. Agarwal (E.614/2005) 3. The main submissions were made on behalf of the assessee by Ld Counsel Shri G. Shiva Dass was assisted by Advocate Shri.G. Prahlad, are as follows: 3.1 Commissioner in the impugned order has confirmed the demand of ₹ 12,10,497/- on the ground that the Appellants had clandestinely removed cotton yarn without payment of duty of PTC which in turn sold the same to different persons and shown in their records as if obtained from a non-existent firm namely, Lakshmi Narayan Enterprises (LNE). 3.2 Documents such as RG-1 register showing the procurement of raw materials, stock of inputs, sale of final products during the relevant period of dispute clearly shows how much quantity of goods has been manufactured and cleared by them during the relevant period of dispute. Further, the Assessment Order issued by the Commercial Tax Officers also certifies the fact of procurement of raw materials, stock of inputs, sale of final products shown in their records during the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish that return goods were physically returned and that the assessee is not liable to prove anything beyond its factory gate. 3.8 There is no evidence in the nature of transport documents or the sender of the goods or the transporter in support of the allegation of clandestine removal. Also, no evidence has been brought on record to show that they had in fact indulged in illicit manufacture and removals 4. The Ld Counsel also made specific submissions with respect to the charges referred in para 14 of the impugned order. 4.1 With respect to charge in 14 (a) that assessee has cleared cone yarn to PTC which in turn was sold by PTC to different parties, but shown in their records as if said yarn received from LNE, Ld Counsel pointed out that since LNE does not exist therefore all PTC purchases from LNE have been manufactured and cleared by assessee only. However, as it is not disputed that PTC has been supplied by many manufacturers, hence non existence of LNE does not implicate assessee. Ld counsel adverted to para 17 of the impugned order, wehre the adjudicating authority himself has held that entire sales made by PTC cannot alleged to be cotton cone yarn and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal (E/612/2005), Sri. D. Ravinder (E/613/2005), Sri. P.K. Agarwal (E.614/2005). Ld Counsel submitted that since the department has not been able to establish the allegations against the assessee, the penalty imposed on the said appellants are unjust and without legal basis. 5. On behalf of department the Ld AR Sri. Nagaraj Naik stated that while adjudicating authority has correctly demanded excise duty of ₹ 13,17,385/- and ₹ 69,06,624/-, however he has erred in extending benefit of cum duty to reduce the demand to 12,10,497/and ₹ 21,10,473/- respectively, for which the department has also filed appeal E-607/2006. The adjudicating authority dropping demand of ₹ 39,25,829/- related to clearance of cotton cone yarn in the guise of Plain Reel Hank Yarn(PRHY) without payment of duty, on the ground that no conclusive evidence has been let in by department to substantiate the allegation is incorrect since as per the SCN some of the buyers have stated that they have received cone yarn only. So also, adjudicating authority dropping demand of 14,32,902/- relating to allegation of clandestine clearances based on private records /private diaries recovered from D. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not confronted with the witness and therefore there is no valid reason to assume or any other evidence to treat the clearances of Hank Yam as Cone Yarn and consequently duty on that. And further more, during cross examination Dontha Devdas (B-9) admitted that his firm name was Sarda Yarn which was closed in 1997 itself and name js not a registered name and denied having received any goods on invoice Nos. 69/12-4-99 and 97/15-6-99 and that other people who have kept the name of Sarda Yarn might have received the goods. The consultant in addition to the above has submitted that the department made the investigations with the wrong buyers resulting in denial of the purchase of goods and had the department made the verification with the correct buyer, present situation could be avoided and as Gaddam Vittal has admitted in his cross examination that goods purchased were Hank Yarn only and not Cone Yarn and from other major buyers, department did not made any verification. Hence conclusion raised by the investigating authority is baseless and without any support and should fall on its own. The consultant also cited and relied on the judgement in 2003 (153) ELT 437 (Tri-Chennai). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined the position and I find that merely because certain entries are found in the private diaries / documents maintained by Shri D Ravinder do not constitute irrefutable evidence against either RSPL or PTC Moreover, D. Ravinder was selling the goods on behalf of PTC in addition to other manufacturers. In the records recovered from the residence of Shri D. Ravinder, though the names of other manufacturers were found, strangely the names of RSPL or PTC were not there, In the absence of any linkage to either RSPL or PTC, it just simply cannot be alleged that the transactions pertain to either RSPL or PTC. And the investigating Officers also could not specify during their cross examination with regard to the above. In view of my above findings, I hold that the demand of ₹ 14,32,902/- as per Annexure D3 does not sustain and is liable to be dropped. 8. It is thus seen the adjudicating authority himself has taken note of the cross examination of the investigating officer who admitted that except for four parties, no statement from other 102 parties were recorded. He has also found that department did not direct investigation at manufacturers end whether the alleged quantities i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs Union of India reported in 411(AII) , it has been held that unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. It is further held that clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the revenue by production of sufficient and tangible evidences 11. From the foregoing discussions, we find that while adjudicating authority has correctly dropped the demands of ₹ 13,17,385/- and ₹ 39,25,829/- the remaining impugned demands confirmed in the order and challenged in this appeal are not unsustainable and require to be set aside, which we hereby do. In consequence, the department appeal is dismissed. Also, in the result, the penalties imposed on the assessee, Shri. Gopal Agarwal, Shri. Pramod Kumar Agarwal and Shri. Debbadi Ravinder are also set aside. 12. Appeals Nos. E/611/2005, E/612/2005, E/613/2005 and E/614/2005 are allowed with consequential benefits, if any, as per law. Department appeal E/607/2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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