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TMI Blog2017 (3) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... tted fact, the manufacture and clearance has not been evidenced with any corroborative evidence established during investigation. The statements were relied upon as corroborative evidences and the cross examination of witnesses who made such statements was denied without valid ground. There is no other corroboration evidencing operation of these machines even for a single day during the impugned period - These evidences, the admissibility of which itself is legally not sustainable, cannot be the basis for confirmation of duty on the goods allegedly manufactured and cleared by the appellant. The impugned order has fallen short in appreciating the factual position, evidence gathered and applicable legal provisions in arriving at the findings of non-payment of duty - appeal allowed - decided in favor of appellants. - E/56939 & 56940/2013-EX(DB) - Final Order No. 50354-50355/2017 - Dated:- 11-1-2017 - Dr. Satish Chandra President and Mr. B. Ravichandran, Member (Technical) Rep. by Shri Manish Agarwal, CA Shri Zared Khar, Advocate for the appellant Rep. by Shri R.K. Manjhi, DR for the respondent ORDER These two appeals were filed against common impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is applicable and duty demand will be made based on the goods deemed to have been manufactured and is for the appellant to prove non-functioning of the machines. 4. Ld. Consultant emphasized that they have repeatedly requested the Department to conduct a technical inspection of the detained machines to establish their exact condition. Such request was not honored and the Original Authority went by perusal of certain still photographs and also referred to the fact that the machines were plugged in. Though the fact that crucial parts like motors, etc. was missing was taken note by the Original Authority, still the duty was confirmed without appreciating the facts. Ld. Consultant also submitted that there is no corroborative evidence of clandestine manufacture or clearance of dutiable items. There is no examination of electricity consumption either by power connection or by generator arrangement. He submitted that whole demand is based on the presumption without any element of supporting evidence. Presence of non-functional scrapped machines cannot be the basis of confirming excise duty demand. 5. Ld. AR submitted that these machines were found by the officers in the prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that such inference apart from being fallacious is legally untenable. The demand was made based on presumption that these machines were working from 8.3.2010 without Interruption. The Original Authority emphasized that in terms of Compounded Levy Scheme, the goods shall be determined to have been manufactured with the help of installed packing machines irrespective of whether it is in use or not, or is in working condition or not. He held that non-working of any machine is not relevant to determine the duty liability. However, we note that in the present case that the submission of the appellant is that these machines were scrapped and were lying un-utilised and cannot be considered as packing machines installed for operation in terms of the Explanation II to Rule 19. If the inference of the Original Authority is considered as a legal ratio, then wherever the packing machines were lying, in any premises, including the premises of the manufacturer or seller of such machines, then the duty can be demanded from them in terms of the Compounded Levy Scheme. Apparently no such situation is covered by the Scheme. Presumptive duty liability as envisaged in the Compounded Levy Scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ategorically concluded that when the machines were found in an unregistered premises and the manufacturer and clearance is established, the duty demand is correctly made. While the presence of machines is an admitted fact, the manufacture and clearance has not been evidenced with any corroborative evidence established during investigation. For this the only reliance was on the statements given by the Accountant of the appellant's unit, labourer and the driver of the tempo. There is no verification of Procurement of raw materials, packing material, bank statements, etc. to corroborate the illicit manufacture and clearance of dutiable items. We also note that the Commissioner did not permit the cross examination of the witnesses with reference to prayer of the appellant regarding serious irregularities in panchnama and search proceedings. We find that the Commissioner recorded since the machines were found in an unauthorized premises, the cross examination of the witnesses would not make any change. Similarly, cross examination of the officers conducting search operation was also denied. We further note that the Hon'ble High Court of Rajasthan in Jupitor Industries and Anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Basudev Garg - 2013 (294) ELT 353 (Delhi) and Hon'ble Allahabad High Court in Parmarth Iron Pvt. Ltd. - 2010 (260) ELT 514 (Delhi). Further, reference can be made to the decision of Hon'ble Delhi High Court in J.K. Cigrettes Ltd. - 2009 (242) ELT 189 (Delhi) and Hon'ble Allahabad High Court in Govind Mills Ltd. - 2013 (294) ELT 361 (All.) . In the present case, we find that the statements were relied upon as corroborative evidences and the cross examination of witnesses who made such statements was denied without valid ground. We find that there is no other corroboration evidencing operation of these machines even for a single day during the impugned period. The presence of machines and certain statements of labourers and accountants were the only evidences, which resulted in confirmation of demand. We find that these evidences, the admissibility of which itself is legally not sustainable, cannot be the basis for confirmation of duty on the goods allegedly manufactured and cleared by the appellant. The investigation in the present case has been very sketchy and will not support the findings in the impugned order. 11. After careful consideration of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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