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TMI Blog2017 (3) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... avor of appellants. - E/172,173,174/2007 - A/60150-60152/2017-EX[DB] - Dated:- 19-1-2017 - Mr. Ashok Jindal, Member (Judicial) And Mr. Devender Singh, Member (Technical) Ms. Krati Somani, Advocate, - for the appellant Sh. G.M. Sharma, AR - for the respondent Coram: Per Ashok Jindal: The appellants are in appeal against the impugned order demanding duty from the main appellant along with interest and imposing penalty on all the appellants. 2. The brief facts of the case are that the appellant is partnership firm and engaged in manufacture of knitted cloth and knitted garments of cotton and cotton polyester. On 20.05.2004, the search was conducted and no shortage of raw material on comparison of stock with the books of accounts were found. However, the department applied a formula based on the statement of Sh. Baldev Singh that the wastages in their factory is about 10-15% and alleged the there has been clandestine removal of goods by the said units. Sh. Baldev Singh also stated that some garments have been cleared by them without payment of duty although the statement has retracted. Later on, Sh. Baldev Singh clarified that the wastes generated during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock physically present and in records. On 21 st May, 2004, the statement of Shri Baldev Singh, Managing Director of the appellant was recorded, wherein shortage has been worked out on the basis of the statement i.e. 15 to 20% wastage took place in manufacturing of their final product and the same was admitted by Shri Baldev Singh. Therefore, it was alleged that the appellants have cleared the goods without issue of invoice and without accountal and without payment of duty. The said statement was retracted by Shri Baldev Singh on 31 st May, 2004. Thereafter on 3 rd May, 2005, another statement was recorded by the department which was also retracted on the same day by Shri Baldev Singh. Thereafter, a show cause notice was issued to the appellants on 5 th October, 2005 by invoking extended period of limitation on the ground that appellants have clandestinely manufactured mufflers and t-shirts from different type of yarns found short and removed the same clandestinely without payment of duty, invoices and without accounting the same. The matter was adjudicated and the impugned order has been passed. Aggrieved from the said order, the appellant is before us. The identical fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odown of M/s. Mahalakshmi Plastics be not confiscated. Further, investigations were carried out by the authorities and statements of various persons like the officers, directors of the company and also the suppliers of raw materials were recorded. Investigations culminated in issuance of show cause notices which summarises the contraventions, main allegation being, that the appellants had contravened the provisions of Rule 57A/57AB of the Central Excise Rules, 1944 and Rule 3(4) of the Cenvat Credit Rules, 2001-2002 inasmuch as they had not used Cenvat credit availed plastic granules in the manufacture of woven fabrics/sacks, but appear to have clandestinely removed them without payment of duty. The said show cause notices while quantifying the demand, worked out the demands based upon the wastage that could be permitted to the appellants which was pegged at 7.5% (based upon percentage of wastes in other factories) and input-output ratio in the Handbook of Procedures of the EXIM Policy and concluded that the reasonable wastage that could be allowed to the appellants is in the range of 7.5%, while the actual percentage of waste is more than that. Coming to such a conclusion, a deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Mahavir Metals Industries v. CCE Cus., Daman, Vapi (supra), this Tribunal further held as under : 7. I further note that my learned brother has also recorded that in absence of any specific evidence to support the clandestine removal of the quantity, it is necessary that the details given by the appellant subsequently are considered and commented upon. While agreeing with my learned brother that there is no specific evidence to uphold the finding of clandestine removal, the remand of the matter for re-calculation of shortages would be only a theoretical exercise. It is settled law that such calculation of shortages arrived at on the basis of input output calculation, cannot be made the basis of clandestine removal. The appellants have also challenged that the statement of the authorized signatory as also by the partner do not stand corroborated with sufficient evidence as they are against the record and cannot be made the sole basis for holding against them. I agree that the veracity of the statements has to be gauged from the accompanying circumstances and has to be corroborated by way of same independent evidences, which is fully absent in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppreciation of the evidence on record, it is apparent that except for the shortage in raw material viz., HD which was disputed by the assessee and the statement of the Director, there was no other evidence on record to indicate clandestine manufacture and removal of final products. On behalf of the revenue, except for placing reliance upon the statement of the Director recorded during the course of the search proceedings, no evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error in giving benefit of doubt to the assessee. 18. In view of the foregoing and there being no concrete evidence (as agreed by both the Members) of clandestine removal of the goods, the appeals are required to be allowed as held by Hon'ble Member (Judicial). I have concurred with her views 10. Further, we find that the Hon'ble Gujarat High Court in the case of CCE v. Saakeen Alloys Pvt. Ltd. (supra) , the Hon'ble Gujarat High Court has observed as under : 7. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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