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TMI Blog2017 (4) TMI 1221X X X X Extracts X X X X X X X X Extracts X X X X ..... d at the end of the buyers whose names were reflecting in the parallel invoices. In that circumstances, the demands cannot be confirmed on the basis of parallel invoices recovered during the course of investigation. Therefore, the demand on account of parallel invoices is not sustainable. The weighment slip produced by the appellant these weighment slip does not have any contents of the goods, whether the finished goods or raw material or there is no evidence to corporate that these weighment slip pertains to the clandestine removal of the goods by the appellant. In the absence of any positive evidence the demand on the basis of weighment slip cannot be confirmed against the appellant. Appeal allowed - decided in favor of appellant. - Appeal No. E/719-720/2007 - Final Order No. 60651-60652/2017 - Dated:- 24-4-2017 - Mr. Ashok Jindal, Member (Judicial) Shri. Surjeet Bhadu, Advocate- for the appellant Shri. H. Singh, AR- for the respondent ORDER Per Ashok Jindal The appellants are in appeal against the impugned orders. 2. The brief facts of the case are that the appellants are registered with Central Excise Department for manufacturing of PVC Pipes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that because of competition in the market they could not sell their product viably and were incurring losses; that then somebody advised them to manufacture the goods and remove the same without accounting for the same in the records and remove without payment of duty. He was forced to adopt that because of business compulsion, that they had been doing the same for few months from last 1997 to May 1998 only, that since they were new to those things it resulted in mistake like over writing, cutting and hand written serial numbers, sometime original copy of invoice and office copy for excise purpose were prepared separately that in the parallel invoices being issued by them the actual sale was of high value whereas in the office copy nominal cash sales was shown and they had done so with few parties that payments of goods cleared by them clandestinely were being received in cash without issue of any cash receipt that as regards some weighment slips of pipes recovered from them, the sale of pipes might have been shown in records on the dates mentioned in the weighment slips and if no invoice was issued on those days then same would have been cleared clandestinely. He further sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular buyers of M/s Raizo Plasto Pvt. Ltd. as mentioned in the cash account of the ledger and the same has been written by him as was conveyed to him by Sh. Surinder Raizada and that further clarification in this regard could be furnished by him only. He further denied that he was any knowledge about the details of other accounts of the regular buyers. He also stated that the accounts might be related to the trading activities of M/s Raizo Chemicals. The case has been booked against the appellants that the appellants were engaged in the activity of clandestine removal of goods. Consequently, by invoking extended period of limitation, the duty was demand along with interest and penalties were also imposed on both the appellants. Aggrieved from the said order, the appellants are before me. 4. The Ld. Counsel for the appellant submits that the period involved in the month of April 1997 to June 1998. The duty has been demanded on the following allegations: (a) Stock of PVC resin was short by 2.525 MT involving Modvat credit of ₹ 19,938.00/-. (b) Stock of calcium carbonate was short by 51.800 MT involving Modvat credit of ₹ 69,930.00/-. (c) Stock of PVC pipes weig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved. (viii) No proof of receipt of sale proceeds. Cash receipts found in the factory of appellant were duly accounted and benefit has been allowed by adjudicating authority in the order in original. (ix) No investigation regarding consumption of electricity. (x) No cash found at factory or head office of the appellant. (xi) No freight paid found either for raw material alleged to have been use or for alleged final product. (xii) No links established with ledger and alleged clearance or manufacture. (xiii) Annexure A to show cause notice calculated demand by mentioning goods sold to ---- whereas, there is no evidence of such sale. (xiv) Statement of director recorded after 3 years that to when his factory was closed much earlier to statement. He was not put records of the company at the time of recording statement. (xv) The said statement dated 12.10.2001 and 10.2.2001 was retracted by the Director vide his letter dated 11.12.2001. This fact of retraction was mentioned in reply to show cause notice dated 14.10.2006. The order in original does not dispute the fact of retraction. (xvi) allegation of irregularities of the records such as non authentication et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in his statement that the ledger was prepared for keeping check on business interest of his wife, Smt. Sapna Raizada who was one of the directors with the appellant company and also running independent proprietary firm in the name of M/s Raizo Chemicals. 12. The director of the appellant firm Sh. Surinder Raizada in his statement categorically submitted that he has no connection with the ledger book containing 385 pages although it was written by his father. It was also confirmed that the ledger contains author s personal information such as bank account expenses made on account of building residential premises, other petty expenses besides vague details of business affairs of appellant company and M/s Raizo Chemicals. 13. In the show cause notice as well as impugned order contents of the ledger has been considered as gospel truth so as to confirm the demand of duty of ₹ 40,25,781/-. It has been admitted that the ledger contains details about other firms. However, confirmed the demand of duty treating the entries as clearances of pipes manufactured by the appellant company. 14. He further submitted that it is relevant to note that entry made in ledger neither ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of such purchasers either reflect that they purchase duty paid material or they did not dealt with the appellant company in any manner. This fact was produced before the adjudicating authority, but the same has not been considered. 19. With regard to the statement /investigation carried out in respect of 35 firms on the ground that follow up action in relation to these 35 firms has not been relied upon in the show cause notice. Reasoning has further extended that enquiries with the buyer would not bear any fruitful result because the buyer and seller have mutual interest. In the light of contrary stand taken in the show cause notice and impugned order, the assumption made by the adjudicating authority in regard to entries made in ledger book cannot be made basis for confirming demand of duty in this regard. 20. The above explanation is fortified by the fact that investigation authorities as well as the adjudicating authority have failed to establish the manner and method of manufacture and clearance of huge quantity of plastic pipes, therefore, on the basis of assumption demand cannot be confirmed. 21. He further submitted that in the show cause notice as well as the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also available with the ledger document and secondly, it is an admitted fact that entries relating to business transactions, Raizo Chemicals was also available in ledger. Therefore, the statement made by late Shri Raizada Vaid is not confirming that entries recorded in the ledger pertain to clandestine removal of plastic pipes manufactured by the appellant company. Further, the statement made by Shri Surinder Raizada, Director of the appellant company is of no assistance to the Revenue to hold that they have made clandestine removal of the plastic pipes without payment of duty. 24. He also relied on the decision of M/s Bearing Manufacturing Company Vs. CCE, Vadodara, 2000(123) ELT 1148 to say that charges of clandestine removal based only private records of an employee made for his own purpose are not sustainable unless corroborative evidences are found. Similar, view was taken in Savitri Concast reported in 2015 (329) ELT 213 (Tri. Del.), Someshwara Cement Chem Ltd. reported in 2005 (191) ELT 1062 and Andhra Cement Ltd. reported in 2005 (191) ELT 1046. 25. Demand based on weighment slips: It is his submissions that the demand has been confirmed on the basis of weighme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 20,000/- or ₹ 10,000/-. This show that the entries made in the ledger document are not reflective of true and correct accounts of the appellant company. This fact is corroborative by ledger account of the M/s Reliance Industries Limited was also maintained, which has not been taken into account for the purpose of demand of duty in the present instance. The appellant after verifying the old records at its end, realize that entries made in the loose ledger sheets recovered during the search were in fact trial entries made by one accountant who was interviewed by the company in June 1998 and during the interview, he was asked to show his accounting skills by making entries in loose ledger sheets. That is the reason, all the ledger folios contains entries, apparently by a person in one go and that to containing a one specific figure on most of the pages in a sequence. Therefore, in event of such a doubt about veracity of the information contained in loose ledger, it is erroneous to presume that the appellant manufactured plastic pipes and cleared without payment of duty and made in the entries in the ledger book. In absence of description of products given in the ledger fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter dted 27.05.1998 allegedly written by M/s Aggarwal Pipe store on the account that the amount shown therein did not tally with Central Excise record relating to clearances made to M/s Aggarwal Pipe Store. 30. He submitted that neither any enquiry is made at M/s Aggarwal pipe store nor any statement is recorded. And the director stated in his statement that M/s Aggarwal pipe store has two sister concerns and the quantity mentioned may have related to such related firms. Since the matter was quite old, he did not remember the same in detail. Second, the show cause notice issued to the appellant by invoking extended period of limitation which is not sustainable in the light of the decisions in the case of Shreeji Colourchem Industries Vs. CCE reported in 2013 (294) ELT 615 (Tri.) and Kothari Products ltd. reported in 2008 (229) ELT 12 (SC), therefore, he prayed that penalty on the appellant is not warranted. 31. On the other hand, the ld. AR opposed the contention of the Ld. Counsel and submits that demand is mainly issued on following issued. (a) Parallel Invoices: Parallel invoices were recovered from the appellants premises where in the original invoices were having di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved. He relied on the case of K.l. Pavunny reported as 1997 (90) ELT 241 (SC) to say that the Apex Court held that statement of accused, if found to be voluntary, can form the sole basis for conviction. The Hon ble Tribunal in the case of Nabha Steels Ltd. reported in 2004 (169) ELT 345 (Tri. Del.) has held that the respondent are bound by the admission made by their director. Further in the case of Parveen Kumar Co. reported in 2015 (328) ELT 220 (tri. Del.) has held that once fraudulent intent to evade is manifested and later confessed, proving such evasion by other activities which are not recorded, will be giving a bonus to the evaders. In that circumstances, the impugned order is to be upheld. 32. Heard both the sides and considered the submissions. 33. After hearing both the sides, I find that demands has been confirmed on the basis of following documents. (a) Ledger book recovered from Shri. Raizada Vaid father of the Shri Surinder Raizada, Director (b) On the basis of parallel invoices recovered during the course of investigation (c) On the basis of weighment slips recovered during the course of investigation 34. I find that the ledger book has been rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the appellant that there is no defect in maintaining the RG 1 register. There is no clear and specific finding which entries are tallying and what is the difference regarding the entries which are not tallied. The above conclusion is made on the basis that the private record maintained is correct. Another observation that further entries in the private note book not tallied with the RG 1 entries indicates that the goods have been illicitly removed by the assessee without payment of Central Excise duty and without accounting in the RG-1 in 1990-91 and 1991-1992. This conclusion is without any basis. Mere non tallying of the entry does not conclude the clandestine removal. These are the only documents he has considered to come to the positive finding regarding clandestine removal. 36. Further the demand has been confirmed on the basis of parallel invoices. I find that the original copy of the invoices would have been recovered from the buyers of the goods but the statement/documents recovered from the buyers were not relied upon documents. Moreover, it has been recorded by the adjudicating authority in the impugned order that no records were resumed. There is no evid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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