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TMI Blog2017 (5) TMI 1336X X X X Extracts X X X X X X X X Extracts X X X X ..... al criteria for the allegation of clandestine removal, as there is no tangible evidence of clandestine manufacture by these appellants, and the whole demand is based on mere assumptions and presumptions. There is no investigation with respect to usage of unaccounted or excess raw materials, discovery of any finished goods outside the factory, use of electricity far in excess than what is necessary for manufacture of goods, otherwise manufactured and validly cleared on payment of duty, proof of actual transportation of goods etc. Inferences cannot be drawn about such clearances merely on the basis of notebooks, diaries privately maintained or some computer data recovered from pen drives not maintained in the ordinary course of business. Further, the impugned orders are vitiated for not giving opportunity of cross-examination, including examination of the witnesses of the Revenue. The demand being mainly based on some private records, etc., maintained by third party - M/s Panchwati Prayogshala for their internal control cannot be the sole basis for raising demand against M/s SCL - the demand is not sustainable against M/s SCL - appeal allowed. So far M/s Panchwati Prayogshala Priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goel was the proprietor of M/s PPPL Unit-I, that both the units were taken over by the appellant (PPPL) with effect from 01/04/2011. Both the units were manufacturing goods under the brand name of Panchvati , they were having Ayurvedic Unani Drugs Controller Licence for manufacturing Ayurvedic medicines/products. During the course of search various incriminating documents, pen drives CPUs, were recovered from various places/premises. The said documents/pen drives/CPUs were resumed by the Officers for further investigation. The documents recovered from the separate office were found to contain date-wise dispatch details for the period 2007-08, 2008-09 (upto 30/11/2008), 2009-10 (upto 01/01/2010) 2011-12 (upto 14/07/2011). It further appeared that M/s PPPL have issued invoices only in a few cases. It also appeared that M/s PPPL were in the practice of issuing invoices for the safe delivery of the goods. Once the goods were delivered, the invoices were being destroyed and again parallel invoices were issued by them. It also appeared that there are two firms namely; M/s PPPL Unit-I M/s PPPL Unit-II and which were neither registered with Central Excise department nor found to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the period August, 2007 to 14 th July, 2011, it appeared that M/s Spack Coaters Limited - appellant have cleared packing material (for the said goods), total assessable value at ₹ 1,49,29,423/- which is liable to confiscation under Rule 25 (1) of the Central Excise Rules, 2002 for contravention of the provisions of Rules 4, 5, 6, 8 10, 11 12 of the Central Excise Rules, 2002, as the same was manufactured and cleared in contravention of the provisions of Acts Rules with intent to evade payment of duty. Further from scrutiny of documents No.48 52 (RUD 4 5) seized from the premises of M/s PPPL revealed that the said documents are gate registers maintained by the guards posted at the gate of the godown premises of M/s PPPL, at 20-B, Mohkampur, Delhi Road, Meerut. The receipt entries of packing material as found in document No.63 (RUD -3) are also available in the said gate registeRs.The receipt of materials as reflected in the gate registers, corroborates the unaccounted receipt of packing material shown in documents No.62 63 (RUD - 2 3). Further from scrutiny of document No.68 (RUD - 6) seized from the premises 20-B, Mohkampur, Delhi road, Meerut of M/s PPPL rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 do 16 478.30 115 3 23.04.2011 do 346 2852.00 97 The corresponding entries of the aforesaid receipt entries of document No.57 are also available in diary No.63. When compared the aforesaid three entries with the sales invoices of M/s Spack Coaters Limited, it was noticed that M/s Spack Coaters Limited have issued invoice No.2352 dated 23/01/2011 for 16 bags (476.100) of Aam Bambmaiya to M/s PPPL. No invoice in respect of entry dated 25/12/2010 23/04/2011 of document No.57 appears to have been issued by M/s Spack Coaters Limited. Thus, it appeared that the goods shown received by M/s PPPL on 25/12/2010 23/04/2011 which were supplied by M/s SCL were without cover of Central Excise invoice and without payment of Central Excise duty. Scrutiny of document No.4 (RUD - 11) seized from the premises 20-B, Mohkampur, Delhi Road, Meeurt of M/s PPPL revealed that page No.85 is the weight sheet dated 11/05/2010 of packing material received from M/s SCL. The said page shows receipt of 328 rolls (2484.56 kgs) and 7 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision) 19-A Mohkampur, Delhi Road, Meerut. For supply of packaging material to M/s PPPL, Roorkee, address and manufacturing license No.of Roorkee was printed on the same. When it was shown that the entries in the name of Spack (in the registers, diaries, etc.) recovered and seized from the factory-cum-godown premises of M/s PPPL at 20-B, Mohkampur, Delhi Road, Meerut Shri Surendra Kumar Gupta stated that they supplied packaing material to M/s PPPL vide Inovice No.1026 dated 10/08/2010, 1791 1792 both dated 12/11/2010 2352 dated 22/01/2011. He stated that though there is minor difference in quantity in kgs as shown against the entries in the name of Spack in seized document No.63 and invoices but the number of rolls/bundles is the same. Further, he stated that they supplied packaging material to Meerut Roorkee Units of M/s PPPL since 2008 the entries in the name of Spack in seized document No.63 pertains to packaging material supplied to M/s Panchwati Prayogshala (Ayurvedic Division), Meerut. He further stated that he will check from their accounts whether goods were supplied on bills or not and revert. When he was asked to produce the document on summons Shri Surendra K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll payments by M/s PPPL, Roorkee was by cheque but all the payments by M/s PPPL to M/s SCL were by cash or by demand drafts. It further appeared that all the appellants colluded with each other in clearing the dutiable goods clandestinely and the Proprietor/Director of M/s PPPL have aided and abetted in receiving dutiable goods clandestinely. 4. On such allegations Show Cause Notice dated 4th September, 2012 was issued invoking the extended period of limitation demanding Central Excise duty amounting to ₹ 16,30,613/- from M/s SCL for alleged clearance of Printed Laminated Flexible Plastic Film in rolls pouches form valued at ₹ 1,49,29,423/-, during the period 01/08/2007 to 14/07/2011. Further the amount of ₹ 8 lakhs deposited during investigation was proposed to be appropriated. Further penalty was also proposed with further proposal to confiscate the packaging materials or goods valued at ₹ 1,49,29,423/- and as the goods were not available for confiscation, why penalty under Rule 25 (1) of Central Excise Rules, 2002, be not imposed. Further penalty under Rule 26 of Central Excise Rules, 2002 was proposed on the Director of M/s SCL - Mr. Surinder Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by M/s PPPL (Company) from 1 st April, 2011. The Central Excise duty amounting to ₹ 38,96,729/-, for the period 1 st April, 11 to 14 th July, 2011, was determined. The applicant - M/s PPPL has indulged in clandestine clearance of the goods and therefore violated the law and hence are liable for penalty. The Bench observed that the applicant has made full and true disclosure and cooperated in the settlement proceedings. Accordingly, the disputes stood settled under Section 32F (3) of the Act on the terms - (i) Central Excise duty on the applicant - M/s PPPL is settled at ₹ 38,96,729/-with interest. Finished goods valued at ₹ 24,47,850/- seized vide seizure memo dated 20/07/2011, are held liable to confiscation under the provisions of the Act and the Rules. Such goods are ordered to be released on payment of redemption fine of ₹ 50,000/-. Out of the excisable goods having assessable value of ₹ 1,09,67,73,557/- manufactured and removed from 01/07/2007 to 14/07/2011, the excisable goods valued at ₹ 9,22,28,840/- cleared during 01/04/2007 to 14/07/2011 are liable for confiscation. The rest of the goods were not manufactured by the applicant - M/s P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 529 (Tri. Ahmedabad) , wherein after considering the earlier judgments, this Tribunal has laid down certain norms for establishing whether clandestine removal has taken place or not. There being no material evidence on record to establish any clandestine manufacture and removal, the demand is fit to be set aside along with penalty. The learned counsel further states that Revenue have placed heavy reliance on the Data obtained from pen drive, found in the possession of one of the employees of M/s PPPL. The said evidence is not admissible in view of the provisions of Section 36B of the Central Excise Act, 1944. The printout from the pen drive etc. have been taken by the DGCEI Officers in their office. The Data on the said pen drive was stated to be copied from the computer by the employee of M/s PPPL, which was used by them. There is no evidence, nor any pleading by the Revenue in the Show Cause Notice that the Data retrieved from the pen drive etc. was with respect to accounts maintained in regular course of business as required by Section 36B of the Act. Thus, neither the Data so obtained is from a computer maintained in the ordinary course of business and further there being no a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at that M/s PPPL, in their application and submissions before the settlement commission have admitted that they resorted to clandestine manufacture and clearance of the finished products, as alleged by the Revenue. The settlement has been done mainly with respect to the period i.e. the cut-off date of 01/04/2011 was adopted, being the date on which M/s PPPL acquired the proprietorship business of M/s Panchwati Prayogshala owned by Mr. Pankaj Goel and his wife MRs.Puja Goel. Further, Mr. Surendra Kumar Gupta, Director of M/s SCL have in their statements recorded before the DGCEI in the course of investigation, have more or less admitted that they have supplied their finished products/packing material to M/s PPPL both with and without invoices. So far the issue of cross examination is concerned it is urged that these appellants did not make any specific request, that is, did not give the names of the persons who were intended to be cross-examined. He further referred to the observations of Commissioner (Appeals) - I observe that appellants were asked by the Adjudicating Authority to specify the name of the persons for cross-examination, but they could not specify the name of any per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, he stated - (I have seen entries in name of Spack in question in seized document No.63. It is stated that bill have been issued by us in respect of all the entries in question for supply of packing material to M/s PPPL (Ayurvedic Division), Meerut. I have been shown print out of account of Spack retrieved from the pen drive GB Data Traveller seized from M/s PPPL located at 19-A Mohakampur, Delhi Road, Meerut and asked to comment. The continuing statement, (that is page 4 of the statement) is missing and it was stated in the course of argument that the same was not supplied by Department. Further, Mr. Surendra Kumar Gupta stated in the concluding portion of the statement I will deposit the duty on the goods supplied to M/s PPPL, Meerut amounting to ₹ 8 lakhs by 20/01/2012, voluntarily towards my duty liability. 16. I, further, find that in their reply dated 09/01/2014 to the Show Cause Notice, the appellants have categorically stated that the statement was recorded under duress and undue influence. The director of M/s SCL - Mr. Surendra Kumar Gupta, knew that Mr. Pankaj Goel Director of M/s PPPL had been arrested by the officers of DGCEI and was granted bail by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The person Mr. Amit Kumar Kansal - Accountant of M/s PPPL from whose possession, the said pen drive was recovered, in his statement have inter-alia stated that Shri Surendra Pal, GM Marketing used to tell him the details of goods cleared without bills/invoices from the factory of M/s PPPL and he made entries in the computer accordingly. Thus it is evident that the said Accountant was himself not knowing about the genuineness of the data entered by him in the computer. He made entries in the computer as per details provided by GM Marketing, which was not in the ordinary course of an activity done by him on behalf of M/s PPPL. Mr. Amit Kumar Kansal was not looking after any dispatch of finished goods, allegedly cleared without payment of duty, nor received any payment in respect of such finished goods. Further the said accountant, neither looked after receipts of any packing material from any supplier nor made payments in respect of the packing materials. He made entries on the oral instructions of the GM Marketing and Director, which cannot be recorded as having been made in the ordinary course of the business. Thus, there was no proper basis for maintaining records on the comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion) (Food Division) with respect to the same investigation. I further find that Revenue have failed to establish certain fundamental criteria for the allegation of clandestine removal, as there is no tangible evidence of clandestine manufacture by these appellants, and the whole demand is based on mere assumptions and presumptions. There is no investigation with respect to usage of unaccounted or excess raw materials, discovery of any finished goods outside the factory, use of electricity far in excess than what is necessary for manufacture of goods, otherwise manufactured and validly cleared on payment of duty, proof of actual transportation of goods etc. Inferences cannot be drawn about such clearances merely on the basis of notebooks, diaries privately maintained or some computer data recovered from pen drives not maintained in the ordinary course of business. Further, the impugned orders are vitiated for not giving opportunity of cross-examination, including examination of the witnesses of the Revenue. The demand being mainly based on some private records, etc., maintained by third party - M/s Panchwati Prayogshala for their internal control cannot be the sole basis for rais ..... X X X X Extracts X X X X X X X X Extracts X X X X
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