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TMI Blog2017 (10) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... ive of the appellant company ; (iii) A show-cause notice dated 07.06.1999 was issued proposing confiscation of the seized goods found in excess and imposition of penalty ; (iv) That further a show-cause notice dated 01.12.1999 was issued proposing demand of duty along with interest and to impose penalty alleging that during the period from September 1997 to December, 1998, the assessee surreptitiously cleared the finished goods and modvatable inputs without payment of duty. The charge of clandestine removal is based on incriminating documents, viz., loose sheets and written pads recovered from the factory premises ; (v) That by adjudication order dated 15.02.2007, the Additional Commissioner of Central Excise, adjudicated the proceedings initiated under show-cause notice dated 01.12.1999. The Adjudicating Authority confirmed the demand of Central Excise duty of Rs. 34,75,865/- along with interest and imposed penalty of equal amount of duty. It has also disallowed Modvat Credit of Rs. 3,05,029/- along with interest and appropriated the amount of Rs. 2,50,000/- as paid by the appellant and also imposed penalty of Rs. 55,029/- ; (vi) By Adjudication Order dated 26.03.2007, in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,495.48 and the amount of Rs. 34,75,860/- based on loose sheets, written pads and labour payment vouchers. For the proper appreciation of the case, the relevant portion of the findings of the Commissioner (Appeals) are reproduced below : "The other allegation is about clandestine removal of finished goods. On the basis of some incriminating documents unrecorded production of June, July and August, 1998, was alleged. From labour payment vouchers of these three months total payment made to labour contractor was worked out. Then through analytical calculation a ratio of these two figures was found and this ratio was applied on the labour payments of several other months to arrive at the value of clandestine manufacture. This application of ratio has become the guiding factor of this demand. Now what are these incriminating documents has not been explained. It has also not been clarified whether the names of items mentioned on the incriminating documents are finished goods or goods under process. The appellants have also mentioned in their submission that noting is understood from the allegation whether the goods mentioned in the loose sheets are at various stages before the finishin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment vouchers to arrive at the assessable value of clandestine manufacture of finished goods. Firstly, these labour payment vouchers were no established properly as to for what purpose these payments were made. Even if, assuming but not admitting, these labour payments were for manufacture of goods, then also by multiplication of a ratio with labour payments, quantum of manufacture and clearance cannot be concluded. Discussions have already been made about a number of corroborative evidences which were required to prove the clandestine manufacture and removal, but not a single piece of evidence was attached. The appellants have relied on a huge number of case decisions of different higher forums which unanimously speak about the necessity of corroborative evidences to prove a charge of clandestine removal. The adjudicating authority also agreed that corroborative evidences are required to be brought out to substantiate clandestine removal and he wrote it is an agreed fact that clandestine removal should be established and not conjectured . There is no evidence or corroborative evidence to establish the charge. This demand made by application of a ratio is just a piece of gues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25979 and labour payments was Rs. 1,01,194.26. In the figures taken from the loose sheet nothing has been mentioned. Only thickness and figures have been shown. Against them, some figures are there. Those have been taken to be the production figures and amount paid to the workers during the month of July. Some figures have been omitted for reasons best known to the department. ******************************************************* 10. In Annexure-II, Part B the demand of duty has been raised for the months of September, 1997, December,1997, April, 1998, July, 1998 and September, 1998. For these 5 months, labour payments had been taken into account and on the basis of labour payments assessable value had been ascertained by ratio of 24.26% and on such assessable value demand of duty has been raised. The respondent submits that such computation of duty is apparently improper and incorrect and is not maintainable. Firstly, the labour charges are dependent on the dimensions of the laminates. The productions of different dimensions of laminates are not same in different months. They vary from month to month. It is further submitted that the price of different thickness of laminates d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority that the assessee could have issued instruction to the Bank to STOP PAYMENT , instead of complaining to the Commissioner. I am unable to accept such finding of the adjudicating authority. It is clear that the assessee complained to the Commissioner of Central Excise against the visiting officers and apparently, no steps had been taken. 8. The ld.Counsel relied upon the various case laws as under : (1) Gupta Synthetics Ltd. Vs. CCEx., Ahmd.-II : 2014 (312) ELT 225 (Tri.-Ahmd.) ; (2) PSL Ltd. Vs. CCEx. & Cus., Visakhapatnam I : 2014 (312 ) ELT 245 (Tri.-Bang.) ; (3) CCEx., Chandigarh I Vs. Shingar Lamps Pvt. Ltd. : 2010 (255) ELT 221 ( P & H) ; (4) CCEx., Chandigarh I Vs. Laxmi Engineering Works : 2010 (254) ELT 205 ( P & H) ; (5) Triveni Engineering & Industries Ltd. Vs. CCEx., Allahabad : 2016 (334) ELT 595 (All.) ; (6) Hemant Goyal Vs. Union of India : 2016 (334) ELT 599 (Jhar.) ; (7) Super Cassettes Industries Ltd. Vs. CCEx., Nodia : 2017 (347) ELT 145 (Tri.-All.) ; (8) Confederation Overseas Clearing Vs. CC (Airport & Admn.), Kolkata : 2017 (347) ELT 148 (Tri.-Kol.) ; (9) Durga Trading Company Vs. CCEx., Lucknow : 2002 (148) ELT 967 (Tri.-Del.) ; (10) CCEx., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , particularly LAB and Soda Ash were being used by them for their final products. Some of these declarations which are on record as Annexure A (Collectively) show that at least for seven final products, LAB and Soda Ash were used as inputs, besides other inputs enumerated in the description of inputs in the declarations dated 22-2-1999, 3-4-2000, 12-4-2000, and 12-6-2000. It is not disputed that the returns were regularly filed and the fact that these inputs were used for the final products was mentioned from the very inception in the declarations made and the returns filed by the assessee before the Revenue authorities. ************************************* ********************************************* 10. There is no tangible evidence to indicate manufacture and clandestine removal of the goods. the preponderance of probabilities in the context of the evidences vis-`-vis, the statement does not lead to conclusion of charge of clandestine removal. Therefore, the Commissioner (Appeals) rightly set aside the demand of duty partly. 11. The amount of Rs. 43,533.59 was confirmed for shortage of raw materials ascertained during the stock verification. There is no material available ..... X X X X Extracts X X X X X X X X Extracts X X X X
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