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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 ..... al of the shortage materials clandestinely without payment of duty and the imposition of penalty of equal amount of duty is not justified. Regarding the confiscation of the excess finished goods and the imposition of fine and penalty, the excess quantity of finished goods was ascertained during stock verification. A feeble attempt was made by the ld.Counsel of the assessee that the stock verification was not conducted in proper manner - The adjudicating authority observed that he customer of the assessee stated that in earlier occasion, he received the goods without invoice. It is already stated that the customers retracted the statements immediately. In any event, the finding of the adjudicating authority on the basis of the customers is not tenable unless there is material available on record in relation to the seized goods - the confiscation of the excess finished goods is justified for contravention of the Rules and the amounts of imposition of fine and penalty are excessive. The imposition of redemption fine and penalty of ₹ 1,00,000/- and ₹ 85,000/- respectively are reduced to ₹ 50,000/- and ₹ 35,000/- respectively - decided partly in favor of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterials/inputs and imposed redemption fine of ₹ 1,00,000/- and ₹ 5,00,000/- respectively. It has also imposed penalty of ₹ 5,00,000/- under Rule 173Q of the erstwhile Rules, 1944 and a penalty of ₹ 5,000/- under Rule 226 of the said Rules ; (vii) The appellant filed appeals before the Commissioner (Appeals) against the adjudication orders. By the impugned order dated 31.08.2009, the Commissioner (Appeals) modified the adjudication order dated 15.02.2007 to the extent that the demand of ₹ 43,533.59 of duty for stock shortage of raw materials was upheld and imposed penalty of equal amount of duty and rest part of the order is set aside ; (viii) By the impugned order, the Commissioner (Appeals) in respect of adjudication order dated 26.03.2007, upheld the confiscation of finished goods and reduced redemption fine to ₹ 1,00,000/- and imposition of penalty to the extent of ₹ 85,000/- under Rule 173Q of the erstwhile Rules and a penalty of ₹ 5,000/- under Rule 226 of the said Rules and rest part of the order is set aside. It is directed that amount of ₹ 2,50,000/- as deposited by the assessee would be adjusted against the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding etc.. I find that the investigation was not complete on this count. These were taken to be finished goods only on assumptions and resumptions. Charge of clandestine manufacture is very serious and cannot be leveled against an assessee without tangible evidence of substance. Firstly, the investigator did not try to get explanation about these loose sheets from the appellants and just did guess work, then, if these related to unrecorded and clandestine manufacture, where from the raw materials were acquired ? For such illicit production there would be extra consumption of electricity about which the investigation is completely silent. Even after that, if goods are produced over and above those mentioned in the records, there should be market for these and proper enquiry should reveal the buyers. Regarding investigation at buyer s end, the officers visited the premises of Kalicharan Jaiswal and Bikash Enterprises . The proprietor of Kalicharan Jaiswal stated that on 09.12.98, they received a consignment from the appellants through invoice no.276. the goods received by him are counted in pieces totaling 189 pcs. stated by him. After converting the pieces in Kgs. by application o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 5. The Revenue in their grounds of appeal strongly opposed the finding of the Commissioner (Appeals) to the extent that in the Panchnama prepared on the spot on 15.12.1998, by the Officer, there is no mention of any documents having been seized by the Central Excise Officers at the time of their visit to the factory. After going through the grounds of appeal filed by the Revenue, I find that the Commissioner (Appeals) decided the case on merit and therefore, there is no need to discuss on such preliminary issue as raised by the Commissioner (Appeals) and refuted by the Revenue in their grounds of appeal. Therefoere, it is appropriate to decide the matter on merit. 6. The Revenue in their grounds of appeal stated that the payments made to the labour contractor would be attributed for manufacture of the final product. Hence, the labour payment vouchers would be relied upon to establish the charge of clandestine removal. It is further stated by the Revenue that the documents seized from the premises of the appellant in the form of loose sheets, letter pad, were admitted by the director of the appellant company. The Revenue cited several case laws on the proposition that adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. Accordingly, it is submitted that on the basis of payment of labour charges, determination of value by percentage is not possible. There will be wide difference between the figures calculated and the actual value of the goods cleared from the factory. The respondent has already submitted that the production has got no relation with the clearance of the goods from their factory. All the goods may not be cleared in the same month. Under such circumstances, such computation of duty is improper and incorrect and is not tenable. It is a settled law that on the basis of assumption and presumption no demand of duty can be raised. It is to be exact. The respondent further states that there is no evidence whatsoever that the goods had been removed from the factory without payment of duty. It appears that the investigating officers had merely proceeded on the basis of the statements and had not examined the seized documents in proper manner. It is seen that the appellant by letter dated 16.12.1998, lodged a complaint to the Officer-in-Charge of Bishnupur P.S. against the stock verification report and the statement from the director was recorded under duress. It is stated by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT 967 (Tri.-Del.) ; (10) CCEx., Bangalore I Vs. Brindavan Tex Processors Pvt. Ltd. : 2002 (148) ELT 97 (Tri.-Bang.) ; (11) Shree Nathjee Industries Vs. CCEx., Surat I : 2011 (267) ELT 241 (Tri.-Ahmd.) ; 9. In the case of Shree Nathjee Industries (supra), the Tribunal observed that statements of some buyers admitting receipt of impugned goods are not sufficient that they are manufactured by the assessee. In my considered view, the charge of clandestine removal cannot be established by way of theoretical calculation on the basis of labour payment vouchers unless, it is corroborated by sufficient evidences. In the present case, it appears that the investigating officers proceeded on the basis of the statements, which were subsequently retracted and the labour payment vouchers etc. The evidences were not examined thoroughly for the purpose of corroboration to establish the charge of clandestine removal. In such situation, the Tribunal in the case of Tejwal Dyestuff Industries Vs. CCEx, Ahmd. : 2007 (216) ELT 310 (Tri.-Ahmd.) observed as under : 54. It appears that, having obtained? confessional statements the Revenue Officers did not carry out the detailed investiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned during the stock verification. There is no material available on record of removal of the shortage materials clandestinely without payment of duty and the imposition of penalty of equal amount of duty is not justified. 12. Regarding the confiscation of the excess finished goods and the imposition of fine and penalty, I find that the excess quantity of finished goods was ascertained during stock verification. A feeble attempt was made by the ld.Counsel of the assessee that the stock verification was not conducted in proper manner. But after considering the facts and circumstances of the case, I am unable to accept the contention of the ld.Counsel. The assessee contended before the adjudicating authority that there is no evidence to show that the excess stock was meant for clandestine removal. In this context, the adjudicating authority observed that he customer of the assessee stated that in earlier occasion, he received the goods without invoice. It is already stated as above that the customers retracted the statements immediately. In any event, the finding of the adjudicating authority on the basis of the customers is not tenable unless there is material available on record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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