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TMI Blog2018 (2) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... ant in clandestine manner. Though the show cause notice has relied upon the statement of weighbridge owner to allege that the clandestinely cleared goods by the Appellant were weighed at the said weighbridge, however even the vehicle owner or drivers were not questioned whose vehicle numbers were mentioned in the weighbridge register - no evidence in the form of receipt of amount towards consideration of such alleged clandestine clearance has been brought on record. The revenue has alleged that the looking to the power consumption it shows that the Appellant had manufactured and cleared the goods without payment of duty - Held that: - only on the basis of electricity consumption without showing commensurate quantity of raw material consumed, source of procurement of excess raw material, payment made to raw material supplier, excess labour involved, clearance of finished goods its transportation and receipt of consideration of finished goods, the demand cannot be made - demand not sustainable. Appeal allowed - decided in favor of appellant. - Appeal No. E/30754/2016 - Final Order No. 30010/2018 - Dated:- 22-1-2018 - Mr. M. V. Ravindran., Member ( Judicial ) Shri Sudhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher than the difference between the cost price of raw materials and selling price of finished goods, which means that the unit is selling goods consistently at loss during the year 2011-12. However, the financial statements are showing a gross profit of ₹ 5.88 lakh in corresponding period, which substantiates the clandestine activity of the appellant. The details entered in the two private note books are tallying with the entries made in the books of Dharam Kanta for both raw materials as well as finished goods. Accordingly, Show Cause Notice dtd 22.4.2012 was issued to the appellant unit proposing demand of ₹ 4180498/- for the period November 2011 to January 2012. Further ₹ 106020/- was sought to be to be demanded on excisable goods found short during stock taking. Penalty u/s 22AC was also proposed to be imposed. 3. The Adjudicating authority confirmed the demand, as proposed in the Show Cause Notice, and also imposed penalty u/s 11AC for equivalent amount. 4. Being aggrieved, the Appellant filed appeal before the Commissioner (Appeals), who vide impugned order confirmed the demand to the extent of ₹ 41,84,918/-. He, however, set-aside the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive evidence. As regard the contention of the Department regarding excess consumption of electricity, he submits that there factory was new set up and during the initial production in the factory, there were unscheduled power cuts and also agitation for separate Telangana State were going on and the agitators used to demand closure / shut down of the production. Due to which power supply had to be shut-down, which resulted into losses of heat and subsequently more power was used to schedule the production again. He submits that the demand based on electricity is not tenable in the light of orders in case of CCE V/s R.A. Casting reported at 2011 (269) E.L.T. 337 (All.- HC) as upheld by the Hon ble Supreme Court in case of Commissioner V/s RA Casting - 2011 (269) E.L.T. A 108(SC). He submits that though the Commissioner (Appeals) has set aside the demand on shortage of demands but the same has been set aside on the ground that the same is covered by the demand made out on the basis of clearances found in note books. He submits that the demand is not sustainable on merits. The shortages arrived on the basis of physical verification of stocks is not correct as no physical weigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that though the visiting officers has recorded statement of Proprietor of the Appellant Unit who accepted the clearance of goods shown in private note book but no further investigation has been made by the revenue. The officers has not been able to find single buyer of the said goods shown to have received the goods from the Appellant. There is no corroboration with goods having been received by any single person. Even not a single statement of transporter or driver of vehicle has been recorded to show that the goods allegedly were removed from the Appellant factory without payment of duty. No investigation has been undertaken from the raw material supplier as whether any goods were received by the Appellant in clandestine manner. Though the show cause notice has relied upon the statement of weighbridge owner to allege that the clandestinely cleared goods by the Appellant were weighed at the said weighbridge, however even the vehicle owner or drivers were not questioned whose vehicle numbers were mentioned in the weighbridge register. I also find that no evidence in the form of receipt of amount towards consideration of such alleged clandestine clearance has been brought on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e note book in respect of goods despatched under proper invoices. He also noted that there is no clandestine removal to prove that entries in the parcel note book show the actual quantities of goods manufactured. In the grounds of appeal, revenue is relying on the statement of the accountant and the entries. Revenue has only examined 5 customers out of 65 customers to whom the goods were supplied. Out of these 5 customers, two of them had given statements initially in favour of the Revenue. However, same has been resiled and they have clearly stated that they had received the goods under invoices. Likewise two other witnesses did not appear for cross examination and the one who appeared clearly stated that he had received the goods under invoices and against full payment. In a circumstance like this, it is not possible to hold that Revenue has produced sufficient evidence with regard to manufacture and clearance of goods clandestinely. Revenue ought to have produced the evidence of purchase of raw material, manufacture and clearance of goods clandestinely by examining the workers and also those who have received the goods without payment of duty. In view of lack of evidence, the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal held that the charge of clandestine manufacture and removal has to be proved beyond doubt. However in the present case in absence of any evidence of removal of goods and absence of corroborative evidence such as production, absence of buyers, transportation and receipt of consideration the charges of clandestinely removal of goods are not sustainable against the Appellant. 9. Further the revenue has alleged that the looking to the power consumption it shows that the Appellant had manufactured and cleared the goods without payment of duty. I find that only on the basis of electricity consumption without showing commensurate quantity of raw material consumed, source of procurement of excess raw material, payment made to raw material supplier, excess labour involved, clearance of finished goods its transportation and receipt of consideration of finished goods, the demand cannot be made. In the case of RA Castings case supra the Hon ble High Court was of the same view and the orders was upheld by the Hon ble Supreme Court. I find that the ratio of said judgment is absolutely applicable to the present case and demands are not sustainable. 10. In view of the foregoing on merits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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