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TMI Blog2018 (2) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... ted following key persons: (i) Shri Y.K. Bhargava, Chief Chemist (ii) Shri Atul Rawat, Chemist (iii) Shri Rajiv Tiyagi, Chemist (iv) Y.K. Sharma, Incharge Testing (v) Shri Madanlal, Store Incharge of raw materials and finished goods and maintaining RG-1 Register. The appellants were having a factory at B-59, Wazirpur Industrial Area and had an office at 12/12, Shakti Nagar, Delhi. In such building, the first floor and second floors were used by Bhargava family as residence and the basement was used as a godown by M/s.Dynamic Laboratories, a trader purchasing goods from the main appellant and from the open market. M/s.Dynamic Laboratories, a Private Limited Company had Shri Abhishek Bhargava and Shri Anuj Bhargava as its Directors, who are the sons of Shri Rakesh Bhargava, Partner of the main appellant. The ground floor was used as an office by M/s.Cooper Pharma. On 17.3.2006, a visit of the officers took place in the factory the main appellant, premises at 12/12, Shakti Nagar, Delhi, premises at 1/1, Shakti Nagar, Delhi (Godown) and the premises at Vardhaman Tower, Roop Nagar, Delhi. During the course of search, various documents like chemist diary from the factory, Kach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained as to who could be the writer/author. There does not appear if Shri Y.K. Bhargava, Chief Chemist was ever asked about the original documents. Accordingly, in the absence of original records, such alleged recovery of documents cannot form the basis to implicate or draw any adverse inference against the appellants. 4. He further submits that a perusal of the said chemist diary shows about the names/description of some goods/medicines. Such descriptions appearing do not have any batch numbers nor provide any evidence of the same having been allegedly cleared from the factory of the appellants. The name of the appellant also does not appear therein. In fact, it is not possible to draw any adverse conclusions on the basis of such diaries. It is submitted that medicines are never sold by weight. The subject diary refers to the term 'Kg' at various pages. This fact, by itself, is sufficient to establish about such referred chemist diaries having no relation to manufacture goods. 5. It is further submitted that the statement of Sh. Y.K. Bhargava, Chief Chemist was recorded on 05.03.2007 showed that such diaries related only to issuance of material for any lot. According to the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers show that such lots have not been tested and packed, even if produced. 8. It is further submitted that the statement of Shri Y.K.Bhargava was not conclusive, the appellant sought his cross examination, which was not allowed. Thus, the appellants have no opportunity to cross examine Shri Y.k.Bhargava. It is well settled that where the statement of a witness is not allowed to be cross examined, such statement cannot be in any proceedings is admissisble as held by Hon'ble High Court of Punjab & Haryana in the case of Jindal Drugs Pvt.Ltd.-2016 (340) ELT 67 (P&H) wherein it has been held that as per Section 9D of the Central Excise Act, 1944, if a statement of any witness has been relied upon, the same is required to be examined in chief thereafter cross examination is required to be allowed to the appellant. Admittedly, it has not been done in the present case, therefore the statement of Shri Y.K.Bhargava is not reliable piece of evidence. (b) demand of Rs. 3,52,399/- with education cess of Rs. 7,048/- and Rs. 31,354/- with education cess of Rs. 627/- by relying on the File No.1 and File No.2 recovered through panchnama dated 17.3.2006 drawn at Vardhman Towers, Roop Nagar, Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed. 11. With regard to the demand of Rs. 20,072/- for the period 2002-03 and Rs. 2,33,757/- for the period 2003-04 by relying on File No.6, it is his submission that the premises are partly the residence of the Bhargava family. The basement of such building belongs to M/s. Daynamic Lab, who is trader and thereby purchases goods not only from the main appellant but also from the open market from different suppliers. The panchnama and annexure relates to the documents resumed from M/s. Daynamic Lab Pvt. Ltd. Such file pertaining to the period from 2004 onwards and accordingly the same is not relevant with the period 2002-03 and 2003-04. Some of the slips of File No.6 also show repacking. Accordingly, the confirmation of demand for the year 2002-03 on the basis of File No.6 recovered from M/s. Daynamic Lab Pvt. Ltd cannot form the basis to confirm such demand. 12. With regard to the demand of Rs. 10,87,204/- and education cess of Rs. 21,744/- based on Lotus Note Book was recovered through panchnama dated 17.2.2006 from the premises at Rajendra Vardhman Tower, Roop Nagar, Delhi, Ld. Counsel submits that Shri Abhishek Bhargava in his statement has explained about the Lotus Notebook ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. Accordingly, the demand needs to be set aside. 14. It is further submitted that even Shri Rakesh Bhargava, in his statement, did not admit of having received and utilized the material from M/s.G.K. Pharma. The kachha slips recovered from M/s.G.k. Pharma were not even in the hand writing of Shri Rakesh Bhargava. Thus, there is no tangible evidence about M/s. Cooper Pharma having used and utilized the material of M/s.G.K.Pharma in their manufacturing. The demand, thus, confirmed is based on assumptions and presumptions. 15. With regard to the statements having been recorded of Shri Rakesh Bhargava, Abhishek Bhargava, Anuj Bhargava, it is submitted that the alleged statements being uncorroborated and cannot form basis to demand duty. It is his submissions that is well settled that mere alleged admissions in the statements are not enough to establish the charge of clandestine removal. It has been a consistent view of this Tribunal that unless there exists on record corroborate evidence, it will not be proper to merely rely on the statements for establishing the charge of clandestine removal. To support his contention, he relied on the decision of the Tribunal in the case of Deven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption fine on M/s.Dynamic Laboratories, it is submitted that in respect of the stocks lying at the premises of M/s.Dynamic Laboratories, the same were duly covered by the Central Excise invoices issued by M/s.Cooper Pharma. Accordingly, such goods have wrongly been confiscated, particularly, when the Central Excise invoices of duty paid has been produced. Accordingly, redemption fine of Rs. 1 lakh imposed needs to be quashed. 21. It is further submitted that as there is no contravention of Central Excise Rules by the appellants, the penalties imposed on them either under Section 11AC of the Act or under Rule 26 of Central Excise Rules need to be set aside. 22. On the other hand, the arguments advanced by the learned Counsel has strongly objected by the learned AR who submitted that the statements recorded during the investigation or thereafter have evidentiary value, the same has not been retracted. Therefore, the statements are reliable piece of evidence as held by this Tribunal in the case of P.B. Nair C & F Pvt. Ltd. Vs CC (Gen.), Mumbai-2015 (318) ELT 437 (Tri.), K.K. Saidalavi Vs. CC-2006 (199) ELT 813 (Tri.) and the decision of Hon'ble Apex Court in the case of Shri Surjee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excisable goods manufactured by them. It is not disputed that the said goods were found at the premises of the appellant and it is established that the appellant had received the goods clandestinely from the manufacturing factory and kept for packing and clandestine removal of the excisable goods manufactured by them. The premises at 12/12, Shakti Nagar, Delhi, Head Office of the main appellant and office-cum-godown of M/s. Dynamic Laboratories Pvt. Ltd. was searched on 17.03.2006. It is his contention that it is established fact that physical stock taking of goods lying in the basement of the premises relating to M/s.Dynamic Laboratories Pvt.Ltd. revealed that goods of the appellant valued at Rs. 7,58,534/- involving Central Excise duty of Rs. 1,23,792/- were found in excess of the recorded balance in the computers/records of M/s.Dynamic Laboratories Pvt. Ltd. Shri Abhishek Bhargava, Director of M/s.Dynamic Laboratories Pvt. Ltd. could not produce any documentary evidence supporting the lawful possession of the said finished goods even till the date of issue of show cause notice dated.15.09.2006. Shri Rakesh Bhargava, Partner and Manager of the appellant in his statement dated 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation, a show cause notice dated 19.7.2007 was issued to the appellants. The demands have been confirmed on the basis of Chemist Diaries which have been recovered from Shri Y.K.Bhargava, who has made entries in the diaries admitted that the entire quantity of finished goods removed without payment of duty was despatched to M/s.Dynamic Laboratories Pvt. Ltd. on the directions of Shri Rakesh Bhargava, Working Partner. 27. Further, with regard to the demand of Rs. 3,59,447/- and Rs. 31,981/- and Rs. 11,08,948/- based on File No.1 and No.2 & Lotus Note Book, It is submitted that the katcha slips marked 'Cooper' in the said files contained the details of removal of finished goods from their factory to M/s.Dynamic Laboratories Pvt. Ltd. while others pertained to sale of goods by M/s.Dynamic Laboratories Pvt. Ltd. to their buyers. It is further submitted that Shri Yogesh Kumar, Partner of M/s.Shakti Bottle Agencies, Delhi when confronted with File no.2 admitted that they supplied 5.6 lacs of measuring cups and 8.5 lacs of droppers to the appellant for which payment was received in cash and he failed to submit any bills. Moreover, Shri Abhishek Bhargava admitted that the payment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded period of limitation as there was suppression of production and clearances without payment of duty, extended period of limitation is applicable in this case. He further submits that the duty of demands are rightly confirmed alongwith interest and penalties on the all the appellants are imposable. Therefore the impugned orders are to be upheld. 31. Heard both sides and considered the submissions. 32. On careful consideration of the arguments advanced by both sides, I find that in this case, the charge of clandestine of removal of the goods has been made against the appellant on the basis of chemist diaries recovered from the Chief Chemist, the main evidence and on the basis of statements recorded thereof. I have examined the chemist diaries maintained by Chief Chemist and have gone through the contents of the diaries. Some of the entries in the Chief Chemist are reproduced below:- 33. On-going through the extract of these documents, which reveal that the Chief Chemist diaries showed that the raw material issued for manufacturing of the goods. The document does not reveal that the fact that the raw material issued for manufacturing has actually been manufactured whereas centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be relied upon to allege the clandestine removal of the goods. Moreover, in the case of Arya Fibres Pvt.Ltd. (supra), this Tribunal has laid down the guidelines for alleging clandestine removal and para 40 of the said order is reproduced below:- 40. After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well-settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenue which mainly are the following : (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions; (ii) Evidence in support thereof should be of : (a) raw materials, in excess of that contained as per the statutory records; (b) instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty; (c) discovery of such finished goods outside the factory; (d) instances of sale of such goods to identified parties; (e) receipt of sale proceeds, whether by cheque or by cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitially differed, the matter was referred to a third Member, who held that clandestine manufacture and clearances were not established by the Revenue. We are not going into it in detail, since the learned Counsels on either side may not have had the opportunity of examining the decision in the light of the facts of the present case. Suffice it to say that the said decision has also tabulated the entire case-law, including most of the decisions cited before us now, considered them, and come to the above conclusion. In yet another decision of a co-ordinate Bench of the Tribunal [Pan Parag India v. CCE, 2013 (291) E.L.T. 81], it has been held that the theory of preponderance of probability would be applicable only when there are strong evidences heading only to one and only one conclusion of clandestine activities. The said theory, cannot be adopted in cases of weak evidences of a doubtful nature. Where to manufacture huge quantities of final products the assessee require all the raw materials, there should be some evidence of huge quantities of raw materials being purchased. The demand was set aside in that case by this Tribunal. 34. In view of the guidelines given by this Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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