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TMI Blog2017 (2) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of the respondent’s company. Moreover, there have been repeated retraction, verifying the position and as such the alleged admission is of no help to revenue. The comparative study clearly sets out that the loose papers found at the time of inspection or search do not belong to the respondents and as such the learned Commissioner appeals have rightly set aside the demand based on the loose papers. Further, it is settled legal position that the documentary evidence prevails over the oral evidence - the Department has not discharged the burden of proof, as required in the matters of alleged clandestine removal. Appeal dismissed - decided against Revenue. - APPEAL No. E/3038/2005-EX[SM] - A/70390/2018 - Dated:- 21-2-2017 - Mr. Anil Choudhary, Member (Judicial) Shri Rajeev Ranjan, Deputy Commissioner (AR), for Appellant Shri Amit Awasthi, Advocate, for Respondent Per: Anil Choudhary The issue in this appeal by Revenue is whether the learned Commissioner (Appeals) have rightly held that the allegation of clandestine removal and/or manufacture, based on loose papers (recovered in search/inspection) is not proved against the respondent. 2. The brief fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Folder No. 1 : 01. Pages 01 to 167 Daily production report regarding the goods manufactured by the party alongwith details of inputs consumed. 02. Pages 169 to 177 265 to 279 Details of rotographic cylinders. 03. Page 179 281 Details of payment in respect of cylinders. 04. Pages 181 to 257, Pages 261 to 263, Pages 289 to 295 Details of finished goods dispatched to different parties. 05. Pages 283 to 287 Details of orders in respect of Raw materials. B. Folder No. 2 : 1. Page 1 to 57 Statutory records maintained on computer in place of RG-1 and RG-23A Pt. Etc. 2. Page 58 to 61 Date wise details of raw materials consumed during April, 03. 3. Page 63, Page 67 to 73 Details of production and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h had been used to denote the goods manufactured by Keymen Laminators Private Ltd. and intended to be sold without entering in their statutory records, whereas R denoted the random sale in cash to different/valued customers, who do not appear in the regular list of purchasers and to whom they cleared the goods without entering in the statutory records. 6. Shri Gupta was asked to clarify the mode of sale of unaccounted finished goods manufactured in the factory. In reply he submitted in his statement dated 02 June, 2003 that they used to sell the said unaccounted goods to different parties in cash as per buyers specifications. Regarding the details of purchase of raw materials to manufacture the unaccounted goods, he deposed that they purchased the raw materials in cash from local market to manufacture and sell unaccounted goods. However, he also stated that in some cases, the buyers also provided the material for the purpose of lamination and printing. The Officers asked him to produce the purchase bills of raw materials used, to manufacture the unaccounted goods. But Shri Gupta told officers that the same are not available with them. It was further informed that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of packing materials bearing brand names: Dum Gutka, Sathiya, Humdum and Humdum Carry Bags, he accepted that the said slips contained the details of the goods pertaining to his firm and the goods mentioned in the slips have already been received in their factory. He also stated that no invoice covering the goods had been received from Keymen Laminators and a letter dated 10th May, 2003 was written to them for providing the bills/invoices. In response thereto the Keymen Laminators issued debit note dated 18th May 2003 in their name, wherein it was stated that ₹ 89,122/- is to be paid by Kothari Food and Fragrances towards supply of 235.150 KG laminates valued at ₹ 39,975/-, at 214.850 KG +152.20 KG valued at ₹ 49,147/- delivered on 8th May 2003. Accordingly, it appeared that respondent had cleared excisable goods - packing material without issuing any invoice and discharging the duty thereon. 10 Raghunath International Ltd. was also visited on 25 July, 2003 and statement of Shri Rajesh Agarwal Authorized Signatory cum factory Manager was recorded. On seeing the resumed clearance slips containing details of clearances of packing materials of Sir Brand Pan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its directors by filing defence reply stating that the proposed demand is based relying upon various unsigned computerized printed paper sheets and handwritten sheets found lying on the table of the director of the Keymen Laminators. These paper sheets were kept into folders and marked as RUD Nos. 2(2A) and RUD No. 2) and that the loose papers marked as nos. 58 to 123 (Set No. 2(b), RUD No. 2B) respectively. It was further stated that in the initial statement taken of the director at the time of search, Shri Manish Agarwal had stated explaining the loose papers that only some of those papers pertain to their business activity. Further on 12 May, 2003 Shri Siddharth Gupta the other director in response to Question No. 5 had stated that the Keymen Laminators manufacture carry bags for KP Pan Products and that no printed laminated Roll for them or under the brand were manufactured. He had also clarified that most of the loose papers could not be explained by him as he was not aware about the author of those papers. Further reliance was placed on the statement dated 20th May 2003 of Shri Manish Agarwal - Director, where he had clearly stated that he was not aware as to whom such loose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not owned by them cannot be relied upon and/or used against them, being wholly unrelated. Unless the person or auther making such documents is examined or identified. No such effort was made during investigation. They had got examined the machines installed in their factory by an approved Chartered Engineer who has given a certificate showing per hour unit consumption of power by each of such machines. It was further submitted that they had a power connection of 99 KVA and their plant was generally operated on the Electricity only. The diesel purchased was normally used in boiler to produce hot air for use in printing and lamination. Further on examination of the loose papers, alleged to be belonging to the respondent, reveals that these papers belong to some factory where production was carried on only with the help of generator, example, RUD Nos. 47, 79, 83, 87, 91, 95 and 99 clearly indicated there was no production on the dates 23rd April, 22nd April, 21st April, 20th April and 19th April, 2003 because the generator was not in working condition. Whereas on these days, production in the factory of the respondent is duly accounted for in the production account. The comparative st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to lay hands on actual owner of those loose papers, because the loose sheets/papers contained in folders, resumed from directors room, and the retraction dated 24th May, 2003, was also later on withdrawn by Shri Sidhartha Gupta, as such, it cannot be concluded that documents do not belong to the party/respondents. Moreover, the burden to provide the name of the real owners, if any of the resumed documents was upon the person/party from whom the records were recovered. The learned Appellate Authority s observation that- I do not find much substance in these findings of the Learned Adjudicating Authority in view of his categorical conclusion that the statement was being tendered under some pressure working upon the appellant. It is also not justified, in view of the fact that nowhere in his order he has discussed as to what pressure was applied by the Department. Contrary to this, the Appellate Authority having himself observed that the ingredients of any pressure upon the appellant are absent. 15. Further, the observation of the Commissioner (Appeals) that no enquiry from raw material supplier to establish the link of clandestine removal, is not correct, inasmuch as no details o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance in these findings of the learned Adjudicating authority in view of his categorical conclusion that the statement was being tendered under some pressure working upon the assessee/appellant. That no statement of the supervisor was recorded, that no positive or affirmative evidence establishing the charge of clandestine removal was adduced by Revenue. The entire confirmation of demand is based on probability, as is evident from the observation of the Adjudicating Authority in Para-7 of the Order-in-Original/ wherein it has been observed that, it is almost impossible to recover/collect the direct evidences to establish with certainty that there has been suppression of production and clandestine removal. What is required to establish is the preponderance of probability and the revenue has established such preponderance on the basis of slips found in the shape of loose papers. Further, the case relied upon by revenue is not applicable as there is no categorical admission of clandestine removal by the director Shri Sidhartha Gupta. Further, the alleged admission of clandestine removal has been retracted at the first instance. Further, it is stated that the charge of clandestine remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al by the director of the respondent s company. Moreover, there have been repeated retraction, verifying the position and as such the alleged admission is of no help to revenue. Further, I find that Shri Sidhartha Gupta was not examined in the course of the adjudication proceedings, which is also in gross violation of Section 9D of the Act. Thus, the statements recorded during investigation cannot be the basis of confirmation of demand. Further, the products mentioned in the loose sheets are output not manufactured by the respondents in their works. Further, the quantity of waste lying in stock as entered in production register, the quantity of fresh goods lying in stock as entered in production register, there was no material mismatch, the respondent had got examined the machines installed in their factory, duly verified by the Chartered Engineer who have given a certificate, showing per hour unit consumption of power by each of such machines. The connected load of 99 KVA was available in the plant of the respondent. They generally operated on electrical energy supplied by the Electricity Board. They used diesel in boiler to produce hot air for use in printing and lamination. Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X
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