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TMI Blog2018 (5) TMI 1300X X X X Extracts X X X X X X X X Extracts X X X X ..... bills. For this financial irregularity, Department will be at liberty to initiate appropriate proceedings under the relevant law. But, in the instant case, the goods were not moved and there is no evidence pertaining to the clandestine removal of the goods - For clandestine removal, which is a serious charge, the strict evidence is required like supply of the raw-material, consumption of extra-electricity, transportation of the confiscated goods and sale of the finished goods. Unfortunately, no evidence has been collected by the Department pertaining to these aspects. When there is no clandestine removal, then no penalty can be imposed under Rule 209A of the Rules - penalty set aside - appeal allowed - decided in favor of appellant-assessee. - Excise Appeal Nos. 3396, 3935 & 3965 of 2010 - Final Order No. 51920-51922/2018 - Dated:- 21-5-2018 - Satish Chandra, President And Bijay Kumar, Member ( Technical ) For the Petitioner : Sh. V.K. Bindal, CA For the Respondent : Sh. R. K. Mishra, DR ORDER Per Bijay Kumar All the present appeals are filed by the assessee-Appellants against the Order-in-Appeal No. 16-21/CE/PKJ/CCE/ADJ/2010 dated 09.07.2010 passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for the assessee-Appellants and Shri R.K. Mishra, learned DR for the Revenue. 7. The learned Chartered Accountant has, at the strength of written submissions, submitted that no evidence of any nature was found from the premises of GTC or the franchisee units to suggest any clandestine removal of the cigarettes as nothing has been mentioned in the show cause notice. No evidence of any unaccounted purchase of raw material was found during the course of search. No excess stock of cut tobacco was ever detected by the Excise Officers and all raw materials were in order during the searches. No discrepancy has been found in the quantity of raw material or finished goods as per physical verification and records of these units as nothing has been mentioned in the show cause notice. No consignment of any raw material or finished goods was seized during the transit. Various Excise Preventive agencies were deputed for surprise checks time and again regularly on the cigarettes factories, no irregularity was noticed pertaining to the assessee-Appellants even on their surprise visits. 8. It is the submission of the learned Chartered Accountant that some additional evidence came to the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, 1989 to March, 1992, under the strict physical control and supervision of the Excise Officer who supervised the manufacturing activities very closely. For this purpose, records were maintained by the Excise Officers posted there in the diary XT-1 for movement of the goods. The Departmental Officers having been constantly present and closely supervising all the activities in the factory. 10. According to the learned Chartered Accountant, there is nothing contrary to show that the goods were cleared at any time in contravention of the provisions of Rule 9(i) without payment of duty. The clandestine removal implies a conscious intention to evade payment of duty. This inference cannot be reached when proper procedure is followed and when there is no collusion of the officers with the assessee-Appellants. No allegation of clandestine removal can be made without alleging collusion of the Departmental Officers and in this case no such allegation has been made by the authorities. For this purpose, he relied upon the ratio laid down in the following cases : (i) RDB Industries Ltd. vs CCE, Vishakapatnam, 2011 (272) ELT 65; (ii) Inderjit Sons Enterprises Pvt. Ltd. vs CCE, Jal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE vs Bansal Steel Corporation Ors. (HC-Mum), dated 12.09.2017 www. taxscan.in (iii) MEK Slotted Angles (I) Ltd. vs CCE, Belapur, (2009) 247 ELT 364 (Mumbai-CESTAT); (iv) Broadway Textiles Ltd. vs CCE, Kanpur, (1999) taxmann.com 385 (CESTAT-New Delhi); and (v) Sujana Metal Products Ltd., 2016 (335) ELT 218 (Madras) 13. Lastly, he made a request that the impugned order may kindly be set aside. 14. On the other hand, the learned DR for the Department, heavily relied upon the impugned order as also the show cause notice. It is his submission that the goods were discounted by the Bank only when the receipt of the goods were duly acknowledged by the GTC on the duplicate bills. This shows that there was actual movement of goods on duplicate bills without payment of excise duty. According to the learned DR, the additional evidences found during search in the year 1995 clearly support the contention of the Department and prove that there was procurement of unaccounted raw material and cut tobacco. It is further submission of the learned DR that physical supervision of the manufacturing units by the Excise Officers does not mean that the Excise Officers were there in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or ten thousand rupees, whichever is greater. 17. From the impugned order, it appears that the manufacture of cigarettes is subject to physical control and the Department has also prescribed a detailed Cigarette Manual which regulates every activity in connection with the manufacture of cigarettes. It was also contended that demands on the basis of clandestine removal cannot be made and established in cases where there is physical control except through unimpeachable evidence of clandestine clearance without knowledge of the departmental officers and in violation of the guidelines issued. 18. As per the ratio laid down by the Hon ble Supreme Court in the case of Audh Sugar Mills, 1978 (2) ELT J172, it was held that in the case of physical control units, cannot be held that there was suppression of facts and the assessee clandestinely manufactured and removed the goods so as to invoke the extended period of limitation. 19. Undoubtedly, in the instant case, during the period February, 1989 to March, 1992, all the franchisee units were under the stri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not have been availed in absence of the knowledge for receipt of the goods, GTC used to put the stamp of goods received though no goods were actually received against these duplicate bills. These documents were accompanied with photocopies of the original excise gate passes whereas no goods were actually received from the franchisee units on the said duplicate invoices by GTC. From the record, it appears that the bank officers accepted that the bills were discounted without any physical verification of the goods. 22. During the course of cross-examination, Mr. K.R. Nair, stated that the bill discounting facility was not extended on the basis of physical verification of goods, but the bank would go by the document representing the title of the goods. Another bank official, Mr. Venkatraman Iyer, in cross-examination has stated that the bank was dealing in the documents of title of the goods and physical movement of the goods was not within their purview. Similarly, Mr. Pramod Kumar, another official of the Bank, also confirmed during cross-examination that the banks were not physically verifying the transactions and that bill discounting may have been done on the basis of Xe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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