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TMI Blog2018 (12) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... d that was lying in the factory did not show any difference. The other evidence relied is with regard to the cash deposits made in the account of Shri Prem Kumar, who is the director of the company. The amounts in his Karur Vysya Bank account has been explained by him stating that he had other business of construction activities and amounts are with regard to such business. The department has rejected and not accepted this explanation. No verification has been done in this regard. Merely because there are certain cash deposits in the account of the director of the company, it cannot be concluded that these are amounts received from sale of clandestinely removed finished products - thus, the department has failed to establish the allegation that the appellant availed fraudulent MODVAT credit to the tune of ₹ 18,93,298/-. The demand on this count cannot sustain and therefore requires to be set aside - The department has not been able to establish clandestine clearance of finished products also and the demand on this count is also set aside. The department has not been able to establish the clandestine removal of goods or wrongful availment of MODVAT credit - the charges a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Act, 1944 was imposed on M/s. EIL. Separate penalty under Rule 209A was imposed on Shri Elangovan, MD of M/s. EIL, M/s Goyal Ispat, Shri Premkumar, Director of M/s. EIL, Shri T.K. Raghunathan, GM of M/s. EIL, Shri S.Sankar PO of M/s. EIL, Shri G. Odayappan Managing Partner of M/s. ASRM and Shri Vijay Jain of M/s. Subash Trading Co. The adjudicating authority dropped proposal to impose penalty against remaining persons like transporters, supplier of inputs / dealers etc. 1.3 An appeal was preferred by the department before the Tribunal aggrieved by the dropping of major part of the demand by the adjudicating authority. The aggrieved appellants also preferred appeals before the Tribunal. The Tribunal vide Final Order No. 853 to 859/2008 dated 7.8.2008 disposed the appeals filed by the appellants as well as the department by a common order. In such order, the Tribunal remanded the matter to the adjudicating authority to consider afresh the issue with regard to clandestine clearance and wrongful availment of MODVAT credit. However, there was a specific direction not to impose penalty on those persons whose charges have been dropped by the adjudicating authority, since department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by office of the factory, general maintenance and other connected places have not been taken into account by the adjudicating authority while arriving at the electricity consumed per heat. The quantity of waste also has been totally ignored. The appellant had paid up the duty and settled the earlier proceedings only to buy peace with department and to avoid litigation. 2.3 In any case and without prejudice, the respondent ought to have seen that for the periods between 21.3.1995 and 28.10.1995, the demand was quantified based on the maximum production the unit could make and the demand for duty on the clandestine removal determined based on power consumption to the extent of 1307.55 MTs was demanded and settled under the KVSS. So the claim of department that the DGAE notice has quantified the demand on different set of buyers compared to the earlier notice has no logic at all. The unit is not able to make production in excess than that quantified based on electricity consumption. Even if the two notices are on different set of buyers, the demand cannot sustain. 2.4 Though the appellant had requested for cross-examination of various persons whose statements were relied upon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant. If the department was relying on the evidences of the private records maintained by the transporter and other dealers, the department ought to have verified the stock of such dealer which has not been done. Since there is no discrepancy in the stock, it indicates that the appellant is not guilty of such charges of clandestine clearance of finished product. The wrong availment of credit is alleged stating that there is difference in the quantity shown in commercial invoice and the excise invoice. The difference if any is very less and of 1 to 2 MTs in few occasions and cannot form basis for alleging clandestine removal of about 1700 MTs. 2.8 The other evidence relied upon by the department is the bank account of Shri Prem Kumar who is one of the Directors. It is the case of department that he was maintaining accounts wherein cash from clandestine clearance was deposited. The said director has clearly stated that he was having other construction activities and had maintained receipts and expenditure with regard to such transactions. The department has wrongly proceeded on presumption that these are financial transactions relating to clandestine clearance of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumption was calculated from the available production log sheets during the period from October 1995 to July 1996 and it was found to be 850 units per MT. Thus, it is seen that M/s. EIL have not only suppressed the number of heats in the production log sheets during the period but have also adjusted the electricity consumption by showing inflated power consumption figures in the accounted heats. Therefore, the contention of the appellant that the quantification of demand ought to have been on the basis of electricity consumption / production capacity cannot be accepted. 3.3 The payments for unaccounted finished products were made by cash. On verification of the accounts maintained by Shri Prem Kumar, director of M/s. EIL, it was seen that one Shri Muthusamy, who was an ex-employee of Anjaneya Steel Rolling Mills (M/s. ASRM) was depositing cash in the said account maintained by Shri Prem Kumar. Shri Prem Kumar has not been able to give proper explanation for these cash deposits made by Shri Muthusamy. It is very much clear that the cash deposits are the funds received from unaccounted clandestine clearance of finished products. The department has been able to prove the unacco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence is that some katcha slips were recovered from the residence of Shri Elangovan which showed payment details of scrap. That in the commercial invoices and Central Excise invoices there is difference of one or two metric tonne of raw material (scrap). For eg. In the invoice dated 23.2.1996, the quantity was shown as 9.870 MT whereas in the commercial invoice the quantity is an additional quantity of 1.550 MTs. When the department alleges that more than 1700 MTs of MS ingots (finished products) have been manufactured and removed clandestinely, the difference of one to two metric tonnes of raw material in a few instances would not and cannot support the huge quantity of clandestine clearances alleged in the show cause notice. We are not able to find any reliable evidence supporting wrong availment of MODVAT credit. 5.4 The second allegation in show cause notice is that the appellant M/s. EIL manufactured and clandestinely cleared 1752.34 MTs of MS ingots without paying duty to the tune of ₹ 25,67,595/- during the period from March 1995 to August 1996. In the impugned order, the Commissioner has confirmed duty of ₹ 24,13,918/- It is to be stated that an earlier s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of dispute. No such thing is forthcoming in the present case. (emphasis supplied) 5.5 Even in the denovo proceedings, the department has not been able to establish the reason for applying a different formula for demanding duty for the overlapping period. We have also to mention that when we have already concluded that the department has failed to establish procurement of unaccounted raw materials and when there is no discrepancy with regard to the stock of raw materials and finished products, noted by the department, the allegation of clandestine clearance of finished products of such huge quantity has to be supported by reliable and cogent evidence which is not present before us. 5.6 Another evidence relied by the ld. AR is with regard to the transport document from the Rajarathina Transporters. It is the allegation of the department that the said transporter was used by the appellant for transporting the unaccounted finished products. However, as already stated, the penalty imposed on the transporter has been set aside by the Commissioner which implies that he has no role to play in such alleged transport of goods. This exoneration indicates that such docum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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