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TMI Blog2019 (7) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... ri of TCC Carriers have been relied upon - HELD THAT:- The Appellant has challenged the manner of taking the data from pen drive as well as the data of the pen drive itself. The Pen drive data is said to be record of clandestine clearance and the same has been taken from the office computer, but we find that no computer has been identified from which such data was copied. There is no source computer on which such data/ record of alleged clandestine clearances was being maintained by the Appellant concern M/s KLMPL. It leads to serious doubt about the credibility of such data found in pen drive - There is no findings as to on whose instructions such data was maintained by him. Shri Shri Sukhdev alias Saral Patidar has never clarified as to for what purpose the data was copied by him in his pen drive, nor has he said as to from which computer such data was copied. In such facts, the data found in the pen drive is not a reliable piece of evidence. No evidence in the form of checkpost record has been adduced to show that the goods were transported from Pithampur to Indore. Even, the loading challans of M/s Parnami Transport shows transportation of goods from Indore to Delhi and even in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncern. It is also a fact that Shri Shailesh Yadav was also working for M/s Sunshine Marketing, as also stated by Shri Dinesh Mittal, partner of M/s Sunshine Marketing. M/s Sunshine Marketing were engaged in anodizing and were undertaking such activity on behalf of other suppliers in addition to M/s KLMPL. Further, even if the data found in the pen drive of Shri Shailesh Yadav is matching with the pen drive data of Shri Sukhdev Patidar, it cannot be a conclusive ground to hold that the goods were clandestinely cleared by M/s KLMPL to M/s KI. It is an accepted fact from the show cause notice that in premises of M/s KI, the goods were also being received from M/s Vimsar, M/s Krishna Profiles as well as other persons. In such case it cannot be alleged that the goods found to be entered in seized records of M/s KI or M/s Sunshine (which was also operating from the same premises) belong to the Appellant - KLMPL. The Pen drive of Shri Shailesh Yadav is his personal pen drive and were not maintained by him under the instruction of Appellant. Nor the same is corroborated with any records of Appellant firm to show that the same were clandestine removed goods. In such case, it cannot be concl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vir Maurya, it cannot be said that the goods were transported clandestinely through such vehicle and therefore there is no ground to demand duty. Demand of 21,24,217/- on the ground that the Appellant had availed credit of duty on the basis of bills of entries of the goods, i.e. Aluminum Scrap, shown to have been purchased on high sea sale basis from M/s Moongad Aluminium and also on the basis of invoices issued by M/s Satya Sales Corporation, Mumbai - HELD THAT:- The allegation of clandestine production vis- -vis allegation of non-receipt of raw material is contrary to each other. The payment against the purchase of imported scrap has been legally made against valid documents for availing credit and even if the goods have first reached Indore and then brought to Appellant s factory, it does not cast a doubt on non-receipt of imported goods. In such view of the facts, we find that the credit availed by the Appellant on imported scrap cannot be denied - In case of credit of 2,41,739/-, the adjudicating authority has denied the same on the invoice issued by M/s Satya Sales, Belapur. It is alleged that as the invoices do not show mode of transportation and vehicle registration numbers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, Advocates for the appellants. Shri R.K. Mishra, Authorised Representative for the respondent. ANIL CHOUDHARY: The present appeals has been filed by M/s Kuchhal Light Metals Pvt. Ltd, (KLMPL) M/s H.M. Enterprises, Shri Manohar Sharma, Shri Sukhdev alias Saral Patidar, Shri Ritesh Gupta (M.D) and M/s Kuchhal International (KI) against Order-in-Original No. 65-66/COMMR/CEX/IND/2017 dated 23.01.2017 passed by the Commissioner of Central Excise, Indore. 2. The brief facts of the case are that the Appellant - M/s KLMPL is engaged in the manufacture of Aluminum profiles/billets/ logs etc. falling under chapter 76 of Central Excise Tariff Act. They are also availing facility of cenvat credit of central excise duty paid on inputs. Based upon the investigation, they were issued show cause notice dated 16.12.2014 demanding duty of ₹ 2,22,62,157/- alleging that they have removed finished goods without payment of duty. A cenvat credit of ₹ 21,24,217/- was also proposed to be denied and recovered on the ground that, they have availed cenvat credit without receipt of goods on the basis of Bills of Entry, in connection with import of Aluminum Scrap and on invoices issued by M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made on ground of availment of cenvat credit on the basis of Bills of Entry and invoices, without receipt of goods in factory. Further, demand of ₹ 1,53,163/- pertaining to show cause notice dt 31.05.2013 was also confirmed on the ground that M/s KLMPL has cleared goods involving duty of ₹ 1,06,164/- to M/s. KI, goods involving duty of ₹ 23,606/- to M/s Sunshine Marketing and goods involving duty of ₹ 23,393/- to M/s Baser Sales. Also goods seized from premises of M/s KI and M/s Sanmati Fabricators were ordered to be confiscated. Penalty was also imposed upon M/s KLMPL and Others. Hence the present appeals. 2. The appellant M/s Kuchchal Light Metals Pvt. Ltd., (KLMPL) are manufacturer of aluminium profiles and aluminium billets. The unit is situated at Pithampur. Mr. Ritesh Gupta is the Managing Director of the company. 3. M/s Kuchchal International (KI) is the Proprietorship concern of Mrs. Yogita Gupta w/o Mr. Ritesh Gupta engaged in the business of anodizers and powder coating on aluminium profile, section received from the appellant KLMPL and also from other customers. Besides this they are also into trading of aluminium profile / section. 4. M/s H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng upon the alleged decoded data of pen drive, the procedures for retrieval of data from electronic device was not followed. In terms of Section 36 B of the Central Excise Act, sub-section (2) for admissibility of a document reproduced from computer, the conditions to be followed are: (a) Identifying the document containing the statement and describing the manner in which it was produced; (b) Giving such particulars of any device involved in the documents as may be appropriate for the purpose of showing that the document was produced by a computer; (c) Dealing with any of the matters to which the conditions mentioned in sub-section (2) relate ; and this should be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities should be there. 8. He submits that in the present case, no such required certificate is available. The procedure and requirement of Section 36B were completely ignored and done away by the investigating authority and, therefore, the evidences on which the entire case is built upon is not admissible as valid legal evidence. The retrieval of data was done under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so-called codes in pen drive were decoded by the officer, because it is apparent that without someone's involvement, the abbreviations /code cannot be easily decoded, as has been mentioned in the notice. Clearly, the person in whose pen drive the data was located, should have been questioned which was not done. Shri Ritesh Gupta, Managing Director, in his statement has clearly stated that the data does not belong to them nor he has instructed any person to maintain such data. He never directed Shri Sukhdev alias Saral Patidar to keep the information / data on any computer. Thus the data found in the pen drive of Shri Sukhdev alias Patidar cannot be made basis to make allegation against the Appellant. Also the revenue has relied upon the challans of Parnami Transport to allege that it contains the details of clandestine clearance of goods. It is only an assumption of the revenue that in challans of M/s Parnami Transport, wherever the name 'Ritesh' occurs, the same pertains to the goods cleared by M/s KLMPL. Shri Ritesh Gupta in his statement has clearly denied that the goods belong to M/s KLMPL. The challans are own internal record of the transporter and no bilty showing transporta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very of goods is not at all required. Such statement has got no evidentiary value, but just an attempt to involve the appellant in fictitious case. He submits that in para-28 of the Show Cause Notice it has been attempted to co-relate "Score Board Out" details with the transport documents in the search conducted on 4.12.2012 at the transporter's premises whereby loading challans were seized. However as admitted in the show cause notice 32 challans mentioned in data contained in "Score Board Out" were not available / could not be recovered during search. The investigating officer though has seized all the documents in search operation had again called for the said 32 challans by writing a letter and the transporter in response submitted 19 challans supporting the figures of "Score Board Out" and for the rest of challans, it was informed that they are not traceable. The retreival of such 19 challans is not convincing since the challans, which could not be unearthed during the search were being called for by correspondence and the transporter meekly submitted some of these documents. It clearly shows that the loading challans were fabricated, just to support the data of pen drive. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int of investigation was photocopies of 37 invoices. However neither the source of such photocopy is known nor any acknowledgment of buyers is there. There is no corroborating evidence from the Appellant premises, which can show that the invoices were issued by the Appellant. Thus the demand is not sustainable as on the basis of photocopies, source of which is not known, and without any corroborative evidence, it cannot be said that the Appellant made any clandestine clearances. He relies upon the Tribunal judgments in the cases of Hiralal Punj Badgujar Vs. CCE 2018-TIOL-2166-CESTAT - MUM and M/s Jalan Concast Ltd Vs. CCE 2018-TIOL-3167 - CESTAT (All.). 9. In reference to demand of ₹ 9,31,658/-, he submits that the same has been made on the ground that the goods were cleared through transporters, M/s Parnami Transport and M/s TCC Carriers, to the buyers located at places other than Delhi. There is no corroboration of pen drive, delivery challan of M/s Parnami Transport, of details extracted from the personal diary of Shri Atri of M/s TCC Carriers, with any independent evidence. The clearances shown to have been made are not corroborated by any evidence. No buyers were identi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is apparent from the statement of Shri Ritesh Gupta, director of M/s KLMPL that he has refused the authenticity of such data. No entry of alleged clandestinely removed goods were found in the books of M/s Sunshine Marketing.There is no evidence of transportation of goods. He draws our attention to the statement dt 02.12.2013 of Shri Mazher Hussein, proprietor of M/s Hardware Stores to whom the goods has been shown to have been cleared, wherein he has clearly stated that they were purchasing aluminum section from the Appellant and the payment of the same was made through cheques or RTGS. He also stated that they have purchased aluminum section on legitimate invoices. That the entries pertaining to unaccounted sales and the payments in cash were not found in his record, hence he cannot comment upon the same. Further, in his statement dated 13.2.2014, he also stated that aluminum section purchased from M/s KLMPL, was on FOR basis. That the code 'HH' found in alleged records does not indicate name of his concern. The entries shown in their name do not belong to them and the entries shown in the books of M/s KI or cash transaction in personal diary of Shri Ritesh Gupta and pen drive do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant, and, therefore, it cannot be said that the clearances by M/s Kucchal International to M/s HM Enterprises, were for goods manufactured by the Appellant. There are no corroborative evidence to show that the goods were cleared to M/s HM Enterprises by the Appellant. 13. In case of demand of ₹ 8,09,315/-, he submits that the demands were made on the ground that M/s KLMPL had cleared aluminum dross and chips to various buyers, and found from the pen drive of Shri Sukhdev alias Saral Patidar as corroboration of the same has been sought to have been made from diary of Shri Ritesh Gupta. He submits that except pen drive of Shri Patidar there are no evidences to show that the goods were cleared by the Appellant. The SCN has relied upon an amount of ₹ 3,99,280/- shown to have been received, in the diary of Shri Ritesh Gupta, whereas Shri Gupta in his various statements has clearly denied the data maintained in the pen drive and even stated that he has not instructed either to maintain such data, nor the goods were cleared. He also refused that the diary pertains to clearances of any clandestine removal of goods. No buyer of such goods or transportation evidence has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also dealing with the goods supplied by Aluminium Traders and perhaps the material receipt report is maintained consignment wise, even with indication of type of profile. The show cause notice has mentioned that material receipt report on a particular date is compared with the invoice issued on that particular date by the manufacturer and the difference is assumed as clandestine removal. This is illogical as it is not necessary that removal on a particular date by the manufacturer is received in the premises of anodizer on the same date. No evidence like payment of any amount, transportation is appearing. Shri Patni of M/s Sanmati fabricator in his statement has clearly stated that being an anodizer he takes orders for anodizing from buyers of the goods and it is not known to him whether the actual buyer of the goods is in receipt of any excise invoice issued by the factory. In fact the anodizer has no business to verify, whether there is an invoice unless he is the direct buyer of the goods. That 1351.9 kgs. was received by M/s Sanmati Fabricators on account of Baser Sales Corporation, said to have been retrieved from records of M/s KI and as they could not produce any invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Appellant. That even the stock verification was done on the basis of eye estimation, which clearly shows that the allegations are devoid of any reasoning and the confiscation of goods and demand of duty is not sustainable. Reliance based on pen drive of Shri Yadav in isolation cannot be a reliable piece of evidence as the same was maintained by Shri Yadav in his own capacity. Records found of M/s KI are not binding upon the Appellant. Moreover, there are no evidences of transportation of such goods from the Appellant factory. He lastly submits that in a catena of cases, it has been held that to prove clandestine removal, the Revenue should present clinching evidences in the form of purchase of unaccounted raw material, use of electricity, sale of finished goods, quantity of raw material consumed, difference in stock of inputs, clandestine removal, mode and flow back of funds and the demands cannot be made on the basis of presumptions and assumptions. He relied upon the judgments in the cases of Continental Cement Company - 2014 TIOL - 1527 - HC-ALL, MSP Steel & Power Ltd - 2017 (357) E 275 (Tri), Golden Steel Corporation Ltd - 2017 (347) ELT 570 (Tri), Sidhartha Tubes 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regards remaining demands, he submits that the pen drive of Shri Shailesh Yadav, employee of M/s KI contains the data of receipt of goods from M/s KLMPL and subsequent clearance to various other firms which were also recorded in various records seized from the premises of M/s KI, and as per the statement of Shri Shailesh Yadav as well as partners of M/s Sunshine, who have been using the premises of M/s KI. 17. In case of demand on Aluminum dross etc., he submits that the clearance details of the same are appearing in the pen drive of Shri Shailesh Yadav and registers maintained by him. Some cash transactions were also found in diary of Shri Ritesh Gupta, which shows that the Appellant has cleared aluminum dross etc. without payment of duty. 18. He submits that the Appellant has availed cenvat credit on Bill of Entry and also on invoices issued by M/s Satya Sales, without actual receipt of goods. He submits that the statements of CHAs, transporters and their employees, showed that the goods shown to be purchased by M/s KLMPL on high sea basis, were transported to M/s Mungad Aluminum, which is apparent from the gate pass issued by M/s Concord. In case of invoices issued by M/s Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such facts, the data found in the pen drive is not a reliable piece of evidence. The Managing Director of Appellant concern, Shri Ritesh Gupta, in his statement has denied the data to be pertaining to the Appellant concern as well as stated that such data was not maintained under his instruction or directions. The data of the pen drive is said to have been corroborated with loading challans of M/s Parnami Transport and diary of Shri Ritesh Gupta. However we find that the reliability of loading challan is questionable as no copy of such loading challans were found by the officers from the Appellant and the same were retrieved solely from the office of the transporter, M/s Parnami Transport, which is third party. The loading challans are internal documents of the transporter with no connection with Appellant firm. There is no acknowledgment of the Appellant on such loading challans. Further no LR of the transporter of the Goods Receipt Note has been found, which is an independent evidence. No statement of the driver has been recorded to show that the goods were transported. No evidence in the form of checkpost record has been adduced to show that the goods were transported from Pith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... data was generated/ copied/ prepared on Pen drive. The pen drive and personal diary of Shri Atri of M/s TCC Carriers are third party documents and do not show any connection with the Appellant for the alleged clandestine clearances. Therefore, we do not find any reason to demand duty on such alleged clearances. Though we have discarded the evidentiary value of the pen drive, diary of Shri Ritesh Gupta and other evidences relied upon by the Department, we, however, also find that the Revenue has not followed the procedure prescribed under Section 36B for retrieval of the data. The sub-section (2) of Section 36B of the Central Excise Act states as under:- (a) Identifying the document containing the statement and describing the manner in which it was produced; (b) Giving such particulars of any device involved in the documents as may be appropriate for the purpose of showing that the document was produced by a computer; (c) Dealing with any of the matters to which the conditions mentioned in sub-section (2) relate ; and this should be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; (ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity; (iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and (iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity. 22. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied : (a) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on his own analysis. 7.2 In Para 6.4 of the Order-in-Original dated 29-5-2009, in the case of Appellant No. 2, it is observed by the adjudicating authority that since an amount of ₹ 1,88,00,000/- was received by Appellant No. 2 from 'Sunderlal', therefore, the remaining amount of ₹ 3,04,21,230/- appears to be attributable to the sale proceeds of M.S. Ingots clandestinely received by Appellant No. 1. The findings of the adjudicating authority are thus clearly based on presumptions, assumptions and surmises when the computerized documents relied upon by the Revenue are not admissible evidences as recorded in Para 7.1 above. Further, in the case of Oudh Sugar Mills Ltd. v. Union of India [1978 (2) E.L.T. (J172) (S.C.)] it is held by Apex Court in Paras 7, 11, 13 to 15 that any demand calculations based on unwarranted assumptions cannot be accepted. 8. Further a case of clandestine removal cannot be upheld on the basis of certain statements alone as held in the case of Commissioner of Central Excise v. Saakeen Alloys Pvt. Ltd. [2014 (308) E.L.T. 655 (Guj.)] wherein Gujarat High Court rejected the appeal of the Revenue by making following observations in Para 10. "10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions where Tempo Nos., were same as in the purchase invoices of the same date, the transactions were genuine and actual delivery of goods took place and further, the transactions were genuine where material supplied was less than 6 tons." 8.3 In the present proceedings there is no confessional statement recorded during investigation that appellants have indulged in any clandestine manufacture and clearance of goods based on documents recovered from the residential premises of Shri Sanatan Maity. There is also no evidence on record as to from where the raw materials for manufacturing of M.S. Ingots and Re-rollable products manufactured by appellants were procured. Alternately there is also weight in the argument of the appellants that M.S. Ingots alleged to be clandestinely cleared by Appellant No. 2 are not sufficient to manufacture quantities alleged to have been manufactured and cleared by Appellant No. 1. 8.4 The above factual matrix of the current proceedings only convey a strong suspicion against the appellants that they are undertaking clandestine manufacture and clearance of dutiable goods. As already observed by the Courts any suspicion, however grave, cannot take t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terials required for production of huge quantity of final product were obtained by the assessee in a manner which is not in its regular course of its business. It stands held by the Tribunal in the case of Mohan Steels Ltd. reported in 2004 (177) E.L.T. 668 (Tri.), that duty demand cannot be confirmed unless it is shown that the manufacturer had procured all the raw materials required to manufacture the goods. There is a long list of decisions and reference to refer to all of them may not be necessary as it is a settled law. Similarly, the Tribunal in various cases, as detailed below, has held that charges of clandestine removal cannot be levelled or confirmed on the basis of private records, the authenticity of which was doubted by the manufacturer without any corroborative evidence and the private records/registers of third party cannot be the sole basis for arriving at the clandestine removal in the absence of corroborative evidences. (i) Dalmia Vinyls P. Ltd. - 2005 (192) E.L.T. 606 (Tri.-Bang.) (ii) Chemco Steels P. Ltd. - 2005 (191) E.L.T. 856 (Tri.-Bang.) (iii) C.M. Re-Rollers & Fabricators - 2004 (168) E.L.T. 506 (Tri.-Del.) (iv) TGL Poshak Corpn. - 2002 (140) E.L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Similarly, in the case of Ratna Fireworks reported in 2005 (192) ELT 382 (Tri.), it was observed that though mathematical procedure is not required to establish the clandestine removal but that does not mean a fact could be proved without sufficient evidence. The Hon'ble Supreme Court in the case of Anjlus Dung Dung v. State of Jharkhand reported in (2005) 9 SCC 765 observed that suspicious however strong cannot take place of proof." 9. In view of the above observations and the settled proposition of law appeals filed by the appellants are required to be allowed, except to the extent indicated in Para 10 below. 10. Learned Advocate submitted that the clandestine manufacture and removal of the goods cannot be upheld based on the printout of the data contained in the USB drive without following the requirement of condition of Section 36B of the Central Excise Act, 1944. Section 36B of the said Act provides admissibility of microfilms, facsimile copies of documents and computer printouts as documents and as evidence. Clause (c) of Section 36B(1) states that the statement contained in a document and included in a computer printout would be an evidence if the condition mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence to support the clandestine removal of the goods. It is noted that the requirement of certificate under Section 36B(4) is also to substantiate the veracity of truth in the operation of electronic media. In the case of M/s. Premier Instrument & Controls Ltd. (supra), the Tribunal has held that the printout of the personal computer of the company's officer, had not fulfilled the statutory condition laid down under Section 36B(2) of the Act and the demand is not sustainable. The relevant portion of the said decision is reproduced below: - "9. On the demand of duty on waste and scrap, again the appellants have made out a strong case on merits. The demand covering the period November, 1993 to September, 1998 is based on certain computer printout relating to the period February, 1996 to September, 1998. These printouts were generated from a personal computer of Shri G. Sampath Kumar, a junior officer of the Company, whose statements were also recorded by the department. Admittedly, whatever facts were stated by Shri Sampath Kumar, in his statements, were based on the entries contained in the computer printouts. The statements of others, recorded in this case, did not disclose a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wful control over the use of the computer. The computer was not shown to have been used regularly to store or process information for the purposes of any activities regularly carried on by the company. It was also not shown that information of the kind contained in the computer printout was regularly supplied by the Company to the personal computer of Shri Sampath Kumar in the ordinary course of activities. Again, it was not shown that, during the relevant period, the computer was operating in the above manner properly. The above provision also casts a burden on that party, who wants to rely on the computer printout, to show that the information contained in the printout had been supplied to the computer in the ordinary course of business of the company. We find that none of these conditions was satisfied by the Revenue in this case. We have considered the Tribunal's decision in International Computer Ribbon Corporation v. CCE, Chennai (supra). In that case, as in the instant case, computer printouts were relied on by the adjudicating authority for recording a finding of clandestine manufacture and clearance of excisable goods. It was found by the Tribunal that the printouts were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the view that the data of pen drive relied upon by the revenue is not a reliable piece of evidence. Further the charges of clandestine removal are not adduced by any corroborative evidences. The revenue has also relied upon the diary seized from Shri Ritesh Gupta on the ground that it contains the details of clandestine clearance of goods. We find that though the show cause notice has named 9 alleged buyers of goods, and even contended that they had received the goods, but we find that the show cause does not rely upon either the records or the statements of such alleged buyers. The outcome of investigation is not appearing. Thus the show cause notice only states that investigation has been conducted but in absence of any affirmation and evidence from the buyers, the demands does not sustain. Shri Ritesh Gupta in his statement has refused that the details found in his diary pertain to any clandestine removal. The only enquiry we find from the show cause notice is about investigations made at M/s Duke Metal or Madhu International at Delhi. However in both the cases, there is no acceptance of any clandestine receipt by the said parties. The show cause notice has also relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta maintained in the pen drive belongs to their concern. It is also a fact that Shri Shailesh Yadav was also working for M/s Sunshine Marketing, as also stated by Shri Dinesh Mittal, partner of M/s Sunshine Marketing. M/s Sunshine Marketing were engaged in anodizing and were undertaking such activity on behalf of other suppliers in addition to M/s KLMPL. Further, even if the data found in the pen drive of Shri Shailesh Yadav is matching with the pen drive data of Shri Sukhdev Patidar, it cannot be a conclusive ground to hold that the goods were clandestinely cleared by M/s KLMPL to M/s KI. It is an accepted fact from the show cause notice that in premises of M/s KI, the goods were also being received from M/s Vimsar, M/s Krishna Profiles as well as other persons. In such case it cannot be alleged that the goods found to be entered in seized records of M/s KI or M/s Sunshine (which was also operating from the same premises) belong to the Appellant - KLMPL. Even the owners of M/s KI were not put to questioning about maintaining such pen drive by Shri Shailesh Yadav. It is not forthcoming as to from which source, such data was compiled by Shri Shailesh Yadav. The show cause notice has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s KI, who was also working for M/s Sunshine. The Pen drive of Shri Shailesh Yadav is his personal pen drive and were not maintained by him under the instruction of Appellant. Nor the same is corroborated with any records of Appellant firm to show that the same were clandestine removed goods. In such case, it cannot be concluded that the clearances by M/s Kuchchal International to M/s H.M. Enterprises were of goods manufactured by the Appellant and cleared clandestinely without payment of duty. Further we find from the statement of Shri Parvez Hasan, Partner of M/s H.M. Enterprises, when he was shown the printouts of data from the pen drive of Shri Shailesh Yadav, that he is not aware of same. Further M/s H.M. enterprises in their reply has stated that during inspection of their shop, no discrepancy in stocks were found. All proper sale/ purchase bills were found and that they were not involved in any purchase/ sale of duty evaded goods. We are of the view that when no incriminating evidence at the Appellant end and the buyers end has been found. Neither their statements are inculpatory, in that case on the basis of third party records or pen drive, the duty cannot be demanded from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive evidence of removal of goods from the Appellant (KLMPL) factory, it cannot be said that the records of M/s Sunshine Marketing or pen drive of Shri Shailesh Yadav point to removal of goods without payment of duty by KLMPL. 30. We find that the charges are mainly based upon the pen drive of Shri Shailesh Yadav employee of M/s KI and who was also maintaining records/ stock of M/s Sunshine Marketing. In case where the demands are based upon the pen drive and such records are third party records and in absence of any affirmation by the Appellant, it cannot be concluded that the Appellant has removed the goods without payment of duty. In case of M/s Rama Shyama Papers 2004 (168) ELT 494 (CESTAT), this Tribunal, while dwelling upon the similar issue of reliance having been placed upon third party records, held as under: 9. We have considered the submissions of both the sides. The Revenue has charged the Appellants with clandestine manufacture and removal of paper, mainly on the basis of documents seized from the premises of Chitra Traders and Transporters and the various statements recorded from the Proprietor of Chitra Traders, transporters and labourers working in the factory of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized from the possession of third party. There should be some corroborative evidence/material. The Tribunal has in the case of Emmtex Synthetics Ltd., supra, when the charge of clandestine removal was made against the Appellants therein out of yarn received from a third party based on the diary, loose documents and packing slips allegedly recovered from Shri B.M. Gupta, Vice President of the Supplier Company, held that "no presumption on the basis of uncorroborated, uncross-examined evidence of B.M. Gupta and the alleged entries made by him in the private diary, loose sheets, charts, packing slips could be drawn about the receipt of polyester yarn by the Appellants from the company, M/s. HPL, in a clandestine manner during the period in question. Similarly, no inference could be legally drawn against the Appellants of having manufactured texturised yarn out of the said polyester yarn and the clearance thereof, in a clandestine manner without the payment of duty." The Tribunal had also referred to the decision in Oudh Sugar Mills Ltd. v. Union of India, 1978 (2) E.L.T. (J172) wherein "the Apex Court has observed that no show cause notice or an order can be based on assumptions an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and not on the basis of any record seized from the premises of the Appellant-company. The Revenue has not been able to adduce any corroborative evidence to show the movement of goods from the premises of the Appellant-company to the premises of M/s. Chitra Traders or the Customers whom the goods were sent directly to as per the direction of Chitra Traders. No inquiry has also been made into these Customers who ultimately received the goods. There is no substance in the reasoning given by the Commissioner in the impugned order to the effect that "as the party did not challenge the fact of their business association with M/s. Chitra Traders, Delhi, the enquiry further down the line was not considered necessary." The onus of proof that the goods were removed by the Appellants without payment of duty and without entering the same in their records is upon the Revenue which cannot be discharged merely on the strength of the entries made in the records of a third party without linking the removal of goods from the premises of the Appellant-company. The mere fact that the Appellant-company had business relation with Chitra Traders, does not mean that they will be liable to each and ever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at charge of evasion cannot be found solely on the basis of records of third party. Records of M/s. Kothari Trading Corporation cannot be relied on to find evasion by the respondents. The Day Book cannot be relied on as the author of its contents could not be identified and his statement obtained. Revenue has not been able to establish receipt of excess amounts against clearances of yarn by the respondents with any reliable evidence. The Commissioner (A) also had found that the Day Book and the records of the broker did not match in entirety. He had found discrepancies in important respects between the entries in the Day Book and the records of the yarn broker. In the decision of the Tribunal in the case of Rhino Rubbers Pvt. Ltd., it was held that third party's records were not reliable when no direct links could be established between the records and offending transactions. In the circumstances, we find that the appeal filed by the Revenue seeking to restore the order of the original authority is devoid of merit. In the result, we sustain the impugned order and dismiss the appeal filed by the Revenue. 31. In case of M/s Hindustan Machine Vs. CCE 2013 (294) ELT 43 CESTAT it was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta in his statement refused to accept the same on the ground that he has not authorized any person to issue such invoice and it may be a case of robbery from his factory. He also undertook to pay duty if found that goods were cleared twice. We find that there is no admission in his statement that the goods were cleared. The department also did not undertake any interest to verify whether the goods against both the invoice were actually cleared or not by way of investigation at the buyers end. In such case we do not find any reason to demand duty. Coming to the charges of clandestine removal it is trite law that the same cannot be upheld merely on the basis of statements and private records unless the corroborative evidence are adduced in the form of procurement of raw material, production records, use of other inputs, transportation etc. The adjudicating authority has alleged that the Appellant received huge quantity of Aluminium scrap from the parties, which was not accounted. In case of one of the supplier M/s Balaji Metals, Bhopal, the scrap has been said to be supplied through transporters M/s Acharya Roadline and M/s New Royal India Transport, through more than 100 consign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for determining the duty liability, that too on imaginary basis, especially when Rules 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. The Tribunal further observed that no experiment have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing on MT of steel ingots. Tribunal also observed that the electricity consumption varies from one heat to another and from one date to another and even from one heat to another within the same date. Therefore, no universal and uniformly acceptable standard of electricity consumption can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the Revenue with no other supporting record, evidence or document to justify its allegations. The Tribunal has also considered the report of Dr. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the imported goods at Indore, and not at Appellant's factory at Pithampur. We find that it is a fact on record that the goods were purchased by the Appellant on high sea sales basis, for which payment was made through bank. If the goods were not directly delivered to the Appellant's factory, it cannot be concluded that the goods have not been received in their factory. The bills of entry are in the name of the Appellant. Further no record of the Appellant or of M/s Mungad Aluminum has been relied upon to show that the imported scraps were not received in the Appellant's factory and were instead received at the factory of M/s Mungad Aluminum. No disposal of such goods otherwise has been shown in the impugned order. Further though the Show Cause notice has alleged that the Appellant received unaccounted scrap, but there is no matching quantity. We find that on the one hand show cause notice mentions that the logs manufactured out of such scraps are also sold to different customers and on the other hand the show cause alleges that there is no actual supply of logs because the quantity claimed to have been manufactured, is more than the capacity of the plant. This fact is contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce there cannot be any demand against M/s KLMPL. 34. In case of demand of ₹ 1,53,163/-, we find that the demand has been made against the Appellant on the ground that they have cleared the goods to M/s Kuchchal International, M/s Sunshine Marketing and M/s Baser Sales Corpn. Further, the quantity of goods, i.e. aluminum Section & profiles, were ordered to be confiscated. We find that the demand has been made on the basis of alleged receipt of goods at the job workers / processors premises, i.e. anodizers or dealers premises. However, no investigation has been conducted at the Appellant's end or their factory and the demand is based on the records of such alleged job workers. Only on the basis of documents of the third parties, without any corroborative evidence at the end of the manufacturers, the demand does not sustain. In case of M/s Sanmati Fabricators, we find that they could not submit the invoice being the job worker. However, this cannot be a reason that such goods were cleared clandestinely by the Appellant. Similarly, in case of M/s Sunshine Marketing, they were undertaking anodizing / powder coating job work of other parties also, including some aluminum traders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther stated that it is not known as to why M/s M/s Sanmati Fabricators in their record had shown that the goods were received from M/s KLMPL. Similarly, the Appellant has also denied supplying the goods to M/s M/s Sanmati Fabricators or any sales to M/s Baser Sales Corpn in their respective statements. In such case, the allegation of clandestine removal on the strength of entry appearing in the record of M/s Sanmati Fabricators, which is a third party, cannot be sustained. Similarly, in case of goods found at M/s Kuchchal International, were shown to have been received by M/s Sunshine Marketing from the Appellant. On the ground that in respect of Invoice No. 146 dated 24.6.12, the quantity shown by the anodizer, M/s Kuchchal International, in its record is 2152.40 kg, whereas the invoice issued by the Appellant shows the quantity only as 1120 kg. It was, therefore, alleged that the difference of quantity of 1032.40 kg, as clandestinely removed goods. Further, in job workers record, for quantity of 1323.450 and 325.00 kg, no invoice could be produced. However, show cause notice also states that though invoice No. 150 dated 2.11.12 of Appellant, involving quantity of 1253.75 kg is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estine manufacture of finished goods, manufacture of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, packing materials used, discrepancy in raw material and final product, clandestine removal of goods with reference to entry of vehicles in the factory premises, loading of goods, transporters documents such as LRs, statements of drivers, entries at check-posts and the receipt of goods by the consignees, amount received from the consignees, statement of consignees admitting receipt as well as receipt of sale proceeds by the consignor and its disposal. None of the above instances has been shown; in such case, we do not find any reason to sustain the demand or to confiscate the goods. 35. In view of our above discussion and findings we thus hold that the impugned order confirming demand against M/s KLMPL is not sustainable. We thus set aside the impugned order and allow the appeal filed by M/s KLMPL. Since we have allowed the main appeal filed by M/s KLMPL, consequentially we also allow the appeals filed by other Appellants who are before us. All appeals are thus allowed with consequential reliefs, if any. [Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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