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TMI Blog2019 (7) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise searched the premises and took stock and found that there was shortage of 5.060 MTs of Sodium Bichromate Mother Liquor (SBML) in the factory on which the duty liability comes to Rs. 28,567/-. Further, they conducted detailed investigation and recorded statements of various persons and seized private records which showed removal of goods without showing them in the Central Excise records and paying Central Excise duty. After analysing all these records, they issued a Show Cause Notice OR No. 54/99-Adjn. dated 10.04.2000 demanding the following duty from VCL. Annexure Product Quantity (MT) Period Duty A SBML 33.555 4/1997 to 6/1998 2,16,007 B SB as YSS 59.5 7/1997 to 6/1998 3,87,351 C SB as BCS 12.95 SB & 12.5 of BCS 3, 9 & 10/1997 1,36,750 D SB, SBML & BCS 11.595 SB, 8.598 of SBML & 1 of BCS June 1998 1,52,624 E SB 172.064 8/1997, Jan to May 1998 12,69,832 - Shortage SBML 5.060 Panchanama 28,567 21,91,131 It was also proposed to impose penalties on the other appellants. 3. The period of dispute in this case was March, 1997 to June, 1998. The appellants submitted their replies to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexures A to E attached to the SCN. These are as follows. 1) Annexure-A - the details of SBML cleared in excess over the invoice quantities during the years 1997-98 and 1998-99. The total amount of differential duty demanded on this differential quantity was Rs. 2,16,007/-. 2) Annexure-B - the details of clearances of SB made in the guise of YSS during 1997-98 and 1998-99. The differential duty demanded on this count is Rs. 3,87,351/-. 3) Annexure-C - the details of the BCS cleared without payment of duty and without any bill. The differential duty demanded on this head is Rs. 1,36,750/-. 4) Annexure-D - details of actual production of SB, SBML and YSS as per the recovered notebook during the period 01.06.1998 to 15.06.1998. The differential quantity, the value and the duty on this count were as follows. DETAILS OF DIFFERENTIAL QUANTITIES BETWEEN NOTE BOOK AND RG-1 PRODUCT DIFFERENTIAL QUANTITY RATE PMT (Rs.) VALUE (Rs.) DUTY (Rs.) SBML 8,598 41,000/- 3,52,618/- 63,453/- SB 11,595 41,000/- 4,75,395/- 85,571/- BCS 1,000 20,000/- 20,000/- 3,600/- TOTAL DUTY 1,52,824/- 5) Annexure-E is the details of actual production of SB & YSS as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not there and during cross-examination it was confirmed that he was an uneducated and cannot read or write. The authenticity of this annexure has not been established by the department. Further, the alleged clandestinely manufactured products must also be set off against the alleged clandestinely removed goods and there cannot be a charge of duty twice - first on the manufacture and again on its removal. He would, therefore, urge that as far as Annexure-E is concerned, they do not subscribe to the authenticity of the records and the department has not been able to establish the same. In view of the above, he pleads that their appeals must be allowed and the impugned order may be set aside. 7. Learned departmental representative reiterates the findings of the OIO. He submits that the assessees were allowed an opportunity to cross-examine the person whose statements were referred to while passing the OIO and four persons appeared for cross-examination on 31.07.2006 and retracted the statements given by them in 1998. The persons are (a) Shri Surender Jhawar, Proprietor of M/s Piyush Chemicals Ltd, (b) Shri Vinay Mehta, Proprietor of M/s Delight Enterprises, (3) Shri Krishna R Latw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri E.V. Koteswar Rao, Chemist. iv. Statements of Shri M.V. Ramana Murthy, Central Excise Incharge given on 16.5.98, 14.8.98, 20.8.98 & 24.12.98. v. Statements of Shri M.V. Murali Krishna, Marketing Manager given on 17.6.98, 4.8.98, 12.8.98, 22.8.98, 23.9.98, 26.9.98 & 11.12.98. vi. Statement dated 18.6.98 of Shri D. Venkat Reddy, Partner M/s Kalyani Chemicals, Hyderabad. vii. Letter dated 14.8.98 of Shri M.V. Murali Krishna, Marketing Manager. viii. Statement dated 18.8.98 of Shri K. Krishnaiah, Managing Partner, M/s Kalyani Chemicals, Hyderabad. ix. Statement dated 18.8.98 of Shri Md. Fazal Rahman, Managing Partner, M/s Chromochem, Hyderabad. x. Letter dated 31.8.98 of Shri Md. Fazal Rahman, Managing Partner, M/s Chromochem, Hyderabad. xi. Statements of Shri Ch. Krishna Murthy, Managing Director, M/s Vishnu Chemicals Pvt Ltd, Khazipalli given on 2.9.98 & 16.1.99. xii. Statement dated 15.9.98 of Shri S. Ganga, Labour Contractor M/s Ganga Transport. xiii. Statement dated 15.10.98 of Shri Vinay Mehta, Prop. Enterprises, Bombay. xiv. Statement dated 26.12.98 of Shri Krishna R Latwade, Partner, M/s Krishna Chemicals, Ichalkaranji. xv. Letter dated 16.12.98 of Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out as per this annexure alleging that there was excess unrecorded production which must be set off against demand of alleged excess unrecorded clearance as in Annexure-A, B & C. As far as Annexure-E is concerned, he submits that this was a notebook meant for payment to the labour contractor and it cannot form a sound basis for alleging that there was clandestine production and clandestine clearance of the goods. Therefore, the demand on this account is not sustainable. 11. This is a case of alleged clandestine removal of goods. Therefore, it is unthinkable that there will be official records of the clandestine manufacture and clandestine clearance. If these were recorded, they will no longer be clandestine. By their very nature, unrecorded production and clearance of goods can only be found based on evidence gathered during investigation such as stock taking, private records, private notebooks, statements of persons concerned, their examination and cross-examination which will lead to conclusion whether there was a clandestine removal of goods and if so, to what extent. Private note books seized from the factory under panchanama during the course of investigation and their analys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed these records. Shri S. Ganga himself states to be an uneducated person and is unable to support the statement as representing the manufacture of the goods clandestinely removed during the period. Further, I find that there is no quantification of the demand in this annexure. For these reasons, I find demand in Annexure- E is not sustainable and needs to be set aside. In conclusion, the demands raised under Annexure-A, B & C to the SCN are upheld; demand under Annexure-D is upheld but the same needs to be set off against any demand on the ground of clandestine clearance in Annexure-A, B & C for the same period; demand based on the alleged clandestine production based on labour contractor reports in Annexure-E are not sustainable and are set aside; demand on shortage of SBML noticed during panchanama is upheld. Consequently, the demand of interest has to be recalculated and the penalty under section 11AC upon the appellants/assessees also needs to be recalculated. Considering the reduction in the demand, the penalty under Rule 173Q upon the assessee M/s VCL is reduced to Rs. 2,00,000/-; the personal penalty on Shri CH. Krishna Murthy, Managing Director of M/s VCL, under Rule 209A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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