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TMI Blog2019 (12) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant are entitled for SSI Exemption on clearance of goods. Demand against M/s Thakar Traders - Supply of various types of wheels viz. Girder Wheels, Bruter wheels, Russian Wheels - HELD THAT:- The demand has been made on ground that the clearances made by Appellant are liable for duty. The Appellant has contended that the Russian bruter wheel was sent for jobwork of grinding without following the procedure under central excise rule or job work exemption notification and the goods came into existence only after grinding of wheels were completed - The activity of manufacture as per Section 2 (f) of the Central Excise Act was completed and Russian Bruter wheel came into existence after the jobworker under took the process of grinding. In such case when the procedure as contemplated under Exemption Notification No. 214/86 CE dt. 01.03.86 was not followed the jobworker of the goods become liable for duty and the duty cannot be demanded from M/s Thakar Traders. We have also gone through the Annexure A . The goods detailed therein were for testing as appearing in seized record. No investigation was made as to why this record was maintained. In absence of any investigation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found that M/s Om Syntheticswere running a factory whereas M/s Thakar traders were operating office in said building. It was found that M/s Bhayani Engineering is partnership firm having two partners viz. Shri Kishorbhai Shambhubhai Bhayani and Shri Thakarshibhai Bhagwanbhai Kukadiya in equal ratio. The firm is engaged in manufacture and after sales service of roundish machine used for giving round shape to diamond after bruiting process. M/s Om Synthetics is partnership firm having partners Shri Kishorbhai Shambhubhai Bhayani, Shri Thakarshibhai Bhagwanbhai Kukadiya and Shri Babubhai Bhawanbhai Kukadiya in equal proportion. The firm is engaged in manufacture of Russian Brutter, Golden Russian and 4P laser machine which are used for bruiting and sawing of diamonds. M/s Thakar Traders is partnership firm of Smt. Dakshaben Kishorbhai Bhayani and Smt. Rekhaben Thakrshibhai Kukadiya in equal proportion and engaged in selling of tools and parts of diamond processing machinery. During investigations records/documents along with some machines were seized and statements of concerned persons and buyers of goods were recorded. Subsequently show cause notice dated 07.09.2015 was issued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani Engineering and residential premises of Shri Kishorbhai Bhayani. Annexure D has been prepared on the basis of record No. 54 seized from the factory premises of Om Synthetics/ Bhayani Engineering and record no. 20 seized from residential premises of Shri Kishorbhai Bhayani of those machinery details, which do not reflect in Annexure A , B C . 4. The Ld. Counsel submits that the clearance alleged to have been made by Appellant in Annexure A are erroneous. The seized documents clearly show the clearances were made by M/s Bhayani Engineering and the documents were not recovered from the Appellant factory but from residential premises and therefore no reliance can be placed upon such document. It is alleged that the value of clearances is 2,77,35,400/- is based on seized documents/ records which were numbered from 1 to 20. The record No 1 to 18 are delivery challan books and record No. 19 20 are loose papers wherein accounts of cash receipt for sale proceeds and expenditure against delivery challans of record no. 1 to 18 and similar types of challans not available in records is mentioned. He submits that the delivery challans are nowhere co-related with an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Bhayani Engineering Co. Only two delivery challans of Appellant Unit were shown in impugned order which show description of goods as On and Off Switch as well as service charge and Motor service charge, nuts and switch . This does not show any removal of machine. Further there is no evidence of Appellant s name in any manner hence the seized records cannot be alleged to be of Appellant. The seized records clearly bear the name of M/s Bhayani Engineering Co and the same cannot be used against Appellant. No independent or corroborative documentary evidence is on record beside the sole evidence of contradictory statement of Shri Kishorebhai Bhayani which cannot substitute the mandatory requirement of manufacture by Appellant. The manufacture of goods has to be shown which is absent. The Ld. Counsel also submits that the vital fact of manufacturing of common machines by M/s Bhayani Engineering and Appellant has been overlooked. The revenue assumed that the machines were manufactured only by Appellant Unit inspite the fact on record that Shri Kishorebhai in his statements has categorically stated that In M/s Bhayani Engineering Co. situated at Ground Floor of J.P. Shopping Center ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cal.), TGL Poshak Corporation 2001 (99) ECR 424 (TRI), Jay AjitCharia 2015 (40) STR 1139 (TRI). He also submits that statement of Third Partner was not recorded which was crucial to ascertain the facts. No show cause notice was issued to M/s Bhayani Engineering Co. inspite of the fact that the seized records contained name of said firm and who were manufacturing same machinery and the same is violation of the settled law by straight away adding the values of those documents in the clearance of Appellant. He relies upon judgment in case of 1997 (94) ELT 88 (TRI), Ramsay Pharma (P) Ltd. 2001 (94) ECR 681. The ld. Counsel submits that the retraction affidavit of Shri Kishorbhai, Shri Thakarshibhai, Shri Prabhakarbhai, Shri Dhaval and Prabhakar make clear that the statements recorded earlier even though not having correlated evidences are not admissible. The said persons in their affidavits has clearly stated that they were not well versed in English language and the questions and answers were precompiled by the officers and they were forced to sign the same. 7. In case of M/s Thakar Traders, the Ld. Counsel submits that the Appellant were undertaking the business activity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays to set aside the impugned order. 8. Shri S.K. Shukla Learned Superintendent (Authorized Representative) appearing for the revenue reiterates the findings of the impugned order. He submits that from the statements of Shri Kishorebhai Bhayani and employees in respect of seized records from residential premises of Shri Kishorebhai and factory premises, it is clear that the Appellant unit has made clearances without payment of duty. He also submits that the clearances made under the trade name Bhayani by Appellant M/s Om Synthetics is not eligible for SSI Exemption under Notification No. 8/2003 CE. He thus prays to uphold the impugned orders. 9. Heard both the sides and perused the case records. We find that the demand has been summed up in Annexure E prepared on the basis of Annexure - A , B , C and D . Annexure A has been prepared on the basis of challans and records No. 1 to 20 seized from residential premises of Shri Kishorbhai Bhayani. The records No.1 to 18 are delivery challans alleged to be prepared by him and Supervisor Shri Prabhakar. The record No. 19 to 20 are loose papers alleged to be containing cash receipts of sale proceeds and expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd issue show cause notice for their involvement. Merely on the basis of statement of Partner or the supervisor, it cannot be concluded that the clearances were of M/s Om Synthetics when the seized records show otherwise. No value of clearances has been shown to have been made by M/s Bhayani Engineering Co. When the documents/ records relied upon for making demand has been seized from residence of partner of M/s Bhayani Engineering, in that case, the first presumption will be that such documents belong to clearances of M/s Bhayani Engineering. It was especially so when the documents bear the name of M/s Bhayani Engineering and or were signed on behalf of Bhayani Engineering. Only on the basis of half cooked investigation, the demand cannot be raised. We also find that though clearances of ₹ 2,77,35,400/- has been alleged to have been made by Om Synthetics on the basis of delivery challan, however when the same is corroborated with record No. 18 and 20, it is hardly corroborating to the extent of Approx. ₹ 35 lakhs. In such case it is clear that even there is no corroboration between the alleged delivery/ clearances of goods and receipt of consideration, there is no basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Sakeen Alloys 2013 (296) E.L.T. 392 (Tri. - Ahmd.), the tribunal held as under : 8. In the cases relating to clandestine removal of excisable goods, following are the indicators of clandestine removal activities by a manufacturer :- (i) Excess stock of raw materials found in the factory premises. (ii) Shortage of raw materials in the records of manufacturer. (iii) Excess/shortage of manufactured goods found in the factory premises. (iv) Excess consumption of electricity/power used in the manufacture of finished goods. (v) Any transit seizure of clandestinely removed goods made by the investigating authority. (vi) Any cash amounts seized from the factory premises or dealer s premises or residential premises searched during investigation. (vii) Confessionary statements of the persons concerned with the clandestine manufacture/removal of excisable goods. 9. It is observed from the case records that in the present proceedings, there are few confessional statements of the persons which were later retracted by the persons concerned. The confessional statements subsequently retracted can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Appellants and also the driver or cleaner of the Truck which was in the process of loading on 22-6-2001 when the Central Excise Officers visited their factory premises. The Appellants, on the other hand, have contended that most of the persons whose statements have been relied upon have not been produced for cross-examination and the documents seized from third parties premises have not been corroborated by adducing evidence of any of the customers though the enquiries were conducted at different places as deposed by Shri Anurag Sharma, Inspector, in his cross-examination on 4-3-2002. Out of 19 consignments said to have been cleared by the Appellant No. 1 without payment of duty on the basis of five transporter, we observe that in respect of two consignments, it has been mentioned by the Revenue that the same may not pertain to the Appellants. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.LT. (J172) wherein the Apex Court has observed that no show cause notice or an order can be based on assumptions and presumptions. The findings based on such assumptions and presumptions without any tangible evidence will be vitiated by an error of law . The Tribunal also took note of the decision in Kamal Biri Factory and Shri Khushnuden Rehman Khan v. CCE, Meerut - 2003 (161) E.L.T. 1197 (T) = 1997 (23) RLT 609 (CEGAT) wherein view has been taken that the allegations of clandestine removal of the goods will not stand established when based on the entries made by the assessee s employee in a diary or on the basis of third party s record in the absence of any corroborative evidence. It has also been the consistent view of the Tribunal that the statements of the witnesses, without allowing the assessee to test the correctness of the same by cross-examining those witnesses; cannot be made the basis for holding the allegation against the assessee. (Takshila Spinners v. CCE, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 every entry made by Chitra Traders in their books of account. It is also noted that none of the transporters and none of the labourers whose statements have been relied upon by Revenue have mentioned that the goods in question were delivered to Chitra Traders from the premises of the Appellants. The material brought on record may at the most create a doubt only. But doubt cannot take the place of evidence. The Revenue has, thus, not proved its case against the Appellants in respect of 149 consignments. We, therefore, set aside the demand of duty and penalty imposed on Appellant-company and consequently the demand of interest. 11. From the above settled law, it is clear that in a clandestine removal case, the facts of clandestine removal of excisable goods cannot be established only on the basis of certain statements which are retracted later b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations, the demand of duty of ₹ 1,85,10,861/- is not sustainable and is required to be set aside. 11. The above order of the Tribunal was upheld by the Hon ble High Court as reported in 2014 (308) E.L.T. 655 (Guj.) and was maintained by the Apex Court as reported in Commissioner v. Saakeen Alloys Pvt. Ltd. - 2015 (319) E.L.T. A117 (S.C.). 12 In case of T.G.L. POSHAK CORPORATION 2002 (140) E.L.T. 187 (Tri. - Chennai), the tribunal while dealing with similar set of evidence held as under : 6 . We have carefully considered the submission and perused the impugned order. Insofar as the assessee s appeal is concerned, we notice from the extracted portion of the Commissioner s order that Revenue is solely relying on the exercise note books mainly balance steets. The Tribunal in large number of cases which have already been noted above in the tabulated list of citations furnished by the Counsel has held that unless there is clinching evidence on the nature of purchase of raw materials, use of electricity, sale, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Others and both these decisions have been followed in the recent decision in the case of M/s. S.K.N. Gas Appliances v. Commissioner of Central Excise, New Delhi reported in 2000 (120) E.L.T. 732 (Tribunal). Learned DR Shri Dube seeks to distinguish the decisions in the case of Ogesh Industries and Dawn Fire Factory Works cited supra by submitting that the present case is not one of clubbing of clearances; however, we find from the impugned order that the Department has proceeded on the basis that the aggregate value of clearances of excisable goods effected by the appellants and all the units of M/s. Shree BaidyanathAyurved Bhawan taken together exceeds the ceiling limit on value of clearances prescribed in the SSI exemption Notifications. Therefore, the ratio of the above cited decisions is applicable on all fours to the present case and following the same, we set aside the impugned order as bad in law on this preliminary point alone without going into the merits of the case. 13. Similar views were given by the Tribunal in case of Ogesh Industries 1997 (94) E.L.T. 88 and M/s. Dawn Fire Works Factory and Others. 1999 (31) RLT 104. We also find that Shri Kishorebhai, Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was made as to why this record was maintained. In absence of any investigation it cannot be concluded that the record pertains to clandestine clearances. Even the author of such record was not questioned. The investigations at two buyers Shri Madanlal Dhanrajji Nagar and Mrs. Dolly Shah who brought goods from Appellant revealed that the goods were brought under invoices which shows that the goods were not cleared clandestinely Further Shri Kishorbhai Bhayani and Shri Thakarshibhai Kukadiya in their affidavit stated that they were not in conversent in English and the statements were pre-complied by the officers. In such case the demands cannot be confirmed without corroborative evidence. No independent and corroborative evidence has been brought to show any excess procurement of raw material or clearance of goods to buyer which can show that the Appellant cleared goods clandestinely. Our views are also based upon judgments in case of Sakeen Alloys and T.G.L. Poshak Supra. Thus we hold that the charges of any clandestine removal against the Appellant are not sustainable. For the same reason we set aside the fines and penalties imposed upon the Appellants. 16. In view of o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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