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TMI Blog2018 (3) TMI 1841X X X X Extracts X X X X X X X X Extracts X X X X ..... t out by the above referred decision of the Tribunal, the culpability of Mr. G.M. Vyas is clearly established. As such, the decision given by the Tribunal is erroneous and liable to be set aside. The CESTAT has erred in holding that the statements recorded from customers, workers and transporters cannot be the basis for establishing the misdeclaration that cone yarn/cheese yarn were removed under the guise of Hank yarn. On examination of the statements recorded from customers it is seen that there is a clear admission of the misdeclaration of the description of the goods by the respondent in the invoices which mentions plain reel hanks instead of the cone/cheese yarn dispatched by them. The CESTAT has not appreciated the fact that the usage of plain reel hanks is not required by the customers who manufacture Terry towels and that there is a deliberate misdeclaration regarding the Plain Reel Hanks supplied by the respondent to its customers stands clearly proved in this case - the CESTAT has not correctly reasoned or given any finding as to how these statements cannot be accepted especially when the customers themselves have admitted the receipt of cone yarns which are used by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the filing of the appeal are that M/s. Vyas Textiles, 2148 Trichy Road, Singanallur, Coimbatore and M/s. Vyas Textiles, B Unit, 2147, Trichy Road, Singanallur, Coimbatore were engaged in the manufacture of cotton yarn falling under Chapter heading 5205 of Central Excise Tariff Act. Based on intelligence, officers from Headquarters (Preventive) visited the unit and noticed two sets of invoices maintained by the respondent. It was also noticed that the respondent has also registered a second unit in the name of M/s. Vyas Textiles, B Unit in the same premises for manufacture of cotton yarn. After conducting a detailed investigation and recording of statements from the customers, workers, transporters, a show cause notice dated 14-7-1999 was issued to both the units, on two issues, (i) clubbing of value of clearances of both the units and denying SSI exemption and demanded duty of ₹ 3 lakhs (BED) and ₹ 45,000/- AED (T) and (ii). Demand of excise duty of ₹ 19,22,816/- (BED) and ₹ 2,88,422/- AED (T) on the cotton yarn in cheese form, cleared in the guise of Plain Reel Hank (PRH). 3. After due process of law, the adjudicating authority/Commissioner of Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case since the applications were made during 92-93 during which period cotton yarn was not under the SSI scheme, the assessee could not have had any intention to evade payment of duty at the time of filing of the application for Registration. It would also appear absurd if it is said that he has anticipated the Governments note to include the item in the SSI list during 94-95. So there was no intention at the time of filing the application for registration. 26. Now, coming to the question whether there was any suppression at all in the case. I see front the file that, the assessee have declared the unit, as Unit B , the address as the same as that of the A unit, the address of the applicant also the same as that of the unit A . The unit is also situated in the same premises which has been clearly indicated in the ground plan filed along with the application. Both the units fall under the same Range Office. In the circumstances the department cannot say now that facts were not known to them, the department had the knowledge of existence of two units. The RT-12 return (copies of some of the months available on file) were filed with same Range Officer and assessed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they require cheese yarn for their use, that they have received the goods under invoices describing them as HB hanks, that they did not have any stock, that they did not maintain any stock book. Against these statements the assessee have argued that the statements were repetitive in nature and that none of the statements were supported by any documentary evidence. I have gone through all the statements of the customers and the case records. None of the statement is supported by any material evidence. Adding to this infirmity is the other factor that in all the statements the customers have stated that they have not maintained any stock books for the raw materials. This seems to be absurd. Further, none of the customers have questioned as to why cone/cheese yarns were invoiced as hank yarn. This also lacks logic as no manufacture would accept an invoice with wrong description that too over a period spanning few years. All these things point out that even if the statement were obtained without any duress, they may not be legally sustainable as they were not supported by any documentary evidence. I rely on the judgments of the Tribunal in the case of the Chandrabadan Bara Bhai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices with HB description were infact cheese yarn bags. The transporter normally go by the weight of the consignment and the declaration in the invoice and I do not see any reason to suspect the contents. If they had suspected the contents they would not have entertained the consignment for fear of penal action by various agencies. So their statement lacks merits and does not support departments case. 31. The statement, by the other transporter namely M/s. Kamalakkanan Transports is the other statement relied by the notice, also lacks merit as the same was not supported by any material evidence. 32. Now coming to the other aspects i.e., the presence of different set of invoices in the factory I see from the statement of Shri S.M. Shanmugham, Authorised Signatory that the circumstances for the same were property explained. I do not see any observation in this aspect. They have explained that the consignments in respect of the invoices found were cancelled by the units. The investigation has not proved that the consignments in respect of these invoices have actually been despatched. In the absence of such evidence the allegation that they have maintained different set of invoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bags as directed by the consignee. In the circumstances the fact that the seized cheese yarn, were received from M/s. Vyas Textiles has not been conclusively proved. In the absence of the same the question of confiscation of the goods under 173Q does not arise. 38. Accordingly, I pass the following order. ORDER I drop all the proceedings initiated against M/s. Vyas Textiles and M/s. Vyas Textiles Unit B in the Show Cause Notices C.No. V/52/15/100/99 Cx.Adj. dated 14-7-99. 4. Being aggrieved, the Commissioner of Central Excise, Coimbatore, preferred Appeal No. E/381/2002, before the Customs, Excise Service Tax Appellate Tribunal, South Zonal Bench, Chennai. Vide order, dated 2-12-2014, CESTAT, Chennai, has passed the following order : - 9. We have carefully examined the submissions made by both sides. Revenue filed appeal against the impugned order on the grounds that there is suppression of facts with a clear intention to evade payment of duty and demand raised is sustainable and the adjudicating authority has not appreciated the facts and has not applied the preponderance of probability. The department also alleged that the appellants have obtained two registr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of G.M. Vyas and the second unit viz. Vyas Textiles B unit was registered in the name of M.G. Vyas s/o G.M. Vyas. Therefore, we find that the department s allegation that the proprietor has deliberately obtained two registrations by changing the initials of G.M. Vyas and M.G. Vyas appears to be factually incorrect. The Revenue contention that respondent has deliberately given a wrong initials as G.M. Vyas and M.G. Vyas while applying for Registration in the Department. We find that Unit I was registered in the name of G.M. Vyas whereas the second unit was held by M.G. Vyas who is s/o. G.M. Vyas. As evident, from the registration certificates, the department has not adduced any evidence to prove that M.G. Vyas is not the son of G.M. Vyas and both relates to same individual. Therefore, we do not find any merit in the Revenue s allegation that proprietor has obtained registration by falsely declaring the name by changing the initials. 12. On the suppression of facts alleged by Revenue, we find that both the units have obtained central excise registration certificates much prior to the SSI exemption extended to cotton yarn vide Notification No. 90/94, dated 25-4-94. We find fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents recorded from seven customers, transporters and few workers of the respondent factory, we find that the adjudicating authority has discussed the issue in para 28.1 and 28.2 of the impugned order which is reproduced as under : - 28.1 First I would like to take the statements of the workers who has stated that they have never seen the half bale being packed in their factory. To this the assessee has placed a counter argument that other than the set of workers referred to in the statement other set of workers were engaged and half bales were in fact been packed. I do see some merits in their argument. It is not the case that the unit has never manufactured hanks. The notice itself has accepted that the unit had facility to manufacture hanks. Further, it has been accepted that the clearance of hanks in other forms that is other than HB bales were made. In the circumstances the argument of the assessee that half bales were infact, been packed assumes greater credibility, as the hanks manufactured in the factory could have been packed into half bales, while they were packed in to full bales/chippam. So the evidence of the worker loses its relevance once the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should be statutory proof beyond doubt other than the statements. Even if preponderance is to be applied in the case of clandestine removal, the department has to establish through corroborative documentary evidence and not merely relying on a general statement from the customers. 15. We also find that the statement of the transporters relied on by the department has no relevance who has stopped business with the respondents for more than 2 years during the relevant period. Even no documents were recovered from the transporter to support his averments made in the statements. As seen from the list of customers appended to the cross-objection, the respondents have cleared the goods to more than hundred customers over the period of five years. If that being the position, relying on only seven customers statements that, too without, any corroborative evidence would not be a valid proof. The very fact that respondent have cleared the goods to M/s. National Handloom Development Corporation which is a Public Sector Undertaking supports the fact that they have not cleared cheese yarn in the guise of PRH. The respondents have submitted returns to the Textile Commissioner giving full d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stine manufacture and surreptitious removal of finished final product. Further, since the charge is regarding clandestine manufacturer and removal of finished product for evading excise duty, the same cannot be held to be proved on the basis of principle of preponderance of probabilities and the Revenue has to prove the same beyond doubt. The reference is answered accordingly. 11. As a result, this reference case is dismissed. However, there will be no order as to cost. The above case law is squarely applicable to the facts of the case. As already discussed above, the department has demanded excise duty on cheese yarn on the ground that respondents have clandestinely removed in the guise of PRJ purely on oral statements without any corroborative evidence either from the respondent s premises or from the buyer s documents etc. Therefore, we find that the adjudicating authority has discussed the issues at length and has given a detailed order while dropping the demand proposed in SCN. By respectfully following the decision of the Hon ble High Court, (supra), we do no find any infirmity in the impugned order passed by the adjudicating authority. Accordingly, we uphold the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by not clubbing the turnover of both the units for the purpose of the SSI exemption. B. The CESTAT has erred in not holding that declarations opting under SSI scheme separately for both the units is a gross misdeclaration when they knew pretty well that they are proprietorship firms and owned by one and the same individual. This has been done with an intention to evade payment excise duty by wrongly availing SSI exemption for both the units and suppressed the information from the department with an intention to avail the ineligible exemption. In this regard, it is pertinent to refer to the decision given by the Hon ble. Tribunal in the case of M/s. Aspee Agro v. CCE, Surat, 2001 (134) E.L.T. 139 (T), wherein it was held that instead of declaring the correct. nature of goods, if the classification list merely describe the goods as parts of agricultural implements, then it is justifiable to invoke extended period. In this case also, Mr. M.G. Vyas, knowing that both the units are owned by him had filed option to avail SSI benefits for each units as if the both are separate units headed by separate individual. In view of the settled legal position brought out by the above refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mers themselves have admitted the receipt of cone yarns which are used by them for the manufacture of Terry Towels which is totally different from the description given in the invoice. Such a decision cannot stand the test of legal scrutiny and liable to be set aside. E. The CESTAT has not recorded nor adduced any reason to establish that the customers from whom statements were recorded have given their statements due to their animosity or to malign the respondents or that the statements were obtained under duress. It should be pointed out here that the statements given by the customers have not been retracted and in the absence of the same, the statements recorded are to be accepted as true. Further, no cross examination of the persons, viz., the customers, transporters, workers who have given statements were not true and thus absolve them of their guilt. Under these circumstances, it is clear that illegality has been committed by the respondent, the burden would shift to the respondent and not on the department to prove the offence beyond reasonable doubt. Against this factual and legal position, the Hon ble Tribunal had erred in holding that the burden of proof rested wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acks merit and hence liable to be set aside. I. The CESTAT has not given cognizance on the following case laws which is very relevant in this case. (a) In the case of Collector of Customs v. D. Bhoormull [AIR 1974 SC 859 = 1983 (13) E.L.T. 1546 (S.C.)], the Hon ble Supreme Court, while discussing the admissibility of preponderance of probability has held that even with regard to burden in criminal prosecution, Department is not required to prove its case with mathematical precision to a demonstrable degree and that all that it is required is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. This decision was also referred and relied by the Hon ble Supreme Court in the case of M/s. Maganlal Gulabchand Shah v. U.O.I. [1992 (59) E.L.T. 235 (Guj.)]. (b) Further, the Hon ble Tribunal in the case of Ramachandra Rexins Pvt. Ltd. v. Commissioner of C.Ex., Bangalore-I [2013 (295) E.L.T. 116 (Tri. - Bang.)] has held as follows :- In a case of clandestine activity involving suppression of production and clandestine removal, it is not expected that such evasion has to be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er analyzing the evidence/statements, held that the adjudicating authority has discussed the issues at length and has given a detailed order, while dropping the demand proposed in the show cause notice. That apart, the CESTAT, Chennai, has held that there is no infirmity in the Order-in-Original, passed by the adjudicating authority. 8. Though Mr. A.P. Srinivas, Learned Counsel for the appellant placed reliance on the above judgments and submitted that the Tribunal, did not assign valid reasons nor indicated application of mind, but misdirected itself, by not applying the correct legal position and therefore, the findings are irrational and perverse, going through the entire material on record, we are of the view that both the Order-in-Original No. 14 of 2001, dated 14-6-2001 and Final Order No. 40867 of 2014 in Appeal No. E/381/2002, dated 2-12-2014, do not attract rationality or perversity. 9. Burden to prove clandestine manufacture and removal is on the revenue. The standard of proof has to be necessarily based on preponderance of probabilities. Conjunctures and surmises cannot be the basis of proof, when clandestine removal is alleged and for establishing the said charge, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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