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TMI Blog2020 (4) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... , dated 21st September, 2017 in the Appeal No. E/607,608/2008. 4. On 19th April, 2018, a Co-ordinate Bench of this Court passed the following order: "Counsel for the appellant submitted that before the Central Excise, Customs & Service Tax Appellate Tribunal, the appellant had raised several grounds of facts and law. The Tribunal, however, dealt with only one of the issues; namely, of ascertaining the production capacity of the machinery. Though several other legal issues arose out of the order in original passed by the Commissioner after the remand made by the Tribunal, the Tribunal did not examine these issues though argued before it. Notice for final disposal, returnable on 20th June 2018." 5. Both the tax appeals are admitted for the consideration of the following substantial questions of law : "(i) Whether or not the Hon'ble Tribunal erred in law in not considering remand order of the Tribunal and confirming the demand beyond the scope of remand proceedings? (ii) Whether or not the Hon'ble Tribunal erred in law in not considering production capacity on the basis of certificate of various authority and confirming demand beyond the production capacity on assumption b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f production arrived at by the Department was three to seven times more than the actual capacity of the machine. At the relevant point of time, the appellants adduced evidence with regard to the manufacturing/production capacity of the machine. It was pointed out that the capacity of the machine was not more than 448 kgs per day in a span of 24 hours. 11. Ultimately, upon final adjudication, the Commissioner came to the conclusion that the appellants were guilty of clandestine removal of the goods manufactured by them in their factory premises without the payment of the requisite excise duty. An order came to be passed by the Commissioner for recovery of a particular amount with penalty. 12. The appellants, being dissatisfied by the order passed by the Commissioner, went in appeal before the CESTAT Tribunal. The Tribunal partly allowed the appeal preferred by the appellants by remitting the entire matter to the Commissioner for de novo proceedings. While remitting the matter to the Commissioner, the Tribunal observed as under: "(a)The appellants had produced Certificate from Technical/qualified authorities to contest the alleged production figures of Texturised Yarn was not pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine optimum production capacities, as provided for under Rule 173E of the Central Excise Rule 1944, which were applicable and available for the period under dispute. Mere entries on the private records cannot be conclusive evidence of unaccounted production. (d) The reliance of the Ld.Advocate for the appellants, on the decision in case of George Varghese {1992 (60) ELT 361 (Ker} is well founded to arrive at an order of Remand since there is a failure on part of the Revenue to advert to proper material/relevant evidence to arrive at actual production & unaccounted clearance thereafter with liability to penalty, if any. (e) Since we are ordering a Remand for redetermination of the production, we do not arrive at any findings on other issues, keeping them for both sides in the Denovo proceedings." 13. Thus, what weighed with the Tribunal in the first round of the litigation was the argument of the appellants with regard to the production capacity of the machine which had been installed in the factory. The Tribunal observed that the Commissioner was not justified in rejecting the certificates which were produced by the appellants with regard to the production capacity of the mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hering records of raw materials, oil and electricity consumption, etc. is also not possible as the unit is closed since long. I find that, the assessee's request for running trial production on any machine will be beyond the scope of CESTAT's directions, because production capacity of the particular machine has to be re-determined which the assessee possessed at the material time. Further, there cannot be a fixed norm for earning production of texturised yarn, the production may differ from machine to machine. It is pertinent to mention that as per Rule 173E of the Central Excise Rules, 1944, the determination of normal production of the factory was not done at the material time and now when the said machine is not in working condition, the same cannot be carried out. I find that the noticee advocating, production capacity of their machine to counter the packing slips and other private records seized during panchnama dated 05.04.95 is an attempt, contrived to mislead the adjudication proceedings in arriving at wrong production data when that particular machine is not in a working condition. Hence, I do not accpet noticee's request to run test production elsewhere on any machine and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Guarantee of Rs. 1,49,000/- (Rupees one lakh forty nine thousand only) already furnished by them at the time of provisional released of the goods. 02. I confirm Central Excise duty amounting to Rs. 3,44,711.86 (BED Rs. 2,99,749.62 + Addl/ Duty Rs. 44,962.24) leviable on seized goods which were provisionally released and subsequently cleared by the factory on payment of duty due thereon, under the provisions of Rule 9(2) of the Central Excise Rules, 1944. 03. I determine Central Excise duty amounting to Rs. 66,87,285/-(Rs. 58,15,030/- BED + Rs. 8,72,255/- Addl. Duty) leviable on the illicit production and clearance of texturised yarn weighing 92,302.078 Kgs. valued at Rs. 96,91,717/- (as detailed in Appendix-I to IV of Show Cause Notice) under Rule 9(2) of Central Excise Rules, 1944 read with Section 11A(2) of Central Excise Act, 1944. M/s. Trinetra Texturusers (P) Ltd., Karanj, Dist. Surat, forthwith will pay the duty so determined under provisio to Section 11A(1) of Central Excise Act, 1944. The interest is also payable for the delayed payment of the duty demanded above as stipulated under Section 11 AB of Central Excise Act, 1944. 04. I, order confiscation of land, build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide their defence submission dated 13.12.2007 has requested deputing any officer at any factory having same machine to verify the production capacity. During personal hearing they showed their inability to run the same machine i.e., HIMSON Scragg Draw Texturising Machine, Model SDS-3, with 144 Spindles, as the said machine is in junked condition and could not run. He requested for conducting a trial run at any factory having machine as M/s Trinetra Texturisers is closed since long and the machine is not in working condition. I find that in absence of the machine in question, the redetermination of production capacity is not possible. Moreover, after 14 years in the exercise of gathering records of raw materials, oil and electricity consumption etc., is also not possible as the unit is closed since long. I find that, the assessee's request for running trial production on any machine will be beyond the scope of CESTAT's directions, because production capacity of the particular machine has to be redetermined which the assessee possessed at the material time. Further, there cannot be a fixed norm for earning production of texturised yarn, the production may differ from machine to mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Mr.Deven Parikh, the learned senior counsel appearing for the appellants, vehemently submitted that the impugned order passed by the Tribunal is erroneous, and on the face of it, not tenable in law. 23. Mr.Parikh, further submitted that the impugned order, in fact, runs contrary to the order passed by the Tribunal in the first round of the litigation. The impugned order completely dilutes the idea with which the matter was remanded by the Tribunal to the Commissioner, in the first round of the litigation. 24. Mr.Parikh, submitted that when the appellants put forward a positive case that the allegations of clandestine removal of goods are not sustainable in view of the production capacity of the machine installed, then the burden shifted upon the Department to establish that the production capacity of the machine tallies with the records and the goods seized and thereby, the allegation of clandestine removal gets fortified. According to Mr.Parikh, the entire burden has been shifted upon the appellants to establish with regard to the production capacity of the machine. 25. Mr.Parikh further submitted that the law with regard to examining the production capacity of the machine i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of few statements of the Directors recorded by the Department. In other words, Mr.Parikh concluded his submissions saying that once the issue of production capacity goes in favour of the appellants, the other issues would pale into insignificance. 28. In such circumstances referred to above, Mr.Parikh prays that there being merit in the Appeals, those be allowed and the impugned order be quashed and set aside. Submission on behalf of the revenue: 29. Mr.Nirzar Desai, the learned standing counsel appearing for the Department, has vehemently opposed both these Appeals. Mr.Desai would submit that no error, not to speak of any error of law, could be said to have been committed by the Tribunal in passing the impugned order. 30. According to Mr.Desai, although in the first round of the litigation the Tribunal thought fit to remand the matter so as to give an opportunity to the Department to look into the production capacity of the machine, yet as the machine installed in the factory premises of the appellants was not found in a working condition, the Department was not able to verify the production capacity. 31. According to Mr.Desai, in such circumstances, no fault could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw is abundantly clear that such examination of the machine can be undertaken at some other place, the Department should have agreed to do so. Having not done so, the Department now cannot take shelter of the order passed by the Tribunal, which is not tenable in law. 38. By now, this litigation is almost two decades old. It will be too much for this Court to once again remand the matter for the very same exercise, which could have been undertaken a decade back. 39. In such circumstances, we decline to accept the vociferous submission of the learned standing counsel appearing for the Revenue that the appellants should not be permitted to have an undue advantage as the same would lead to a huge loss to the Revenue. 40. We shall now look into the Case-law, which has been pointed out by Mr.Parikh, the learned senior counsel appearing for the appellants. In the case of R.K.Mill Board (P) LTD. Versus Commissioner of Central Excise, Meerut, reported in 2001 (135) E.L.T.1296 (Tri-Del.), the Tribunal has observed as under: "15. Heard the rival submissions. We have considered the evidence on records and the statements of the various persons. We have perused the chart prepared by the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners of M/s. SPH were concerned with the receipt of the goods which they had reason to believe that they were liable to confiscation and, therefore attracted the provisions of Rule 209A." 41. The aforesaid decision of the Tribunal came to be affirmed by the Hon'ble Supreme Court. The Hon'ble Supreme Court's decision, affirming the Tribunal's order is reported in 2002 (139) E.L.T.A85 (S.C.). 42. Our attention has also been drawn to the decision of a Co-ordinate Bench of this Court in the case of Shivam Casting Versus Commissioner of Central Excise reported in 2018 (359) E.L.T. 16 (Guj.), wherein, this Court has observed as under: "1. The assessee is in appeal against the CESTAT dated 16.05.2017 raising following questions for our consideration: 1) Whether the CESTAT is correct in remanding the case to the Original adjudicating authority, for reappreciation of Chartered Engineer's Certificate on the basis of the direction given in para 6 of the order? 2) Whether the CESTAT is correct in remanding the matter to the Original adjudicating authority, ignoring the fact that the department has not produced any evidence to prove that the order of the Honourable Commissioner is perve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters, the Furnace could work for 15 days a month and the total production capacity per day could be assessed at 2000 to 2750 Kg. per day. Considering the observation of the Chartered Engineer, and average estimated production of 2500 kg., the total production of the Noticee, per year could come to only 4,50,000/- and for the period under consideration could come to only 10,50,000/kg. whereas the department has worked out 29,42,722 kg which is almost three times of the capacity worked out by the chartered engineer. 3.6.2 In this regard, I find that no manufacturing unit can manufacture the goods beyond their capacity. Since, installed capacity of machinery viz. copola furnace used for casting of goods have capacity of 2000 Kgs to maximum 2750 Kgs per day no more casting can be takes place as in no case work of furnace for melting of metal can be carried out by any other means. Hence as per the Chartered Engineer factory work for full efficiency then turnover of the company could come to about of Rs. 75,00,000/- and the said turnover being less then exemption limit of Rs. 1,00,00,000/-. However the said production includes rejection which is again melted in furnace for re-casting. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross-Objection filed by the Respondent is also disposed of accordingly. "This judgement the assessee has challenged in the present appeal. 3. Learned counsel Mr. Sheth for the assessee submitted that the Tribunal committed an error in remanding the proceedings enabling the department to controvert the contents of the Chartered Engineer's certificate produced by the assessee. After a long gap of time it will not be possible for the assessee to produce further material in support of its stand that the annual production capacity of the unit could not have exceeded Rs. 10.50 lakh kilograms whereas the department had worked out clearance of Rs. 29.42 lakh kilograms. Counsel further submitted that the Tribunal erred in appreciating the order of the Commissioner as being passed solely on such Chartered Engineer's certificate. The Commissioner had referred to and taken into account other evidence also. 4. We do not find that the Tribunal understood the Commissioner's order as being passed solely on the Chartered Engineer's certificate. According to the Tribunal, this was one of the important grounds which weighed with the Commissioner in dropping the proceedings. The perusal of the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal, while passing Order No. A/108171820/ WZB/ AHD/2013 dated 15.07.2013, was correct in admitting the evidences for the past clearance and ignore the evidences for the remaining clearances ?" {d} Whether the Customs, Excise & Service Tax Appellate Tribunal, while passing Order No. A/108171820/ WZB/ AHD/2013 dated 15.07.2013, was correct in holding that the statement has been retracted even though the same person has admitted the depositions made in the retracted statements in his statement recored subsequent to the retraction ?" 3. We have heard learned counsel Ms. Amee Yagnik for the Revenue and with her assistance, examined the material on record. In the following factual background, these appeals arise. 4. Messrs. Saakeen Alloys Private Limited, which is engaged in the manufacture of CTD/Round bars, is situated at Visnagar Mahesana Road, District Mehsana. On the premises of Messrs. Saakeen Alloys Private Limited and Messrs. Sunrise Enterprises, Mahesana simultaneous searches were carried out wherein three notebooks and one pendrive were recovered containing details of illicit clearances made by the said M/s. Saakeen Alloys Private Limited. On 24th November ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess consumption of power like electricity, seizure of cash, etc., the Tribunal noted and held that there was nothing to bank upon except the bare confessional statements of the proprietor and of some of the persons connected with the manufacturing activities and such statements were retracted within no time of their recording. The Tribunal also noted the fact that the requisite opportunity of cross examination was also not made available so as to bring to the fore the true picture and therefore, it concluded against the Revenue observing that not permitting the cross examination of a person incharge of records of M/s. Sunrise Enterprises and absence of other cogent and positive evidences, would not permit it to sustain the demand of Rs. 1.85 Crores raised in the Demand notice and confirmed by both the authorities below. 8. As could be noticed from the material on record that for the remaining amount of Rs. 8.25 lakhs from the transporter's premises, the parallel invoices were recovered which not only were confirmed by the proprietor of the said transporter but independent evidences also affirmed the same. The Tribunal has chosen to sustain such amount levied in order-in-origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the factory premises it is shown that there was no excess/shortage of the raw materials or finished goods found. The documentary evidences collected from the business premises of M/s.Sunrise Enterprise and the statements recorded by investigation, can at the most raise a reasonable doubt that some clandestine removal activities are undertaken by the appellant. However, such a suspicion or doubt has to be strengthened by positive evidences which seem to be lacking in this case. Any suspicion whosoever cannot take the place of evidence regarding clandestine removal of excisable goods. Moreover, after having positive evidences, qualification of duty on clandestinely removed goods also becomes essential. As already mentioned above, the stock lying in the stock yard of M/s. Sunrise Enterprise, Mehsana was found containing the goods received from M/s.Sakeen Alloys Pvt. Limited under proper invoices. When the goods received under proper invoices are found in the stock yard of M/s. Sunrise Enterprise, then it is possible that out of such goods certain quantities were sold to various customers by accepting payment in cash. In such a situation, the quantification undertaken by the investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Supreme Court in the case of Parashuram Pottery Works Co. Ltd. v. Income Tax Officer, Circle I, Ward A, Rajkot, reported in (1977) 106 ITR 1, which read thus : "It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue." 48. In the overall view of the matter, we are convinced that the impugned order of the Tribunal is not sustainable in law. Once again, at the cost of repetition, we state that we could have remanded the matter once again but, for the obstinate attitude of the Department, we decline to grant any further opportunity to the Revenue. 49. In the result, both the Appeals succeed and are hereby allowed. The impugned orders passed by the Tribunal are hereby quashed and set aside. The substantial questions of law are answered in favour of the appellants and against the Revenue. 50. It is needless to clarify ..... X X X X Extracts X X X X X X X X Extracts X X X X
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