9911796707
TMI Blog2021 (7) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue. The established factors will lead or indicate whether the unestablished factors are probable or not. Needless to say that the conclusion has to be drawn on established facts and probable facts and not on presumption of facts. In grave cases of forgery, fraud, conspiracy etc. seldom direct evidence would be available. In a case of fraud there is always an intention to hide / delete / eliminate or cover up the acts of fraud. Such violations of law go undetected for a long period by tactful ways of hiding, deleting or covering up the fraud. For the same reason, the process of investigation and collecting evidence also become humongous and challenging. This would equally apply to the requirement to prove and establish such evidence in court. While applying the standard of proof of preponderance of probability, in the present case though some of the witnesses have negated their original statements in the cross-examination, the statement of Shri Kalyan Chakravarthy, Shri Duraga Prasad, the misdeclaration of the goods seized from the premises of transporter SRMT, Chennai, discrepancies / reconciliations in accountsmaintained by V. Srinivas Mahesh and others would sufficiently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficers showed that the goods were indeed the resins manufactured by the appellant/assessee and were misdeclared as orthoxylene and booked in the name of M/s Kalyan Chemicals. Chemical analysis of the samples confirmed that the goods were indeed resins. 3. After completing their investigations two show cause notices were issued by the officers of the DGCEI, Chennai OR No.57/2003 dt.19.04.2004 and OR No.54/2005 dt.31.10.2005 for ₹ 1,00,000/- and ₹ 67,47,513/- respectively. These, on adjudication, culminated in an Order-in-Original passed by the Commissioner of Central Excise which on appeal was remanded to the original authority by CESTAT Bangalore by Final Order No.1397-1404/2009 and S.O. 1649-1656/2009 dt.24.11.2009. The specific direction given while remanding the matter was to provide to the appellants copies of all the relied upon documents and allow cross examination of various witnesses sought by the appellant and pass an order after following principles of natural justice. 4. In compliance of these directions, the impugned adjudication order (denovo) has been passed which is under challenge in these cases. During the denovo proceedings cross examination was cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were already supplied along with the original SCN. As relied upon documents were not legible, fresh copies of all relied upon documents, except five, have been supplied to the appellant. The five documents which could not be supplied were S.No.23, 42, 44, 46 & 48 of Annexure-C to the SCN which are as follows: "23. Made-up file No.1 with pages (odd-numbered) from 1 to 447. 42. CE Invoices of HRPL for 2000-01, 2001-02 and 2003-04, in totally 29 books, submitted by Sri Sama Rajasekhar vide letter dated 10.08.2004. 44. Invoices of Priya Chemicals (two no.s) submitted by Sri N. Nagarajan of M/s Balaji Enterprises, Chennai vide letter dated 27.10.2003. 46. Bill, letter of Kalyan Chemicals and copy of SRMT-LR, submitted by Star Paints, Chennai. 48. Invoice of Kalyan Chemicals, submitted by Nirma Paints, Bellary." 7. The reason for the inability of the department to supply these documents was that the original documents could not be traced in the office of DGCEI. 8. At this stage, it would be pertinent to discuss the evidentiary value of the statements made by various persons before the officers of Central Excise. Such statements are made under section 14 of the Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court." 9. It has been the practice for a long time to accept the statements made before the officers of Central Excise under section 14 as evidence in judicial/quasi-judicial proceedings without having regard to the provisions of section 9D. This matter came up before the Hon'ble High Court of Punjab & Haryana in the case of Jindal Drugs Ltd [2016 (340) ELT 67 (P & H)] and the Hon'ble High Court has held that section 9D is a mandatory provision and no statement before an officer under section 14 is relevant as evidence in any judicial/quasi-judicial proceedings unless the requirement of section 9D is fulfilled viz., the person being examined as wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No2 to allow the said request, as it is trite and well-settled position in law that statements recorded behind the back of an assessee cannot be relied upon, in adjudication proceedings, without allowing the assessee an opportunity to test the said evidence by cross-examining the makers of the said statements. If at all authority is required for this proposition, reference may be made to the decisions of the Hon'ble Supreme Court in Arya Abhushan Bhandar v U.O.I., 2002(143)ELT 25 (SC), Swadeshi Polytex v Vollector, 2000 (122) ELT 641 (SC)." 10. In the present case, only 12 out of 18 statements can be considered as these were the cases where the persons were cross examined during the proceedings before the adjudicating authority. 11. The case of the department rests on the following 6 pieces of evidence: (a) The representative samples drawn from barrels seized at the premises of M/s SRMT Ltd, Chennai, the transporter, by Panchnama dt.14.04.2004 and the test report indicated that the materials are resins and not orthoxylene as declared. The modus operandi adopted by the assessee in clearing the resins clandestinely in the guise of orthoxylene is therefore, held to be proven b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Proprietor of M/s Star Paints, Chennai. v. Statement of Shri M. Mohan, working in M/s Sujatha Paints, Chennai given on 22.10.2003. vi. Statement of Shri R. Karthick (Alias R. Daniel Karthick), Proprietor of M/s Raja Colour Tech, Chennai recorded on 03.08.2004. vii. Statement dt.29.08.2005 of Shri K. Nagaraj, Partner of M/s Nirma Paints & Chemicals, Bellary. viii. Statements of Smt. S. Shanthi, W/o P. Sekar (late), Proprietrix of M/s Vivek Paints, Erode recorded on 14.07.2005 and 25.08.2005. All but two of the above eight were cross examined. During the denovo proceedings when the above were cross examined, all the above purchasers have held that they purchased only resin from M/s HRPL, the appellant under proper invoices thus supporting the assessee's case. They have not, however, retracted their earlier statements made under section 14. (f) Evidence of sale proceeds flowing back to the appellant by way of cash/DD was discovered during investigation. The counterfoils of deposit slips pertaining to deposits of cash and cheques into savings bank account of Shri V. Srinivas Mahesh, Marketing Representative with Canara Bank were recovered. Some of the DD application counte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also could not establish that the money has flown back to the assessee. With regard to the above 6 specific pieces of evidence on which the department's case is built up, he would argue as follows: i. The samples of the chemicals drawn from the seized barrels do not pertain to them as has been always maintained by them from date of seizure. ii. The statement of Shri V. Durga Prasad, Booking clerk of M/s SRMT Ltd (transporter) was relied upon by the department to assert that the goods were indeed collected from the assessee/appellant. Shri V. Durga Prasad was not examined under section 9D or cross examined during the proceedings and therefore, his statement cannot be relied upon. Once the statement of Shri V. Durga Prasad is not relied upon, nothing survives against the assessee as far as the seized barrels are concerned. iii. The statement of Shri S.S. Abrar, Proprietor of M/s Inter City Cargo Movers, another transporter was relied upon by the revenue in which he said that he was collecting material from the assessee/appellant although the bills were issued in the name of M/s Kalyan Chemicals. It is true that Shri S.S. Abrar has not retracted his statement on his own. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urge that there is no evidence, whatsoever, adduced by the revenue in the case and the entire case has been built on assumptions and presumptions. Consequently, the case needs to be dismissed and impugned order needs to be set aside and their appeal needs to be allowed with consequential relief. 15. Per contra, learned Departmental Representative (DR) supports the impugned order. At the outset, he would argue that in case of clandestine removal it will be impossible to have records with mathematical precision. If everything has been recorded in the books of accounts then the clearance will not be clandestine at all. Such cases must necessarily take into account various pieces of evidence which come to light during investigations such as the private records, cash flow details, statements of various persons concerned, etc. He would submit that case started on the basis of specific intelligence. The barrels of the chemicals seized at the transporter M/s SRMT Ltd was just the beginning of the case. The barrels were marked in the name of M/s Kalyan Chemicals and were said to contain orthoxylene but had the resin instead. The person who booked the consignments, Shri V. Durga Prasad, age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself and has been interpreted as such by the Hon'ble High Court of Punjab & Haryana in the case of Jindal Drugs Pvt Ltd (supra). Therefore, the statement of six persons who could not be cross examined are not relevant for the present proceedings and only the statements of 12 persons who have been cross examined are relevant. Of the persons who have been cross examined, we find that Shri Kalyana Chakravarthy and Shri V.B.S. Durga Prasad have stood their ground and affirmed their original statements made before the Central Excise officers. Shri Kalyana Chakravarthy worked as clerk/typist in the assessee's firm and has opened another company in the name of M/s Kalyan Chemicals. He confirmed when cross examined by the assessee's counsel that it was a dummy firm created at the behest of Shri Sama Rajasekhar, Managing Director of the appellant firm and no manufacturing activity takes place there and only papers are made in the name of M/s Kalyan Chemicals for the goods actually cleared by the assessee. Similarly, Shri V.B.S. Durga Prasad, Sales executive has also confirmed that M/s Prasad Chemicals was dummy firm opened by him at the behest of his employer Shri Sama Rajasekhar, through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the revenue and it has not been countered effectively by the assessee. b) The evidence regarding transportation of goods alleged to be clandestinely manufactured and removed and their sale to the buyers have not been established as both the transporters and the buyers have all negated their statements during cross examination before the adjudicating authority. In terms of section 9D the statements are only admissible if the persons were examined before the adjudicating authority. Thus, the evidential value of the original statement is in doubt. c) As far as the alleged flow back of money is concerned, we do find that there is some evidence regarding cash deposits and counterfoils of DDs but we do not find this sufficient to establish a flow back of money to the assessee. 22. We are aware that the case under Central Excise Act is civil case and preponderance of probabilities is the level of evidence required and not proof beyond reasonable doubt. We are also fully conscious of the fact that in case of clandestine removals there cannot be a 100% accurate point to point correlation with mathematical precision. If such accounts are maintained then it will no longer be clandest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that his duty included typing, correspondence, maintaining various records and other things in HRPL. He also looked after the work of M/s Priya Chemicals, the other firm owned by Mrs. M. Varalaxmi w/o Shri S. Rajsekhar, the Managing Director. He further admitted that he has signed various documents like bank account opening forms, cheque books, bills, sales tax registration application, etc. etc. on the instruction of Shri S. Rajsekhar. He did not know the details of the business and was signing on the dotted line, as being instructed by Shri S. Rajsekhar. He categorically stated that he has nothing to do with the amount deposited in the bank account No. 1142 and 1248 with Global Trust Bank, Vijayawada. He also stated that the cheque book and passbooks were kept with Shri S. Rajsekhar only. He also identified various bills issued in the name of M/s Kalyan Chemical and corresponding slips written by him at the instruction of Shri S. Rajsekhar. He also categorically stated that the bills of M/s Kalyan Chemicals were used to cover the finished goods clandestinely removed by M/s HRPL to various customers. Such bills were prepared, showing the bills for sale of orthoxylene, M.T.O. or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Even the LR nos. was found to be consecutive. Further, the transporters have also affirmed that they were lifting the goods from the premises of M/s HRPL, partly consigned by M/s HRPL and partly (purportedly) consigned by M/s Kalyan Chemicals or M/s Prasad Chemicals. The transporters categorically stated that they had ignored the anomaly in view of their business interest. 30. Shri Durga Prasad, agent of M/s SRMT, Vijayawada (transporter), in his statement dated 19.08.2004 stated that they use to go with lorry for pick up to the premises of M/s HRPL, for booking of resin barrels. He use to deal with Shri S. Rajsekhar for getting the transport orders for M/s HRPL and its sister concern M/s Priya Chemicals. On being questioned as to the booking made by them in the name of M/s Kalyan Chemicals he stated that he did not know where M/s Kalyan Chemicals were actually located or to whom it belongs. He categorically stated that the bills in the name of M/s Kalyan Chemicals were actually for covering the barrels which were loaded at M/s HRPL factory, as required by Shri S. Rajsekhar. He also stated that the staff of M/s HRPL used to give the bills in the name of M/s Kalyan Chemicals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Chemicals were made from May, 2003 onwards while in the earlier period certain booking of M/s HRPL were available. Evidently in the consignment note No. 8114 dated 01.05.2003 pertaining to the first booking in the name of M/s Kalyan Chemicals by ICCM, the consignor name column was written as 'M/s Kalyan Chemicals, Vijayawada c/o Harika'. The goods were usually indicated as 'alkyd resin' and the values reflected in the LR was about ₹ 10/- per kg. 33. The Proprietor of ICCM Shri S.S. Abrar in his statement dated 28.07.2005 stated that they were transporting for M/s HRPL being resin in barrels to Chennai through railway. He further stated - regarding consignments of M/s Kalyan Chemicals, these were also brought by the staff of M/s HRPL for transport to Chennai. Shri Abrar identified LRs and they were indicative of M/s Harika in the consignor name, was written to identify the party in case of any need. He reiterated that the barrels covered under the bills of M/s Kalyan Chemicals were brought by M/s HRPL staff only. 34. Revenue also searched Room No. 20 at Shivkasi Nadar Mansion at Chennai which was taken on rent by Shri V. B. Durga Prasad, Sales Executive of M/s HRPL who lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s located as also used in other instances. However, for booking the transport, the goods were declared as 'Orthoxylene' with the price at ₹ 10/- per kg., while in actuality, the goods were Resin i.e., RMD (Rosinated Medium DCO (Dehydrated Castor Oil-based) Alkyd Resin of value at ₹ 49/- per kg., as depicted in the above entry. (b) Similarly, in the page dated 17th March, 2003 of the said Diary, the following handwritten entry was available: Vivek, Erode - 951202 -10 RMD (LAV) - 9@ 48 MM -1 @ 50 These particulars were correlatable to a consignment booked under LR No. 951202 of SRMT, Vijayawada, the consignor - name being Kalyan Chemicals, of 10 barrels declared to be containing 'Orthoxylene'. However, as the above entry shows, the goods actually consisted of 9 barrels of Alkyd Resins indicated as RMD-LAV plus one barrel consisting of Malleic Resin denoted as 'MM' beneath these entries and the total value was arrived at as ₹ 91,580/- against which the payment of ₹ 49,580/- was deducted and the balance indicated as ₹ 42,000/- (which was also indicated as subsequently paid on 04.06.03). The details of payment of ₹ 49,580/- were also written w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consignment transported through SRMT or ICCM. Most of the entries in the private ledger /diary were corelatable to the consignment transported through SRMT or ICCM in terms of date, party name, quantity and also the actual description of the consignment transported under the bill of M/s Kalyan Chemicals. The amounts written in partywise account in the private ledger were found to be expressed in code, as was evident from comparison with the value arrived at from the entries in the Executive Diary-2003 (i.e. rate per kg. and total quantity in kgs.). For example, the figures 389.50 were written in ledger to denote ₹ 38,950/-. For illustration, in folio No. 30 of pocket ledger vide Mahazar Sl. No. 2 pertaining to the party 'BHARANI', such entry dated 09.06.2003 is RMD 5 barrels x 190 kg.- 475.00. But, in page for 09.06.2003 in the Executive Diary-2003, the supply of 5 barrels of 190 kg. each of RMD @ ₹ 50/- is equal to ₹ 47,500/- supplied vide LR No. 1144296 to BHARANI was mentioned. Similarly, in folio 50 of the pocket ledger against ten barrels @ ₹ 49/- per kg. was mentioned. Thus, the debit apparently pertains to the value of supplies and credit for the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing handwritten particulars as "RMD10X190 kgs. @ 46/- to Star Paints, Chennai through SRMT (Door delivery)", which on verification, apparently showed the actual description (and price) of the consignment booked with SRMT under the name of Kalyan Chemicals vide LR No. 1171077 to M/s Star Paints, Chennai on 26.07.03, however with goods described as 'orthozylene'. (d) Page 371 of the above said file consists of a handwritten statement of party-wise outstanding amounts, showing certain remarks, additions and adjustments from different parties' amounts. The caption on the page 'Mahesh book and boss book' appeared to be self-indicative that the details pertained to a reconciliation between the amounts reflected in the privately maintained ledger of Sri V. Srinivas Mahesh, the employee of HRPL at Chennai and the amounts as per the 'boss-book' an obvious reference to Sri Sama Rajasekhar, M.D. of HRPL. (e) More importantly, page 299 of the above said file was a printed List of products i.e. Resins manufactured by HRPL (with the printed company name and address). In this sheet, prices were handwritten against many items and in addition notings/ remarks were written as the prices bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records / documents recovered from the residence of Shri V. Srinivas Mahesh include - made up file No. 1 containing various documents as party's account - statements, correspondence, etc. pertaining to HRPL and M/s Priya Chemicals. Sheet 64 and 65 of the file consist of Bill No. 1/65 dated 20.06.2003 of M/s Kalyan Chemicals, Vijayawada showing supply of goods declared as orthoxylene ten barrels x 190 kg. @ ₹ 10/- per kg. total value ₹ 19,000/- (including CST) to M/s Ranga Paints, Chennai vide LR No. 1009160 of SRMT for door delivery. Sheet 66 is the small slip, stapled to sheet No. 64 and 65 containing handwritten details as follows:- 20.06.2003: Ranga Paints, Chennai, RML (LAV)- 10x 190 kg. @ 49/-; SRMT - Door delivery. Thus, from the matching of the particulars and date, consignee, quantity and transporter's name in the bill and LR with the small slip, it is apparent that the goods supplied were resins (EML-LAV denoting Resonated Medium Linseed Resin with Low Acid Value) at a price of ₹ 49/- per kg., while the corresponding bill was issued showing supply of orthozylene @ ₹ 10/- per kg. 41. Similarly, sheet No. 57 to 62 consist of set of LR of SRMT, Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his statement recorded with the department on various dates under Section 14 has identified the documents and admitted the same as being maintained in the normal course of business at the instance of Shri S. Rajsekhar. He further admitted that he has been employee of HRPL from 1997 till June, 2003 stationed at Chennai and his duty included contracting buyers of resin manufactured by HRPL, procuring orders, forwarding the same to HRPL, receiving the LR and collecting the sale proceeds from the buyers. Normally he communicated the orders for sale to Shri S. Rajsekhar over phone and raisin was despatched generally by door delivery through SRMT, Vijayawada. That after dispatch of resin Shri S. Rajsekhar used to send the third copy of the LR alongwith a chit and bill of Kalyan Chemicals or Prasad Chemicals or Priya Chemicals. That the chit contained details of the buyers name, description of goods, quantity and actual rate at which the resin was supplied. That the set of documents i.e. LR, chit and bill was received by courier and were handed over by him to the respective buyers, who in turn issued a chit being an acknowledgement of receipt of goods and in these chits also the actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rubber-stamp impression of HRPL. The contents of this documents were as follows: "Dear Mahesh, Today, we opened Current Account Premium at Global Trust Bank Ltd., in the name and style of M. Kalyana Chakrawarthy A/c No. 29011 01142. Today onwards, you deposit all the 'without funds' in the above account. Also we are going to close V. Durga Prasad A/c. So please do the necessary action immdtly". 45. On requisition, Global Trust Bank, Vijayawada furnished the copies of the Account- Statements of the above said accounts alongwith copies of the Account-Opening forms and related documents. The relevant details as per these documents, are as follows: Name S/Shri Account Number Period operated Total amounts deposited Ch. Siva Durga Prasad 29000 - 18190 October, 2001 to March, 2002 ₹ 27.54 lakhs (excl. Transfers) V. Durga Prasad 29011 -01075 July, 2002 to May, 2003 ₹ 62.64 lakhs M. Kalyana Chakravarthy 29011- 01142 March, 2003 to October, 2003 ₹ 1.1 crores approx. M. Kalyana Chakravarthy 29011-01248 October, 2003 to November, 2003 For the above accounts, the introduction for the account opening in the name of V. Durga Prasad was given by Ch. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rasad Chemicals as well as those of M/s Kalyan Chemicals for the earlier period were destroyed and hence not available. Shri S. Rajsekhar further confirmed that Plot No. R.S. 409/2 which was the address of M/s Prasad Chemicals belongs to him and the address of M/s Kalyan Chemicals D. No. 25-52/1, Kabela Road was a room in a corner of the plot which was used by the Watchman who stayed there and rared cattle. He also identified and admitted the rent receipts of M/s Kalyan Chemicals as issued by him. He also affirmed that all the letters in the name of M/s Kalyan Chemicals were delivered at HRPL factory (located nearby). 47. Thus, it is evident that M/s Prasad Chemicals and M/s Kalyan Chemicals were created and registered with the Sales Tax Authority in the name of employees of HRPL to clandestinely purchase raw materials for HRPL and also clandestine clearance of the finished goods of HRPL for the purpose of evading Central Excise duty and other taxes. Further, bank accounts were opened in the name of the said employees namely Shri M. Kalyan Chakraworty, V. B. Durga Prasad, C. S. Durga Prasad etc. to facilitate the receipt of flow back of money for the clandestinely cleared finished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso prepared as instructed by Shri S. Rajsekhar, and he did not know anything or any details. He also stated that the purchase invoices for M/s Kalyan Chemicals were also arranged by Shri S. Rajsekhar and he did not know the manner of disposal of the purchases. Further, he categorically stated that he has done all activities in the name of M/s Kalyan Chemicals on the instruction of Shri S. Rajsekhar, being the employee and have not received any additional consideration for the same. 49. Shri V. B. Durga Prasad, Sales Executive of M/s HRPL in his statement dated 09.08.2004 deposed, that in connection with his duty he used to visit Chennai and other places frequently for procuring orders and collection of payment from the customers. That the amount(s) collected were deposited in the account of M/s HRPL and also in the account of Shri M. Kalyan Chakraworty in Global Trust Bank, and sometimes the customer deposited the payments directly in the accounts as per the instructions of Shri S. Rajsekhar. He used to note down the details of despatches of resin and collection of payment. He had taken a room on rent in Shivkasi Nadar Mansion, Chennai for his stay. He also identified the Executi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of Shri S. Rajsekhar, obtained the Sales Tax registration, opened the bank account, signed the blank cheques and everything at the instance of Shri S. Rajsekhar. He has no personal interest in M/s Prasad Chemicals or in the bank account No. 29000 -18190 opened in Global Trust Bank, Vijayawada. He further affirmed that the said account was used for depositing the unaccounted amounts (flow back) from the sale of resin removed clandestinely by M/s HRPL under the invoices of M/s Prasad Chemicals or M/s Kalyan Chemicals. He also stated that he has not received any additional consideration in this matter. 51. In the course of enquiry made with M/s Oilchem India, they admitted that they have supplied raw materials to M/s HRPL as well as M/s Prasad Chemicals on receipt of payment by way of demand draft. 52. Further, the clandestine purchase of raw materials by M/s HRPL, is also established from several payments made from the aforementioned bank accounts of Shri V. B. Durga Prasad and Shri M. Kalyan Chakraworty during the year 2002-2003 in the name of Shri K. Rajeswar Rao and Shri K. Rajnikant. These payments aggregate to about ₹ 32 lakhs which were mainly credited in the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tine transactions recorded in the resumed private records vide Mahazar from V. S. Mahesh and V. B. Durga Prasad. 54. Similar confirmation was made by other buyers of clandestinely removed goods namely - M/s Sujatha Paints, Chennai through its Partner Shri M. Mohan, by M/s Vee Kay Jay Paints & Chemicals, Chennai through its prop. V. Veeraraghavan, M/s Star Paints, Chennai through its Prop. Shri R. Radhakrishnan, M/s Raja Paints, Chennai through its Prop. R. Karthikeyan etc. 55. From the aforementioned documentary facts which were revealed in the course of investigation and enquiry, I find that the statements of various persons are supported by documentary evidence. Such documentary evidence have been admitted by the concerned employees of M/s HRPL and also admitted by Shri S. Rajsekhar, the Managing Director of M/s HRPL. Both clandestine purchases of raw materials, clandestine removal of finished goods, evidence of transport, flow back of sale proceeds of the clandestinely removed goods have been established. I further hold that retraction of the statements by some of the persons at the later stage as well as non appearance of some of the witness in the adjudication proceedings, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce have already been narrated in detail in both the orders, I do not think it necessary to repeat the same in this order. Brother Member (Technical) after his finding of facts in para 21, has reached the conclusion that the Revenue could not establish the case based on preponderance of probabilities and statements. He thus set aside the impugned order allowing the appeals. On the contrary, brother Member (Judicial) after considering the evidence has held that there is enough evidence apart from the statements recorded and therefore held against the appellant by dismissing the appeals. 58. The questions referred to me are based on the above discussions and conclusions made by both the Members. 59. The appellant company had Central Excise registration both as 'manufacture' and 'dealer' and was clearing goods by paying duty at concessional rate availing SSI exemption. The gist of the allegations in the Show Cause Notice is that appellant company manufactured resins more than the quantity accounted by them and cleared such goods clandestinely under fictitious bills issued in the name of 'Kalyan Chemicals' and 'Prasad Chemicals'. On perusal of paragraph 21 of the order recorded by bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product (resin) in the guise of other products on lesser value through their dummy unit in order to evade excise duty. The link of transportation is clear as the goods were seized at the premises of the transporter M/s. SRMT. The register recovered from this transporter also reveals various instances where goods have been lifted in the name of Kalyan Chemicals and Prasad Chemicals. Para 6.2 and 6.3 and 7.4 of Show Cause Notice dated 31.10.2005 explains this in detail. Further, the proprietor of M/s. Kalyan Chemicals is Mr. Kalyan Chakravarthy who is a clerk cum typist of appellant-company. It is also revealed from evidence that this unit M/s. Kalyan Chemicals was functioning within the premises of appellant-company. 61. M/s. Kalyan Chemicals was started only in 2001. Prior to June 2001, the other firm Prasad Chemicals was started by the appellant. The proprietor of Prasad Chemicals is Shri Siva Durga Prasad who is an employee of HRPL and Priya Chemicals. This is another alleged dummy unit floated by appellant company of which Ms. Varalakshmi, wife of M.D. of appellant company is the proprietor. In a court document relating to Priya Chemicals, Shri S. Durga Prasad is shown as accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the appellant, the strong inference that can be drawn is that these dummy units were used by the appellant-company for clandestine removal of finished goods so as to evade payment of excise duty. The appellant company was availing SSI exemption and the aggregate turnover was suppressed by clearance of goods through these dummy units. 63. With regard to the evidence of the transportation, as mentioned earlier, during the search, 10 barrels were seized from premises of M/s. SRMT Ltd., Chennai which is also a transporter for appellant company. The fact that the goods in the bills seized at the premises of transporter were declared as 'orthozylene' instead of 'resin' and also as these bills were raised in the name of M/s. Kalyan Chemicals would prove the clandestine clearance of goods. The other transporter Inter City Cargo Movers (ICCM) has not filed any reply clarifying their position as noted by the adjudicating authority in para 115 of Order in Original. Though it is seen that Shri S.S. Abrar, Proprietor of ICCM in his statement dated 28.7.2005 stated that they were carrying goods from the consignors'godown only, he negated his own statement during cross-examination. Without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es various instances of clandestine clearance of resin. From the totality of the facts and evidences, I am of the view that the department has succeeded in establishing the allegation of clandestine clearance of finished products by appellants by raising fictitious invoices bills in the name of dummy units. 65. The two types of standards of proof applied in proceedings are 'proof beyond reasonable doubt' and 'proof of preponderance of probability. The appreciation of evidence in either of these types of standards of proof differs depending on the facts involved. In a serious case such as evasion of duty by fraud, the degree of appreciation of evidence has to be higher than in a case of allegation of mere delay in payment of duty though in both cases the evidence has to be appreciated on the preponderance of probability. 66. In adjudication proceedings, there may be factors established in favour of appellant and some in favour of Revenue. The established factors will lead or indicate whether the unestablished factors are probable or not. Needless to say that the conclusion has to be drawn on established facts and probable facts and not on presumption of facts. In grave cases of fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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