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TMI Blog2022 (5) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon ble High Court also took notice of the fact that the said Officers have retracted their statements soon thereafter and also not supported their statement given at the time of investigation, in their cross-examination. On a careful examination of the statements and cross-examination, it is found that there is no categorical admission of clandestine removal as alleged by the Revenue. It is also found that all these persons had retracted their statement within a period of few weeks/ months of the recording of their initial statement by the officers during investigation. Thus, these statements discussed hereinabove, do not support the allegations of clandestine removal for the alleged duty evasion of Rs.9,94,65,997/-. The charge of clandestine removal and duty evasion is a serious charge having civil consequences upon the assessee. Such charge cannot be confirmed unless there is sufficient corroborative evidence which leads to the inevitable conclusion of clandestine removal - In the facts of the present case, it is found that in absence of the relevant inputs necessary for production for the alleged quantity removed clandestinely, namely raw materials, electricity, labour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordered to be released along with interest earned on it. However, penalty of Rs. 5 lakhs was imposed on Shri N. K. Gupta, Vice President of M/s Prakash Industries Limited, New Delhi under Rule 26 of Central Excise Rules, 2002. The proposed penalty on Shri V. K. Gupta, Vice President of M/s Prakash Industries Limited, Raipur was dropped. 4. Being aggrieved, the appellant assessee had filed appeal before this Tribunal being Appeal No. E/2287/2006-EX(DB) against confirmation of duty amount of Rs. 1,51,44,426/- as well as penalty and confiscation. The Director Shri N. K. Gupta also filed Appeal No. E/2292/2006-EX(DB) challenging the imposition of penalty. 5. Revenue also filed Appeal No. E/3704/2006-EX(DB) assailing the order-in-original against dropping of demand of Rs.9,94,65,997/- for alleged clandestine removal of 67170.156 MT of finished goods, which have been proposed in the show cause notice on the basis of third party record being the bilty nakal register (a sort of daily book) and on the basis of copies of GRs recovered from the transporters alleged to be corroborated with photocopies of GR notes etc. provided by a source/ complainant. 6. Vide common Final Order N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as already appreciated by it. It was further observed that if the Tribunal required more evidence, it could have called for the same. It was further observed that it was for the Tribunal to examine the legality and validity of the findings on the grounds raised by Revenue and arrive at its own finding, as to whether the Adjudicating Authority was correct in law and on facts in reaching upon the conclusion that demand of duty of Rs.9, 94, 65,997/-, was liable to be dropped. 10. As regards to the admissibility of the statements recorded during investigation, the Hon ble High Court observed that such issue has been considered in its preceding judgment in the case of Hi Tech Abrasives Limited vs. The Commissioner, Central Excise and Customs, Raipur, wherein Hon ble High Court has held that unless the person, whose so called admission is said to be recorded during investigation, is examined by the Adjudicating Authority and Adjudicating Authority forms an opinion that the statement should be admitted in evidence, in the interest of justice, such a statement would not be admissible. In the present case, however, the admitted facts are that the statement of the two Assistant General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his part of the demand was also based on the same set of evidence on which the demand of Rs.9,94,65,997/- was dropped by the Commissioner? 14. So far the first question is concerned, the same was held against the Revenue and in favour of the appellant assessee. 15. So far the second question is concerned, the same was held against the appellant-assessee and in favour of Revenue. 16. So far the appeal of Shri N. K. Gupta against confirmation of reduced penalty is concerned, the said appeal was dismissed. 17. The Hon ble High Court held Revenue s appeal (No. TAXC 167/2017) is allowed and the order of the Tribunal to the extent it directed remand, is set aside and the appeal of Revenue before the Tribunal is restored to its original number. The Tribunal shall consider all the grounds raised by the Revenue to assail the order of the Adjudicating Authority in dropping the demand of Rs.9,94,65,997/-, and decide the same on its own merit. 18. Accordingly, the Excise Appeal No. 3704/2006 by Revenue before this Tribunal has been restored. Both the parties have been heard at length and the written submissions have been filed by both sides, have been considered. 19. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port. Statement dated 30.04.2002 of Shri A. Pandey, incharge of M/s Bajrang, statement dated 30.04.2002 of Shri Kamal Kumar Agrawal, Proprietor of M/s Kamal Transport and statement dated 30.04.2002 of Shri Narayan Singh, employee of M/s Kamal Transport, who confirmed that the photocopy of LRs shown, were prepared by them in respect of transportation of goods manufactured by the appellant. Further, the fact of removal, both on invoices and without invoices were admitted by Shri S. N. Jha, AGM (Excise). Thus, it appeared that the appellant have clandestinely manufactured and cleared 67,170.156 MT of finished goods without payment of duty (excluding the entries in chart C for which duty have been separately worked out). Such finished goods included semi-finished goods of steel like, M.S. billets, M. S. Bloom, M.S. Ingots etc. valued at Rs.62, 16, 62,483/-(taking average rate of such goods cleared, on payment of duty, as shown in chart B , which works out to Rs.9,439.08/- PMT) and thus evaded Central Excise duty amounting to Rs. 9, 94, 65,997/- (as calculated in Annexure A-5 to the show cause notice). 20. It also appeared to Revenue that the appellant was resorting to suppressi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -day requirement. The Revenue had also investigated as regards record of despatches mentioned in the bilty nakal register from one of the named recipient namely M/s Jabalpur Ispat Re-rolling Mills, Jabalpur, but no confirmation or corroboration was found. 23. It was further urged that about 14 bilty books were recovered from the premises of M/s Bajrang Transport for the period related to February, 2002 to March, 2003, wherein only one bilty register was relied upon. Further, it indicates that others bilty register were not corroborating the allegation of Revenue. Further, if the theory of clandestine removal as alleged by Revenue is believed, the bilty nakal register was seized on 30.04.2002 at 1200 hrs containing entries up to 29.04.2002. This register shows transport of three consignments of bloom /ingot where the quantity and truck number was mentioned from PIL, Champa to PIL, Gogaon, this material should have reached PIL, Gogaon, Raipur on 29.04.2002 or 30.04.2002. As search operation was taking place also at PIL, Gogaon, but as per the Panchnama no such goods or the said truck were found in neither the factory nor any efforts made to look for discrepancy in the stock at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and evidence of receipt of flow back of sale proceeds of the alleged clandestine sales. Thus, suppression of production is required to be established first to establish clandestine removal of goods, as production is the first step for removal. 28. Learned Commissioner examined the evidences relied upon by Revenue in support of the allegation which are as follows:- (a) Statement of Shri S. N. Jha, AGM (Excise) wherein it was admitted that against some entries found in the register of M/s Kamal and M/s Bajrang, Central Excise duty was paid, while against some entries no duty was paid. (b) Statement of Shri R. K. Bhadoria, AGM (Logistics) dated 30.04.20002, wherein he has also admitted that on some invoices duty was paid and on certain other invoices no duty was paid. These invoices are entered in the register recovered from M/s Kamal and M/s Bajrang. 29. Learned Commissioner observed therefore the allegation is solely based on the bilty nakal register of the two transporters and statement of some persons as mentioned above. No other evidence in form of clandestine receipt of raw material, consumption of electricity, manufacture of goods, transportation of goods, rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctness of the entries made in the bilty nakal register . 33. Learned Commissioner also took notice that the bilty nakal register were recovered and seized on 30.04.2002 at about 1200 hrs wherein entries were made upto 29.04.2002. Such entries contain details of despatch made on 29.04.2002. But investigation have not attempted to trace or intercept such despatches which must have been either in the course of transport or at the destination on 30.04.2002, as three such consignments were despatched within Raipur district. Revenue has neither traced the truck numbers which is mentioned in the bilty nakal register nor at the premises of the said consignee. 34. Learned Commissioner also took notice that number of searches were conducted at various premises and records were withdrawn from the premises such as M/s PIL, Champa, M/s PIL, Raipur, M/s PIL, Head Office Delhi, M/s Gupta Sales Corporation, M/s R. K. Sales etc., no discrepancies have been found in the various records resumed from these premises, as no evidence has been relied upon or brought on record. It is further noticed that in the circumstances, bilty nakal register of M/s Kamal and M/s Bajrang, and some bilties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isgarh High Court by its order dated 09.08.2018. 38.2. It is further urged that the bilty nakal register is not the only evidence. Bilty nakal register may or may not be sufficient evidence of clandestine removal in the facts of the present case for the period in dispute. However, in the facts of the present case the bilty nakal register was filling up some gaps, for the entire gamut of evidence. The investigation has been conducted on one principal offender/ respondent which covers a given period of time. There are various types of evidence adduced by the Revenue. The Adjudicating Authority has clearly erred in examining the different types of evidences, as if they belong to water tight compartments. Learned Commissioner have failed to consider that it have been established that the respondent assessee have been indulging in the evasion of duty, during the given period, the only thing left is to arrive at the quantum of duty evasion. The bilty nakal register in this case is definitely a cogent evidence for quantification. Further, the bilty nakal register contains the details of both clearances of duty paid goods as well as clandestinely cleared goods. The said regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) held that the department is not required to prove its case with mathematical precision but what 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 facts in issue. (iii) Siemens Ltd., vs. Collector of Central Excise, Calcutta 1994 (70) ELT 305 has held that the whole circumstances of the case appearing in the case records as well as other documents are to be evaluated and necessary inferences are to be drawn from these facts as otherwise it would be impossible to prove everything in a direct way (iv) Madras Chemicals -1986 (24) ELT 308 (T)- The Tribunal observed the Eldora do of absolute proof being unattainable, the law accepts for its, probability as a working substitute in this work-a-day world. In fine, legal proof is not necessarily a perfect proof but only a prudent man s estimate as to the probabilities of the case. 38.7. He also urges that in the course of investigation, it was found that during the brief period w.e.f. 11.04.2002 to 28.04.2002 (18 days), the respondent assessee was found to have clandestinely manufactured and removed finished goods without payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l photocopies),they confirmed that the lorry receipts shown to him were prepared by them in respect of goods cleared by respondent. He further stated that the details mentioned in the lorry receipts, were true and correct. It is also stated that the goods were unloaded at the consignee place as mentioned in the Lorry Receipts. He also stated that his employee Shri Narayan Singh prepared the lorry receipts, and they do not receive any remuneration for unloading of goods at consignee place. 41.2. During his cross-examination on 17.01.2006 /22.02.2006, he reiterated that he works on commission basis and have got no trucks; the officers have recorded his statement in his office and was forced to give the statement as dictated; he was threatened that he will be arrested and taken to Police Station; he has filed affidavit of retraction dated 07.11.2002; the three registers belong to his firm and that he used to make extra/ fictitious entries in the said register to project bigger size of his business. 41.3. Statement of Sh. Narayan Singh, employee of M/s Kamal Transport Company was recorded on 30.04.2002 by the officers wherein he inter alia stated that he is working in M/s Kamal T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truck peoples/ driver; further, stated that his earlier statement recorded on 30.04.2002 was obtained by the officer under pressure and force; the signature on the Lorry Receipts as per the photocopies of the bilties are not his signature; only the last page of the bills dated 30.04.2002 bears his signature and rest of the pages do not bear his signature; he writes A. Pandey only as his signature; on being shown the bilty nakal register of M/s Bajrang Transport Company (seized by the officers), he stated that he has not written the said register nor the register contains his signature. 42. On a careful examination of the aforementioned statements and cross-examination, we find that there is no categorical admission of clandestine removal as alleged by the Revenue. We also find that all these persons had retracted their statement within a period of few weeks/ months of the recording of their initial statement by the officers during investigation. Thus, we find that these statements discussed hereinabove, do not support the allegations of clandestine removal for the alleged duty evasion of Rs.9,94,65,997/-. 43. So far the contention of Revenue that in view of the confirmat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he show cause notice is bad for non -joinder of parties involved. Admittedly, the bilty nakal registers which have been relied upon as material evidence by Revenue were seized from the premises of the two transporters; alleged parallel bilties, Xerox copy of which were provided by the source /informer, which were alleged to have been prepared by the said two transporters. For the reasons best known to the appellant Revenue, the transporters, who could have been charged with abetment and consequent penal action, were not made co-noticees in the show cause notice.In such circumstances, the bilty nakal register which were recovered from their premises lose evidentiary value as it gives rise to serious suspicions and would not stand scrutiny of Law . (emphasis supplied). 46. Thus, the presumption as to the truth and evidentiary value of the documents is available to the Revenue, if the document relied upon is recovered and seized from the premises of the assessee. However, where any incriminating documents are recovered from the premises of third party, such third party should also be jointly prosecuted by being added as co-noticee in the show cause notice. Similar view has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorized by him; (f) Use of electricity for in excess of what is necessary for manufacture of goods otherwise manufactured and validity cleared on payment of duty (g) Statements of buyers with some details of illicit manufacture and clearance; (h) Proof of actual transportation of goods, cleared without payment of duty (i) Links between the documents recovered during the search and activities being carried on in the factory of production, etc. 48. We find that in the instant case, none of the ingredients as above, have been proved. Moreover, as observed above, even a basic level of enquiry on the available evidence has not been conducted. We find that the Revenue has failed to establish the charge of clandestine removal. Therefore, we are of the considered opinion that Learned Commissioners order as far as it relates to the dropping of demand of duty for Rs.9,94,65,997/-, needs no intervention. Accordingly, we hold that the appeal filed by Revenue is liable for dismissal. We further hold that the respondent assessee is entitled to consequential relief, if any, in accordance with law. (Pronounced on 10.05.2022). - - TaxTMI - TMITax - Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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