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TMI Blog2022 (9) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... department had not conducted any investigation to prove clandestine manufacture - It is well settled law that neither the shortage/ excess of one or more of the raw material nor the unaccounted finished goods found lying in the premises of manufactures during the course of search can lead to inevitable conclusion of clandestine manufacturer and removal. In the present case also, there are no evidence which establishes beyond doubt or which is a positive evidence to establish beyond doubt the allegation of clandestine removal of the finished goods by the appellants manufactures. The doubt and apprehension as mentioned in the show cause notice remains incorroborated due to the lack of any evidence. The Adjudication Authority below while confirming the demand have given their finding on the fact that manufacturer failed to produce any relevant document either in the form of invoices / bill or in the form of stock register / RG I register but non production of these documents cannot be sole basis for demanding duty on the allegations of clandestine removal. Thus, the allegations of clandestine removal of the goods against both the manufactures and their office bearers/ owner (also app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Imposition of penalty upon the truck driver, Shri Jhabbu Singh - HELD THAT:- The imposition of penalty upon him under any of the Rules or both of these Rules is highly illegal. Above all, there is no corroboration to his statement which has been considered as the sole basis for confirming the duty demand on the allegation of clandestine removal. The penalty against him is also therefore, liable to be set aside. None of the deponent has been examined by the Adjudicating Authority as is mandatorily required in terms of section 9D of Central Excise Act, 1944. In absence of said compliance the contents of the statements cannot be the proof of relevant fact. Confirmation of demand and imposition of penalty based on such statements which have not put to test of veracity is highly uncalled for and is actually against the statute. Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... of documents such as invoices / challans. It was also revealed that the goods produced in their factory are being removed clandestinely to the dealers and distributors appointed by them in various cities, towns of the country. Based on such intelligence that the searches were conducted not only at the factory premises of M/s. Monty Confectionery but also in the premises/offices of their transporter, dealer and distributor on 23.10.2013. In the presence of independent Panchnama/ witnesses, physical stock verification of goods, such as raw material including packing machines, finished goods and recorded stock was also conducted and all the proceedings were recorded in Panchnama of the even date. Shri Murlidhar Dhingra was the incharge of Monty Confectionery. On being asked, he also produced stock register of 1515 kg as on that date of search, i.e. 23.10.2013. Since during physical verification stock was found to be 6262 Kg and 3900 kg confectioneries were deposed to have been produced on 23.10.2013, that 847 Kgs of stock was found by the investigating officer to be in excess (opening stock of 23.10.2013 being 1515 Kgs), no satisfactory explanation could be given by Shri Murlidhar D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., M/s. Amber Sales Corpn., M/s. Satyam Traders and the truck owner thereof namely Jhabbu Singh vide such show cause notices as mentioned in the aforesaid table. 3. The said proposal have been confirmed by the Adjudicating Authority vide the Order-in-Original as are mentioned respectively in the aforesaid table. The appeals have been rejected vide the common order as mentioned in the table above. 4. Being aggrieved the appellants are before this Tribunal. 5. I have heard Ms Priyanka Goel, learned Counsel appearing for the Appellant and Shri Mahesh Bhardwaj, learned Authorised Representative for the Department. 6. Learned Counsel for the appellant has mentioned that three manufacturers of confectionery items were raided together on the said date along with the few dealers i.e. on 23.10.2013. Separate show cause notices were issued for the seizure of goods and demand of duty and even for the imposition of penalty. It is submitted that duty demand in case of M/s. Amber Nutrition Pvt Ltd. has already been set aside by the Assistant Commissioner vide Order-in-Original No. 37/2019-2020 dated 25.10.2019. Hence, the fine and penalty against the said Company and its various representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party evidence. While confirming the penalties under Rule 26 of Central Excise Rules, no specific reason about how and which of the ingredient of Rule 26 is being violated by the respective party/appellants has been mentioned. There is no evidence in the form of any bill number for purchase and sale of raw material or finished goods of the appellants. It is not the case of the Department that raw material was not received. 8. Finally, it is submitted that demand is otherwise barred by limitation as statement of Shri Murlidhar Dhingra was recorded on 24.10.2013. thereafter no new evidence was adduced by the Department, but still the show cause notice was issued after four years i.e. on 24.07.2018. There is no evidence of any willful suppression on the part of any of these appellants, manufactures and their office bearers/ owner nor any contemporaneous conduct was apparent. The extended period has wrongly been invoked. Adjudication is prayed to be wrong on this sole ground and in the light of entire above submissions, learned Counsel has prayed that order under challenge may be set aside and all appeals may be allowed. 9. To rebut these submissions, learned Departmental Representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10.2013 were meant for clandestine removal and as such the demand of duty has rightly been confirmed upon them; (2) Whether the penalty upon the manufacturer there of and upon the inchrarge of these manufacturers and the penalties upon there unregistered dealers can be imposed under Rule 25/ Rule 26 of Central Excise Rules, 2002, are justified. 11. With respect to first point of adjudication, it is observed that both the manufacturers i.e. M/s. M G Food Products/ Shankar Lal Dhingra and M/s. Monty Confectionary / Murlidhar Dhingra are manufacturers of candy and other confectionary items. Pursuant to the search of 23.10.2013 in the premises of non registered dealers, unaccounted finished goods amounting to Rs.23,18,302/- were found in the premises of M/s. M.G. Food Products and the raw material, packing material and finished goods were found in excess to the recorded stock in the premises of M/s. Monty Confectionary. Accordingly, the goods at both the premises were detained on the apprehension that goods were lying unaccounted for clandestine removal and the goods for which the invoices could not be produced were detained on the apprehension that the goods were non duty paid goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . & S.T. Ghaziabad vs Auto Gollon Industries P Ltd. reported in [2018 (360) ELT 29 (All)] has held that the reliance of department only on rough work progress documents and no evidence of raw materials purchase, inculpatory statement by representative, no inquiry with the buyers of finished goods, transportation and consideration for goods clandestinely removed final products, the shortage of one of raw materials and theoretical basis of input output ratio do not lead to conclusion of clandestine manufacture and removal thereof. 14. In the present case, also I do not find any such evidence which establishes beyond doubt or which is a positive evidence to establish beyond doubt the allegation of clandestine removal of the finished goods by the appellants manufactures. The doubt and apprehension as mentioned in the show cause notice remains incorroborated due to the lack of any evidence. The Adjudication Authority below while confirming the demand have given their finding on the fact that manufacturer failed to produce any relevant document either in the form of invoices / bill or in the form of stock register / RG I register but non production of these documents cannot be sole basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations of non - maintenance of records. It is observed from the statement of Shri Shankar Lal Dhingra dated 23.10.2013 that he informed the officers about the maintaining the computerized record. Otherwise also this manufacturer was availing SSI exemption benefit due to which there was no necessity to prepare the statutory records. The department had put no effort to examine the computerized records. There is no evidence even about any cash flow which may prove the element of any mens rea / bad intention to evade the duty, question of imposition of penalty does not at all arise. 18. The penalty otherwise has been imposed under Rule 26 of Central Excise Rules. Two condition have to met with for imposition of such penalty : (i) There has been some willful misconduct on the part of the assessee; and (ii) The excisable goods dealt with by the assessee who knows that such goods are liable for confiscation. In the present case, as already held above, there is no proof of any willful mis-conduct on part of these manufacturers - appellants nor there has been any show cause notice for confiscation of the goods. These observations are sufficient to hold that penalty upon the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufactures who are M/s. Amber Sales Corporation and M/s. Satyam Traders. Both these dealers apparently are non registered dealers. The penalty under Rule 25 cannot be imposed upon the non-registered dealer. I draw my support from the decision of Tribunal in the case of R K Induction Industries P Ltd. vs CCE, Jaipur reported as [1998 (97) ELT 342]. I also observe it to be a fact on record that Shri Parmamnad Jha, incharge of godown informed the officers that the main office of the firm is at Azad Market and all the goods were received and dispatched under proper invoice/bills. But the departmental officers had put no efforts to collect the documents from the said office. They normally proceeded based on their apprehensions about the dealers role in holding the manufacturer for clandestine removal of their excisable goods. Penalty under Rule 25 / Rule 26 of Central Excise Rules, 2002 cannot be imposed even upon these dealers also for the reasons as are mentioned in the findings in respect of imposition of penalty upon the manufactures. Above all, I observe that no specific clause of either of two Rules has been mentioned / invoked for the imposition of penalty. Order-in-Original as ..... 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