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TMI Blog2024 (5) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... f the finished goods, whose names are shown in the diaries, have stated in their statement that they have purchased the goods from the appellant firm with as well as without invoice and that in respect of goods purchased without invoice, payment was made in cash, however cross-examination of the said buyers has been denied by the Learned Commissioner without giving any justifiable reason; the said statements are therefore not relevant and admissible as evidence. It can been seen that once untested statements and rough records/diaries are discarded, there is no tangible evidence, absent which case of clandestine removal cannot be sustained as held in the decision of this tribunal in the case of Vishwa Traders Pvt Ltd V. Commissioner of Central Excise [ 2011 (10) TMI 94 - CESTAT, AHMEDABAD] - the demand of duty of Rs. 2,22,48,302 based on said dairies as worked out at Annexure X VII is not tenable and is liable to be set aside. Demand of duty based on weighment slips/details - HELD THAT:- The third party records under the statements of buyers and weighment bridge operators cannot be straightway relied upon having denied cross-examination of the said person to the appellants. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er). Appellant Shri Manharbhai Viradia is the owner of the truck used in the transportation of the excisable goods manufactured and sold by the appellants. 1.1 On 22-05-2014, the officers of anti-evasion section of central excise, Rajkot carried out search of the factory premises of appellants during which certain documents, registers etc were seized. The officers drew panchnama and brought on record several statements of partner of the appellant firm and buyers of the goods manufactured and sold by the appellants; based on statements of various persons, five dairies, weighment slips/details and two invoices, a show cause notice dated 16-3-2016 was issued to the appellants by which a demand of duty of Rs. 2,62,87,260/- was raised. After adjudication process, the said demand was confirmed by the Commissioner of Central Excise, Rajkot vide his Order dated 28.02.2017 by which he has further imposed penalty on the appellant firm as well as on partners of the appellant firm and on owner of the truck used in transportation of the goods manufactured by the appellant firm. 2. Shri Rahul Gajera, learned counsel appearing on behalf of appellants, submitted that the case of the department i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brokerage forcibly taken away from his residence by the officers and which was wrongly shown in the Annexure to panchnama dated 22.5.2014 as having been recovered from the appellant firm's factory; the panchnama does not record the recovery of the said diaries and hence no reliance can be placed upon the dairies to demand the duty from the appellant firm. 2.2 It was further submitted that the most of statement of the alleged buyers appearing in the diaries, are almost similarly worded, computer typed pre-drafted, stating that they purchased finished goods from the appellant with as well as without invoice and payment was made in cash in respect of goods purchased without invoice and records of such purchase are destroyed and not available with them. It was submitted that the buyers who stated that they purchased goods without invoice from the appellants against cash payment have not beem made party to show cause, and their cross-examination has been denied to the appellants, in the circumstances, the same are not relevant and admissible as evidence and hence no reliance can be placed upon the said statements of the said persons. In this behalf they have relied upon the following d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eighment slip mentioned this truck number only in 4 instances out of 58. As regards, the weighment slips/details produced by Shri Dhirubhai Lavjibhai Vaghasiya of M/s. Shiv Shakti Oil Industries under his statement dated 29.7.2014 and Shri Mahendrabhai Vaghasiya of M/s. Patel Steel under his statement dated 22.8.2014 and rough records/accounts of buyers, it was submitted that partner of the appellant shri Priyal Viradia in this statement dated 18.1.2016 denied having sold goods without invoice and payment of duty to the said party. Further, the said third party records and statement cannot be relied upon having denied cross-examination of the said persons by the Commissioner. Further, the said person who has allegedly purchased goods from the appellant without invoice and payment of duty has not been made party to show cause, suggests that department has not treated the said party having purchased goods without invoice. 2.5 As regards the two invoices, it was submitted that partner of the appellant shri Priyal Viradia in his statement dated 18.1.2016 have explained the same relates to finished goods returned or on account of cancellation of order by the buyer and have specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contain the signature of the Inspector who signed the panchnama nor does it contain running page number in continuance of panchnama. Thus, seizure of the said diaries from the appellant's factory as sought to be shown by the investigation is not established; and, having wrongly shown as seized from the factory premises by the investigation; weakens evidentiary value of the said diaries. 4.3 It is further observed that the statements dated 22.5.2014 and 12.6.2014 and 2.6.2014 of the partners of the appellant firm have been retracted; the partner of the appellant firm, Mr. Vibhav Mishra has stated while retracting his statements dated 22.5.2014 and 12.6.2014 vide affidavit dated 23.5.2014 and 12.6.2014 that the said pocket-sized diaries have been forcibly taken away from his residence by the officers of department and the same pertained to his personal business of brokerage, unrelated to the factory of the appellant firm and that his statement dated 22.5.2014 and 12.6.2014 in which it is stated that the said dairies were recovered from the factory premises during search, was not voluntary. Further, another partner of the appellant firm Mr. Priyal M Viradia by his affidavit dated 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dairies themselves are not tangible and reliable evidence particularly in absence of cross-examination of said person whose statement has been relied upon; further, said person having not made party to show cause, no reliance on such statement and records of such party can be made as that may indicate that the statements might have been obtained from the parties by way of inducement. 4.7 It can been seen that once such untested statements and rough records/diaries are discarded, there is no tangible evidence, absent which case of clandestine removal cannot be sustained as held in the decision of this tribunal in the case of Vishwa Traders Pvt Ltd V. Commissioner of Central Excise - 2012 (278) ELT 362, the relevant para is extracted herein after: "10.3 The adjudicating authority, in his findings in Para 9.2.5, had not granted cross examination of the above said people only on the ground that they are co-accused and they have in one way or other has helped M/s. VTPL to evade payment of duty. It is also seen that the adjudicating authority had dismissed the request for cross examination only on the ground that M/s. VTPL has not given any reason and justification for cross examina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... destine manufacture and clearance, and the submissions made before us, it is clear that the law is well-settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenue which mainly are the following : (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions; (ii) Evidence in support thereof should be of : (a) raw materials, in excess of that contained as per the statutory records; (b) instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty; (c) discovery of such finished goods outside the factory; (d) instances of sale of such goods to identified parties; (e) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him; (f) use of electricity far in excess of what is necessary for manufacture of goods otherwise manufactured and validly 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said decision has also tabulated the entire case-law, including most of the decisions cited before us now, considered them, and come to the above conclusion. In yet another decision of a co-ordinate Bench of the Tribunal [Pan Parag India v. CCE, 2013 (291) E.L.T. 81], it has been held that the theory of preponderance of probability would be applicable only when there are strong evidences heading only to one and only one conclusion of clandestine activities. The said theory, cannot be adopted in cases of weak evidences of a doubtful nature. Where to manufacture huge quantities of final products the assessee require all the raw materials, there should be some evidence of huge quantities of raw materials being purchased. The demand was set aside in that case by this Tribunal." In view of above discussions and decisions, demand of duty of Rs. 2,22,48,302 based on said dairies as worked out at Annexure X - VII is not tenable and is liable to be set aside. 4.8 As regards demand of duty based on 58 weighment slips (ii) above, it is the case of department that transportation of goods under the said weighment slips was carried out to the buyers of the appellant without payment of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , needs to be corroborated with tangible and sufficient evidence to bring home the serious charges of clandestine removal, which are clearly absent; case of department cannot be sustained on account of weak and insufficient evidence. It has been consistently held in several judicial pronouncements of the Hon'ble High Court and Apex Court that in case of clandestine manufacture and removal of goods, revenue has to prove it beyond doubt. Reliance in this behalf is placed on the Hon'ble High Court judgment in the case of Commissioner of Central Excise V. Brims Products - 2011(271) ELT 184 (Pat.) wherein it was held that:- "8. Facts emanating from the records, disclose that the Central Excise authority itself has held with regard to two consignments out of four, that the investigation is incomplete and has been carried out only at the transporters end, thus, does not reveal actual purchase by the buyers. The authorities with regard to the aforesaid two consignments have also extended benefit of doubt to the respondent. We are of the opinion that there could not have any reason for arriving at different conclusion with regard to the remaining two consignments. 9. In our opinion, sin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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