9911796707
TMI Blog2024 (6) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... ve not furnished any response on the four issues is factually incorrect. The suppressed quantities of glass sheets clandestinely removed have been determined by estimating production based on maximum installed capacity and such maximum installed capacity has been determined based on the statement of three employees of the Appellants. The suppressed quantities alleged to be clandestinely removed have been computed by deducting such production from the figures as reported by the Appellants in its RT-12 returns during the period in dispute. The allegation of clandestine removal and suppression of facts on the ground of non-recording of loose glass sheet at the stage of production itself miserably fails. Had the Department also not carried and agreed to the view that the RG-1 stage for loose glass sheets would be the point when such loose sheets are decided to be cleared as such, there was no need to withdraw the letter dated 01.01.1985 by a subsequent letter dated 09.09.1994 which was after the date of the search. No evidence of unaccounted purchases of inputs have been brought on record by making enquiries from the suppliers of such material. There is no evidence of any unaccounted s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the trucks was not recorded in RG-1 register and the excise invoice was also not available and thus they confiscated such truck. Since there was stock of huge quantity of glass sheets, the physical verification of which would take considerable amount of time, a detention memo dated 17.07.1994 was issued and later, on 20.07.1994, the physical verification of stock of glass sheets was conducted with factory officials in all the four plants. On verification of the physical loose glass sheets with the Daily Stock Account, it was observed that loose sheet glass valued at approx. Rs.1.36 crores were not recorded in the RG-1 register which was seized under a Panchnama dated 20.07.1994. It was the contention of the Appellant that they do not maintain the account of loose glass sheets in RG-1 on a continuous basis but enter the quantity cleared in RG-1 only on the next date of clearance at 10 a.m. and such method of recording of loose glass sheets was known to the Department. The private records of the Appellant were compared with the Daily Stock Account (RG-1) and RT-12 to hold that they do not match with each other. Again, production quantity and sales quantity as computed/derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght shifts and the final production on a daily basis. It also shows the daily, monthly average and yearly average of the production, packing, packing in sq. meters and despatch. The trimming of irregular edges results in waste/breakage at the very production stage are the first type of breakage. The glass sheet so accounted for in the DPR are then visually inspected for defects like bubbles, scratches, stone etc. and in the course of such inspection the defective / unwanted portion of the glass is cut and the resultant waste i.e., cullets are collected in silos or bins. Such cullets are never sold but used entirely as raw materials for use in the manufacture of sheet glass. The cullets so generated are the second type of breakage. These inspected glass sheets are then cut into the standard marketable sizes and such quantity of glass obtained is sent to the packing section. Packing slips are prepared and the glass sheets are moved to the bonded warehouse on the strength of this packing slip. This packing slip is the basic documents which show the movement of the final sheet glass from the packing area to the bonded warehouse. Packing slips are also issued even in case where the shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /594 dated 02.08.1994. iii. Letter issued by the Assistant Collector, Central Excise, Division -I bearing C. No.V (17)Val.64/94/2705 dated 09.09.1994 iv. Copy of the letter of Appellant dated 01.10.1994. v. Statement of employees Shri D.D. Dubey, Excise In-charge on 20.07.1994, Shri M.P. Srivastava, Loading Supervisor, on 27.07.1994, Shri Raees Ahmed Siddiqi, Loading Supervisor, on 27.07.1994 vi. Annual Stock Taking Report of the Central Excise Division, Range- Naini (Rural -I) dated 24.09.1992 C. That no discrepancies have been noted w.r.t. physical verification and book records of the stock of Packed Glass Sheets which was taken on 20.07.1994. D. There ought to be an inherent mismatch in the quantity as reported in RG-1 RT-12 and as reported in the Audited Financial Statements Some Private Records of the Appellant which is due to the method of recording of loose glass sheets in the RG-1 register. E. That the allegations of mismatch made in Production Quantity and Sales Quantity as Derived from Mathematical Formula from Audited Financial Statement figures on statement of Shri M.K. Chattopadhyay Vs. quantity as reported in RT-12 Returns is arbitrary and without any recognised basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subsequent day of their clearance. He further submitted that the production quantity and sale quantity as derived from the audited financial statements do not match with the statutory records which show that the Appellants had clandestinely removed loose glass sheets and therefore the Ld. Commissioner was justified in computing the demand based on installed capacity of four plants. 6. We have heard both sides and perused the appeal petition and documentary evidence placed on record. 7. We find that Ld. Commissioner in the impugned Order has rejected the submissions made by the Appellants and reiterated the findings made in the SCN. The Ld. Commissioner in the impugned Order has noted that the Appellants have not furnished its response to certain facts which weigh heavily against it. Before dealing with the observations made by the Ld. Commissioner, we take note of the fact that the Appellants had duly filed its response to the four issues raised in the impugned Order and therefore the observation that the Appellants have not furnished any response on the four issues is factually incorrect. We now examine the four observations made by the Ld. Commissioner as under:- 6.1 The first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2mm basis. The Appellant in its response to SCN has duly explained the reason for such difference by submitting that the report of the said Consultant has been prepared on the basis of Monthly Production Report (MPR) without deducting breakage. The Ld. Advocate of the Appellant while explaining the manufacturing process has submitted that that production from furnace is the basis of DPR and thereafter breakage occurs at various stages viz at the time of quality inspection, desired size cutting, movement of glass sheets from production floor, handling etc. We find that the submission of the Appellant has not been controverted. We further take note Ld. Advocate in its submission has contended that since loose glass sheets are recorded at the time of clearance only such stock of loose glass sheets is included in the book figures but not in RT-12. Thus, we find that the charge of clandestine removal cannot be sustained on this ground. 6.4 The fourth issue is w.r.t. difference between the actual sale value vis-a-vis the collection/remittance during the year 1993-94. The observation pertain to Hyderabad Branch of Appellant whereas the search was conducted at the plants in Allahabad. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We also find that, when the Appellants were confronted as to why no entries have been made in the RG-1 Register, the employees of the Appellants in their deposition categorically submitted that the Appellant company does not maintain the account of loose sheets in RG-1 on a continuous basis but enter the quantity cleared in RG-1 only on the next date of clearance at 10 AM but the dispatch/ clearance are recorded in the authenticated log book after issuing the necessary packing slip and such procedure of recording has been permitted by the Superintendent, Central Excise (Range-V), Allahabad vide Letter No.- MISC/Corr/R- V/85/117 dated 01.10.1985. 7.5 We have examined the letter of the Collector, Central Excise addressed to the Secretary, CBEC, New Delhi and to the Asst. Collector, Allahabad dated 12.09.1985, the letter dated 01.10.85 issued by the Superintendent, Range V, Allahabad and the letter bearing C. No. V (17)Val.64/94/2705 dated 09.09.1994 was issued by the Assistant Collector, Central Excise, Division -I. From the letter dated 12.09.1985 it can be gathered that glass and glassware were dispatched/ sold in packed cases only and therefore the Board had agreed to the propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra, we find no plausible reason to disagree with the contention of the Ld. Advocates that the practice of recording the loose glass sheets was consistently done at the stage of clearance and this very fact was known to the Department. We also find that such loose sheets were duly recorded at the time of despatch in the log book, authenticated by the Department, after issuance of the packing slip and before clearance though recorded in RG-1 after clearance. Therefore, the allegation of clandestine removal and suppression of facts on the ground of non-recording of loose glass sheet at the stage of production itself miserably fails. Had the Department also not carried and agreed to the view that the RG-1 stage for loose glass sheets would be the point when such loose sheets are decided to be cleared as such, there was no need to withdraw the letter dated 01.01.1985 by a subsequent letter dated 09.09.1994 which was after the date of the search. 7.8 We also agree with the contention of the Ld. Advocates that the excise invoice is mandatory when the goods are removed from the factory and when the sole truck was stationary in the factory premises, fully loaded but without excise invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of any corroborative evidence. With regard to the sales quantity, the Ld. Advocates have submitted that the same has been derived by dividing the stock value by unit sale value without appreciating the two basic facts, stock value represents the closing stock as on the last date and is values at lower of cost or market value prevailing on that closing date and second that Sale value per unit includes profit element. 7.11 The Ld. Advocates of the Appellants have placed reliance on the judgment of the coordinate Bench of the Tribunal in A R Shanmuga Sundaram vs. CCE, Salem 2016 (333) E.L.T. 158 (Tri-Chennai) wherein it has been held that the departmental authorities could not raise demand on the basis of mathematical formula by taking notional quantity of one raw material. We find that the said judgment of the Tribunal has been upheld by the Hon ble Madras High Court which is reported in 2022 (380) E.L.T. 151 (Mad.). He has further placed reliance on the following judgments in case of Belgium Glass Ceramic Pvt. Ltd. vs. Commissioner 2015 325 E.L.T. A-51 (Tri.-Ahmd.) and CCE, Surat vs. K K Textile 2007 (215) E.L.T. 429 (Tri-Ahmd.) where identical views have been upheld by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce any cogent evidence in respect of raw materials, which was required for production of Starter Motors. Also, the revenue did not allege anywhere that the assessee was buying any unaccounted for copper wire, yolk, bearings, brakes, slot insulators, laminations and commutators, which are also required for the manufacture of starter motors as in the absence of these essential raw-materials, it was thus not possible for the assessee to manufacture their final product with just Armature Assemblies. 15. The Tribunal records that I agree with the contentions of the Ld. Advocate that the allegations of clandestine removal are serious allegations and are required to be established beyond doubt by production of sufficient and positive evidence. The doubts, however, strong cannot be converted into evidence so as to confirm the demand. There is no inculpatory statement by any of the representative of the manufacturers; no enquiry as regards the buyers of the said starter motors so as to establish their identity; no enquiry as regards procurement of various raw materials required for manufacture of final products; no enquiry as regards the transportation of the goods; no enquiry as regards th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory records are sustainable. In coming to this conclusion, we have noted that no evidence of unaccounted purchases of inputs have been brought on record by making enquiries from the suppliers of such material. There is no evidence of any unaccounted sales which has been brought on record by making enquiries from either the transporters or the buyers of alleged clandestinely removed glass sheets. Interestingly, the SCN notes that enquiries had been initiated against the transporters but no finding, much less an adverse finding, has been noted in the SCN. Even no unaccounted payments to the transporters have been alleged. The allegation of clandestine charge has been made solely on self-evolved mathematical analysis of figures of audited financial statements, computing the production quantity and sales quantity by employing formulas, making assumptions in computing such derived quantities and then comparing the same with the statutory excise records are clearly unsustainable when a serious charge of clandestine removal has been made against the Appellants. The revenue has utterly failed to discharge the burden of proof by bringing on record any evidence of any kind to substantiate t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
