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TMI Blog2024 (9) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by the Revenue. The bare minimum requirement would be to verify the outward movement details by questioning the truck owners/transporters, when the vehicle numbers are purportedly been shown in the recovered diary/note sheets. Thus, the Revenue with the sole evidence coming in the form of the recorded Statements of the Director Mr Daga on three occasions - the Revenue has not discharged its onus to prove the clandestine manufacture and dispatch of the goods in question with proper corroborative evidence. Shortages found during the stock verification - HELD THAT:- The verification report is not corroborated by way of supporting documents like weighing slip, quantification method adopted etc. As the appellant has submitted, in some case, the stock taking process could not have been completed in the short time said to have been taken to arrive at the actual quantity of stocks. The appellant s arguments that the stock taking should have been taken in the presence of the Panchas cannot be subscribed. It would be sufficient if the same taken in the presence of the officials of the appellant, which has been done in this case. However, the details of the method adopted to quantify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 15.07.2008. In respect of the first appellant demand of Rs.93,22,667/- was made on account of clandestine removal and another Rs. 2,19,448/- was demanded towards the shortage of stock. In respect of the second appellant, demands of Rs. Rs.13,18,216 and of Rs.27,196 on these counts. Against the Director Sri Dharmendra Kumar Daga Penalty was also proposed under Rule 26 of CER 2002. After due process the Adjudicating authority confirmed the demands. Being aggrieved, the appellants are before the Tribunal. 2. The Learned Counsel appearing on behalf of the appellants submits that there was no evidence on record to establish actual clandestine clearance or any attempted clandestine clearance. No discrepancy could be found as regards consumption of unaccounted inputs or excess electricity vis-a-vis statutory records, for utilization in clandestine manufacture. There was neither any seizure of offending goods sought to be cleared nor any seizure of conveyance carrying purported offending goods. There was no evidence in the form of any recorded statement from an identified buyer, transporters or any other evidence to establish flow-back of funds towards the alleged clandestine clearances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. v. Commissioner of Central Excise, Bhubaneshwar-II - 2022-TIOL-817-CESTAT-KOL ii. Jai Balaji Industries Ltd. v. Commissioner - 2021 (378) ELT 674 (T) iii. Commissioner v. Anand Founders and Engineers - 2016 (331) ELT 340 (P H) 7. He further submits that the only statement recorded of the Director Sri Daga also cannot be taken as having any evidentiary value. The first statement was recorded on18.07.2008, wherein he has clearly stated that tonight it is very late and I am not feeling well , which goes on to show that this statement was recorded under extreme pressure and the statement was given because of coercion and is not out of free-will by a normal healthy person. After this, the next statement was recorded after more than 2 years 4 months on 4.01.2011, wherein he has stated that he could not vouch for the truth or reliability the earlier statement taken on 18.07.2008 . This shows that he has practically retracted his earlier statement. In his next statement recorded on 12.01.2011 also, there is no admission of any clandestine removal. A combined reading of all these Statements would make it clear that his first statement recorded on 18.07.2008 cannot be relied upon by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indings of the lower authority. He submits that the DGCEI officials visited the office and factory premises of the appellant and conducted thorough verification of the document and stocks. Only after finding shortages in the physical verification and recovering incriminating documents, the investigation was taken in a bigger detail. The Director has recorded his statement, where he has admitted to wrong doings and also has voluntarily deposited Rs.50 lakhs. Hence, it is a clear admission of shortage of stocks and clandestine removals. Accordingly, the AR justifies the confirmed demands and prays that the appeals may be dismissed. 15. Heard both the sides. Perused the Appeal papers and further submissions made along with the cited case laws. 16. On going through the SCN, it is seen that the Dept. officials visited the premises of the appellants on 18.07.2008 and they have recorded the statement of Sri Dharmendra Kumar Daga on the same day. It is also an admitted fact that a diary and some other notes have been recovered in the premises connected with the operations of the present appellants. While it is alleged that the Diary and Notes record the details of various buyers with Invoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itness was necessary, which was not allowed to the appellant and, therefore, we are left with no option; but agree to the contention of the Learned Advocate that the veracity of the panchanama is doubtful. Relying on these judgments, we hold that the charges of clandestine removal of the goods cannot be upheld merely on assumptions and presumptions, but has to be proved with positive evidence such as purchase of excess raw materials, consumption of excess electricity, employment of extra labour, seizure of cash, transportation of clandestinely removed goods etc. It has also been held that onus of proof of bringing clinching evidence is on the Revenue. It has been held that the clandestine manufacturing and removal of excisable goods is to be proved by tangible, direct affirmative and incontrovertible evidence relating to receipts of raw materials inside the factory premises, and non-accountal thereof in the statutory records, utilization of such raw materials for clandestinely manufacture of finished goods, manufactured of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, amount received by the consignees, sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not tested in accordance with Section 9D of the Central Excise Act, 1944. We accordingly set aside the said demand of Rs. 13,36,476/-. Affirmed by Supreme Court 2022 (380) E.L.T. 385 (S.C.) CCE RANCHI Vs GAUTAM FERRO ALLOYS Delay condoned. Heard Counsel for the parties. 2. We decline to interfere in this appeal being devoid of merits. The appeal is accordingly dismissed. 2022 (380) E.L.T. 351 (Tri. Kolkata) AMBICA IRON STEEL PVT. LTD. Vs CCE ST ROURKELA The clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidences relating to (i) Receipt of raw material inside the factory premises, and non-accounted thereof in the statutory records; (ii) Utilization of such raw material for clandestine manufacture of finished goods; (iii) Manufacture of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, packing material used, records of security officers, discrepancy in the stock of raw materials and final products; (iv) Clandestine removal of goods with reference to entry of vehicle/truck in the factory premises, loading of goods therein, security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CESTAT CHENNAI 37. Further, the Tribunal faulted the Adjudicating Authority for having computed the quantity and value purely on mathematical formula and worked out the total quantity of Acid Slurry by adopting the ratio of raw materials, LAB and Oleum without being supported with any evidence. Further, the Tribunal noted that there is no link between the payments made to three employees of SWC with that of the supply of LAB to the assessee-firm and mere statements that those three persons are related and controlled by the assessee-firm is not enough to hold the assessee-firm guilty of having received LAB. Further, the Tribunal also noted that if the assessee had to manufacture such huge quantity of Acid Slurry, it would require huge storage capacity of not only the raw materials, but also the finished products and the spent acid, which is a by-product, which is released during the manufacturing process and the same cannot be thrown out without clearance. Therefore, the Tribunal held that based on statements and private records, the demand of excise duty of clandestine removal cannot be sustained without corroborative evidence. The Tribunal took note of a decision in the case of N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As already observed, the onus was on the Department to prove that there was clandestine manufacture and removal by the assessee-firm and this having not been established to the extent required, we find no error or perversity in the approach of the Tribunal warranting interference. 45. For the above reasons, we hold that there is no substantial question of law arises for consideration in the appeals filed by the Revenue in C.M.A. Nos. 2714 and 2715 of 2016 and accordingly, the same are dismissed.[Emphasis supplied] 18. In the above case, it has been held that based on statements and private records alone, the demand of excise duty of clandestine removal cannot be sustained without corroborative evidence such as : (i) there should be tangible evidence of clandestine manufacture and clearance and not merely based on inferences or unwarranted assumptions; (ii) evidence in support thereof should be of raw materials, in excess of that contained as per the statutory records; (iii) instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty; (iv) discovery of such finished goods outside the factory; (v) instances of sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n done right from the date of production of those items. The shortage, when compared to the total production over the years, comes to a very nominal percentage as indicated in para 6.3 above. This has not been contested by the department. Such nominal percentage differences are to be expected while weighing, keeping the nature of the products in mind which are not amenable to precise weighment. We are, therefore, of the view that the shortages noticed are not actual but only notional and, hence, no differential duty is payable. 2020 (371) E.L.T. 751 (Tri. - Kolkata) SUPER SMELTERS LTD. Vs CCE ST DURGAPUR 20. The shortage which was detected by the officers is based on average weight method basis and, therefore, mere admission by the Directors, who deposited the duty for the shortage, is not enough to proof that the goods were clandestinely cleared from the appellant factory. We have also considered the judgment cited by the appellant in case of C. C. Ex., Lucknow v. M/s. Sigma Castings reported at 2012 (282) E.L.T. 414 (Tri.-Del.), M/s. Micro Forge (I) Pvt. Ltd. v. C. C. Ex., Rajkot reported in 2004 (169) E.L.T. 251 (Trib.- Mumbai), C.C.Ex. Indore v. M/s. Kapil Steel Ltd. 2006 (204) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, suppression on the part of the appellant cannot be ruled out. But we find that the officials did not take up the further investigation properly and were shoddy at their best. As noted earlier, no statements were recorded from the purported buyers inspite of having their details from the diary / notes. They have waited for next 2 years to take further statement from the Director. In case of shortages, they could have issued the SCN immediately, but even this was delayed, on account of unexplained reasons. All these point out to the extreme negligence of the officials when dealing with the case of this size. Therefore, irrespective of the above observations, we are also forced to consider the pleadings of the appellant on account of limitation. 26. The following decision would be relevant to the facts of the present case : 2006 (195) E.L.T. 90 (Tri. - Bang.) LOVELY FOOD INDUSTRIES Vs CCE COCHIN 4. We have carefully considered the submissions and have perused the citations. The Show Cause Notice was issued after a lapse of 3 years. The department gathered all the information on their visit to the factory on 5-11-1999. The records were seized and statements were recorded on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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