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TMI Blog2025 (4) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... ka, Managing Director of the company, under Rule 25 of Central Excise Rules, 2002. 2. The facts of the case are that M/s. Maa Bhagwati Re- Rolling Mill Pvt. Ltd (herein after referred as the appellant no.1) engaged in the manufacture of MS Flats/MS Bars/MS Squares falling under Chapter 72 of the First Schedule of the Central Excise Tariff Act, 1985, at their factory in Ratakhandi, Bisra, Sundargarh district, Odisha. On 03.08.2012, officers of the Directorate General of Central Excise Intelligence (DGCEI) conducted simultaneous search operations at: * The Appellant's factory-cum-office premises * The residence of Appellant no. 2 (Managing Director) * Factory-cum-office premises of their sister concern M/s Vinayak Agro Industries * Premises of M/s Radhe Gopi Auto Industries * Shop of M/s Bijay Trading 2.1. During the course of search, one Laptop and 4 pen drives were recovered from the residence of Shri. Rajesh Rajuka, Managing Director of the company (herein after referred as appellant no.2). Some documents were recovered from the factory premises of M/s Vinayak Agro Industries. Physical verification of the stocks has shown some shortages is finished goods. 2.2. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal in favour of the sister-concern. Hence, the demands of central excise duty confirmed on the allegation of clandestine removal of the goods by the appellant company on the basis of the same evidences also does not survive. 3.1. The Appellants submit that the charge of clandestine manufacture and clearance is a serious charge, which is required to be established with positive/affirmative/tangible evidence and the burden of establishing the said charge lies heavily upon the revenue. Further, no demand of clandestine manufacture and clearance can be confirmed purely on conjectures, surmises, assumptions and presumptions. In the present case, the Appellate Authority has erroneously upheld allegations of clandestine removal without any corroborative evidence. There has been no seizure of unaccounted goods or interception of consignments cleared without payment of duty. The department has failed to present any affirmative evidence, such as records indicating unaccounted procurement of raw materials, excess production, or unrecorded sales, to substantiate its claims. Furthermore, the investigating agencies have made no effort to establish the existence of unaccounted manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter 6 p.m. i.e. after conclusion of panchnama proceedings. Moreover, the 'computer printout' was not directly generated from any computer owned, operated, or used by the Appellants. Instead, it was allegedly printed from a computer used by the DGCEI officers after the conclusion of the search proceedings, with no verification of the source or authenticity of the data. Thus, the same cannot be relied upon. Reference in this regard has been invited to the judgment of the Tribunal in the case of Modern Laboratories vs. CCE, Indore [2017 (358) ELT 1179 (Tri. - Del.)]. 3.6. The Appellants submits that the printouts are extraneous document that does not relate to the Appellant's business and was manufactured after the conclusion of the Panchnama proceedings to fabricate evidence. The alleged sales ledger relied upon by the departmental authorities is also grossly untenable. None of the entries in the Sales Ledger were matching with the Central Excise Sales Invoices. In the absence of any link between the sales ledger and central excise invoices effected by the Appellant no. 1, any attempt to allege that the sales in the sales ledger were pertaining to is unwarranted. When t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that documents not signed by Panch witnesses cannot be relied upon for framing allegations, and it cannot be assumed that they were recovered during search. 3.8. The Appellants further submit that the alleged shortage of stock is on account of the differential methodologies of accounting adopted while recording the same in its books of accounts and not otherwise. The stock in books was maintained on the basis of average weight per piece of the finished goods, while the physical stock was taken on actual weight basis. This discrepancy is entirely normal and expected in the steel industry, where each piece of MS Ingot naturally varies in weight due to manufacturing tolerances. In his statements dated 03.08.2012 and 03.07.2013, the Appellant No. 2 explained that the Appellant no. 1 maintains the Daily Stock Register on the basis of weight per piece of the finished goods, which generally varies from piece to piece. This might have caused the apparent difference between the actual physical stock and the stock recorded in the Daily Stock Register. Thus, the same cannot be held to be due to clandestine removal of goods. Reliance in this regard is placed on the ruling in the case of Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EL] (iii) The Statements of Appellant No.2 was not voluntary and taken under the influence of sleep from 11.30pm at night post midnight as well. 3.12. The appellants also submits that the entire demand is barred by limitation. Levy of interest and imposition of penalty u/s 11AC read with Rule 25 of the Central Excise Rules, 2002 is illegal and the benefit of reduced penalty was also not allowed. Penalty U/r 26 of the Central Excise Rules, 2002 against the Managing Director is illegal, arbitrary and against the principle of natural justice. 3.13. Thus, the appellants prayed for setting aside the demands confirmed in the impugned order and allow their appeal. 4. The Ld. A.R. reiterated the findings in the impugned order. He submits that the demands have been confirmed on the basis of documentary evidences recovered from the appellant's residence and factory premises. The appellant has admitted the shortages during the course of stock verification and hence duty has been rightly confirmed on the shortages. Accordingly, he supported the confirmation of the demands against the appellants in the impugned order. 5. Heard both sides and perused the appeal documents. 6. I observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings. There is considerable force in the contention of the Appellants that the computer printouts relied upon to uphold the charge of clandestine clearance were not obtained in conformity with the mandatory conditions and safeguards laid down in Section 36B(2) & (4) of the Central Excise Act, as these were not produced by a computer which was being used regularly to store or process the information during the period in dispute and Certificate referred to Section 36B(4) of the Central Excise Act was also not obtained. The decision of the Tribunal in the case of Popular Paints reported (supra) fully supports the contentions of the Appellants on this point and the relevant paras 14 to 15.5 of the said decision .................... Even the statement of Appellant No. 2 could not be admitted as evidence being not in accordance with the procedure prescribed under clause (b) of section 9D(1)of the Central Excise Act. This contention of the Appellant is duly supported by the decision of the Punjab and Haryana High Court in the Ambika International Case (supra) 7. We also find from the case records that the printouts from the Pen drives are neither co-relatable with the central excise i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the appellant company on the basis of the same evidences also does not survive. Accordingly, I set aside the demand confirmed in the impugned order on this count. 7. Regarding the demand of Central Excise duty of Rs. 2,07,803/- confirmed on account of the shortage of 46.359 MT of finished products (MS Flats/Squares/Rods) detected during physical verification, I find that the shortage of stock is on account of the differential methodologies of accounting adopted while recording the same in its books of accounts. The stock in books was maintained on the basis of average weight per piece of the finished goods, while the physical stock was taken on actual weight basis. This discrepancy is entirely normal and expected in the steel industry, where each piece of MS Ingot naturally varies in weight due to manufacturing tolerances. In his statements dated 03.08.2012 and 03.07.2013, the Appellant No. 2 explained that the Appellant no. 1 maintains the Daily Stock Register on the basis of weight per piece of the finished goods, which generally varies from piece to piece. This might have caused the apparent difference between the actual physical stock and the stock recorded in the Daily ..... X X X X Extracts X X X X X X X X Extracts X X X X
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