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TMI Blog2003 (11) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... that no payment has been received and admission also of the customers that no goods has been received. Hence there cannot be any duty liability based on the hundies in question. While we agree that the department is not to prove the case with mathematical precision, it has to make out a case at least on the basis of preponderance of probabilities . As analysised by us above, the figures of evasion as alleged in the show cause notice suggest that illicit manufacture and clandestine removal were far in excess than legally recorded production and clearances (1 Sq. Mtr. legal: 4 Sq. Mtrs. illegal). Probability of detection of such a massive evasion, if it were to be happening for over the years, would have been certain and yet the fact is that in none of the 640 surprise visits to the manufacturing premises, even a single Sq. Mtrs. of excess finished goods or raw material has been found or any transportation of clandestine nature noticed. The collected evidence cannot be considered even of a circumstantial nature . The law in respect of acceptance of circumstantial evidence is very clear. The circumstantial evidence must be of a conclusive nature and cannot be capable of duality and fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey have purchased processed fabrics from the appellant's manufacturing units. However, through raids conducted on the premises of the buyers no unaccounted printed and knitted fabrics were found. It is claimed by the appellants that, the bills which have been collected do not indicate that the same pertain to the purchase of processed fabrics. The appellants claimed that the bills relate to the trading activity of the appellants or sister concerns who deal in trading of unprocessed fabrics. It was claimed that, the persons who had given the statements against the appellants, claiming to have purchased the processed fabrics, have not been made available for cross-examination. It is also pleaded that, the factory was subjected to surprise check by the officers of the department on 684 occasions (Appellants subsequently revised the figures to 640). The appellants claimed that none of the surprise checks brought out any irregularity in the factory of the manufacturing units. 3. Reliance was also placed by the appellants on Chapter Note 4 inserted under Chapter 60 of the Central Excise Tariff with effect from 16-3-1995. In terms of the said Chapter Note, processing of knitted fabri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings before the Commissioner) it has been claimed that, the said payment was not required, in the absence of Chapter Note 4 under Chapter 60, during the relevant period. Since the payment was made during the period from 5-9-88 to 28-10-88, it is belated for them to say after looking at the 1995 amendment that, the said payment was not authorised by law. This plea was not raised during the initial hearing before the Commissioner or the Tribunal. Therefore, taking this plea of non-liability to duty on the processed man-made knitted fabrics at the stage of de novo adjudication before the Commissioner and also in the instant proceeding, and that too, only in respect of alleged clandestinely removed quantities, cannot be permitted, when no such plea was ever raised in response to the show cause notice and no protest was ever raised while making the clearance on payment of duty on fabrics which have been accounted far. The appellant's plea on this ground is therefore rejected. 7. The department's main thrust to allege suppression of production and clandestine removal generates from the recovered sale bills and recorded statements from the buyers. Not a single piece of fab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been obtained to show receipt of processed fabrics . The evidence generated through the said statements is therefore liable to be discarded as unreliable. 9. More importantly the show cause notice alleges massive quantum of evasion. For example, on going through the contents of the show cause notice, it is revealed that in respect of M/s. New India Printing Works, the actual sale of processed fabrics was 34,10,938 Sq. Mtrs. as against the recorded production of only 4,68,202 Sq. Mtrs. In other words, show cause notice alleges that as against every 100 Sq. Mtrs. of dutiable man-made fabrics cleared from the factory, only 13.72 Sq. Mtrs. has been recorded in the statutory books of accounts and the rest has been cleared clandestinely. The figure in respect of M/s. J.D. Woollen Silk Mills works out to only 20.79 Sq. Mtrs. of recorded clearance out of every 100 Sq. Mtrs. dutiable man-made fabrics allegedly cleared. The figure of recorded production in respect of M/s. Pawha Silk Mills (P) Ltd. works out to only 12.89 Sq. Mtrs. as against clearance of every 100 Sq. Mtrs. These percentages have been extracted above, in order to understand the gravity of the allegation made by the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removed in a clandestine manner. Summing up, the show cause notice claims that clandestine activity was predominant against the legal activity. It is intriguing that such a clandestine operation involving several chains, starting from clandestine procurement of raw material, manufacture of finished goods and their sale and transportation could not be detected any time during the numerous visits and also not even at the time of visit on 29-10-88, by the concerned officers, despite the high probability of its occurrence (80% illegal : 20% legal ). 10. Appellants have claimed that during the period in question, the officers conducted 640 surprise checks and no adverse observations were ever recorded. On the basis of our analysis above, we hold that the basic foundation of the case that the recovered sale bills relate to processed fabrics, lacks support and the material gathered during the investigation has no evidential value. It is undisputed fact that, the appellants through their inter-connecting units also carried out the business of trading in grey fabrics. Therefore, the evidence of recovered sale bills and connecting statements of the buyers cannot be accepted to be relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en mentioned that the department is not required to prove the case with mathematical precision (Collector of Customs, Madras v. D. Bhoormull, reported as 1983 (13) E.L.T. 1546 (S.C.). From the Commissioner's order we quote :- .......Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs absolute certainty is a myth, and as Prof. Brett felicitiously puts it - all exactness is a fake . El Dorado of absolute Proof being unattainable, the law, accepts for it, probability as a working substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on the basis, believe in the existence of the fact in issue. Thus, legal proof is not necessarily perfect proof often it is nothing more than a prudent man's estimate as to the probabilities of the case. (cited above ). 13. While we agree that the department is not to prove the case with mathematical precision, it has to make out a case at least on the basis of preponderance of probabilities . As analysised by us above, the figures ..... X X X X Extracts X X X X X X X X Extracts X X X X
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