9911796707
TMI Blog2004 (8) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... is of terms of rate contract without corroborating and substantiating with tangible evidence that the decorative laminated sheets against rate contracts were supplied by the Appellants from their own manufacture from factory. Such a demand cannot be sustained for want of tangible evidence. We, therefore, set side the same Merely because the figures were in odd number, it could not be presumed that they represent the figures of actual production and not figures for production planning. Shri Gairola, in his statement dated 12-6-96 recorded on the date of search itself has stated that the figures were production planning. The learned Advocate has also relied upon the decision in the case of T.G.L. Poshak Corporation v C.C.E., [ 2001 (9) TMI 683 - CEGAT, CHENNAI] wherein it has been held by the Tribunal that unless Department produces evidence, which should be clinching, in nature of purchase of inputs and sale of the final product, demand cannot be confirmed based on some notebooks. Similar views have been expressed by the Tribunal in the case of Bearing Manufacturing Co. v. C.C.E., [ 2000 (2) TMI 148 - CEGAT, MUMBAI] . Accordingly, we set aside the said demand of duty. As the laminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent : O.P. Arora, SDR Order V.K. Agrawal, Member (T) 1. M/s. Paras Laminates Pvt. Ltd. and Sh. Ravi Bansal, Director, have filed these two appeals arising out of a common Order-in-Original, by which the Commissioner, Central Excise, has confirmed demand of Central Excise duty against the Appellant-Company and imposed penalties on both the Appellants. 2.1 Shri A.R. Madhav Rao, learned Advocate mentioned that the Appellants manufacture laminated sheets in their factory at Bhiwadi (Rajasthan) and have their godown at Delhi; that they have mainly sold under DGS & D Rate Contract the laminated sheets under the brand name "Paras" to the Indian Railways; that they were supplying the laminates after manufacture at Bhiwadi factory or from the Delhi godown; that the purchased laminated sheets were stocked at Delhi, branded as "Paras" and offered for visual inspection at Delhi and samples were drawn, taken to Bhiwadi factory and tested there; that in view of such trading activity, they obtained necessary sales tax registration; that the laminated sheets have been procured against S.T.I form and the sales tax returns have all been assessed; that S.T.I is for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved clandestinely from Bhiwadi factory; that consequently the benefit of S.S.I. exemption under Notification No. 1/93-C.E., dated 28-2-93 has been denied to the goods cleared during 1993-94; that duty has also been demanded on 2109 nos. and 198.8 Kgs of laminated sheets found short on verification of physical stock with the recorded balance in R.G.I on 12-6-96; demand has also been confirmed on 2871.4 Kgs. of base paper, on which MODVAT Credit had been taken, found short on verification, and duty has also been confirmed on the ground that 10,414 numbers of laminated sheets shown in private record of Shri Gairola, General Manager. 3.1 The learned Advocate submitted that the impugned Order is based on erroneous inferences drawn from the terms of the DGS&D rate contract and the statement of the dealers that the laminated sheets supplied under DGS&D rate contract were all goods manufactured in the factory and clandestinely removed to Delhi; that it has been the consistent view of the Tribunal that to allege and establish clandestine removals, it has to be supported by evidence with regard to purchase of inputs, production, source of funds, sale and receipt of consideration [Ambica Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction recorded in the R.G. 1 for supply from Delhi godown under the guise of traded goods. He also mentioned that there were instances where the testing was not at all carried out in Bhiwadi factory but in independent testing institutions. 4.2 He said that the Commissioner has also relied on letter dated 29-12-95 of RITES that the inspection was carried out at factory premises; that RITES was not involved in respect of orders of DGS&D on rate contract on which demand of duty has been confirmed; that the Adjudicating Authority has not dealt with this factual aspect of the matter. 4.3 He further mentioned that according to the case of the Department, laminated sheets under the DGS&D contract are to be of "Paras" brand and therefore the laminated sheets procured from the market having brand name other than "Paras" could not have been supplied from Delhi godown and contended that the contract did not stipulate where and how the brand name is to be affixed; that "Paras" brand is affixed in the factory on the laminated sheets manufactured as also in the Delhi godown on the laminated sheets procured from the market through screen printing (Pages 1052 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein they have stated that they did not deal with laminated sheets of 3 mm thickness and as a trade practice, the thickness of the sheets was not shown in the invoices; that the fact that such statements are false is evident from the very fact that the sales were for laminated sheets of 1.5 thickness and laminated sheets of unspecified thickness; that the practice of issuing of invoices for sale of sheets of unspecified thickness cannot be the basis to allege that such invoices were fake or such invoices were not for sheets of 3 mm thickness; that since the DGS & D rate contract was for sheets of 1.5 thickness and 3 mm thickness and since the invoices for purchase of laminated sheets of 1.5 mm thickness were available, consequently, the invoices with thickness not specified were for sale of laminated sheets of 3 mm thickness; that laminated sheets supplied by the dealers under the invoices showing unspecified thickness were received under proper challans and sold under the Appellants' Commercial invoices; that such quantity of traded sheets was duly assessed under Sales Tax which conclusively prove that the sheets were of 3 mm thickness; that further they have been paying for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Regarding 1180 sheets found in packed condition, he stated that the same was lying in the finishing room for 3 or 4 days and it was not meant for clandestine removal. 5.4 He also stated that demand on alleged shortage of base paper 2871.4 kg. is not sustainable; that at the most the Revenue can disallow the credit, if any credit of duty had been availed of by them; that duty cannot be demanded on the premises that they had availed MODVAT Credit on the alleged shortage; that once an input is entered in R.G. 23A Part-I, it is obvious that the same has been issued for manufacture; that the use of base paper in manufacture of laminated sheets was work-in-progress and its issue was yet to be accounted for in the Register. 5.5 He finally submitted that the demand of duty under sub-heading 4823.90 of the Schedule to the Central Excise Tariff Act is totally unsustainable; that as per the judgment of the Supreme Court in the case of C.C.E., Hyderabad v. Bakelite Hylam Ltd., 1997 (91) E.L.T. 13 (S.C.), the laminated sheet is classifiable under Heading 39.20 of the Tariff; that, therefore, the demand is liable to be set aside for this reason alone, that penalty is not imposable on any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I, 2001 (138) E.L.T. 351 (T) wherein the Tribunal has upheld the Adjudication Order of confiscation of goods which were in the process of being removed at the time of visit of the officers without reflecting them in the R.G.I. and the explanation that the same were being sent out for inspection was not accepted by the Authorities by observing that as per the contract of the Appellants with their customers, inspection had to take place in the Appellants' own factory. 6.2 The learned S.D.R., also contended that the scrutiny of the invoices issued by the dealers revealed that size and thickness of the sheets was not mentioned in the column for description of goods in most of the cases; that enquiries from the dealers also revealed that they had not supplied the laminated sheets of 3.0 mm thickness; that Sh. Basant Kumar Bansal, Director of M/s. Om Prakash Fatesh Chand Ltd., has deposed in his statements dated 12-6-1996 and 22-11-96 that they sold decorative laminated sheets of thickness varying from 0.8 mm to 1.5 and also some quantity of 2.00 mm thickness and they had not sold laminated sheets of thickness more than 2.00 mm to the Appellants and that they had never sold 'Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance in the Appellants' plea that they did not have sufficient capacity to manufacture the alleged quantity of laminated sheets; that even the Joint Inspection Committee, in its Inspection Report, had assessed their manufacturing capacity as 1.80 lakh sheets per annum; that the total sheets cleared by them were much below the said manufacturing capacity; that thus their plea that on account of less capacity of production, they resorted to procure the goods from market is not acceptable. 7.1 The learned S.D.R., further, submitted that 3290 laminated sheets found in packed condition at the time of visit of the officers were not entered in R.G.-I Register; that Sh. M.L. Sharma, Supervisor had admitted in his statement dated 12-6-96 that these goods were in finished condition and were completely in packed condition; that thus these goods are liable for confiscation. 7.2 Regarding excess stock of raw-materials worth Rs. 44,769/- he mentioned that the stock taking of raw-material was done by Shri Abdul Rashid Khan, Production Manager, who in his statement dated 12-6-96, has confirmed the fact besides stating that he was fully satisfied with the manner of stock taking; that the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s duties were to take care of incoming material as well as dispatches; that they were supplying decorative laminated sheets of standard size (8'x4') having 3 mm thickness to the Appellants. He also mentioned that Vardhana Industries (India) had given to them S.T.-I declaration which shows that they were registered with the Sales Tax Department; that there were few instances of purchase of laminated sheets from Ms. Kumar Industries and except in two cases, the laminated sheets were rejected and returned; that Sh. Vipin Talwar of M/s. Sheetal Electricals, had clearly deposed in his statement that they were generally dealing in laminated sheets of 0.5 mm to 25 mm; that, therefore, no adverse inference whatsoever can be drawn to allege that the laminated sheets sold from Delhi Office were not goods procured from the market. 9. We have considered the submissions of both the sides. The major demand of duty has been confirmed against the Appellants on the ground that the laminated sheets could not have been supplied by the Appellants by purchasing the same from dealers as rate Contract awarded to them contained the conditions that goods should be of their own make - PARAS brand a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was put to him whether did he personally conduct any inspection and whether was he aware that samples were taken from Delhi Godown to the Appellants' factory at Bhiwadi. We observe that no statement of any of the members of the Inspection Team has been recorded by the Revenue, though Shri Balraj Chugh, Marketing Manager, has deposed in his statement on 12-6-96, on the day of search itself that "materials are inspected at our works and Delhi Godown." We, therefore, agree with the submissions of the learned Advocate that the terms of the DGS&D Rate Contract cannot be the basis to infer that there was manufacture and clandestine removal of laminated sheets from the factory of the Appellants. 10.1 The Revenue has relied upon the statements of the dealers to show that they had not supplied laminated sheets of 3 mm thickness. First of all these dealers were not produced for being cross-examined by the Appellants. It has been held by the Tribunal in Takshila Spinners v. C.C.E., Chandigarh, 2001 (131) E.L.T. 568 (T) that "Whatever those witnesses stated during the investigation before the Preventive Staff could not be accepted as gospel truth by the Commissioner&quo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or an order can be based on assumptions and presumptions. The findings based on such assumptions and presumptions without any tangible evidence will be vitiated by an error of law. In the present matter also the duty has been demanded on the basis of terms of rate contract without corroborating and substantiating with tangible evidence that the decorative laminated sheets against rate contracts were supplied by the Appellants from their own manufacture from factory. Such a demand cannot be sustained for want of tangible evidence. We, therefore, set side the same. 11. For the same reasons, the demand of duty based on the figures mentioned in the Spiral Pad of Sh. R.K. Gairola, General Manager, cannot be sustained as the Revenue has not corroborated the assumed production with any independent material/evidence. Merely because the figures were in odd number, it could not be presumed that they represent the figures of actual production and not figures for production planning. Shri Gairola, in his statement dated 12-6-96 recorded on the date of search itself has stated that the figures were production planning. The learned Advocate has also relied upon the decision in the case of T.G. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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