At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad
By, THE HONORABLE JUSTICE: M.V. RAVINDRAN
For Petitioner: S. Suriyanarayanan, Advocate And For Respondents: A. Mishra, Authorised Representative
1. These appeals are directed against OIA-RKA-751-SRT-I-2009 dtd. 15/10/2009 passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals) -SURAT-I.
2. The relevant facts that arise for consideration after filtering out unnecessary details are that the Balaji Processors (the Main appellant) during the period in dispute October 2003 was engaged in the business of processing of Grey Fabrics as an independent processor; factory premises were visited by the Central Excise Officers on 27.3.2013 and Panchnama was recorded, investigation was carried out and it was concluded that process of fabrics was not accounted and was seized with re
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asonable belief that these goods are intended to be cleared without payment of duty, and on conclusion of investigation a show cause notice dt. 4.1.2005 was issued for the demand of duty on goods cleared without payment of duty on the ground of clandestine removal of goods, as also for the imposition of penalty on both the appellants. The appellants contested the issue on merit. The Adjudicating Authority did not agree with the contention raised and confirmed demand alongwith interest and imposed penalties; on an appeal the first appellate authority also held against the appellants.
3. The Ld. Counsel submits that the Panchnama which was drawn on 27.3.2003 was drawn overnight upto early morning of 28.3.2003 it shows the proceedings were carried out in the night and the explanations in the Panchnama cannot be taken on face value; that three individuals Shri Sanjay R. Waghela and Shri Suresh K. Patel, Excise Clerk and the other one in the office main appellant were retracted by a affidavit which is accepted by the Adjudicating Authority in Para 18 of the OIO, another affidavit that Shri Suresh K. Patel affirming that he was witnessed pressure and coercion exercised by the investigating officer during panchnama proceedings; no corroborative evidence of production capacity, power consumption, raw-material consumption is alleged for clandestine manufacture and removal of the goods, receipt of amount in cash, the entire case of the Revenue being on two blue note books recovered from the factory premises is totally wrong in as much as Revenue has not brought on record and corroborative evidence other than note book and entries made thereof. It is his submission that in the absence of corroborative evidence allegation of clandestine removal is not established is the law which stands settled in the case of Arya Fabrics Pvt. Ltd. - 2014 (311) ELT 529 (Tri-Ahmd) and Mahesh Silk Mills Ltd. : 2014 (304) ELT 703 (Tri-Ahmd) upheld by Hon'ble High Court of Gujarat. He submits that the impugned order is set aside.
4. Ld. DR on the other hand, draws my attention of the fact that the main appellant has not denied the fact that the two blue colour note books were recovered from the factory during the search and they were recorded in the panchnama but only contested the recovery of the note book was in fact from the factory premises, that the officials of the appellant and their statements were recorded and there is no material discrepancy which can doubt recovery of the 2 note book; it is the submission that the factual of the contents of the two note books are very important which contains the details of several consignments of fabrics indicating the period, lot number, number of fabrics, linear mtr, quality, challan number and date. It is further submission that retraction of the statements made by the employees is an afterthought there is nothing on record to show that the statements were retracted. It is the submission that it is the claim that the appellant there was no clandestine removal of the goods, but he has not explained the clearance of fabrics which is indicated in the blue note book has disappeared. It is his submission that there being clear evidence of clandestine removal of goods demand should be upheld.
5. On careful consideration of the submissions made by both sides and perusal of the records, it is noticed that demand which have been raised and confirmed by the lower authorities is based upon the following evidences:
5.1 The details indicated in the blue note book which was recovered during the visit of the officers, statements of the employees recorded during the panchnama. There was unaccounted finished goods during the visit which settled by the appellant on payment of redemption fine with penalty.
6. I find that the appellant has taken a specific belief before the First Appellate Authority that blue note books were recovered during the visit I the premises of the appellant was not from a specific place, should have been recovered from the specific individual nor there is any findings recorded by both the lower authorities that the blue note book were maintained by the appellant or any other person during the course of business for the confirmation of the demand that the author is also not clear. It is also noticed that except for these evidences, Revenue authorities have miserably failed in bringing on record the evidence as to whom the clandestine clearance were made in any form. It is surprising to note that the investigating authorities, despite having some kind of evidence as to clearances of the goods did not record any statements of the purchaser of the goods or to whom the goods were sent. In the absence of details of recipient of the goods or any evidence they had accepted and admitted the receipt of goods; also in absence of clandestine purchase of raw-materials, unexplained consumption of electricity, movement of goods through transporters and receipt of sale proceedings, the demand made against the appellant seems to be incorrect and unsustainable as per the ratio laid down by this Bench in the case of Arya Fabrics Pvt. Ltd., and Mahesh Silk Mills Ltd. (supra). It is to be noted that in the case of Mahesh Silk Mills Ltd., specifically this issue as to allegation of clandestine removal based upon entries made in the diary were considered by the Bench and held in favour of assessee and the Revenue aggrieved by this order of the Tribunal challenged the same, but Hon'ble High Court of Gujarat, by a reasoned order dismissed the appeal as reported at 2015 (319) ELT A 052 (Guj).
7. In view of the foregoing, in the absence of any evidence which would indicate there was clandestine manufacture and clearance of the goods, it is to be held that the impugned order is unsuitable and liable to be set aside.
8. The impugned order is set aide and the appeal is allowed with consequential relief, if any, as per law.
(Pronounced in the open Court on 12/01/2018