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Commissioner of Central, Ludhiana v/s M/s. Renny Steel Castings (P) Ltd

    Excise Appeal Nos.2206-2207 of 2007-SM(BR)

    Decided On, 24 April 2012

    At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi


    For the Appellants: Ashwini Jain, AR. For the Respondent: Sudhir Malhotra, Advocate.

Judgment Text

Per Archana Wadhwa, J.

1. Being aggrieved with the order passed by the Commissioner (Appeals), Revenue has filed the present appeal. I have heard Shri Ashwini Jain, learned AR appearing for the Revenue and Shri Sudhir Malhotra, learned advocate appearing for the respondent.

2. As per facts on record the respondents are engaged in the manufacture of non-alloy steel ingots. Their factory was visited by the Central Excise officer on 3.9.2001, who conducted stock verification and found certain shortages in the inputs and excess in the final products. However, a separate show cause notice stand issued for the same which is not the subject matter of present appeals.

3. It is seen that some informer provided 5 photo copies of the sale invoice issued by respondents M/s. Renny Steel Casting Pvt. Ltd. Proceedings alleging clandestine removal were initiated against the said respondents, on the basis of said photo copies, resulting in confirmation of demand of duty of Rs.1,54,784/- and imposition of penalty of identical amount. In addition, penalty of identical amount was imposed on Shri Dev Gupta, Director of M/s. Renny Steel Casting Pvt. Ltd.

4. On appeal against the above, Commissioner (Appeals) set aside the impugned order by observing as under:-

'It is observed that the departmental case is that goods were physically removed under cover of the said invoices by the appellants no.1 to the respective consignees, whereas the appellants deny having removed any goods clandestinely under the said goods. The appellants deny having removed any goods clandestinely under the said goods. The appellants no.1 have contended that since there had been no corroboration of the alleged removal, the allegation could not be upheld merely on the basis of photocopies provided by the informer. They have putforthe the argument that the photocopies can be manipulated and therefore the same has been wrongly relied upon in absence of any other corroborative evidence. In this regard, it is relevant to refer to case law of Orissa Synthetics vs. CCE [1995 (79) ELT 137 wherein it has been held by the Tribunal that facsimile copy permissible in view of Section 36B(1)(b) of the Central Excise Salt Act, 1944 and not Xerox copy which can be tampered with. This view of the Tribunal clearly signify that term 'facsmile copy' as specified in Section 36B (1)(b) of the Act does not mean 'xerox copy' as there always scope of tampering with the Xerox copy. It, therefore, has to be proved that the copy available is exact copy of the original document before any cognizance of such copy is taken for any legal matter. Thus, there is strength in the argument of the appellants that the photocopies of sale invoices cannot be made sole basis to allege clandestine removal. And the findings of the adjudicating authority regarding the evidentiary value of the said copies of invoices in the instant case in terms of Section 36B(1)(b) does not hold good in view of the distinction between 'facsimile copy and xerox copy made by the Tribunal in the above referred case law. It is apparent that in such cases of clandestine removal when the appellants denied having removed any goods as alleged by the department, it was imperative that the consignees should have been confronted with a query as to whether they received goods under cover of the invoices in dispute. However, there is no material on record to indicate that any statement of any of the consignees was recorded by the department. Further, it is observed that statements of the representatives of the appellants no.1 placed on record also do not indicate whether the said goods were actually removed vide the said invoices. Thus, the statements do not in any way substantiate the allegations levelled by the department against the appellants.

It is also observed that the Government Examiner of Questioned Documents, Chandigarh, in his report as mentioned in the show cause notice and the impugned order, has given opinion regarding the signatures on the copies of the invoices. The said report, however, does not say anything about the authenticity of the said copies. It is noticeable that the report specifically discusses about 'issuing column' and ‘pre-authentication column’ of the said documents (copies of invoices) and not about the complete documents in question. Thus, the report does not in any way signify that the said documents are authentic / exact copy of the original and the same have not been manipulated as contended by the appellants. Therefore, the appellants have rationale in contending that such allegation cannot be on the basis of the photocopies of sale invoices even though the said copies bear the signatures of their representatives and that the burden is on the department to prove clandestine removal of excisable goods. It is well settled that initial burden always rests on the Revenue to prove the clandestine manufacture and thereafter removal of the goods by the assessee. This burden has to be discharged by adducing some cogent and tangible evidence. In the instant case, such evidence is lacking. It is conclusive that as there is no admission by the appellants no.1 and there is also no evidence to prove actual clearance of the goods through invoices in question by the appellants in a clandestine manner, the duty demanded could not be confirmed just on the basis of photocopies of sale invoices by an informer, without seeking corroboration from the other evidence regarding the actual removal of the said goods from the appellants no.1 and receipt of the same by the consignees, especially when such photocopies are not free from scope of manipulation as held by the Tribunal in above mentioned case law.

4. Hence the present appeal.

5. As rightly observed by Commissioner (Appeals), apart from the photocopies of the notices, there is virtually no evidence indicating or evidencing any clandestine removal by the respondents. The buyers of the final product allegedly cleared by them, as reflected in the invoices have not bee

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n approached by the Revenue and examined. Neither there is any statement of transporters. Further, the fact of manufacture of such goods also does not stand established by the revenue. The appellate authority has rightly observed that the allegation of clandestine removal are required to be substantiated by positive and tangible evidence and cannot be upheld on mere assumptions and presumptions. The confirmation of demand on the basis of photocopies provided by the informer cannot be upheld in the absence of any evidence. 6. As such, I find no infirmity in the views adopted by the Commissioner (Appeals). Both the appeals of the revenue are accordingly, rejected.