Customs, Excise and Gold Tribunal - Bangalore
Chemco Steels Pvt. Ltd. vs Cce on 28 January, 2005
Equivalent citations: 2005(191)ELT856(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. The appellants are challenging the confirmation of demand in OIO No. 3/98 dated 12.01.1998 on the ground of clandestine removal. It is the case of the appellant that the Revenue has proceeded on the basis of certain private records and without any corroborative evidence with regard to the purchase of raw materials, manufacture of the final goods and sale of the same. They contend that there is no evidence with regard to the flow back of funds and demands cannot be confirmed on the basis of private records maintained by the shift supervisor/workmen in the factory. It is further submitted that the raw material for manufacture of Cold Rolled Steel Strips Sheets are all permitted items supplied by SAIL. There is no proof that the appellants have obtained the same from any other place to manufacture and clear clandestinely as alleged in the Show Cause Notice and as confirmed by the Commissioner.
2. The learned Counsel submitted that without corroborative evidence and without seizure of any clandestinely manufactured goods, the demands cannot be confirmed based on private registers maintained by the workmen and the supervisors. As there is no corroborative evidence, the demands cannot be confirmed. He submits that the Tribunal, in a large number of cases, has set aside the confirmation of demands on similar facts and circumstances. He filed a detailed list of the said cases, which is reproduced herein below:
CITATIONS IN SUPPORT
1. In Final Order No. 1547 & 1548/2001 dated 6.9.2001 TGL Poshak Corporation, Hyderabad. v. CCE, Hyderabad, Clandestine removal alleged on the basic of private registers maintained by supervisors.
PAN NOT BE ESTABLISHED
2. 1998 (97) ELT 74 (Tribunal) Krishna & Co. v. Collector of Central Excise, Jaipur. Clandestine removal of goods - Evidence - Accounts and records - Private records maintained
3. 2000 (123) ELT 1148 (Tribunal) Bearing Manufacturing Company v. Commr. of C.Ex. Vadodara. Clandestine removal - Records and registers - Evidence - Charge of clandestine removal based only on private records maintained by workers for their own purpose not sustainable when consumption of raw material to the fact of clandestine removal not otherwise established.
4. 2004 (170) ELT 364 (Tri. - Bang.) Andhra Cements Ltd. v. Commissioner of Central Excise, Guntur Demand for clandestine manufacture and removal solely based on entries made in private register.
5. 2003 (153) ELT 392 (Tri. - Chennai) Commissioner of C. Ex., Chennai v. G.M. Re-Rollers Clandestine removal - Prima facie evidence of excess power consumption - Revenue to establish, with figures of power consumption, fact of clandestine production and removal, together with supporting evidence.
6. 2003 (168) ELT 506 (Tri. - Del.) Commissioner of C.Ex. Raipur v. C.M. Re-Rollers & Fabricators. Clandestine removal - Proof of - Private records - Discrepancies vis-_-vis RG-1 affecting creditability.
7. 2003 (159) ELT 1162 (Tri.-Mumbai) Kirtibhai Maganbhai Patel v. Commissioner of Ce., Nagpur. Clandestine manufacture and removal-Entries in register alone, on the basis of which allegations raised, not sufficient to establish that appellants clandestinely manufactured and cleared goods.
8. 2003 (152) ELT 131 (Tri.-Del.) Kalvert Foods India (P) Ltd. v. Commissioner of C.Ex., Mumbai. Clandestine removal - relevant documents in respect of goods loaded in tempo, in factory premises-confiscation of tempo and goods set aside.
9. 2004 (165) ELT 280 (Jhar.) Commissioner of Ce. v. Telco. Assessee not liable the interest on duty determined and payable for the period before section applicable
10. 2003 (160) ELT 956 (G.O.I.) Shri. Dinesh Kacker, Joint Secretary. IN RE: SWETA EXPORTS Demand - Penal interest under Sec.11AB not leviable where alleged offence and removal of goods takes place prior to introduction of the section, irrespective of the date of passing of adjudication of case.
11. Board's circular No. 655/46/2002-CX dated 26th June 2002.
12. 2001 (128) ELT52 (S.C.) CCE., Combatore v. Elgi Equipments Ltd., Penalty - Mandatory penalty - Section 11AC of CE Act 1944 prospective in operation.
13. 2003 (173) ELT 70 (Tri. - Mumbai) Beck India Ltd. v. CCE, Pune. Clandestine removal of inputs - Shortage of physical stock - Mere shortage in raw material not sufficient.
14. 2004 (173) ELT 402 (Tri. - Mumbai) Pilot Industries v. CCE., Mumbai V. Confiscation, fine and penalty-Clandestine manufacture and removal - Evidence, corroborative evidence.
3. The learned SDR reiterated the departmental contention and prayed for confirmation of demand as there were private records maintained by the workmen and supervisors showing manufacture and clearance of goods.
4. On a careful consideration and perusal of records, we find that the Revenue has proceeded solely on the basis of certain private registers and packing slips maintained in the factory by the shift supervisors/operators. There is no evidence with regard to the purchase of raw materials by the appellants. It is the submission of the appellant that the raw material viz. steel has to be purchased only from the SAIL who are the only sole suppliers. They have contended that they cannot manufacture and clear by clandestine removal without the use of excess electricity and the other raw materials. We have examined this point and find that Revenue has failed to gather evidence with regard to the receipt of the inputs and also with regard to the excess use of electricity, which are the primary factors for the purpose of confirming demands on clandestine manufacture and clearance of final goods. The Revenue has not examined any purchasers of these goods nor they have examined the shift supervisors/operators who are said to have maintained private records and cleared the clandestinely manufactured goods. There is no evidence of receipt of funds. It has been held in all the cited cases which are extracted above that for confirming demands of clandestine manufacture and its clearance, the department has to produce corroborative evidence with regard to the purchase of raw material and manufacture of final goods and removal of the same clandestinely. Except the packing slips and the private registers maintained by the ship supervisors/operators, there is no other evidence on record. There are no statements to corroborate the receipt of raw material and manufacture of the goods. The department ought to have examined the use of excess electricity, which would have established to some extent the allegations. The Tribunal, in a large catena of judgments, which are extracted supra, has clearly laid down that the department has to establish the manufacture of goods by clandestine purchase of raw material and clandestine removal of the same. Each link is required to be established. It is well laid down that private registers and slips maintained by the shift supervisors/operators cannot be a basis for confirming the demands. In view of the well laid down judgments and lack of evidence in this case, the impugned order is set aside and the appeal is allowed with consequential relief, if any.