Custom, Excise & Service Tax Tribunal
Kuchchal Light Metals Pvt Ltd vs Indore on 1 July, 2019
1
Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB)
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
NEW DELHI.
PRINCIPAL BENCH, COURT NO. II
Excise Appeal No.50684 of 2017 (DB)
[Arising out of common Order-in-Original No.65-66/COMMR/CEX/IND/2017
dated 23.01.2017 passed by the Principal Commissioner, Central Excise,
Customs & Service Tax, Indore (Madhya Pradesh)]
M/s. Kuchchal Light Metals Pvt. Ltd. Appellant
103-A, Sector-II, Industrial Area,
Pithampur, Madhya Pradesh.
VERSUS
Principal Commissioner of Central Excise Respondent
and Service Tax, P.B. No.10, Manik Bagh Road, Manik Bagh Palace, Indore, Madhya Pradesh-452 001.
With Excise Appeal No.50783 of 2017 (DB) [Arising out of common Order-in-Original No.65-66/COMMR/CEX/IND/2017 dated 23.01.2017 passed by the Principal Commissioner, Central Excise, Customs & Service Tax, Indore (Madhya Pradesh)] M/s. H.M. Enterprises Appellant 6, Kazi Ki Chaal, Malwa Mill, Opposite Koyala Fatak, Indore.
VERSUS Principal Commissioner of Central Excise Respondent and Service Tax, P.B. No.10, Manik Bagh Road, Manik Bagh Palace, Indore, Madhya Pradesh-452 001.
With Excise Appeal No.50784 of 2017 (DB) [Arising out of common Order-in-Original No.65-66/COMMR/CEX/IND/2017 dated 23.01.2017 passed by the Principal Commissioner, Central Excise, Customs & Service Tax, Indore (Madhya Pradesh)] Shri Manohar Sharma, Authorised Signatory of M/s. Kuchchal Light Metals Pvt. Ltd. Appellant 103-A, Sector-II, Industrial Area, Pithampur, Madhya Pradesh.
VERSUS Principal Commissioner of Central Excise Respondent and Service Tax, P.B. No.10, Manik Bagh Road, 2 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) Manik Bagh Palace, Indore, Madhya Pradesh-452 001.
With Excise Appeal No.50785 of 2017 (DB) [Arising out of Order-in-Original No.65-66/COMMR/CEX/IND/2017 dated 23.01.2017 passed by the Principal Commissioner, Central Excise, Customs & Service Tax, Indore (Madhya Pradesh)] Shri Sukhdev Alias Saral Patidar Appellant Authorised Signatory of M/s. Kuchchal Light Metals Pvt. Ltd.
103-A, Sector-II, Industrial Area, Pithampur, Madhya Pradesh.
VERSUS Principal Commissioner of Central Excise Respondent and Service Tax, P.B. No.10, Manik Bagh Road, Manik Bagh Palace, Indore, Madhya Pradesh - 452 001.
With Excise Appeal No.50878 of 2017 (DB) [Arising out of Order-in-Original No.65-66/COMMR/CEX/IND/2017 dated 23.01.2017 passed by the Principal Commissioner, Central Excise, Customs & Service Tax, Indore (Madhya Pradesh)] Shri Ritesh Gupta Appellant Flat No.2010, Bakhatgarh House, Manoramaganj, Indore (M.P.) VERSUS Principal Commissioner of Central Excise Respondent and Service Tax, P.B. No.10, Manik Bagh Road, Manik Bagh Palace, Indore, Madhya Pradesh-452 001.
AND Excise Appeal No.50879 of 2017 (DB) [Arising out of Order-in-Original No.65-66/COMMR/CEX/IND/2017 dated 23.01.2017 passed by the Principal Commissioner, Central Excise, Customs & Service Tax, Indore (Madhya Pradesh)] M/s. Kuchchal International Appellant 41-42, Industrial Area, Rau Distt.
Indore.
VERSUS Principal Commissioner of Central Excise Respondent and Service Tax, P.B. No.10, Manik Bagh Road, 3 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) Manik Bagh Palace, Indore, Madhya Pradesh-452 001.
APPEARANCE:
Shri Manish Saharan and Shri Rohit Choudhary, Advocates for the appellants.
Shri R.K. Mishra, Authorised Representative for the respondent.
CORAM: HON'BLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE SHRI BIJAY KUMAR, MEMBER (TECHNICAL) FINAL ORDERS NOS.50825-50830/2019 DATE OF HEARING: 03.01.2019 DATE OF DECISION:01.07.2019 ANIL CHOUDHARY:
The present appeals has been filed by M/s Kuchhal Light Metals Pvt. Ltd, (KLMPL) M/s H.M. Enterprises, Shri Manohar Sharma, Shri Sukhdev alias Saral Patidar, Shri Ritesh Gupta (M.D) and M/s Kuchhal International (KI) against Order-in-Original No. 65-66/COMMR/CEX/IND/2017 dated 23.01.2017 passed by the Commissioner of Central Excise, Indore.
2. The brief facts of the case are that the Appellant - M/s KLMPL is engaged in the manufacture of Aluminum profiles/billets/ logs etc. falling under chapter 76 of Central Excise Tariff Act. They are also availing facility of cenvat credit of central excise duty paid on inputs. Based upon the investigation, they were issued show cause notice dated 16.12.2014 demanding duty of Rs. 2,22,62,157/- alleging that they have removed finished goods without payment of duty. A cenvat credit of Rs. 21,24,217/- was also proposed to be denied and recovered on the ground that, they have availed cenvat credit without receipt of goods on the basis of Bills of Entry, in connection with import of Aluminum Scrap and on invoices issued by M/s Satyam Sales Corporation, Mumbai. A Second Show Cause Notice dated 31.05.2016 was also issued proposing to demand duty of Rs. 1,53,163/- from M/s KLMPL on the ground that they by suppressing the production have cleared aluminum section / profile, cleared goods to M/s KI, M/s Sunshine Marketing and M/s Baser Sales, and have evaded the payment of duty. Further goods seized from M/s Sanmati Fabricators and M/s KI were proposed to be confiscated alleging that the same were cleared clandestinely by M/s KLMPL. The proposed demands as per both the show cause notice alongwith equivalent amount of penalty were confirmed on contest and the 4 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) seized goods were ordered to be confiscated by the adjudicating authority. The demand of Rs. 2,22,62,157/- as proposed in SCN dt. 16.12.2014 was confirmed as under :
(i) demand of Rs. 1,76,98,647/- was confirmed on ground that M/s KLMPL has removed finished goods from their Pithampur factory through M/s Parnami Transport without issuing invoices or by issuing bogus invoices to various buyers at New Delhi.
(ii) demand of Rs. 11,62,356/- was confirmed on ground that M/s KLMPL have cleared goods through M/s TCC Transport without issuing legal invoices or under bogus invoices to buyers at New Delhi.
(iii) Demand of Rs. 9,31,658/- was confirmed on ground that clearance was made to buyers other than above.
(iv) Demand of Rs. 3,24,240/- was confirmed on ground that as per the seized records / documents of KI and pendrive of Shri Shailesh Yadav employee of M/s KI, and also working for M/s Sunshine, the goods were cleared by Appellant to M/s KI and from there to M/s Sunshine Marketing without invoice.
(v) Demand of Rs. 7,47,242/- was confirmed on account of clearances made to M/s Sunshine Marketing as found from the records of M/s KI and pen drive of Shri Sukhdev Patidar and Shailesh Yadav of M/s KI and diary of Shri Ritesh Gupta, Managing Director of the Appellant company.
(vi) Demand of Rs. 2,58,667/- and Rs. 3,04,357/- was confirmed on the ground that goods were cleared to M/s Hardware Stores and M/s H.M. Enterprises without payment of duty, as found from seized pen drives of Shri Sukhdev Patidar and Shailesh Yadav.
(vii) Demand of Rs. 80,9315/- was confirmed on the ground that they have cleared aluminum logs and chips without payment of duty.
(viii) Demand of Rs. 21,24,217/- was made on ground of availment of cenvat credit on the basis of Bills of Entry and invoices, without receipt of goods in factory.
Further, demand of Rs. 1,53,163/- pertaining to show cause notice dt 31.05.2013 was also confirmed on the ground that M/s KLMPL has cleared goods involving duty of Rs. 1,06,164/- to M/s. KI, goods involving duty of Rs. 23,606/- to M/s Sunshine Marketing and goods involving duty of Rs. 23,393/- to M/s Baser Sales. Also goods seized from premises of M/s KI and M/s Sanmati Fabricators were ordered to be confiscated. Penalty was also imposed upon M/s KLMPL and Others. Hence the present appeals.
5Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB)
2. The appellant M/s Kuchchal Light Metals Pvt. Ltd., (KLMPL) are manufacturer of aluminium profiles and aluminium billets. The unit is situated at Pithampur. Mr. Ritesh Gupta is the Managing Director of the company.
3. M/s Kuchchal International (KI) is the Proprietorship concern of Mrs. Yogita Gupta w/o Mr. Ritesh Gupta engaged in the business of anodizers and powder coating on aluminium profile, section received from the appellant KLMPL and also from other customers. Besides this they are also into trading of aluminium profile / section.
4. M/s H.M. Enterprises, proprietary concern is engaged in trading of aluminium sections/ profiles located at Indore.
5. Shri Manohar Sharma and Shri Sukhdev alias Saral Patidar are the Authorised Signatory and employees of KLMPL. Shri Ritesh Gupta is the Managing Director of appellant M/s KLMPL and also helps his wife in managing her proprietorship concern M/s Kuchchal International.
6. Ld. Counsel appearing for M/s KLMPL submits that the demands of Rs. 1,76,98,647/- and Rs. 11,62,356/- are based upon the data in pen drive recovered from the hand-bag of Shri Sukhdev alias Saral Patidar, loading challans of M/s Parnami Transport and personal diary of Shri Sunil Atri of M/s TCC Carriers, alongwith few challans. Also reliance was placed on diaries recovered from Shri Ritesh Gupta, director of M/s KLMPL. It was alleged that the entries found in pen drive were in abbreviations like SCORE BOARD OUT, ABCD, KHEL, ABG, BALLS, PLAY, SIZE, SCORE BOARD IN, DRS etc which respectively meant Aluminium section, date, name of buyer, quantity, number of bundles, vehicle number, transporter name, raw material inward and details of aluminium dross. It was alleged that the data found in pen drive corroborates with challans of M/s Parnami Transport for transportation of Aluminum profiles / sections for the period Jun‟ to Nov‟ 2012 and the diary recovered from Shri Ritesh Gupta, Director of the Appellant, which allegedly is said to be containing details of cash payment of freight charges and receipt of some amount from the buyers of New Delhi. It was alleged that goods were cleared under bogus invoices to buyers at New Delhi. Reliance was placed upon the statement of Shri Rajan Chugh, Partner of M/s Parnami Transport and statement dt 24.12.2013 of Shri Jitendra Bhoj, authorized signatory of M/s TCC Carriers. The investigations were initiated against M/s KLMPL on the basis of anonymous complaint, wherein 6 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) photocopies of 37 invoices were forwarded, stating the same to have been issued by M/s KLMPL.
7. He submits that the demand of Rs. 1,76,98,647/-made on the basis of pendrive data of Shri Sukhdev alias Saral Patidar by co-relating the same with the loading challans of M/s Parnami Transport and few entries in the diary of Shri Ritesh Gupta is not sustainable for the reason that the data found in pen drive seized from Shri Patidar is not a reliable piece of evidence. For relying upon the alleged decoded data of pen drive, the procedures for retrieval of data from electronic device was not followed. In terms of Section 36 B of the Central Excise Act, sub-section (2) for admissibility of a document reproduced from computer, the conditions to be followed are:
(a) Identifying the document containing the statement and describing the manner in which it was produced;
(b) Giving such particulars of any device involved in the documents as may be appropriate for the purpose of showing that the document was produced by a computer;
(c) Dealing with any of the matters to which the conditions mentioned in sub-section (2) relate ;
and this should be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities should be there.
8. He submits that in the present case, no such required certificate is available. The procedure and requirement of Section 36B were completely ignored and done away by the investigating authority and, therefore, the evidences on which the entire case is built upon is not admissible as valid legal evidence. The retrieval of data was done under panchnama dated 19.12.2015 but the data was neither signed by the panchas nor by Shri Ritesh Gupta in whose presence it is said to be retrieved. The so called data Annexures 16 and 17 were signed only by the officer, perhaps the person who had drawn the panchnama and thus the retrieved data cannot be treated as authentic and legally valid. It has to be shown that sub-section (1) (2) and sub-section (4) of Section 36 B has been followed. Since none of the conditions given in the above sub-section has been followed, therefore, the data of the pen drive is not admissible as evidence against M/s KLMPL, 7 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) as held in the cases of Shivam Steel Corporation V/s CCE, BBSR-II 2016(339) ELT 310 (Tri), Premium Packaging Pvt Ltd V/s CCE - 2005 (184) ELT 165 (CESTAT) and Ambica Organics V/s CCE, Surat -I - 2016 (334) ELT-97 as upheld by Hon. High Court, Gujarat - reported in 2016 (334) ELT A67. He further submits that there was no investigation as to who is the author of the data found in pen drive and how the officers decoded the abbreviations. It is not known as to from where and which computer the data in the pen drive was copied. Shri Sukhdev alias Saral Patidar has never clarified as to why and for what purpose the data was allegedly kept by him in his pen drive. Though Shri Sukdev Patidar has stated that the data in the pen drive was copied from office computer, but the investigation shows that the office computer does not have any such data. In his statement dated 21.12.2012, Shri Patidar stated that the pen drive is his personal and it contains data relating to himself as well as M/s KLMPL. The above instance shows that the data found in the pen drive is not reliable. The fact is that no such data was available in the office computers of M/s KLMPL. Not a single computer on which such data was maintained was found. The Show cause notice states, that the data of pen drive was maintained in abbreviations like SCORE BOARD OUT, ABCD, KHEL, ABG, BALLS, PLAY, SIZE, SCORE BOARD IN, DRS etc. which were said to have been deciphered to Aluminium section, date, name of buyer, quantity, number of bundles, vehicle number, transporter name, raw material inward and details of Aluminium dross respectively. However it is not known as to how the investigating officer deciphered the terms unless and until somebody gave tips to him. The show cause notice does not spell out as to how the so-called codes in pen drive were decoded by the officer, because it is apparent that without someone‟s involvement, the abbreviations /code cannot be easily decoded, as has been mentioned in the notice. Clearly, the person in whose pen drive the data was located, should have been questioned which was not done. Shri Ritesh Gupta, Managing Director, in his statement has clearly stated that the data does not belong to them nor he has instructed any person to maintain such data. He never directed Shri Sukhdev alias Saral Patidar to keep the information / data on any computer. Thus the data found in the pen drive of Shri Sukhdev alias Patidar cannot be made basis to make allegation against the Appellant. Also the revenue has relied upon the challans of Parnami Transport to allege that it contains the details of clandestine clearance of goods. It is only an assumption of the revenue that in challans of M/s Parnami Transport, wherever the name „Ritesh‟ occurs, the same pertains to 8 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) the goods cleared by M/s KLMPL. Shri Ritesh Gupta in his statement has clearly denied that the goods belong to M/s KLMPL. The challans are own internal record of the transporter and no bilty showing transportation of goods was seized. The loading challans show that the goods were transported from Indore to Delhi, whereas the Appellant‟s factory is located at Pithampur. If the challans belong to the Appellant, the goods would have shown to have been transported from Pithampur to New Delhi. As per statement dt 23.3.2013 of Shri Rajan Chugh, partner of M/s Parnami Transport, a person of the party used to travel along with the goods in truck and therefore record of delivery of goods was not required. His statement itself clearly shows that the case against the Appellant is fictitious. No person from the Appellant concern has been named to have travelled with the goods from the Appellant factory to Delhi, in spite of such huge quantity of goods which are alleged to have been transported. The investigating officers never tried to ascertain the person who allegedly travelled with the consignment. Even the transporter, was not made party to the case for the alleged offence of clandestine removal. There is no statement of any driver who transported the goods and not a single place in Delhi has been identified by the transporter where they have unloaded the goods. As per the show cause notice the data of pen drive is said to be corroborated with the statement of Shri Ramkrishna Pawar, Office in-charge of M/s Parnami Transport Co. It was alleged that in the loading challans wherever consignee name is written as "Ritesh", the same belongs to the Appellant. He submits that only to support the allegation of clandestine transport, the revenue has relied on statement of Shri Ramkrishna Pawar, office in charge of M/s Parnami Transport. That the meaning of consignee has to be considered as consignor which is very surprising. No reason has been given for the transporter to write the name "Ritesh" as consignee. Even if it is assumed that the said reference is to M/s KLMPL or any consignment allegedly transported by them to Delhi clandestinely, the loading challans name of consignee cannot be treated as challans of consignor and it is just an assumption to cast liability on M/s KLMPL. Further, no GR has been issued in respect of these consignments as said to be confessed by the transporter Shri Rajan Chugh of M/s Parnami Transport, in his statement dated 22.3.2013. According to Shri Chugh a person of the party used to go along with the goods in the truck, and therefore record of delivery of goods is not at all required. Such statement has got no evidentiary value, but just an attempt to involve the appellant in fictitious case. He submits that in para-28 9 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) of the Show Cause Notice it has been attempted to co-relate "Score Board Out" details with the transport documents in the search conducted on 4.12.2012 at the transporter‟s premises whereby loading challans were seized. However as admitted in the show cause notice 32 challans mentioned in data contained in "Score Board Out" were not available / could not be recovered during search. The investigating officer though has seized all the documents in search operation had again called for the said 32 challans by writing a letter and the transporter in response submitted 19 challans supporting the figures of "Score Board Out" and for the rest of challans, it was informed that they are not traceable. The retreival of such 19 challans is not convincing since the challans, which could not be un- earthed during the search were being called for by correspondence and the transporter meekly submitted some of these documents. It clearly shows that the loading challans were fabricated, just to support the data of pen drive.
8.1 Also in case of the goods alleged to have been transported through TCC Carriers, the demand is mainly based upon pen drive of Shri Patidar and personal diary of the director of the transporter, which is not admissible as evidence since the diary of a third party cannot be the basis to implicate the Appellant. Not a single LR/ GRN was seized. There is no evidence of transportation. The personal diary of transporter cannot be made basis for demand. Even though show cause notice states that the buyers have accepted the receipt of goods, but no statement has been relied upon in the show cause notice to this effect. The Revenue is said to have conducted investigation at the end of alleged consignees/ recipients of the alleged clandestinely removed goods, but no result of such investigation has been mentioned in the show cause notice. Though the adjudicating authority, on the basis of SCN has stated that the buyers accepted the receipt of the goods, but no statement of any such buyer has been relied upon. Only in case of M/s Duke Metal, the loading challans were made in the name of Shri Vijay Gupta and it was stated in the show cause notice that such investigation showed receipt of the goods. However, it is apparent from the show cause notice that the said consignee has refused the receipt of goods from the Appellant. That in one more case, on the basis of purchase ledger of M/s Madhu International, in comparison with sales ledger of the Appellant, it revealed that the goods were not purchased by the buyer, but the show cause notice mentions that the freight amount not shown in the books 10 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) indicated illicit clearance and transport of goods, which is purely an assumption without any evidence. The adjudicating authority has also relied upon the 37 photocopies of invoices said to have been given by the anonymous complainant. However no copy of such invoice was ever recovered from the factory or office premises of the Appellant or from the directors. There is no corroboration of any duplicate / bogus invoices, which clearly shows that the photocopies of invoices were fabricated. No investigation at the alleged buyers end was conducted, as apparent from the show cause notice. He relies upon the judgments in case of Shree Nakoda Ispat 2017 (348) E.L.T. 313, J. Yashoda (2012) ELT 458 (SC), and Premiere Instruments 2005 (183) ELT 65 (Tri.). He submits that the starting point of investigation was photocopies of 37 invoices. However neither the source of such photocopy is known nor any acknowledgment of buyers is there. There is no corroborating evidence from the Appellant premises, which can show that the invoices were issued by the Appellant. Thus the demand is not sustainable as on the basis of photocopies, source of which is not known, and without any corroborative evidence, it cannot be said that the Appellant made any clandestine clearances. He relies upon the Tribunal judgments in the cases of Hiralal Punj Badgujar Vs. CCE 2018-TIOL-2166-CESTAT - MUM and M/s Jalan Concast Ltd Vs. CCE 2018-TIOL-3167 - CESTAT (All.).
9. In reference to demand of Rs. 9,31,658/-, he submits that the same has been made on the ground that the goods were cleared through transporters, M/s Parnami Transport and M/s TCC Carriers, to the buyers located at places other than Delhi. There is no corroboration of pen drive, delivery challan of M/s Parnami Transport, of details extracted from the personal diary of Shri Atri of M/s TCC Carriers, with any independent evidence. The clearances shown to have been made are not corroborated by any evidence. No buyers were identified. He relies upon the judgments in case of S.J.N Auto Industries Pvt. Ltd. Vs. Commissioner 2005 (191) ELT 1168 (TRI) that computer summary is not reliable when data is not authentic. He also relies upon rulings in Gupta Synthetics Ltd 2014 (312) ELT 225, Gopi Synthetics Ltd 2014 (302) ELT 435, Surya Alloy Ind. Ltd. 2014 (305) ELT 340 ( Cal.), Hindustan Machines 2013 (394) ELT 43 and Arya Fibers Pvt. Ltd. 2014 (311) ELT 529, that in absence of evidence, mere admission of document as evidence, does not amount to its proof.
11Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB)
10. He submits that demand of Rs. 2,58,607/- has been made against the Appellant on the basis of pen drive of Shri Shailesh Yadav, an employee of M/s KI and other records seized from M/s KI and others. It was alleged that the pen drive contained receipt of goods in the premises of M/s KI and clearance thereof to the buyers of the goods. Shri Yadav is an employee of M/s KI and also of a third party, who was not even made co-noticee, which clearly casts a doubt on the admissibility of the pen drive as evidence against the Appellant. M/s KI is an anodizing unit, who were undertaking work of anodizing from many manufacturers. The premises of M/s KI was taken by M/s Sunshine Marketing for storage purpose, without payment of rent on the ground that they shall get job work of powder coating and anodizing from M/s KI. The same is apparent from the statement of Shri Dinesh Mittal, partner of M/s Sunshine marketing. Shri Mittal has stated that Shri Shailesh Yadav was looking after their work relating to receipt of aluminum profile, powder coating, anodizing, loading and despatches from the said place. It is evident from the statement dated 4.12.2012 of Shri Yadav, in answer to Question No. 11, that he was saving data in his personal pen drive and no data was stored on computer by company. The data maintained in pen drive was entered by Shri Yadav himself without any direction or involvement of the Appellant or M/s KI. It is coupled with the fact that Shri Yadav was also working on behalf of M/s Sunshine Marketing in his personal capacity, as apparent from his statement. Shri Dinesh Mittal, partner of M/s Sunshine Marketing has clearly stated that they did not direct Shri Yadav to maintain any such data. The allegation of removal is also based upon the register, in which entries were found to have been made by Shri Shailesh Yadav. However, it is apparent from the statement of Shri Ritesh Gupta, director of M/s KLMPL that he has refused the authenticity of such data. No entry of alleged clandestinely removed goods were found in the books of M/s Sunshine Marketing.There is no evidence of transportation of goods. He draws our attention to the statement dt 02.12.2013 of Shri Mazher Hussein, proprietor of M/s Hardware Stores to whom the goods has been shown to have been cleared, wherein he has clearly stated that they were purchasing aluminum section from the Appellant and the payment of the same was made through cheques or RTGS. He also stated that they have purchased aluminum section on legitimate invoices. That the entries pertaining to unaccounted sales and the payments in cash were not found in his record, hence he cannot comment upon the same. Further, in his statement dated 13.2.2014, he also stated that aluminum section purchased 12 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) from M/s KLMPL, was on FOR basis. That the code „HH‟ found in alleged records does not indicate name of his concern. The entries shown in their name do not belong to them and the entries shown in the books of M/s KI or cash transaction in personal diary of Shri Ritesh Gupta and pen drive do not pertain to transaction of their concern.
11. In case of demand of Rs. 7,47,242/- on alleged clandestine clearance to M/s Sunshine Marketing, he submitted that the same is made on the basis of pen drive of Shri Shailesh Yadav, employee of M/s KI and his statement, and upon the record / register of M/s KI. It was alleged that the data found in the pen drive of Shri Yadav is matching with the clearance entries made in pen drive of Shri Sukhdev alias Saral Patidar and that diary of Shri Ritesh Gupta had payment details. He submits that the pen drive of Shri Shailesh Yadav is his personal pen drive and is not admissible as evidence since it is not known upon whose instruction, he was maintaining such device. Even the owners of M/s KI for whom Shri Yadav was working were not put to questioning about maintaining of such pen drive by Shri Yadav. It is not known as to from which source, such data was compiled by Shri Yadav. He was not even made a co-noticee in the show cause notice. Even though the SCN has relied upon the statement of Shri Ram Mittal and Shri Dinesh Mittal, partners of M/s Sunshine Marketing, who accepted the allegations, the fact remains that M/s KI was not only doing job work of M/s KLMPL, but also of M/s Sunshine Marketing, M/s H.M. Enterprises, M/s Hardware Stores, M/s Shree Glass and M/s Takan, etc. Even the partners of M/s Sunshine Marketing were not questioned about their own books and records or any person to whom they have sold such goods. There are no transport documents of goods transported. Hence the demands are not sustainable. Similarly in case of demand of Rs. 3,24,240/-, the demand is on the ground that the goods were removed from M/s KI to M/s Sunshine Marketing, as found from records of M/s KI and pen drive of Shri Shailesh Yadav, the details of same are available. The Ld. Counsel submits that the pen drive of Shri Shailesh Yadav is itself not reliable. Also there are no evidence of transportation of such goods or receipt of consideration.
12. In case of demand of Rs. 3,04,357/- on the alleged clearances made to M/s H.M. Enterprises, he submits that the demands are based on the documents seized from the premises of M/s KI and the pen drive of Shri Shailesh Yadav. The said clearances were made under invoice of M/s KI to M/s HM Enterprises. M/s KI was undertaking job work activity of various 13 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) entities including the Appellant, and, therefore, it cannot be said that the clearances by M/s Kucchal International to M/s HM Enterprises, were for goods manufactured by the Appellant. There are no corroborative evidence to show that the goods were cleared to M/s HM Enterprises by the Appellant.
13. In case of demand of Rs. 8,09,315/-, he submits that the demands were made on the ground that M/s KLMPL had cleared aluminum dross and chips to various buyers, and found from the pen drive of Shri Sukhdev alias Saral Patidar as corroboration of the same has been sought to have been made from diary of Shri Ritesh Gupta. He submits that except pen drive of Shri Patidar there are no evidences to show that the goods were cleared by the Appellant. The SCN has relied upon an amount of Rs. 3,99,280/- shown to have been received, in the diary of Shri Ritesh Gupta, whereas Shri Gupta in his various statements has clearly denied the data maintained in the pen drive and even stated that he has not instructed either to maintain such data, nor the goods were cleared. He also refused that the diary pertains to clearances of any clandestine removal of goods. No buyer of such goods or transportation evidence has been found, hence the demand is not sustainable.
14. In respect of demand of cenvat credit availed by the Appellant on the basis of Bill of Entries, the goods which were purchased on high seas sale basis, and credit on invoices issued by M/s Satya Sales Corporation, he submits that the revenue has relied upon the statements of CHA/ Transporter. He submits that the goods were transported and received in the Appellant factory, and therefore the credit was availed by them. The goods were recorded in stock account and the amount towards such purchases were paid. The director of the Appellant concern as well as M/s Moongad Alumnium, Shri Rajesh Moongad in their statements has clearly accepted the sale of goods to Appellant concern and transportation. In case of invoices issued by M/s Satya Sales Corporation also, the goods were received by the Appellant and entered in books. Such goods have been used in manufacture, and the finished goods have been cleared on payment of duty. There is no other goods having been used in place of such goods. No evidence has been adduced to show that the records of the Appellant concern are wrong or fudged.
15. With regard to demands of Rs. 1,53,163/- confirmed against the Appellant and the confiscation of goods as proposed vide SCN dated 14 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) 31.5.2013, he submits that the confiscation of goods and demand were made on the ground that the goods were clandestinely cleared to M/s KI, M/s Sunshine Marketing and M/s Baser Sales. He submits that the demands are based on record of M/s KI. There is no evidence that the goods were cleared by the Appellant. The Aluminium profiles and sections were seized from premises of anodizers/ powder coaters namely M/s Sanmati Fabricators and M/s KI, and two different dealers namely M/s Sunshine Marketing and M/s Baser sales. The demand has arisen due to non accountal of goods at the jobworkers/ processor premises, i.e at the anodizers premises and dealer‟s premises. No investigation was carried out at the Appellant‟s (KLMPL) end, and the entire allegation is based upon records of aforesaid persons. The irregularity done at third party end cannot be interpreted as clandestine clearance of goods by Appellant. If M/s Sanmati Fabricator could not produce the invoices of goods found at their premises, it cannot be assumed that the goods were cleared by Appellant. The show cause notice itself states that M/s KI is also dealing with the goods supplied by Aluminium Traders and perhaps the material receipt report is maintained consignment wise, even with indication of type of profile. The show cause notice has mentioned that material receipt report on a particular date is compared with the invoice issued on that particular date by the manufacturer and the difference is assumed as clandestine removal. This is illogical as it is not necessary that removal on a particular date by the manufacturer is received in the premises of anodizer on the same date. No evidence like payment of any amount, transportation is appearing. Shri Patni of M/s Sanmati fabricator in his statement has clearly stated that being an anodizer he takes orders for anodizing from buyers of the goods and it is not known to him whether the actual buyer of the goods is in receipt of any excise invoice issued by the factory. In fact the anodizer has no business to verify, whether there is an invoice unless he is the direct buyer of the goods. That 1351.9 kgs. was received by M/s Sanmati Fabricators on account of Baser Sales Corporation, said to have been retrieved from records of M/s KI and as they could not produce any invoice, the same was held to be clandestine removal of Appellant concern. However it can be seen that Shri Rakesh Baser, the Partner of M/s Baser Sales Corporation in his statement dt. 07.01.2013 has clearly stated that the goods shown in records of M/s KI as having been cleared to him, were never bought by them. There is no transaction with M/s KI and he does not know as to why their name has been mentioned in records of M/s KI. He has not done any transaction for last 4-5 years with 15 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) M/s KI. The Appellant has also denied any transaction with M/s Baser Sales. Similarly it was alleged that 1032.40 Kgs of goods which were received by dealer M/s Sunshine Marketing and were lying at the premises of Anodizer - M/s KI, are clandestine removed goods of the Appellant. The basis of such allegation is that in respect of invoice no. 146 dt. 26.10.2012, the quantity shown by the anodizer in his record is 2152.40 whereas the invoice shows a quantity of 1120 Kgs. Also that against receipt of 1323.450 Kgs and 325 Kgs of material shown in jobwork records, no invoice could be produced. However the SCN also mentioned that though Appellant‟s invoice No. 150 dt. 02.11.2012, involving quantity 1253.750 Kgs is available, no receipt of such quantity is shown to be received in the anodizer/ job-workers record. It was alleged that quantity excess received and the quantity for which no invoice could be produced are actually clandestinely removed goods. He submits that there is no analysis of or conclusion in respect of above invoice no. 150 dt. 2.11.2012, produced by the jobworker without accounting the same in their records. It clearly shows that the jobworker/ anodizer were not maintaining the record properly. Merely on the basis of unsystematic entries, the demand of central excise duty cannot be made against the Appellant. Further no investigation were made at the end of Appellant. Thus the allegation of clandestine removal of 2680.85 Kgs (1323.45 + 325 + 1032.40) is not sustainable. A demand on 4642.9 kg of Aluminium profile at jobworker M/s KI is based upon records of M/s KI only. The inference is based upon the opening stock plus goods received minus finished goods dispatched. It is only an assumption that the accounted goods are duty paid and non accounted goods are non duty paid cleared by the Appellant. No verification of invoices were conducted either at the jobworker‟s end or from the Appellant. That even the stock verification was done on the basis of eye estimation, which clearly shows that the allegations are devoid of any reasoning and the confiscation of goods and demand of duty is not sustainable. Reliance based on pen drive of Shri Yadav in isolation cannot be a reliable piece of evidence as the same was maintained by Shri Yadav in his own capacity. Records found of M/s KI are not binding upon the Appellant. Moreover, there are no evidences of transportation of such goods from the Appellant factory. He lastly submits that in a catena of cases, it has been held that to prove clandestine removal, the Revenue should present clinching evidences in the form of purchase of unaccounted raw material, use of electricity, sale of finished goods, quantity of raw material consumed, difference in stock of inputs, clandestine removal, mode and flow back of 16 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) funds and the demands cannot be made on the basis of presumptions and assumptions. He relied upon the judgments in the cases of Continental Cement Company - 2014 TIOL - 1527 - HC-ALL, MSP Steel & Power Ltd - 2017 (357) E 275 (Tri), Golden Steel Corporation Ltd - 2017 (347) ELT 570 (Tri), Sidhartha Tubes 2005 - TIOL - 1286 - CESTAT, S T Texturiser 2006 - TIOL - 574 - CESTAT - MUM, Venateshwara Iron Castings Pvt. Ltd. 2007 - TIOL - 1861 - CESTAT, Rawalwasia Ispat Udyog Ltd. 2005 (70) RLT 435, (Tri.), in support of his contention. He submits that no corroborative evidence has been brought on record and the demand is purely on assumption/ presumption basis. He relies upon the orders in case of Fenil Udyog Vs. CCE, Mumbai 2006 - TIOL - 736 - CESTAT - MUM and Kalyan Glaze Tiles 2008 (222) ELT 147 (Tri). That the department is under obligation to investigate further by contacting or searching the buyer to whom the alleged goods have been supplied, when the delivery challan indicates the name of the customer. He also relies upon the judgments in case of M/s Dhruv Dyestuff Pvt. Ltd. 2007 - TIOL- 953-CESTAT that the entries made in gate register or private record cannot be made basis for upholding charge of clandestine removal. He further relies upon judgments in case of TGL Poshak Corporation 2002 (140) ELT 187 (TRI), Sri Jayajothi & Co. Ltd 2002 (141) ELT 676 and Emtex Synthetics Ltd. 2003 (151) ELT 170 (TRI).
16. Shri R.K. Mishra, ld. Authorised Representative appearing for the Revenue submits that the demand in case of goods cleared through M/s Parnami Transport and M/s TCC Carriers has been rightly confirmed on the basis of pen drive found from Shri Sukhdev Patidar. He is an employee of M/s KLMPL and had recorded the clandestine transaction in his personal pen drive. The said transactions are corroborated with the loading challans of M/s Parnami Transport Company. The challans also bear the name „Ritesh‟, which shows that the goods were cleared by the appellant concern. He also submits that in case of goods transported through M/s TCC Carriers, the data of pen drive is corroborated with the personal diary of Shri Atri, owner of M/s TCC Carriers, which shows that the goods were transported by the said transport company. The diary of Shri Ritesh Gupta also has entries of clearance of goods and receipts of consideration. Queries were also made from the buyers, some of them stated that the goods were received. In case of demands other than above, pertaining to clearances made to buyers other than Delhi, he submits that the pen drive of Shri Sukh Dev Patidar contained 17 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) the details of such clearances, which shows that the goods were cleared clandestinely by the Appellant. As regards remaining demands, he submits that the pen drive of Shri Shailesh Yadav, employee of M/s KI contains the data of receipt of goods from M/s KLMPL and subsequent clearance to various other firms which were also recorded in various records seized from the premises of M/s KI, and as per the statement of Shri Shailesh Yadav as well as partners of M/s Sunshine, who have been using the premises of M/s KI.
17. In case of demand on Aluminum dross etc., he submits that the clearance details of the same are appearing in the pen drive of Shri Shailesh Yadav and registers maintained by him. Some cash transactions were also found in diary of Shri Ritesh Gupta, which shows that the Appellant has cleared aluminum dross etc. without payment of duty.
18. He submits that the Appellant has availed cenvat credit on Bill of Entry and also on invoices issued by M/s Satya Sales, without actual receipt of goods. He submits that the statements of CHAs, transporters and their employees, showed that the goods shown to be purchased by M/s KLMPL on high sea basis, were transported to M/s Mungad Aluminum, which is apparent from the gate pass issued by M/s Concord. In case of invoices issued by M/s Satya Sales, he submits that the credit is not available since the goods were not received in the appellant factory. The invoices do not contain the mode of transportation or vehicle number; if the goods were received in the appellant factory, the same would have been found mention in the pen drive of Shri Sukh Dev Patidar. He also submits that the goods were cleared to M/s KI, Sunshine International and M/s Baser sales and hence the duty of Rs. 1,53,163/- and confiscation of goods is sustainable. He supports the impugned order and submits that in view of the findings of the adjudicating authority, the demands are sustainable.
19. Heard both the sides and perused the case records. We find that the demands of Rs. 1,76,98,647/- and Rs. 11,62,356/- has been confirmed against the Appellant on account of goods allegedly cleared through M/s Parnami Transport and M/s TCC Carriers. The personal pen drive of Shri Sukhdev alias Saral Patidar, diary of Shri Ritesh Gupta, loading challans of M/s Parnami Transport and personal diary of Shri Sunil Atri of TCC Carriers have been relied upon. We find that the pen drive was recovered from the hand-bag of Shri Sukh Dev alias Saral Patidar. On questioning, he has stated 18 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) that the pen drive is his personal pen drive and the data contained in the pen drive was taken from the office computer. The data of Pen drive was found to be encoded which has been deciphered by the Revenue. We find that the Appellant has challenged the manner of taking the data from pen drive as well as the data of the pen drive itself. The Pen drive data is said to be record of clandestine clearance and the same has been taken from the office computer, but we find that no computer has been identified from which such data was copied. There is no source computer on which such data/ record of alleged clandestine clearances was being maintained by the Appellant concern M/s KLMPL. It leads to serious doubt about the credibility of such data found in pen drive. It is coupled with the fact that Shri Sukhdev alias Saral Patidar is his statement has stated that the pen drive is his own. There is no findings as to on whose instructions such data was maintained by him. Shri Shri Sukhdev alias Saral Patidar has never clarified as to for what purpose the data was copied by him in his pen drive, nor has he said as to from which computer such data was copied. In such facts, the data found in the pen drive is not a reliable piece of evidence. The Managing Director of Appellant concern, Shri Ritesh Gupta, in his statement has denied the data to be pertaining to the Appellant concern as well as stated that such data was not maintained under his instruction or directions. The data of the pen drive is said to have been corroborated with loading challans of M/s Parnami Transport and diary of Shri Ritesh Gupta. However we find that the reliability of loading challan is questionable as no copy of such loading challans were found by the officers from the Appellant and the same were retrieved solely from the office of the transporter, M/s Parnami Transport, which is third party. The loading challans are internal documents of the transporter with no connection with Appellant firm. There is no acknowledgment of the Appellant on such loading challans. Further no LR of the transporter of the Goods Receipt Note has been found, which is an independent evidence. No statement of the driver has been recorded to show that the goods were transported. No evidence in the form of check- post record has been adduced to show that the goods were transported from Pithampur to Indore. Even, the loading challans of M/s Parnami Transport shows transportation of goods from Indore to Delhi and even in such challans "Ritesh" has been shown as consignee and other parties as consignors, which allegedly has been clarified by the transporter that in the loading challans „consignor‟ stands for the recipient and the „consignee‟ stands for the supplier, i.e. Shri Ritesh. We find that the loading challans 19 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) show transportation from Indore whereas the Appellant‟s factory is located at Pithampur. Further Shri Ritesh Gupta, during recording of his statement, has refused that his diary contains details of clandestine removal of any goods or that the goods covered by such loading challans were cleared by them clandestinely. It is also a fact that no statement of any of the buyers has been relied upon in the show cause notice, though the show cause notice states that the buyers in their statement have accepted receipt of goods. We find that none of the buyers has accepted receipt of alleged clandestinely removed goods by the Appellant. The loading challans of Parnami Transport are their internal record and no document from any of the buyers of the goods has been adduced as evidence. The transporters, M/s Parnami Transport, in their statement has stated that bilties or any other transportation documents were not prepared as some person from the appellant factory used to accompany the goods to Delhi. We find that no such person has been identified by the transporter. Looking to the quantum of goods alleged to have been cleared without payment of central excise duty, it was obvious that hundreds of trips might have been undertaken to Delhi and the Revenue authorities could not find even a single person who used to accompany such goods. Thus, the evidences relied upon by the Revenue are incomplete and do not have any evidentiary value. In absence of any buyer of the goods or transportation evidence, money receipts, we are of the view that the demands based upon alleged clandestine removal of goods, cannot be sustained.
20. In case of demand of duty of goods said to be transported through TCC Carriers, we find that reliance has been placed only upon the pen drive of Shri Sukh Dev alias Saral Patidar and personal diary of Shri Sunil Atri of M/s TCC Carriers. We have held that pen drive is not reliable as it is not even known as to from where such data was generated/ copied/ prepared on Pen drive. The pen drive and personal diary of Shri Atri of M/s TCC Carriers are third party documents and do not show any connection with the Appellant for the alleged clandestine clearances. Therefore, we do not find any reason to demand duty on such alleged clearances. Though we have discarded the evidentiary value of the pen drive, diary of Shri Ritesh Gupta and other evidences relied upon by the Department, we, however, also find that the Revenue has not followed the procedure prescribed under Section 36B for retrieval of the data. The sub-section (2) of Section 36B of the Central Excise Act states as under:-
20Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB)
(a) Identifying the document containing the statement and describing the manner in which it was produced;
(b) Giving such particulars of any device involved in the documents as may be appropriate for the purpose of showing that the document was produced by a computer;
(c) Dealing with any of the matters to which the conditions mentioned in sub-section (2) relate ;
and this should be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities should be there.
21. As pointed out by the Appellant, the data has not been signed by the Panchas or Shri Ritesh Gupta, in whose presence, it is stated to be retrieved. The same is signed only by the officers, who have drawn the Panchnama. Since none of the procedures under Section 36B has been followed, the data of the pen drive is not admissible as evidence. Our views are also based upon the judgments as held in the case of Shivam Steel Corporation V/s CCE, BBSR-II 2016(339) ELT 310 (Tri) wherein the Tribunal while dwelling upon the admissibility of computer data as evidence and in respect of charges of clandestine clearances, without corroborative evidence has held as under :
7. Central Excise duty demand on Appellant No. 1 (KLMPL), other than amounts mentioned in Para 5 above, is solely based on a two page computerized statement recovered from the residence of Shri Sanatan Maity. It is not coming out of these documents as to from which computer these printouts were taken and whether the condition specified u/s 36B(2) and (4) of the Central Excise Act, 1944 were followed. In the case of Anvar PV v. V.K. Basheer [Manu/SC/0834/2014] Apex Court, while interpreting Sec. 65B of the Evidence Act, passed following ruling in Paras 13 to 17.
"13. Any documentary evidence by way of an electronic record under the Evidence Act, in view of Sections 59 and 65A, can be proved only in accordance with the procedure for admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the Section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e. electronic record which is called as computer 21 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) output, depends on the satisfaction of the four conditions under Section 65B(2). Following are the specified conditions under Section 65B(2) of the Evidence Act :
(i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer;
(ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity;
(iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and
(iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity.
22. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied :
(a) There must be a certificate which identifies the electronic record containing the statement;
(b) The certificate must describe the manner in which the electronic record was produced;
(c) The certificate must furnish the particulars of the device involved in the production of that record;
(d) The certificate must deal with the applicable conditions mentioned under Section 65B(2) of the Evidence Act; and
(e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device.
23. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly; such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in 22 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc., without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice.
24. Only if the electronic record is duly produced in terms of Section 65B of the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to Section 45A-opinion of examiner of electronic evidence.
25. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence, if requirements under Section 65B of the Evidence Act are not complied with, as the law now stands in India.
7.1 The language of Section 65B of the Evidence Act, 1872 and Section 36B of the Central Excise Act, 1944 is similar. The ratio laid down by the Apex Court will thus be squarely applicable to the provision of Section 36B of the Central Excise Act, 1944 and any reliance placed on the computerized printouts, without following statutory procedures and conditions of Section 36B, are not acceptable as evidence. It is observed that none of the statements recorded by the investigation convey that the entries made in the documents recovered from the residence of Shri Sanatan Maity are actually manufactured and cleared clandestinely by either Appellant No. 1 or Appellant No. 2. The conclusions arrived at by the adjudicating authority are based on his own analysis.
7.2 In Para 6.4 of the Order-in-Original dated 29-5-2009, in the case of Appellant No. 2, it is observed by the adjudicating authority that since an amount of Rs. 1,88,00,000/- was received by Appellant No. 2 from „Sunderlal‟, therefore, the remaining amount of Rs. 3,04,21,230/- appears to be attributable to the sale proceeds of M.S. Ingots clandestinely received by Appellant No. 1. The findings of the adjudicating authority are thus clearly based on presumptions, assumptions and surmises when the computerized documents relied upon by the Revenue are not admissible evidences as recorded in Para 7.1 above. Further, in the case of Oudh Sugar Mills Ltd. v. Union of India [1978 (2) E.L.T. (J172) (S.C.)] it is held by Apex Court in 23 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) Paras 7, 11, 13 to 15 that any demand calculations based on unwarranted assumptions cannot be accepted.
8. Further a case of clandestine removal cannot be upheld on the basis of certain statements alone as held in the case of Commissioner of Central Excise v. Saakeen Alloys Pvt. Ltd. [2014 (308) E.L.T. 655 (Guj.)] wherein Gujarat High Court rejected the appeal of the Revenue by making following observations in Para 10.
"10. All the appeals are based predominantly and essentially on factual matrix. The Tribunal elaborately and very correctly dealt with the details furnished by both the sides and rightly not sustained the demand of Rs. 1.85 crores, which had no evidences to bank upon. Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements. To the extent there existed substantiating material, Tribunal has sustained the levy. No perversity could be pointed out in the approach and treatment to the facts."
8.1 In the present proceedings before us there is no confessional statements, except admissions of certain duty liability made by the appellants as mentioned in Para 5 above. In the case of Palvinder Kaur v. The State of Punjab (supra), Supreme Court held that a statement has to be read as a whole. Similar view was expressed by P&H High Court in the case of Commissioner of Central Excise, Delhi-IV v. Rajdoot Cables (P) Ltd. (supra), where following observations were made by Hon‟ble High Court in Para 3 while dismissing Revenue‟s Appeal.
"3. We have gone through the records and perused the orders passed by the adjudicating authority, Commissioner (Appeals) as well as the Tribunal. We are of the considered opinion that the orders passed by the Tribunal setting aside the order of Commissioner (Appeals) is fully justified. The Tribunal has rightly held that Revenue has solely placed reliance on the statement of Shri R.K. Gupta, Proprietor of M/s. R.K. Enterprises and, therefore, the entire statement of Shri R.K. Gupta should be taken into consideration and not only part of it. There is no dispute about the proposition that the Courts can disengage the truth from the falsehood of the statement of a person. The person may speak partly true and partly false. The grain can be separated from the chaff but in the instant case, except for the statement of Shri R.K. Gupta, there is no corroboration by the Revenue during the investigation. The part of the statement of Shri R.K. Gupta is in favour of the Revenue and part of it not. If the statement of Shri R.K. Gupta is to be believed then it has to be believed in entirety. The scrutiny of the statement of Shri R.K. Gupta reveals that he has stated that about 50% of the transactions were bogus and the transactions where Tempo Nos., were same as in the purchase invoices of the same date, the transactions were genuine and 24 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) actual delivery of goods took place and further, the transactions were genuine where material supplied was less than 6 tons."
8.3 In the present proceedings there is no confessional statement recorded during investigation that appellants have indulged in any clandestine manufacture and clearance of goods based on documents recovered from the residential premises of Shri Sanatan Maity. There is also no evidence on record as to from where the raw materials for manufacturing of M.S. Ingots and Re-rollable products manufactured by appellants were procured. Alternately there is also weight in the argument of the appellants that M.S. Ingots alleged to be clandestinely cleared by Appellant No. 2 are not sufficient to manufacture quantities alleged to have been manufactured and cleared by Appellant No. 1.
8.4 The above factual matrix of the current proceedings only convey a strong suspicion against the appellants that they are undertaking clandestine manufacture and clearance of dutiable goods. As already observed by the Courts any suspicion, however grave, cannot take the place of an evidence. In the present proceeding certain documents recovered from the residence of Shri Sanatan Maity, etc., are the only indicators to raise suspicion that certain goods might have been manufactured and cleared by the appellants. In the case of Pan Parag India Ltd. v. Commissioner of Central Excise, Kanpur (supra), relied upon by the appellants, also there were 719 loading slips indicating clandestine clearance by that appellant. It was held, by CESTAT, inter alia, that demands are not sustainable on the basis of loose papers/loading slips unless corroborated appropriately by other independent evidence. In Para 39 of this case law it is also observed that a statement has to be accepted or rejected in its entirety and part of the same cannot be held to be incorrect and another part as acceptable. In this case law, on the issue of raising of demands on the basis of documents recovered from the third party‟s premises, following observations were made by CESTAT, Delhi by relying upon several case laws including decided by Hon‟ble Apex Court and High Courts :-
"51. It has been constantly held by various decisions that the charges of clandestine removal cannot be upheld on the basis of documents recovered from the third party‟s premises. Reference in this regard can be made to Tribunal‟s decision in the case of Rutvi Steel & Alloys reported in 2009 (243) E.L.T. 154 (Tri.) as also to the Tribunal‟s decision in the case of Bhandari Industrial Metals Ltd. reported in 2009 (245) E.L.T. 613 (Tri.). Similarly there is catena of judgments laying down that the inculpatory statements alone cannot be made the basis 25 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) for arriving at a finding of clandestine removal. In a nutshell, it has been the constant stand of quasi-judicial and judicial appellate forums that for establishing the fact of clandestine removal, there need to be sufficient evidence on record leading to conclusive proof of production of goods, their removal from the factory by any mode of transportation and clandestine clearance to the buyers. Mere doubts, howsoever strong cannot take the place of evidence required to be produced by the Revenue. The onus to establish such clandestine activities, resulting in confirmation of demand is placed heavily on the Revenue and is required to be discharged by production of sufficient evidences.
Again, it is to be proved by the Revenue that the raw materials required for production of huge quantity of final product were obtained by the assessee in a manner which is not in its regular course of its business. It stands held by the Tribunal in the case of Mohan Steels Ltd. reported in 2004 (177) E.L.T. 668 (Tri.), that duty demand cannot be confirmed unless it is shown that the manufacturer had procured all the raw materials required to manufacture the goods. There is a long list of decisions and reference to refer to all of them may not be necessary as it is a settled law.
Similarly, the Tribunal in various cases, as detailed below, has held that charges of clandestine removal cannot be levelled or confirmed on the basis of private records, the authenticity of which was doubted by the manufacturer without any corroborative evidence and the private records/registers of third party cannot be the sole basis for arriving at the clandestine removal in the absence of corroborative evidences.
(i) Dalmia Vinyls P. Ltd. - 2005 (192) E.L.T. 606 (Tri.-Bang.)
(ii) Chemco Steels P. Ltd. - 2005 (191) E.L.T. 856 (Tri.-Bang.)
(iii) C.M. Re-Rollers & Fabricators - 2004 (168) E.L.T. 506 (Tri.-Del.)
(iv) TGL Poshak Corpn. - 2002 (140) E.L.T. 187 (Tri.-Che.)
(v) Minakshi Steels - 2005 (190) E.L.T. 395 (Tri.-Kol.)
(vi) Sri Jayajothi & Co. Ltd. - 2002 (141) E.L.T. 676 (Tri.-Che.)
(vii) Sharma Chemicals - 2001 (130) E.L.T. 271 (Tri.-Kol)
(viii) Opel Alloys P. Ltd. - 2005 (182) E.L.T. 64 (Tri.-Del.) Similarly, in the case of Paras Laminates P. Ltd. reported in 2005 (180) E.L.T. 73 (Tri.); as confirmed by Hon‟ble Supreme Court reported in 2006 (199) E.L.T. A182 (S.C.); Ruby Chlorates P. Ltd. reported in 2006 (204) E.L.T. 607 (Tri.-Che.); D.P. Industries reported is 2007 (218) E.L.T. 242 (Tri.-Del.); Durga Trading Co. reported in 2002 (148) E.L.T. 967 (Tri.- Del.); Durga Trading Co. reported in 2003 (157) E.L.T. A315 (S.C.) and Laxmi Engineering Works reported in 2010 (254) E.L.T. 205 (P & H), it was held that charge of clandestine removal must be corroborated by independent and un-impeachable evidences such as purchase of consignees mentioned in invoices/payment to the manufacturers; that the charge of clandestine removal is a serious charge which must be proved by the department by a adducing sufficient and tangible evidences and demand of 26 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) duty cannot be confirmed on the basis of assumptions and presumptions and surmises & conjectures.
52. At this stage, we may refer to the decision of Hon‟ble Supreme Court in the case of CBI v. V.C. Shukla reported in (1988) 3 SCC 410. Though the said decision does not relate to clandestine removal and confirmation of demand of duty of excise but reference can be made to the observations and findings of the Apex Court relating to the evidences. While dealing with probative value of the entries made in the books of accounts, the Hon‟ble Supreme Court observed that such statements shall not alone be sufficient evidence to charge any person with liability. Entries even if relevant are only corroborative evidences and required independent evidence as to trusthworthiness of those entries necessary to fasten liability. The entries made in the diaries though admissible u/s 34 of the Evidence Act, 1872, truthfulness thereof is not proved by any independent evidence.
Relying on the above observations made by Apex Court to the facts of the present case, we find that the entire cases of the Revenue is made on the basis of 719 invoices of doubtful nature, the trustworthiness of which do not stand established by the Revenue by any admissible independent evidences.
Similarly, in the case of Ratna Fireworks reported in 2005 (192) ELT 382 (Tri.), it was observed that though mathematical procedure is not required to establish the clandestine removal but that does not mean a fact could be proved without sufficient evidence. The Hon‟ble Supreme Court in the case of Anjlus Dung Dung v. State of Jharkhand reported in (2005) 9 SCC 765 observed that suspicious however strong cannot take place of proof."
9. In view of the above observations and the settled proposition of law appeals filed by the appellants are required to be allowed, except to the extent indicated in Para 10 below.
10. Learned Advocate submitted that the clandestine manufacture and removal of the goods cannot be upheld based on the printout of the data contained in the USB drive without following the requirement of condition of Section 36B of the Central Excise Act, 1944. Section 36B of the said Act provides admissibility of microfilms, facsimile copies of documents and computer printouts as documents and as evidence. Clause (c) of Section 36B(1) states that the statement contained in a document and included in a computer printout would be an evidence if the condition mentioned in the sub-section (2) and other provisions contained in this section are satisfied in relation to the statement and the computer in question, shall be deemed to be the document for the purpose of this Act and the rules made thereunder and can be admissible in proceedings. Sub-section (2) of Section 35B provides the condition referred to in sub-section (1) in respect of the computer printout shall be the following viz.
27Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) "(a) the computer printout containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer;
(b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement of the kind from which the information so contained is derived;
(c) throughout the material part of the said period, the computer was operational properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of the contents; and
(d) the information contained in the statement reproduced or is derived from information supplied, to the computer in the ordinary course of the said activities."
Sub-section (4) of Section 36B requires issue a certificate in this behalf by a person occupying the responsible official position in relation to the operation of the relevant device or the management of the relevant activity (whichever is appropriate) shall be evidence in any matter stated in the certificate and for the purpose of the sub- section, which shall be sufficient for a matter to be stated to the best of the knowledge and the belief of the persons stating it. In the present case, the data was not stored in the computer. It is stated that the computer expert accompanied with the Central Excise officers had taken the printout from the USB drive by connecting to the computer. The officers had not obtained any certificate as required under Section 36B of the said Act. It is also noted that none of the conditions under Section 36B(2) of the Act, 1944 was observed. In such situation, it is difficult to accept the printout as an evidence to support the clandestine removal of the goods. It is noted that the requirement of certificate under Section 36B(4) is also to substantiate the veracity of truth in the operation of electronic media. In the case of M/s. Premier Instrument & Controls Ltd. (supra), the Tribunal has held that the printout of the personal computer of the company‟s officer, had not fulfilled the statutory condition laid down under Section 36B(2) of the Act and the demand is not sustainable. The relevant portion of the said decision is reproduced below: -
"9. On the demand of duty on waste and scrap, again the appellants have made out a strong case on merits. The demand covering the period November, 1993 to September, 1998 is based on certain computer printout relating to the period February, 1996 to September, 1998. These printouts were generated from a personal computer of Shri G. Sampath Kumar, a junior officer of the Company, whose statements were also recorded by the department. Admittedly, whatever facts were stated by Shri Sampath Kumar, in his statements, were based on the entries contained in the computer printouts. The statements of others, recorded in this case, did not disclose any additional fact. Therefore, apparently, what is contained in the computer printout is the only basis of the demand of duty on waste and scrap. The question now arises as to whether these printouts are 28 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) admissible as evidence, in this case. Ld. Sr. Counsel has pointed out that the computer print-outs did not satisfy the statutory conditions. He has referred to the relevant provisions of Section 36B of the Central Excise Act which deals with admissibility of computer printouts etc. as evidence and says that the statement contained in a computer printout shall be deemed to be a document for the purposes of the Act and the rules made thereunder and shall be admissible as evidence of the contents of its original, if the conditions mentioned in sub-section (2) and other provisions of the Section are satisfied in relation to the statement and the computer in question. Sub-section (2) reads as under: -
"2. The conditions referred to in sub-section (1) in respect of the computer printout shall be the following, namely: -
(a) the computer printout containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly, carried on over that period by the person having lawful control over the use of the computer;
(b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement of the kind from which the information so contained is derived;
(c) throughout the material part of the said period, the computer was in operation properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of the contents; and
(d) the information contained in the statement reproduced or is derived from information supplied to the computer in the ordinary course of the said activities."
Ld. Sr. Counsel has argued that the above conditions were not fulfilled in respect of the computer printout taken from the personal computer of Shri Sampath Kumar. It appears from the statement of Shri Sampath Kumar and the averments in the memorandum of appeal that it is an admitted fact that Shri Sampath Kumar was the person having lawful control over the use of the computer. The computer was not shown to have been used regularly to store or process information for the purposes of any activities regularly carried on by the company. It was also not shown that information of the kind contained in the computer printout was regularly supplied by the Company to the personal computer of Shri Sampath Kumar in the ordinary course of activities. Again, it was not shown that, during the relevant period, the computer was operating in the above manner properly. The above provision also casts a burden on that party, who wants to rely on the computer printout, to show that the information contained in the printout had been supplied to the computer in the ordinary course of business of the company. We find that none of these conditions was satisfied by the Revenue in this case. We have considered the Tribunal‟s decision in International Computer Ribbon Corporation v. CCE, Chennai (supra). In that case, as in the instant case, computer printouts were relied on by the adjudicating authority 29 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) for recording a finding of clandestine manufacture and clearance of excisable goods. It was found by the Tribunal that the printouts were neither authenticated nor recovered under Mahazar. It was also found that the assessee in that case had disowned the printouts and was not even confronted with what was contained therein. The Tribunal rejected the printouts and the Revenue‟s finding of clandestine manufacture and clearance. We find a strong parallel between the instant case and the cited case. Nothing contained in the printouts generated by Sampath Kumar‟s PC can be admitted into evidence for non-fulfilment of the statutory conditions. It is also noteworthy that the computer printouts pertained to the period February, 1996 to September, 1998 only but the information contained therein was used for a finding of clandestine removal of waste and scrap for earlier period also, which, in any case, was not permissible in law. In the result, we hold that the entire demand of duty on waste and scrap is liable to be set aside."
11. Taking into consideration the overall facts and circumstances of the case, I find that the entire case was made out on the basis of statements of the buyers and the computer printout. Commissioner (Appeals) already held that the evidentiary value of the statements is weak. It is also noted that the statements of the 30 persons were mostly similarly pre-drafted. The investigating officers failed to comply with the conditions of Section 36B of the Act in respect of relying upon this computer printout. There is no adequate material available on record to establish the clandestine removal of goods. Therefore, the demand of duty solely on the basis of these materials cannot be sustained. Hence, as the clearance value was within the SSI exemption, the confiscation of the goods cannot be sustained. So, the imposition of penalties are not warranted.
12. In view of the above discussion, the demand of duty along with interest and penalties on the appellants cannot be sustained. Accordingly, the impugned orders are set aside. All the appeals filed by the appellants are allowed".
26. The above judgment was upheld by the Hon‟ble High Court of Gujarat as reported in Ambika Organics 2016 (334) ELT A67. Similar views has been taken by the CESTAT in case of Premium Packaging Pvt Ltd V/s CCE - 2005 (184) ELT 165 (CESTAT). In view of the aforesaid judgment which are exactly on point of admissibility of data as evidence and proving charges of clandestine removal on the basis of statements, we are of the view that the data of pen drive relied upon by the revenue is not a reliable piece of evidence. Further the charges of clandestine removal are not adduced by any corroborative evidences. The revenue has also relied upon the diary seized from Shri Ritesh Gupta on the ground that it contains the details of clandestine clearance of goods. We find that though the show cause notice has named 9 alleged buyers of goods, and even contended that they had received the goods, but we find that the show cause does not rely upon either the records or the statements of such alleged buyers. The outcome of 30 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) investigation is not appearing. Thus the show cause notice only states that investigation has been conducted but in absence of any affirmation and evidence from the buyers, the demands does not sustain. Shri Ritesh Gupta in his statement has refused that the details found in his diary pertain to any clandestine removal. The only enquiry we find from the show cause notice is about investigations made at M/s Duke Metal or Madhu International at Delhi. However in both the cases, there is no acceptance of any clandestine receipt by the said parties. The show cause notice has also relied upon the 37 photocopies of invoices said to have been provided by the anonymous complainant and which culminated into investigation. Such invoices have not been corroborated with any evidence in the form of investigation at the buyers‟ end. The invoices were not found from the Appellant‟s factory or premises nor there is original copy of any such invoice. Thus it cannot be said that the 37 photocopies of invoices are reliable piece of evidence. In case of Shree Nakoda Ispat2017 (348) E.L.T. 313 the photocopy of invoices in absence of seizure of same from the assessee‟s premises and without any corroboration, were held to be not a reliable piece of evidence. While passing the said orders the Tribunal has relied upon the judgment of Apex Court in case of J. Yashoda (2012) ELT 458 (SC) and Tribunal‟s order in case of Premiere Instruments 2005 (183) ELT 65 (Tri.). A demand of Rs. 9,31,658/- has been made on the ground that the goods were transported through M/s Parnami Transport and M/s TCC Carriers to the buyers located at places other than Delhi. Reliance has been placed upon the pen drive of Shri Sukhdev Patidar, loading challans of M/s Parnami Transport and personal diary of Shri Atri of M/s TCC Carriers. We find that the demands has been raised in similar manner without any corroboration or any evidence. No investigation at the buyer‟s end has been conducted and even if conducted, has not been relied upon. In absence of any such corroboration it cannot be said that the Appellant has removed the goods clandestinely.
27. Some of the demand are confirmed against the Appellant on the basis of data found in personal pen drive of Shri Shailesh Yadav, employee of anodizer/ processor M/s KI. Shri Yadav was also working for M/s Sunshine Marketing. The demand has been confirmed against the Appellant concern on the ground that no invoices towards clearances were found at M/s KI, whereas their records show the receipt of material. A demand of Rs.3,24,240/- has been made on the basis of pen drive of Shri Shailesh Yadav alleging that the goods were cleared by the Appellant to M/s KI and 31 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) from there to M/s Sunshine Marketing. We find from the statement dated 4.12.2012 of Shri Shailesh Yadav that he was saving data in his personal pen drive and no data was fed or stored on computer by M/s KI. There is no acceptance on the part of the owner of M/s KI, that the data maintained in the pen drive belongs to their concern. It is also a fact that Shri Shailesh Yadav was also working for M/s Sunshine Marketing, as also stated by Shri Dinesh Mittal, partner of M/s Sunshine Marketing. M/s Sunshine Marketing were engaged in anodizing and were undertaking such activity on behalf of other suppliers in addition to M/s KLMPL. Further, even if the data found in the pen drive of Shri Shailesh Yadav is matching with the pen drive data of Shri Sukhdev Patidar, it cannot be a conclusive ground to hold that the goods were clandestinely cleared by M/s KLMPL to M/s KI. It is an accepted fact from the show cause notice that in premises of M/s KI, the goods were also being received from M/s Vimsar, M/s Krishna Profiles as well as other persons. In such case it cannot be alleged that the goods found to be entered in seized records of M/s KI or M/s Sunshine (which was also operating from the same premises) belong to the Appellant - KLMPL. Even the owners of M/s KI were not put to questioning about maintaining such pen drive by Shri Shailesh Yadav. It is not forthcoming as to from which source, such data was compiled by Shri Shailesh Yadav. The show cause notice has relied upon the statements of Shri Ram Mittal and Shri Dinesh Mittal, partners of M/s Sunshine Marketing. However, we find that M/s Sunshine Marketing were undertaking the job work activity for other parties also. The Show cause notice has not brought on record any books or records of any person to whom M/s Sunshine Marketing has cleared such goods. There are no transport documents of such goods. The records of M/s KI and the pen drive of Shri Shailesh Yadav is not a conclusive evidence to allege clandestine removal from M/s KLMPL. Also, a demand of Rs. 2,58,607/- has been made on the ground that the pen drive of Shri Shailesh Yadav shows clearances to M/s Hardware House holding same to be clandestine clearances. We, however, find that the proprietor of M/s Hardware Stores Shri Mazher Hussein in his statement dated 2.12.2013 has stated that the payment towards purchases of aluminum section from the appellant was made through cheques or RTGS. Further, that they have purchased aluminum sections on legitimate invoices only. He also stated that no unaccounted sales or cash payments are found from his record. He also stated in his statement dated 13.2.14 that the aluminum sections purchased from the Appellant were on FOR basis. The code „HH‟ found in the alleged 32 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) records does not indicate name of his concern and the entries shown in their name do not belong to them. Also, that the entries shown in the books of M/s Kuchchal International or cash transaction in the personal diary of Shri Ritesh Gupta or pen drive of Shri Shailesh Yadav does not pertain to transaction of their concern. In view of such fact when the alleged buyer of the goods has refused receipt of goods and in absence of any other evidence, duty cannot be demanded from M/s KLMPL. A demand of Rs.3,04,357/- has been made on the ground that the details of such clearances to M/s H.M. Enterprises were found from the documents seized from the premises of M/s Kuchchal International and the pen drive of Shri Shailesh Yadav. Further reliance has been placed upon statement of Shri Parvez Hasan, Partner of M/s H. M. Enterprises. We find that M/s KI were undertaking job work activity of various entities including the Appellant and the clearances were made to M/s H.M. Enterprises by M/s KI under invoice. The charges of clandestine removal are based upon the pen drive of Shri Shailesh Yadav employee of M/s KI, who was also working for M/s Sunshine. The Pen drive of Shri Shailesh Yadav is his personal pen drive and were not maintained by him under the instruction of Appellant. Nor the same is corroborated with any records of Appellant firm to show that the same were clandestine removed goods. In such case, it cannot be concluded that the clearances by M/s Kuchchal International to M/s H.M. Enterprises were of goods manufactured by the Appellant and cleared clandestinely without payment of duty. Further we find from the statement of Shri Parvez Hasan, Partner of M/s H.M. Enterprises, when he was shown the printouts of data from the pen drive of Shri Shailesh Yadav, that he is not aware of same. Further M/s H.M. enterprises in their reply has stated that during inspection of their shop, no discrepancy in stocks were found. All proper sale/ purchase bills were found and that they were not involved in any purchase/ sale of duty evaded goods. We are of the view that when no incriminating evidence at the Appellant end and the buyers end has been found. Neither their statements are inculpatory, in that case on the basis of third party records or pen drive, the duty cannot be demanded from the Appellant.
28. A demand of Rs. 8,09,315/- has been made on the basis of pen drive of Shri Sukhdev alias Saral Patidar on alleged clearance of Aluminium dross. The show cause notice also relied upon the diary of Shri Ritesh Gupta, which shows receipt of amount of approx. Rs. 3,99,280/-. We find that Shri Gupta in his various statements has denied the data mentioned in the pen drive 33 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) and stated that he has not instructed any person to maintain such data nor any goods have been cleared. He has even stated that the diaries seized from him does not pertain to any clandestine clearance of goods or receipt of consideration of any clandestine sale. No investigation seems to have been undertaken to locate the buyer of such goods or transportation. Thus the allegations lack the corroboration, and in absence of same the demand of Rs. 8,09,315/- is not sustainable Further dross being a waste product, the same is not dutiable as held by Hon‟ble Bombay High Court in Hindalco Industries.
29. Demand of Rs. 7,47,242/- has been confirmed against Appellant concern on the ground that the pen drive of Shri Shailesh Yadav and records of M/s Sunshine show the receipt of such goods. Also that diary of Shri Ritesh Gupta has details of payments. Reliance has also been placed upon statement of Shri Dinesh Mittal of M/s Sunshine Marketing. We find that all evidences were retrieved from third party. The pen drive is owned by Shri Shailesh Yadav in his personal capacity. The records of Sunshine Marketing are their own records. Shri Ritesh Gupta in his statement has denied that the diary seized from him has details of any clandestine transactions. The data found in the pen drive from Shri Shailesh Yadav was not known to have been copied from any office computer of M/s KI or M/s Sunshine Marketing. No record of M/s Sunshine marketing has shown receipt of such stocks and disposal thereof. The pen drive of Shri Shailesh Yadav and the records relied upon are third party documents without any corroboration and the same cannot be relied upon to fasten the duty liability against the Appellant. We find that on the basis of third party records, the demand cannot be confirmed against Appellant concern. We find that M/s Sunshine was receiving goods from other parties also viz. M/s Vimsar, M/s Ravi Enterprises, M/s Hindustan Marketing amongst others. In absence of any corroborative evidence of removal of goods from the Appellant (KLMPL) factory, it cannot be said that the records of M/s Sunshine Marketing or pen drive of Shri Shailesh Yadav point to removal of goods without payment of duty by KLMPL.
30. We find that the charges are mainly based upon the pen drive of Shri Shailesh Yadav employee of M/s KI and who was also maintaining records/ stock of M/s Sunshine Marketing. In case where the demands are based upon the pen drive and such records are third party records and in absence of any affirmation by the Appellant, it cannot be concluded that the 34 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) Appellant has removed the goods without payment of duty. In case of M/s Rama Shyama Papers 2004 (168) ELT 494 (CESTAT), this Tribunal, while dwelling upon the similar issue of reliance having been placed upon third party records, held as under:
9. We have considered the submissions of both the sides. The Revenue has charged the Appellants with clandestine manufacture and removal of paper, mainly on the basis of documents seized from the premises of Chitra Traders and Transporters and the various statements recorded from the Proprietor of Chitra Traders, transporters and labourers working in the factory of the Appellants and also the driver or cleaner of the Truck which was in the process of loading on 22-6-2001 when the Central Excise Officers visited their factory premises. The Appellants, on the other hand, have contended that most of the persons whose statements have been relied upon have not been produced for cross-examination and the documents seized from third parties‟ premises have not been corroborated by adducing evidence of any of the customers though the enquiries were conducted at different places as deposed by Shri Anurag Sharma, Inspector, in his cross-examination on 4-3-2002. Out of 19 consignments said to have been cleared by the Appellant No. 1 without payment of duty on the basis of five transporter, we observe that in respect of two consignments, it has been mentioned by the Revenue that the same may not pertain to the Appellants. Further, only one transporter Shri Sanjay Garg of M/s. Balaji Transporter Co. was produced for cross-examination which accounts for only two consignments out of 19 consignments in question. Shri Garg, it is observed from the record of cross-examination, has deposed that they generally work as commission agent and provide transport to Appellant No. 1; the payment is used to be received directly by the drivers after delivery of the goods at the consignee‟s end and in case the driver did not report back for the next 3-4 days, it was presumed that the goods had reached the consignees end. Further, the name of the Applicant No. 1 on one GR No. 34 had been written not by Shri Sanjay Garg, but by his brother, whose statement has not been recorded and on GR 187, there is no mention of the name of the Appellant No. 1 at all. No statement of the drivers concerned has been recorded by the Revenue to establish that the finished goods manufactured by the Appellants were removed without payment of duty. The other transporters have not been produced for the purpose of cross-examination nor the statements of drivers who might have actually carried the goods, had been recorded. Moreover no statement of any of the recipients of the goods had been brought on record. Thus the statements of the transporters have remained uncorroborated and also suffers from the short coming of being not being cross-examined by the Appellants. It has been the settled law that the liability cannot be fastened on an assessee on the strength of documents seized from the possession of third party. There should be some corroborative evidence/material. The Tribunal has in the case of Emmtex Synthetics Ltd., supra, when the charge of clandestine removal was made against the Appellants therein out of yarn received from a third party based on the diary, loose documents and packing slips allegedly recovered from Shri B.M. Gupta, Vice President of the Supplier Company, held that "no presumption on the basis of uncorroborated, uncross-examined evidence of B.M. Gupta and the alleged entries made by him in the 35 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) private diary, loose sheets, charts, packing slips could be drawn about the receipt of polyester yarn by the Appellants from the company, M/s.
HPL, in a clandestine manner during the period in question. Similarly, no inference could be legally drawn against the Appellants of having manufactured texturised yarn out of the said polyester yarn and the clearance thereof, in a clandestine manner without the payment of duty." The Tribunal had also referred to the decision in Oudh Sugar Mills Ltd. v. Union of India, 1978 (2) E.L.T. (J172) wherein "the Apex Court has observed that no show cause notice 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". The Tribunal also took note of the decision in Kamal Biri Factory and Shri Khushnuden Rehman Khan v. CCE, Meerut - 2003 (161) E.L.T. 1197 (T) = 1997 (23) RLT 609 (CEGAT) wherein view has been taken that the allegations of clandestine removal of the goods will not stand established when based on the entries made by the assessee‟s employee in a diary or on the basis of third party‟s record in the absence of any corroborative evidence. It has also been the consistent view of the Tribunal that the statements of the witnesses, without allowing the assessee to test the correctness of the same by cross-examining those witnesses; cannot be made the basis for holding the allegation against the assessee. (Takshila Spinners v. CCE, supra). Similar views have been expressed by the Tribunal in the case of Haryana Petrochemicals Ltd., supra wherein the Tribunal has held that reliance cannot be placed on the documents maintained by a third party "who did not have the courage to come forward for cross-examination in order to test the veracity and correctness of the private record maintained by him." It has also been held by the Tribunal in the case of Kothari Synthetics Industries v. CCE, Jaipur, 2002 (141) E.L.T. 558 (T) that entries made in the transport Register of the transport company could not be accepted as a conclusive proof of clandestine receipt of goods from that transport company for want of corroboration from any tangible evidence. Following the ratio of these decision, the duty demand cannot be upheld solely on the basis of uncorroborated statements and records of transporter. The statements tendered by the labourers can also not be relied upon by the Revenue as these persons were not produced for being cross-examined. Moreover, there is no corroboration of their statements with regard to the Trucks by which the goods were allegedly removed or the persons who received the goods. The Truck driver Shri Shiv Bahadur Yadav has also not been cross-examined and cleaner Shri Rakesh Kumar had deposed that the Bills/Invoices are supposed to be with the Driver and he being cleaner had no knowledge.
10. The confirmation of duty in respect of 149 consignments is also based on the records seized from the premises of M/s. Chitra Traders and not on the basis of any record seized from the premises of the Appellant-company. The Revenue has not been able to adduce any corroborative evidence to show the movement of goods from the premises of the Appellant-company to the premises of M/s. Chitra Traders or the Customers whom the goods were sent directly to as per the direction of Chitra Traders. No inquiry has also been made into these Customers who ultimately received the goods. There is no substance in the reasoning given by the Commissioner in the impugned order to the effect that "as the party did not challenge the fact of their business association with M/s. Chitra Traders, Delhi, the 36 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) enquiry further down the line was not considered necessary." The onus of proof that the goods were removed by the Appellants without payment of duty and without entering the same in their records is upon the Revenue which cannot be discharged merely on the strength of the entries made in the records of a third party without linking the removal of goods from the premises of the Appellant-company. The mere fact that the Appellant-company had business relation with Chitra Traders, does not mean that they will be liable to each and every entry made by Chitra Traders in their books of account. It is also noted that none of the transporters and none of the labourers whose statements have been relied upon by Revenue have mentioned that the goods in question were delivered to Chitra Traders from the premises of the Appellants. The material brought on record may at the most create a doubt only. But doubt cannot take the place of evidence. The Revenue has, thus, not proved its case against the Appellants in respect of 149 consignments. We, therefore, set aside the demand of duty and penalty imposed on Appellant-company and consequently the demand of interest.
11. As far as the excess stock found in the factory is concerned, the same is liable to confiscation as it was not entered in the books of account. No material has been produced by the Appellants in support of their contention that part of the goods were manufactured on the day of seizure and remaining goods were not of good quality. No such assertion about quantity was also made by Manoj Sharma in his statement dated 22-6-2001 when the goods were seized by the officers. We, however, reduce the redemption fine from Rs. One lakh to Rs. 50,000/- and penalty from Rs. 50,000/- to Rs. 15,000/- on this count. As penalty has been imposed on Appellant-company on account of excess goods found unaccounted, there is no need to impose separate penalty on Director and Authorised Signatory under Rule 209A of the Central Excise Rules, 1944. We, therefore, set aside the penalty imposed on Appellant Nos. 2 and 3.
In case of M/s Rajguru Spining Mills 2009 (243) ELT (280), this Tribunal while examining the Third party records as evidence, held as under:
3. We have carefully considered the case records and the submissions made by both sides. In the appeal filed by the Revenue, no valid grounds have been raised to challenge the findings of the Commissioner (A). The appeal is based on the existence of material which the first appellate authority had found to be unreliable as evidence. The appeal proceeds on the basis that denial of ownership of the Day Book seized from respondents was no ground to discard it as evidence. That the entries in the Day Book matched with the entries in the registers maintained by M/s. Kothari Trading Corporation was adequate circumstance which established excess realization by the respondents and evasion. We find that charge of evasion cannot be found solely on the basis of records of third party. Records of M/s.
Kothari Trading Corporation cannot be relied on to find evasion by the respondents. The Day Book cannot be relied on as the author of its contents could not be identified and his statement obtained. Revenue has not been able to establish receipt of excess amounts against clearances of yarn by the respondents with any reliable evidence. The Commissioner (A) also had found that the Day Book and the records of the broker did not match in entirety. He had found discrepancies in 37 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) important respects between the entries in the Day Book and the records of the yarn broker. In the decision of the Tribunal in the case of Rhino Rubbers Pvt. Ltd., it was held that third party‟s records were not reliable when no direct links could be established between the records and offending transactions. In the circumstances, we find that the appeal filed by the Revenue seeking to restore the order of the original authority is devoid of merit. In the result, we sustain the impugned order and dismiss the appeal filed by the Revenue.
31. In case of M/s Hindustan Machine Vs. CCE 2013 (294) ELT 43 CESTAT it was held that the internal records maintained by a worker in his private capacity is not sufficient to alleged clandestine removal. Also in case of Savitri Concast 2015 (329) ELT 213 (TRI), the Tribunal held that ledgers/ private note book recovered from third party are not reliable. The findings were as under:
7. Coming to the 1st question as to whether on the basis of the recovery of a private ledger book from the factory premises of SSSRM which contain entries regarding receipt of MS Ingots by SSSRM from the appellant company during the period from April, 2005 to August, 2005 allegation of clandestine removal can be made against the appellant we are of the view that in terms of the Apex Court‟s judgment in the case of Kishin Chand Chella Ram v. Commissioner of Income Tax reported in 1980 (Supp) SCC 660 allegation of duty evasion cannot be made against an assessee on the basis of the entries in the records being maintained by some other person unless an opportunity for cross-examination of that person had been allowed.
In this case no such opportunity for cross-examination of the writer of the private ledger book of SSSRM or their supervising officer had been given. Moreover, the entries in the private ledger book of SSSRM showing receipt of MS Ingots from the appellant during the period from April, 2005 to August, 2005 are not supported by any other independent evidence on record. Therefore, we hold that merely on the basis of the entries in the private ledger book of SSSRM, the allegation of duty evasion against the appellant company cannot be sustained.
32. We also find that the show cause notice has relied upon the statement of driver of vehicle no. MP-09-KA-4616 Shri Raghuvir Maurya, that he was transporting goods from the Appellant factory to premises of M/s KI. However as pointed out by the ld. Counsel no record of such clearance has been brought on record. Merely on the basis of statement of Shri Raghuvir Maurya, it cannot be said that the goods were transported clandestinely through such vehicle and therefore there is no ground to demand duty. An invoice no. 179 dt. 07.10.2011 is alleged to have been issued twice by the Appellant i.e. once to M/s Lucky Aluminum, Bhopal and again to M/s Sunshine Marketing. The same was shown to Shri Ritesh Gupta who in his statement stated that duty shall be paid for such abnormality. However we 38 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) find that Shri Ritesh Gupta in his statement refused to accept the same on the ground that he has not authorized any person to issue such invoice and it may be a case of robbery from his factory. He also undertook to pay duty if found that goods were cleared twice. We find that there is no admission in his statement that the goods were cleared. The department also did not undertake any interest to verify whether the goods against both the invoice were actually cleared or not by way of investigation at the buyers end. In such case we do not find any reason to demand duty. Coming to the charges of clandestine removal it is trite law that the same cannot be upheld merely on the basis of statements and private records unless the corroborative evidence are adduced in the form of procurement of raw material, production records, use of other inputs, transportation etc. The adjudicating authority has alleged that the Appellant received huge quantity of Aluminium scrap from the parties, which was not accounted. In case of one of the supplier M/s Balaji Metals, Bhopal, the scrap has been said to be supplied through transporters M/s Acharya Roadline and M/s New Royal India Transport, through more than 100 consignments. The reliance has been placed upon the bilties and loading register as well as entries of cash payment appearing in diary of Shri Ritesh Gupta. It was alleged that the diary show cash payment to "Sunil Gupta, BPL" or "S Gupta BPL and that the same stands for Sunil Gupta, proprietor of M/s Balaji Metals. We find that Shri Sunil Gupta in his statement has stated that they have sold scrap to the Appellant only to the tune of Rs.8,06,579/-. The transporter in his statement has stated that the place of consignment is not known as the employee of consignor used to travel with the vehicle for delivery of scrap at Pithampur. In such case when the alleged consignor has denied selling the goods to the Appellant as well as transporter who has allegedly transported more than 100 consignments has denied knowing the place where the goods were transported, it cannot be said that the Appellant unit has received Aluminium Scrap clandestinely. Even Shri Ritesh Gupta, the director of Appellant firm has denied receipt of scrap and also denied that the diaries pertain to the Appellant Unit Transaction in cash. No documents of Appellant unit showing the receipt of scrap has been brought on record. The revenue has relied upon the facts that four cheques for Rs. 20 lakhs were given as security, however issue of cheques as security cannot be taken as evidence of purchase of scrap. Even if some of the scrap has been shown as purchased by the Appellant but not recorded in books, the same cannot be evidence that the said scrap was used by them in clandestine production and removal 39 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) of Aluminium Ingots. The adjudicating authority has relied upon the project report of West Bengal Tiny Industries Department to show that the electric consumption of Appellant unit is more and therefore the excess consumption has been used for manufacture of excess production which was cleared clandestinely. WE find that no physical verification of electric consumption was undertaken at the factory. Moreover the Hon‟ble Allahabad High Court in case of CCE Meerut Vs. R.A. Castings Pvt. Ltd. 2011 ELT 337 (All.) has held as under:
3. Being aggrieved by the impugned orders, the respondents filed appeals before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The Tribunal observed that it is settled principle of law that the electricity consumption cannot be the only factor or basis for determining the duty liability, that too on imaginary basis, especially when Rules 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. The Tribunal further observed that no experiment have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing on MT of steel ingots.
Tribunal also observed that the electricity consumption varies from one heat to another and from one date to another and even from one heat to another within the same date. Therefore, no universal and uniformly acceptable standard of electricity consumption can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the Revenue with no other supporting record, evidence or document to justify its allegations. The Tribunal has also considered the report of Dr. Batra, which has been relied upon for making the allegations that there was higher electricity consumption. It appears that Dr. Batra in his report has observed that for the production of 1 MT of steel ingots, 1046 units electricity required.
4. So far as the various after allegations relating to the fictitious firms and the income from the share trading, the Tribunal recorded the finding that since the incriminating statements of share brokers etc. have been relied upon in the proceedings, it was incumbent upon the Revenue to produce them as well as the investigating officer for cross- examination by the appellants, as was repeatedly requested by them. In the absence of the same, the statements of the share brokers etc. cannot be relied upon. The Tribunal further observed that even if, for the sake of argument, it is accepted that the income shown in the balance sheets is not the income derived form the sources declared by the appellants, there is nothing on record to link it with the so called clandestine removal of the goods.
5. On consideration of the aforesaid findings, we are of the view that the findings of the Tribunal are based on the material on record and they cannot be said to be without any material and perverse. We find that the Revenue has invoked the proviso to Section 11A(1) of the Act but no case has been made out in the show cause notices or in the 40 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) adjudication order that there were any mis-statement, suppression of fact or fraud on the part of the respondents. No substantial question of law arises from the order of the Tribunal.
6. In the result, all the appeal fails and are accordingly, dismissed".
The above judgment was maintained by the Apex Court as reported in 2011 (269) ELT A208 (SC).
33. The adjudicating authority has also confirmed a demand of Rs.21,24,217/- on the ground that the Appellant had availed credit of duty on the basis of bills of entries of the goods, i.e. Aluminum Scrap, shown to have been purchased on high sea sale basis from M/s Moongad Aluminium and also on the basis of invoices issued by M/s Satya Sales Corporation, Mumbai. The show cause notice and the impugned order has contended that the said goods were received in the factory of Mungad Aluminium, as evident from the deposition of CHA and transporters and which is also corroborated by gate passes issued by CONCOR, which reflects the picture of delivering the imported goods at Indore, and not at Appellant‟s factory at Pithampur. We find that it is a fact on record that the goods were purchased by the Appellant on high sea sales basis, for which payment was made through bank. If the goods were not directly delivered to the Appellant‟s factory, it cannot be concluded that the goods have not been received in their factory. The bills of entry are in the name of the Appellant. Further no record of the Appellant or of M/s Mungad Aluminum has been relied upon to show that the imported scraps were not received in the Appellant‟s factory and were instead received at the factory of M/s Mungad Aluminum. No disposal of such goods otherwise has been shown in the impugned order. Further though the Show Cause notice has alleged that the Appellant received unaccounted scrap, but there is no matching quantity. We find that on the one hand show cause notice mentions that the logs manufactured out of such scraps are also sold to different customers and on the other hand the show cause alleges that there is no actual supply of logs because the quantity claimed to have been manufactured, is more than the capacity of the plant. This fact is contrary in itself, since on one hand the show cause notice in first place alleges removal of huge quantity of aluminum profile said to be manufactured clandestinely whereas in the second part it is alleged that the intermediate goods, i.e. logs, required for such clandestine manufacture was not possible to be produced in the factory due to non- availability of raw material namely scrap and also because the capacity of 41 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) the plant is limited to justify the production claimed. Thus, the allegation of clandestine production vis-à-vis allegation of non-receipt of raw material is contrary to each other. The payment against the purchase of imported scrap has been legally made against valid documents for availing credit and even if the goods have first reached Indore and then brought to Appellant‟s factory, it does not cast a doubt on non-receipt of imported goods. In such view of the facts, we find that the credit availed by the Appellant on imported scrap cannot be denied. In case of credit of Rs. 2,41,739/-, the adjudicating authority has denied the same on the invoice issued by M/s Satya Sales, Belapur. It is alleged that as the invoices do not show mode of transportation and vehicle registration numbers and therefore, it cannot be presumed that the goods were delivered to the Appellant. Further, that the imported goods of Satya Sales Corpn, who is dealer of imported scrap were supplied to the Appellant from the container imported at ICD, Pithampur; that even if the goods received in Pithampur is supplied to Indore, they can supply other goods / scrap available with them to the Appellant, for which they have issued an invoice. We find that the small procedural / technical lapse of non-mentioning the vehicle number or mode of transportation cannot be a reason to deny credit to the Appellant. If the receipt of goods is not found in the pen drive of Shri Saral Patidar, the authenticity of which itself is highly doubtful, the same cannot be a reason to deny credit to the Appellant. The invoice issued by M/s Satya Sales Corporation is a valid invoice issued in the name of the Appellant and in absence of any significant evidence, the credit available to the Appellant cannot be denied on the basis of irregularity committed by the supplier. Further in case of cenvat demand no diversion of goods by M/s Moongad Aluminium or M/s Satya Sales Corporation, has been shown. Hence there cannot be any demand against M/s KLMPL.
34. In case of demand of Rs. 1,53,163/-, we find that the demand has been made against the Appellant on the ground that they have cleared the goods to M/s Kuchchal International, M/s Sunshine Marketing and M/s Baser Sales Corpn. Further, the quantity of goods, i.e. aluminum Section & profiles, were ordered to be confiscated. We find that the demand has been made on the basis of alleged receipt of goods at the job workers / processors premises, i.e. anodizers or dealers premises. However, no investigation has been conducted at the Appellant‟s end or their factory and the demand is based on the records of such alleged job workers. Only on the 42 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) basis of documents of the third parties, without any corroborative evidence at the end of the manufacturers, the demand does not sustain. In case of M/s Sanmati Fabricators, we find that they could not submit the invoice being the job worker. However, this cannot be a reason that such goods were cleared clandestinely by the Appellant. Similarly, in case of M/s Sunshine Marketing, they were undertaking anodizing / powder coating job work of other parties also, including some aluminum traders. Further, in the SCN itself, it is an admitted fact that the type of profile found at the factory of M/s Kuchchal International was not found in the invoice of the Appellant. The show cause notice states that the invoices mentioned in the said material receipt report on a particular date was compared with the invoices issued on that particular date by the Appellant and the difference was presumed as clandestine removal. This is merely an assumption as it is not necessary that the removal done on a particular date by the manufacturer is received in the anodizers premises on the very same day. It is also possible that the anodizer, who is not obligated to maintain proper records, especially date wise, as he is not statutorily mandated to do so. In any case, by any stretch of imagination, the difference between receipts at the anodizers premises compared with the removal at the manufacturer‟s premises cannot be a reason for alleged clandestine removal. It is further found that there is no corroborative evidence like payment, transportation, etc. to prove the allegation of clandestine removal. Only on the basis of some inquiries at the buyers and job workers end, serious allegation of clandestine removal cannot be made against the manufacturer. The anodizer, from whom the goods are seized, i.e. Shri S. P. Patni of M/s Sanmati Fabricators, has himself stated that he takes orders for anodizing from the buyers of the goods and it is not known to him whether the actual buyer of the goods is in receipt of an excise invoice issued by the factory or not. The show cause notice has alleged that M/s Sanmati Fabricators had received 1351.9 kg of aluminum profile on account of M/s Baser Sales Corporation, which was received from the factory of appellant - KLMPL, as the record maintained by M/s Sanmati Fabricators show that the goods are received from the Appellant. Since no invoice could be produced by M/s Sanmati Fabricators, the same are clandestinely removed by the Appellant. We find from the statement of Shri Rakesh Baser, partner of M/s Baser Sales Corporation, who is said to be original buyer, who sent the goods for anodizing to M/s M/s Sanmati Fabricators, the goods shown to have been supplied by M/s KLMPL in the record of M/s Sanmati Fabricators has never been bought by them 43 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) and confirmed that since last 4 / 5 years, he has no transaction with the Appellant. He has further stated that it is not known as to why M/s M/s Sanmati Fabricators in their record had shown that the goods were received from M/s KLMPL. Similarly, the Appellant has also denied supplying the goods to M/s M/s Sanmati Fabricators or any sales to M/s Baser Sales Corpn in their respective statements. In such case, the allegation of clandestine removal on the strength of entry appearing in the record of M/s Sanmati Fabricators, which is a third party, cannot be sustained. Similarly, in case of goods found at M/s Kuchchal International, were shown to have been received by M/s Sunshine Marketing from the Appellant. On the ground that in respect of Invoice No. 146 dated 24.6.12, the quantity shown by the anodizer, M/s Kuchchal International, in its record is 2152.40 kg, whereas the invoice issued by the Appellant shows the quantity only as 1120 kg. It was, therefore, alleged that the difference of quantity of 1032.40 kg, as clandestinely removed goods. Further, in job workers record, for quantity of 1323.450 and 325.00 kg, no invoice could be produced. However, show cause notice also states that though invoice No. 150 dated 2.11.12 of Appellant, involving quantity of 1253.75 kg is available, no such quantity has been shown to have been received in anodizers / job workers record. It was, thus, alleged that the excess quantity received and the quantity for which no invoice could be produced are clandestinely removed goods by M/s KLMPL. We find that the above discrepancies can only lead to a conclusion that the anodizers / job workers were not maintaining records properly. The show cause notice does not reveal as to whether any enquiry was conducted at the premises of the appellant. If at all, there was a clandestine removal, the same should have been proved by any incontrovertible evidences collected from the supplier /manufacturer premises. We are of the view that the demands are based upon assumption and presumption. We find that the demand against the appellant is based on the stock position of M/s Kuchchal International. The Show cause notice thus alleges that 464.92 kg of aluminum profile are clandestinely removed goods from the factory of the appellant. It is a simple assumption that whatever goods have been accounted at the job workers premises are duty paid goods and the balance quantity is non-duty paid goods. This conclusion has been reached without verifying availability of invoice at the job workers premises or at the manufacturers premises. Without undertaking verification, no conclusion can be reached. The show cause notice does not mention whether there was any invoice showing duty payment, could be traced at the job workers 44 Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) premises. It is also not known if the goods lying in stock with the job workers were to be dispatched on challans in future or whether the duty payment character of the goods is proved or not. The show cause notice in case of M/s Kuchchal International has admitted material receipt from another trader / customer namely M/s Nakoda Anodizing, to be deducted in respect of two invoices, whereas one more consignment of the party weighing 661.69 kg was not accounted for without any reason. It shows that the investigations were not conducted properly. We also find that the stock taking was done on eye estimation, as has been admitted in the concerned panchnama. In such case, we do not find any reason to sustain the demand. The charges of clandestine removal must be proved with independent / cogent / clear and tangible evidence in the form of receipt of raw material, utilization of such raw material for clandestine manufacture of finished goods, manufacture of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, packing materials used, discrepancy in raw material and final product, clandestine removal of goods with reference to entry of vehicles in the factory premises, loading of goods, transporters documents such as LRs, statements of drivers, entries at check-posts and the receipt of goods by the consignees, amount received from the consignees, statement of consignees admitting receipt as well as receipt of sale proceeds by the consignor and its disposal. None of the above instances has been shown; in such case, we do not find any reason to sustain the demand or to confiscate the goods.
35. In view of our above discussion and findings we thus hold that the impugned order confirming demand against M/s KLMPL is not sustainable. We thus set aside the impugned order and allow the appeal filed by M/s KLMPL. Since we have allowed the main appeal filed by M/s KLMPL, consequentially we also allow the appeals filed by other Appellants who are before us. All appeals are thus allowed with consequential reliefs, if any.
[Pronounced on 01.07.2019] (Anil Choudhary) Member (Judicial) (Bijay Kumar) Member (Technical) Ckp