Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs Unknown on 31 July, 2013
\IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT - I
Appeal No.E/1021, 1061, 1062, 1085, 1089, 1090, 1188, 1238, 1256, 1479, 1480, 1485/2009
Arising out of: OIO No.07/Commissioner/RKS/Ahd-II/2009, dt.25.03.2009
Passed by: Commissioner of Central Excise & Customs, Ahmedabad
For approval and signature:
Mr.M.V. Ravindran, Honble Member (Judicial)
Mr. H.K. Thakur, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant: M/s Arya Fibres Pvt.Ltd., M/s Nova Petrochemicals Ltd., Ms.Jyoti Prasad Agarwal, Shri M/s Spectrum Fabrics, M/s Zakaria Trading Co., M/s Swastik Texturisers Pvt.Ltd., M/s D.K. Polyn. Ltd., M/s Balaji Exports, M/s Cosmic Textiles, M/s Asharam Sizers, M/s Amber Sizers, M/s Amber Texturisers, M/s Sab Filaments.
Respondent: CCE Ahmedabad-II
Represented by: For Assessee: Shri M. Chandrasekharan, Sr.Adv., Shri P.M. Dave, Adv., Shri P.P. Jadeja, Consultant, Shri S. Suriyanarayanan, Adv., Shri M.N. Saiyed, Consultant, Shri N.J. Gheewala, Consultant, Shri Rakesh Jain, Adv.
For Revenue: Shri P.V.R. Ramanan, Special Counsel.
CORAM:
MR.M.V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL) Date of Hearing:29, 30 & 31.07.13 Date of Decision:
ORDER No. /WZB/AHD/2013, dt. Per: M.V. Ravindran
These appeals are directed against the Order-in-Original No:07/Commissioner/RKS/AHD-II/2009 dated 24.3.09 passed by the Commissioner of Central Excise, Ahmedabad-II. As the issues involved in the present appeals are interconnected and arise out of the same impugned order dated 24.3.09 passed by the Commissioner, all the appeals are being disposed by a common order.
2. The brief facts which are necessary for the disposal of the appeal may be stated thus:
The main appellant (hereafter referred to as Nova), against whom the duty has been confirmed, is registered with the central excise department and is engaged in the manufacture of Partially Oriented Yarn (POY), Fully Drawn Yarn (FDY) and Draw Twisted Yarn (DTY). The impugned order, which has been challenged in the present appeals, confirms the duty demands against Nova under the following heads:
(i) Rs.56,25,945/- leviable on 2,75,197.31 kgs of POY of 115/68 Denier, clandestinely manufactured and cleared by Nova to Gupta Synthetics Ltd (GSL), who in turn had processed the said POY on their Draw Twisting Machine, liable to be recovered from Nova under the first proviso to sub-section (1) of Section 11A of the Central Excise Act, 1944 (hereinafter referred to as the Act);
(ii) Rs.3,93,20,685/-, leviable on 19,10,587.5 kgs of POY, during the period from March 2002 to August 2002, manufactured and clandestinely cleared by Nova, is liable to be recovered under the first proviso to sub-section (1) of Section 11A of the Act;
(iii) Rs.2,82,64,613/- leviable on 13,96,923 kgs of POY during the period from March 2002 to August 2002, manufactured and clandestinely cleared by Nova, liable to be recovered under the first proviso to sub-section (1) of Section 11A of the Act; and
(iv) Rs.9,77,62,573/- leviable on POY, purportedly cleared by Nova to various EOUs under CT-3 certificates, but in fact diverted in local market and not put to the intended use, liable to be recovered from Nova.
3. Besides demand of duty and interest thereon and imposition of penalty against Nova, the impugned order has also imposed penalties upon two directors of Nova, namely, Nand Kishore Gupta and Jyoti Prasad Agarwal. Against both the directors, penalty of Rs.2,50,00,000/- each has been imposed by the Commissioner. The impugned order has also imposed penalty on 48 EOUs, to whom Nova had made duty free clearances. The appeals preferred by some of EOUs against whom penalties have been imposed are also under consideration before us. The said appeals are also being disposed of by the present order.
4. Investigations in the present case concluded with the issuance of Show Cause Notice dated 30.06.2006, issued to Nova and various other parties. The facts and evidence relied upon in the Show Cause Notice in respect of each demand are different.
5. The facts narrated in the Show Cause Notice as regards the first demand of Rs.56,52,945/- are that search was conducted at the factory premises of GSL, when various documents were seized from the premises of GSL, and statements were also recorded during the course of search operations. The basis of the four demands on Nova are briefly as under:
I. The main documents which form the basis of the first demand are titled in the Show Cause Notice as A-19, A-20, A-21, A-22 & A-23. Apart from documents, Statement of V.N Parab, DTY supervisor of GSL and of Mohan Bhai Nandkishore Gupta, one of the directors of the GSL, have also been recorded. These statements are also relied upon in the Show Cause Notice. The nature and contents of documents seized from the premises of GSL have been described in the Show Cause Notice in the following manner:
A-19 is a Daily Report Book, maintained by the V.N Parab, which contains the details about daily opening stock of POY, consumption quantities, quantities of waste of POY generated, working hours of machine etc. A-20 is a file of loose papers. Page No.13 of said loose papers shows number of boxes, the weight of the yarn, the denier no, merge number, crill no and date etc. A-21 is a duplicate note book maintained by V.N Parab. The entries referred to in the said note book are A.P Total, A.P Production total and A.P Production day. The said Note book has been maintained for the purpose of reporting the daily progress made in achieving the production targets, till the end of the month on cumulative basis.
A-22 is a Note Book (91 pages) maintained by V.N Parab, which contains the details of Crill No and number of Crill Positions etc. The document marked as A-23 is a note book, containing 83 pages, which are serially numbered. The entries contained therein are the details of random samples, drawn from different positions of spindles of the DT machine by the Quality control department of GSL.
As per the Show Cause Notice, entries in A-19 tally with the entries in A-21, entries made in Page 13 of the loose papers, compiled as A-13, are in conformity with the entries made in A-19, entries in the Note Book (A-21) are in conformity with the entries made in A-19, entries made in A-22 pertain to illicit procurement of POY of 115/68 Denier from Nova, which were subjected to Draw Twisting at GSL, and entries made in A-23 show that POY of 115/68 Denier was being subjected to process in the DT machine by GSL.
Statement of V.N Parab was recorded on 16.8.2002. He admitted the register maintained by him, in his own handwriting. He also admitted that 115/678 denier POY, received from Nova, was only being processed by GSL. Statement of Mohanbhai Gupta, director of GSL, was also recorded, wherein he stated that GSL procures POY mainly from Nova and that the total average of POY loaded on a crill for processing would work to 1560 kgs. Jyoti Prasad Agarwal, one of the directors of Nova, on being shown the private records of GSL, said he cannot comment on the records of GSL. Sunil Gupta, another director of Nova has also refused to accept any liability determined on the basis of the documents seized from GSL.
Based on the documents recovered from the premises of Nova and statements recorded during the course of investigation, Show Cause Notice concludes that GSL and Nova in collusion with each other had devised a modus operandi, by which Nova was clandestinely supplying POY of Denier 115/68 to GSL, without the cover of any duty paying documents. GSL in turn, on receipt of POY of 115/68 denier, subjected the said POY to further manufacturing process and manufactured DTY of denier 70/68. The said DTY has been cleared by GSL without payment of duty.
Annexure B-1, B-2 and B-3 to the Show Cause Notice shows the quantification of total duty demand of Rs.56,52,945/-.
Annexure B-1 is prepared on the basis of the seized documents marked as A-23. A-23, which contains the sample test reports shows that GSL had consumed 162240 kgs of POY of 115/68 denier during the period 1.6.2001 to 16.2.2002. Statutory records maintained by GSL showed purchases of POY of only 68,349.04 kgs of POY of 115/68 denier. Therefore, a quantity of 93,890.96 kgs of POY of 115/68 denier has been, according to the Show Cause Notice, clandestinely cleared by Nova to GSL during the period 1.6.2001 to 16.2.2002. Duty demand of Rs.19,25,438/- has been raised on Nova for the said period.
Annexure B-2, is prepared on the basis of the seized document marked as A-22. For the period 20.02.2002 to 30.06.2002, duty amount of Rs.23,01,934/- has been demanded on the basis of document marked as A-22.
Annexure B-3 is prepared on the basis of seized documents marked as A-19 to A-21. This Annexure, as per the Show Cause Notice, shows consumption of 69510.73 kgs of POY of 115/68 denier and manufacture of 65545.570 kgs of DTY of 70/68 denier during the period 1.7.2002 to 15.8.2002 by GSL. The seized quantity of 69510.73 kgs of POY of 115/68 denier has been cleared without payment of duty by Nova. A duty demand of Rs. 14,25,570/- has been demanded on the said quantity of POY.
Thus a total of duty of Rs. 56,52,945/- has been demanded for the period starting from 1.6.2001 to 15.8.2002 from Nova.
II. The facts narrated in the Show Cause Notice as regards the second demand of Rs.3,93,20,685/- are as under:
Diaries marked as A-296, A-297 and A-298, seized from the factory premises of Nova, form the basis of the second demand. In one of diaries, Ashok Chiripal was written and handwriting in all the three diaries was of the same person. These diaries contained details of production, captive consumption and clearance of polyester chips. There were huge variations in the entries made in the diaries when compared with the statutory records. Statement of Ashok J.Chiripal who had working with Nova as Assistant Stores Manager was also recorded. Besides Chiripals statement, statements of Anil Dhirendra Prakash Garg, General Manager of Nova, Sunil Nandkishore Gupta, Director of Nova, Gonal Bogot Nanda, General Manager (Production) of Nova and Jyoti Prasad Devkinandan Agarwal, Director of Nova were also recorded. The Show Cause Notice states that Ashok Chiripal, in his statement dated 21.7.2004, has confirmed that the diaries were being maintained by him in his own handwriting. Private records and documents seized tally with the entries made in the diaries. From the entries made in the diaries, Nova had started production of polyester chips with effect from 16.3.2002. This fact has been confirmed by the person in charge of the Poly Plant as well as by the directors. Further, it has been stated that during the month of March 2002 i,e 24.3.2002 to 31.3.2002, Nova had manufactured a total quantity of 497.388 MT of Polyester Chips and had shown 90.26MT as issued. In the RT-12 return, Nova had shown no production or consumption of polyester chips. The Show Cause Notice, therefore, alleges that Nova had suppressed the total production of polyester chips during the month of March 2002. Personal diaries reveal the total quantity of polyester chips captively consumed for further production of POY. Entries made in the diaries show more production of POY than what was shown in the RG-1 register. The entries in the diaries show unaccounted consumption of polyester chips for manufacture of POY. Relying upon the entries made in said three diaries, Annexure C (C-1,C-2 &C-3) has been prepared for quantification of duty demand. The said quantification shows clearances of POY weighing 19,10,587.5 kgs of POY without payment of duty. The duty attributable to the said clearances is to the tune of Rs.3,93,20,685/-. This duty has been demanded from Nova in the Show Cause Notice.
III. The facts narrated in the Show Cause Notice as regards the third demand of Rs.2,82,64,613/- are as under:
The duty has been demanded under this category on the basis of the records resumed during the search. It is stated that substantial quantity of degraded polyester chips and waste of polymer was cleared by Nova, without giving full address of the buyers, on the invoices, which created a doubt about the genuineness of the said sales effected by Nova. The evidences relied upon in the Show Cause Notice are the following :
(i) RTOs report indicates that the transportation as shown by Nova with regard to their clearances refer to fictitious transport vehicles. These vehicles were not capable of carrying goods as claimed by Nova.
(ii) Nova had failed to provide addresses of buyers, freight payment details, copies of purchase orders, or any other documents, to verify the genuineness of sale transactions.
(iii) Ashok Chiripals diaries do not mention about any clearance of degraded chips or waste of polymers.
(iv) Seized documents (File No:A-240, A-249 and A-291) from the premises of Nova contained certain torn pages, showing stock of chips, PTA, MEG,LDO,FO etc which are raw materials for the manufacture of polyester chips.
A prima facie conclusion has been drawn from the aforesaid evidence that Nova had issued bogus invoices for sale of degraded polyester chips and waste of polymers. Cenvat credit has been taken on the inputs (PTA and MEG), used in the manufacture of polyester chips. The quantity shown as waste of polymers and degraded chips was actually used by Nova in the manufacture of POY and such POY was cleared by them without payment of duty. Thus, for a period of April-2002 to August-2002, a duty demand of Rs.2,82,64,613/- has been made on Nova on POY, so cleared without payment of duty.
IV. The facts narrated in the Show Cause Notice, as regards the fourth demand, of Rs.10,07,06,323/-, are as under:
Duty has been demanded under this head on the allegation that Nova had clandestinely cleared and sold POY to 100% EOUs against CT-3 certificates received from them. Show Cause Notice has disputed clearances effected to 46 EOUs in total. Seven such EOUs are located outside the state of Gujarat, namely, Blue Moon Textiles, Karishma Silk Mills, Maharashtra Weaving Works, Jash Overseas, Bajrang Yarn Pvt Ltd, Ravi Enterprises and Omi Textiles. Show Cause Notice states that this duty is recoverable jointly and severally from Nova and the EOUs. The evidences relied upon in the Show Cause Notice are mainly the following:
(i) Inquiry from transporters who had been shown in the documents to have transported the duty free goods reveal that the duty free goods cleared by Nova were never transported to the said EOUs located at Malegaon (M) and Dhulia (D). The goods were unloaded at Surat. Therefore, Nova, in collusion with the EOUs of Malegaon & Dhule evaded payment of excise duty on the said yarn by selling the goods in the domestic market.
(ii) Vehicle verification Report received from RTOs indicated that goods have not been never reached respective EOUs.
(iii) In many of the Delivery Challans showing transportation of goods from Nova to EOUs situated at Malegaon, the signatures of the authorized signatory and the person in the EOU receiving the goods were not found. On the reverse side of some Delivery Challans, names of dealers based at Surat were mentioned. They belonged to Surat. It is, therefore, alleged that the goods were sold at Surat, and not delivered to the EOUs outside Surat (Malegaon etc.) as mentioned in the Delivery Challans.
(iv) Enquiries regarding types of vehicles used for transportation of yarn to EOUs shows that large quantity of yarn has been cleared by Nova on vehicles incapable of carrying goods.
(v) Enquiries from the Central Excise Officers of Malegaon and Dhule make it clear they never verified receipt of duty free goods sent by Nova to EOUs under their charge. CBEC Circular 88/99-Cus dated 2.12.98 absolves the Central Excise Officers from physical verification of goods before issuance of certificates.
It is alleged on the basis of the aforesaid evidences that Nova in collusion, with EOUs, procured CT-3 certificates from them and cleared the excisable goods against AR-3As but diverted the goods in the open market. The goods are alleged to have not reached the said EOUs. EOUs have never used the goods received from Nova for manufacturing export goods. EOUs, without receipt of duty free inputs, submitted the documents only to the jurisdictional Central Excise Officers and got the re-warehousing certificates issued which were sent to Nova. As duty was evaded by collusion between Nova and the aforesaid EOUs, the duty is liable to be recovered jointly and severally from Nova and the EOUs. Show Cause Notice, thus, proposed recovery of duty amount of Rs. 10,07,06,323/- jointly and severally from Nova and the EOUs. It also proposed imposition of penalty upon Nova and also on the EOUs.
6. Show Cause Notice dated 30.06.06 was contested by the following noticees:
(i) Nova
(ii) Sunil Nand Kishore Gupta (Director of Nova)
(iii) Jyoti Prasad Aggarwal (Director of Nova)
(iv) Swastik Texturizers Pvt Ltd (100% EOU)
(v) Vandevi Texturizers Pvt Ltd (100% EOU)
(vi) Zakari Trading Co. (100% EOU)
(vii) Goyal Industries Ltd (100% EOU)
(viii) Suvidha Polyesters (100% EOU)
(ix) Angana Textiles Pvt Ltd (100% EOU)
(x) Prime Furnishing Pvt Ltd (100% EOU)
(xi) Kansal Texo-Tube Pvt Ltd (100% EOU)
(xii) Balaji Exports, Dist, Surat (100% EOU)
(xiii) Arya Fibres Pvt Ltd, Daman (100% EOU)
(xiv) Rolite Synthetics Pvt Ltd (100% EOU)
(xv) Gandhi Capital Pvt Ltd (100% EOU) (xvi) Gandhi Fibres, Surat (100 % EOU) (xvii) M/s Om Sai Textiles (100 % EOU) (xviii) Kanchan Polytex Pvt Ltd (100% EOU) (xix) Karnavati Exim Pvt Ltd (100% EOU)
7. Preliminary response was made by Nova vide their letter dated 28.7.2006 in which a specific request was made for cross examination of the witnesses on whose documents/statements reliance had been placed in the Show Cause Notice. This request was reiterated by furnishing a list of 63 persons, whom Nova desired to cross-examine. During the course of hearing before the adjudicating authority on 15.9.08, Nova was directed to specifically indicate the reasons for cross-examination. Nova, thereafter, furnished vide their letter dated 19.9.2008, the reasons for request for cross examination of 63 persons. In the said letter, Nova had classified the witnesses broadly into 6 categories. Vide letter dated 10.10.2008, the adjudicating authority rejected Novas request for cross examination stating that they had not provided justifiable reasons. From para 56.5 to 58.6 in the impugned order, the adjudicating authority has dealt with the request for cross-examination. Nova, thereupon, without prejudice, made detailed submissions on merit vide their letter dated 15.1.09, dealing with each demand. As regards the first demand of Rs.56,52,945/-, Nova submitted that Note Books/Loose Sheets maintained by GSL employee cannot in any way bind Nova. Statements of Directors (both of GSL as well as Nova) do not admit the correctness of the documents. In fact, it is stated by the Director of GSL that VN Parab was not a person authorized to keep records relating to production since he was Supervisor in Machines Section. Further, even as per the Show Cause Notice, V.N Parab worked with GSL for 4 years till October 2002. V.N Parab kept records during the period 1.7.2002-15.8.2002 (A/19). The period covered by the SCN is from March 2002 to 15.8.2002. There is nothing forthcoming from him (or in the Show Cause Notice) as to whether any such records had been kept by GSL for the remaining period covered by the SCN. The demand is, however, for the entire period covered by the SCN mainly on the basis of inferences re. production referred to in A/19. Such an inference based on averages is, according to Nova, legally impermissible. It is significant that V.N Parab was, while giving his statements, asked to explain A/19. It was pointed out by Nova that not a single question seeking his clarification regarding A/21 was put to V.N Parab.
8. As regards the second demand of Rs.3,93,20,685, Nova submitted, inter alia, that the demand is based purely on conjectures and surmises without any evidence with probative value. A/296 and A/297 allegedly show Poly Chips manufactured by Nova for captive consumption. The entry for March 2002 shows 4.97 lakh Kgs (approx.), the entry for April 2002 shows 16.49 lakh Kgs (approx.) and the entry for May 2002 shows 28.54 lakh Kgs (approx.) & so on. Such variation cannot be real and no clarification has been sought from Ashok Chiripal. The Directors have deposed to the effect that there is no system of maintenance of records by Nova in the form used in the Diaries. JP Agarwal, director of Nova, did not, in fact, agree with the statement of Ashok Chiripal. There were names of other manufacturers of Polyester Chips, namely, Modern, Rajshree, etc. in the 2 Diaries. Quantities under their names have not been considered while calculating POY manufactured by Nova . No duty has been demanded in respect thereof. No reason for adopting this method has been indicated. There is no evidence of procurement of raw materials or for payments being made by Nova for the same.
9. As regards the third demand of Rs.2,82,64,613/-, Nova submitted, inter alia, that the allegation that 13,96,923/- kgs of POY were manufactured and cleared without payment of duty and the presumption that no degraded chips or polyester waste arises during the course of manufacture is totally unfounded. According to Nova, there is no evidence to justify such a presumption. The Central Excise Officers in charge of Novas factory did not raise any objection regarding the quality of POY. The RTOs report dealt with only 9 consignments out of130 (79,090 Kgs out of 1396923 kgs). According to Sunil Gupta, director of Nova, entries made in the 9 consignments could have arisen out of human error or typing mistakes. As JP Agarwal pointed out, the numbers of the vehicles are written down as stated by the Driver. Department has failed to confirm the details of identity and addresses of the customers furnished to the department. Instead, the department has chosen to allege that no details were given. In fact, in para 11.1 of the SCN (p.55), the Report of the RTO concerns 9 consigments. Invoices show the details and addresses of the customers and the vehicles used. The allegation is that the vehicles numbers stated in the Invoices were wrong. No effort was made to verify from the customers whose names were indicated therein, whether they received the goods or not. HK Jha, Manager, Quantity Control, in his statement has stated that 10 to 26% of the quantity cleared were of degraded chips. There is no correlation between the details in the invoices and the figures contained in A/296 and A/298, claimed to have been prepared by Ashok Chiripal. Chiripal has no where stated that the 2 diaries showed clearances of POY only. No detail has been given as to how the department has been able to trace out MP Patel, which according to them was one of the customers of Nova. The request for his cross examination was also been denied. Ashok Chiripal has no where stated that the Polymer Chips were, in fact, good quality polyester chips. There is no evidence of consumption of polyester chips or polyester waste or actual production of 13,96,923 kgs of POY. There is no evidence of any customer, to whom Nova has sold POY. In the light of these facts and the absence of any evidence, it was the submission of Nova that the demand was not sustainable.
10. As regards the fourth demand of Rs.10,07,06,623, Nova had made detailed submissions before the adjudicating authority . They had submitted, inter alia, that the department has not disputed the fact that re-warehousing certificates were issued by all the concerned EOUs in evidence of having received the consignment from Nova. Such re warehousing certificates were duly countersigned by the Central Excise Officers in charge of such EOUs. The enquiries as regards transport vehicles and transporters could not be evidence against Nova, when the consigned goods were re-warehoused at the EOUs. Only 8 transporters evidence was sought to be relied upon by the Revenue to substantiate the stand of the Revenue to hold that vehicles provided by or arranged by the said transporters were not used for transporting goods outside Gujarat EOUs. As regards the stand of the department that the LR books were permanently kept in the premises of Nova, not a single blank L.R book was found during the time of raid at the premises of Nova. It was a normal practice in the trade of paying freight by the consignor. The factum of outstanding freight in some of the cases would not prove the case of the Revenue that the goods were never transported to EOU customers. There is no evidence regarding off loading of goods at Sural, instead of Malegaon in case of non Gujarat EOUs. For alleging that the goods were not delivered to Gujarat EOUs, the only stand of the department is that some of the vehicles mentioned in AR-3As and invoices issued by Nova were incapable of carrying POY. There is no corroborative evidence to substantiate this stand. No plausible explanation has been given to ignore the re-warehousing certificates issued by the proper Central Excise Officers. The demand of duty jointly and severally is, therefore, according to Nova, legally not permissible.
11. It was also submitted by Nova before the adjudicating authority that all the four demands are time barred.
12. On behalf of Swastik Texturizers Pvt Ltd, Vandevi Texturizers Pvt Ltd and Zakaria Trading Co. (100% EOUs ), it was submitted before the adjudicating authority that RTO registration certificates alone cannot be the proof of non-receipt of goods. The details of buyers of such huge quantity of yarn, payment slips, deliveries etc are absent in the present case. According to them, the duty liability, if any, can be fastened only on Nova. Demanding of duty jointly and severally is not legally permissible.
13. On behalf of Goyal Industries Ltd, Suvidha Polyesters, Angana Textiles Pvt Ltd, Prime Furnishing Pvt Ltd and Kansal Texo-Tube Pvt Ltd (100% EOUs), it was submitted before the adjudicating authority that the activity of in-bond manufacture out of imported/indigenous duty free raw materials was carried out strictly after following the requirements of statutory provisions, including filing of declarations, maintenance of records etc. They had received the goods against CT-3 certificates and under cover of statutory invoices and statutorily prescribed AR-3As. The fact about receipt of each individual consignment was duly notified to the Central Excise Range officer by filing D-3 declarations within 24 hours of receipt of goods in their premises.
14. On behalf of Balaji Exports, it was, inter alia, submitted before the adjudicating authority, that due intimation was given to the Range Office regarding receipt of goods. AR-3As received from Nova were produced before the department and the same is on record of the department. By way of additional submissions dated 23.1.2008, they had pointed out further discrepancies in the Show Cause Notice.
15. On behalf of Arya Fibres Pvt Ltd, it was, inter alia, submitted before the adjudicating authority that demand is time-barred. Based on CT-3 certificates, Nova had supplied the required goods. Goods received by them from Nova have been used in the manufacture of export goods. Payments were made to Nova by cheques.
16. On behalf of Rolite Synthetics, it was submitted, inter alia, before the adjudicating that no duty could be demanded from them if the allegation of the Revenue is that Nova has diverted the goods in open market. Duty cannot be demanded jointly and severally.
17. On behalf of Gandhi Capital Pvt Ltd and Gandhi Fibres, it was submitted, inter alia, before the adjudicating authority that duty cannot be demanded jointly and severally. M/s Om Sai Textiles also made similar submissions before the adjudicating authority.
18. On behalf of Kanchan Polytex Pvt Ltd, it was submitted, inter alia, before the adjudicating authority that it is the statutory provision under the law to file D-3 intimation on receipt of raw material and, based on D-3 intimation, the range officer verifies the material received in the factory and after that issues re-warehousing certificates. Since they have complied with all the statutory obligations, the allegation made in the Show Cause Notice regarding non receipt of goods is not sustainable. No evidence has been brought on record to prove non receipt of goods.
19. On behalf of Karnavat Exim Pvt Ltd, it was, inter alia, submitted that the demand is barred by time. On merits it was submitted that the goods in question were required by them for production and they had requested their jurisdictional Superintendent of Central Excise to consider requirement of goods and issue of CT-3 certificates. Based on the CT-3 certificates Nova had supplied the goods under AR-3A, which has been consumed by them in the manufacture of export goods. They have fulfilled the export obligation and opted for debonding, which has been considered by the Regulatory authority for their EOU and de-bonding certificate issued by them.
20. The adjudicating authority after consideration of the submissions, has adjudicated each demand separately by the impugned order. He has first proceeded to deal with the preliminary objections. Regarding preliminary issues, the adjudicating authority has held thus:
(i) Jurisdiction to demand duty and adjudicate the case: CBEC has issued necessary orders for adjudication of the case by the Commissioner of Central Excise, Ahmedabad-II.
(ii) Denial of cross-examination: Novas letter dated 19.9.08, does not contain any specific reason(s) justifying the cross-examination. The reasons for not allowing cross-examination had been communicated to Nova vide letter dated 10.10.2008, issued by the office of adjudicating authority.
(iii) Non supply of documents: Nova in their submissions have not pointed out as to which of the documents relied upon in the Show Cause Notice has not been supplied to them.
21. On merits, the adjudicating authority has dealt with each demand separately. As regards the first demand in the Show Cause Notice, the adjudicating authority has confirmed duty demand of Rs.56,25,945/- under the proviso to sub-section (1) of Section 11A of the Act and has held that Nova has clandestinely manufactured and cleared POY of 115/68 denier, to GSL, who in turn had processed the said POY on the Draw twisting machine. The adjudicating authority has proceeded to confirm the duty demand on the reasoning that it could be inferred from Mohan Lal Guptas statement that on an average 1560 Kgs of DTY was manufactured by GSL per day. Purchase documents produced by GSL show only two purchases of 2084.380 Kg. Balance quantity required for manufacture of DTY was procured illicitly from Nova. Mohan Lal Gupta put his dated signature on being shown VN Parabs statement. He has not stated that VN Parabs statement was incorrect. Statement of VN Parab is, therefore, correct and admissible as evidence. Statement of VN Parab is, therefore, corroborated by the statements of Mohan Lal Gupta. Mohan Lal Gupta, on being shown A/20, put his dated signature on it and did not disagree that the details matched, which means that he has admitted them to be correct. Mohan Lal Gupta, on being shown A/21, put his dated signature thereon and said that the entries are in conformity with the entries in A/19. A/21 is, therefore, a vital piece of evidence for arriving at GSLs production. A/22 carries the signature of VN Parab. Mohan Lal Guptas statement refers to Crill change everyday. Therefore, A/22 is corroborative evidence of use of POY by GSL. Drawal of samples from different positions of spindles shows that goods were processed on the DT machines and the production has not been shown in the records of GSL. As POY of 115/68 denier was mainly purchased from Nova, the adjudicating authority concluded that Nova had clandestinely cleared POY of 115/68 denier to GSL.
22. As regards the second demand, the adjudicating authority has confirmed the duty demand of Rs. 3,93,20,685/- against Nova under the proviso to sub-section (1) of Section 11A of the Act and has held that Nova has suppressed the actual production of POY. They have not recorded the entire production of Polyester Chips manufactured. The excess Polyester Chips was captively consumed by them in the manufacture of POY, which was clandestinely cleared by Nova. The adjudicating authoritys confirmation of duty demand is based on the entries made in diaries marked as A/296,A/297 & A/298. Excess production has been recorded in the diaries maintained by Ashok Chiripal. Since there is a variation in the production recorded in Chiripals diary and statutory records maintained by Nova, the adjudicating authority concluded that excess production of POY has been clandestinely cleared by Nova.
23. As regards the third demand, the adjudicating authority has confirmed the duty demand of Rs.2,82,64,613/- against Nova under the proviso to sub-section (1) of Section 11A of the Act and has held that they had not cleared any quantity of degraded Polyester Chips or waste of Polymers. In order to maintain input output ratio, Nova had issued bogus invoices purportedly showing clearance of degraded chips. The quantity of degraded polyester chips and waste of polymers was actually consumed in the manufacture of POY, which in turn was clandestinely cleared without payment of duty. The findings of the adjudicating authority are that, since the vehicles indicated in the 9 invoices, as per the report of RTO, were incapable of carrying the goods, the only logical conclusion would be that goods shown to have been transported were not in fact transported from the factory of Nova. Clearances of degraded chips have been shown to bogus customers for the purpose of regularizing Novas account. Since Ashok Chiripal has stated that the quantities mentioned in his diaries were good quality chips, the adjudicating authority came to the conclusion that Nova did not clear degraded chips.
24. As regards the fourth and last demand, the adjudicating authority has refrained from confirming the duty demand against the EOUs and has confirmed the total duty demand of Rs.9,77,62,573/- only against Nova under the proviso to sub-section (1) of Section 11A of the Act. Confirmation of duty demand is based mainly on the reasoning that some vehicles which have been shown by Nova for transportation of POY were incapable of transporting the goods. Further, in most of the Delivery Challans showing transportation of goods from Nova to the EOUs, signatures of the authorized signatory and of the person in the EOU are not there. Statements of the officers of Central Excise make it clear that they have not done physical verification of receipt of duty free inputs in the concerned EOUs. CBEC circular dated 2.12.1998 permits the Central Excise Officers to issue certificates without physical verification. The adjudicating authority has rejected the submission of Nova that duty cannot be demanded jointly and severally from Nova and other co-noticees. For this purpose, adjudicating authority has relied on the definition of manufacture in Section 2(f) of the Act.
25. Besides confirmation of duty demand, the adjudicating authority, by the impugned order, has also imposed penalty on Nova. He has also imposed penalties upon the Directors of Nova and has also imposed penalties upon 48 EOUs.
26. Nova and some of the co-noticees to the Show Cause Notice are in appeal before us against the impugned order.
27. Nova and its directors were represented by Mr. M. Chandrasekharan, Sr. Advocate along with Mr. Paresh Dave, Advocate. The Revenue was represented by learned Special Counsel Mr. P.R.V Ramanan. Co-Noticees, who are in appeal before us were represented by Shri P.P. Jadeja, Consultant, Shri S. Suriyanarayanan, Adv., Shri M.N. Saiyed, Consultant, Shri N.J. Gheewala, Consultant, Shri Rakesh Jain, Adv.
28. We have heard at length ld. Sr. Advocate, Mr. M. Chandrasekharan, appearing for Nova and its directors and learned Special Counsel Mr. P.R.V Ramanan, appearing for the Revenue. According to us, following issues arises for consideration:
(i) Whether the Adjudicating Authority was justified in rejecting the request for cross examination of the witnesses whose statements have been relied upon in the Show Cause Notice?
(ii) Whether the duty demand of Rs 56,52,945/- has been rightly confirmed alleging clandestine clearance of POY from Nova to GSL?
(iii) Whether duty demand of Rs 3,93,20,685/- has been rightly confirmed alleging evasion of duty on POY by Nova by suppressing the quantity of Polyester Chips?
(iv) Whether the duty demand of Rs 2,82,64,613/- has been rightly confirmed against Nova alleging evasion of duty on POY by mis-declaring the same as degraded Polyester Chips/Polymer Waste?
(v) Whether the duty demand of Rs.9,77,62,573/-/- has been rightly confirmed against Nova, alleging diversion of EOU clearances effected by them?
29. Apart from the aforesaid issues, there are some legal issues which we would be considering while dealing with the factual aspects of the case. On the preliminary issue of violation of principles of natural justice, we find that the Adjudicating Authority has rejected the request for cross-examination on the reasoning that no justifiable and tangible reasons have been furnished by Nova while requesting for cross examination. In this regard, the ld. Senior Advocate has referred to the communications made by Nova requesting for cross examination of the witnesses.
30. As early as on 28.07.2006, Nova requested for cross examination of witnesses to examine the reliability and veracity of the evidences brought on record. By subsequent letter dated 09.09.2008, Nova had raised the issue of need and relevance of cross examination in cases like the present at the initial stage and cited several judgements in support thereof, starting with State of Kerala v K.T Shaduli Yusuff Grocery Dealer (AIR 1977 SC 1627). The names of the witnesses, whose statements had been relied upon and whose cross examination was requested for, was also indicated therein. At a personal hearing given to Nova on 15.09.2008, Nova was called upon to make elaborate submissions regarding the request made in the earlier letter in the matter of cross examination of witnesses and about the witnesses who had been named in the earlier letter. Accordingly, by its letter dated 19.09.2008, Nova classified the witnesses in six different categories for their cross-examination. The learned Senior Advocate appearing for Nova has taken us through these letters. We find, however, that by the order dated 10.10.2008 issued from the office of Adjudicating Authority, the request made in the aforesaid communication of Nova was rejected, holding that cross examination of the concerned persons did not appear to be justifiable and proper for reasons stated in the said letter. We have also been taken through the said order dated 10.10.2008. It was pointed out in the order that Nova had not furnished specific reasons for cross examination person-wise and that no tangible reasons or justification had been given for cross examination. The reasons for the conclusion of the Adjudicating Authority for the aforesaid order are also contained in the said letter. The main reason for rejection has been that the statements given by the persons concerned are only stated and confirmed on the basis of documentary facts, and some of them are employees of GSL or Nova and that, therefore, no new facts can be brought out during cross examination. It is also stated that statements of these persons have been corroborated by other evidences also which are in the form of documents or oral statements. In respect of some witnesses, cross examination has been denied on the ground that the witnesses did not have any connection with the case. The statements were based on factual details and documents maintained by the witnesses and, therefore, cross examination is not relevant and without any basis. The Adjudicating Authority also holds that, in the case of some of the witnesses, the statements are admissible in evidence under the provisions of the Act which has been corroborated by documentary evidence and, therefore, no cross examination can be acceded to. In respect of others, it is held that, they being machine operators their cross examination is not relevant. Cross examination has no relevance in the face of evidence available on record and the request was accordingly rejected. The statements of representatives of EOUs have been corroborated by other documentary evidence and are admissible as evidence under the law and cross examination of such persons cannot be permitted. To similar effect is the reason for rejection of cross examination in the case of transporters, since their statements have been recorded under Section 14 of the Act. The decisions cited in the submission made by Nova have been held to be not applicable since the facts and circumstances of those cases did not appear to be relevant to the facts of the present case. However, there is no discussion of any case referred to by Nova or to the facts and circumstances of those cases or even the dicta laid down in those decisions. On the contrary, the order relies upon the decision in the case of Collector v D Bhoormul (1983) 13 ELT 1546, K. Balan v GOI, (1982) 10 ELT 386 (Mad.), UOI v GTC Industries Ltd, 2003 (153) ELT 244 (SC) and Shivom Ply-N-Wood Pvt Ltd v CCE, 2004 (177) ELT 1150, and Liyakat Shah v CCE, 2000 (120) ELT 556, the last 2 decisions being those of this Tribunal. The order also relies upon judicial decisions in the matter of confessions made in statement by persons who have been examined during the investigation, as being a ground for rejecting the cross examination. In paras 56.5 to 57.27 of the impugned order, the Adjudicating Authority has reproduced the details contained in the earlier order dated 10.10.2008 by which cross examination of the witnesses had been denied.
31. The ld. Senior Advocate submits that the law on the issue of cross examination of witnesses whose statements have been relied upon either in the Show Cause Notice or in the Adjudication Order is quite well-settled. As could be seen from the facts stated hereinabove, the Show Cause Notice proceeded on the basis of documents seized from different persons and from different premises, and statements thereon made by the persons concerned with the documents. It cannot be a ground for rejecting the cross examination to say that the documents clearly proved the case of the department and no purpose could be served by cross examining the witnesses whose statements in respect of the documents were relied upon. It is, further, submitted by the learned Senior Advocate in his written submission that the correctness of the statements made by witnesses vis-`-vis documents on record and correctness of the documents on record vis-`-vis statements made by the witnesses would be the subject matter for cross examination. We find merit in the said submission made by the learned Senior advocate. In our opinion, there has been, in the present case, denial of natural justice to Nova by the rejection of the request of cross-examination of the persons whose statements have been relied upon. In the view we are taking, the following decisions relied upon by the ld.Senior Advocate, are in support:
In Bareilly Electricity Supply v Workmen, (1971) 2 SCC 617, the Honble Supreme Court had held that when a document is produced in a Court or Tribunal, mere production of the document does not amount to proof of it or the truth of the entries therein. . The writer must be produced or his affidavit in respect thereof be filed and an opportunity accorded to the opposite party who challenges this fact. In Swadeshi Polytex Ltd v CCE, Meerut 2000 (122) ELT 641 (SC), it was held that if the Adjudicating Authority intends to rely upon the statement of any such persons, the Adjudicating Authority should give an opportunity of cross examination to the appellant.
In Lakshman Exports Ltd v CCE, 2002 (143) ELT 21 (SC), the Honble Supreme Court had held that where an assessee had specifically asked to be allowed to cross examine the representatives of two concerns to establish that goods in question had been accounted for in their books of accounts and the appropriate amount of Central Excise duty had been paid, the logic of such request is clear from what is stated therein.
In Basudev Garg v CC, New Delhi, 2013 (294) ELT 353, the Honble Delhi High Court relied upon the earlier decision in J & K Cigarettes v CCE, 2011 (22) STR 225 (Del.), and held that, insofar as general propositions are concerned, there can be no denying that when any statement is used against the assessee, an opportunity of cross examining the persons who made those statements ought to be given to the assessee. Reliance is placed on the decisions of the Honble Supreme Court in Swadeshi Polytex (supra) and Lakshman Exports Ltd (supra) and to the earlier decisions of the Honble Delhi High Court in J &K Cigarettes case as clinching the issue in favour of the assessee. Reference is made in the said decision to the importance of Section 9D of the Act, the validity of which was also upheld in the said decision.
32. In the above connection, the ld. Senior advocate has also submitted that, in the light of the decisions cited above, reliance in the cases referred to by the department and relied upon in the letter of 10.10.08, (and recounted in the impugned order) is not appropriate. In D Bhoormals case (supra) what was being considered by the Honble Supreme Court was the applicability of the provisions of the Evidence Act and the Code of Criminal Procedure to adjudication proceedings. In fact, this aspect has also specifically been adverted to by the Honble Supreme Court in the Bareilly Electricity Supply case (supra), referred to by the learned Senior Advocate, particularly, the issue of applicability of Evidence Act to proceedings before the Courts and Tribunals. As held by the Honble Supreme Court in that decision:
If a letter or other document is produced to establish some fact which is relevant to the enquiry the writer must be produced or his affidavit in respect thereof be filed and opportunity afforded to the opposite party who challenges this fact. This is both in accord with principles of natural justice as also according to the procedure under Order XIX Civil Procedure Code and the Evidence Act both of which incorporate these general principles.
33. In K. Balans case (supra), the Honble Madras High Court states that the necessity of cross examination depends upon the facts and circumstances of each case. The Adjudicating Authority has to give an opportunity to the party concerned as would assure him proper opportunity to defend himself. Opportunity of cross examination is given wherever it is relevant, justified and genuine and is not for protracting the proceedings. The decision in GTC Industries case (supra) is again to the effect that cross examination cannot be granted as a matter of routine and is to depend upon the facts of each case. This Tribunals decisions cited in the latter of 10.10.2008 are also to similar effect that cross examination is not always a mandatory procedure to be adopted in all cases. The request should not be dismissed arbitrarily or without exercising its discretion in the facts of each case. The Adjudicating Authority may refuse cross examination for justifiable reasons. According to the ld.Senior Advocate, these judgements relied upon in the letter of 10.10.2008 are not, therefore, decisions which can justify the order passed in the present case rejecting Novas request for cross examination of the witnesses on whose statements reliance has been placed. We agree with the aforesaid submissions of the ld.Senior Advocate that the decisions cited by the adjudicating authority on this aspect are clearly distinguishable. They do not lay down the proposition that cross-examination is not a right, but only that it would depend on the facts of each case. During the hearing held before this Tribunal, and while replying to the submissions on this issue made before us by the ld.Senior Advocate, the learned Special Counsel for the department made reference to the recent decision of the Honble Supreme Court in Telestar Travels Pvt Ltd v Special Director Enforcement, 2013 (289) ELT 3 (SC) as supporting the order rejecting cross-examination. In the said case, the Adjudicating Authority had relied upon the statements of two persons and communication received from Indian High Commission in London. These statements under reference were challenged as being inadmissible in evidence as the appellants request for an opportunity to cross examine these witnesses had been unfairly declined thereby violating the principles of natural justice. On the other hand, it was argued by the department that right of cross examination was available to a party under the Evidence Act which has no application to adjudication proceedings under the FERA and Adjudicating Rules framed thereunder. We have perused the said judgement of the Honble Supreme Court and also heard the submissions of the ld. Senior Advocate. The Honble Supreme Court held that it is evident from Rule 3 of the Adjudicating Rules framed under Section 79 of the FERA that Rules of Procedure do not apply to adjudication proceedings. At the same time, as pointed out by the ld. Senior Advocate, the Honble Supreme Court proceeded to say as under:
That does not, however, mean that in a given situation, cross examination may not be permitted to test the veracity of a deposition sought to be issued against a party against whom action is proposed to be taken. It is only when a deposition goes through the fire of cross-examination that a Court or Statutory Authority may be able to determine and assess its probative value. Using a deposition that is not so tested, may therefore amount to using evidence, which the party concerned has had no opportunity to question. Such refusal may in turn amount to violation of the rule of a fair hearing and opportunity implicit in any adjudicatory process, affecting the right of the citizen.
34. After referring to the decision of the Honble Supreme Court in the case of Surjeet Singh Chhabra v UOI, 1997 (89) ELT 646 and M/s Kanungo & Co v CC, 1983 (13) ELT 1486, the Honble Supreme Court (in para 20), while dealing with the case at hand, held that reliance had been placed upon certain documents produced by the two persons as referred to above. The documents were permitted to be inspected by the appellants. Production of document duly confronted to the appellant was in the nature of production in terms of Section 139 of the Evidence Act, where the witness producing the document is not subjected to cross examination. Such being the case, refusal of the Adjudicating Authority to permit cross examination of the witnesses producing the document, cannot even on the principles of Evidence Act, be found fault with. It was, therefore, held that no prejudice was caused to the appellant nor was demonstrated by the appellant before the Honble Supreme Court or before the Courts below. We agree with the submissions of the ld.Senior Advocate that the said decision of the Honble Supreme Court does not support the proposition that rejection of request for cross examination of witnesses whose statements have been relied upon, does not amount to violation of principles of natural justice. On the other hand, the observations extracted above demonstrate to the contrary. As far as the facts before the Honble Supreme Court were concerned, production of the documents being in the nature of production of documents under Section 139 of the Evidence Act, their cross examination was prohibited by the said Section itself. In the present case, witnesses who have given the statements are not persons who were asked to produce documents under Section 139 of the Evidence Act. Their statements were recorded as witnesses. This decision, therefore, does not help the contention put forward by the learned Special Counsel. For the above reasons, we hold that there has been a denial of natural justice in the facts of the present case. The impugned order, as is evident, solely, relies on the statements of VN Parab, Mohanlal Gupta, Ashok Chiripal, and the transporters, and on the documents seized from GSL and Nova premises and explained by the witnesses whose statements were recorded. Nova had sought permission to cross-examine 63 persons for reasons which had been broadly stated by them. One could not have expected Nova to outline the scope of the questions to be put to the witnesses, when their cross-examination was sought. In the present case, as we would be dealing with later, de hors the documents and the statements, there was no material to establish the case made out against Nova, GSL or the EOUs. The decisions cited by the ld. Senior Advocate categorically reject the proposition that cross-examination can be refused in cases like the present. We also agree with the ld.Senior Advocate that the decisions cited by the ld. Special Counsel for the Revenue do not lay down any law to the contrary.
35. We are, therefore, constrained to hold that the decision made by the Adjudicating Authority in his letter dated 10.10.08 and in the impugned order, denying Novas request for cross examination of witnesses, and subsequently recounted in the impugned order is clearly in violation of principles of natural justice in the matter of the need to permit cross examination of witnesses on whose statements reliance has been placed.
36. As a matter of course, we would have considered remitting the matter back to the Adjudicating Authority for fresh adjudication on the ground that principles of natural justice have been violated. The ld. Senior Advocate has, however, desired to argue the case fully on merits since, according to him, the case made against Nova in the Show Cause Notice is totally unsustainable on facts as well as in the light of the catena of decisions of this Tribunal (some of them affirmed in reference/appeals by higher Courts) on the degree of proof necessary to be adduced by the Department to establish clandestine manufacture and clearance of excisable goods, which, according to him, is totally lacking in the present case. The ld. Special Counsel for the Revenue had no objection to argue the case of the Revenue fully on merits and justify the correctness of the impugned order. We, therefore, proceeded to hear the matter fully and examine the entire case on merits as well.
37. It is the submission of the ld. Senior Advocate that the impugned order is, per se, apart from being violative of principles of natural justice, on merits, in the facts of the present case, contrary to a long line of decisions of Courts and of this Tribunal in the matter of how clandestine manufacture and clearance of goods has to be established by Revenue. He submits that the law, in this regard, has been repeatedly laid down by this Tribunal in a long line of cases, some which have also been affirmed by different High Courts, and one of them, by the Honble Supreme Court.. The issue of clandestine manufacture and clearance of goods arises, according to the ld.Senior Advocate, in the case of first three demands confirmed in the impugned order and has some relevance to the fourth demand as well. He, therefore, submitted that we may hear the submissions of both the parties on the said issue and, thereafter, apply the principles to facts relating to each demand.
38. In a Note submitted by the learned Senior advocate for Nova at the hearing on 29.07.2013, on clandestine clearance and how they are to be established, he has referred to some of the decisions in this regard (copies of which were compiled and filed before us). He has referred to the following cases and, in brief, made oral submissions on their contents:-
(i) In Oudh Sugar Mills Ltd v Union of India, 1978 (2) ELT (J172) (SC), the Honble Supreme Court, after discussing the facts before them, held that the finding that the alleged quantity of Sugar had not been accounted for has been arrived at without any tangible evidence and was based only on inferences involving unwarranted assumptions and is vitiated by an error of law. The orders of the lower authorities were quashed.
(ii) In Deena Paints v CCE : 2001 (43) RLT 805, raw materials and finished products were found lying in the factory in excess of what was entered in the statutory records, at the time of search of the factory. The foreman of the factory deposed that he had been working in the factory for 26 years and was keeping daily account of production in his diary, which he had handed over to the officers. He was responsible for the manufacturing the finished product out of the raw material. The Manager of the factory, who had been working in the factory for 20 years and looking after the Central Excise work of the factory and the day-to-day production deposed that the Note Book recovered from the Foreman contained details of production, which were genuine and correct. It was argued by the appellants in that case that the department has not brought on record any evidence that the appellants had procured additional raw material and manufactured the goods. It was, also argued by the appellants that the department has not brought on record any evidence about clandestine removal of the goods without payment of duty. It was also submitted that there was no evidence placed on record to show that appellants received any amount of sale proceeds of the goods. It was therefore, contended by the appellants that duty was not demandable in the absence of any proof or records. It was submitted that clandestine manufacture and clandestine removal of the goods without payment of duty should have been proved properly, which was not done. It was further contended that the figures recorded in the diary maintained by the Foreman were not corroborated by any other evidence. Several decisions of this Tribunal were cited in support of the contentions of the appellant [CCE, Meerut v Moon Beverages Ltd., 2002 (150) ELT 976, Kabra Enterprises & others v CCE, 1999 (109) ELT 571, Kothari Products Ltd and others v CCE, Kanpur, 2003 (159) ELT 1187, CCE v Raman Ispat, 2000 (121) ELT 46]. This Tribunal cited and followed the earlier decision in the Moon Beverages Ltd case (supra) to the following effect:
it is well settled that the charge of clandestine removal cannot be established on the basis of one single factor which in this case, is the figures of sales reflected in the computerised sheets recovered by the Department from M/s. PEL. Without obtaining evidence such as evidence of other inputs required for manufacture of finished product namely Sugar, Carbon-di-Oxide being purchased and utilised in the manufacture of the final product during the period in dispute is required. There is no such evidence in the present case. There is also no evidence regarding higher electricity consumption. There is also no evidence of receipt of extra sale of goods clandestinely manufactured or removed. Dropping of the demand was upheld. This was despite documents having been recovered and statements of officials of the assessee that clandestine clearances were resorted to by the appellant.
(iii) In Brims Products v CCE : 2001 (130) ELT 719, this Tribunal was considering a case where four bags of Pan Masala containing 30 Kgms each were seized for non-accountal of the same in the RG-I Register. Some loose sheets of papers were found in the dustbin, containing entries of transactions relating to pan masala. The quantity of alleged clandestine clearance was calculated based on transport companys records. This Tribunal held that clandestine manufacture and surreptitious removal is required to be proved beyond doubt by the Revenue. There was evidence only of receipt of some raw materials but not of others. Such evidence, according to this Tribunal, may create a doubt in favour of the revenue but cannot take the place of legal evidence. The order was set aside.
(iv) In CCE v Laxmi Engg. Works, 2001 (134) ELT 811 (Tri-Delhi), during the search of factory premises, slips showing sale of different types of electric fans were recovered and seized. There was nothing on record to show if on physical verification of stock any excess raw material or finished goods were fund lying in the factory premises. In the absence of any corroborative evidence, merely on the basis of the slips allegedly recovered from the factory premises which did not even contain names of the customers or any other details regarding receipt of raw material or manufacture and clearance of electric fans by the Respondent, this Tribunal held that duty liability as demanded could not be fastened. In the reference application filed by the Commissioner against the said order of this Tribunal, the Honble High Court of Punjab & Haryana held that even if some record recovered during the raid and was corroborated by some supportable evidence holding that there was admission of clandestine production and removal of goods, it is necessary to have some positive evidence of clandestine production and removal of goods. The question of law preferred whether in the light of the private record discovered during the raid, the Tribunal was right in holding that there was no positive evidence of clandestine production and removal of goods was answered against the revenue and in favour of the assessee.
(v) In T.G.L Poshak Corp. v CCE, 2002 (140) ELT 187, this Tribunal considered the issue as to whether the demands can be confirmed on the basis of recovery of exercise Note Books and certain balance sheets maintained by the assessee and in the absence of any corroborative evidence. In fact, in a tabulated form this Tribunal dealt with the judgements which were referred to, to support the plea that demands cannot be confirmed which contained the reason for this Tribunal coming to the conclusion that, in the absence of any corroborative evidence, of a tangible nature, clandestine removal cannot be established. This Tribunal relied on the tabulated list of citations furnished by the Counsel that unless there is clinching evidence on the nature of purchase of raw material, use of electricity, sale and mode of flow back of funds, demands cannot be confirmed solely on the basis of Note Books maintained by some workers.
(vi) In Hilton Tobacco v CCE, 2005 (178) ELT 378, certain private documents maintained in the factory were seized under which it appeared that the appellant had not accounted for raw material procured by him. This Tribunal held that a inference cannot be based on certain private documents only when there is no corroborative evidence recorded. Investigation had not found out at least a few buyers who had received the goods cleared clandestinely. There was no evidence of excessive consumption of electricity. When the unit was visited there was no unaccounted stock of raw material. Charges were based purely on theoretical working out based on private document which are not statutory. Relying upon the earlier decision of the Tribunal, it was decided that clandestine removal cannot be sustained. The source of procurement of raw material had not been established, buyers of finished goods had not been contacted and receipt of sale proceed had not been proved. There was, therefore, no corroborative evidence in support of the revenues case.
(vii) In Vishwa Traders Pvt Ltd v CCE, 2012 (278) ELT 362, the appellant had submitted that the Adjudicating Authority has passed the order on conjectures and surmises. It was submitted that documents recovered from the premises of the employees and third parties are not official records. Their cross examination had also been denied by the Adjudicating Authority. Serious charge of clandestine removal cannot be sustained on the basis of documents recovered from outside the premises of the assessee. It was submitted that despite large scale investigation including visits to the premises of raw material suppliers, there was nothing brought on record to show that the appellant had purchased raw materials without recording the same in their books of accounts. The submission of the appellant was that demand cannot be upheld on clandestine removal on the basis of documents along with statements unless there is tangible, independent, corroborative proof like financial flow back, actual manufacture and clearance, excess purchase of raw material, electricity consumption, statement of workers, actual transportation of the goods, and statement of purchasers. It was contended on behalf of the revenue that the case was based on parallel invoices recovered from the residential premises of the factory manager and accountant. Lorry receipts indicated that there was no movement and even if there was any movement they were not clandestine clearances. The Managing Director of the company had even stated that they were making clandestine clearance of the finished products without recording the same in their books of account. The request for cross examination of some of the persons whose statements were relied upon was rejected by the Adjudicating Authority only on the ground that the assessee had not given any reason and justification for their cross examination. This Tribunal held that this approach of the Adjudicating Authority is inconsistent with the law of evidence. On a careful perusal of the entire records of the case, the Tribunal found that there was nothing on record as to unrecorded purchases or consumption of other various raw materials in the manufacture of finished products. There was no statement of suppliers of raw material, except in respect of one of the raw materials. His cross examination has also been rejected. In the absence of any other tangible evidence to show that other major raw materials had been procured without recording the same in books of accounts, this Tribunal did not accept the contention of the revenue that finished goods had been clandestinely manufactured and cleared. After referring to several earlier decisions of the Tribunal on the subject, the Tribunal held that the charge of clandestine manufacture was not established. This decision was taken by the Commissioner of Central Excise in appeal before the Honble High Court of Gujarat which was dismissed by the Honble High Court [2013 (287) ELT 243 (Guj.)]. The Honble High Court quoted with approval paragraph Nos 12, 13 & 16 of the order of the Tribunal which were extracted, stating that from findings of the Tribunal, it is clear that the appellant had not made any clandestine manufacture which he had removed clandestinely and on which duty was payable.
(viii) In CCE v Dhariwal Industries Ltd, 2012 (283) ELT 113, the department had alleged that the appellant had made clearance of Gutkha without cover of invoice and without payment of duty and the transit documents were brought back and sent along with subsequent consignments. Unaccounted quantities of packing material had been procured. It was contended on behalf of Revenue that the appellant had devised a clever modus operandi to clear the goods without payment of duty by multiple use of the same document which had been confirmed by the managers of the transport company who booked the consignments. Purchase of some raw materials had also been alleged. After going through the exhaustive evidence which was produced in that case, this Tribunal held that demand cannot be confirmed entirely on the basis of documents of the transporters. There should be independent corroborative evidence to support the finding of clandestine clearance. The Tribunal observed that for the quantity of finished goods allegedly removed clandestinely it would have required approx. 700 trips for transporting the same. No evidence had been adduced by the revenue to establish this. Procurement of essential raw material without accounting had also not been established. The Tribunal noticed that an identical issue of clandestine manufacture and clearance came up before a coordinate Bench of the Tribunal in the case of Durga Trading Company v CCE wherein the Tribunal held as under:
9.?It is well settled that the charge of clandestine manufacture of the dutiable goods and removal thereof without discharging the duty liable by an assessee, cannot be established on assumptions and presumptions. Such a charge has to be based on concrete and tangible evidence. In this context, reference may be made to Oudh Sugar Mills Ltd. v. Union of India - 1978 (2) E.L.T. (J 172) (S.C.), wherein the Apex Court has observed that demand of duty cannot be raised on the strength of assumptions and presumptions. There should be sufficient evidence of the removal of the goods alleged to have been manufactured and cleared without payment of duty. The charge of clandestine removal must be based on tangible evidence and not on inferences involving unwarranted assumptions. This very principle of law had been applied by the Tribunal in a number of cases and out of those, few are, Amba Cement and Chemicals v. CCE - 2000 (115) E.L.T. 502 (Tribunal) = 2000 (90) ECR 265, Gurpreet Rubber Industries v. CCE - 1996 (82) E.L.T. 347 and Madhu Foods Products v. CCE - 1995 (76) E.L.T. 197.
10.?For want of any legal, tangible and concrete evidence, the duty demand of Rs. 4,64,56,058/- as confirmed by the learned Commissioner along with equal amount of penalty and interest, against the company appellant No. 1, cannot be legally sustained and is set aside. Being aggrieved by the order, the revenue carried it in appeal to the Honble Supreme Court and the same was dismissed as reported in 2003 (157) ELT A315 (SC). The ratio of the decision clearly indicated that in the case of clandestine removal it was for the revenue to substantiate the allegation of clandestine removal.
(ix) In Radha Madhav Corporation Ltd v CCE, Daman, 2012 (284) ELT 369, the issue was once again raised in a case where the allegation was that there was clearance of plastic film in the guise of Lay Flat Tubing (LFT). The revenues case was based on statements of transporters and of the Director of the main appellant. This Tribunal held that the charge of clandestine removal is to be established on the basis of preponderance of probability and not on the basis of presumptions and assumptions. It was held that, on facts, there was no sufficient cogent, unimpeachable, relevant and credible material to establish the case of clandestine manufacture and clearance. After examining the facts of the case at length, it was held that a link between the documents recovered in the search and the activities of the appellant in their factory is required to be proved. This Tribunal held that the revenue had failed to prove the same.
In our view the decisions which have been cited in the Note submitted by the learned Senior Advocate reflect the true legal position in the matter of how cases relating to clandestine manufacture and clearance have to be established. In two of the decisions, the matter had been taken up in reference/appeal before the Honble High Court and one of the cases was even taken up before the Honble Supreme Court. All the three of them had been dismissed which confirms that the view taken by this Tribunal in the earlier cases lays down the correct law in the matter.
39. Even though the learned Special Counsel for the Revenue did not challenge the correctness of the decisions cited as above by the learned Senior Advocate, and perhaps rightly so, in the light of their being approved by the higher judicial fora, he had contended that such cases have to be decided on the principle of preponderance of probability. It was not necessary for the revenue, nor possible, to establish the cases of clandestine manufacture and clearance with mathematical precision as has been observed by the Honble Supreme Court in CC v D. Bhoormull, 1983 (13) ELT 1546 . In our view, this submission may be of help to the revenue only in cases where, in the matter of clandestine manufacture and clearance, there is some tangible evidence of such manufacture and clearance by Nova. This Tribunal has, in the above referred cases, laid down several criteria which could go to establish the cases of clandestine manufacture and clearance. Where such ingredients exist, a contention that a case need not be proved with mathematical precision may become relevant. The decision in D. Bhoormull would not, therefore, be of help to the revenue in cases where there is no evidence at all satisfying the tests laid down by this Tribunal in the long line of cases referred to earlier. In support of the submission regarding preponderance of probability being tested to determine the issue the learned Special Counsel had referred to 3 decisions. Gulabchand Silk Mills Pvt Ltd v CCE, 2005 (184) ELT 263, Umiya Chem v CCE, 2008 (7) LCX 0602 2009 (239) ELT 571 and Ureka Polymers v CCE, 2001 (127) ELT 618. These decisions, according to the ld. Senior Advocate, are not contrary to the decisions cited by him for Nova. In the case of Gulabchand v CCE, the vehicle was intercepted carrying non duty paid goods. Unaccounted duty paid goods were found in the dealers premises and they gave statements to the effect that the goods were supplied with bills and without bills. This was not a case where there was no evidence of clandestine manufacture and clearancee. In the Umiya Chem (supra) during the course of search, shortage of finished goods was noticed when compared with RG-23A Part I register. The partner of the firm had also admitted illicit clearance. Brokers statement gave details of commissions received against sale. There was, therefore, evidence regarding illicit clearance. In the third case of Ureka Polymers, the department had obtained the statement of raw material suppliers and also of finished goods dealers. Since no regular records were maintained by the assessee to show electricity consumption, as to how much electricity was consumed, the submission of the assessee was rejected. This again was a case where there was some evidence to show manufacture and clearance, supposedly clandestine.
38. It was, therefore, the submission of the ld. Senior Advocate that, in three cases cited by the ld.Special Counsel for the Revenue, this Tribunal and Honble High Court of Gujarat had taken a view that there was no need to prove such clandestine clearance with mathematical precision. These were cases where evidence was available regarding unaccounted duty paid goods being found, shortage of finished goods found and evidence regarding supply of raw materials and receipt of commission by brokers, which were all tangible evidence of clandestine clearances. It was further submitted by the ld. Senior Advocate that the cases cited by him were cases where no such evidence was available at all and the law laid down as applicable to such cases, to which category the present case belongs.
40. After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well-settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenue which mainly are the following:
(i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions;
(ii) Evidence in support thereof should be of:
(a) raw materials, in excess of that contained as per the statutory records;
(b) instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty;
(c) discovery of such finished goods outside the factory;
(d) instances of sale of such goods to identified parties;
(e) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him;
(f) use of electricity far in excess of what is necessary for manufacture of goods otherwise manufactured and validly cleared on payment of duty;
(g) statements of buyers with some details of illicit manufacture and clearance;
(h) proof of actual transportation of goods, cleared without payment of duty;
(i) links between the documents recovered during the search and activities being carried on in the factory of production; etc. Needless to say, a precise enumeration of all situations in which one could hold with activity that there have been clandestine manufacture and clearances, would not be possible. As held by this Tribunal and Superior Courts, it would depend on the facts of each case. What one could, however, say with some certainty is that inferences cannot be drawn about such clearances merely on the basis of note books or diaries privately maintained or on mere statements of some persons, may even be responsible officials of the manufacture or even of its Directors/partners who are not even permitted to be cross-examined, as in the present case, without one or more of the evidences referred to above being present. In fact, this Bench has considered some of the case-law on the subject in Centurian Laboratories v CCE, Vadodara, 2013 (293) ELT 689. It would appear that the decision, though rendered on 3.5.2013, was reported in the issue of the ELT dated 29.7.2013, when the present case was being argued before us, perhaps, not available to the parties. However, we have, in that decision, applied the law, as laid down in the earlier cases, some of which now have been placed before us. The crux of the decision is that reliance on private/internal records maintained for internal control cannot be the sole basis for demand. There should be corroborative evidence by way of statements of purchasers, distributors or dealers, record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. A co-ordinate Bench of this Tribunal has, in another decision, reported in the ELT issue of 5.8.2013 (after hearings in the present appeals were concluded), once again re-iterated the same principles, after considering the entire case-law on the subject [Hindustan Machines v CCE, 2013 (294) ELT 43]. Members of Bench having hearing initially differed, the matter was referred to a third Member, who held that clandestine manufacture and clearances were not established by the Revenue. We are not going into it in detail, since the learned Counsels on either side may not have had the opportunity of examining the decision in the light of the facts of the present case. Suffice it to say that the said decision has also tabulated the entire case-law, including most of the decisions cited before us now, considered them, and come to the above conclusion. In yet another decision of a co-ordinate Bench of the Tribunal (Pan Parag India v CCE, 2013 (291) ELT 81), it has been held that the theory of preponderance of probability would be applicable only when there are strong evidences heading only to one and only one conclusion of clandestine activities. The said theory, cannot be adopted in cases of weak evidences of a doubtful nature. Where to manufacture huge quantities of final products the assessee require all the raw materials, there should be some evidence of huge quantities of raw materials being purchased. The demand was set aside in that case by this Tribunal.
42. We may now proceed to deals with the four demands of duty in the present case:
I. The first duty demand of Rs 56,52,945/- is mainly based on documents seized from the premises of GSL i.e. A-19, A-20, A-21, A-22 and A-23. Other than these documents, the evidence is V N Parabs statement and Mohan Bhai Guptas statement. The seized documents as per the stand of the Revenue are note books maintained by Parab. The allegation with regard to the present demand is that Nova had clandestinely cleared POY to GSL. According to the Revenue the entries made in A-19, A-20, A-21, A-22 and A-23 pertain to clandestine procurement of POY of 115/68 denier from Nova and clandestine production of DTY by GSL by processing the same. The ld. Senior Advocate has submitted that the entries made therein by V N Parab are totally vague, in as much as there is nothing therein to show that they pertains to clandestine procurement of POY and clandestine clearance of DTY. The learned Senior Advocate has also pointed out that there are discrepancies in the seized documents relied upon by the Revenue. He has further pointed out that A-21 does not even refer to the quantity of DTY produced by GSL. It is also difficult to establish that all the quantities of DTY were made out of 115/68 denier of POY. Annexure B-1 and B-2 have been prepared only on the basis of presumptions. He, further, submitted that the conclusion that A-19 and A-21 refer to the quantities being loaded in the crill is also without any evidence. There is no proof that GSL has used 100% of its capacity for production of DTY. Except for these entries, there is no substantial material to show that such a huge quantity of POY has been cleared to GSL without payment of duty and that the entire quantity has been used of production of DTY. There is no proof of purchase of such huge quantity of POY from Nova by GSL. No evidence has been led by the Revenue to show that GSL had actually produced DTY out of POY supplied by Nova. There is no evidence of transportation of POY from Nova to GSL factory. Undoubtedly, huge quantities of raw material would be required for manufacturing such a huge quantity of POY. No evidence has been brought either in the SCN or in the Adjudication Order to show that raw materials have been purchased by Nova for manufacture of such a huge quantity of POY. There is no proof of any extra payment being made to Nova by GSL. In the absence of these evidences, the ld. Senior Advocate submitted that it would be impossible to conclude that Nova had cleared POY of such huge quantities to GSL, in the light of the decisions of this Tribunal, which he has earlier placed before use. He also submitted that V N Parabs statement, could not be given much credence for the reason that these were note books maintained by him in the office of GSL. It would be difficult for Nova to explain why such entries were made by V N Parab who was neither their employee nor acting under their instructions. When the Directors of Nova were shown the records of GSL, the have stated that they cannot comment on the records of GSL. It was also the submission made by the ld. Senior Advocate that no presumption of truth can be drawn against Nova from the documents A-19, A-20, A-22 or A-23 or from the statement of V N Parab. Under Section 36A of the Act, where any documents have been seized from the custody or control of any person and such document is tendered in evidence against him or against him and any other person who is jointly tried with him, unless the contrary is proved against such person, the Court shall presume the truth of the contents of such document. Therefore, the truth of contents of such documents can be presumed only where the person from whose custody or control the document has been seized is being proceeded at all, whether solely or jointly tried with some other person. In the present case, V.N Parab has not been proceeded against solely or jointly with some other person. In the present case, admittedly the documents were recovered from the premises of GSL. The said documents were produced by Parab who is no way connected with Nova. No presumption could therefore be drawn against Nova. There has, therefore, to be independent corroboration of the facts alleged in the Show Cause Notice, apart from documents. The learned Senior Advocate has relied upon the decision of the Honble Supreme Court in the case of State of Kerala v M M Mathew (1978) 4 SCC 65. He drew attention to the relevant para of the said judgement:
It is now well settled that strong suspicion, strange coincidences and grave doubts cannot take place of legal proof. To establish the charges against the respondents, it was, in our judgement, essential for the prosecution to establish that the secret books of account related to the business transactions carried on by the respondents and none else. This it could have established in a variety of ways viz. (1) by adducing satisfactory proof to the effect that the place from which the secret books of accounts were seized formed part of the place of business of the respondents or was in their exclusive possession and control, (2) that the secret books of account were maintained by or under the orders of the respondents, (3) that the said books of account were in the handwriting of either of the respondents or their accountant, or clerk or some other person employed by them.
Admittedly none of the documents marked as A-19 to A-23 was recovered from the premises of Nova. It is not the case of the Revenue that these Note Books were maintained by V N Parab under the instructions of Nova. Further, these Note Books were not in the handwriting of any of the persons of Nova or its accountant or clerk or any employees of Nova. Applying the ratio of the decision of the Honble Supreme Court in M M Mathew (supra), the documents upon which the Show Cause Notice has placed strong reliance has no probative value. The ld. Senior Advocate further submitted that merely because the document has been produced during investigation, it does not establish its probative value. The Honble Supreme Court in the case of Bareilly Electricity Supply v Workmen, 1971 (2) SCC 617 has held that mere production of document does not amount to proof. Further, in the case of Life Insurance Corporation of India & Anr v Rampal Singh Besin (2010) 4 SCC 491, the Honble Supreme Court has held that mere admission of a document in evidence does not amount to its proof. Para 25 of the said decision reads thus:
We are of the firm opinion that mere admission of a document in evidence does not amount to its proof. In other words,, mere marking of exhibit on a documents does not dispense with its proof, which is required to be done in accordance with law.
The ld. Senior advocate has, therefore, submitted that the confirmation of the demand of Rs.56,52,945/- is arbitrary, illegal and unjustified and deserves to be set aside.
In reply to the submission of the ld. Senior advocate, the ld.Special Counsel has filed written submission on 30.7.2013, which he also explained orally. After summarizing the facts as stated by the Adjudicating authority, by way of what has been stated in the Show Cause Notice, the ld. Special Counsel has submitted that, except for saying that investigations did not touch on purchase of raw materials and payments therefor, Nova did not come forward with any satisfactory explanation in respect of the facts stated in the Show Cause Notice, and the statements referred to therein. In this view of the matter, he submits that the present demand has been confirmed by the Adjudicating Authority for valid reasons and cannot be faulted.
We have considered the submissions of both parties. We find that no evidence has been produced by the Revenue to show that Nova has effected sale of such huge quantities of (2,75,197.31 kgs) POY to GSL. There is no tangible evidence of GSL having actually produced all the DTY or Twisted Yarn from out of non-duty paid POY supplied by Nova. No transporters documents have been seized or produced by the Department to show transport and sale of such huge quantities of POY from Nova to GSL or, even for that matter, from GSL to the buyers of DTY produced by GSL. No evidence has been forthcoming of purchase of raw materials by Nova for production of POY in such huge quantities, or of payments effected by GSL to Nova for the excess quantities of POY, clandestinely manufactured and cleared by Nova and sold to GSL, or even of payments made by the buyers of DTY from GSL made out of quantities alleged to have been purchased by GSL from Nova. The only basis of the demand is the figures contained in A/19 and A/21, seized from GSL premises, of which VN Parab is the author. Even if the figures in the seized documents tally (this is disputed by Nova, since VN Parab has not, when he was being examined during the investigation, stated that they tally), that by itself cannot prove clandestine manufacture and clearance, the tests for which have been adequately explained by this Tribunal in the decisions cited earlier, amongst several others. The documents in question, have not been resumed from Novas premises, nor is the author of the documents (V.N Parab), a person in Novas employment or acting under Novas instructions. Reliance by the ld. Senior Advocate on the decisions of the Honble Supreme Court in State of Kerala v M.M Mathew (supra) and Bareilly Electricity Supply v Workmen (supra) are appropriate and supports the submission made on behalf of Nova. In cases like the present, where the demand is based on clandestine production, clearance and sale of excisable goods, mere entries in note books or diaries cannot establish the same. Proof of actual production, whether by direct evidence or corroborative evidence is a must, and the probative value of such evidence has to be established, especially when such a finding would lead to penal consequences.
In our view, therefore, the present demand of Rs.56,52,945/-, which has been confirmed against Nova by the impugned order, is not based on evidence which, as this Tribunal has repeatedly emphasized in cases of clandestine manufacture and clearance, would justify a finding against the appellant (Nova). Inferential or conjectural conclusions cannot be arrived at in such cases as has been done in the present demand, merely based on what GSL did with the POY allegedly sold to them by Nova. Unless there is conclusive evidence that Nova did actually manufacture POY and clandestinely clear them without payment of duty, liability cannot be placed on Nova on the basis of conjectures and surmises, as the Honble Supreme Court emphatically declared in the Oudh Sugar Mills case (supra). We are of the view that there is no tangible evidence produced by the department to establish that Nova has clandestinely manufactured and cleared POY on which the present demand has been made. We, therefore, set aside the demand of Rs. 56,52,945/- as being illegal and unjustified.
II. The second demand of Rs. 3,93,20,685/- is based on Ashok Chiripals diary, his statement and statements made by some of the employees of Nova. According to the Show Cause Notice, the diaries refer to production, captive consumption and clearance of Polyester Chips by Nova. Figures showed wide variations with statutory records. The chips are further used in the manufacture of POY by Nova. As regards this demand, the allegation is that Nova had suppressed the actual production, captive consumption and clearance of Polyester Chips and has not recorded for the entire production of Polyester Chips in the statutory records. Excess Polyester Chips have been captively consumed by Nova for further manufacture of POY which was further clandestinely cleared by them. According to the Revenue, the diaries were maintained by Ashok Chiripal in his own handwriting showing production and captive consumption of Polyester Chips. Excess production of Polyester Chips was recorded in these diaries. According to Nova, these diaries by themselves do not speak of any clandestine procurement of raw-materials, manufacture of Polyester Chips and excess production of Polyester Yarn. Inferences have been drawn from the entries made in these diaries without corroborating the same with any concrete evidence. Merely because Ashok Chiripal has stated that the entries mentioned in the diaries are true and pertains to the excess production of Polyester Yarn, would not be enough to fasten the liability upon Nova. There is no evidence of procurement of raw material i.e. Mono Ethylene Glycol (MEG) and Purified Terephtalic Acid (PTA) for the production of such a huge quantity of Polyester Chips in a period of less than 6 months. Not a single person has been identified by the Revenue who has supplied such a huge quantity of raw materials for the manufacture of Polyester Chips. That apart, no evidence have been led by the Revenue regarding production of such a huge quantity of POY. Undoubtedly, these POY could not have been transported without proper mode of transport. The Revenue has failed to bring on record any evidence regarding transportation of POY alleged to have been manufactured clandestinely. No buyer has been identified who has clandestinely procured the POY from Nova. Merely because Ashok Chiripal has explained the entries made in the diary, it cannot be accepted as a basis for demanding duty against Nova. The adjudicating authority has sought to rely upon the statement of Ashok Chiripal without subjecting him to cross examination. The ld. Senior advocate appearing for Nova reiterated these submissions. He emphasized that, under Section 36A of the Act, mere production of document would not have no probative value as has been held by the Honble Supreme Court in Bareilly Electricity Supply (supra). It was pointed out by the learned Senior Advocate that the decision of Honble Supreme Court in Duncan Agro Ltd has been wrongly applied to the facts of the present case. It has further been pointed out in the written submissions filed before us by the ld. Senior Advocate that the decision only states that a statement under Section 108 of the Customs Act 1962 corresponding to Section 14 of the Central Excise Act, 1944 is admissible as evidence. Admissibility of a statement in evidence does not make it a confession. In this connection, he has referred to the decision of the Honble Supreme Court in Veera Ibrahim v State of Maharashtra (1976) 1 SCC 302, that Section 24 of the Evidence Act requires certain facts to be established. The statement in question should be a confession. Firstly, such confession should have been made by the accused. Other ingredients of S.24 are not relevant in the context of the present case. It is important to note that the statement in order to amount to confession must admit the offence or at any rate substantially all the facts which constitute the offence. Admission of incriminating facts howsoever great, is not by itself a confession. In the present case, the so-called confession has not been made by a person charged with any offence. Ashok Chiripal has not been charged with any offence which is in violation of the law in the present case. No show cause notice has been issued to him. The question of his statement being regarded as confession does not, therefore, arise, because confession, by its very nature, has to be made by a person charged with breach of law. In fact, at the time of hearing, the ld. Special Counsel did not dispute the submissions made by the ld. Senior Advocate of Nova that there was no confession by Ashok Chiripal. It was only his statement that has been relied upon.
According to the submission made by the ld. Senior Advocate, who, once again relied heavily on the tests laid down by the Tribunal regarding the nature of evidence required to affirm a finding of clandestine manufacture and clearance, a very important consideration which failed to be appreciated by the Adjudicating Authority was that, in respect of the instant demand, there was no evidence whatsoever of the procurement of the required raw materials (MEG & PTA) for production of the alleged 1910587.5 Kgs of Polyester Chips in less than 6 months. Nor was there any evidence of actual production of such quantities by Nova. There is also no evidence of transportation of POY, if at all manufactured, to any buyer. No payments made by Nova to suppliers of raw materials, nor by buyers of POY to Nova have been specifically alleged or any evidence adduced of the same. The ld. Senior Advocate for Nova, in his written submissions, again referred to the decisions of the Honble Supreme Court in Bareilly Electricity Supply Case (supra), Ram Bihari Yadav (supra), LIC of India v Ram Pal Singh Besin, (2010) 4 SCC 491 in support of the proposition that mere admission of a document in evidence does not amount to its proof, which has to be done in accordance with law. He also relies upon the fact that the entries in the diary showed that approximately 4.97 lakhs Kgs were manufactured in March 2002, 16.46 lakhs Kgs in April 2002 and 28.54 lakhs Kgs May 2002. Such variation could not have been real, on which no explanation was sought from Ashok Chiripal when his statement came to be recorded. Novas request for his cross-examination was rejected. The Adjudicating Authority, as submitted by the ld. Senior Advocate, rejected the aforesaid submission regarding the variation by merely stating that there was no such variation in the Polyester Chips manufactured from month to month in 2002 since Annexures C1 and C2 to the Show Cause Notice do not support it, and the Diaries and the statement of Ashok Chiripal have to be taken as correct and weightage given. The ld. Senior Advocate also submitted that MEG and PTA (raw materials) were being purchased by them from Reliance Industries Ltd, a major supplier of the same, in respect of which proper records are maintained by them as well as Nova, and it was presumptuous for the Department even to contend that they were purchased from Reliance Industries Ltd. without any payment being recorded or in cash. Apparently, the investigating authorities never verified this from Reliance Industries Ltd and the impugned order records a mere finding that the statement that Nova purchases the raw materials from Reliance Industries Ltd is factually incorrect without giving any reason for arriving at the said finding. It was, therefore, the submission of the ld.Senior Advocate for Nova that the diaries and statements relied upon by the Revenue do not prove the case of clandestine manufacture and clearance of POY by Nova, which has to be established in accordance with law laid down by the Tribunal in the long line of decisions, referred to by him while dealing with the earlier demand.
In reply to the submissions made on behalf of Nova, the ld.Senior Special Counsel for the Revenue filed written submissions on 30.7.13 and explained the same. The Diaries had been maintained by Ashok Chiripal, showing production and consumption of polyester chips in Novas factory from March 2002 to August 2002. The statement of Ashok Chiripal was not retracted by him, which stated that the figures were showing actual production of polyester chips by Nova and captive consumption thereof for manufacture of POY. A quantity of 17,69,298 kgs of polyester chips shown to have been transported were not entered in the Excise records. The statements of Vikram Oza and Nitin Patel, employees of Nova were to the effect that Nova was receiving PTA (one of the raw materials) which was not accounted for in the records. The ld. Special Counsel also showed us certain figures in the Diaries about production on 31.3.2002 and submitted that the records and the statements cannot be belittled.
We have considered the rival submissions. We are constrained to reiterate that it is one thing to make out the content of entries made in a document. It is totally a different thing to assess the probative value of the contents of the document. As repeated by this Tribunal, clandestine manufacture and clearance cannot be readily inferred from documents and statements. They have to be established on evidence, relatable to or linked with actual manufacturing operations. As far as the present demand is concerned, there is no such evidence forthcoming in the record before us. Mere reliance on note books/diaries or statements cannot justify a finding of clandestine manufacture and/or clearance. Investigation into the sources of supply raw material (MEG & PTA in the present case), especially when Nova had stated that they get their raw materials from Reliance Industries Ltd, one of the biggest producers thereof, would have revealed the actual facts. Apparently, no efforts seem to have been made in this behalf by the investigating authorities. Of equal importance would have been investigations into the transportation of the raw materials (in huge quantities, as alleged) to Nova and of POY allegedly manufactured from the factory of Nova to its buyers, and payments for such raw materials and for the clandestinely cleared POY. In the absence of all such evidence, a finding that excisable goods have been clandestinely manufactured and cleared by Nova cannot justifiably be arrived at. The probative value of the entries needs to be established by independent corroboration, which is lacking in the present case. The long line of decisions referred to and relied upon by the ld. Senior advocate for Nova have laid down the parameters for a charge of clandestine manufacture and clearance to be established, which have not been satisfied in the present case. We need to say nothing more. The present demand of Rs.3,93,20,685/- is, therefore, unjustified and deserves to be set aside. Accordingly, we do so.
III. The third demand of duty of Rs 2,82,64,613/- is on Degraded Chips/Polymer Waste arising in the factory of Nova during the course of manufacture of POY. The allegations are essentially based on a report of the Regional Transport Officer (RTO) showing that the vehicles shown as transporting degraded chips are incapable of carrying the goods, that full addresses of buyers had not been given, and no payments have been made to transporters. It was alleged that no clearances of degraded Polyester Chips/Polymer Waste took place, and they were consumed captively to manufacture POY which was cleared clandestinely. Reliance has been placed upon the statement of Pankaj Patel, Accounts Assistant and H K Jha. Again Ashok Chiripals statement has been relied upon to conclude that Nova has never cleared degraded chips. According to the Show Cause Notice, in order to maintain input-output ratio, bogus invoices were issued by Nova showing clearances of degraded chips and waste. What was cleared was POY in the guise of such degraded chips/waste. The ld.Senior Advocate for Nova submitted that the allegation being that 1396923 Kgs of POY were manufactured and cleared clandestinely, it is inconceivable that there were no degraded chips or polymer waste arising during the manufacture of such a huge quantity of POY. The allegation is, itself, therefore, baseless. H K Jha had stated that degraded chips could be recycled. He had not where stated that degraded chips were actually recycled and issued for making POY. The stand of the Revenue that no degraded chips were ever manufactured and cleared, is without any basis as it is admitted in the Show Cause Notice itself that 10 to 25% of the chips manufactured were degraded and cleared as degraded chips as waste. The ld. Senior Advocate also submits that no evidence has been led by the Revenue as to how such huge quantity of POY have been manufactured and transported by Nova to its customers. For such huge production of POY there is no evidence regarding excess consumption of electricity etc. No material has been brought on record to show that Nova had actually produced 13,96,923 Kgs of POY and cleared them without payment of duty. It was submitted in the written submission filed by the ld. Senior Advocate for Nova that 13,96,923 Kgs comprised 5,92,920 Kgs of degraded chips and 8,03,931 Kgs of polymer waste which arose during the manufacture of 103,15,642 kgs of Polyester Chips, and the said 13,96,923 Kgs were cleared on payment of duty. No customer to whom Nova had allegedly sold POY clandestinely has been identified. There is no evidence regarding payment received for sale of such huge quantity of POY. In fact, there is evidence to the contrary showing that degraded chips were cleared by Nova which is reflected in the returns filed before the jurisdictional Authorities. Annexure D-1 and D-2 to the reply filed by Nova to the Show Cause Notice referred to 130 Central Excise invoices of goods cleared on payment of duty and shown in monthly returns filed with the Central Excise Officers in-charge of Novas factory. No objection had been raised by them that they were POY of good quality. Ashok Chiripals statement, therefore, would not substantiate the case of the revenue. The primary evidence which is required to establish clandestine removal is absent in the present case as explained in the decision of the Tribunal referred to earlier, is absent in the present case.
It is further stated in the written submission filed by the ld. Senior Advocate that the RTOs Report relied upon by the Department dealt only with 9 consignments out of 130 (79090 gms out of 1396923 kgs) in which, as the Director of Nova pointed out in his statement, there could have been a human error, since the Vehicle Nos were written down as given by its Driver. It was also stated by Nova that details of identity of the customers and addresses were all given on the invoices. In fact, one of the customers had even been summoned by the investigating officers, who stated that he did not know Nova. Further, in the 9 consignments referred to by the RTO, addresses were indicated in the invoices. Though the vehicle numbers were wrong, the Department made no efforts to verify from the addressee customers as to whether they received the goods or not. There is no evidence of consumption of degraded chips or polymer waste for actual production of 1396923 kgs of POY by Nova, nor of their removal from Nova or their buyers thereof. No monetary transactions dealing with such sale of POY by Nova have been found by the investigating agency or placed on record.
The ld.Special Counsel for the Revenue has relied upon the statement of Ashok Chirpal made on 22.7.04, that he had never received in the State any degraded chips. All chips mentioned in his diary were good quality chips used for manufacture of yarn. However, this is controverted by the ld. Senior Advocate for Nova who pointed out that in his first statement made on 14.9.02, Ashok Chiripal had admitted the production of degraded chips during manufacture and their sale, and also produced two invoices evidencing their sale. Strangely enough, the first statement has been ignored by the Adjudicating Authority, though the statement figures in the list of Relied upon Documents supplied to Nova.
We have considered the submissions made by both parties. The Adjudicating Authority has, in the impugned order, referred to RTOs report regarding 9 vehicles that they were incapable of carrying the goods, and that the logical inference is that goods shown to have been transported were not in fact transported from the factory premises of Nova. This is totally incompatible with the allegation in the Show Cause Notice that Nova was clearing goods as degraded chips/polymer waste while they were POY of good quality. The returns filed by Nova with the Central Excise Authorities showed removal of degraded chips/polymer waste. The inference drawn in the impugned order does not seem, therefore, to be supported by the facts of the case. In any event, like in the earlier two demands, which have been dealt with us already, this demand also, being one, where clandestine manufacture and clearance is alleged, the facts on record do not establish the same. There is no tangible evidence that Nova actually produced 13,96,923 kgs of POY as alleged, or to whom such goods were sold, how they were transported, how payments for the POY came to be made etc. This cannot be a matter of inference from the fact that 9 out of 130 consignments were stated to have been transported by vehicles, which according to the RTO Report, were not capable of carrying the goods. As reliance has been placed in the impugned order to the decision of the Tribunal in the Viraj Alloys Ltd case, 2004 (177) ELT 892, we have gone through the same. We agree with the submission of the ld. Senior Advocate for Nova that the said decision is distinguishable for the reason that the said decision was in a case where R.57G of the erstwhile Central Excise Rules had prescribed the particulars which an Invoice under Rule 52A should contain. Correct registration No. of the vehicle was a mandatory prescription. In the present case, no such mandatory provision has been pointed out to us. Further, the decision cited by Revenue confirmed the duty demand in respect of the invoices where the mandatory provision was found to been violated in as much as 99 vehicles were found to have been incapable of carrying the goods. In the present case, there were 9 vehicles out of 130 but the entire duty in respect of all the 130 vehicles has been confirmed. In any event, this being a case of clandestine clearance, evidence thereof cannot be the mere incapacity of 9 vehicles (inferred from only the Vehicle No. indicated) out of 130 to carry the goods. Corroborative evidence of actual manufacture of POY and clearance to identified person or places and of payments made are some of the required conditions, which are not there in the case of the present demand, as in the earlier two demands.
We, therefore, have no hesitation in holding that this demand has been made without any concrete or tangible evidence, and for the sole reason that no goods were sent out because the vehicle no. indicated was wrong. No attempt was made to find out from the parties to whom 130 consignments had been sent as to whether or not they received the goods. We accordingly, set aside the duty demand of Rs. 2,82,64,613/- confirmed against Nova, as being not substantiated.
IV. The demand of duty of Rs 10,07,06,323/- (of which a sum Rs 9,77,62,573/- has been confirmed by the Adjudicating Authority, is based on the allegation that POY was illicitly cleared by Nova to EOUs against CT-3 Certificates with intent to evade payment of duty. The allegation is that enquiries from the transporters revealed that the goods were never transported to the EOUs but were unloaded in or around Surat and sold in the domestic market, allegedly in collusion with the EOUs. Delivery Challans, according to the Show cause Notice, showed transportation of the goods from Nova to the EOUs. The signatures of the authorized signatory of the EOU receiving the same were not present in the Delivery Challans. On the reverse side of the same Delivery Challans, names of dealers based at Surat were mentioned. Clandestine clearances to local parties at Surat were thus camouflaged. Enquiries made with the dealers whose premises were searched revealed no incriminating documents since, according to the department, they were aware of the search of Nova premises 20 days before and were expecting searches of their premises as well. It is also the case of the department that enquiries regarding types of vehicles used for transportation of yarn to EOUs showed that large quantities had been cleared by Nova in incapable vehicles. Transportation had been arranged by the factory. As per the allegation in the Show Cause Notice, transactions to EOUs were routed through Novas dealers. Dealers submitted CT-3 certificates of the concerned EOUs and placed order on Nova. It is sent to the Excise Section. All transactions were made only through dealers. Nova does not directly deal with any of the EOUs. Rewarehousing certificate in respect of goods consigned to EOUs as well as payment in respect of the goods from the EOUs were also submitted by the dealers. Enquiries with the Central Excise authorities, according to the Show Cause Notice, made it clear that they never verified duty-free input sent by Nova to EOUs under their charge because of CBEC Circular 88/98-Cus dated 2.12.1998. Certificates were issued on the basis of documents without any physical verification. In respect of EOUs located in the State of Gujarat, transportation of goods were, in some cases, made in incapable vehicles. Demands were, therefore, made jointly and severally from Nova and different EOUs. In the case of some EOUs, the Show Cause Notice alleged that they did not have the machinery to manufacture the goods from POY sold by Nova to them and export them. The Adjudicating Authority confirmed the demand holding, inter alia, that the Show Cause Notice, as alleged by Nova, was not defective in demanding duty jointly and severally from Nova and the EOUs. He relied upon the definition of the term manufacture under Section 2(f) of the Act and usage of the word person in Section 11A thereof. In all the cases of EOUs, the demands have been confirmed on Nova, on the ground that no POY was transported/received by the EOUs. Though the Show Cause Notice demanded duty jointly or severally from Nova and the EOUs, demands have been confirmed only as against Nova. There is no demand of duty against the EOUs.
The demands have been confirmed merely for the following reasons:-
i) Some of the vehicles shown to have transported the goods were incapable of transporting the goods;
ii) The goods to the EOUs outside Gujarat (Malegaon/Dhulia) were not, in fact, transported from Nova to the respective EOUs but were unloaded in or around Surat, and sold in domestic market.
iii) Statutory documents like AR3A, CT-3 and Rewarehousing certificates are not relevant because the officers did not have to physically verify receipt of goods by the EOUs, as per Board Circular 88/98-Cus dated 2.12.98;
iv) Only Delivery Challans could be proof of the delivery which, in the present case, were not all signed by the recipient EOUs.The Delivery Challans were more important that the statutory documents.
v) There were names of dealers of Surat on the Delivery Challan (on the reverse) which proved that the goods were delivered in or around Surat.
vi) Some of the EOUs did not have machinery to process POY and there was no evidence of the EOUs having given the POY for job work;
vii) Some of the transporters had licence only to ply within the State of Gujarat.
viii) LRs and LR books were kept in the office of Nova and were prepared by two of their employees.
The above is a gist of the allegations in the Show Cause Notice which have been culled out there from, in the written submissions submitted by the learned Senior Advocate for Nova. We notice that the learned Special Counsel appearing for the department has also filed written submission before us on 30.7.13, wherein he has also summarized the reasons for which duty amounts have been confirmed on Nova vis-`-vis each of the EOUs. This has been done in a tabulated form which helps us to examine the case on all its aspects.
The learned Senior Advocate for Nova has raised a preliminary objection which Nova had raised before the Adjudicating Authority, but had been rejected, on the issue of joint and several liability for payment of duty on independent persons. The learned Senior Advocate submitted that the manufactured product in the present case is POY which, admittedly, is manufactured by Nova and not by the EOUs. There is no manufacturing activity attributable to the EOUs insofar the manufacture of POY is concerned. Though the Adjudicating Authority has relied upon the definition of the term manufacture in Section 2(f) of the Act, the learned Senior Advocate submits that the Adjudicating Authority has misinterpreted the inclusive part in the definition of the term manufacturer appearing in the said Section 2(f) to mean that there could be more than one manufacturer in some cases. The learned Senior Advocate submits that the Adjudicating Authority has erred in coming to the above conclusion. Nova had relied on the decisions of this Tribunal in Famous Textiles v CCE, 2005 (190) ELT 361 and in the case of Shree Arvindh Steels, 2007 (216) ELT 232. Though they directly dealt with the issue, the Adjudicating Authority held that the ratio of the decisions is not strictly binding, since Famous Textiles decision was in a stay application under Section 35F of the Act and not a final order under Section 35 thereof. The decision in Arvindh Steels Ltd is the subject matter of appeal filed by the Department which, according to the Adjudicating Authority, is pending before the Honble High Court of Madras and is, therefore, not final in nature. The learned Senior Advocate submits that, while it is true that the decision in Famous Textiles case was passed in a stay application, the decision in Arvindh Steel Ltd is a final order passed by this Tribunal and the filing of an appeal does not affect the finality of the said decision. It is well recognized that the filing of an appeal does not automatically render the decision inapplicable. He relies upon the decision of the Honble Supreme Court in Madan Kumar Singh v District Magistrate, (2009) 9 SCC 79 where it is held that mere filing of petition, appeal or suit would, by itself, not operate as stay until specific prayer in this regard is made and orders thereon are passed. It is, therefore, well established that unless the decision gets wiped out as a result of final decision of a higher forum, it would continue to be binding on lower/sub-ordinates Courts. In this view of the matter the ld.Senior Advocate submitted that the Show Cause Notice itself is per se void and it is not open to the Adjudicating Authority to dissect the Show Cause Notice and come to a finding that only one is liable.
We have gone through the written submissions filed by the learned Special Counsel for the revenue on this aspect and he has made only a reference that, in respect to the preliminary objection, the Respondent has held that given the usage of the expression person in Section 11A, the differential duty can be demanded jointly and severally from Nova and EOUs.
Though the issue raised by Nova as regards the question of whether the Show Cause Notices can be issued demanding duty against two or more independent persons jointly and severally has been raised as a preliminary objection, and is an issue which deserves examination, we do not think it necessary to venture on such exercise in the present case, in view of the decision which we are taking in the matter of the instant demand on merits.
On the merits, it was submitted by the ld. Senior Advocate orally as well as in the written submission filed by him it is an admitted fact stated in the impugned order that re-warehousing certificates for the entire quantity of yarn were received by the Central Excise Office in charge of Nova directly from Central Excise and Customs officers in charge of all the EOU customers. These have been shown as received in the in-bond register of the EOUs and payments have also been made by the EOUs to Nova by cheques/drafts. According to the Adjudicating Authority, physical verification of receipt of POY by the EOU was not necessary because of the Board Circular. The Delivery Challans are the conclusive document. The DC did not contain the signature of the authorized person or of the recipient. Therefore, there was no delivery at Malegaon/Dhulia. At the same time Delivery Challan is relied upon by the learned Adjudicating Authority to say the goods were delivered at or around Surat since the reverse side contained the names (not signatures) of Novas brokers at Surat. From this it is presumed that the goods were sold in local market in or around Surat. There is no reference anywhere as to when they were sold in Surat, by which broker to which buyer. Significantly, enquiries were made with the brokers but it was found that no incriminating documents were available with them because the enquiries were twenty days after the search at Nova and the brokers anticipated the search of their premises. Strangely enough, the department did not consider it necessary to record any statement from the brokers whose names were found on the reverse of the Delivery Challans. The ld. Senior Advocate emphasized the fact that there is not even an iota of evidence of the goods having been sold in or around Surat as alleged in the Show Cause Notice and as confirmed by the learned Adjudicating Authority. No Transporter or broker has given evidence to this effect. Obviously, the unloading of the goods from the trucks cannot be on a public road. It has to be to some specified person at some premises of his. It is certainly not the case of the department that the goods were unloaded in the brokers premises or sold to the brokers. The entire matrix of the case on which the conclusion of the learned Adjudicating Authority is based, therefore, fails. More so, in cases where a wrong vehicle number was mentioned in the invoices. Since in these cases the learned Adjudicating Authority concludes that the transport could not have carried the goods, but the goods are presumed to have been sold. Any sale could be presumed only in respect of the goods which were actually transported. If the vehicle mentioned in the invoice is wrong and it was not capable of carrying the goods it cannot be concluded that the goods were carried and sold in or around Surat. It is significant that, in the present case, there is no evidence at all of any part of the goods having been sold in or around Surat to any person. No transporter has stated so. As regards the statutory documents (CT-3s, AR-3As, D-3 etc), the ld.Senior Advocate submitted that the Adjudicating Authority has brushed aside the submission of Nova that importance has to be attached to the role of the Central Excise Officers in these transactions. Everyone of the Inspectors in-charge of the EOUs has been examined and their statements are almost uniform and have been summarized in the impugned order. According to these statements made by them, insofar as imported goods/Raw Materials/consumables are concerned, the respective EOUs would immediately submit an intimation regarding receipt of such import goods along with copies of Bills of Entries etc and in all such cases the officer personally visits the factory premises to verify receipt of the consignment and all the details as reflected in the documents with that seen physically and ensured that proper entries were made in the records maintained in this regard by the concerned EOUs. So far as indigenous duty free goods duty-free goods/consignments are concerned, all the works relating to re-warehousing were based on documents. The EOUs were filing D-3 intimation, along with copies of AR-3As and invoices covering the consignments etc., with the Range. Since the physical supervision of EOUs had been dispensed with in terms of the CBEC circular No:88/98-cus dated 2.12.98, issued from F.No.473/9/98-LC, all re-warehousing procedures, other than those in respect of imported duty free consignments, were being monitored on the basis of records/documents maintained both by the EOUs as well as those maintained at the Range level. As and when the EOU were filing the D-3 intimation, the necessary records were called for with regard to in-bonding of such duty free goods, and based on the entries made therein and so far as it relates to other documents so submitted by the EOU to the Range under their signatures/certification, the Central Excise officer was signing the re-warehousing certificates on that basis viz., record/document basis only. At no time were the consignments of indigenous origin physically verified, as per the Boards Circular. Thereafter, re-warehousing certificates were being dispatched, either weekly or fortnightly basis, to the jurisdictional Central Excise Officer of the consignor end. On being shown seized records/ files containing copies of AR-3As, in respect of clearances of Polyester Yarn made by Nova, and which have been duly re-warehoused by Central Excise Officers, in respect of the units falling under their charge, they confirmed their signatures appearing on the AR-3As (rewarehousing certificates). Copies of CT-3s, AR-3As & rewarehousing certificates and D-3 intimation were enclosed with the written submissions of the ld. Senior Advocate, which clearly show that the receipt of the goods is acknowledged by EOU in the D-3 intimation, which is one of the documents relied upon by the Central Excise Officers. For the learned Adjudicating Authority to say that the goods were not received in the EOU when a statutory record prescribed for the purpose acknowledges receipt is, to say the least, very incongruous. The learned Adjudicating Authority relies on the Delivery Challans which according to him should outweigh the statutory records to hold that the goods have been unloaded and sold in Surat just because the name of the broker at Surat is shown on the reverse of some Delivery Challans. The ld. Senior Advocate submits that this is a conclusion which defies any plausible explanation. A second important factor in this regard is that the Circular No:88/98 (supra), itself is one issued by the Land Customs section of the Board and the circular incorporates the salient features in the matter of imported goods and refers to physical control being abolished. The evidence given by the officers in the present case speak of physical control being carried out by them in respect of imported goods. The ld. Senior Advocate submitted that it would appear that the liberalization of bonding procedure by the Circular No:88/98 (supra) did not cover cases where EOUs were receiving indigenous goods. The ld. Senior Advocate continued his submission and stated that, even assuming without admitting that the circular is applicable, the circular also provides for examination of the records of the units and transactions undertaken by unit at least once in a month. All movements of goods had to be recorded in a proper register. Therefore, even assuming that physical verification has been dispensed with, responsibility of departmental officers to ensure checking the correctness of raw material, quantity used, finished goods produced etc and maintenance or proper records is prescribed under the said circular and not dispensed with. Therefore, in the light of the CT-3s, AR-3As, D-3 and re-warehousing certificates having been issued in present case, by the parties, the ld. Senior Advocate submits a mere mention of the brokers name on the backside of Delivery Challans cannot have any significance or impact, particularly when D-3 intimation is a document which acknowledges the receipt of goods by the EOUs and is duly signed by the EOU. It was also the contention of the ld. Senior advocate that all EOU customers who were interrogated during the investigation have confirmed when their statements were recorded under Section 14 of the Act, that they have received the consignments of yarn from Nova which were warehoused in their premises and were used for further manufacturing purpose. The Adjudicating Authority has rejected these statements only on the ground that EOU customers had given details of the total quantity of yarn received and warehoused by them during the period but no specific information about the consignments received from Nova. This is a total mis-appreciation of evidence on the part of the Adjudicating Authority since the statements were recorded in the context of enquiry against Nova only. The total quantity shown as warehoused by some of the EOUs also included yarn received from Nova which were also duly recorded in the in-bond register as warehoused. Even in the proceedings before the Adjudicating Authority, some of the EOUs who had participated therein had contended that they had received the consignments of yarn from Nova and had duly accounted them in their register. The Adjudicating Authority has rejected this on the ground that the number of some of the vehicles written in the Delivery Challans were vehicles incapable of carrying them as there were no National Permits available for such trucks. It is also important that only 4.65% was involved in such erroneous vehicle numbers. To demand duty on all the yarn sold and delivered to all the EOUs is, therefore, totally arbitrary. For example, in the case of Blue Moon (one of the EOUs), 29 vehicles out of 402 showed discrepancy of vehicle numbers. The evidence of transporters also did not indicate that their vehicles were not used for delivering the yarn at places like Malegaon and Dhulia. In some cases LR books were found in the transporters office and no LR Book was seized from the premises of Nova during the search. Even in cases where the Adjudicating Authority held that vehicle did not have licences to ply outside Gujarat, no evidence like RTOs permit or RC Book was produced. It is an established practice that temporary permits are granted on payment of requisite RTO fee to transport goods in the neighbouring States. The statement of eight transporters cannot, therefore, be conclusive evidence that they had not used their vehicles for delivery of yarn to EOUs located outside Gujarat. Their evidence could not have, by any stretch of imagination, been used to prove that 13,800 clearances made to EOU customers had not taken place. The eight transporters accounted for less than 60 trips during the two years. It had been pointed out to the Adjudicating Authority during the hearing that even DGCEI had committed errors in writing vehicle numbers. These facts/submissions have not been considered/appreciated by the Adjudicating Authority. It was, therefore, submitted by the ld. Senior Advocate that the confirmation of the present demand in the impugned order is totally devoid of any factual basis and is legally untenable.
On the merits of the present demand, the learned Special Counsel for the revenue has, as stated earlier, analyzed the evidence in a tabulated form in the written submission filed by him on 30.7.2013. He submitted that, in view of the reasons given in the tabulated form in column 4 under the head reasons, on the basis of complying with the principle of preponderance of probability and the weight of documentary and circumstantial evidence, it has been correctly held by the respondent that the allegation in respect of the seven EOUs (outside Gujarat) has been proved. He has also emphasized the fact that none of the aforesaid 7 EOUs participated in the adjudication proceedings. The learned Special Counsel has, while summing up his submissions, justified the order passed by the Adjudicating Authority in the present demand since, as per the report of the RTO, a number of vehicles shown to have been used to transport duty free goods under the CT-3 certificates were found to be incapable of carrying the same. It was corroborated by the statements of key persons of some of the EOUs. He further submitted that, in respect of some of the EOUs, enquiries reveal that they did not have enough plant and machinery to manufacture the final product from POY. He also submitted that the dealers of Nova were getting CT-3 certificates issued by the EOUs and giving them to the Surat office of Nova and goods were being sent by Nova without payment of duty against AR-3As. Such goods were off loaded at Surat and sold in the market. He further submitted that enquiries with transporters reveal that they never transported duty free goods to Malegaon and Dhulia (outside Gujarat) but off loaded the same in and around Surat. Some of the trucks did not have the permits to travel beyond Gujarat. He also submitted that on several delivery challans the names of agents of Surat are mentioned and the representatives of the EOUs admitted that duty free goods were not received by them. [The ld. Senior Advocate rebutted the submission that there was any such admission of non-receipt of goods by the EOUs]. LRs of most of the transporters were kept with Nova and were prepared by the employees of Nova who did not appear in response to the summons issued by the department. Transportation was being arranged by Nova and freight was also being paid by Nova. According to the learned Special Counsel, duty free polyester yarn cleared by Nova to EOUs as deemed exports were diverted into domestic market. On these facts it was contended by the learned Special Counsel that the confirmation of the demand by the Adjudicating Authority deserves to be upheld. The learned Special Counsel also disputed the contention of Nova that wrong numbers on challans could have been the results of clerical mistakes. The two employees of the dispatch section had disappeared from the scene soon after the investigation started and could not be traced thereafter. This was a situation which, according to him, was created by the Directors so that the truth never surfaced.
He also contended that the argument of Nova that 1004 consignments (where vehicle numbers were not correct) out of 13800 formed a small per centage of total clearances was not material, and submitted that these 1004 consignments are backed up by the evidences and justified the entire demand. Reliance was placed on the decision of the Tribunal in the Viraj Alloys & Stees (supra). He also cited 3 decisions in the matter of preponderance of probability which, according to him, proved the case in favour of the revenue in the instant case.
We have considered the submissions of both the parties on the merits of the demand. It is true as pointed out by the ld. Senior Advocate for Nova that the impugned order itself states that re-warehousing certificates for the entire quantity of yarn were received by the Central Excise Officers In-charge of all the EOU customers. These have also been shown as received in the in-bond register of the EOUs and payments have also been made by the EOUs to Nova by cheques/drafts. These have not been disputed by the ld. Special Counsel for the Revenue. CT-3 certificates, AR3As and D-3 declarations are all mandatory prescriptions under the Central Excise Rules in respect of transactions occurring between manufacturers and EOUs. The Adjudicating Authority, while passing the impugned order, has in the light of the statements of Inspectors in-charge of EOUs that physical supervision of receipt of goods by the EOUs had been dispensed with in terms of the CBEC Circular 88/98-Cus dated 2.12.98 in respect of clearance of goods made by the indigenous manufacturers as against importers, held that all the works relating to re-warehousing were based only on documents, and concluded that what would be relevant and conclusive in the present case would be the Delivery Challans. We have gone through the said Circular. The Circular is, no doubt, intended to liberalise the bonding procedures in respect of 100% EOUs by providing operational flexibility, by easing restrictions and removing practical difficulties being faced by such EOUs. It may be relevant, in this connection, to reproduce the said Circular in full, which is as under:-
Export -Liberalisation of bonding procedure in respect of?100% EOUs The degree of supervision of the departmental officers on movement of raw materials, components, finished goods and manufacturing process and accounting of the same in an EOU has been under the review of the Board for some time. The board has since amended the Manufacture and Other Operations in Warehouse Regulations, 1966" by Notification No. 44/98-Customs-(N.T.), dated 2-7-1998 to provide operational flexibility, ease the restrictions and remove practical difficulties being faced by such EOUs, considering the changes in the environment of import control and tariff regime. The salient features of the changes are as under:
(i) The revised?procedures will apply only to the EOUs as mentioned above. It will be observed from the amended regulations that the provisions relating to fixing the days/hours of operation of the warehouse, the manufacture to be carried out under the physical supervision of the customs officers, locking of the warehouse premises, control over the issue and return of imported goods have been deleted. Therefore all movements from and to the units like clearance of raw materials/components to the job workers premises, return of the goods from the job workers premises, clearance to other EOUs, export and sale into DTA can be made by the manufacturer himself subject to his recording of each transaction in the records prescribed by the Board/Commissioners or their private records approved by the Commissioners.
(ii) As physical control is being abolished, greater stress needs to be given on proper maintenance of prescribed records/accounts and non-maintenance of the accounts shall be viewed seriously and should also reflect on the supervisory role of the officers who have been assigned to supervise the said units. Such accounts should be scrutinised once in every month by the officer who have been posted on cost recovery basis or other officers assigned to the unit.
(iii) Movement of non-duty paid goods:?
The movement of goods without payment of duty has been allowed from the EOU to another EOU or to STP/ EHTP units and for exports. The officer incharge of the sending EOU and receiving units shall watch such movements as there are reports of misuse of this facility. The rewarehousing certificate on transfer of the goods from one EOU to another shall be obtained by post and shall be cross-checked occasionally with the Superintendent incharge of the next unit to see whether the goods have been actually received in the unit or not. In case of non-receipt of rewarehousing certificate and similarly proof of export from the proper officer, within 90/180 days, the duty shall be demanded from the sending unit immediately.
(iv) Audit of the unit:?
The presently sanctioned Cost Recovery Officers shall examine the records of the units and transactions undertaken by the unit at- least once in a month. The notification provides in regulation 11, that the Chief Commissioner may order special audit of the unit by a Cost Accountant (CA) nominated by him in this regard. Cost Auditor may be employed as a tool to check the correctness of raw material, quantity used, finished goods produced or other such situations. Before such approval, the Chief Commissioner may form a panel of CAs, fix the rate of the charges to be received by the said Cost Accountant. The names of the CAs and the details of the charges may be pre-notified at regular intervals.
(v) It may be seen that while the latitude for manufacture and? clearance and movement of raw materials and finished goods have been given to the EOUs, extra responsibility devolves on the cost recovery officers who are presently attached to the said units. There is no proposal at present for reduction or abolition of the said cost recovery posts. Wherever one officer has been assigned to more than one unit, the said officer would be made responsible for specific monthly checks. However, the units be permitted to operate with as much flexibility as possible. To obtain economy of scale units resort to various cost cutting measures like combining purchase of raw materials with other units, dispatch of goods in the same conveyance with other units or setting up common user facilities. Such arrangements may be allowed subject to proper and easy accounting of the duty free raw material and capital goods used therein. However, it must be insisted upon and ensured that all movements of goods be recorded in a proper register. Where specific difficulty arises, units may be cost audited with the prior permission of the Chief Commissioner.
The Circular provides for examination of the records of the units and transactions undertaken by the Unit at least once in a month. All movements of goods have to be recorded in proper register. Therefore, even assuming physical verification has been dispensed with, the responsibility of departmental officers to ensure checking the correctness of raw material, quantity used, finished goods produced or such other situation, and maintenance of proper records is prescribed under the said Circular and not dispensed with. In our view, it is only the physical verification of the receipt of the goods in the EOU and matters relating thereto, that are dispensed with. The Circular does not absolve the departmental authorities from (on the other hand, it prescribes it) the responsibility for periodic check of the factory as well as the EOUs to ensure that the records maintained for the purpose are proper and true, apparently because the manufacturers and EOUs enter into transactions which involve duty-free clearances under liberalized procedures. It is important to note that the impugned order takes into consideration the fact that, in compliance of the Board Circular, officers were not verifying physical receipt of goods in the EOUs. It would be incongruous to presume that the departmental officers did not carry out, in the present case, the periodic checks which have been prescribed under the latter part of the Board Circular. A Board Circular is binding in its entirety and not in parts. If their duty is to inspect the units on periodic basis to verify the correctness of the records, their failure to do so would amount to a non-compliance with the Circular. The relevancy of statutory records cannot, therefore be minimized by the department itself and pre-dominance be given to contractual documents like Delivery Challans issued by or between private parties. The reasoning of the Adjudicating Authority, that the Delivery Challan would outweigh the statutory records, is not sound. There is another vital fact, which is important to the present case. The Delivery challans according to the department did not show receipt of the goods in the EOUs. From this it is presumed that the goods were not received in the EOUs. According to the statements made by some transporters they were unloaded in or around Surat. This statement is as vague as it can ever be. There is no evidence that the goods were delivered to the dealer whose name was indicated on the reverse of the Delivery Challan. No transporter has stated this. Neither the dealer nor the person to whom it could have been handed over has signed it. In this connection, it is seen from the Show Cause Notice (para 13.13.2) that all transactions with EOUs were through Dealers. It was explained by Novas Marketing Manager as under:
13.13.12 On being asked as to how they process the requirements of manufactured goods received from 100% EOUs, he stated that all their transactions were only routed through their dealers. The dealer submit to them the CT-3 certificates of the concerned EOUs and placed order for the goods manufactured by them. Upon receipt of the CT-3 certificate from the dealers, handed over to them by hand, they transmit the same to their Excise section of the factory, to Shri Nitin Patel. Based on the aforesaid certificates, materials were dispatched from the factory premises. On being asked, he specifically and categorically admitted that all their transactions were made only through the dealers, and they are not directly dealing with any of the EOUs. Further, on being asked, he stated that the re-warehousing certificates in respect of the goods consigned to such EOUs as well as payment in respect of the goods are also submitted to their company by their dealers only by hand, and they do not directly interact with the EOUs in this regard. Once the goods are delivered from the factory, all the movements were taken care of by the dealers. He also informed that in case the buyer turned fake or non-existing, the payment of the goods were recovered from dealers who had placed the orders. It is not the case of the Department that the procedure was any different. It cannot, therefore, be said that the presence of names of the dealer on the reverse side of the Delivery Challans would mean that the goods were delivered to the dealer in or around Surat. It is clear and an admitted fact as seen from what has been extracted above that all transactions between Nova and EOUs were through dealers and the name of the dealer on the reverse of the Challan was to identify the dealer who was connected to the particular EOU. To conclude that the name of the dealer on the reverse of the challan is only to direct that the goods should be sold in or around Surat in the domestic market by the named dealer is too presumptuous and not backed by any evidence to support it. Secondly, if the intention of Nova was that the goods should be delivered to dealers at Surat, in such a case, at least in some of the Delivery Challans, it would be reasonable to expect that the dealer to whom the goods were delivered would have signed in token of having received the goods, whether it be for onward sale in Surat itself or on behalf of the EOU. We are not in a position to appreciate the inaction on the part of the Investigating Authority to get any clarification in this behalf from dealers, more so after having visited their premises and not found any incriminating materials. They have merely stated that no incriminating materials could be found because the dealers would have anticipated search of their premises since Nova had been searched 20 days earlier. Nothing precluded the authorities from recording the statements of dealers on how the transactions involved in the present case were handled by them, particularly in cases where their names figured on the reverse of the Delivery Challans. If the departments case is, as has been made out in the Show Cause Notice and as presented before us, that the dealers whose names appeared on the reverse of the Delivery Challans were to deal with the consignment covered by it and sell it in the local market, and that the goods instead of having been delivered in the EOU were unloaded in or around Surat where the named dealers are, the dealers so named would have clearly be in the know of what happened to the goods-whether they were at all received in or around Surat or whether they were in fact received in the EOU itself or whether they were sold off either in Surat or by the EOUs. This lacunae in the investigation is vital and, in our view, totally destructive of the departments case before us, since the impugned order bases itself essentially on the presence of the name of the dealer on the reverse of Delivery Challans and the statements of the transporters that goods were delivered in or around Surat. Even as regards the transportation alleged to have been made in incapable vehicles as reported by the RTO, there was no effort made the Investigating Authority, to check up from the name of the dealer on the reverse of the Delivery Challan about the actual factual situation in respect of that consignment. It is relevant to mention in this context that, in his written submissions, the ld. Special Counsel for the Revenue had referred to the representatives of EOU having denied receipt of the goods, which was rebutted by the ld. Senior Advocate for Nova during the hearing. We had heard some of the EOUs to whom Show Cause Notices were issued and orders had been passed against them by the Adjudicating Authority who had filed appeals before us, which were also heard along with this appeal by Nova. The EOUs which were represented before us had unequivocally stated that they had received the goods and paid for the same. One of them had even produced evidence of the POY having been sent for job work and having exported the finished product thereafter, and the consequent de-bonding of the unit. Another important consideration which has a vital bearing on the justifiability of the present demand is the fact that, even though there had been statements of transporters that the goods were unloaded at Surat, there has not been, any evidence of any such unloading having taken place. Since there is not even an iota of evidence as to where in Surat the goods were unloaded or as to who took delivery of the same (this should have been known to the transporter) and to whom the goods had been sold, the present demand has no factual basis to sustain itself. The demand itself is been made in respect of 43,53,933.42Kgs as pointed out by Nova in their reply to Show Cause Notice, and covers the period (FY-2001-02 & 2002-03). No evidence of any sort (not even a single instance) showing actual sale of goods in the domestic market has come on record. The textile industry being one of the predominant industries in Surat, it is difficult for us to conceive that clandestine activities of sales of such large magnitude could have taken place without coming to the notice of the Central Excise authorities. This is not a case where goods sent to an EOU were found being sold in the domestic market. There is no evidence of any sale and there has been no identification of even a single buyer.
There being a conspicuous absence of evidence of actual diversion of the goods into the domestic market, transactions in such goods by named persons, and flow-back of funds, a demand as in the present case cannot be sustained on the basis of mere statements made by transporters of goods and that too, not of the drivers who transported the goods but of the owners of such company, who were not involved in the physical transport of the goods. To say the least, the impugned order is solely based on the statements which have no precise content.
We have also noticed the contention raised by the department that some of the units did not have machineries like texturising/twisting machines fit enough to fullfil their export obligation. The impugned order takes note of this allegation in the Show Cause Notice and confirmation of demand in some of the EOUs is sought to be justified on this ground. On going through the facts of the case we find that, in the statements made by Inspectors of Central Excise, while dealing with the question of physical verification of receipt of goods in the EOU, they have stated, on being asked as to whether they had visited the EOUs that were under their charge at any time, that, initially when the jurisdictional Division Office had sent the application for registration filed by the EOUs to the Range for verification purposes, the Inspectors accompanied by their Superintendents visited the site of the factory premises of the EOU for verification of the facts stated in the applications. It defies logic or reason for us to believe that they had verified the application for registration as an EOU, but failed to notice that they had no machinery to manufacture the export goods. It is not the case made out in the Show Cause Notice that all the EOUs involved in the present case were getting job-work done by others. This would again show that the Adjudicating Authority has failed to apply his mind to all the facts, before arriving at his conclusions, and has confirmed the demand only on conjectures and surmises, without any concrete evidence on any of the aspects referred to by us above. In dealing with cases like the present involving allegations of clandestine sales in the domestic market by the EOUs or even by manufacturers under the guise of sending the goods to EOUs, one has to keep in mind the need for clinching evidence of violation of the provisions of the Act and the Rules made thereunder. A conclusion cannot be arrived at on the basis of inferences which are, in turn, based on statements which are not supported by actual facts in existence or found. As far as the present demand is concerned, the allegations against Nova are based on some vehicles mentioned in the invoice being not capable of being used, the goods mentioned in the invoices not having been received by the EOUs, and the incapacity of some of the EOUs for utilizing the goods. From our discussion above, it would be clear that none of these grounds is substantiated by concrete or credible evidence. Mere reliance on the statements not corroborated by tangible evidence cannot be the basis for confirmation of a demand of high demand as in the present case. On the basis of the aforesaid findings, we are constrained to set aside the demand of Rs.9,77,62,573/-.
43. The learned Senior Advocate has also in his written submission raised the ground of limitation against the 4 demands in the present case, and that the Show Cause Notice dated 30.6.06 was time barred since the extended period of limitation could not apply in the facts of the present case. He had submitted that Nova had maintained all the statutory records wherein raw materials and inputs as well as finished products have been duly entered and final product, namely, POY has always been cleared on payment of duty under Central Excise Invoices as shown in the documents like RG-1, PLA and monthly returns which have all been examined and assessed by the Central Excise authorities. No specific finding has been recorded in the impugned order holding as to how the extended period of limitation was available to the revenue under the provisions of the proviso to Section 11A of the Act, which can be invoked only where suppression of facts, or willful misstatement, or collusion, or contravention of the provisions of the Act or the Rules with intent to evade payment of duty is proved on the part of the assessee. It is not the case of the department that Nova had colluded with the authorities and clandestinely cleared the goods. There is no finding in the impugned order as to which of the elements comprised in the Section 11A of the Act was applicable to the assessee. The learned Senior Advocate had also referred to the case law on the subject which had been filed by Nova in the appeal which is being heard by us. He has further submitted that all the 4 demands in the present case are based on assumptions and presumptions and not based on any acceptable evidence. The learned Special Counsel for the Revenue only reiterated the discussion and the finding in the impugned order to support the same.
Since we are clearly of the view that all the four demands have to be set aside on merits for reasons contained hereinabove, and dealt with seriatim in this order, it would not be necessary for us to dwell into the issue and decide the same. We are also not dealing with the submission made by the learned Senior Advocate for Nova as in the matter of applicability of cum-duty price formula for determination of the value of the goods, and recovery of interest under Section 11AB of the Act for the same reason. In view of our conclusion that all the four demands are set aside, the question of imposition of penalties on Nova and its directors cannot arise and are, therefore, set aside.
44. Taking up the cases of the EOUs who have filed appeals before us and have been heard during the course of the hearing of Novas appeal, we find that they figure only in the fourth demand made against Nova, which we have dealt with in detail while setting aside the same. The EOUs who are in appeal before us have submitted that they had received the goods from nova and due intimation in this regard had been given to the Officer In-charge of each unit. Moreover, some of the EOUs have also produced Export Obligation Discharge Certificates in support of their submissions. We have referred to these facts while dealing with the demand against Nova, which we have set aside. The Adjudicating Authority, in the impugned order, has imposed penalties on the said units. Imposition of penalty on these units has been justified by the Adjudicating Authority on the basis that there has been collusion between Nova and EOUs. Since we have allowed Novas appeal and set aside the demand for duty, imposition of penalty on these units on the ground of collusion with Nova cannot arise. There appeals are allowed and the penalties set aside. We do not, therefore, have to deal with the other submissions made by the EOUs appearing before us.
(Pronounced in Court on ______________________)
(H.K. Thakur) (M.V. Ravindran)
Member (Technical) Member (Judicial)
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