Custom, Excise & Service Tax Tribunal
Bajrangbali Re Rollers Pvt Ltd vs Rourkela on 7 May, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Excise Appeal No. 75434 of 2017
(Arising out of Order-in-Original No. 43/CCE/CEX/RKL/2016-17 dated 19.12.2016
passed by the Commissioner, Central Excise, Customs & Service Tax, Rourkela
Commissionerate, KK-42, Civil Township, Rourkela - 769 004)
M/s. Bajrangbali Re-rollers Private Limited : Appellant
Plot No. A-3, Industrial Estate,
P.O.: Kalunga, P.S.: Brahmani Tarang, Dist.: Sundergarh (Odisha)
VERSUS
Commissioner of Central Excise, Customs and : Respondent
Service Tax
Rourkela Commissionerate,
KK-42, Civil Township, Rourkela - 769 004
AND
Excise Appeal No. 75435 of 2017
(Arising out of Order-in-Original No. 43/CCE/CEX/RKL/2016-17 dated 19.12.2016
passed by the Commissioner, Central Excise, Customs & Service Tax, Rourkela
Commissionerate, KK-42, Civil Township, Rourkela - 769 004)
Shri Amit Agrawal, Director, : Appellant
M/s. Bajrangbali Re-rollers Private Limited
Plot No. A-3, Industrial Estate,
P.O.: Kalunga, P.S.: Brahamani Tarang, Dist.: Sundergarh (Odisha)
VERSUS
Commissioner of Central Excise, Customs and : Respondent
Service Tax
Rourkela Commissionerate,
KK-42, Civil Township, Rourkela - 769 004
APPEARANCE:
Shri Sudhir Mehta, Advocate for the Appellant(s)
Shri S.S. Chattopadhyay, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NOs. 75863-75864 / 2024
DATE OF HEARING: 29.04.2024
DATE OF DECISION: 07.05.2024
Page 2 of 19
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Order : [PER SHRI K. ANPAZHAKAN]
The present appeals have been filed against the
impugned Order-in-Original No.
43/CCE/CEX/RKL/2016-17 dated 19.12.2016 passed
by the Commissioner, Central Excise, Customs &
Service Tax, Rourkela Commissionerate wherein the
Ld. Commissioner has confirmed the demand of
Central Excise Duty of Rs.56,52,591/- along with
interest and imposed equal amount of duty as penalty.
He also imposed penalty of Rs.1,00,000/- on Shri Amit
Agarwal, Director of the Appellant-company.
2. The facts of the case are that the appellant is a
manufacturer of M.S. Rods, Flats, Angles, etc., falling
under Chapter 72 of the Central Excise Tariff Act,
1985. The appellant had its registered office situated
at Lal Building, Kachary Road, Rourkela. In the same
premises, a trading firm viz. M/s. Bajrangbali Steel
Industries Pvt. Ltd., which is registered under the
Central Excise Act, was also functioning. Shri Amit
Agarwal is a Director of the Appellant-company and
also looked after the affairs of the trading firm.
2.1. On 26.02.2009, a search was conducted by
Officers of the Directorate General of Central Excise
Intelligence (DGCEI) at the office as well as factory
premises of the appellant. Search was also conducted
at the premises of the trading firm viz. M/s.
Bajrangbali Steel Industries Pvt. Ltd. located in the
same building. During the course of search certain
loose sheets, papers and documents were seized from
the premises of the trading firm M/s. Bajrangbali Steel
Industries Pvt. Ltd. Some documents were also seized
from the personal office of Shri Amit Kumar Agrawal.
Page 3 of 19
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3. On completion of the investigation and verification
of the documents seized from the trading firm, a Show
Cause Notice dated 10.12.2011 was issued to the
appellant inter alia demanding Central Excise Duty of
Rs.3,39,76,566/- (Including Cess).
4. The Notice was adjudicated by the Ld.
Commissioner of Central Excise, Rourkela vide the
impugned order wherein the Ld. Commissioner has
confirmed the demand of Central Excise Duty of
Rs.56,52,591/- (Including Cess) along with interest
and imposed equal amount of duty as penalty.
However, he dropped the demand of Rs.2,83,23,975/-
made in the Notice. The amount already paid by the
appellant during the course of investigation was
appropriated against the demand confirmed. A
penalty of Rs.1,00,000/- was also imposed on Shri
Amit Kumar Agrawal, Director of the appellant-
company under Rule 26 of the Central Excise Act,
2002.
5. Aggrieved against the said order, the present
appeals have been filed.
6. In their appeal, the appellant contended that
the adjudicating authority has given a finding in the
impugned order that there is no evidence to
substantiate the allegation of clandestine clearance of
the goods without payment of duty. However,
contrary to his own findings, he has confirmed part of
the demand made in the Notice without any
corroborative evidence. Hence, the demands
confirmed in the impugned order is not sustainable.
The contentions of the appellant-company are
summarized as under: -
Page 4 of 19
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i. The entire allegations are framed on the basis
of loose sheets/ documents seized during
search operation which did not belong to them
and there is no concrete evidence to
substantiate the charge of clandestine removal.
The loose sheets were seized from the trading
firm and they do not relate to the business of
the appellant, who is a manufacturer of
excisable goods.
ii. The allegation of clandestine removal has not
been corroborated to establish that the contents
of the loose sheets are the actual business
transaction of the manufacturing company. It is
well settled in law that no loose sheets can be
considered as evidence over the statutory
records, books of accounts unless its maker is
identified and examined and the purposes for
which it is made are known and the contents of
such loose sheets are corroborated. In support
of this argument, they relied upon the following
decisions:
(a) Union of India Vs. M.S.S. Foods Products Ltd.[2011
(264) E.L.T. 165(M.P.)]
(b) Commr. of C.Ex. Vs. Lord's Chemicals Ltd.[2010(258)
E.L.T. 48(Cal.)]
iii. The Statement of Shri Agrawal is in very general
terms not specific to each of the loose sheets,
each of the transactions, purpose for which it
was made and by whom it was made and at
whose instructions. He also did neither state the
facts verifying the correctness or otherwise of
each loose sheet. It was humanly not possible
Page 5 of 19
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for him to verify each of the more than 5000
pages shown to him in the limited time when he
was under the influence of sleep. Also,
Shri Agrawal was under the treatment of acute
depression and advised to sleep at least eight
hours daily.
iv. In his statement Shri Agrawal never stated that
the loose sheets are the testimony of the
clandestine activities.
v. In the facts and circumstances of this case, the
burden is on the Department to bring home the
charge of clandestine removal with positive,
tangible, cogent and unimpeachable evidences
that the excess purchase, production and
clearances as appearing in the loose sheets
relates to actual business transactions of the
appellant. In this regard, the appellant relied
upon the decision of Commissioner of C.Ex.,
Patna Vs. Universal Polythene Industries
reported in 2011(270) E.L.T. 168(Pat.) in
support of their contention that in case of
reporting of higher production in the balance
sheet vis a vis the RT-12, the balance sheet
would prevail over the RT-12 returns.
vi. No demands can be confirmed or penalties
levied upon the appellants unless the allegations
are proved beyond reasonable doubt by cogent,
affirmative, tangible and unimpeachable
evidences
vii. In the instant case, there is neither any
confession of the guilt on record nor there is any
corroborative evidence brought on record to
prove the allegations. There is no circumstantial
Page 6 of 19
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evidence of conclusive nature based on proved
facts. The charge of clandestine removal is
entirely based on 'loose sheets' and statement
dated 26-02-2009 of Shri Agarawal. There is not
a single material brought on record to
corroborate the contents of the loose sheets and
the charge of clandestine removal.
viii. The documentary evidences must be proved by
other primary or secondary documentary
evidences. Oral statements being secondary
evidence cannot prevail over documentary
evidences which are primary evidences and in
case of conflict between the documentary
evidences and oral evidence, the documentary
evidences shall prevail. In the instant case there
is absolutely no corroborations of the loose
sheets in material particulars, therefore, the
contents of books of accounts, statutory records
cannot be rejected.
ix. Their installed capacity was only 6000 TPA as
certified by the Project Manager, District
Industries Centre whereas as per the allegations
in the Notice, they have manufactured
14026.792 MTs of re-rolled products in a period
of 11 months during 24.03.208 to 24.02.09
which is 270% of the installed capacity. In the
above background of the case the charges of
clandestine removal is quite improbable and
entirely based on assumptions and
presumptions.
x. In the course of search operations in the
factory, neither excess nor shortage of raw
materials or finished goods were found nor flow
back of funds, etc., were noticed for such large
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scale clandestine transactions, as alleged. No
unaccounted cash or any parallel invoice was
found during search and seizure operations. Not
a single incriminating document was found in
the factory as clearly admitted in the Show
Cause Notice. Therefore, the charges of
clandestine purchase, production and clearance
are quite improbable. In support of this
contention, the appellant relied on the decision
in the case of Ruby Chlorates (P) Ltd. v.
Commissioner of C. Ex., Trichy, [2006 (204)
E.L.T. 607 (Tri.-Chennai)].
xi. The documents relied upon are vague, unsigned
and of unknown authorship. Such documents
cannot be termed affirmative and cogent
evidence required to prove the charges of quasi
criminal character. In support of this contention,
they relied upon the following decisions:
(a) Sunder Brothers vs. Commr. of C.Ex. [2007
(217)E.L.T 561 (Tri.)]
(b) Shabroc Chemicals Vs. Commr. of C.Ex. [2002 (149)
E.L.T. 1020(Tri.-Del.)]
(c) Kedarnath Silk Mills vs. Commr. of C.Ex. [2006(195)
E.L.T. 58(Tri.-Bang.)]
(d) Chanda Tubes & Metals P. Ltd vs. Commr. of C.Ex.
[2006(193) E.L.T. 48(Tri.)]
(e) K.Harinath Gupta vs. Commr. of C.Ex. [1994(71)
E.L.T. 980(Tri.)]
(f) Rochees Watches Ltd vs. Commr. of C.Ex [2006(197)
E.L.T 2018 (Tri.)]
xii. The documents relied upon are of uncertain
authorship who are neither identified nor
examined. Hence, unless the maker of the
Page 8 of 19
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documents are identified and examined, no
adverse inference could be drawn on its basis
against the appellant. In this regard, they
placed reliance on the following case laws:
(a) DCW Limited vs. State of Tamil Nadu[(1999) 113 STC
5]
(b) Commr. of C.Ex. vs. Raman Ispat P. Ltd.
[2000(121)E.L.T. 46(Tri.)]
(c) Dalmiya Vinyls P. Ltd vs. Commr. of C.Ex. [2005 (69)
RLT 342(Tri.)]
(d) Rochees Watches Ltd vs. Commr. of C.Ex. [2006(197)
E.L.T 218(Tri.)]
xiii. The allegation of clandestine removal has not
been corroborated by acceptance of buyers,
transporters, flow back of funds,
excess/shortage of raw materials or finished
goods, extra use of labour/electricity etc. in
support of this contention, they relied upon the
following decisions:
(a) Essvee Polymers P. Ltd Vs. Commr. of C.Ex.
[2004(165) E.L.T. 291 (Tri.)]
(b) Commr. of C.Ex. vs. Laxmi Engineering Works
[2010(254) E.L.T. 205 (P& H)]
6.1. With respect to imposition of penalty on Shri
Amit Kumar Agrawal, Director of the appellant-
company, he made the following submissions: -
i. His statement on 26.02.2009 was recorded
between 09.30 pm on 26.02.2009 to 2am on
27.02.2009 by showing 5000 pages of loose
sheets after conclusion of search operation at
9.15 pm on 26.02.2009.
Page 9 of 19
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ii. The statement was in general terms as
correctness of each and every transaction
appearing in loose sheets was not verified since
he was suffering from acute depression.
iii. When the exact nature of offences has not been
specified, imposition of penalty is not
sustainable. In the absence of evidence to show
specific roles played by a Director and his active
involvement, such Director cannot be visited
with penalty under Rule 26.
iv. Reliance has been placed upon the following
decisions: -
(a) Amrit foods vs Commr. of C.Ex., U.P. [2005 (190)
E.L.T. 443 (S.C.)]
(b) Commr. of Cus., ICD v. Cyber Express P. Ltd. [2004
(172) E.L.T. 388 (Tri. - Del.)]
6.2. He further submits that on the same set of facts,
proceedings initiated against the appellant was
dropped by the Tribunal in the case of M/s. Kalinga
Sponge Iron Ltd., Shri Sish Pal Solanki and Shri Amit
Kumar Agarwal v. Commissioner of Central Excise,
Bhubaneswar-II [Final Order Nos. FO/A/77139-
77141/2018 dated 14.12.2018 in Appeal Nos. Ex/41-
43/2012 - CESTAT, Kolkata].
6.3. Accordingly, he prayed for setting aside the
penalty imposed on him in the impugned order.
7. The Ld. Authorized Representative for the
Revenue submits that the ld. adjudicating authority
has considered the submissions made by the appellant
and dropped part of the demand; the appellant could
not give any valid document for the manufacture and
clearance of the remaining quantity of 1365.257 MT
Page 10 of 19
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and accordingly the demand has been confirmed only
on the quantity which was not explained by the
appellant. Accordingly, he supported the impugned
order.
8. Heard both sides and perused the appeal
documents.
9. We observe that the issue involved in the
present appeals is regarding suppression of
production and clandestine removal of excisable
goods without payment of duty. The entire demand
has been confirmed on the basis of certain loose
sheets/documents recovered from the trading firm
located in the same premises where the appellant-
company is also located and the statements recorded
from the Director Shri Amit Agrawal.
9.1. We observe that the Show Cause Notice was
issued demanding Central Excise Duty amounting to
Rs.3,39,76,566/- on the basis of documents / loose
sheets recovered from the trading firm viz. M/s.
Bajrangbali Steel Industries Pvt. Ltd. Upon
adjudication, the Ld. Commissioner has dropped the
demand of Rs.2,83,23,975/- and confirmed the
demand of Rs.56,52,591/- along with interest and
imposed equal amount of duty as penalty. A penalty
of Rs.1,00,000/- has also been imposed on Shri Amit
Kumar Agrawal, Director of the appellant-company.
9.2. In their defence, the appellant submits that the
installed capacity of their manufacturing unit is only
6,000 M.T. per annum whereas the Show Cause
Notice has alleged that the appellant has produced
14026.792 M.T. during the period from 24.03.2008 to
24.02.2009; the Department has not adduced any
evidence regarding expansion of the installed capacity
Page 11 of 19
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of the unit during the material period; the Department
has also not produced any documentary evidence
regarding excess consumption of electricity, raw
material and labour, to substantiate the excess
production which is alleged to have been clandestinely
removed by the appellant without payment of duty.
10. We observe that the Ld. Commissioner has
accepted the above argument put forth by the
appellant and reduced the demand raised in the Show
Cause Notice and confirmed only Rs.56,52,591/-. The
Ld. Commissioner's observation in the impugned
order is reproduced below: -
"6.5 I find that the demand has been based on the
private register and some loose hand written chits
seized from the office of the Director at Lal
Building,Kachery Road, Rourkela. From the copies of
the documents seized and appended with the Show
Cause Notice details of the purported sales effected
from 01/01/2009 to 31/01/2009 and 01/02/2009 to
24/02/2009 taken from the Sales Register with
details of the Party Name, Lorry No. and weight of
the materials has been mentioned whereas for the
period from 24/03/2008 to 31/12/2008, purported
Sales figure has been notionally arrived from the
loose chits seized from the office. The
Assessee/Noticee defended the case that the sales
figure are inclusive of both their firms i.e. M/s
Bajrangbali Re-rollers (P) Ltd. and M/s Bajrangbali
Steel Industries (P) Ltd. The authorities have only
taken the figures of sale of M/s Bajrangbali Re-
rollers (P) Ltd. into consideration and left the sale
figure of M/s Bajrangbali Steel Industries (P) Ltd.
high and dry. They have submitted the invoices
issued by M/s Bajrangbali Steel Industries (P) Ltd.,
their other firm, actual sales ledger, Bank
statements, VAT Returns, Central Excise Invoices,
RG23D Register(in respect of Sales under Dealers
Invoice as per Cenvat Credit Rules 2004) to support
their stand. I find that the defense of the Party is
acceptable and fully corroborated. I find that the
noticee has produced evidences/invoices to
substantiate their stand that a quantity of 7284.395
MT had been cleared by M/s. Bajrangbali Steel
Industries (P) Ltd. during the material period which
Page 12 of 19
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was not considered by the Department in the Show
Cause Notice for allegation of clandestine removal.
The Sale statement from 01/01/2009 to 24/02/2009
as found in Annexure 4A to the Show Cause Notice
and sales invoices issued by M/s Bajrangbali Steel
Industries (P) Ltd. as produced completely matches.
...
.
.
.
6.6 I find that the most of the sales details as above are also reflected in the RG23D Register and invoices issued under Cenvat Credit Rules. The sales figures are also reflected in the Sales Ledgers, Bank Statements and periodical Returns filed with the State VAT Authorities and Central Excise Department. From the above facts it is clear that the demand has been raised without taking into consideration the sale particulars which have appeared in the combined sales register. Therefore, the sale made by both their firms has to be taken into consideration while computing the demand for clandestine removal.
6.7 I find that the Department has computed the clandestine clearances on the data based on the purported production figures based on some chits showing payments to different persons which were seized by the officers during the search seizure operations for the period from 24.03.2008 to 31.12.2008 as reflected in Annexure 1 to the Show Cause Notice. Sample copies of the seized documents at 3A/2, 3A/3, 3A/10, 3A/18 and their corresponding sheets found on the reverse of the documents are produced below:
.
.
.
.
.
6.9 I find the seized chits were purported expenses made to different persons / transporters including the aforesaid three persons. The rough calculation has been made in the reverse of the individual chits to arrive at the purported expenditure figures.Page 13 of 19
Appeal No(s).: E/75434 & 75435/2017-DB Neither the sale chits could tell anything about the actual quantity of production or clearances. Further, the author of the hand written chits has not been identified and his statements recorded to find out the truth. No attempt has been made to identify these three aforesaid persons purported to have been engaged as contractors for production and dispatch of goods and their statements recorded. Actual payment particulars made to these persons has not been collected or any Ledger or Bank Statement to that effect have been collected or adduced as evidences. No contract papers about the engagement of the purported contractors has been collected or produced. Corroborating statements from other persons of the factory like Production Manager/ Factory Manager, authorized signatory and other persons were also not taken. In absence of other evidences, the seized hand written chits cannot be the basis for raising huge amount of demand on clandestine production and removal. These documents can at best be held as raising doubts indicating further investigation. No such investigation has been undertaken or any evidence has been produced. Hon'ble Supreme Court in the case of J.Naidu vs. State of Maharashtra reported in 1983(13)ELT1611 (SC) inter alia held that suspicion however grave cannot take the place of proof. Similarly, in the case of State of Kerala vs. M.M. Mathew and others reported in 1978 (42) STC-348 (SC) Hon'ble Apex Court has held that strong suspicion, strange co-incidences and grave doubts cannot take the place of legal proof."
10.1. From the above findings in the impugned order, we observe that the Ld. Commissioner has given a clear-cut finding and held that the seized handwritten chits cannot be the basis for demanding duty on the allegation of clandestine production and clearance. Accordingly, the Ld. Commissioner has dropped the demand of Rs.2,83,23,975/-.
10.2. However, in spite of the above findings that the loose sheets cannot be relied upon to confirm the demands, the Ld. Commissioner has confirmed Central Excise duty of Rs. 56,52,591/- on the basis of Page 14 of 19 Appeal No(s).: E/75434 & 75435/2017-DB the same documents. The findings of the Ld. Commissioner in the impugned order for confirmation of the demand of Rs.56,52,591/- is reproduced below:-
"6.15 1 find that the assessee/noticee could not fully substantiate with corroborative evidences the entire quantity found excess cleared without payment of duty. I find that in the SCN it has been alleged that during the material period the assessee/noticee has cleared 14026.790 MTs of finished products out of which only 5377.140 MTs were cleared on payment of duty as per DSA/ER-1 Returns filed by them. Now it has been found that a quantity of 7284.395 MTs were cleared by M/s. Bajrangbali Steel Industries (P) Ltd., their trading firm which were duly accounted for as per invoices, VAT Returns, RG23D Register as discussed in Para 6.5 supra. Thus, the total accounted for clearances comes to 12661.535 MT (5377.140+7284.395) which leaves a quantity of 1365.257 MT(14026.79-12661.535) which has not been duly accounted for and has been cleared clandestinely without payment of duty. The detailed revised duty calculation is given below in the table. It has been found that a total quantity of clandestine production and clearance to the tune of 1365.257 MTs were found to have been not substantiated with evidences on which the noticee is liable to pay duty of Rs.56,52,591/- along with interest. The Director of the unit has also admitted in his statement that where there no invoices were found and corroborated might have been cleared without payment of duty and he has agreed to pay the differential duty. They have also deposited Rs.25,00,000/-(Rupees Twenty five Lakhs) only at the time of investigation towards their potential duty liability. Accordingly, the entire demand is to be re- calculated after taking into account the sales figures made by M/s. Bajrangbali Steel Industries Pvt....."
11. From the above finding, we observe that the Ld. Commissioner has relied upon the details available in the loose sheets only to confirm the demand, contrary to his own findings in paragraph 6.9 of the impugned order, as reproduced hereinabove.
Page 15 of 19Appeal No(s).: E/75434 & 75435/2017-DB 11.1. From the submissions of the appellant, we observe that the installed capacity of the unit was 6,000 M.T. only. As per the records, the appellant has produced 5377.140 M.T. of the goods and cleared the same on payment of duty. There is no evidence brought on record to show any increase in the installed capacity of the unit during the material period. There is no evidence available regarding excess consumption of electricity or procurement of raw material or utilization of labour to produce excess goods clandestinely. If the excess production of 1365.257 M.T. is added, then that would amount to production of 6742.397 M.T. (5377.140 M.T. + 1365.257 M.T.) by the appellant during a period of 11 months, whereas the installed capacity of the unit itself is only 6,000 M.T. per annum. The adjudicating authority has not given any finding as to how it is possible to produce excess quantity beyond the installed capacity. Thus, we find that the demand has been confirmed much beyond the installed capacity of the unit without adducing any evidence in support of clandestine manufacture and clearance.
11.2. We observe that the entire allegation is based on certain loose sheets / documents recovered during the course of search. The clandestine removal has not been corroborated with any other evidence. The burden of proving clandestine removal with positive, tangible and cogent evidence is on the Department, to establish that the appellant has manufactured and clandestinely cleared the goods.
11.3. For the purpose of establishing clandestine clearance, there must be documentary evidence, to support the said allegation. The entire demand in this case has been made only on the basis of some loose Page 16 of 19 Appeal No(s).: E/75434 & 75435/2017-DB sheets and the statement of Shri Amit Kumar Agrawal. Oral statements being secondary evidence, cannot prevail over documentary evidences. We observe that there is no shortage or excess of raw material or finished goods found at the time of search in the factory of the appellant. No parallel invoice was found during the course of search operations. There is no verification done at the customer's end regarding receipt of the clandestinely manufactured and cleared goods.In the absence of any such evidence, the allegation of clandestine removal cannot be substantiated only on the ground of assumptions and presumptions. We find that this view has been taken in the case of Hardip Singh v. State of Punjab [(2008) 8 SCC 557].
11.4. We also observe that the allegation of clandestine removal has not been corroborated by acceptance of buyers, transporters, flowback of funds, shortage/excess of raw materials or finished goods, extra use of labour/electricity. In the absence of any such evidence, clandestine removal cannot be substantiated.
11.5. In the entire records of proceedings, there is no evidence to indicate that there was clandestine manufacturing. There is no independent tangible evidence on record of any clandestine purchases or receipt of the raw materials required for the manufacturing of the alleged quantity of finished goods for its clandestine removal from the factory. In the entire notice and the order, there is no satisfactory and reliable independent evidence as regards the unaccounted manufacture and/or receipt of the huge quantities of raw materials. The quantities of the clandestinely manufactured goods dispatched from Page 17 of 19 Appeal No(s).: E/75434 & 75435/2017-DB the factory would require some transportation arrangement for delivery from the factory.
11.6. There is also no cogent evidence of disproportionate and unaccounted receipt and consumption of the basic raw materials and packing material, required for manufacturing alleged quantity of unaccounted finished goods. We do not find any tangible proof of unauthorized payment for procuring such unaccounted raw material and packing material. We do not find cogent evidence of disproportionate power consumption, capacity utilization and labour employed, or any cogent evidence of clandestine manufacture of unaccounted quantity alleged as clandestinely removed. We find that unaccounted production in the factory of the appellant-company has not been established.
11.7. In the case of Ruby Chlorates (P) Ltd. v. Commissioner of C. Ex., Trichy [2006 (204) E.L.T. 607 (Tri.- Chennai)], it was held as under:-
"21..... The settled legal position is that when several raw materials are involved, when a case of clandestine production and clearance is built on clandestine use of raw materials, the same should be proven with reference to unaccounted use of all such major raw materials".
"22. In a case of clandestine removal the Department should produce positive evidence to establish the same. In the absence of corroborative evidence, a finding cannot be based on the contents of loose chits of uncertain authorship. Department has not produced evidence of use of inputs to prove that there was manufacture of unaccounted finished product...."Page 18 of 19
Appeal No(s).: E/75434 & 75435/2017-DB 11.8. Thus, we observe that there is no corroborative evidence brought on record to substantiate the allegation of clandestine manufacture and clearance of finished goods by the appellant. In the absence of such corroborative evidence, the demand of central excise duty confirmed in the impugned order is not sustainable. In view of the above discussions and the decisions cited above, we hold that the demand of Rs.56,52,591/- confirmed in the impugned order, on the basis of the loose sheets/documents found in the trading firm is not sustainable. and hence we set aside the same.
12. As the demand itself is not sustainable, the question of demanding interest and imposing penalty on the appellant does not arise.
13. Regarding the penalty imposed on Shri Amit Agrawal, Director, we observe that a Statement dated 26.02.2009 was recorded from him by showing 5000 pages of loose sheets after conclusion of search operation at 9.15 pm on 26.02.2009. and it cannot be considered as a certificate of correctness of each and every transaction appearing in loose sheets. Hence, the statement given by him cannot be considered as an admission of his guilt. Since the offence alleged to have been committed by the appellant company is not established, we hold that imposition of penalty on the basis of the same allegation is not sustainable. In the absence of any evidence to show specific role played by a Director and his active involvement, in the commission of the offence, penalty cannot be imposed under Rule 26 of the Central Excise Rules, 2002.
Page 19 of 19Appeal No(s).: E/75434 & 75435/2017-DB 13.1. In view of the above discussions, the allegations of clandestine removal and clearance of goods without payment of duty has not been established. Accordingly, we hold that the role of the Director in the alleged clandestine manufacture and clearance of the goods is not established. Thus, we hold that no penalty is imposable on him under Rule 26 of the Central Excise Rules, 2002. Accordingly, we set aside the same.
14. In the result, we set aside the impugned order and allow the appeals filed by both the appellants.
(Order pronounced in the open court on 07.05.2024) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd