Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise, ... vs M/S W.S. Industries India Ltd. on 10 August, 2001
ORDER
Shri S.L. Peeran
1. This is a Revenue appeal against order-in-original No.21/96 dated 22.3.1996 by which he has confirmed duty demand to the extent of Rs.2,25,442/- in respect of the removal of goods unauthorisedly found by the Department on investigation of the case in terms of Rule 9(2) read with the proviso of Section 11A(1) of CE Act. The ld. Commissioner has also imposed a penalty of Rs.25,000/- under Rule 173Q. The assessee is not aggrieved with this position of the order, however, the Revenue is aggrieved with regard to the Commissioner dropping the recovery of the demand raised in the show cause notice to an extent of Rs.30,09,772/- on account of lack of evidence produce by Department.
The Commissioner in para 10 & 11 has noted in below:-
"The shortage of goods has also not been corroborated by any evidence of clandestine removal; of transport of the goods; receipt of goods by the buyers of payment for the receipt of non-duty paid goods, even though the goods are custom built; majority buyers are Government undertakings; the payments are received only through cheques and the type and the nature of goods in such that they not being sold to all the sundry and in the open market. Similarly, there is no evidence of excess procurement of raw materials for the manufacture of the goods found in excess. the decision of the Tribunal in the case of M/s. Associated Cylinder Industries 1990 (48) ELT 460 (T) relied upon by WSI, that difference between RGI balance and physical stock alone is not sufficient proof of clandestine removal; direct physical or circumstantial evidence would be necessary to show clandestine removal is squarely applicable in the case.
In view of the above, I am inclined to hold that the stock taking was not conducted property; the allegation of clandestine removal or of shortage/excess are not proved and no duty is demandable on this ground."
2. Ld. DR Shri V. Ramakrishna took us through the records and the grounds taken up by the Revenue and submits that the Ld. Commissioner was not justified in dropping the proceeding as in the revenue liability is very high. He points out that the place from where a particular stock was ascertained was also indicated in the assessee's production sheet. Ld.DR points out to para 12.1 of grounds of appeal and submits that it was possible for the officers to visit the factory to know the details of stock of all styles without ascertaining the stock as was lying in the factory. It is stated in the grounds that the said worksheet were also endorsed by the representative of the assessee and it is verifiable form the mahazar. Therefore, ld. Commissioner should not have rejected these working sheets which were admitted documents and it was sufficient evidence for the purpose of upholding the charge of clandestine removal. He submits that the finding recorded by the Commissioner that the Department did not produce evidence is not correct as the statement and working sheets itself indicate about shortage and the shortage had not been explained by the assessee and they have not discharged their burden. The Revenue had discharged their initial burden and therefore the demands have to be confirmed. Ld. Counsel referring to the para 10 & 11 extracted above contends that the burden to prove that there was manufacture and clandestine removal was on the Revenue. It is his submissions that there is not a single evidence of recovery of clandestinely removed goods or with regard to receipt of inputs used in the factory for manufacture of final product and sale to any customer. There were not invoice to show that there was sale of goods clandestinely and without payment of duty. He submits that the appellant were manufacturing and supplying goods to Govt. undertakings and there was no possibility of clandestine removal in the matter. He submits that the Commissioner was justified in dropping the case for lack of evidence and has given cogent reasons. The prayer of Revenue for confirming the demands cannot be accepted in the light of Tribunal's judgment reported in 1999 (37) RLT 845 in which the Tribunal went through the entire case law and have clearly laid down the law as to when the demands can be confirmed in clandestine removal of goods. The Tribunal has clearly held that mere seizure of records has no evidentiary value. There has to be evidence of the receipt of raw materials, its consumption, of sale clandestinely by the assessee. He submits that as materials evidence was not available, the Ld. Commission was justified in dropping the proceeding and the same is as per the law. He also refers to the judgment rendered in the case of Krishna Bottlers as reported in 2001 (44) RLT 775 wherein also it has been clearly held that no demand can be confirmed based on assumption and presumption. In this regard the judgment of Hon'ble Supreme Court in the case of Oudh Sugar Ltd. as reported in 1978 ELT 3(172) is relied.
3. We have carefully considered the submissions and pursued the records. On our examination of records, we notice that the Department has not produced any material evidence in the form of assessee purchasing raw materials utilising the same for manufacturing of final produce and selling it clandestinely to large number of purchasers. In the absence of this vital evidence the assumption cannot be drawn that just because when there was shortage of raw materials it leads to the conclusion of clandestine removal of goods. The Ld. Commissioner has correctly applied the test as laid down in the case of Oudh Sugar Mills (Supra) which has been followed in large number of judgments. The ratio of Krishna Bottling Pvt. Ltd. (Supra) relied by the Counsel clearly applies to the facts of the case. The dropping of the demands by the Ld. Commissioner for lack of evidence is legal and proper and the demands cannot be confirmed by on the basis of mere working sheets and mahazar statements recorded by the investigating officers. There is no merit in this appeal and hence the same is rejected.
(Pronounced & dictated in open court)