Custom, Excise & Service Tax Tribunal
Wilson Paper Mills P Ltd vs Rajkot on 16 September, 2020
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
Excise Appeal No.11179 of 2016
(Arising out of OIO-RAJ-EXCUS-000-PR-COM-26-15-16 dated 15/03/2016 passed by
Commissioner of Central Excise-RAJKOT)
Wilson Paper Mills P Ltd .........Appellant
Lilapar Road, Near Geb Sub Station,
Lilapar, Morbi,
Gujarat
VERSUS
C.C.E. & S.T.-Rajkot .........Respondent
Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat-360001 WITH ii. Excise Appeal No. 11176 of 2016 (Girishbhai Chaturbhai Detroja) iii. Excise Appeal No. 11177 of 2016 (Baldevbhai Devjibhai Nayakpara) iv. Excise Appeal No. 11190 of 2016 (Jagdishbhai Mansukhbhai Chapani) v. Excise Appeal No. 11191 of 2016 (Bharatkumar Bhagwanjibhai Savsani) vi. Excise Appeal No. 11192 of 2016 (Hirjibhai Bhagwanjibhai Savsani) vii. Excise Appeal No. 11193 of 2016 (Bipin Vallabhbhai Bhimani) viii.Excise Appeal No. 11194 of 2016 (Girishbhai Vasantbhai Patel) ix. Excise Appeal No. 11195 of 2016 (Hasmukhbhai Bharatbhai Jiyani) x. Excise Appeal No. 11196 of 2016 (Prayag Bhavanbhai Varmora) xi. Excise Appeal No. 11197 of 2016 (Rajesh Chimanlal Mehta) xii. Excise Appeal No. 11198 of 2016 (Ramkishor Gigaram Mittal) xiii. Excise Appeal No. 11199 of 2016 (Laxminarayan Uttamchand Arora) xiv. Excise Appeal No. 11200 of 2016 (Pratapbhai Bhikhabhai Dholaria) xv. Excise Appeal No. 11201 of 2016 (Mohammadali Kasambhai Visani) xvi. Excise Appeal No. 11202 of 2016 (Pramit Pravinbhai Patel)
2|Page E/11176,11177,11179,11190- 11206/2016 xvii. Excise Appeal No. 11203 of 2016 (Maheshbhai Dhansukhlal Badlawala) xviii. Excise Appeal No. 11204 of 2016 (Harshil Nileshbhai Mehta) xix. Excise Appeal No. 11205 of 2016 (Harjibhai Bhagwanjibhai Savsani) xx. Excise Appeal No. 11206 of 2016 (Dhaval Vashantrai Dudherjiya) APPEARANCE:
Sh. Devashish K Trivedi, Advocate for the Appellant Sh. H K Jain, Assistant Commissioner (Authorised representative) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No. A/11166-11185/2020 DATE OF HEARING: 25.08.2020 DATE OF DECISION: 16.09.2020 RAMESH NAIR The brief facts of the case are that the appellant M/S. WILSON PAPER MILLS PVT. LTD. is engaged in manufacture of Kraft paper falling under Tariff Heading 4804. They are registered with Central Excise Department for manufacture of excisable goods.
2. Based on intelligence, a search was carried out at the factory premises of M/S. GAJANAND PACKAGING, Morbi on 17.7.2012 and during the course of investigation and scrutiny of data it appeared to Investigating Officers that noticee no. 1 who were engaged in manufacture of Kraft paper were removing their excisable goods without issuing invoices and without payment of excise duty and thus indulged in evasion of Central Excise Duty by clearing/removing their goods clandestinely. Four dispatch slips were recovered which were kept in file which is marked as Annexure 'A' to the Panchnama dated 17/7/2012. A follow up raid was conducted at the factory of M/S. WILSON PAPER MILLS PVT. LTD. on 20-21/7/2012. Two delivery challans were recovered during search. The Investigating Officers conducted the Stock taking and recovered various documents which they found that
a) There was alleged shortage of finished goods i.e. as per daily stock account 87,845 KGs. of Kraft paper was recorded whereas physical stock was found as 65,364 KGs. Therefore, there was shortage of 22,481 KGs. of kraft paper.
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b) Four dispatch slips claimed to have been recovered from M/s. Gajanand Packaging, Morbi.
c) Two delivery challans claimed to have been recovered from factory of M/s. Wilson Paper Mill Pvt. Ltd &
d) Print outs claimed to have been obtained from computer CPU available at residence to one of the directors M/s. Wilson Paper Mills Pvt. Ltd.
2.1 After retrieving the same with the help of Computer forensic expert, a Show Cause Notice No.V.48/AR-MORBI-DIV.II./144/COMMR./2013 dated 02/07/2013 was issued upon M/s. Wilson Paper Mills Pvt. Ltd proposing demand of Rs. 1,15,72,496/- along with interest and also proposing imposition of penalty. This demand was in regard to alleged clandestine clearance of 1,41,72,571 KGs. of Kraft paper valued at Rs. 24,71,33,466/- during the period from April 2009 to July 2012. The Show Cause Notice also placed heavy reliance on the statements of various people. Apart from M/s. Wilson Paper Mills Pvt. Ltd personal penalties were also proposed to be imposed on various persons including two directors of M/s. Wilson Paper Mills Pvt. Ltd and some buyers who are alleged to have purchased the goods clandestinely cleared from where M/s. Wilson Paper Mills Pvt. Ltd had purchased Kraft paper for the purpose of trading and also alleged suppliers of Kraft papers. The said Show Cause Notice was confirmed vide Order-In- Original No. RAJ-EXCUS-000-HPR.COM-26-15-16 dated 15/3/2016.
3. Being aggrieved by the said Order-In-Original appellants filed the present appeal.
4. Shri D.K. Trivedi, Learned Counsel appearing on behalf of the appellants submits that apart from the print outs claimed to have been obtained from a computer available at residence of director of M/s. Wilson Paper Mills Pvt. Ltd. after reinstallation of deleted data in the CPU by computer forensic experts, the only material available with the department to support allegation of such huge clandestine clearance are.
a) Two delivery challans recovered from the premises of M/s. Wilson Paper Mills Pvt. Ltd on premises of M/s. Wilson Paper Mills Pvt. Ltd on 20-21/07/2012
b) Four dispatch slips recovered from factory of M/s. Gajanand Packaging, Morbi on 17/07/2012.
c) Payment of Rs. 36,600/- in cash towards alleged clandestine clearances of M/s. Wilson Paper Mills Pvt. Ltd from a customer in Rajula, Gujarat.
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d) Shortage of physical quantity of 22,481 KGs.. of kraft paper, when stock taking was carried out and compared with Daily Stock Register.
4.1 He submits that such huge demand could not be supported by aforesaid four things. Without prejudice to the fact that there was no clandestine clearance at all, it is submitted that if two delivery challans and four dispatch slips, cash receipt of Rs.36,000/- and shortage of physical quantity of 22,481 KGs.. as alleged is taken into consideration. At the best if at all, quantity of kraft paper as mentioned in the said two delivery challans, four dispatch slips would be 48,813 KGs. valued at Rs.9,24,110/- and it would attract Central Excise Duty along with Cesses valued at Rs. 58,302/- only. However, by no stretch of imagination such huge demand could be supported. He submits that the statements are not admissible in evidence and could not be relied as they are full of confliction. As far as statements of Rajesh P. Detroja billing clerk and Pritesh P. Vadhadiya, Loading supervisor both dated 20/7/2012 are concerned it is important to note that panchnama dated 20-21/07/2012 states that it started at 9:30 PM of 20/7/2012 and completed on 7:35 AM on 21/7/2012. However, the panchnama did not make any mention about recording of statements of the Billing Clerk and Loading Supervisor. It is not known as to when were the statements recorded.
4.2 The statements of Director are also far from truth, they are not supported by any corroborative evidence. Signatures were obtained under pressure, threat and duress without even allowing the director to read the contents of the statements which were prepared by officers themselves. The copies of the statements were provided only along with Show Cause Notice and not prior thereto therefore, it is not possible to retract statements before the issuance of Show Cause Notice. As soon as copies were provided along with Show Cause Notice, on the first available opportunity i.e. while filing reply to Show Cause Notice the appellant herein had explained in detail before the Adjudicating Authority that statements were not recorded in free and fair atmosphere. After the statements were prepared by the Officers as per their own requirements, signatures of the persons who are claimed to have made statements were obtained under pressure, threat and duress. All the statements are stereotype and tailor made. In all these statements, authors were shown panchnama dated 20-21/7/2012 and after reading the same all of them agreed. It is not possible as no one can agree things pertaining to others. A person who is not present at the scene could not verify the same, all the parties were shown voluminous print outs placed in three files which pertain to alleged clearances made to other parties, same is
5|Page E/11176,11177,11179,11190- 11206/2016 admitted by all of them. It is important to note that none of the buyers had admitted that goods were manufactured by M/S. WILSON PAPER MILLS PVT. LTD. not a single incriminating document was recovered from any of the premises which were searched subsequent to search at premises of M/s. GAJANAND PACKAGING, Morbi i.e. a. Royal Industries, Veraval on 30/08/2012.
b. Packwell Entryprise, Veraval on 30/08/2012 c. Multipack Industries, Veraval on 27/09/2012 d. Empee Kraft, Rajkot on 27/09/2012 e. Divyang Paper Mills Pvt. Ltd, Morbi on 12/10/2012
5. Not a single incriminating document was recovered from any of the alleged buyers of alleged clandestinely cleared goods, whose statements are sought to be relied upon. He submits that certain depositions are contradictory in the statements given by various persons therefore such statements which are full of contradictions are not relied upon in evidence when not supported by concrete, tangible, corroborative evidence. This finds support from following judgments:
SULEKHRAM STEELS PVT. LTD. vs. COMMISSIONER OF C.EX., AHMEDABAD-II- 2011 (273) E.L.T. 140 (Tri.Ahmd.) CUSTOMS Versus MOHAMMAD BAGOUR - 2012 (275) E.L.T. 513 (Del.) COMMISSIONER OF C.EX., KANPUR Versus MANOJ KUMAR PANI- 2010 (260) E.L.T. 92 (Tri.Del.) COMMISSIONER OF CENTRAL EXCISE, RAIPUR V/S. ANIL AGRAWAL-
2013 (287) ELT 489 (TRI-DEL).
5.1 He also invited our attention to the judgments of Hon'ble Gujarat High Court in case of COMMISSIONER OF CENTRAL EXCISE Vs. SAAKEEN ALLOYS PVT. LTD.- 2014 (308) ELT 655 (Guj.). He submits that the statements were recorded only in respect of seventeen customers, the statements of many more alleged customers were not recorded. This is also the reason that the allegation of clandestine removal would not sustain. He further submits that the entire demand was worked out on the basis of computer print out. It is not clear from Annexure 'A' to the panchnama that which CPU was seized and which files are containing said data. It is also mentioned that computer print outs taken from seized CPU and said three files contains different data than what is discussed in panchnama. The data of the computer was not retrieved/recovered in accordance with Section 36B (2). He submits that print outs could be admissible only when it is produced in computer during
6|Page E/11176,11177,11179,11190- 11206/2016 the period for which computer was used regularly to store/process information.
6. In the present case, it is not in dispute that to store/process information, the data is reconstructed from retrieved data. According to panchnama dated 20-21/07/2012 the case of the department is that data pertaining to clandestine clearance was first maintained in computer available at the factory of M/S. WILSON PAPER MILLS PVT. LTD. The said data was deleted and hard disc was changed, backup of said data was taken and it was stored in another CPU which was subsequently shifted to the house of director of M/S. WILSON PAPER MILLS PVT. LTD. The said backup data was also deleted from the said computer available at residence of director. According to the case of the department said deleted backup data was retrieved with the help of Computer Forensic Experts. It is submitted that Section 36B (2) did not permit retrieving of deleted backups. It is not the case as if original data was retrieved therefore, the printouts did not qualify as evidence as per Section 36B (2). It is his submissions that in the above situation computer printouts are not admissible in evidence as per Section 36B (2) which finds support from the following judgments:-
PREMIUM PACKAGING PVT. LTD. Versus COMMISSIONER OF C.EX., KANPUR- 2005 (184) E.L.T. (Tri.-Del.) 6.1 He also submits that the computer printouts did not bear name or logo of M/S. WILSON PAPER MILLS PVT. LTD. Though the CPU was brought from the residence of director but the director has studied only up to IX Std. in Gujarati Medium. It is not known who operated the computer. He submits that the recovered data related to transaction of M/S. WILSON PAPER MILLS PVT. LTD. entered in three different computers, two in cabin of Billing Clerk and one in chamber of Director. Panchnama dated 20-21/07/2012 states that Girishbhai has stated that ledger account of M/s. GAJANAND PACKAGING, Morbi was maintained in computer lying in his house which was deleted last week. If the case of the department is that Forensic Expert was called, the data was retrieved, the question is why said Forensic Expert was not asked to retrieve data from all three of his computers. He submits that CPU got from the residence of the director was not in regular use on the facts that as per printouts the data was available up to 28/3/2012 whereas invoices were regularly issued up till 30/6/2012 that means the computer was not used after 28/3/2012. He further submits that the investigation would obviously record relevant history of computer i.e.
1. Under whose control
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2. Who entered data.
3. On what basis such data was entered.
4. Who deleted data immediately after completion of search.
7. However, all these things are mentioned in the statements dated 1.7.2013 of Girishbhai (i.e. after nearly one year from panchnama dated 20- 21/07/2012) just to fill up the lacuna and clear the lapse. He submits that CPU was not seized in accordance with proviso of law as there is no mention about the Model, make, Configuration of CPU or its Hard Disc anywhere in the panchnama. Without establishing identity of hardware no reliance can be placed on alleged printouts. He submits that there was serious lacuna as regard computer forensic expert as how is Alpesh Vyas identified as Computer Forensic Expert? No certificate or authorization of Government approved agency was obtained. Panchnama does not disclose that Alpesh Vyas was informed of deleted program yet he is claimed to have recovered data. Software used by Alpesh Vyas is not identified. It is not confirmed that it was authentic and reliable software, neither panchnama nor printouts bear signature of Alpesh Vyas, no statement of Alpesh Vyas was recorded. He further submits that there is serious lapse on the part of the Investigating Officers regarding seizure of CPU. He pointed out following deficiencies:
No mention of place of residence of Girishbhai in the panchnama. No mention of location of computer inside the house. No mention of make and model of computer. No mention of how and who detached the CPU from the computer. No separate panchnama at the residence of Girishbhai was drawn. Residence of Girishbhai was visited/ searched without a search warrant. No running panchnama was made. Make, model and configuration of CPU was not mentioned. Before taking CPU from residence to factory, it was not sealed by the officers.
8. He further submits that the serious short comings in recording the panchnama as the same is not specifically clear and it did not contain vital requirements. He submits that in ambassador car i.e. GJ-3G-426, eight officers, two panchas and Girishbhai total 11 people are claimed to have gone to the residence of Girishbhai from the factory. It is impossible.
Therefore, the printouts cannot be relied as evidence. He submits that the panchnama has to be specifically clear otherwise the same cannot be relied upon. He takes support from the following judgments:-
HINDUSTAN MACHINES Versus COMMISSIONER OF CENTRAL EXICSE, DELHI- 2013 (294) E.L.T. 43 (Tri.Del.)
8|Page E/11176,11177,11179,11190- 11206/2016 8.1 He submits that their claim of the investigation that soft copies of delivery challan, packing slips were deleted and hard copies was destroyed, this is devoid of merits. It was claimed that hard disc was changed and old hard disc was thrown in pulp machine by Sumit Girishbhai Detroja, son of the director. This cannot be true because first of all it has a metal composition and it cannot be thrown in pulp machine which would damage the pulp machine. Secondly, no statement of Sumit Detroja was recorded.
He was not even summoned. He further submits that mere entry in private books could not be used as evidence but there has to be factors such as surreptitious receipt of raw material, utilization of such raw material in clandestine manufacture, manufacture with reference to installed capacity, vehicle/truck intercepted or even in the factory premises loaded with goods, entries of illicit clearance in security gates records, etc. Therefore, since there is no aforesaid evidence the charge of clandestine removal will not sustain. He takes support from the following judgments:-
AARYA FIBRES PVT. LTD. V/s. COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-II-2014 (311) ELT 529 (Tri.-Ahmd.) AMBICA CHEMICALS V/S. COMMISSIONER OF CETRAL EXCISE, CHENNAI, 2002 (148) ELT 101 (TRI-CHENNAI) R.A. CASTINGS PVT. LTD. V/S. COMMISSIONER OF CENTRAL EXCISE 2009 (237) ELT 674 (TRI-DELHI).
SAID JUDGMENT IS UPHELD BY HON'BLE HIGH COURT IN 2011 (269) ELT 337 (ALL) SAID JUDGMENT IS FURTHER UPHLED BY HON'BLE SUPREME COURT IN 2011 (269) ELT A108 (SC) PAN PARAG INDIA LTD. V/S. COMMISSIONER OF CENTRAL EXCISE, KANPUR - 2013 (291) ELT 81 (TRI-DELHI) RAMA SHYAMA PAPERS LIMITED V/S. COMMISSIONER OF CENTRAL EXICSE, LUCKNOW 2004 (168) ELT 494 (TRI-DELHI)
9. Shri Trivedi, Learned counsel further submits that the appellant M/S. WILSON PAPER MILLS PVT. LTD. was also actively involved in trading of kraft paper as such. It is on record the printouts clearly reveal that kraft papers were produced from various mills. The entries were made on the debit side.
Shri Girishbhai Detroja, Director of M/S. WILSON PAPER MILLS PVT. LTD. has stated in his statement that purchased craft papers was not brought to the factory premises but was directly traded and supplied to various buyers. He submits that as per the statement the appellant had purchased kraft paper for trading purpose from following paper mills:
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DIVYANG PAPER MILLS PVT. LTD., Morbi
ANAND PAPER MILLS, Morbi
SOMNATH PAPER MILLS, Morbi
RADHESHYAM PAPER MILLS, Morbi
MAGNUM PAPER MILLS, Morbi
9.1 The fact of trading of kraft paper was also confirmed by Shri
Arvindbhai J. Fultariya, director of M/s. DIVYANG PAPER MILLS PVT. LTD. even as per the case of the department itself that M/S. WILSON PAPER MILLS PVT. LTD. had purchased kraft paper from M/s. DIVYANG PAPER MILLS PVT. LTD. for the purpose of trading. He submits that major portion of the goods alleged to have been cleared without bill, without entering it in Daily Stock Account were traded goods therefore, on the traded goods no demand of Excise Duty can be raised. At the most there is a technical lapse of not taking permission/informing department about trading activity. Only for this technical lapse it cannot be presumed that the kraft paper traded by M/S. WILSON PAPER MILLS PVT. LTD. was manufactured by them. Despite noticing that the appellant M/S. WILSON PAPER MILLS PVT. LTD. involved in trading, the officers have not verified or asked any question to the director to bifurcate the quantity of trade and manufacture. The traded goods were purchased without invoice and were sold without invoice. Only due to this reason it is unlawful to consider entire quantity as manufactured quantity.
10. He further submits that the entire case is based only upon computer printouts. It was presumed that all the goods mentioned in the said printouts were not manufactured goods, Except printouts, the investigating officers have not produced any evidence regarding procurement of raw material, power consumption, man power, manufacturing capacity, transportation, receipt of cash towards the sale proceeds to alleged clandestine removal. He placed reliance upon the following judgments:-
HANS CASTINGS PRIVATE LIMITED V/S. COLECTOR OF CENTRAL EXSCISE, KANPUR 1998 (102) E.L.T. 139 (Tribunal) JAY LAMINART LIMITED v/S. COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD 1998 (102) E.L.T. 402 (Tribunal) PRABHAVATI SAHAKARI SOOT GIRINI LTD V/s. CCE 1990 (48) E.L.T. 522 (T) ROXY ENTERPRISES P. LTD. V/s. CCE 1992 (40) ECR 361 (T-NRB) V.K. THAMPY V/s. COLLECTOR OF CENTRAL EXCISE, KOCHI 1994 (69) E.L.T. 300 (Tribunal) 10 | P a g e E/11176,11177,11179,11190- 11206/2016
11. In absence of above evidence merely on the basis of computer printouts the clandestine manufacture and clearance cannot be established.
It is his submission that statements of seventeen buyers were arbitrarily taken, this seventeen buyers are said to have admitted the panchnama drawn at premises of M/s. Wilson. It is important because panchnama contains narration pertaining to M/s. Wilson and supplies made to various other parties. A particular person cannot admit and accept allegation and sale made to other parties. Not only that but after long time of more than three years nobody can accept and admit documents recovered from suppliers when no documents are recovered from their premises. Therefore it clearly shows that the statements were recorded as per the version of Investigating Officers not voluntarily given by the persons whose statements were recorded. He further submits that the raw material required for manufacture of Kraft paper is waste paper, paper board, resin, etc. The waste paper is generally procured from foreign country, the import of waste paper cannot be cleared without payment of Custom duty. Procurement of indigenous waste paper also not verified except sterotype statements of two very small scale suppliers, both of them also not having any shop or godown and supplying to 2/3 paper mills after purchasing from hawkers collecting paper waste, no figure of quantity procured is obtained. He submits that the private records such as private note book, diary, printout cannot be sufficient in absence of vital ingredients related to manufacture capacity, electricity consumption, man power, receipt of sale proceeds, etc. He takes support from the following judgments:-
K. HARINATH GUPTA V. CCE, HYDERABAD 1994 (71) ELT 980 (TRIBUNAL) T.M. INDUSTRIES V/s. COLLECTOR OF CENTRAL EXCISE 1993 (68) E.L.T. 807 (Tribunal) KRISHNA & CO. V/s. COLLECTOR OF CENTRAL EXCISE, JAIPUR 1998 (97) E.L.T. 74 (Tribunal) GANGA RUBBER INDUSTRIES V/s. CCE 1989 (39) E.L.T. 650 (T-NRB) GURPREET RUBBER INDUSTRIES V/s. COLLECTOR OF CENTRAL EXCISE, CHANDIGARH 1996 (82) E.L.T. 347 (Tribunal) KASHMIR VANASPATI (P) LTD. V/s. COLLECTOR OF CENTRAL EXCISE, 1989 (39) ELT 655 (Tribunal) ASHWIN VANASPATI INDUSRTRIES P LTD. V/s. CCE, 1992 (59) ELT 175 (Tribunal) CCE V/s. R.G. ELECTRONICS 1992 (60) ELT 121 (T-SRB)
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12. He submits that in view of the above submission the demand was made on conjunctures and surmises. It is his submission that suspicion cannot take place of evidences unless there are tangible evidences and in absence of which clandestine clearances cannot be proved. The onus is on the department to prove the clandestine clearances. Clandestine clearances needs to be proved by positive evidences and creditable evidences is necessary otherwise demand is not sustainable he finds support from the following judgment:-
AMBICA METAL WORKS v/S. COLLECTOR OF CENTRAL EXCISE, CALCUTTA- 1990 (29) ECR 549 ICYCOLD COMMERCIAL ENTERPRISE V/S. COLLECTOR OF CENTRAL EXCISE, CALCUTTA-I -1994 (69) E.L.T. (Tribunal) COMMISSIONER OF CENTRAL EXCISE, MADURAI V/s. RATNA FIRE WORKS 2005 (192) E.L.T. 382 (TRI-CHENNAI) COMMISSIONER OF CENTRAL EXCISE, LUDHIANA V/s. RENNY CASTINGS (P) LTD. 2011 (274) ELT 94 (TRI-DELHI) SAID JUDGMENT IS AFFIRMED BY HON'BLE PUNJAB & HARYANA HIGH COURT 2013 (288) ELT (P&H).
OUDH SUGAR MILLS LTD. V/s. UNION OF INDIA- 1978 (2) ELT (J172) (SC).
RUTVI STEEL & ALLOYS V/s. COMMISSIONER OF CENTRAL EXCISE, RAJKOT 2009 (243) ELT 154 BANCO PRODUCTS (INDIA) LTD. V/S. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, VADODARA-II, 2008 (232) ELT 762 (TRI-AHMD) 12.1 He submits that despite making categorical submission in reply to show cause notice before the adjudicating authority that the appellant have no manufacturing facility and capacity to manufacture such huge quantity of alleged clandestine removal. He submits that the adjudicating authority has brushed aside the same. The Learned Counsel referred to various documents such as ER7, ER1, electricity bill project report whereby he submits that the appellants' unit's manufacture capacity is 10,000 MTs P/A, therefore, it is beyond imagination that huge quantity of alleged manufacturing of clandestine removal were manufactured over and above the installed capacity of 10,000 MTs P/A the appellant was supposed to utilize the capacity as under:-
50% of production capacity in the first year, i.e. 2006-07 55% in second year 2007-08 60% in third year 2008-09 12 | P a g e E/11176,11177,11179,11190- 11206/2016
65% in fourth year 2009-10 70% in fifth year 2010-11 75% in sixth year 2011-12 80% in seventh year 2012-13 85% in eight year 2013-14 12.2 He submits that the statutory auditor certified that the appellant have purchased machinery for installed capacity in Financial Year 2005-06 and 2006-07 only and thereafter no new machinery was purchased therefore the production capacity was remained at 10,000 MTs. P/A. He also referred to certificate issued by Chartered Engineer who personally visited the factory on 02-06-2016 and checked the number of machines installed in the factory. He has also certified that the appellant which could manufacture only 30MT of Kraft paper in a day, also certified the input output ratio i.e. out of 1 MTs of waste paper only 0.97 Metric tons of Kraft paper could be manufactured and against consumption of one electricity unit Kraft paper of 1.30 KGs can be manufactured. He submits that as per the above certification and actual position of the unit, the allegation of huge quantity of alleged manufacture of Kraft Paper is based on assumption and presumption. He further submits that there is no evidence pertaining to surreptitious procurement of raw material, manufacture of finished goods and clandestine removal of goods. As no evidence about delivery, transport of goods of such huge quantity of alleged clandestine removal, no statement of any transporter was recorded, even statement of truck driver GJ-3W-8252 belonging to M/s. Wilson was also not recorded. It is also fact that except merely shortage of 22481 KGs Kraft paper there is no other shortage of raw material or finished goods was found in the factory premises since no weighment was carried out even shortage of 22481 KGs is not established. In this regard he place relied on the following judgments:-
COMMISSIONER OF C.EX., JAIPUR V/s. RAJASTHAN FASTENERS PVT. LTD.- 2013 (292) ELT 466 (TRI-DEL) CENTRAL CABLES LIMITED V/s COMMISSIOER OF C.EX., NAGPUR 2011 (272) ELT 735 (TRI.MUMBAI) 12.3 He submits that since all the statements were recorded under the threat and duress and the same were not voluntarily given by the witnesses and the copies of the statements also not supplied at the time of recording the statements and the same was provided along with the Show Cause Notice. Since the appellants were not accepting their statements, the appellants have requested for cross-examination of witnesses before the 13 | P a g e E/11176,11177,11179,11190- 11206/2016
adjudicating authority in respect of those statements recorded and relied upon in the Show Cause Notice in the appellant's reply dated 28/10/2014 and also in submission dated 11/05/2015. The adjudicating authority has arbitrarily denied the cross examination. He submits that provisions of Section 9D requires for cross examination of person whose statements are relied upon in the Show Cause Notice must be allowed. If the same is not allowed despite that their being a specific request such statements could not be admissible in evidence. He takes support for this submission from the following judgments :-
J & K CIGARETTES LTD. v/S. CCE 2009 (242) ELT 189 (DEL) BASUDEV GARG V/S. CCE 2013 (294) ELT 353 (DEL) CCE V/S. GOVIND MILLS LTD. 2013 (294) ELT 361 (ALL) ANDAMAN TIMBER INDUSTRIES V/S. COMMISSIONER- 2005 (324) ELT 641 (SC).
MUKESH APPLIANCES PVT. LTD. V/S. COMMISSIONER OF C.Ex & ST, DAMAN- 2016 (343) ELT 246 (Tri-Ahmd).
12.4 He submits that in view of the above detailed submission the demand of duty confirmed against the appellant deserves to be set aside. As regard appeals filed by directors of M/s. Wilson i.e. Shri Girishbhai Chaturbhai Detroja & Baldevbhai Devjibhai Nayakpara. He submits that both the appellants have challenged the imposition of personal penalty. He submits that since the demand itself is not sustainable, penalties on director also will not sustain. Without prejudice he submits that no penalty under Rule 26 is imposable on said directors. As they are made parties to the Show Cause Notice only for the reason that they are directors of M/s. Wilson however, for imposition of penalty under Rule 26 the various ingredients need to be satisfied. However, there is no direct act of directors for transporting, removing, depositing, keeping, concealing or purchasing or in any other manner deals with excisable goods or he has a reason to believe that said excisable goods are liable for confiscation therefore, the penalty otherwise also cannot be imposed. He placed reliance on the following judgments:-
GUJARAT BOROSIL LIMITED V/s. CCE, SURAT-II Order No. A/1624 to 1626/WZB/AHD/ dated 14/02/2007(CESTAT-AHD) A.K. TANTIA V/S. CCE- 2003 (158) ELT 638 (Trib) ITC Limited V/s. CCE- 1998 (104) ELT 151 (Trib) SHRI ANIL BHALLA V/S. CCE- 2001 (138) ELT 883 (Trib) 14 | P a g e E/11176,11177,11179,11190- 11206/2016
13. Shri D.K. Trivedi, Learned counsel also appeared in respect of other connected appeals and submits that as far as other co-noticees are concerned not a single piece of document or any other form of incriminating material was found from the premises of any of such person. A Stereotyped statements were prepared and all the said co noticee were made to sign the same. In the said statements it is mentioned that they were purchasing goods without invoice from M/s. Wilson. It is mentioned in all the statements that goods were supplied under packing list and delivery challans without invoice. In all the statements it is mentioned that after receipt of goods the packing list/delivery challan were destroyed. However, all the statements are fabricated and tailor made. The format of all the statements are copy paste therefore, the same could not be true because at no place any goods alleged to have been received without invoice were seized. There is absolutely no seizure either of any document or any goods. The said buyers of alleged clandestine goods have categorically in their respective replies before the Adjudicating Authority as well as in Appeal Memorandum filed before this tribunal that their signatures were obtained forcefully against their will on the statements which were prepared by the officers of the department themselves. He submits that even otherwise the statements could not be true because a perusal of the same could show that all of them were shown panchanama drawn at the factory premises of M/s. Wilson and all of them have admitted the entire panchnama, it means no mention that said buyers are not expected to know and admit the details pertaining to the other parties. Such blind admission itself suggests that the statements are fabricated.
14. In view of the above factual submission of the co-appellants also deserve waiver of penalties.
15. On the other hand Shri H.K. Jain, Learned Assistant Commissioner (Authorized Representative) appearing on behalf of the revenue reiterates the finding of the impugned order. He filed a detailed submission dated 24.8.2020 wherein he submitted that the appellant have raised many points and cited case laws in their grounds of appeal, the Adjudicating Authority has given detailed finding of all the points, the case laws cited by the appellant are not relevant particularly in the present case. As the directors themselves have destroyed the data of illicit clearances only to escape from duty involved in illicit clearances. The statement of director has been recorded on various dates spreading over a period of 12 Months and he has never retracted his statements, he has accepted to purchase raw material from open market in all the statements. So far as statements of suppliers of 15 | P a g e E/11176,11177,11179,11190- 11206/2016 raw material is concerned he has been regularly asked in all the statements but as usual he simply told all the times that he has purchased from the open market but did not remember their names. In such a situation it is almost impossible for investigating officer to go into deep. The officers have made all the efforts and recorded the statements of at least two raw material suppliers. Appellant have accepted their liability and submitted cheques which has been deposited which shows that at no point of time have raised any issue which have been raised now which is clearly an afterthought. As regard statements of other witness no one has retracted their statements, another director was also actively involved in illicit clearances as accepted to have destroyed the diary in which amount to be collected was written. He has accepted everything like data retrieved from the computer and details mentioned therein to have purchased raw material from open market and received payment in cash. The appellant has also raised issue of capacity of plant and electricity consumption but no investigation has been done in this area. It is submitted that this can be corroborative evidence but simultaneously always have been controversial. Appellant has never raised this issue till adjudication proceedings which clearly indicates that it is an afterthought to escape from their liability.
16. He submits that there are many case laws even of the highest court that electricity consumption cannot be the criteria. The appellant has wrongly contended the printouts taken from the seized computer cannot be relied upon in accordance with the provision of Section 36B(2) of the Central Excise Act, 1944. He submits that the adjudicating authority has given detailed finding at Para 35.1 to 35.6 wherein it was held that the condition mentioned in section 36B (2) have been fulfilled and the printouts taken from the seized CPU/computer are admissible evidences which are correctly relied upon by the Adjudicating Authority.
16.1 He submits that the adjudicating authority has given detailed finding that the buyers have categorically admitted their role in the clandestine removal of finished goods by the appellant during the relevant time. He also referred to Para 42 &43 of the impugned order. He submits that the order has discussed the establishment of cash flow through clandestine sale of finished goods by the appellant through confessional statement deposed by the person of Angadia firm. The raw material were supplied to the appellant without invoice as per the evidence collected during investigation therefore, the adjudicating authority has rightly imposed penalties under Rule 26 of the Central Excise Rules, 2002 on buyers, raw material suppliers and Angadia 16 | P a g e E/11176,11177,11179,11190- 11206/2016 firm as there were documentary and oral evidences to prove their involvement in evasion of duty. In respect of his submission he placed reliance on the following judgments:-
HON'BLE HIGH COURT OF MADRAS IN THE CASE OF M/S. LAWN TEXTILE MILLS PVT. LTD. 2018 (362) ELT 559 (Mad) WINDSON CHEM. IND v/S. COMMN DAMAN-2012 (2) ECS (118) (Tri.Abad) COMM v/S. RA CASTINGS PVT LTD- 2011 (269) ELT A108 (SC) COMM v/S. BHAWAANI SHANKIER CASTING- 2012 (275) ELT A57 (P&H) COMM C EX RAIPUR v/S. MAMTA ELECTRO- 2018 (363) ELT 493 (Tri-Del) 16.2 He further submits that there were valid reasons for denying the cross examination which was discussed in detail in Order-In-Original therefore, the adjudicating authority has reason for not allowing the request of cross-
examination which is supported by the following case laws:-
COMMISSIONER OF CENTRAL EXCISE SALEM v/S. M/S. ERODE ANNAI SPINNING MILLS (PVT.) LTD,- 2019 (366) ELT, 647 2019 (368) ELT A155 (SC) filed by M/S. ERODE ANNAI SPINNING MILLS (P) LTD. against the Judgment and Order dated 29/11/2018 of Madras High Court HARISONS STEEL PVT. LTD. v/S. UNION OF INDIA- 2017 (354) ELT 442 (Bom.) Hon'ble Supreme Court has dismissed the Civil Appeal No. 398 of 2018 filed by M/s. HARISONS STEEL PVT. LTD. against the decision of Mumbai High Court in CMA Nos. 2688-2690 of 2017.
16.3 As regard the reliance made on the various statements recorded under Section 14 of the Central Excise Act, 1944 he takes support of the following judgments:-
Hon'ble High Court of Chhattisgarh in the case of PRINCIPAL COMMISSIONER OF CGST & C.EX, RAIPUR v/S. G.P. ISPAT PVT. LTD.- 2019 (368) ELT 76 (Chhattisgarh).
Hon'ble Supreme Court has dismissed the Petition for Special Leave to Appeal (Civil) Nos. 13654 of 2019 filed by M/s. G.P. ISPAT PVT. LTD. (Respondent) against the aforesaid decision of Chhattisgarh High Court in TA No. 135/2018 POWER CONTROL CORPORATION v/S. CCE, JAIPUR-I- 2019 (369) ELT 471 (Raj).
17 | P a g e E/11176,11177,11179,11190- 11206/2016 POWER CONTROL CORPORATION v/S. CCE, JAIPUR- 2018 (359) ELT 201 (Tri.Del).
PRINCIPAL COMMR OF CGST & CE, RAIPUR V/s. G P ISPAT P LTD.-
2019 (368) ELT 76 (Chhattisgarh).
POOJA TEX PRINTS P LTD v/S. ADDL. COMMR. OF C.EX., SURAT-I-
2019 (365) ELT 42 (Guj.) 16.4 He submits that in case of clandestine removal of excisable goods, the revenue has to discharge initial burden of proof through documents recovered, voluntarily statements given by the assessee's director and statements recorded from buyers thereafter onus is on the assessee to prove by evidences that there are no clandestine removal. In this regard he placed reliance on the following judgments:-
Hon'ble High Court of Madras in the case of C.EX, SALEM reported at 2019 (366) ELT 647 (Mad.) N.R. SPONGE PVT. LTD. V/s. COMMISISONER OF C.EX, RAIPUR- 2020 (372) ELT 321 (Del.) RELIANCE CABLE IND. v/S. COMMISSIONER OF CST (East) Delhi- 2019 (365) ELT 788 (Del.) AAKASH FABRICS V/s. COMMISSIONER OF C.EX. & CUSTOMS, DAMAN- 2019 (368) ELT 22 (Guj.)
17. With his above submission he prays for dismissal of the appeal filed by the appellant.
18. We have heard both the sides and perused the records. The case of the departments is that the appellant have clandestinely manufactured and cleared 1,41,72,571 KGs of kraft paper which was valued at Rs. 24,71,33,466/- by evading excise duty to the tune of Rs.1,15,72,496 during the period from April, 2009 to July, 2012. The investigating officers have conducted thorough investigation, during the investigation the officers found a) alleged shortage of finished goods to the tune of 22,481KGs of kraft paper. B) four dispatch slips claimed to have been recovered from M/s. Gajanand Packaging, Morbi. C) two delivery challans claimed to have been recovered from factory of M/s. Wilson. The officers during investigation taken printouts from the computer CPU available at residence of one of the directors of M/s. Wilson. However, the major demand was worked out on the basis of data available in the computer print out and small demand of Rs.58302/- is based on aforesaid four dispatch slips and two delivery challans. Therefore, the main evidence for making allegation of clandestine removal and raising demand is computer printouts. The investigation reveals that the printout was taken from 18 | P a g e E/11176,11177,11179,11190- 11206/2016 seized computer wherein, the data was copied and the computer on which the data was produced originally the hard disc of the same was destroyed by the directors of the appellant M/s. Wilson. There is no evidence regarding this contention that whether data was originally produced at different computer and the hard disc of the same was destroyed and the data from which the printout was taken is the backup one. As regard the computer print out being admissible as the evidence a specific provision was made under Section 36B which is reproduced below:-
"36B. Admissibility of micro films, facsimile copies of documents and computer print outs as documents and as evidence.--
"(1) Notwithstanding anything contained in any other law for the time being in force,--
(a) a micro film of a document or the reproduction of the image or images embodied in such micro film (whether enlarged or not); or
(b) a facsimile copy of a document; or
(c) a statement contained in a document and included in a printed material produced by a computer (hereinafter referred to as a "computer print out"), if the conditions mentioned in sub-section (2) and the other provisions contained in this section are satisfied in relation to the statement and the computer in question, shall be deemed to be also a document for the purposes of this Act and the rules made thereunder and shall be admissible in any proceedings thereunder, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible.
(2) The conditions referred to in sub-section (1) in respect of a computer print out shall be the following, namely:--
(a) the computer print out containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer;
(b) during the said period, there was regular supply to the computer in the ordinary course of the said activities, information of the kind contained in the statement or of the kind from which the information so contained is derived;
(c) throughout the material part of the said period, the computer was operating properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of period was not such as to affect the production of the document or the accuracy of the contents; and
(d) the information contained in the statement reproduces or is derived from information supplied to the computer in the ordinary course of the said activities.
(3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether--
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(a) by a combination of computers operating over that period; or
(b) by different computers operating in succession over that period; or
(c) by different combinations of computers operating in succession over that period; or
(d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer; and references in this section to a computer shall be construed accordingly.
(4) In any proceedings under this Act and the rules made thereun- der where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say,--
(a) identifying the document containing the statement and de- scribing the manner in which it was produced;
(b) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer;
(c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it.
(5) For the purposes of this section,--
(a) information shall be taken to be supplied to a computer if it is supplied thereto in any appropriate form and whether it is so supplied directly or (with or without human intervention) by means of any appropriate equipment;
(b) whether in the course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities;
(c) a document shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment. Explanation.--For the purposes of this section,--
(a) "computer" means any device that receives, stores and proc- esses data, applying stipulated processes to the information and supplying results of these processes; and
(b) any reference to information being derived from other infor- mation shall be a reference to its being derived therefrom by calculation, comparison or any other process."
19. As per the above section printed material produced by the computer shall be admissible as evidence only when the condition 20 | P a g e E/11176,11177,11179,11190- 11206/2016 mentioned in Sub-section (2) and other provision contained in the said section 36B are satisfied. As per the condition laid down in sub- section (2) the statement of computer printout must be produced by the computer during the period for which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer. In the present case it is admitted by the revenue itself that the statement was not produced in the computer which was seized, it is only having the backup data the data originally produced in different computer. As per the department the hard disc of the said computer was destroyed. Therefore it is clear that the computer which was seized, the data was not produced on the seized computer. No evidence was brought on record that the data retrieved from the computer was originally produced on different computer and the hard disc of the same was destroyed. It is only as per the statement of the director which was claimed by the appellant having been taken under duress and threat. As per clause (b) of Sub-section (2) of Section 36B the information must be regularly supplied to the computer during that period. In the present case the period involved is April, 2009 to June, 2012 during that period the computer which was seized was not in use therefore, clause (b) is not satisfied. Similarly, since the seized computer was not in use for the material period clause(c) is also not satisfied. Even the seized computer is not the computer to which the data was supplied in the ordinary course of the said activities, therefore, clause
(d) is also not satisfied.
20. It is the department's case that the data of which the printout was taken was not produced in the seized computer but was produced in different computer which was not seized. It is also their case that the hard disc wherein the data was originally produced was lost by the director of the company. In this situation the printout taken from the computer wherein the backup of the data said to have been stored is not as per the procedure laid down under Sub-section (2) of Section 36B therefore, the computer printout particularly in the fact of the present case is not admissible evidence. The above view is supported by this tribunal judgment in case of PREMIUM PACKAGING PVT. LTD.- 2005 (184) ELT 165 (Tri.-Del.) wherein, the tribunal has taken the following view:-
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"The Department has no doubt placed much reliance on the provisions of Section 36-B, to sustain the admissibility of the computer print outs for proving the charge of clandestine receipt of raw material and manufacture of the final products by the appellants, but admissibility of the printed material under the said Section, has been made subject to the fulfilment of certain conditions, detailed therein. The condition in respect of the computer print out laid down in that Section, as is evident from the reading of its clause (ii), is that, the computer print out containing the statement was produced by the computer during the period over which the computer was used regularly to store or possess the information. In the instant case, the print outs were not produced by the computer. Peripherals were picked up by the Officers from the Head Office-cum-Sale Depot of the appellants and they were inserted into the computer, and that too, not all but certain informations from the part of two zip discs were taken in the absence of the appellants. Certain zip discs were copied out by the Officers in the computer of the Department and that too without associating any authorized person of the appellants' company. As observed above, when the appellants wanted to have access to the peripherals and requested for obtaining the information or data from those peripherals, some floppies were found blank while some even could not run on the computer. The hard disc even could not be opened for the reason best known to the Department as all these peripherals remained in their custody after the date of seizure i.e. 30-7-1999."
21. Applying the ratio of the above judgment, in the above case also the data was not recovered from the data on which it was regularly supplied during the relevant period. In the present case also the undisputed fact is that the computer seized by the department, the data was not supplied in the said computer. Therefore, in terms of the Section 36B(2) the computer printout in the present case cannot be accepted as admissible evidence.
22. We also find that the computer printouts does not bear the name or logo of the appellant company M/s. Wilson. Whether it belongs to M/s. Wilson or otherwise is based on the statement of directors of M/s. Wilson. Since the statements are under serious dispute and as per our above discussion in the forthcoming paras, the statements are not admissible evidence. For this reason also the mere computer printout which is not the conclusive evidence of clandestine removal is not admissible as evidence.
23. The Adjudicating Authority has heavily relied upon the statements of directors and various alleged raw material supplier and buyers of goods. We find that the appellant have requested for cross-examination of all the witnesses but none of the witness was allowed to be cross-examined by the adjudicating authority. We find that since the entire basis of demand is computer printout and the statements of third parties, it is incumbent on the adjudicating authority to allow the cross-examination as required 22 | P a g e E/11176,11177,11179,11190- 11206/2016 not only under Section 9D of the Central Excise Act but also to follow the Principle of Natural justice. Section 9D is reproduced below:-
"9D. Relevancy of statements under certain circumstances.
(1) A statement made arid signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains,-
(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or
(b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.
(2) The provisions of sub- section (1) shall, so far as may be, apply in relation to- any proceedings under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court."
24. As per the above section even if the person against whom the statements of witnesses are used as evidence does not ask for cross- examination. The adjudicating authority if wish to rely upon such statement he must examine the witness before adjudication of case. In the present case despite the specific request by the appellant the adjudicating authority denied the cross-examination. The adjudicating authority also contended that none of witnesses who gave the statements has retracted their statement at any point of time. We find that copy of all the statements were not supplied by the department to the persons whose statements were recorded. The appellant have lodged their retraction while filing reply to Show Cause Notice as the statement copies were supplied only along with Show Cause Notice and not before that. When the appellant have retracted the statements in the reply to the Show Cause Notice then the burden was on the adjudicating authority to allow the cross-examination of the witness. However, the adjudicating authority has denied the cross-examination. In this admitted position, the statements recorded by the investigating officers cannot be accepted as their confessional statement in absence of statutory compliance of section 9D of Central Excise Act, 1944 by the adjudicating authority. In the case SULEKHRAM STEELS PVT. LTD.(supra), the coordinate bench of this tribunal on the issue of cross-examination held as under:-
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"15. After carefully considering the submissions and appreciating the evidences available on record, we first take up the issue of clandestine manufacture and clearance of goods by M/s. SULEKHRAM STEEL PVT. LTD. Admittedly, Revenue's case is based upon the evidences collected during the course of investigation, which indicate that M/s. A.S. CORPORATION procured fictitious bills from various traders and sold the goods to their buyers. As such, one thing become clear that Revenue's case revolves around the activities of M/s. A.S. CORPORATION. It has to be kept in mind that M/s. A.S. CORPORATION, in some of their statements recorded during the investigation rebutted the statement made by various traders or brokers indicating that the goods were never supplied to them. On the contrary, they always maintained that the goods in question stand purchased by them from the traders, to whom payments were made by cheque. Some of these traders were also registered with Sales Tax department and Revenue's investigation also support the said fact. Merely because some of the traders have subsequently cancelled their registration with Sales Tax department, would not reflect upon their bogus status.
It is also seen that M/s. A.S. CORPORATION as also M/s. SULEKHRAM STEEL PVT. LTD. has asked for cross examination of the traders as also brokers, whose statements are being relied upon against them. While making the request for cross examination, they submitted that there were number of contradictions in the statements of the said suppliers and as such cross examination is required to be allowed so as to test the veracity of their statements and to bring true and correct facts on record. Such cross examination request stand rejected by the adjudicating authority on the ground that cross examination of 35 persons have been sought but no justification for the same has been given. He also rejected the request for cross-examination on the ground that no statement made by the said suppliers stand retracted.
We do not find any justification for denial of such request. If the statements of traders (whether retracted or not) is sought to be relied upon in the show cause notice it was incumbent on the part of the Revenue to tender the above witnesses for cross examination. The statements of traders being in the nature of statement of co- accused, cannot be relied upon without putting the same through the test of cross examination. However, we do not feel inclined to remand the matter on this ground inasmuch as all the traders appearing before us have again reiterated their stand that no goods were actually supplied by them to M/s. A.S. CORPORATION under the cover of invoices raised by them and it was only bills which were issued against which payments were received by them by cheque from M/s. A.S. CORPORATION."
25. From the above judgment it is clear that even if there is no retraction of the witnesses and if the statement is sought to be relied on in the Show Cause Notice it is incumbent on revenue to present witness for cross-examination. Therefore, without cross-examining the witness the statement cannot be relied upon as admissible evidence. In the case of COMMISSIONER OF CENTRAL EXCISE, RAIPUR v/S. ANIL AGRAWAL(supra) this tribunal has held that statement of director accepting the clandestine removal is not conclusive proof of clandestine removal.
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"6. On going through the Grounds of Appeal raised by the Revenue, I find that they have placed reliance on the Supreme Court's Judgment in the case of Commissioner of Customs, Madras v. Bhoormul - 1983 (13) E.L.T. 1546 (S.C.) to support their argument that the demand should have been confirmed on the basis of such degree of possibilities. They have also referred to some other decisions of the Tribunal upholding the demand of clandestine removal.
7. I find that the charges against the Respondent are clandestine removal of their final products without payment of duty. Admittedly such charges made by the revenue are required to be proved by the way of sufficient evidences. In the present case the Revenue has solely relied upon the recovery of certain photocopies of the bills from the trading unit as also on the statement of the Director, accepting the clandestine removal. Apart from the above, there is no other evidence showing clandestine manufacture and removal of the final products."
25. Applying the ratio of the above judgment in the present case also the mere statement of the persons cannot be a conclusive evidence for establishing clandestine removal. The Hon'ble Gujarat High Court in the case of SAKEEN ALLOYS PVT. LTD. (supra) observed that confessional statement solely in absence of any cogent evidence cannot make the foundation for levying the excise duty on the ground of evasion of tax.
26. As per statutory provision under Section 9D and also settled law as cited above, we are of the view that all the statements which were retracted in the form of reply to Show Cause Notice and without allowing the cross-examination of the witnesses cannot be used as admissible evidence, therefore all the statements are discarded. We find that the major demand is based on the computer printout and various statements. Since both are not admissible evidence as discussed above the charge of clandestine removal is not established against the appellant. We also find that except the above inadmissible evidences there is no evidence on the following:-
i.) No evidence of physical manufacture of alleged clandestinely removed goods.
ii.) There is no evidence of transportation of such removals. iii.) No evidence of receipt of cash against the alleged supply of huge quantity of goods valued at Rs. 24,71,33,466/-
In absence of any of the above evidence the clandestine removal is not established.
27. The above position was considered by this tribunal in identical case which was upheld by the Hon'ble Gujarat High Court in the case of VISHWA 25 | P a g e E/11176,11177,11179,11190- 11206/2016 TRADERS PVT. LTD. V/S. COMMISSIONER OF C.EX, VADODARA-2013 (287) ELT 243 (GUJ). The relevant order portion is reproduced below:-
"7. The Tribunal in Paragraph Nos. 12, 13 and 16 has recorded clear finding that when the premises of the respondent were visited, the stock of raw-material and finished goods were tallying with the recorded goods. Further, nothing on record was found by the authority, which showed that unrecorded raw-materials were purchased or consumed by the respondent or that the respondent had clandestinely manufactured or removed the goods. It is necessary to extract Paragraph Nos. 12, 13 and 16 of order of the Tribunal, which reads as under :-
"12. Be that as it may be, it is to be noted that there is no dispute that to manufacture of said final product „Frit‟ requires the use of Quartz, Feldspar, Zinc, Borax Power, Calcium and Dolomite as inputs/raw material. On the date of visit of the officers to the factory premises of the appellant, it is undisputed that the stock of raw materials as well as finished goods was tallying with recorded balances. This conclusion can be reached from perusal of records, as there is nothing on record to indicate otherwise.
13. On careful perusal of the entire records of the case, we find that there is nothing on record as to unrecorded purchases or consumption of various other raw material in the manufacture of Frit, there is also nothing on record to indicate that the appellant had purchased the Quartz, Feldspar, Zinc, Borax Powder, Calcium and Dolomite and without accounting them used for the manufacture of Frit for clandestine removal. There is also nothing on record nor there is any statement of the suppliers of other raw materials, which would indicate that the appellant had received unaccounted raw material from the suppliers of these raw materials. There is a solitary evidence in the form of statement of supplier of one of the raw material i.e. Borax Powder, who indicated that the appellant had procured Borax Powder and not accounted the same in his record; and the said entries and information were deduced from the documents of the premises of Shri Anil Jadav and whose evidence has been discarded for having not been produced for cross examination; in the absence of any other tangible evidence to show that the appellant had been procuring the other major raw materials required for manufacture of Frit without recording in books of accounts, we are unable to accept the contentions of the ld. AR appearing for the Revenue and the findings of the adjudicating authority, that there was clandestine manufacture and clearance of the finished goods. The investigation has not proceeded further to bring on record unaccounted purchases of all the raw materials required for manufacturing of „Frit‟.
16. In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the factory premises of M/s. VTPL, in the peculiar facts and circumstances of this case, we hold that the impugned order which confirms the demand on the appellant M/s. VTPL and imposes penalty on them is not sustainable and is liable to be set aside and we do so."
8. From the aforesaid findings of the Tribunal, it is clear that the appellant has not made any clandestine manufacture, which he has removed clandestinely and on which the duty was payable.
9. It is well settled that the findings of the Tribunal can be interfered only if it is perverse or some material evidence is ignored. In such circumstances, only the Court may exercise jurisdiction on issue which may give rise to any substantial question of law. In this appeal, no substantial question of law arises for consideration of this Court.
10. We agree with the view taken by the Tribunal, and the appeal is devoid of any merits. Both the questions raised by the appellant do not involve any substantial question of law and therefore, the appeal is dismissed."
28. The above judgment of the Hon'ble High Court has been upheld by the Hon'ble Supreme Court reported as VISHWA TRADERS PVT. LTD. V/S. COMMISSIONER OF C.EX,- 2014 (303) ELT A24 (SC). This tribunal in 26 | P a g e E/11176,11177,11179,11190- 11206/2016 another case of ICYCOLD COMMERCIAL ENTERPRISE V/S. COLLECTOR OF CENTRAL EXCISE, CALCUTTA-1- 1994 (69) ELT 337 (Tribunal), considering the issue of clandestine removal held that clandestine removal is a positive act and burden of proving is on the department and not to depend merely on conjunctures and presumptions. In the said case since the order was non- speaking and the assessee's explanation was not accepted, therefore was not sustained and the tribunal also held that remand of the matter not justified when impugned order are non-speaking one. Benefit of doubt extendable to the appellant in this circumstances. In the present case also the appellant's request of cross-examination was not accepted by the adjudicating authority which is very vital and in the absence of cross- examination the statements are not admissible evidence. Therefore, the case ought to have been decided without considering the statements as evidence. In the case of RENNY STEEL CASTING PVT. LTD. on the issue of clandestine removal, the tribunal has passed the following order:-
"6.1 We have carefully considered the submission from both sides and perused the records. It is on record that when the officers visited the factory premises on 20-5-2006, there was no discrepancy of stock notices. There was no seizure of any consignment while being transported without excise invoices. What has been alleged is that a consignment has been sent alongwith invoices and the same were delivered to one M/s. Saeco Iron and Steel Mills and the invoices in original, duplicate and triplicate were brought back alongwith empty truck. This may lead to a suspicion that perhaps the invoices were meant to be used for transportation of the goods once again. Suspicion cannot take the place of evidence.
6.2 The department alleged recovery of private records which were maintained by Shri John Masih/Shri Avtar Singh. How Shri John Masih was concerned with maintaining the heat records of the furnace has not come out during investigation. Shri John Masih was only a kanda in charge. In an affidavit dated 16-9-2002, he had stated that he had no exact knowledge about the production of the goods in the factory. Further, there is no evidence relied upon to show that Shri Avtar Singh was contractor working for the respondent-company. It has been claimed that there was no written contract between Shri Avtar Singh and the company for engaging Shri Avtar Singh as contractor. In view of the matter as above, the authorities below have rightly held that the private records said to have been maintained by them cannot be relied upon.
6.3 It is not the case of the department that these entries were got explained by the authorized signatory or the director or any other responsible person of the company. It is also not the case of the department that the entries mentioned in the private records were corroborated by conducting investigation with the transporters or the recipient of allegedly clandestinely removed goods. It is not the of the department that evidence was produced in respect of any particular invoice that consignments have been cleared more than once such invoice. The department having recovered private documents, in our considered opinion, failed in conducting investigation in the relevant direction.
6.4 It is not a case that any authorised persons of the company admitted to unaccounted production and clandestine removal and therefore the officers felt that there was no need for further investigation. The authenticity of the documents seized and the veracity of the entries made
27 | P a g e E/11176,11177,11179,11190- 11206/2016 therein have not been corroborated by any meaningful investigation, even though show cause notice has been issued nearly after 3 and half years after the commencement of investigation. If the private records indicate the position as claimed by the department it is a clear case of failure to gather necessary evidence to support the allegation.
6.5 As already mentioned there was no difference in stock found by the officers on the date of visit. The authenticity of documents relied upon and the locus standi of the persons who have explained the document have not been bought out. There is no admission of unaccounted production and clandestine removal by any of the authorised persons. There is no corroborative evidence relied upon in support of entries in the private record sought to be relied upon especially when their authenticity is in serious doubt.
7. Under these circumstances, we hold that the original authority has rightly appreciated the evidences and dropped the demand and the Commissioner (Appeals) has rightly upheld the order of the original authority."
29. The aforesaid judgment was upheld by the Hon'ble Punjab & Haryana High Court reported at COMMISSIONER OF CUSTOMS, EXCISE, LUDHIANA V/S. RENNY STEEL CASTING PVT. LTD.- 2013 (288) ELT 45 (P&H). The revenue also heavily relied upon the shortage of 22,481 KGs found when stock taking was carried out and compared with the daily stock register. The total production as per the capacity for a year is approximately 10,000 MTs and as against such huge quantity the shortage of 22,481 KGs comes to 0.02%. Moreover, while carrying out the stock taking no weighment of goods was done therefore the shortage of 22,481KGs also cannot be said to be the actual shortage therefore on this basis also the huge demand is not justified. The appellant have also made the detailed submission along with various documents that the capacity of their plant is for producing 30 MT Per day which comes to approximately 10,000 MT P/A. In this regard the adjudicating authority has rejected the submission on the ground that the appellant have not produced any evidence. We find that the appellant have relied upon their ER-7 & ER-1 returns along with other documents, these returns were very much available with the department which were filed from time to time. The ER-7 return clearly shows the production capacity therefore, it cannot be said that the department did not have any evidence regarding production capacity of the appellant's unit.
30. We find strong force in the submission of the appellant that they did not have production capacity of more than 10,000 MT P/A. Accordingly, the allegation of clandestinely manufactured and clearance over and above the production capacity is beyond imagination. The submission of the appellant is not much in dispute on the following points:-
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i) No investigation to find out how alleged surreptitiously procured raw material was transported there is nothing on record for illicit receipt of raw material.
ii) The appellant has no production capacity of plant and machinery for the manufacture of alleged clandestine.
iii) There is no excess electricity consumption
iv) No employment of excess labour.
v) There is no evidence of transportation of finished goods.
vi) Cash flow back from buyers or cash payment of suppliers.
31. Accordingly, no credible independent evidence found therefore, the allegation of clandestine clearance is not sustainable. This is supported by the following judgments:-
RAJ RATAN INDUSTRIES LTD. v/S. COMMISSIONER OF CENTRAL EXCISE, KANPUR- 2013 (292) ELT 123 (Tri.-Del.) "6. On going through the impugned order I find that the duly demand stand confirmed in respect of shortages detected at the time of visit of the officers read with the statement of Shri Jai Kishan Khatri. The appellants have strongly contended, the manner of weighment of the final product. It is seen that the Revenue has not produced any inventory on record to show that the weightment was actually done and the shortages were not on the basis of average weight system but real and based upon actual weighments. Similarly reliance of the revenue on the statement of the authorized representative cannot ipso facto lead to the inevitable conclusion of clandestine removal of final product especially when there is no variation in the stock of the raw material. There is no other evidence on record to reflect upon the above fact. Hon'ble Delhi High Court in the case of Commissioner of Income Tax v. Dhingra Metal Works, 2010-
TIOL-693-HC-DEL-IT has held that though an admission is extremely important piece of evidence, it cannot be said to be conclusive.
7. It is well settled law that allegations of clandestine removal are required to be established by the Revenue by production of concrete and tangible evidence. In the present case apart from the statement of the authorized representative, there is no evidence to reflect upon the said activities. Reference at this point can be made to the Tribunal decision in the case of Vikram Cement - Final Order Nos. A/1419-1421/2012-SM(BR), dated 4- 10-2012 [2012 (286) E.L.T. 615 (Tri.)] and Punjab & Haryana High Court judgment in the case of CCE v. Luxmi Engineering Works - 2010 (254) E.L.T. 205 (P & H). As the Revenue has failed to bring on record any evidence showing illegal manufacture and removal of their final product, I find no justification in upholding the confirmation of demand of duty or imposition of penalty on both the appellants. Accordingly, the impugned orders are set aside and both the appeals are allowed with consequential relief to the appellant."
KUBER TOBACCO PRODUCTS LTD. v/S. COMMISSIONER OF C.EX., DELHI- 2013 (290) ELT 545 (Tri.-Del.) 29 | P a g e E/11176,11177,11179,11190- 11206/2016
"135. There is no dispute on the fact that in adjudication proceedings, the charge of clandestine removal and under-valuation is definitely to be established on the basis of preponderance of probabilities. However, it cannot be merely on the basis of presumptions and assumptions. Suspicion however grave cannot replace the proof. As rightly pointed out by the Hon‟ble President with detailed findings, the link between the documents recovered in search and the activities of the appellants in their factory is required to be proved. However, I find that due to various reasons as recorded above, the Revenue has failed to prove the same.
136. The loose sheets, Kachcha Challans and hisaba books were not recovered from the factory of the appellant-company or from any of their office or residential premises. I find that for considering the same as relevant and credible material, on one hand a series of assumptions and presumptions are to be made, and on the other hand various fatal objections regarding veracity of the panchnama and the contents of these documents stated to have been seized in the course of panchnama, as correctly recorded in the detailed findings of the Hon‟ble President are to be ignored. I agree with the reasons and findings recorded by the Hon‟ble President that entire proceedings had lost their credibility and serious doubt arises about the credibility of the materials stated to have been collected in the course of such proceedings. Therefore, it would not be justified to rely on these records to fasten the duty and penal liability on the appellants even by applying the principles of preponderance of probability.
137. I find that the Revenue failed to substantiate the findings recorded in the impugned Order regarding production capacity, to persuade me to reject the contention of the appellant that there is failure on the part of respondent to collect any evidence in relation to either procurement of raw materials by the appellant or production of huge quantity of final goods alleged as removed clandestinely to sustain the charge of clandestine removal. Once unaccounted production is not established, even otherwise there can be no clandestine removal thereof. Unaccounted removals have in any case not been established on the basis of the evidence available on record.
138. The ratio laid down by the Hon‟ble Apex Court in Oudh Sugar Mills Ltd. v. Union of India, 1978 (2) E.L.T. J172 (S.C.), is clearly applicable in the peculiar facts of the instant case inasmuch as the demand cannot be sustained without any tangible evidence, based only on inferences involving unwarranted assumptions.
139. In this view, I would concur with the Hon‟ble President that these appeals should be allowed. Reference ordered accordingly.
Registry is directed to place this file before Hon‟ble acting President/HOD for further action."
RUBY CHLORATES (P) LTD. v/S. COMMISSIONER OF C.EX., TRICHY- 2006 (204) ELT 607 (Tri.-Chennai).
"21. It is seen that, apart from potassium chloride, Hydrochloric Acid was the other major chemical used in the manufacture potassium chlorate by the assessee. Several other chemicals also were used. The case of clandestine production and clearance had been attempted to be made out with the figures of use of Potassium Chloride and no effort was made to investigate such use of Hydrochloric Acid or any other raw material. 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.
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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. No statements have been obtained to show as to from whom raw materials were purchased. No evidence has been obtained for the use of electricity or receipt of sale consideration by the assessee to prove clandestine manufacture and sale. The department had obtained a statement from M/s. Dhanalakshami Traders, dealer in Potassium Chloride to the effect that the assessee herein had obtained from them on payment of commission, bills for having purchased raw material without purchasing any raw material. These bills covered a significant portion of the raw material involved in the unaccounted production determined. This statement on record does not support a conclusion of clandestine production based on the allegation of clandestine procurement and use of raw material. (This initial statement was retracted by the dealer, later).
23. A unit under physical control is visited by the officers of the department regularly and clearance of the goods is effected in their presence. In such a situation, it is not understandable as to how it can be said that that there was clandestine removal of the goods. Clandestine removal in such situation can only be effected with the connivance of the department's officers. It is not the case of the department that their officers connived with the assessee for removal of the goods clandestinely and any officer was proceeded against. In Kalekhan Mohd Haniff v. CCE, Nagpur, reported in 2001 (132) E.L.T. 374, (Tri.-Mumbai) the Tribunal made the following observation :
" 4. The Tribunal, in LML Limited v. CCE. - 1991 (51) E.L.T. 434 (Tribunal) = 1991 (32) ECR 63 has held that in a case where the factory is under the physical control of the officers of the Department, extended period cannot be invoked on the ground of suppression of facts relating to manufacture and clearance. This is so for the reason that virtually every step of the manufacture and clearance is subject to the control by the officers of the department, who are required to carry out checks of such clearance to the prescribed extent. In that situation, therefore, unless collusion between the officers and the appellant were alleged the extended period will not be available. No such collusion is alleged. The notice issued to the appellant is therefore barred by limitation."
24. Demand of duty cannot be made simply on assumptions and presumptions. In the case of Hilton Tobaccos Pvt. Ltd. v. CCE, reported in 2005 (183) E.L.T. 378 (Tri.-Bang) the Tribunal while dealing with an order of the Revenue in a case of similar set of facts held as under in para 8 of their order :
"We have gone through the records of the case carefully. The Revenue has come to the conclusion that 41,777 kgs. of raw tobacco was unaccounted and the appellant had manufactured cut tobaccos out of it and removed it clandestinely. The inference is based on certain private documents only. There is no corroborative evidence recorded. If such huge quantity of cut tobacco was manufactured during the period from April 1998 to September 1998 when the factory is under physical control and removed, either the officer in charge has connived with the appellants or he closed his eyes to whatever was happening. In either case, the department should have proceeded against the officers. There is absolutely no indication in the investigation 31 | P a g e E/11176,11177,11179,11190- 11206/2016 regarding any complicity of the officers posted in the appellants' unit. Moreover, the investigation has not found out at least a few buyers who have received the goods cleared clandestinely. There is no evidence of excessive consumption of electricity. When the officers visited the unit, they had not found out any unaccounted stock of cut tobacco. In the present case, the charges are based purely on a theoretical working out based on the private documents, which are not statutory. The Hon'ble CEGAT, in the case VST Industries Ltd. (cited supra), has held that the charges of clandestine removal cannot be based on assumptions and presumptions. In the Godfrey Philips case, the Tribunal has held that duty is not demandable on assumed productions. In the Sangamitra Cotton Mills case, it was held that in the absence of evidence of use of electricity, receipt of sale consideration to prove the event of manufacture and clearance of goods, clandestine removal cannot be sustained. In the Harinath Gupta case, it was held that the clandestine removal charge is not sustainable as the source of procurement of raw material has not been established, buyers of finished goods had not been contacted and the receipt of sale proceeds has not been proved. This is a case where investigation has miserably failed to get any corroborative evidence to strengthen the Revenue's case. The adjudicating authority, in his zeal to decide the issue in favour of Revenue, has not displayed a judicious approach and concluded that there has been clandestine removal in the absence of corroborative evidences."
25. The above ratio squarely applies to the facts of the present case. The impugned order is not a speaking order and its findings are not supported by facts and acceptable evidence or reasoning. In the circumstances the impugned order is set aside and we allow the appeals."
COMMISSIONER OF CENTRAL EXCISE, CHENNAI v/S. R.V. STEEELS PVT. LTD.- 2009 (243) ELT 316 (Tri.-Chennai) "3. We have heard both sides. On a careful consideration of the case records and the rival submissions we find that the Commissioner (Appeals) vacated the demand and penalties ordered by the original authority based on several judicial authorities. In the appeal filed by the Revenue there is no mention that any of the case law relied on by the Commissioner (Appeals) is not applicable to the facts of the case. The Revenue has relied on a case law in support of the appeal which does not appear to us to be relevant. The original authority had passed the order in violation of principles of natural justice. It was incumbent on him to have allowed the request for cross- examination of witnesses whose statements had been relied on in passing the order. We do not find a valid challenge to the impugned order in the appeal filed by the Revenue. Barring a retracted statement of a functionary of the respondent-company all the statements relied on as evidence had been rendered by staff of third party such as SSL, SIL and Proprietor, Jaiganesh Transport. There is no material evidence corroborating the third party statements. The statement by the proprietor of the transport company was relied on to find that scrap imported by SSL had been delivered to the respondents. Record of the transporter however showed delivery at a place different from the location where the respondent's unit is situated. Shri N. Kuppusamy, Proprietor of Jaiganesh Transport deposed that false destination was recorded in their register at the instance of the involved parties. We do not find this explanation to be genuine as we find no necessity for creating a false account in a private 32 | P a g e E/11176,11177,11179,11190- 11206/2016 record of the transporter. The Department could not identify and obtain a statement from the person who maintained the register of the transport company showing transport of raw material to the respondents. As these witnesses were not allowed to be cross-examined by the respondents their depositions could not have been relied on by the original authority. We find that in the instant case Revenue could not produce any evidence for receipt of the raw material and sale of the clandestinely cleared goods. There is no evidence of receipt of cash against unaccounted clearances. There was no attempt to ascertain any discrepancy in the stock of raw material or finished goods at the premises of the respondents. All these go to show that the finding of clandestine removal is based on assumption and presumption. Therefore, the Commissioner (Appeals) passed the impugned order vacating the order of the original authority based on sound grounds. We do not find that Revenue has raised any valid ground in the appeal and that the impugned order calls for any interference by us.
4. The case of the Revenue was that SSL diverted imported scrap violating provisions of law and had knowingly dealt with excisable goods liable to confiscation. However, the Revenue has not challenged the order of the Commissioner (Appeals) vacating the penalty imposed on SSL. It would appear that the Revenue has no reliable case that SSL had diverted scrap unauthorizedly for manufacture and clearance of excisable goods without payment of duty thereby incurring liability to penalty under Rule 209A of the CER.
5. We find that the following judicial authorities cited by the respondents amply support our finding :
(i) In Commissioner of Central Excise, Patna v. Universal Polythelene Industries - 2001 (130) E.L.T. 228 (T), the Tribunal held that clandestine removal and clearance was a serious charge against the manufacturer which was required to be discharged by the Revenue by production of sufficient and tangible evidence.
Standard of proof in such cases had to be on the basis of absolute proof and not on the basis of the preponderance of probabilities.
(ii) In T.G.L. Poshak Corporation v. Commissioner of Central Excise, Hyderabad - 2002 (140) E.L.T. 187 (Tri. - Chennai), the Tribunal made the following observation :
"We have carefully considered the submission and perused the impugned order. Insofar as the assessee's appeal is concerned, we notice from the extracted portion of the Commissioner's order that Revenue is solely relying on the exercise note books mainly balance sheets. The Tribunal in large number of cases which have already been noted above in the tabulated list of citations furnished by the counsel has held that unless there is clinching evidence on the nature of purchase of raw materials, use of electricity, sale, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some workers. The facts in the case of Aswin Vanaspati Industries would be identical to the facts herein as in that case also the allegation was with regard to removal of Vanaspati based on the inputs maintained. The Tribunal went in great detail and have clearly laid down that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly 33 | P a g e E/11176,11177,11179,11190- 11206/2016 apply to the facts of this case. Hence, following the ratio of the cited judgments, the assessee's appeal is allowed."
(iii) In Chennai M.T.K. Gurusamy v. CCE, Madurai - 2001 (130) E.L.T. 344 (T), it was held that quantity of excisable goods clandestinely removed calculated on basis of transport companies' records was not sustainable.
(iv) In Sanket Food Products Pvt. Ltd. v. CCE - 2005 (188) E.L.T. 107, the Tribunal held that when the proceedings against supplier of raw material was dropped evidence of such person in finding of supply of raw material for production and clearance of unaccounted goods could not be relied on. In the same decision the Tribunal had held that evidence of witnesses not available for cross-examination could not be used against the assessee.
(v) In Premium Packaging Pvt. Ltd. v. CCE - 2005 (184) E.L.T. 165 (Tri. - Del.), the Tribunal held that charge of clandestine removal of dutiable goods had to be proved by the Department by adducing cogent, convincing and tangible evidence and not on assumptions and presumptions. It was also held that statements of Director and authorized signatory regarding receipt of raw material in a clandestine removal and manufacture of finished goods therefrom was not conclusive evidence in the absence of any other material/tangible evidence.
6. In the circumstances we dismiss the appeal filed by the Revenue as devoid of merit."
32. The appellant also made a submission that they were involved in the trading of kraft paper, since we have discarded the computer printout being not admissible evidence, we need not to discuss about the content of the data available in the printouts therefore, we need not to give finding on the aspect of trading of kraft paper, whether the same was factually carried out by the appellant or otherwise.
33. As discussed above, the majority of demand amounting to Rs.11514194/- is based entirely on computer printout which we held that demand on the basis of computer printout is not sustainable. Accordingly, the demand of Rs.11514194/-, consequential penalties and interest are set aside. In addition to aforesaid demand, demand of Rs. 58302/- is not based on computer printout but it is based on packing slips recovered from M/S. GAJANAND PACKAGING, Morbi & M/S. WILSON PAPER MILLS PVT. LTD. which was prepared for clandestine removal of 48813 KGs of kraft paper however, no duty paid invoice have been issued by M/S. WILSON PAPER MILLS PVT. LTD. The appellant could not make out convincing defense as regard this demand therefore, on the basis of evidence namely packing slip the demand of Rs.58302/- is sustainable. Accordingly, we upheld the said demand. Since the amount of duty out of total duty confirmed in the impugned order has been re-determined, the appellant is entitled for reduced penalty of 25% under Section 11AC in terms of the proviso thereof. 34 | P a g e E/11176,11177,11179,11190- 11206/2016 Moreover, the amount of duty of Rs. 58302/-, 25% Penalty and interest thereupon stood paid as the appellant has made the lump sum payment during investigation. Accordingly, the demand of Rs. 58302/-, 25% penalty thereof and interest ,if any, payable is confirmed.
34. As per our above discussion and finding we are of the view that the charge of clandestine removal in respect of major quantity could not be established by the revenue. Accordingly, consequential demand of duty worked out from computer printout is not sustainable. In respect of the co- appellants a penalty under Rule 26 was imposed. This penalty is consequential to the demand confirmed by the Adjudicating Authority. Since we hold that the major demand of duty confirmed itself is not sustainable penalties of co-appellants are also not sustained.
35. Accordingly, the impugned order is modified to the above extent. Appeal of M/s. Wilson Paper Mills Pvt. Ltd. is partly allowed in the above terms. All other appeals are allowed.
(Pronounced in the open court on 16.09.2020) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Mehul