Customs, Excise and Gold Tribunal - Mumbai
Fenil Udyog vs Commissioner Of Central Excise on 1 May, 2006
ORDER K.K Agarwal, Member (T)
1. The appellants are SSI unit engaged in the manufacture of clutch plates. The total value of the clearance during the year 1995-96 was Rs. 14,62,323.90/-. However, on visit of the Central Excise officers in the factory it was found that they have cleared finished goods amounting to 18,00,865.20 on the basis of delivery challan which were meant for certain raw-material on job work without raising any invoice and payment of duty. The appellants also admitted destruction of challan during various months, the total value of which aggregated to Rs. 9 lacss. They were therefore issued a show cause notice seeking to demand duty and impose penalty. The duty amounting to Rs. 58,159.49/- was demanded and penalty of Rs. 30,000/- was imposed which was confirmed in appeal.
2. The learned advocate for the appellants submits that demand of duty was based solely on the statement of the partner who has subsequently retracted the statement within 2-3 days by filing an affidavit and that there is no other evidence besides the statement of the partner in the form of procurement of raw material, manufacture of final goods and statements from the purchaser. The goods cleared under delivery challan were several times returned and therefore there was no requirement of accounting them in clearance, Since they were not under excise control they were not required to follow Rule 173 H produce for return of goods etc. They referred to Cegat decision in the case of T.G.L. Poshak Corporation v. CCE. wherein it was held that the charge of the clandestine removal based merely on note books maintained by workers and other private accounts not sustainable unless supported by corroborative evidence with regard to purchase of raw-material, manufacture of final goods, flow back of money or any seizure or statements from the purchaser. This decision in turn referred to series of Cegat decisions where a similar view has been taken.
3. The learned J.D.R. however, submits that even though the statement is retracted by one of the partner it was not done or objected by the other partner and therefore once the offence was admitted there was no need of any further investigation. The demand is therefore correctly confirmed and penalty imposed.
4. I have considered the submission. I find that in this case the demand is confirmed solely on the basis of the statement of the partner which has been retracted by filing affidavit by one of the partner who was mainly looking into the business. Since the statement was retracted within 2-3 days there was a obligation upon the department to investigate further by contacting or searching the buyer to whom the alleged goods have been supplied when the delivery challan indicates the name of the customers. Therefore in absence of any other corroborative evidence the demand cannot be sustained solely on the statement of the partner which was retracted as has been held by the tribunal in the decision cited by the appellant and several other decisions.
5. In view of above I set aside the order of the lower authority and allow the appeal.
(Pronounced in Court)