Custom, Excise & Service Tax Tribunal
Ramoji Granite Pvt Ltd vs Rajkot on 3 December, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
Excise Appeal No. 10088 of 2022 - DB
(Arising out of OIA-RAJ-EXCUS-000-APP-061-062-2021 dated 29/12/2021 passed by
Commissioner of Central Excise, Customs and Service Tax-RAJKOT)
RAMOJI GRANITE PVT LTD ........Appellant
8-A National Highway At Sartanpar Matel Road Dhuva
Morbi, Morbi, Gujarat
VERSUS
Commissioner of C.E. & S.T.-RAJKOT ......Respondent
Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat-0360001 WITH Excise Appeal No. 10089 of 2022 - DB (Arising out of OIA-RAJ-EXCUS-000-APP-061-062-2021 dated 29/12/2021 passed by Commissioner of Central Excise, Customs and Service Tax-RAJKOT) RAJESHBHAI R KUNDARIYA ........Appellant Director Ms Ramoji Granite Pvt Ltd 8-A National Highway At Sartanpar Matel Road Dhuva Morbi, Morbi, Gujarat VERSUS Commissioner of C.E. & S.T.-RAJKOT ......Respondent Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat-0360001 APPEARANCE:
Shri Devashish K Trivedi, Advocate for the Appellant Shri Neilprakash G Makwana, Superintendent (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No. 12987-12988/2024 DATE OF HEARING: 29.11.2024 DATE OF DECISION: 03.12.2024 RAMESH NAIR The present appeals have been filed by appellants against Order-In- Appeal No. RAJ-EXCUS-000-APP-061 to 062 -2021 dated 15.12.2020 dated 29.12.2021 passed by Commissioner (Appeals) GST & Central Excise, Rajkot 1.1 The brief facts of the case are that the appellant are engaged in the manufacture of Polished Vitrified Tiles falling under Central Excise Tariff sub-
heading No. 69071010. The officers of DGCEI collected an intelligence which
2|Page E/10088-10089/2022-DB indicated that various Tile manufactures of Morbi are indulging in malpractices in connivance with Shroffs/Brokers and thus are engaged in large-scale evasion of Central Excise Duty. This intelligence was gathered during the course of an investigation in the case against a local Tile manufacturer when they came across some suspicious bank accounts. On gathering further information about these accounts and their analysis, it was observed that these accounts pertained to certain Shroffs (Cash Handlers) and cash transactions worth several crores has been made through these accounts which seemed to be related to various manufacturers of Tiles located at Morbi. Discreet inquiry was conducted to ascertain the source and destination of such transactions alognwith purpose thereof. On the basis of such inquiry, simultaneous searches were carried out on 22.12.2015 by the officers of DGGI and four Shroff's premises and some of the connected people to find out the details of these transactions. During the search operations, various incriminating documents were recovered under Panchnama. A cash amount was also seized, during the investigation statement of various persons was also recorded. On the basis of documents/ records, recovered/ submitted from/by Shroff and Broker it was revealed that Appellant is one such tile manufacturer out of total 186 Tile Manufacturers, who have adopted the aforementioned modus operandi and indulged in the evasion of Central Excise Duty by way of clandestine removal of their finished goods to the different buyers situated all over India and collecting such cash amount through the "Shroffs/Middelman", having individual bank accounts, search operations were carried out at premises of appellants and residential premises of Shri Rajeshbhai R. Kundariya, Director. Accordingly, the officers withdraw the records. Statement of director and employees of the appellant was recorded.
1.2 Scrutiny of private documents recovered from the premises of all the Shroffs viz. M/s. K.N. Brothers, M/s. Ambaji Enterprises, M/s Maruti Enterprises, M/s PC Enterprises and M/s. National Enterprise, Morbi reveals that Shroff had received cash deposits in their bank accounts from various parts of India. Shroffs have maintained records of each such credit entry mentioning the place of deposit and the name of persons associated against those entries. It was alleged that Appellant appear to have illicitly manufactured and clandestinely cleared Vitrified Tiles to various buyers without determining the correct assessable value as required under Section 4A of the erstwhile Act and without appropriate payment of Central Excise Duty. After detailed investigation, the department has issued show cause notice dated 04.05.2019 proposing recovery of duty; confiscation of goods
3|Page E/10088-10089/2022-DB manufactured and clandestinely cleared and imposition of penalties. Further, personal penalty was proposed on the Director, under Rule 26. The show cause notice was adjudicated by the Joint Commissioner, who has confirmed the proposed duty as well as its appropriation from the pre-deposit made during investigation. Further, interest as well as equal amount of penalty was imposed under Section 11AC of the Act. Further, penalty of Rs. 60,00,000/- was imposed under Rule 26 on the Director, Shri Rajeshbhai R. Kundariya. Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals) who vide impugned order rejected the appeals of the appellants. Aggrieved, the appellants are before this Tribunal.
2. Shri Devashish K. Trivedi, Learned Counsel appearing on behalf of the Appellants submits that during the investigation, no statements of any of the alleged buyers of clandestinely cleared tiles by the appellant herein are recorded. The alleged these Shroffs are supposed to be main links for depositing cash. It is pertinent to note that in any of the statements said shroffs do not even mentioned the name of the Appellant. They have no concern with the Appellant. They have only named various brokers who are supposed to have withdrawn cash deposited by the Shroffs. The Shroff M/s K.N. Brothers/ Ambaji Enterprises, Rajkot, in their statement, states that one such broker was Pravinbhai Patel.
2.1 He further submits that private records were resumed from the premises of Shroffs. Bank Statements of the Shroff M/s. K.N. Brothers/ Ambaji Enterprises were seized under the Panchanama dated 22.12.2015. Scanned image of the said Bank Statements are reproduced on internal page Nos. 8 to 15 of the show cause notice. It would be found that as far as Pravin Shirvi (Broker) is concerned, against 21 entries of cash deposit, his name is mentioned by the DGCEI in the show cause notice, although it was not there in the original bank statement. The total of these 21 entries comes to Rs. 18,21,600/- only. Further, only the words 'PS' were mentioned in the said records. The DGCEI has considered it to be 'Pravin Shirvi'. Needles to mention that when only Rs. 18,21,600/- is deposited by the Shroff, which is withdrawn by the broker, how can it be concluded that through that broker, the Appellant has received cash aggregating to Rs. 15,62,92,335/-. This shows that the case made against the appellant is completely false.
4|Page E/10088-10089/2022-DB 2.2 He also submits that records are seized from the premises of Shri Pravin Shirvi (Broker) under Panchanama dtd. 23.12.2015, a diary was recovered. Two diary sheets are scanned and reproduced on internal page No. 23 and 24 of the Show cause notice. Although, in the scanned image, at no place name of the appellant is mentioned, whereas the name of one 'Kanti' (Praksh) is mentioned, all these entries are assumed to be the entries showing payment of cash to the Appellant. It is pertinent to note that no such person named 'Kanti' is even found by the DGCEI. No statement of any such person is recorded. Without any basis, it is concluded that Pravinbhai Shirvi (Broker) had received cash from M/s. K.N. Brothers (Shroff), which was deposited in the Bank account, maintained by M/s. K.N. Brothers and that said cash was handed over to the authorized persons of the Appellant i.e. Mr. Kanti (Prakash).
2.3 He also submits that statement dtd. 24.12. 2015 of Pravin Shyamjibhai Shirvi (broker) was recorded. In his statement, in answer to question No. 4, Pravin Shrirvi is supposed to have stated that he is disbursing the cash to various ceramic companies. One such name given by him is 'Ramco Ceramic'. He states that 3,07,400/- was paid to Shri Kanti of 'Ramco Ceramics'. Although the name of the appellant company is M/s. Ramoji Granite Pvt. Ltd., it is wrongly concluded in the show cause notice that as stated by Mr. Pravin Shivri, cash given to Mr. Kranti of Ramco Ceramics, indicates cash given to the authorized person of the Appellant company.
2.4 He further submits that investigation is also conducted at the Appellant's end, two panchnamas were drawn on 15.03.2016 at Appellant's factory premises and residence of the Director. It may be observed that not even single document supporting the case of the DGGI is found from any of the said premises. There is no admission at all at the end of appellant. The Billing clerk is shown one WhatsApp Printout, he clarifies that he is doing a side business. The WhatsApp chat was a conversation between himself and one of his clients. He has saved the name of said client Mr. Amit Limbasiya as Amit (Ramco). He clarifies that said person works in M/s. Luton Ceramics Pvt. Ltd. He explains the contents of the WhatsApp chat message. The Director, Shri Rajeshbhai R. Kundariya, states in his statement that they sell their goods only under invoice and payments are received through cheque, NEFT, etc. He clarifies that as the Appellant is having a retail outlet also, if a customer purchase tiles in retail and pays in cash, the said cash is also accounted in the books. On showing an
5|Page E/10088-10089/2022-DB image retrieved on 22.01.2019 from his cell-phones, the said Director explains that there is one Dealer M/s. K.K. Enterprises, one Mr. Yadgiri is his customer. On being referred by M/s K.K. Enterprises, Mr. Yadgiri used to directly purchase ceramic tiles from the appellant. For that, Mr. Yadgiri used to credit payment amount in the bank account of M/s. K.K. Enterprise. The WhatsApp Chat shows that Mr. Yadgiri has credited Rs. 1,13,700/- in the bank account of M/s. K.K. Enterprises and that in turn, goods were supplied to M/s K.K. Enterprises under invoice by the Appellant. Thus there is no illegality. There is no clandestine clearances.
2.5 He also submits that there is yet another company named as M/s Ramco Ceramics Pvt. Ltd. It was previously owned by one Hasmukbhai Kesavbhai Patel. Said person had sold the company to one M/s. Griton Ceramics Pvt. Ltd. on 06.06.2014. Thus it is clear that 'Kanti (Chirag) (Ramco) would not mean that said person is an authorized person of the Appellant company viz. M/s Ramoji Granite Pvt. Ltd. The allegations made against the appellant are completely false.
2.6 Without prejudice, he further submits that even otherwise, demand fails. It is so because, the demand along with interest and consequential penalty is confirmed on the ground that vitrified tile manufactured by the appellant during the period from 21.04.2014 to 18.12.2015 was clandestinely cleared. However, it is not even mentioned in the show cause notice as to :
(a) Which kind of ceramic tiles were manufactured by the Appellant ?
(b) Which kind of Ceramic tiles were illicitly cleared by Appellant ?
(c) What was the price of the ceramic tiles illicitly cleared by the appellant ?
(d) what was the quality of ceramic tiles alleged to have been illicitly cleared by appellant ?
(e)Who had purchased said clandestinely/illicitly cleared titles and how much quantity was purchased by whom?
(f) At what price said illicitly cleared tiles were purchased and at what time (period/month/year/ date) they were purchased?
(g) Towards which transaction, how much payment was made by whom and how the same was credited to the alleged bank account of aforesaid M/s. K.N. Brother/ M/s. Ambaji Enterprises, Rajkot (Shroff) ?
(h) No statement of the alleged buyer who had made alleged payment is recorded. As a matter of fact, no such buyer is even identified.
6|Page E/10088-10089/2022-DB
(i) For manufacturing illicitly cleared ceramic tiles, which raw material were used by appellant ?
(j) From where such raw material was purchased ?
(k) Whether said raw material was purchased surreptitiously (without invoice) ?
(l) whether such surreptitiously procured raw material was used by appellant in their factory for manufacturing clandestinely cleared ceramic tiles?
(m) Whether appellant had capacity to manufacture alleged clandestinely cleared tiles ?
(n) What kind of manufacturing facility appellant were having, i.e. what kind of machines were installed in appellant's factory and what kind of kiln were appellant having at appellant's factory?
(o) Whether appellant have used any excess electricity in order to manufacture alleged clandestine quantity?
(p) Whether appellant had any excess labour employed in appellant's factory who could be capable to manufacture said clandestinely cleared quantity over and above the quantity cleared under invoice ?
(q) How was alleged clandestinely cleared ceramic titles transported by appellant? No statement of any transporter is recorded. Any such transporter is not even identified.
2.7 He argued that it is settled law that unless investigation is not carried out in regards to all the aforesaid, no case of clandestine clearance of excisable goods could sustain. He placed reliance on various decisions out of some are following:-
• Vishwa Traders Pvt. Ltd. Vs. Commissioner of C.Ex. Vadodara - 2012(278)ELT 362 (Tri. Ahd,) • Premium Packaging Pvt. Ltd. Vs. Commissioner of C.Ex., Raipur - 2005(184)ELT A24 (SC) • K.Harinath Gupta Vs. CCE, Hyderabad -1994(71)ELT 980 (Tribunal) • M. Industries Vs. Collector of Central Excise -1993(68)ELT 807 (Tribunal) • Krishna & Co. Vs. Collector of Central Excise, Jaipur -1998(97)ELT 74 (Tribunal) • Ganga Rubber Industries Vs. CCE - 1989(39)ELT 650 • Gurpreet Rubber Industries Vs. Collector of Central Excise, Chandigarh
-1996(82)ELT 347 (Tribunal)
7|Page E/10088-10089/2022-DB • Kashmir Vanaspati (P) Ltd. Vs, Collector of Central Excise, Chandigarh - 1996(82)ELT 347 (Tribunal) • Ashwin Vanaspati Industries P.Ltd. Vs. CCE -1992(59)ELT 175 (Tribunal) • CCE Vs. R.G. Electronics -1992(60)ELT 121 (T-SRB) • Hans Castings Pvt. Ltd. Vs. Collector of Central Excise, Kanpur - 1998(102)ELT 139 (Tribunal) • Jay Laminart Ltd. Vs. Commissioner of Central Excise, Ahmedabad - 1998(102)ELT 402 (Tribunal) • Bnco Products (India) Ltd. Commissioner of Central Excise & Customs - II 2008(232)ELT 762 (Tri, Ahmd) • Raj Ratan Industries Ltd. Vs. Commissioner of Central Excise, Kanpur 2013(292)ELT 123(Tri. Del) • Commissioner pf C. Excise Vs. Saakeen Alloys Pvt. Ltd. -2014(308)ELT 655 2.8 He also submits that in the statements of Shroffs and Brokers, there is absolutely nothing which could support the case of DGGI. The Appellant herein had requested the Adjudicating authority to afford the cross-examination of Broker and Shroffs. Despite this, no cross-examination was offered. In such situation, it is settled law that statements of the said Shroffs and Brokers which were recorded during investigation cannot be relied to confirm the demand against the appellant company. He placed reliance on the following judgments:-
• Andaman Timber Industries Vs. Commissioner of C.Ex., Kolkata - 2015(324)ELT 641 (SC) • Arya Fibers Pvt. Ltd. Vs. Commissioner of C.Ex., Ahmedabad -II 2014(311)ELT 529 (Tri. Ahmd.) • Mukesh Appliances Pvt. Ltd. Vs. Commissioner of C.Ex. & ST., Daman - 2016(343)ELT 246 (Tri. Ahmd.) 2.9 He also submits that Duty on Tiles was assessable under Section 4A of Central Excise Act, 1944, which means, the duty was required to be demanded on MRP less abetment basis. A perusal of the show cause notice, would show that Central Excise Duty Calculation is made on the basis of cash amount alleged to have been received through the middle men viz, Shri Pravinbhai Shirvi (Broker). The calculation is made on the basis of alleged details of records, alleged to have been received from the Shroffs who are having bank
8|Page E/10088-10089/2022-DB accounts and alleged details of records alleged to have been recovered from the broker Shri Pravin Shirvi. The duty payable is worked out on transaction value basis, considering duty @ of 12.36 % Adv. In other words, whatever amount is found to be deposited in the Bank Account of the Shroff, duty @ of 12.36% is calculated on the same. Section 4 of Central Excise Act, 1945 is applied instead of Section 4A. It is settled law the same cannot be done.
2.10 He also submits that there is absolutely no investigation conducted by the DGGI in the direction of ascertainment the MRP declared by the Appellant on the package of Ceramic Tiles cleared by them. The investigation agency was duty bound to check from the package as to what MRP was declared. They were supposed to follow the Rules viz. Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 introduced vide Notification No. 13/2008-CE (N.T.) dated 01.03.2008, as the same is not done, even otherwise, the demand is unsustainable.
2.11 He argued that in the impugned order, Ld. Commissioner (Appeals) travels beyond the scope of show cause notice as well as beyond the scope of Order-In-Original and observes that the duty was not required to be calculated under Section 4A (supra) and that the same is rightly calculated under Section 4 (supra), because there is no evidence that ceramic tiles were cleared for retail sale. At the outset, the Section 4A (supra), do not contemplate that only goods cleared for retail sale shall be assessed to duty under Section 4A(supra). Secondly, it is settled law that Ld. Commissioner (Appeals) could not travel beyond the scope of show-cause notice as well as Order-In-Original.
An order cannot be made against the assessee , that was based on allegations and grounds that were not raised in the show cause notice. He placed reliance on the following judgments:-
• Commissioner of Customs, Mumbai Vs. Toyo Engineering India Ltd. 2006(201)ELT 513(SC) • Reckitt & Colman of India Ltd Vs. Collector of Central Excise 1996(88)ELT 641 (SC) • Commissioner Vs. Reliance Ports and Terminal Ltd. 2016(334)ELT 630 (Guj.) • R. Ramadas Vs. Joint Commr of C.Ex., Puducherry -2021(44)GSTL 258 (Mad);
• CJ Darcl Logistics Ltd. Vs. Union of India 2023(73)GSTL 643(Jhar.)/2023 4 Centax 442 (Jhar).
9|Page E/10088-10089/2022-DB
3. On other hand Shri Neilprakash Makwana, the Learned Superintendent (AR), reiterating the finding of impugned Orders, submits that investigating officers gathered evidences from the premises of M/s. K.N. Brothers/Shree Ambaji Enterprises, Rajkot, Shroff, Shri Pravin Shrivi, Morbi, Middlemen, which indicated that Appellant routed sale proceeds of illicitly removed goods through the said Shroff and Middlemen/Broker. In catena of decisions, it has been held that in cases of clandestine removal, it is not possible to unearth all the evidences and department is not required to prove the case with mathematical precision. He also placed reliance on the following judgments:-
• Surjeet Singh Chhabra Vs. Union of India -1997(89)ELT 646(SC) • Umesha Textiles Pvt. Ltd. Vs. CCE, Mumbai -2014(314)ELT 176 (Tri. - Mum) • Montex Dyg & Ptg Works Vs. CCE, Surat -I 2007(208)ELT 536 (Tri. Ahmd) • Sharad Ramdas Sangle Vs. CCE, Aurangabad-2017(347)ELT 413(Bom) • Krishna Screen Art Vs. CCE -2015(316)ELT 534 (Guj.) • Shalini Steels Pvt. Ltd. Vs. CCE, Hyderabad- 2011(269)ELT 485(AP) • ACTO, Anti -Evasion -I, Alwar Vs. Khandelwal Foods Products • CCE, Delhi-I Vs. Praveen Kumar & Co. -2015(328)ELT 220 (Tri. Del) • National Boards Vs. CCE, Calicut -2014(313)ELT 113(Tri.-Bang,) • Ramchandra Rexins Pvt. Ltd. Vs. CCE, Bangalore-I- 2013(295)ELT 116 (Tri,.-Bang) • Soni Vallabhadas Liladhar & Others Vs. CC, Jamnagar -1983(13)ELT 1408 (SC) • Bhana Khalpa Bhai Patel Vs. CC, Bulsar-1997(96)ELT 211(SC) • Rajesh Kumar Vs. CESTAT-2016(333)ELT 256(Del) • Haryana Steel & Alloys Ltd. Vs. CCE, New Delhi -2017(355)ELT 451 (Tri,-Del) • Somesh Paper Tubes P Ltd. Vs. CCE, Daman -2014(313)ELT 669 (Tri. Ahmd)
4. We have considered the submissions made at length by both sides and perused the records.
4.1 After appreciating the submissions made by both sides and after going through the impugned order, we find that the appellant are manufacturing Tiles. The allegations of clandestine removal of goods are primarily based upon the private documents/records recovered from the premises of M/s K.N. 10 | P a g e E/10088-10089/2022-DB Brothers/ Shree Ambaji Enterprises, Shroff and office premises of Shri Pravin Shirvi, Morbi, Broker/middlemen. The revenue also relied upon the statements of said persons. On the basis of said records and statement of said persons the revenue alleged that various buyers had deposited cash in account of M/s. K.N. Brother/Ambaji Enterprises (Shroff) and subsequently after deducting their commission said Shroff had given said amount of cash to Shri Pravinbhai R. Shirvi who is claimed to be middleman (Broker) and who had in turn after deducting his commission, made payment of cash to yet another middleman/ representative of appellant. However on going through the relied upon documents and documents scanned in impugned show cause notice we find that in the said documents mentioned the words "PS" but in the table prepared by the DGGI, they have mentioned name of Shri Pravinbhai R. Shirvi and in total amount of cash paid to Shri Pravinbhai R. Shirvi aggregates to Rs. 18,21,600/- only whereas on the other hand vide show cause notice it is alleged that total amount of cash aggregating to Rs. 15,62,92,335/- was paid to the Authorized person of Appellant, the same is completely unbelievable. We also find that in present matter to find out the truth, appellant requested the cross-examination of Shri Jayesh Mohanlal Solanki, Proprietor of M/s. K.N. Brothers, Rajkot, Shri Suresh Girdharbhai Gangwani, Proprietor of M/s. Shree Siddhnath Agency, Rajkot, Shri Lalit Ansumal Gangwani, actual owner of M/s KN Brother and also other persons. However despite such request, cross- examination was not afforded by the Ld. Lower Adjudicating Authority. When statement of a third party is relied upon against an assessee, the assessee has a right to cross-examine such witness otherwise, statement of the concerned person, and in any case, statement of a said persons, could not have been relied upon for holding anything against the appellant. In the circumstances, it was incumbent upon adjudicating authority to follow the mandate of section 9D of the Act by way of examining the witness and thereafter giving opportunity to the appellant to cross-examine them. Having disregarded this mandate of section 9D, results is to giving up on the said statements for proving the truth contained therein. The same view has also been taken in the case of G-Tech Industries v. UOI and in the case of Basudev Garg v. UOI supra. Reference can be made to the Hon'ble Delhi High Court's decision in the case of J&K Cigarettes Ltd. v CCE, 2011 (22) S.T.R. 225 (Del.). While upholding the constitutional validity of the said section, the Court observed as under:
"(i) That, provisions under section 9D provides for relevancy of statements recorded under section 14 of the Act, under certain circumstances, in criminal as well as quasi judicial proceedings, to meet the ends of justice.
11 | P a g e E/10088-10089/2022-DB
(ii) That, the quasi judicial authority can rely on the statement of such a person only when the stated grounds is proved.
(iii) That, the opinion or order of the quasi judicial authority is subject to judicial review by the Appellate Authority."
4.2 It is well settled law that though the statements carry good persuasive value but such untested statements of third parties cannot be made stand- alone basis for arriving at an adverse conclusion against the assessee. Though an admission or a statement is extremely important piece of evidence but the same has to bear the test of veracity through the tool of cross examination. In the case of NU Trend Business Machine Pvt Ltd v. Commissioner of Central Excise, Chennai, 2002 (141) E.L.T. 119 (Tri. - Chennai), it was held that the demand based on the statements of persons who have not turned up for cross- examination, is unsustainable. Such inculpatory statements lose their evidentiary value when the same are not corroborated by Revenue. To the same effect is another decision of the Tribunal in the case of Rawalwasia Ispat Udyog Ltd. - 2005 (186) E.L.T. 465 (Tri. - Del.), laying down that allegations of clandestine removal based upon the statement as also the invoices issued by the informer, cannot be upheld in the absence of cross examination of the deponents of the statements.
4.3 We have also gone through the records which were seized from the premises of Shri Pravinbhai R. Shirvi Morbi, under Panchanama dated 23.12.2015. Scanned images of said documents are also reproduced on Page Nos. 23 & 24 of the Show Cause Notice. Based on the same, on page No. 25 a table is prepared by the DGGI. On that basis it was contended that Shri Pravinbhai R. Shrivi had paid cash to the Appellant. However, perusal of said records and scanned image on page 23 & 24 of the show cause notice clearly show that at no place name of appellant's company is mentioned in the said entire records. Further in statement dated 24.12.2015 Shri Pravinbhai R. Shirvi in answer to Q.No. 4 in his statement, has named various tiles manufacturers to whom he was distributing cash. One of the name given by him is of M/s Ramco Ceramics and against Q.No. 6 he has explained 4th entry pertains to cash disbursement which was paid to one Mr. Kanti of M/s Ramco Ceramics. However, name of Appellant i.e. M/s. Ramoji Granite Pvt. Ltd. is nowhere mentioned in the entire statement. Beside this, the so-called person 'Kanti' was not found by the investigating team, no statement of any such person is even recorded. Department nowhere recovered any piece of paper from the Appellant's premises by which it can be concluded that the Appellant 12 | P a g e E/10088-10089/2022-DB is involved in alleged clandestine clearance activity of tiles. We find that Tribunal in the case of Sharma Chemicals v. CCE, Kolkata - 2001 (130) E.L.T. 271 (Tri.-Kolkata) has observed that the distance between 'may be true' and "must be true' is a long distance which must be covered by legal and impeachable evidence. The entire evidence referred to by both the adjudicating authority in the present matter stand on a doubtful platform and cannot be made the basis for confirming huge demands on the ground of clandestine activity. Similarly, in the case of CCE, Chandigarh-1 v. Shingar Lamps Pvt. Limited [2010 (255) E.L.T. 221 (P&H)], the Hon'ble High Court held that the private records which have been discovered during the raid may not be sufficient for holding clandestine production and removal but there should be some positive evidence suggesting clandestine production and removal.
4.4 We also find that in the present matter appellant's production capacity is not being doubted by the revenue; that there is no direct evidence of procurement of raw material and clearance of tiles, buyers of alleged clandestine cleared tiles have not been identified; that the excess consumption of electricity is neither alleged nor proved on record; that excess labour utilization has not been examined; and above all, the transporter of the allegedly removed Tiles have not been identified and their statements recorded. Thus the Revenue's case which is based mainly on the third party records and statements cannot be sustained. The Tribunal in the case of Charminar Bottling Co. Pvt Ltd v. Commissioner of Central Excise, Hyderabad, 2005 (192) E.L.T. 1057 (Tri. - Del.) held that the charges of clandestine removal based upon the evidences accounts and records of third party cannot be sustained when there is no evidence on record as regards extra procurement of raw materials, clandestine manufacture of the goods as also the movement of the Final Products and the absence of identification of the buyers. It may be mentioned here in the instant case, the conditions for sustaining the addition laid down in the case of M/s. Continental Cement Company v. Union of India and Others [Central Excise Appeal No. 228/2010 = 2014 (309) E.L.T. 411 (All.)] passed by Allahabad High Court have not been met. Hence, we find no merits in the impugned order.
4.5 We further note that the allegations of clandestine removal are required to be established by production of positive and tangible evidences and should not be arrived at on the basis of assumptions and presumptions. It does not require the support of any judicial pronouncement to observe that the charges of clandestine removal being quasi-criminal are required to be proved 13 | P a g e E/10088-10089/2022-DB sufficiently and such findings cannot be arrived at the assessee in the realm of conjunctions and surmises. Case of the Revenue in the present matter is only based upon the records of Shroff and Broker/middleman which even do not contain the name of the appellant and statements which are not supported by any independent corroborative evidence. The whole demand is theoretical.
5. In view of the above discussions, the impugned order cannot be sustained and accordingly the same is set aside. The appeals are allowed with consequential relief as per law.
(Pronounced in the open court on 03.12.2024) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Raksha