Indian Kanoon - Search engine for Indian Law

4. The Learned Advocate on behalf of the Appellants submits that the demand of duty of Rs. 14,65,949.00 is on the shortage of 48,2220 L.Mtrs detected on the basis of Lot Register. He submits that the officers had not carried out physical stock verification of the grey fabrics properly and the said goods were lying in the factory in semi-finished stage. The demand of duty of Rs.27,560.00 is not seriously contested by the Learned Advocate, being a small amount. The other demand of duty is Rs. 17,72,360.00 based on the job cards and after allowing shrinkage to the extent of 5% has alleged that 5,53,862.45 L.Mtrs of MMF(P) has been cleared without payment of duty. He submits that the demand of duty of Rs.17,72,360.00 is based on theoretical calculation of the job cards, which has no nexus with the physical verification of the stocks. The demand of duty of Rs.1,81,38,719.00 on 56,68,349.8 L.Mtrs alleged clandestine removal of processed fabrics, is on the basis of rough scribbling papers recovered from the factory of the assessee company, which has no relation to the receipt of the grey fabrics, manufacture and clearance of the MMF(P). He further submits no statement of the writer of the rough scribbling was recorded. It is submitted that the Central Excise Officers attempted to corroborate these rough scribbling termed as L.R. Challans, with the statements of the transporters and the statement dt.22.05.2006 of Shri Sandeep Khaitan. He drew the attention of the relevant portion of the statements of the employees of the transporters as reproduced in the Show Cause Notice. The employees of the transporter merely stated that process of issuing the transport documents. There is no admission by the transporters of delivery of the grey fabrics on the basis of the said rough scribbling.

12. On perusal of the above Panchnama, it is evident that on 26.11.2001, the Appellant was having two Stentor machines of four chambers in each machine in the mill. Thus, there was no change of machinery after 01.03.2001, till 26.11.2001. So, the annual capacity of production would be 96 lakhs Sq.Mtrs as per Trade Notification No.17/2000 (supra). In this context, the learned Advocate strongly opposed the demand of duty of Rs.1,99,11,079.00 on 62,22,212.25 L.Mtrs on alleged clandestine removal of goods on the basis of scribbling papers, job cards and statements of transporters. It is submitted that during the relevant period of 6 months, the appellant manufactured and cleared about 41 lakhs Sq.Mtrs on payment of duty as evident from the monthly return out of capacity of 48 L.Mtrs. Hence, the allegation of clandestine manufacture and clearance of about 62 lakhs Sq.Mtrs in addition to about 41 lakhs Sq.Mtrs are beyond the manufacturing capacity of 8 chambers.

16. The Adjudicating authority proceeded on the basis of rough scribbling recovered from the factory premises of the assessee. The Learned Authorised Representative heavily relied upon the statements of employees of the transporters. Shri Rajiv Sharma, Manager of M/s Kanhaia Cargo, Surat, in his statement dated 26.05.2006 stated that each LR is prepared in four copies (i) consignee copy (ii) consignor copy (iii) Lorry copy (iv) office copy. He confirmed that grey fabrics covered under LR were delivered from their godown situated at Saroli, Surat to the person who produced copy of LR/letter pad. On being further asked, he stated that such consignee copy of LR/Letter pad/bond were not available with them. Similarly, Shri Harandra D. Kotwala Accountant of M/s. South Gujarat Transport Service, Surat in his statement dated 29.05.2006 stated that they do not have consignee copy or letter pad on the basis of which delivery of grey fabrics were made in year 2001-02. It is seen from the Show Cause Notice that all the employees of the transporters in their statements categorically stated that the copy of LRs or letter pad as shown to them were not available with them. So, it is evident from the statements of the employees of transporters that they could not produce copy of the LRs as relied upon by the Department. It is stated by the employees of transporter that they retained the office copy of the LRs in their record, but, they could not produce them. So, it is difficult to accept that these LRs were issued by the transporters. It is noted that the Adjudicating Authority also rejected the opportunity of the cross examination to the employees of transporter. In any event, the statements of the transporter are not corroborative with any evidence, and therefore, the said statements has no evidentiary value. The Tribunal in the case of Tejwal Dyestuff Industries (supra) observed that recording of confessional statement would not put an end to investigation particularly when such strategic confessional statement retracted. The relevant portion in the case of Tejwal Dyestuff Industries (supra) is reproduced below:-