Full Judgment
Accordingly, show cause notice was issued to the respondents demanding duty on the goods specified in the four outward gate passes and proposing penalty. On adjudication, the Additional Commissioner confirmed the demand of Rs. 1,42,712/- under Section 11A of the Central Excise Act and imposed penalty of equal amount under Section 11AC of the said Act. On appeal by the respondents, the Commissioner (Appeals) has set aside the order of original authority.
2. Now revenue has filed the appeal against the order of the Commissioner (Appeals) on the ground that the Commissioner (Appeals) has erred in acceding to the appeal of the party on the ground that the stock of raw material and finished goods were tallying during physical verification. This is not correct as it was found that the quantity shown in 4 outward gate passed recovered on the spot was neither accounted for in the statutory records nor any central excise duty was paid on them. Clandestine removal of the goods is always effected by the party in a secret manner. The non-accountal and clearance of the excisable goods on the 4 outward gate passed has been admitted by the party.
3. Shri Ajay Jain, ld. Advocate for the respondents, however relied on the findings of the Commissioner (Appeals) and argued that the demand was confirmed by the original authority only on the basis of 4 outward gate passed which are the private documents of the respondents and there were neither signed by the gate keeper nor there is any evidence that the goods mentioned in these gate passed were cleared from the factory. Even the statement of the author of these gate passed was not recorded by the department nor any inquiry was made from him. Only on the basis of these documents, which is not corroborated by any evidence, duty cannot be demanded any penalty cannot be imposed. He relied on the following decisions :M.M. Dying & Finishing Mills (P) Ltd. v. CCE, 2001 99 SCR 75 (Tribunal) Where it was held that on the basis of bare entries in the diary and register allegedly maintained by the worker/Dyeing Master without any corroborative evidence in that regard does not at all stand proved.Doaba Alloys Casting (P) Ltd. v. CCE 2003 56 RLT 650 (CESTAT-Delhi) Where it was held that loose slips recovered from gate keeper and Dharam Kanta receipts are not sufficient to establish clandestine removal in absence of clear admission by the appellants and the statements/details of buyers.CCE v. Dhanavilas (Madras) Snuff Co. 2003 153 ELT 437 (Tri-Chennai) Where it was held that entries of despatches in Private Parcel Note Book not, in absence of credible corroborative evidence, sufficient to sustain charge of clandestine removal.K. Rajagopal v. CCE, Madurai Where it was held that private note books not a conclusive piece of evidence to prove clandestine removal - Scribe of notebook not examined - no other corroborative evidence with regard to purchase of raw materials and sale and purchase by particular persons clandestine manufacture and removal not substantiated.
Where it was held that private note books in English allegedly showing clearance - scribe not examined - person maintaining records knowing only Tamil not admitting to contents of note book - corroborative evidence in form of receipt of raw materials, manufacturing details, use of electricity, sale of goods and receipt of money not produced and no further investigation carried out by department - clandestine removal held not proved.
4. I have considered the submissions made by both the sides. I find that although in their appeal petition the department has pointed out that the Commissioner (Appeals) has erred in acceding to the appeal of the party on the ground that stocks of raw material and finished goods were tallying during physical verification but no evidence was shown to me to establish that fact that the Commissioner (Appeals) has erred in acceding to the appeal. Therefore, in the absence of any evidence that there was any difference in the recorded balance and the stock available at the time of stock verification, I do not find that there is any error in the findings of the Commissioner (Appeals). I find that the original authority had confirmed the demand on the basis of the outward gate passes said to have been found in the records of the party. There are the private records of the party, which if required to be relied upon to establish clandestine removal, then the statement of the author of the documents and the statements of the persons to whom the goods were sent and shown in these gate passes were relevant to establish the charge. But no such statements have been recorded to establish that the goods have actually been cleared and received by customers. I find that the Revenue has totally failed to establish by any corroborative evidence that the goods were removed clandestinely.
Therefore, the Commissioner (Appeals) has correctly set aside the order of the original authority. I, therefore, find no merit in the appeal of the Revenue and the same is rejected. Ordered accordingly.