Full Judgment
1.2 The Addl. Commissioner confirmed the proposals as made imposed penalties & offered redemption fines. The Commissioner (Appeals) relying upon the decision in case of CCE v. Moon Beverages Ltd 1999 (33) RLT 153 remitted the matter back for denovo proceedings with the direction that no mandatory Page 0216 penalty under Section 11AC & interest under Section 11AB should be ordered for the period prior to 28/9/96 following Marcandy Prasad, 1999 (107) ELT A121 & Elgi Equipments 2001 (128) ELT 52 S.C.1.3 The Adjudicator, after considering the remand order confirmed the confiscation of 75 MT of Clinker valued at Rs. 90,000/- & duty of Rs. 18,96,131 under Section 11A(1) with interest under Section 11AB & penalty under Section 11AC of Rs. 5,85,958/- in respect of clandestine clearances after 28/9/96 & penalty of Rs. 6,50,000/- under Rule 173Q on the assessee and Rs. 2 lakhs & Rs. 1.5 lakhs on the Accountant & the Managing Director under Rule 209A.1.4 In appeal, the Commissioner (Appeals), after observing that the Adjudicator had not taken into consideration affidavits filed by the Accountant & the Managing Director & concluding that there was no corroborative evidence i.e. electricity consumption, consumption of Raw materials, mode & manner of transport of goods, receipt of extra sale proceeds etc to conclude clandestine removal of excisable goods proceeded to hold that it is well settled that revenue cannot proceed solely. On the basis of seized private note books unless the entries are corroborated & relying upon the decisions of this Tribunal set aside the order & allowed the appeals after observing that directions in remand were not followed. Hence these appeals by Revenue.
a) statements of Accountant & Managing Director were inculpatory & voluntary & confessional statements retracted bilatedly b) affidavits dtd 9/2/98 & 31/3/98 communicated by Defense advocates letter dtd 27/10/99 were retraction on hypothetical defense & an after thought. They are only to mislead the adjudication. The finding of the CCE (A) that the affidavits were not taken into consideration by Adjudicating authority is not correct. The order is not showing correct picture.
submits therein it was held that affidavits of experts prepared with a view to boost the partys case in the proceedings & when not backed by any technical authority or literature would not be reliable & this was followed in Kedia Agglomeratue Marble Ltd ) Trib d) Corroboration is available from the statements of the Accountant on the production capacity of the assessee & is confirmed by Managing Page 0217 Directors statements, receipts of M/s Kalpana Trading Agency Keshod & Others on record.
2.2 Heard the Ld. DR who took us through the various decisions relied upon in the appeal memo. The respondents are not represented inspite of notice.
2.3 We proceed to decide the issue after considering the material on record & the submissions made.
a) The Accountants affidavit, relied by the Ld. Commissioner (Appeals) reads as - I am working as an Accountant in M/s Harikrishna Cement & Chemicals Industry Pvt Ltd, Vijaypur road, Vijaypur, dist. Junagadh. In the September-October of 1997, I had requested to the managing director of the company for increase in my pay. For this purpose I had frequently requested to the managing director of the company Shri Dhirendrakumar Sinhar. The managing director of the Company had denied for increment in my pay and hurt my self respect in the presence of other staff members. So I had threatened him that I will see you and to your company, and he had told me that do what ever you can.
After this incident, I had decided to create troubles for the company and its managing director by creating a rumor that this company is evading taxes.
As I was working as an accountant of the company, the financial records were in my control. With the details of actual business transaction which were stated in the financial records. I had prepared a worksheets for the year 1994-95, 1995-96, 1996-97, 1997-98 which were containing actual as well as dummy figures and in the said work sheets, I had created a pink picture of the business of the company showing unaccounted business transactions. I had prepared these sheets to hand it over to the Central Excise department.
On 29/1/98, the Central Excise officers had visited the factory. At time of their visit, I had decided to handover the said sheets to the Central Excise Officers. Before that I had a quarrel with the managing director of the company, and finally, I had handed over the said sheets to the Central Excise officers.
After seizure of the documents from the factory, at night, I felt that whatever I have done is not fair on my part. I should not do such thing for my employers who have given me bread and outter.
On the next day on 30/1/98, the Central Excise officers had called me for my statement. At the time of recording my statement, I told the Central Excise officer that I have changed my mind and I do not want to create any trouble to my employers and requested to give me back the said dummy work sheets.
The officers had denied for giving it back as the same had been seized under the panchnama and advised me to give detailed statement on the said work sheets for the purpose for which the same had been prepared by me. The officers had promised me that I will not be in trouble due to giving any statement on the said work sheets.
Ultimately on 30/1/98, the Central Excise officers had recorded any statement for details of the said work sheets, containing dummy figures.
As stated above, the said worksheets are creature of my mind and has no relevance with the business of the Company. In the said work sheets some actual figures have also been covered to create an image that the same are of the total (accounted as well as unaccounted) business of the company. Since, the said figures are dummy the same could not be correlated with statutory records.
So, my statement recorded by the Central Excise Officers on 30/1/98, is against facts and hence, is not acceptable to me.
While that of the Managing Director is only explaining the circumstances under which he was pressurized to make the statements.
A reading of the affidavits do not disclose to us that the same should be evidence on an affidavit as envisaged in the apex court decision in case of M/s Novopan Industries Ltd & other decision as relied by Revenue. These affidavits are not of Expert witness.
The reading of the affidavit of the accountant brings out the reasons for having tendered his statements to the Central Excise Officer. A statement made out of an inducement of profit or gain or motivated by illwill/hatred etc would be a statement unworthy of the reliance being placed on the same. The CCE (A)s finding to the effect - a) It is observed from the impugned order that except for attaching a great evidentiary value to the confessional statements Accountant and Managing Director that were recorded by the officers (refer para 3.6.2), the Adjudicating Authority does not make any reference or even a single corroborative evidence to prove the allegation which in literal terms translate into surreptitious manufacture and removal of as much as 3568.90, 4960.60, 3868.55 and 3496.55 mts of cement valued at Rs. 62.71, 94.24, 81.68 and 70.79 lakh without payment of Central Excise duty.
In regard to evidentiary value of a retracted statement, the Tribunal has held as under : 7. As regards the charge of clandestine removal of the tyres and tubes, the learned Collector has himself admitted in paragraphs 3 and 3.1 that it is Page 0219 based mainly and solely on the private diary which was written by Shri Mahavir Parshad. The learned Collector has confirmed the demand on the basis of the entries made in the said diary after referring to the confessional statement of Shri Surinder Singh and the statement made by Shri Mahavir Parshad discarding the evidence of the defense witnesses. While relying upon the confessional statement of Shri Surinder Singh, he has not taken into consideration the retraction made by him at all nor he has considered the discrepancies and material contradictions appearing in the statement of the said Mahavir Parshad. To take the alleged confessional statement of Shri Surinder Singh, First it may be stated at the outset that the learned Collector has not taken into consideration the retraction at all while using it for the purpose of considering the evidentiary value of the diary. In the case of Kali Charan Basant Lal v. Collector of Central Excise, , it was held that it is a trite law that whenever a confessional statement is retracted, it is the duty of the authority deciding the case, to take into consideration the said confession while coining to a particular conclusion. For, retraction does affect the voluntary nature and truthfulness of the confessional statement and, therefore, no importance can be attached to that part of the confessional statement, which incriminates him as it was immediately retracted. On this score alone the said confessional statement cannot be relied upon for the purpose of appreciating the evidentiary value of the notebook in question. That apart, in the case of Sarwan Singh v. State of Punjab, supra, it was held that it must not only be established that a confession is voluntary but also it must be established that it is true. For the purpose of establishing the truth, it is necessary to examine the confession and compare it with the rest of the evidence on the record.
And again, statements would lose their evidentiary value when these are not corroborated.
There is therefore no other alternative but to collate and corroborate the oral evidences that are recorded from time to time in an evasion related investigation in order to lend the element of sustainability to a demand.In Manubhai U Patel v. Commissioner of C.Ex. Rajkot, , the Mumbai Bench of the Tribunal noted that: 22. Whenever the charge of clandestine removal is made, the department has to prove that assessee has procured all the raw materials required for the manufacture of final product, the assessee have utilized human resource in the form of labour and paid that much wages for the production of the quantity of units which have been confirmed in the Page 0220 Order in Original as produced, what is the optimum electricity consumed for producing the quantity that is sought to be added to production on the ground that the same was not accounted, through evidence of tampering of the meter, the evidence of not reflecting the correct expenditure in the account books, in procuring the raw materials, the expenditure of actual amount on transportation of goods to the customers place, as per the requisition of the customer. Normally these are all the evidence required for confirmation of the charge of clandestine removal by the department.
In the same vein, it has now been a settled laid out position that the Revenue cannot proceed solely on the basis of a seized private notebook unless the entries are corroborated by various other pieces of evidences (L. Rajagopal v. Commissioner of Central Excise, Madurai ). Each link in the aspect of production and clandestine removal is required to be proved. In other words, the charge of clandestine removal should be proved beyond doubt by production of affirmative evidence (Beco Industries Ltd ) and department ought to produce corroborative evidence in cases where clandestine removal is alleged (Krishna & Co. , Bearing Manufacturing Company, 2000 (123) ELT 1148).
Cannot be found fault with. If the statements are taken out, the entire case fails.
b) there is no ground taken to satisfactory challenge the finding arrived by the CCE (A) to the affect.
Contextually, despite being specifically desired, the impugned order does not provide any detail as to what was the actual quantity of inputs-principal raw material for manufacturing cement and HDPE bags (packing material) that was received in the appellant unit for manufacture of the quantity allegedly manufactured by the appellant unit. Limestone, as the appellant contest is procured only from Government controlled mines from payment of royalty and that movement of limestone from mines to their factory through trucks is duly recorded in the registers maintained by them. There is also no reference to electricity consumption, mode (conveyance) and manner (loose/pack) of clearance, evidence from Consignees whose name (s) appear in the private record etc. Again, when one takes into consideration that the quantity of cement allegedly removed by appellant in the above period it would become clear that the extent of sale alleged against the appellant unit would have involved realization of a huge amount of sale proceeds, as alleged in the notice itself. Again, there is no evidence to show that appellant unit received any sale proceeds, as not a single consignee as per the private record appear to have been summoned for inquiry.
Then the inconsistencies between oral and documentary evidences are also all too evident. Shri Dhirendrakumar Hiralal Sinhar, Managing Director in his statement is said to have accepted the fact triplicate and quadruplicate copies of the bills-cum-challan Nos.
501 and 502 seized from their factory were kept blank and that the consignees therein were instructed to destroy its original and duplicate copies immediately upon receipt of cement at their end. At para 3.5.1. of its order, the Adjudicating Authority while relying upon the above has observed that the blank copies of these clearances documents were kept blank with a purport to manipulate the clearance figures. This, however, does not appear to be the correct position. A perusal of triplicate copies of both the above bills cum challan forming part of the record reveal that there is no detail which can be said to have been left blank to be entered by the appellant at a later stage. While both clearly reveal clearance of 10 MT each of cement, it also contains details of previous and total clearance of cement. And since no other bills cum challan are relied upon to support its allegation relating to modus operandi, it can only be held that the contradiction noticed above is sufficient to nullify any presumption in regard to non accountal and clandestine removal of cement.
In the same token, in absence of any inquiry with the transporter whose particulars are available on invoice cum challan Nos. 456, 459, 466, 472, 477, 483, 488 and 459, there is hardly any justification in demanding duty by relying upon the statements of Shri Devraj Veja Vadecha, Parbhat Nanji Palpara and Ugad Kama Parmar wherein they interalia stated that persons shown in above invoices were not the residents of their villages. The Adjudicating Authority has failed to discern that the crux of the allegation is clearance of 10mt of cement under each of the above invoices by accounting for not more than 10 bags in the statutory register. The only person who could have given a proper account of the quantity cleared under the above invoice cum challan is the person who transported the goods, be they in bags or tons. In having failed to make any effort to summon the transporter and record his statement, it cannot be presumed that each of such invoices related to clearances of 10MT cement.
All in all, it is to be noted that the allegation of clandestine removal against the appellant unit remains to be proved to the hilt.
There is nothing in the findings of lower authority on the basis of which it can be held that notwithstanding the retraction, the facts recorded in the statements of Accountant and Managing Director are true. The order does not point towards any unflinching and unimpeachable evidence that can establish the allegation. I am therefore unable to sustain the findings of lower authority on clandestine removal contained in the impugned order. Further, in having failed to prove mens rea, confiscation of 75 tons clinker found lying in factory premises is also set aside by relying upon the findings of three member Bench of Tribunal in Bhilai Conductors Pvt Ltd 2000(125) ELT 781.
In view of the same, the findings cannot be faulted with. The reliance on the Tribunals decisions in the case of Bhilai Conductors Pvt Ltd 2000 (125) ELT 781 has to be upheld & the liability to confiscation of 75mt of clinker has to be set aside. Duty demands & penalty under Rule 173Q & or Section 11AC cannot be sustained.
c) When the liability to confiscation is not being upheld there is no cause or case for a penalty under Rule 209A. At the same time, it is also to observe that in having failed to pass a reasoned order by keeping in view the various directives given by this authority while remanding the matter back for denovo proceedings, the Adjudicating Authority has certainly circumvented the mandate flowing out of the earlier appellate order. On this ground too, the impugned order is liable to be set aside.
3.2 The entire proceedings are therefore to be set aside. Consequently no merits are found in the appeals filed by Revenue.