1. All the appeals are being disposed off by a common order as they arise out of the same impugned order passed by Commissioner of Central Excise vide which he has confirmed demand of duties against M/s. Indo Green Textiles Pvt. Ltd. (now known as M/s. Usha Fashions Pvt. Ltd.) and has imposed personal penalties upon various appellants.
2. As per facts on record the appellant M/s. Indo Green Textiles Pvt.
Ltd. were engaged in the processing of Man Made Fabrics classifiable under Chapter 54 & 55 of the first Schedule to the Central Excise Tariff Act, 1985 Their factory premises were put to search on 21.5.2002, which resulted in seizure of documents/records/computer floppies etc. Proceedings relating to physical stock inventory of grey fabrics resulted in shortages of processed fabrics totally valued at Rs. 74.63 lakhs (Approximately). Another quantity of processed MMF totally valued at Rs. 31 .80 lakhs (Approximately) were found to be excess than the recorded balance, which was seized. Similarly search was conducted in the office premises of the said appellant resulting in seizure of documents/records. It is seen that Shri Kamal Singhania one of the Directors of the company accepted the shortages and excess and also deposited an amount of Rs. 10 lakhs (Rupees ten lakhs only) towards duty vide TR6 Challan dt. 28.5.2002.
3. Apart from searches conducted at the factory and office premises of the said appellant, the office premises of the transporter M/s. S.P.Thakkar Transport Company (hereinafter referred to as M/s. SPTT), situated at Bhiwandi and Kalbadevi, were also put to search. The records maintained by the said transport company were taken into custody. Simultaneous searches were also made in the residential premises of M/s. Kamal Singhania Director of M/s Indo Green Textiles Pvt. Ltd. as also in the factories of merchant manufacturers and their statements recorded.
4. Based upon the above, proceedings were initiated against the appellants by way of issuance of two show cause notices. Show cause notice dt. 15.11.02 proposed confiscation of the seized goods and show cause notice dt. 30.3.2004 proposed confirmation of demand of duty of Rs. 4,30,85,194.84 along with imposition of personal penalty. The said show cause dt. 30 3 2004 raised demands in respect of - (i) processed fabrics found short in the factory during stock verification carried out on 21/22-05-2002 (involving duty of Rs. 11,94,219.20), (ii) processed fabrics seized from the premises of Merchant Manufacturers and transporter (involving duty of Rs. 2,17,004.64), and (iii) processed fabrics detailed in Annexure 'B' to the show cause notice as clandestinely cleared by M/s. Indo Green (involving duty of Rs. 4,16,73,971.00).
5. After due adjudication proceedings, the demand stand confirmed and various penalties imposed by the impugned order.
6. Shri Prakash Shah, Advocate, Shri Amit Jain C.A. Shri A.K.Chatterjee Advocate, Shri J.F. Pochkhanwala Sr. Advocate appeared for the appellants. Shri Prakash Shah, arguing for M/s. Indo Green made it clear that they are not contesting demand at Serial No. (i) as detailed above on account of the small amount. As regards the demand against Serial No. (ii), Ld. Advocate submits that the same is already included in Serial No. (i), inasmuch as, the fabrics found short in the factory premises were ultimately seized from he premises of the Merchant Manufacturer and the transporter.
7. As regards the main duty demand of Rs. 4,16,73,971.00 Ld. Advocate submits that the entire demand for the period 1.3.2001 to 23.5.2002 is based upon the records maintained by the said transporter. It is alleged that the movement of the processed fabrics by the said transporter under the name as "S" One Tex/S One Dying" belongs to the appellant M/s. Indo Green Textile Pvt. Ltd. and reflect upon the clandestine clearance by the said processor. For the above purposes reliance has been placed upon the statement of Shri Ajay S. Thakkar partner of M/s. SPTT, who in his statement recorded on 28.5.2002 has confirmed that the said code name is for M/s. Indo Green Textile and he has been instructed by Shri Kamal Singhania to use the said code number. Drawing our attention to the transporters document appearing at page 529-530 of the Paper Book, the Ld. Advocate submits that a perusal of the said document would show that the same pertain to M/s. "S" One Tex' and there is no indication showing any connection with the appellant. It is the statement of the transporter of the said transport company indicating that the said "S One Tex/Dying' relates to the appellant. Ld. Advocate submits that the cross examination of the said transporter has been denied by the Commissioner on the ground that the same amounts to delaying tactics on the part of the appellant. Ld.
Advocate submits that inasmuch as the entire case of the Revenue is based upon the said statement of the Transporter, his cross-examination was vital to their case. Inasmuch as, the veracity of the said statement of the transporter has not been tested by the tool of cross examination, his statement cannot be taken into consideration. If the said statement of Shi, S.P. Thakkar is taker out of the records, there is no other evidence to show that the said code number belongs to the appellant. In any case, submits the Ld. Advocate that the said statement being in the nature of statement of co-accused cannot be made the sole basis for confirming the charge of clandestine removal against the appellant in the absence of any other corroborative evidence.
Drawing our attention, once again to the records maintained by the said transporter Shri Shah submits that such records were being maintained by the transporter in respect of number of other manufacturers also under various other code numbers. No investigations have been conducted into all those cases and it is only that the transporters statement had been recorded against the appellant. He submits that the 60% of the confirmed demand was available to the appellant as deemed credit in terms of Notification No. 7/2000 and as such there was no motive for the appellant to indulge in clandestine removal. He, for the above submissions, relies upon various decision of the Tribunal, in support of his contention that charges of clandestine removal are required to be established beyond doubt and cannot be made on the basis of assumption and presumption.
8. As regards the demand of duty of Rs. 11,94,219.20, confirmed in respect of the processed fabrics found short during stock verification, the same is not being contested. However, confirmation of demand of duty of Rs. 2,17,004.64 confirmed in respect of processed fabrics seized from the premises of merchant manufacturers and transporter is being assailed on the ground that the same is already included in the quantum of Rs. 11,94,219.20 confirmed in respect of short found goods.
As such, it has been contended that the goods which have been found short in the appellants premises are the same which were found in the merchant manufacturers premises and as such there was no justification for confirming the demand again.
9. We have also heard the other appellants through their Advocates challenging the imposition of penalties upon them.
10. Shri R.K. Pardeshi Ld. DR appearing for the Revenue submits that there is a lot of evidence collected by the Revenue during investigation. The appellant's Director, in his statement has admitted his duty liability and has also deposited cheque of Rs. 10 lakhs (Rupees ten lakhs only) towards duty. Statement of the merchant manufacturers have also revealed that the appellant was indulging in clandestine removal. As regards the main demand based upon the transporters records, Shri R.K. Pardeshi submits that in the light of the statements made by the transporter, Commissioner was justified in confirming the same. Shri R.K. Pardeshi submits that the Commissioner has rightly observed that going by the settled position in law regarding presumptive evidences and burden of proof, the burden in the instant case, is first on the Department to prove that the code number "S" One Tex/Dying' were belonging to M/s. Indo Green. By observing so he has referred to the show cause notice, which has brought out the Modus Operand adopted by the appellant. It has been clarified by the Commissioner that it s only w.e.f. April 2001 onwards, when the Compounded Levy Scheme was done away with, that the appellant started indulging in clearing the goods in their code name. The Commissioner has also referred to the fact that during the course of search of their appellant factory, one truck loaded with grey fabrics and carrying documents which indicated the name of the party as 'S One Tex/Dying', which show that the name 'S One Tex/ Dying' refers to the appellant only.
11. We have heard the submissions made by both the sides and have gone through the impugned order. The fact of search of the appellant's premises and seizure of the excess found goods from various placed relates to the duty demand of Rs. 11,94,219.20. The various statements recorded also related to the clearance of the fabrics involving the above duty amount. The said duty amount is not being contested by the appellant. As such, without referring to the various evidences on record, we confirm the duty of Rs. 11,94,219.20. However, as regards confirmation to duty of Rs. 2,17,004.64, we take note of the appellants contention that the same is in respect of processed fabrics seized from the premises of merchant manufacturers and transporter and is already included in the duty amount of Rs. 11,94,219.20 detected at the appellants factory We agree that there is nothing on record to show that the shortages found in the factory are not the excesses found in the merchant manufacturers premises As such, we set aside the demand of duty of Rs. 2,17,004.64/-.
12. As regards duty demand of Rs. 4.16 crores (Approximately), we have gone through the order of the adjudicating authority and find that said demand for the period 1.3.01 to 23.5.2002 is mainly and primarily based upon the records manufactured by the transporter M/s. SPTT. The examination of the records maintained by the said transporter reveal that under various columns, date, meter & taka are mentioned under various parties names. One of the column belongs to 'S One Tex'. A bare perusal of the said record does not reveal in any manner that the said accounts maintained for 'S One Tex' belong to M/s Indo Green. It is only the statement of the transporter, which explains that "S One Tex' is code name for M/s. Indo Green.
13. The question which arises, for confirming/upholding demand of duty against the said processors is as to whether it is safe to rely upon the said un-corroborative statement of the transporter, which is in the nature of statement of co-accused. Admittedly, the adjudicating authority has not allowed the cross examination of the said transporter so as to test the veracity of the same. Presuming for a second that the said transporter has some score to settle with the processors and has attributed the records maintained under code name 'S One Tex', which may belong to some other persons, to the appellant. Surprisingly, the records maintained under other names, which also appear to us to be some code names, have not been investigated into and there is no statement of the transporter in respect of the other persons. We find that law on the point is very clear the charge of clandestine manufacture and removal of the goods is required to be proved by the Revenue by production of affirmative and tangible evidence and beyond doubt. The same cannot be sustained on the basis of surmises and conjectures. The Tribunal in number of decisions, has reiterated that entries in private records can at the most raise a doubt but cannot take the place of evidence in the absence of other corroborative evidences like raw material utilization, labour employed, power consumption and packing etc. As observed by the Tribunal in the case of Sharma Chemicals v. Commissioner of Central Excise Calcutta-11 , which discusses the law on the point, the distance between " may be true' and 'must be true' is long distance which must be covered by legal and impeachable evidence. We find absence of such evidence in the present case. The corroboration, which the Commissioner has sought to achieve: by referring to the presence of a truck loaded with grey fabrics sent by merchant manufacturers under the documents describing the processors as 'S One Tex' stand on the same doubtful platform as that of the transporters statement. There is again, nothing in the said documents to establish the fact that the grey fabrics were sent to the appellant for further processing. To confirm huge demands of duties based upon such flimsy evidences which are nothing but presumptive evidences, is not in accordance with the establish law on the point. The Revenue's case that the appellants, for a period of 11/2 years, were indulging in clandestine removal of huge quantities of processed fabrics by operating smoothly, without an inkling to the Revenue and without ever being caught by the Preventive Officers, cannot be upheld on the basis of mere entries made in the transporter records, which in any case does not even show their name.
14. In view of the foregoing, we find that in the absence of any positive evidence on records, confirmation of demand of duty to the tune of Rs. 4,16,73,971/- against M/s. Indo Green is not called for.
The same is accordingly set aside along with setting aside of demand of Rs. 2,17,004.64, as already discussed. However demand of duty to Rs.11,94,219.20 is upheld.15. As regards personal penalty of Rs. 4,30,85,192/- imposed under Section 11AC on M/s. Indo Green Textile Pvt. Ltd., we find that the demand of Rs. 4.16 crores (Approximately) having been set aside by us and demand of around Rs. 11.94 lakhs having been confirmed, the said penalty is required to be reduced. We accordingly reduce the penalty to Rs. 3,00,000/- (Rupees three lakhs only). Similarly penalty of Rs. 4,28,68,190/- imposed under Section 34 of Central Excise Act read with Rule 25 and Rule 173Q is set aside. There is also no justification for imposition of penalty of Rs. 40 lakhs (Rupees forty lakhs only) on the transporter-. Duty having been set aside against the main processor, the same is also set aside. Penalty of Rs. 1 Crore (Rupees one crore only) imposed on Mr. Kamal K. Singhania, Director of the said processing unit is also set aside in terms of show cause notice dt.
30.3.2004 are also set aside.
16. It is further seen that the impugned order also adjudicates upon another show cause noticed dt. 15.11.2002 proposing confiscation of the processed fabrics found in excess in the appellant's factory as also from the transporters premises and the premises of the Merchant Manufacturers. We find that the excess found goods were admittedly in the factory premises and there is noting on record to show that they were in the process of being cleared clandestinely from the appellants factory. Accordingly, we set aside the confiscation and redemption fine of Rs. 8,00,000/- (Rupees eight lakhs only) in respect of the same.
17. As regards the goods found at the Merchant Manufacturers premises and the transporter premises, we find that the appellant have admitted clandestine removal of the same and his duty liability. As, such, the said goods are liable to confiscation, We note that the redemption fine imposed by the adjudicating authority in lieu of option to redeem the goods are not on the higher side, keeping in view the value of the seized goods. We accordingly uphold the confiscation and the quantum of redemption fines fixed by the Commissioner. Similarly, the penalties imposed upon the Merchant Manufacturers are also not on the higher side, the same are accordingly confirmed. The penalty of Rs. 3,00,000/- (Rupees three lakhs only) imposed on M/s. Indo Green Textile Pvt. Ltd. and penalty of Rs. 5 lakhs (Rupees five lakhs only) impaled on Mr.
Kamal K. Singhania, Director of the said firm is not called for inasmuch as penalties have already been imposed on the said appellants, while confirming the demand of duty of Rs. 11,94,219.20. Imposition of penalties for the second time in respect of the goods clandestinely removed and found at the merchant manufacturers premises is not justified, the same is accordingly set aside.(K.K. Agarwal) (ArchanaWadhwa)Member (T) Member (J) 1. I have perused the above order. For better appreciation of facts, it would be necessary to describe the modus operandi adopted by the appellant for clandestinely clearing fabrics processed by them.
2. The appellant M/s Indo Green is engaged in the processing of grey fabrics on behalf of various merchant manufacturers who were sending their grey fabrics under delivery challans through M/s S.P. Thakkar Transport Company, Bhiwandi (SPTT). The freight for transport of grey fabrics as well as for the transport of processed fabrics, were both for paid by M/s Indo Green. The entire quantity of the grey fabrics sent by all the merchant manufacturer was transported by only one transport company i.e. M/s SPTT and the processed fabrics were also delivered through them only. As per the investigation, it was found that after receipt of grey fabrics the entire quantity was not accounted for in the statutory records & only part was recorded while other remained unrecorded. For this purpose the appellants were maintaining two or three types of job cards carrying alphabets 'C', D & 'E'. While job card carrying alphabet 'C' related to the fabric on which duty was intended to be paid and lot numbers were assigned to them, the fabrics entered in job card carrying alphabet 'D' or 'E' were not entered in the lot register and were meant to be cleared without payment of duty. These alphabets 'C', 'D' & 'E' were also written on the back of the delivery challans under which the merchant manufacturer were sending their grey fabric and the subsequent recording way accordingly made. The processing of fabrics indicated in job card 'E' was done under open lot Nos. These open lot numbers were the one which were assigned for processing of fabrics intended to be cleared on payment of duty but were kept open as the whole lot has not been processed. Accordingly, the processing of fabrics indicated in job card 'D' & 'F' was camouflaged under the lot Nos. assigned in respect of job card 'C' and were kept open. It is note worthy to mention that every merchant manufacturer was allotted a code number and the job card 'D' & 'E' invariably did not mention the name of the party but only the code number, whereas, the job card 'C' carried the party's name. The transporter was also asked by the Director of M/s Indo Green to show the clearance of processed fabrics in the code name "S One Dyeing/Tex" from 01.04.2001. The grey fabrics were delivered by the transporter under his own gate pass which alongwith it carried the delivery challans of the merchant manufacturers and these delivery challans were given a specific number by transporter for which he has maintained a book account in the usual course of his own business. The processed fabrics after clearance were accompanied by an invoice as per say of the transporter and were delivered to the merchant manufacturer as per directions of M/s Indo Green. For this purpose the transporter was maintaining a daily Trip sheet in which all the delivery of processed fabrics in respect of all the manufacturer including Indo Green was maintained by him.
3. On searches and investigation conducted at the premises of M/s Indo Green and the merchant manufacturer shortages and excesses were found in the premises of M/s Indo Green and processed fabrics of varying quantity were seized at the premises of the various merchant manufacturers whose fabrics were being processed by M/s Indo Green and which were cleared without payment of duty as the merchant manufacturers failed to produce any duty paying documents relating to them and admitted that same have been cleared without payment of duty.
The merchant manufacturer in their respective statement admitted the clandestine clearances and also admitted the fact that they were allotted an account code number specific to them and that some times the grey delivery challans and the packing slips referred to them by their account code number rather than by their name. M/s Indo Green also admitted the shortages in their factory premises and paid duty on the shortages so discovered.
4. Scrutiny of records of the transporter revealed that the quantity of the grey fabrics delivered by the SPTT was much higher than the quantity of processed fabrics cleared on payment of duty as reflected in the records of M/s Indo Green. The quantity of grey fabrics delivered under the gate passes of transporter more or less tallied with the quantity of processed fabrics delivered by the transporter and found to be entered in the daily trip sheets of the transporter leading to a conclusion that though the fabrics were processed, cleared and delivered to the merchant manufacturers, duty was paid only on a pan; quantity and accounted for in the statutory records of M/s Indo Green while the balance quantity was cleared without payment of duty and was the one which was entered in the job card 'E' & 'D' some of which were recovered from the premises of M/s Indo Green and the balance could not be recovered as the same were destroyed by M/s Indo Green. The above fact is borne from chart shown at page 25 of Order in-Original (para 56) according to which 18655400 meters of grey fabric was delivered during the period 01.03.2001 to 21.05.2002 and as per trip sheets the processed fabrics delivered by the transporter was 19009887.45 meters, as reflected in para 126(ix) of Order-in-Original. Duty on the quantity of such fabrics determined from the records of the transporter came to Rs. 4,16,73,971/- while that on shortages found during the stock verification carried out in the premises of M/s Indo Green came to Rs. l 1,94,219.20 and that on fabric seized from the premises of the merchant manufacturer came to Rs. 2,17,004.64.
5. The above facts are supported by the statements of all the merchant manufacturers and in particular Shri Nilesh Patil, an employee of M/s Indo Green & In-charge of grey section. Mr. Nilesh Patil. working in the Grey Section of M/s Indo Green, in his statement dated 22.05.2002, inter alia, deposed that he was working with M/s Indo Green since the last three to four months; that he was working in the grey department, that he maintains a programme book; that on receipt of grey delivery challans alongwith grey fabrics, he showed the challans to Mr. Sushil Raika, owner of M/s Indo Green: that Mr. Sushil Raika gave him the party code number & the party card number and he made entries in the programme book such as party's grey delivery challan number programme number, number of prices. L. Meter- of grey fabrics and the card number; that after getting the programme from Mr. Sushil Raika he noted down the same in the card book and based on the card book he wrote down all information on one paper and handed over the same to Mr. Jain, Dyeing Master that similarly he wrote the information written in the card book on the back side of the grey delivery challan; that he thereafter hand over the grey delivery challans to stampers for writing the lot number, party code number/name etc. on both side ends of each lump/taka in indelible ink; that after getting the programme from Mr.
Sushil Raika he gave the details about receipt of grey fabrics to Mr.
Shaikh, Computer Operator, that Mr. Sushil Raika gave him the programme orally or sometimes on rough paper/challan, which he entered in his card book; that so far he has prepared cards starting with alphabet 'C'.'E' & 'D' series that in case any party wanted to process fabrics in its own name, then such grey fabrics as well as challans were allotted card number starting with alphabet 'C' series, that those parties which did not want to process its grey fabrics in its own name, Mr. Sushil Raika directed him to make entries in cards starting with alphabet 'E' or 'D' series; that in respect of the lot numbers allotted with card number starting with alphabet 'C', the corresponding grey delivery challans were kept, on its records, however, in respect of the lot nos. allotted with card numbers starting from alphabet 'E' or 'D', the respective grey delivery challans, as per the directions of Mr.
Sushil Raika, were destroyed after stamping on the grey fabrics; that once the grey fabrics was forwarded to the dyeing plant for dyeing/processing, his responsibility ceased; that after forwarding the grey fabrics to the dyeing department, he destroyed the respective page from the card book from time to time; that he did not make entries in the lot register maintained by him in respect of the lots allotted with card number starting with alphabet 'E' or 'D' series as per the directions of Mr. Sushil Raika, that the lot numbers, referred in the card numbers, starting with alphabet 'E' or 'D' series, were in fact the lot numbers of 'C' series card which were also entered in the Lot registers; that he interacted with Mr. Dubey, excise in-charge, only in respect of lot numbers with 'C' series card numbers and in turn Mr.
Dubey made entries in the Lot register, that Mr. Dubey had not made entries in respect of the lot nos. pertaining to 'E' or 'D' series card numbers in the lot registers, Seized record No. 88 was similar to that of seized record No. 87, the only exception being that the entries made therein were pertaining to the card numbers starting with alphabet 'C' which on a comparison/co-relation with the statutory records was found to tally.
6. Records seized from the premises of M/s Indo Green consisted of job cards and also party master code list of code numbers allotted to different merchant manufacturer for such clandestine transactions. The particulars in respect of card number, lot number, number of pieces, length of fabrics etc. mentioned in respect of cards under 'C' series tallied with the lot register whereas particulars of fabrics covered by 'D' & 'E' series do not match with the relevant records. Further, whereas, in respect of 'C' series card, the actual name of the concerned merchant manufacturer was mentioned (in abbreviated initials) the same was not at all mentioned but shown under secret code number allotted to the party in respect of transaction entered in 'D' & 'E' series card (para 123 (ii) of the order-in-original).
7. Records seized from the merchant manufacturer also showed that the quantity send by them for processing and reflected in their packing report tallied in all respect with the entries made in the 'E' card recovered from M/s Indo Green in respect of fabrics relating to Shri Mukesh Textile sent on 19.05.2002. Further in respect of the goods entered in job card 'E' some of which were recovered from M/s Indo Green, it was shown that the goods were delivered through transport SPTT (para 16 & 17 of Order-in-Original). The fact that M/s Indo Green had code name as "S One Dyeing/tex" is confirmed by the statement of Shri Ajay Thakkar of the transport company and is also supported by the facts that on the day of search of the factory premises of M/s Indo Green, on 21/22.05.2002, the officers of anti-evasion found one truck loaded with grey fabrics and carrying documents which indicated the name of the party as "S One Dyeing". This fact was recorded in the panchnama dated 21/22/05.2002 and has not been subsequently negated by any of the noticees. The documents in the possession of the driver of the aforesaid truck included delivery challans of various merchant manufacturers and a consolidated slip of M/s SPTT, the transporter. The particulars entered in the aforesaid delivery challans regarding total number of pieces/takas (402 pieces) tallied with the total number of pieces mentioned in the M/s SPTT's aforesed consolidated gate pass (1871 dtd. 21.05.2002) under the cover of which the grey fabrics were received in the premises of M/s Indo Green. Further the particulars of the delivery challan nos. of individual merchant manufacturers were also duly found incorporated in the consolidated delivery challan of the transporter. This confirmed the facts that the consolidated slip/gate pass of M/s SPTT covered the total number of consignment mentioned in the individual delivery challans of merchant manufacturers, grey fabric belonging to all of whom were being transported in the said truck. This consolidated delivery gate pass/challan/slip of the transporter makes mention of the party as "S One Dyeing", all the delivery challans except one make a specific mentioned of delivery at Indo Green, Tarapur. In all these delivery challans the name of transporter is duly mentioned as SPTT there by linking these documents to M/s SPTT's consolidated delivery gate pass/challans/slip for the total quantity transported. The driver in his statement has admitted of undertaken similar five transportations in the past.
8. The above fact shows that there is ample evidence against M/s Indo Green, regarding their clandestine clearances. They have admitted the clandestine clearances in respect of the shortages found in there premises and is not contesting the same. He has also admitted that the fabrics found at merchant manufacture premises were cleared without payment of duty but states that this was out of the shortages found in his factory on which duty liability is not being contested.
9. As regards the shortages detected on the basis of the transporter records the same is not being admitted by the appellant on the ground that the same is based on the sole testimony of the transporter and on his records who is co-accused in the matter and whose cross examination has not been allowed & that the records maintained by him were incorrect. The learned Judicial Member has agreed with this view and did not find sufficient evidence in respect of the shortages determined on the basis of records of the transporter whose cross examination was not allowed. It has been observed that entries made in the name of "S One dyeing" refer to the clearances made by M/s. Indo Green only & no other is solely based on the statement of the transporter for which there is no other corroborative evidence.
10. With due respect I am not in agreement with the above view. I find that the record maintained by the transporter was in the usual course of his business which was maintained for all manufacturers and not in respect of M/s Indo Green only. The code number "S One Dyeing/Tex" belongs to M/s Indo Green is confirmed not only by the statement of the transporter but that of the driver whose cross examination has not been asked for and whose evidence cannot be brushed aside. The documents recovered on the day of visit was a consolidated slip of M/s SPTT attached with the delivery challans of each merchant manufacturer whose goods were brought for processing and the details contained in these challans regarding number of pieces etc. exactly tallied with the details contained in the consolidated gate pass/slip of the transporter. The consolidated gate pass/slip issued by the transporter gave the name of the manufacturer as "S One Dyeing" and delivery challans of the merchant manufacturer indicated that goods were to be delivered at the premises of M/s Indo Green and therefore, when looked together it leads to one and only one conclusion that the code name "S One Dyeing" belongs to M/s Indo Green only. The appellant has also not denied that he was referred to as "S One dying" in the consolidated gate passes/slips of the transporter, but disputes the use of such name in those gate passes which were not accounted for by him. This is brought out by the fact that those gate passes which are accounted for in 'C' job cards also referred to Ms Indo Green as S One Dyeing/Tex.
Further, despatch details statement dtd.20.05.1992 (actually 20.05.2002) (para 42, 43 & 44 of the Order-in Original), recovered from the premises of M/s Indo Green shows clearances of processed fabrics from E cards and transport by M/s SPTT which establishes that the records maintained by M/s SPTT are reliable. The goods cleared without payment of duty recovered at the premises of the merchant manufacturer were also delivered by M/s SPTT which further shows that the records maintained by him cannot be found fault with. On a specific query by the bench the learned advocate for the transporter Shri Pochkanwala after confirming from the transporter stated that they were paid for all the trips made by him for delivery of grey fabrics as well as processed fabrics which were entered in gate pass book & daily trip sheets recovered from them and that he has paid income tax on such income which is duly reflected in his income tax return. I am told these record are in the form of bound gate pass book and daily trip sheet books and contains details of all merchant manufacturers whose fabric they were transporting. Every delivery challan of grey fabric was given a specific number starting with alphabet I, A, M etc. where the alphabet denoted the name of processor like for Indo Green A for A one dyeing, M for Mandana Dyeing etc. These records have been recovered from the premises of M/s SPTT for the period January, 2001 to May 2002 & therefore, can not be tutored, manipulated and were not in the form of loose papers/sheets etc. but in bound books and therefore, have to be taken as records maintained in the usual course of business & deemed to be correct & reliable. Evidence of such records can not be discarded merely on the fact that the cross examination of the transporter was not allowed. This is supported by the Tribunal decision in the case of Gulabchand Silk Mills Pvt. Ltd. v. Commissioner of Central Excise, Hyderabad-II admissions/statements are supported by recovery of non duty paid goods as well as incriminating documents, such admission does not need further corroboration, that denial of cross examination of such persons does not vitiate the proceedings since they are retracted from statement - clandestine removal establish. In this case also the goods cleared without payment of duty have been found at every conceivable place i.e. the premises of M/s Indo Green, its all merchant manufacturers and the godown of M/s SPTT in Bombay from where the goods are further delivered to merchant manufacturers and therefore in such a situation correctness of the records cannot be doubted specially when the transporter has stood by his statement, reiterated the same before the Bench and not retracted so far. In case of Sun Vijay Re-rolling & Engineering Works v. Commissioner 2000 (124) E.L.T. 862, clandestine removal was established on the basis of detail of entries in the labour pay book seized and the fact of payment of loading & un-loading of goods of assessee. It can not therefore, be stated that the charge is based on assumption & presumption. Even the apex court has in the case of Collector v. Dassani Electrodes Pvt. Ltd. 2001 (129) E.L.T. A-85 (SC), has upheld clandestine removal on the basis of missing Sr. Nos.
of alternators in the statutory records when in practice alternators were given a running serial numbers. Besides, the Commissioner in his order at para 127 has referred to Supreme Court decision in which it has been held the department would be deemed to have discharged its burden if it adduces so much evidences circumstantial or direct, as sufficient to raise a presumption in it s favour with regard to the existence of the fact sought to be proved (&Collector of Customs, Madras and Ors. v. D. Bhoormull 11. It is noticed that all the appellants except the transporter have reiterated their statement but these retracted statements are not available in the records of the investigating agency and as per the Commissioner's observation the appellants have managed to get an office seal stamp on the copy of the paper through some junior hand. It has further been observed that retractions are identical in nature and only say that the statements were recorded under duress or coercion.
However, even after retracting the merchant manufacturer have not produced any proof regarding duty payment on fabrics lying in their premises and that the statement of the officers of the company are such which are based on the records and which can be in their own personal knowledge and cannot be tutored.
12. The other aspects is regarding conf scation of excess fabrics found in the premises of M/s Indo Green. In the above order it has been said that no evidence has been found that M/s Indo Green had any intention to clear them without payment of duty and therefore the confiscation is not justifiable. I however find from the Commissioner's order that in para 131 (2) he has observed that the goods in question are not one produced just on the previous date and remained to be accounted as the search team visited the factory on the very next day. In this case the goods in question were not intended to be accounted for in the prescribed production record. The unaccounted goods found during stock verification were fabrics covered by 'E' series job cards, some of them with lot numbers parallel to the once duly entered in the lot register in respect of fabrics covered by 'C' series, which have been proved as one, which were meant for clandestine clearance. In view of this it has been clearly established that this excess production was not recorded in register with intent to evade duty and therefore they would be clearly liable to confiscation. This intention is also supported by the recovery of non duty paid stock at the premises of merchant manufacturers and godown of SPTT.13. The learned Member (Judicial) has also set aside the penalty of Rs. 1 Crore imposed on Shri Kamal K. Singhania, Director of the processing unit as a consequence of setting aside the demand of Rs. 4.16 Crore (approx.). A penalty of Rs. 5 Lakhs on him has again been set aside on similar ground even though demand of Rs. 11,94,219.20 has been upheld against M/s Indo Green. In view of the same some amount of penalty on Mr. Singhania, Director of the firm is definitely called for. The ultimate determination of penalty on M/s Indo Green and Mr. Kamal K.Singhania will of course depend on the fact whether the demand of Rs. 4.16 Crore can be sustained against M/s Indo Green. So will be the case with setting aside of the penalty on the transporter In view of the difference of opinion the matter is required to be referred to the third Member for his opinion on the following question: (1) Whether the demand of duty to Rs. 4,30,85,192/- is required to be set aside on the ground of insufficient evidence to establish the clandestine removal as held by the Ld. Member (Judicial) or the same is required to be confirmed in terms of the order of Member (Technical).
(2) Whether the confiscation of the goods found in appellants premises in excess of the recorded balance in RG1 register is required to be set aside as held by Member (Judicial) or confiscation is to be upheld in terms of the order of Member (Technical).
(3) Whether penalty is to be set aside on the Director of the firm Shri Kamal K. Singhania as held by Member (Judicial) of the same is required to be imposed as opined by Member (Technical).