|HiS»t- /' y"ii FiVE RUREESK ..^I-IVi^MUiSEX^-;;| ilS^SISSssBl' S^B^^^ii o.^/ THE HIGH COURTOF JUbICATURE AT BILASPUR (CHHATTESGARH) TAX CASE N0. ^s OF 2009 f PPELLANT JJNION OF INDIA ..«" •y'SS--^ ^ ;K^'°* ^"THROUGH COMMISSIONER, CENTRAL EXCISE ANt) CUSTOMS, CENTRAL EXCISE BHAWAN, DMAMTARI ROAt), TCKARAPARA, RAIPUR(C.G.) 492 001 Versus BtESPONDENT ,. M/SPRAKRITI: INDUSTRIES 9 B, INDUSTRIAL AREA, RAWABHATA,RAIPUR(C.6.) ^' APPEAL UN&ER SECTION 35-6 OF THE CENTRAL EXGISE ACT. 1944: (Appeal decided by the Principal Bench of CESTAT on **<_ _ ^ _ . - .' 05.08.2008; Copy of the order received by thc Appellant on 10th October 2008) HtGH COURT OF CHHATTISGARH AT BILASPUR TaxCase No.7 of2009 APPELLANT: RESPQNDENT: APPELLANT: RESPONDENT: APPELLANT: Union of India, Through Commissioner, Central Excise and Customs, Central Excise Bhawan, Dhamtari Road, Tikarapara, Rajpur (CG) 492 001 Versus M/s Ambattur Petrochem Ltd. 17/19, Industrial Area, Rawabhata, Raipur (CG) Tax Case No.8 of 2009 Union of India, Through Commissioner, Central Excise and Customs, Central Excise Bhawan, Dhamtari Road, Tikarapara, Raipur (CG) 492 001 Versus M/s Prakriti Industries, 9B, Industrial Area, Rawabhata, Raipur (CG) AND Tax Case No.9 of 2009 Union of India, Through Commissioner, Central Excise and Customs, Central Excjse Bhawan, Dhamtari Road, Tikarapara, Raipur (CG) 492 001 V^rsys RESPONDENT: M/s Mohini Industries, 9A, Industrial Area, Rawabhata, Ralpur (CG) Present: Shri Bhishma Kinger, counsel for the appellant. Shri Rahul Tamaskar, counsel for respondent in Tax Case No.7/09. Division Bench: Hon'ble Shri DhirendraJKIishra & Hon'ble Shri R.N. Chandrakar.-JJ. J UDG ME NT (26-3.^010) \ •jepjo peu6nduji sqi ^q passiuisip jeqijnj SBM iue||sdde 84} Aq p8jja(8jd jeedde ai|i •S}uspuodssj 34} Aq pa|it S|eedde 9i|i paMO||e pue sjepjo uoseajpnfpe 341 epjss ies (sieeddy) jauoissituiuoo 041 •sjepjo uoiiBoipnfpe e»Bjedss Aq isejaiui MIIM 8uo|e lunoiue |enba p A||eusd pesoduii pue- Ainp y> pueujap ^q^p^UJJUUO^ Aiuoi|}nv Buneaipnfpv 941 '.46uig Aefueg ui|9 }Q s||ig jnoqe-|, 341 ;o siseq eifl uo A}np jo pueLuep Buisodojd siuepuodsej sy» o( A|3}Bjed3s ponssi SJSM saoiiou esneo MO^S aajqi 'jayeejsyi •sajijSnpui Buaiejcl s/n -s'l ' I."ON Uiapuodsaj 10 jotaudojcl 'jeiunx uoose^d jjtis 10 lueiuaieis 94) pepjooej osie Aeyi 'stuspuodssj 04} jo seuopei aiji }B spooB p Buipeoiun pue Suipeoi 101 ainoqei p8Ao|dujs OIJM 'qBuis ilefues uqs P tueuietets eqi pspjoaoj Aeyj. • fON }uepuodsaj ^o sssiujsjd Sttt luoj^ ,,46uig Aefues jo tljg jnoqe-], SUIUIBIUOO pjoosj B pajeAOoaj OS|B A941 '8oue|eq )|ooq 0} pejedtuoa spooB paysiuy pue sieyateuj MBJ y> ypioys (BOisAqd ui uoiieueA puno( pue uoseayuaA ifoois pspnpuoo pue siuspuodsaj eifl p sauope^ 8t)} psiisiA sjaoijjQ sspxa |BJIUSO sifl' lOOZ '^Gnjqaj z uo •S961 'PV Wel aspxg 164003 041 oi sinpayos 941 10 92 pue 6Z '8£-laideqo japun e|qByisse|o spoo6 jo ajnpeinueui 341 ui paSeSue aje siuepuodsaj ei(i }B4i sje 'japjo peuSndiui 914 ui paiasfojd se 'sysei pa»E}s Auaug 2 ^,9|qBj3Aooaj si siuepuodsaj eqi^ A|9ussapuB|o peAoiuej se»yaiqM 'spooB aiqesioxe paijsiuyio Aiuoiune BuffBaipnfpe 94) Aq passssse swh \f»W*^inp esioxg |ej)ueo syt jaytait/yv • -:ME| y) uogsenb |B!tUB(sqns 6utMO||01 34» UO (,»OV 84), }j04s j(»|.) frt.gl 'PV aspxa IBJIUSO ain 10 Q-se uoipas Jspun psiis,(sjd ueaq SAeq S|esdde eseqi -(siesddv) jeuoissituuioo eqi p japjo 041 tsuie6e enueAsy 9L|i ^q pajjs^d siesdde aajqi 94} ||B pessiiusip sei< |eunqui aqt pue (.leunqui aqi, poys JQ)) iqiaQ MeN 'youea lediouud 'ieunqui e}B||addv xei eoiMes '? ssioxg 'siuoisno 041 Aq passed 800Z-6-6Z paieP •'ap-io uoiuiuoo aifl isuieBe pepejip eje sjeedde eseqi ||B se 'jepjo uoiuiuoo e Aq ys posodsip Buieq aje sieedde piesejo^e 91(1 i. / 3. Shri Bhishma Kinger, learned counsel for the appellant, vehementty argued that 'Labour Bilt of Sanjay Singh' was recovered under Panchanama proceeding. The contents were certified to be true by said Sanjay Singh in his statement dated 2nd February, 20Q1 recorded under Section 14 of the Act. The aforesaid document cieariy shows that respondents socretly and clandestinely removed manufactured goods leaving no trace of consumption of raw materials and sale details. The set of documents i.e. 'Labour Bill of Sanjay Singh" and his statement could not be brushed aside onty on the ground of absence of record and other corroborative evidence as manufacturer clandestinely removing the goods would leave no trace of consumption of raw materials and sale details. The shortage of stock of raw materials was also found in physical verification. Variation in the stock of finished goods and inputs during physical verification is sufficient to prove that the respondents were engaged in removing the goods clandestinely without entering the same in their statutory records. Sanjay Slngh was employed as a labour by M/s Prakriti Industries, Raipur who also worked simultaneously for all the 3 units and with his cooperaUon the respondents availed exemptlon from excise duty. The finding recorded by the Commissioner (Appeals) and subsequently confirmed by the Tribunal is based on incorrect interpretation of the statute and therefore erroneous and improper. The question of taw as proposed arises for adjudication. 4. Shri Rahul Tamaskar, learned counselappearing for respondent in Tax Case No.7/09, submitted that the appellate Commissioner and th&Tribunal on the basis of material available on record have set aside the order of the adjudicating authortty by recording a finding of Tact that larger quantity of Chlorinated gas cannot be obtained from open market as the procurement of chlorine gas requires fulfillment of various legal formalities. No queries were conducted from respondents No.2 and 3. There is no material that the t ^•.f.^'^. respondents had knowledge of maintenance of 'Labour Bill of Sanjay Singh'. No material was placed by the Revenue that thegoods were cleared outside of the factory to the customers. Mere slips of statements are not sufficient for confirmation of demand on the allegation of clandestine removal and to substantiate the allegation of clandestine removal, the evidence in the form of receipt of raw materials, shortage thereof, excess use of electricity, excess/shortage of inputs in stock, flow back of funds, purchase of final products by parties alleglng recelpt and removalof goods ete are necessary. 5. We have heard leaned counsel for fte parties. 6. The proceedings were initiated against the respondents on the basis of record namely, 'Labour Bill of Sanjay Singh' recovered from the premises of M/s Prikriti Industries during the visit of officers on 2-2-2001 . The documents revealed unloading, manufacturing and shifting of goods to the adjacenl units during the period October to December, 2000. The aforesaid removals were not recorded in the statutory records of the respondents and no invoices were Issued. Accordingly, 3 show cause noUces were issued for demand of duty of Rs.3,02,817/- and Rs.1,52.800/- on the finished goods and inputs respectively. The respondents denied the charges. The adjudicating authority relying upon the document 'Labour Bilt of ShriSanjay Singh' and statement of Shri Sanjay Singh recorded under Section 14 of the Act, and rejecting the defence of the respondents, held that central excise duty of Rs.3,02,817/- under Section 11-A of the Actand Cenvat credit of Rs.1,52.800/- under Rule 57AH ofthe Central Excise Rules, 1944 (for short the Rules, 1944') read wtth Section 11-A of the Art was imposed with - interest on the aforesaid amount under Section 11-AB of the Act. An equal amount of penaHy was also imposed under SecSohs 11AC of the Act read with Rule 173Q ofthe Rules, 1944. 'x 7. The Commissioner (Appeals) dropped the proceedings vide order dated 31s' March, 2006 and observed thatvariation in stock noticed at the time ofstock taking was negligible as compared to the alleged quantities that have been produced. The departmental officers have not come acrossany document to indicate variation in stock to that extent though the raw materials except for chlorine and controlled commodities, but such huge quantities of raw materials would not be freely available in the market and would have to be procured by the appellant from well established units which would be received under proper document. Such large quantities of chtorine gas cannot be obtained from the open market as the procurement of chlorine gas requires fulfillment of various legal formalities and accordingly held that the clandestine production of such large quantities of goods in 3 months is not corroborated by any evidence of purchase of raw materials ete. There is no evidence of sale of such goods and also of cash or financial transactions which would tead one to believe clandestine manufacture and clearance of goods and recorded a finding of fact that no extra production of goods has taken ptace and consequently the clearance. Even the removat of raw materials does not get proved. 8. Learned Tribunal concumng with the finding of fact recorded by the Commissioner of Appeals also observed that the separate show cause notices were issued against shortage/excess of stock verification and the said proceedings are stitl pending. The present proceedings were initiated on the basls of document "Labour Bills of Sanjay Singh" recovered from the premises of respondent No.1. It was finally observed .that Commissioner (Appeals) rightly observed that such larger quantity of chlorinated gas cannot be obtained from the open market as the procurement of chlorine gas requires futfillment of various tegal formal'rties. Since no enquiries were conducted Trom respondents No. 2 and 3, there is no •V ^^x-^1 "•;i^'i3HEi Er^[^i^i^^@s^^3i5;'ss3':'ssa?^ material that respondents had knowledge of maintenance of 'Labour Bills of Sanjay Singh'. The order passed by the Commissioner (Appeals) has been upheld and the appeal preferred by the department was dismissed. 9. From perusal of the orders passed by the forums below, it is manifestly clear that the Commissioner (Appeals), after elaborately considering material availabte on record, has recorded a finding of fact that clandestine manufacture of excisable goods and Its removal from the factory premises is not proved. Merely on the basis of document "Labour Bills of Sanjay Singh" and his statement and without any further enquiry and corroborativ< evidence, it cannot be held that the extra production of goods has taken place and consequently the clearance. Even the removal of raw materials does not get proved. 10.0n the basis of aforesaid discussion, we are of the opinion that the substantial question of lawas proposed by Uie appellant is a question of fact and no substantial question of law arises for adjudication of these appeals. .11. The appeals are accordingty dismissed. Sd/. :'ra IWishra Judge Sd/- R.N.Chandrakar Judge Bar/e X