Allowed

Madhav Bhageria v. Vapi

CESTAT11 Apr 2019E/1228/2011

Case brief

AI extract

What is this about?

The CESTAT allowed appeals filed by M/s Filatex India Ltd and co-appellants against an order demanding excise duty. The Tribunal set aside the demand, holding that the Revenue failed to produce conclusive evidence proving clandestine removal or diversion of yarn, as charges of such removal require positive and tangible proof.

What did the court decide?

Impugned order set aside; appeals allowed with consequential reliefs.

Madhav Bhageria vs Vapi — Banking and Recovery | CESTAT (2019)

¶1

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT AHMEDABAD

¶2

REGIONAL BENCH – COURT NO. 03

¶3

Excise Appeal No. 1227 of 2011

¶4

[Arising out of OIO-14/MP/VAPI/2011 dated 22/06/2011 p assed by Commissioner of Central Excise, Customs and Service Tax-VAPI]

¶5

M/s Filatex India Ltd …..Appellant

¶6

Survey No. 274, Demini Road, Dadra, Silvassa

¶7

VERSUS

¶8

C.C.E. & S.T.-Vapi …..Respondent

¶9

7^4h Floor, Adash Dham Building, Opp Police Station Vapi-396191

¶10

WITH

¶11

(i)Excise Appeal No.1228 of 2011 (M/s Madhav Bhageria); (ii) Excise Appeal No.1229 of 2011 (Sajjan Kumar Singhal); (iii) E xcise Appeal No.1230 of 2011 (Vimal Kedia)

¶12

[Arising out of OIO-14/MP/VAPI/2011 dated 22/06/2011 p assed by Commissioner of Central Excise, Customs and Service Tax-VAPI]

¶13

APPEARANCE :

¶14

Shri. Prakash Shah, Advocate for the Appellant Shri. Nitina Nagori, Authorized Representative for the Respondent

¶15

CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU

¶16

FINAL ORDER NO.A/ 10670-10673 /2019

¶17

DATE OF HEARING: 19.02.2019

¶18

DATE OF DECISION: 11.04.2019

¶19

PER: RAMESH NAIR

¶20

The present appeals have been filed by M/s Filatex India Ltd., its director Shri Madhav Bageria, Assistant Vice-President Shri Sajjan Kumar Singhal and Asst. Manager Shri Vimal Kedia against Order-inoriginal No. 14/MP/VAPI/2011 dated 22.06.2011 passed by the Commissioner, Central Excise, Vapi. The brief facts of the case are that M/s Filatex were issued Show Cause Notice dated 08.06.2009 alleging that for the period April’04 to July’04 they have shown the supply of

¶21

2 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶22

yarn to job workers for getting the fabric manufactured in terms of Rule 12B of the Central Excise Rules and from their cleared the fabric for sale on payment of duty. During investigation at the end of job worker and the buyers of the finished goods, it was found that some of the job workers and buyers were not traceable or existing or the sub job workers stated that they did not undertake the job work. The transporters whose statements were recorded refused transportation of the fabric. Based upon investigation it was alleged that the transaction of manufacture of fabric and its sale, receipt of consideration towards sale were mere paper transactions. No grey fabrics were manufactured from the yarn cleared without payment of duty and the yarn allegedly had not been used for manufacture of fabric but was diverted and sold elsewhere. The show cause demanded duty on such yarn and its confiscation along with imposition of penalty and penalty on all other appellants. The demand was raised by invoking extended period of limitation. An addendum to show cause notice was also issued on investigation conducted towards banking transactions shown to have done in relation to such job work activity of grey fabric and clearance thereof. The Appellant filed reply to said show cause notice on merits, Time bar as well as against the issue of addendum on merits. They also argued that since the show cause notice is deemed to be delivered on the date of issue of addendum to show cause notice only, therefore the demands are time barred as the addendum dated 14.04.2010 was served to them on 15.04.2010. The adjudicating authority confirmed the demands as proposed and also imposed penalty upon all the Appellants, Hence the present appeals. 2. Ld. Advocate Shr. Prakash Shah appearing for the Appellants submits that the POY was sent in terms of Rule 12B for manufacture of

¶23

3 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶24

fabric on job work basis. They had filed intimation with their jurisdictional division office as well as of the job workers before sending yarn for job work manufacturing of fabric. After manufacture of fabric the same was cleared from the job work premises to the buyers on payment of duty. The buyers received the fabric from the premises of job workers and acknowledge the receipt of fabrics by signing the delivery challans prepared by the job workers. He also draws our attention to the challans annexed to the appeal. That in some cases the grey fabric was sold by the brokers without interacting with the actual buyers. They have filed monthly returns in Form ER-1 showing the clearance of fabrics from the premises of the job workers and payment of duty thereon. The investigation was first carried on in Dec, 2003 wherein they were asked to submit details of job workers. Thereafter no investigation was conducted. It started again in Feb to Sep, 2005 but nothing was heard. Again in Nov’2008 the investigations were conducted and SCN was issued on 08.06.2009. The SCN demands duty on Yarn cleared to job workers viz. Geena Synthetics P. Ltd., M/s Rama Filaments P. Ltd., M/s Micro Polyster P. Ltd., M/s Goodluck Synthtics P. Ltd., M/s Masa Synthetics P. Ltd. and A.A. Textiles for the period April, 2004 to July, 2004. No duty was demanded in respect of such job workers for the period October, 2003 to March, 2004 and in respect of 10 job workers for the period October, 2003 to July,2004. All the job workers accepted processing of goods except M/s A.A. Textiles whose unit could not be found. He submits that the statement of various persons has been relied upon without complying with the provisions of section 9D. He relies upon the judgments in case of Andaman Timber Industries 2015 (324) ELT 641 (SC), Basudev Garg 2013 (294) ELT 353 (DEL.), Govind Mills 2013 (294) ELT 361 (ALL.), Swiber Offshore Cons.

¶25

4 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶26

Pvt. Ltd. 2014 – TIOL – 58 – CESTAT-AHM, Slotco Steel products Pvt. Ltd. 2013 (157) ELT 193 (DEL.), Hi Tech Abrasives Ltd. 2018 (362) ELT 961( Chattisgarh) , J & K Cigarettes Ltd. 2009 (242) ELT 189 (Del.), Inter Metal Trade Ltd. 2014 (381) ELT 481 (TRI), Parmarth Iron Pvt. Ltd. 2010 (260) ELT 514 (All.).

¶27

He further submits that it is an accepted position that the yarn was received by the job workers. The job work records were found at the job workers premises. In case of M/s Mansa Textiles the statement of Shri Abhishek Singhal was recorded who stated that they have received POY for job work and manufactured fabrics. That though the SCN alleged that M/s A.A Textiles was found to be nonexistent during investigation, however it is to be seen that M/s A.A. Textiles was registered unit and its registration number was given to the department at the time of filing job work intimation. The reliance has been placed upon statement of one Shri Jayendrabhai Patel but he was not offered for cross examination. In case of Geena Synthetic, the department has claimed that the said unit did not have any weaving machinery at the given address. However Shri Rafiq Abdul in his statement has stated that yarn was texturized at his karanj factory and fabric was weaved at his factory at Unn, Surat. Reliance was placed upon Shri Hanuman Singh whose vehicle was shown to have used for transportation of POY has claimed that his Tempo GJ-5UU-2097 did not transport goods manufactured by M/s Geena to the buyers. Also that no receipt of fabric from Unn factory was shown in records. That two more transporters having tempo no. GJ-5UU-2097 and GJ-5V-2295 have denied transportation of fabrics. 4. He submits that their statements cannot be relied upon as they were not permitted to be cross examined. In case of Rama Filaments it

¶28

5 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶29

was alleged that they did not have any weaving machine and Shri Mayur Patel stated that they have got the fabrics manufactured from sub job workers. However the job workers M/s Raj Textiles, D.K. Textiles, Laxmi Polyweave, Shakti Textiles, Atlas Synthetics, Shakti Fabrics, Century Fabrics, Irfan fabrics were nonexistent whereas Satish Textiles, M.M. Kapadia and Balaji Tex confirmed that they have not received yarn from job work from M/s Rama Synthetics. In case of M/s Salim Textiles though they claimed job work but no documents were produced for carrying out manufacture of fabrics and no payments was received by them for job work. Further that the owners of vehicles bearing registration no. GJ-15X-2522 and GJ-5UU-2415 used for transportation of fabric from M/s Rama Synthetics to various buyers have refused transportation. The statement of Shri Murli Goyal was recorded in May’2009 wherein he stated that they did not manufacture fabric on job work except in few cases. The Ld. Counsel submits that no cross examination of the owners of vehicle and Shri Murli Goyal was permitted and hence their statements cannot be relied upon. The statement of director of Rama Synthetics Shri Murli Goyal made after 5 Years is contrary to statement of its authorized signatory Shri Mayurbhai Patel. The allegation of non existence of sub job workers without any material evidence on record as the relied upon documents do not show any documents in support. In case of Micro Polysterand Good luck Synthetics, they both were investigated only in May’2009 almost 5 years after the job work was done by them which is fatal. Statement of Shri Suresh C. Singhal, director of both the concerns was recorded in May’2009 wherein he stated that the records of both the units was destroyed in flood in 2006 but he cannot specify whether the goods were purchased or received for job work. The SCN denied job work

¶30

e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶31

6 | P a g

¶32

activity on the ground that no evidence of manufacturing could be found.

¶33

He submits that it cannot be said that no activity was undertaken by the manufacturer on the ground that no record of manufacture of goods on job work was found as the same is not required under Rule 12B. He submits that they had paid job work charge of more than 4,01,72,785/- which has not been disputed. The TDS was deducted on such amount. There is no allegation that such job work charges flowed back to the Appellant. That M/s Geena and M/s Rama Filaments were investigated in 2005 but the summon was issued in 2009 when the same returned as undelivered with remark “company close”. The fabrics were cleared to 30 buyers on payment of duty whereas the department investigated or shown to have investigated only 4 buyers. Out of the 4 such buyers it was alleged that except Swastik Silk Mills no other buyers could be located. There is no evidence that the buyers could not be located. No statements are on record of any person to be found at the buyers address. That though the bank statements of 4 buyers i.e. Shree Textiles, Umiya Textiles, GirwarTexspin and Tirupati Textiles were collected but no steps were taken to summon them or investigate the same.

¶34

It was alleged that M/s Umiya Textiles deposited huge cash in their account either on previous day or same day on which the cheque was issued to the Appellant but there is no evidence that such amount was handed over to them by the Appellant. The sole basis is statement of Shri Kantilal Shah of Shah Corporation that the Appellants provided cash to Umiya Textiles to deposit in their account. However, Shri Kanatilal Shah’s statement is not supported by any evidence. He has no business relation with the appellant. He was not subjected to cross-

¶35

7 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶36

examination. The bank account of M/s Umiya Textile showed number of cheques issued by them to the Appellant. There is no illegality in the cheques issued by the Shah Corporation to the Appellant. It was alleged that in case of M/s Girwar Texspin and M/s Tirupati Textiles, the payments made by the appellant were preceded by cash deposit in their bank accounts. However, there is no ground to suggest that the cash deposits made by both the entities in their bank accounts were received from the appellant. In it is on record that the buyers have issued cheques from their own account except Umiya Textiles, which in the same case has issued cheques of Shah Corporation. In case of Girwar Texspin, it was alleged that they had two accounts in two different banks in the names of two different persons as sole proprietors. This irregularity cannot be presumed that M/s Girwar Texspin did not purchase fabrics from the Appellant. On the basis of the statement of the proprietor of Shah Corporation, it is alleged that he has used to discount the cheques given by the Appellant and used to pay cash to the Appellant. 7. It is submitted that their accounts are audited being limited company and no addition is made on account of any cash being received from Shah Corporation or anybody else. There is no material evidence that the appellants either received cash from Shah Corporation or discounted cheques with them. In case of Swastik Silk Mills, it is alleged that they have denied the purchase transaction with the appellant. It can be seen from the ledger account of Swastik Silk Mills that there were 4 transactions in March 2004, and four in May 2004. No demand has been made in respect of yarn cleared prior to April 2004. The payment has been made by M/s Swastik Silk Mills from their own bank account, which was deposited by the Appellants in their own account.

¶37

8 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶38

The cross examination of Shri Surya Prakash Jaiswal of M/s Swastik Silk Mills to ascertain the truth was denied by the adjudicating authority. He submits that at no point of time, the payment of duty on grey fabrics was disputed by the Department and without such rejection, it cannot be alleged that no grey fabrics was manufactured by the appellant. No person has been found to whom yarn has been sold by the Appellant. Shri S.K. Singhal in his statement dated 16.12.2008 had given details of name and address of the broker, through which the grey fabric was sold. Six job workers have admitted delivering grey fabrics to the buyers, as per direction of the appellant. The transporters were not cross examined by the Department during adjudication and their statement cannot be formed basis for holding that the appellants have not delivered grey fabrics to the buyers. There is no evidence that supporting the allegation that the appellant has cleared yarns manufactured it under the guise of job work delivery. There are no whereabouts of the yarn allegedly sold without payment of duty by the appellant. There is no evidence of any consideration received by the appellant towards the alleged sale. He relies upon the judgment in the case of Rakesh Nayyar – 2010 (255) ELT 234 (P & H). He also submits that the show cause notice was issued to the appellants on incomplete investigation. The investigation was first initiated in December 2003 and no action was taken for more than one year. Subsequently, the investigation was again carried out in February to September 2005 and then it stopped for almost three years. The Department once again stated the investigation in November 2008 and the show cause notice was issued on 8.6.2009, almost after 10 months. That the appellant filed their reply and also attended the personal hearing and addendum dated 15.4.2010 was issued to the Appellant in respect of show cause

¶39

9 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶40

notice dated 8.6.2009, which shows that the investigation was in complete and half-hearted and no perception can be drawn that Yarn was diverted by the Appellant without converting into fabrics. 8. He submits that the charge of clandestine removal has to be proved conclusively with all corroborative evidence and in absence of same the duty cannot be demanded. He relied upon the judgments in case of Brims Products Vs CCE, Pune – 2001 (130) ELT 719 (Tri, Kol), Sharma Chemicals, CCE, Calcutta – II -2001 (130) ELT 271 (Tri, Kol), Prince Gutaka V/s CCE, New Delhi – 2001 (135) ELT 109 (Tri, Del), D.Suyaraj V/s Collector of Central Excise, Coimbatore – 2001 (135) ELT 202 (Tri, Chennai), Utkal Polyweave Ind. Pvt Ltd V/s CCE & C, Bhubanneshwar-I - 2001 (136) ELT 520 (Tri, Kol), T.G.L. Poshak Corporation V/s CCE, Hyderabad - 2002 (140) ELT 187 (Tri, Chennai), K. Rajagopal V/s CCE, Madurai - 2002 (142) ELT 128 (Tri, Chennai), CCE, Trichirapalli V/s Ravishankar Industries Ltd - 2002 (150) ELT 1317 (Tri, Chennai), United Metal & Steel Pvt Ltd V/s CCE &Cus, BBRsI - 2003 (161) E.L.T. 585 (Tri, Kol) , Utility Alloys Pvt Ltd Vs CCE, Cochin - 2009 (236) ELT A19 (Ker.), Commissioner V/s Utility Alloys Pvt Ltd - 2009 (236) ELT A19 (Ker.), Swati Polyster V/s CCE, Surat I - 2005 (192) ELT 985 (Tri,Mum), Commissioner V/s Swati Polyster – 2008 (221) ELT A25 (i), CCE, Indore V/s Prashant Electrode - 2006 (196) ELT 297 (Tri, Del), CCE &Cus.Calicut V/s Manuelsons Wood Ind. – 2007 (210) ELT 230 (Tri, Del), D.P. Industries V/s CCE, Allahabad – 2007 (218) ELT 242 (Tri, Del), CCE, Rajkot V/s Kalyan GlazeTiles – 2008 (222) ELT 417 (Tri, Ahmd), Nav Karnataka Steel Pvt Ltd V/s CCE, Belgaum - 2008 (225) ELT 454 (Tri, Bang.), Stilbene Chemicals Ltd V/s CCE, Vishakhapatnam - 2008 (227) ELT 94 (Tri, Bang), Kumar Cotton Mills Pvt Ltd V/s CCE, Ahmedabad - 2008 (229) ELT

¶41

10 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶42

273, Tri, Bang., Kumar Cotton Mills P.Ltd V/s CCE, Ahmedabad - 2008 (229) ELT 272 (Tri, Ahmd), CCE, Vadodara V/s Air Command India Ltd -2008 (230) ELT 152 (Tri, Ahmd), HG Entertainment Technology Ltd V/s CCE, Vapi - 2009 (233) ELT 431 (Tri, Ahmd), CCE &Cus., Surat –I V/s Finornic Chemicals (I) Pvt Ltd -2009 (237) ELT 84 (Tri, Ahmd), J.I. Gandhi Silk Mills V/s CCE,Surat –I 2009 (237) ELT 103 (Tri, Ahmd). He also submits that demands are time barred. They had given intimation to their own jurisdictional officers as well as to jurisdictional offices of job worker. The statement of senior manager was recorded on 23.12.2003 and SCN issued in June 2009. Thus, the Revenue was aware that even prior to the period of investigation, the appellants were getting grey fabrics manufactured on job work basis. He relies upon the Hon’ble Supreme Court judgment in case of Modipon Fibre Company - 2007 (218) ELT 8 (SC) to submit that since the department was in knowledge of facts, the extended period is not invokable. He submits that the demand against the appellant is not sustainable and the penalties against the appellant and the co-appellant are also not sustainable.

¶43

Ms. Nitina Nagori, Ld. Joint Commissioner (AR) appearing for the Revenue reiterates the impugned order. He further submits that the investigation was conducted at the end of the six job workers. M/s AA Textiles was found to be non-existent. M/s Rama Filaments was found to have no weaving machines to manufacture fabrics from yarn received without payment of duty from Appellant. M/s Geena Synthetics did not have machinery to manufacture grey fabrics. Only one texturing machine was found installed in the unit. M/s Mansa Synthetics Pvt. Ltd failed to produce any documents in support of manufacture of fabrics and its transportation to the buyers of the appellant and also failed to

¶44

11 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶45

produce the documents showing receipt of payment of job work. Records of M/s Micro Polyester and M/s Good Luck Synthetics Pvt. Ltd are claimed to have been destroyed in floods. That in case of buyer of fabric M/s Umiya Textiles, the payment against sale of fabrics was actually received from Shah Corporation, with whom the Appellant has no business relation. The proprietor of M/s Shah Corporation in his statement confirmed to have issued cheques after receipt of third party cheques / cash at the instance of the appellant. The records of the Appellant show that the fabrics sold to M/s Umiya Textiles were got manufactured from M/s A A Textiles, which was found to be nonexistent. The records of the appellant are manipulated. The yarn was diverted elsewhere and the duty has been evaded. The transaction between the appellant and buyers are not genuine as payments were not received directly from the buyers of fabrics, but was received through cheques from the accounts of Shroffs, who were involved in cheque discounting business. They used to first get money in their account by way of cash or bearer cheque from the market or from appellant and then they issued cheques to the appellant on behalf of the alleged buyers of grey fabrics to adjust the accounts. Shri Vimal Kedia, Authorized signatory was confronted with various evidences showing that no grey fabrics were manufactured by some of the job workers. Statement of Shri Madhav Bhageria, JMD of the appellant agreed to have received cheques from M/s Shah Corporation and shown the said amount of cheques in the account of M/s Umiya Textiles. He has stated that they sent the yarn for job work and prepared the invoice of finished goods and sent them to their marketing office at Surat. Thus, the appellant has intentionally evaded the duty on yarn cleared to the job workers by resorting to suppression of facts or mis-statement.

¶46

12 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶47

He submits that the transporters Shri Hanuman Singh, Shri Narendra Govind Patel, Shri Vasudev Mishra and Shri Rajendra Jain said that no fabric was transported by them, sub-job workers M/s Satish Textiles and M/s M.M. Kapadia denied having done any job work. The sub job workers M/s Balaji Textiles, M/s Shakti Textiles, M/s Atlas Synthetics were not found to be existents. That M/s Rama Filament do not have machines to manufacture fabrics. The summons were issued to the buyers to whom fabrics manufactured by the job workers were cleared were returned undelivered. M/s Swastik Silk Mills, one of the buyers, denied having purchased any fabrics from the Appellant. He thus supports the impugned order. 11. Heard both the sides and perused the case records. The Revenue has demanded duty on the ground that either the job workers did not have facility to manufacture or were not existing. We find that in the present case the fabric was shown to have been manufactured from six job workers. It was alleged that M/s Rama Filament Pvt Ltd, M/s Geena Synthetics Pvt. Ltd, M/s A.P. Textiles Ltd, M/s Mansa Synthetics Pvt Ltd, M/s Micro Polyester Pvt. Ltd and M/s Good Luck Synthetics Ltd, had not carried out the job work of fabric manufacturing. In case of Rama Filaments, it was alleged that the said company did not have weaving machines and the sub-job workers either were not existent and have refused receiving Yarn from Rama Filament for manufacturing the fabrics. In case of Micro Polyester Pvt. Ltd and Good Luck Synthetics Pvt. Ltd, it is alleged that the said units could not produce the job work, records stating that records were destroyed in the floods in 2006 and, therefore, no evidence indicating manufacturing of fabrics was produced. In case of Geena Synthetics, it was alleged that the Company had only one texturising machine and did not have any

¶48

13 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶49

weaving machine. Also, on scrutiny of record received that they had sent yarn received from the Appellant to other manufacturers for manufacture of fabrics and that showed the receiving back of fabrics in their unit at Karang only in respect of fabrics from their unit at Unn. No receipt of fabrics from other job workers were reflecting in the records. The owner of vehicle No. GJ 544 – 2097 and GJ 5V - 2295 denied transporting of Yarn or grey fabrics from Geena Synthetics to other place. In case of Mansa Synthetics, it was alleged that they have failed to produce documents for manufacture and transportation of same to the customers. In case of A. A. Textiles, it is alleged that the unit was found to be non-existent. 12. Further, reliance has been placed upon the statement of Shri Shah of Shah Corporation that the amount showed received towards sale of fabrics in case of Umiya Textiles was shown to have been received from Umiya Textiles, but the said payment was not genuine and was not received from the buyers of fabrics. We find that the Appellant before sending the goods for job work filed intimation with the department as required under the Central Excise Rules. Copy of said intimations has been annexed to the appeal and thus it remains undisputed that the Department was in knowledge of the job work activities. While sending the goods the challans were prepared and the yarn was acknowledged by the job worker of having been received. The Appellant has paid job work charges to the said job workers and also deducted TDS on such payments as found from Form No.16A issued to all six job workers. During investigation the statement of employee and the director of the Appellant firm were recorded and all of them have stated that the goods were sent for job work. It is not in dispute that M/s Geena Synthetics, M/s Rama Filaments, M/s Mansa Synthetics, M/s Micro Polyester and M/s

¶50

14 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶51

Good Luck Synthetics were existing at the time of investigation, albeit, they were not operating. However this cannot be interpreted that during the impugned period they were not in operation. None of the statements from the job workers recorded by the investigation deny the fact that they had undertaken job work activity on behalf of Appellant. In case of M/s A.A. Textiles, the unit was found non-existent as the officers recorded statement of person found at said unit who stated that some other unit was running during the period 20.8.03 to 10.3.2006.

¶52

However we find that M/s A.A. Textile was registered unit and the Appellant has shown the acknowledge the receipt of goods by the said M/s A.A. Textiles and job work payment. All the remaining five job workers in their statement have clearly stated that they had undertaken job work of manufacturing of Fabrics on account of the Appellant. The Revenue has relied upon the investigation conducted to hold that some of these units were not having weaving machines or they had not sent the Yarn to sub-job workers who were not existing or some of them had refused to have done the job work. Also, some transporters or owners of trucks whose evidence shown to have been transported the fabrics / yarn have refused the transportation. 14. We find that only on the ground that some job workers could not be found or that some of them refused to have done job work, it cannot be concluded that no activity of job work manufacturing of fabrics was undertaken. The transporter did not show as to where else their vehicles were deployed. Moreover the statement of few transporters that they did not transport the fabric cannot be a ground to hold that no fabric was manufactured as the main job workers have accepted the manufacture of fabric on job work. Even the clearance/ sale of fabric and duty payment thereupon is not under dispute. There are no

¶53

15 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶54

evidences that job work charges paid by the Appellant to the job workers flowed back to them. Even if some of the buyers of the fabrics could not be found, it cannot lead to the conclusion that the Appellant did not sell the fabrics to such parties. It is also not shown that if such fabric was not manufactured from the yarn in question then from what other source the Appellant procured yarn to manufacture the fabric. Further majority of job workers, i.e. 5 job workers out of 6 investigated, have accepted the job work manufacturing of the fabrics from the Yarn supplied by the appellant. The Revenue in case of Umiya textiles and few other buyers have alleged that the accounts were fabricated to show receipt of amount from the buyers, whereas the same were received from third parties, i.e. shroffs or that cash was deposited in the account of buyers one day before or at the time of issue of cheques to the Appellant.

¶55

We find that only on the basis of above allegations, it cannot be said that the Appellant did not get manufactured the fabrics and instead diverted the yarn in the market. No single evidence has been adduced by the Revenue to show that the Appellant had cleared yarn from their factory for sale as such and thereby evaded central excise duty. Not a single buyer of yarn has been identified by the Revenue nor there are any statements of the employee, authorized signatory or the director of the Company that the Appellant had cleared any yarn clandestinely and it is coupled with the fact that no consideration has shown to have been received by the Appellant. There are no evidences of transportation of yarn from the Appellant’s factory or its diversion. It is a settled law that the allegation of clandestine removal should be based upon clinching evidences whereas in the present case, not a single evidence of clearance and sale of Yarn by way of any evidence in the form of

¶56

16 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶57

clearance of yarn, identification of buyers, receipt of consideration and any single paper supporting the allegation of the revenue has been found. In case of CCE, Rajkot V.s Kalyan Glaze Tiles 2008 (222) ELT 417 (TRI)the Tribunal held as under :

¶58

“2. The appellants’ main contention is that the name given in the loading slips does not tally with their names in as much as in most of the slips had mentioned as “Kalyan Ceramics” and “Kalyan Tiles”, whereas the name of their unit is “Kalyan Glazed Tiles”. Further, it has been contended that the entire case of Revenue is based on the loading slips recovered from the transporter’s premises and the statement of the partner. As regards the recovery of the slips, it is seen that the transporter has not been made a party to the proceedings. He has placed an affidavit on record during the course of adjudication, to the effect that the chits are prepared to keep notes of requirements given by the clients over phone and it is not always that the trucks are booked and actually used by such persons. The transportation does not get executed due to various practical problems. It has further been mentioned in the affidavit that the trucks booked for the minimum quantity due to freight reason which does not mean that the quantity mentioned in chit is also the loaded quantity. We find that the said affidavit of the transporter has not been considered by the Commissioner (Appeals). Admittedly, the party has number of group companies under the main name of “Kalyan”, manufacturing the identical goods and in absence of correct co-relation of the company with the appellant, such transport chits cannot be made the basis for arriving at finding of clandestine removal, especially in the light of the affidavit given by the transporter.

¶59

3. It is not understood as to when the names of the buyers was also mentioned in the said transport slip, what prevented Revenue officers to take the investigation up to the buyers’ end and place on record more evidences to substantiate the allegation of clandestine removal. Since these have not been done by Revenue, the benefit of doubt has to be extended to the appellant in the absence of any corroborative evidence and on the face of the doubtful nature of transport slip. It is well established that the charges of clandestine removal cannot be confirmed on the basis of surmises and conjectures and require positive and tangible evidence. In the absence of such evidence in the present case, we find no merits in the findings of the authorities below. We may note here that the Revenue’s reliance on the statement of the partner is also not justified in as much as apart from the fact that there is no corroboration to the said statement, it is seen that the partner has deposed in the said statement that anything showing clandestine removal if found, they will pay the duty. The language used does not inspire confidence to the effect that the partner has admitted the clandestine removal.”

¶60

Further the judgments cited by the Appellant are on the same ground that charges of clandestine removal are not sustainable without

¶61

17 | P a g e E / 1 2 2 7 - 1 2 3 0 / 2 0 1 1 - D B

¶62

corroborative evidence. The revenue could not produce any evidence of removal and sale of POY and hence the demand on alleged removal of same does not sustain. Thus as per our above findings and observations, we are of the view that the demand against the Appellant concern is not sustainable. We thus set aside the impugned order and allow the appeal filed by the Appellant concern with consequential reliefs, if any. The appeals filed by co-appellants are also allowed for the same reasoning.

¶63

(Order pronounced in the open court on 11.04.2019)

¶64

(RAMESH NAIR) MEMBER (JUDICIAL)

¶65

(RAJU) MEMBER (TECHNICAL)

¶66

Seema

Madhav Bhageria v. Vapi

Case brief

What is this about?

What did the court decide?

Madhav Bhageria v. Vapi

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Lakhamshibhai v Bhanushakli vs Rajkot

Commissioner of Customs Excie and Service Tax-Pune-Iii vs Visaka Industries Ltd.

Sharda Motor Industries Ltd. vs Commisioner Central Excise and Service Tax-Pune-I

Rabi Engineering Works Private Ltd. vs Kolkata North Commissionerate

Ch Jawahar Babu Ceo vs Hyderabad-i

M Suryanarayana Officer In Charge vs Hyderabad-i

Shri Ram Wires vs Raipur

National Plastic Technologies Ltd. vs Commissioner of Gst&Cce(Chennai outer)