: 31-r-gu (zitta--v) coRtiozi, : kiWcAcp i Lim :

: 3T141-4Tf, 31-61=RT-41-q— 380015. :

Gico .11. 5 NI

175-1T- : File No : V2(39)12/EA2Ahd-I/11

31-0-6 31-07- Order-In-Appeal No.7/2012 (Ahd-I)CE/MM/Commr(A)/Ahd

ft-4T Date 27.01.2012 it't cr) ,=r 4 -rtt-3T Date of Issue `-2,1 ) ©f it_o i ct—_

PATO- 4-IRTicoi 4-161v1-1, 3Trtiwr (3tO -6.-V) T-Tr tri-ftu Passed by Smt. Mallika Mahajan, Commissioner (Appeal-V)

Tr .3041q c~371:17T7q-1 3 1 pTIT-671R1 Wt1

WTT •

Arising out of Order-in-Original No. MP/11/AC/Dem/2011 Dated 20/10/2011

Issued by: Assistant Commissioner Central Excise, Div.-III Ahmedabad-I.

3111-6M—di (01 c•I't-Idl Name & Address of the Appellant / Respondent

M/s.Pooja Industries Ahmedabad.

chl v:ff4tT 3Ttc 3TI T 31t-dliEf 31T17 Crit TPITR-2Tit

Nita' TIT a9taTuT 3.T1 t9 CF7 ct t I

Any person a aggrieved by this Order-In-Appeal may file an appeal or revision application, as the one may be against such order, to the appropriate authority in the following way :

ct, I T aTuT

Revision application to Government of India :

(1) \---4tzl 'c-11(1 c 3i14 4-i, 1994 c0 ql-RT TdT7 14PTA A 74-4rff z1T71-

(Tt V2-1Tf 3T -1 T4taTuT 11RU

1141T111, 44- Aftr'id, : 110001 41 rft-g I

(i) A revision application lies to the Under Secretary, to the Govt. of India, Revision Application

Unit Ministry of Finance, Department of Revenue, 4 th Floor, Jeevan Deep Building, Parliament

Street, New Delhi - 110 001 under Section 35EE of the CEA 1944 in respect of the following case,

governed by first proviso to sub-section (1) of Section-35 ibid :

(ii) err cf1 HI 4 Ic4 A .sir ft-# 11-03-FrH TIT 31-g cr)1.) 111

14-1=1 , 11 1-11:WITT7 1 ulIc) 4-1141 .4, TIT ft-RtT 1Tu&TTT-7 TiT u I cI6

ft-41 cI-)11 ,=f .zrr f l71-cr&ITR A ~1 4-k -r 4 7 -1 -err

(ii) In case of any loss of goods where the loss occur in transit from a factory to a warehouse or to another factory or from one warehouse to another during the course of processing of the goods in

a warehouse or in storage whether in a factory or in a warehouse.

(RT) 1.17-ff ft-t zrr crtvr Rend 4-Her TR TIT 4116* 14 11?41r -vs- cot,

\3c-Livc-i fez .TrFr- qr-e f Trr 0,7-r t

In case of rebate of duty of excise on goods exported to any country or territory outside India of on excisable material used in the manufacture of the goods which are exported to any country or territory outside India.

cb I qj 4 1d1 T f ch (kci-Fr .1 .-qt-J ft -7r Tim 41 id ei

In case of goods exported outside India export to Nepal or Bhutan, without payment of duty.

3 3c-(-11q-1 4 3-0-1-1" 1A 4 R11-1 i 7 Uft 11 31-rkTF of I *fl qN -1 1j-ffiftT 31T-pff, 3 trft-d- TiTRT I (If qr- if ftTa- 31--t-Mi 0.2) 1998 109 -171 fcM c T 4 N. 6) I

(d) Credit of any duty allowed to be utilized towards payment of excise duty on final products under the provisions of this Act or the Rules made there under and such order is passed by the Commissioner (Appeals) on or after, the date appointed under Sec.109 of the Finance (No.2) Act, 1998.

1,10.45 f. .] 4 11cloi), 2001 ct\) f-71-7i 9 ch .cr-q7 3fitU vit 3Tr -v-r •R -dr9. TIRT

1-7-31-1k7T . 311-ccf -cTfd-t 311-1 .M-1:0 3flc1) ct>I 71 E0 cY) 3id 4 id 41-7 lb() ch T-Td-T9 ch X1 12-T cbik-6 TIIMi A c f ert z-107

The above application shall be made in duplicate in Form No. EA-8 as specified under Rule, 9 of Central Excise (Appeals) Rules, 2001 within 3 months from the date on which the order sought to be appealed against is communicated and shall be accompanied by two copies each of the 010 and Order-In-Appeal. It should also be accompanied by a copy of TR-6 Challan evidencing payment of prescribed fee as prescribed under Section 35-EE of CEA, 1944, under Major Head of Account.

(2) ftrui.-1 311q-1 T-F12T -) 1 \3 ,m1 6 (1) LIR'-r 200/— itNi q.A 4 1019- er .1 Trff4=1 Ga r •3R-11q1 6)- cl) 1000 /— ttRi Tic-1Fr 7-r- I

The revision application shall be accompanied by a fee of Rs.200/- where the amount involved is Rupees One Lac or less and Rs.1,000/- where the amount involved is more than Rupees One Lac.

7.1y(1) I1 \)jc-f-bu 11 c I cry 3T-L) a -z1I I'4WTLIT cl\-) Appeal to Custom, Excise, & Service Tax Appellate Tribunal.

F-(1-17, , 1 31----L1?-1-1-4, 1944 c6‘I 3-Ic14

Under Section 35B/ 35E of CEA, 1944 an appeal lies to :-

crig-ctivu -\4 4111i c: -T SFr 31Moitzi ,, -_11•1 I '07R-0-{ m f.1uIcr t-ftwr . ci>>. cl-))

,

ZAppellate Tribunal of West s relating to classification

the special bench of Custom, Excis Block No.2, R.K. Puram, New Del valuation and.

3 ......

\IFTff ROM i8 c, 2 (I) ZNITt; 3T1N 31--r1111 ebr) 311:11-F, arcirct 1i1-1=0 trlIT

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316 41q1c11 31)--20, +-tr1 61[4.4-ltd. et) 14-11\3u5, *IT* 316 1-1q1.11q-380016 .

(b) To the west regional bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) at 0-20, New Metal Hospital Compound, Meghani Nagar, Ahmedabad

: 380 016. in case of appeals other than as mentioned in para-2(i) (a) above.

(2) -;),tc,ci) (3T-arl) .rfiz-FITt, 2001 i 6 3-ic1+tc1 H.

k177 31T-1R 311-M71 7-al-zilf0-eM14 +1 31-1-TM 3TtfrO- f+— 31-r--t -r 4 -GIN

-(7161 7J-- 4 Hill, 7:1-r - lit-TT 31'1-R r1 4 11W 1:T7 5 -F131f

zn \3-1-R) c1) 1-1 -FcN 1000/ — 1)74C tiftl ui61 \R-Lim -arr- 4

liriT 311 r1 4 11q1 TRIT W4 5 r1NA TIT 50 r1N-q cict) cl) Wc17 5000 / — thti

el , $) I ,041, -Thr 91+1 31k r1 4 11L11 , R11 TT .--c17 50 .F731 ZIT

- l0000/— Wft I u 1Thti fl61 r1(1) 'd:rk-tk -114-r

A.T ) 1 1-1Z 111 34-4q. ML) ‘3117 q6 Tc[Z .3fl 7 d. X11 v1Pet)

4 WPM utei uwr 7--arziRFT-Tur 4 tl'm R-Qm t I to 3fr---q--

-11---q $5 'MU 75k-N 500/— 1:141 1)-7-4)- tA I

The appeal to the Appellate Tribunal shall be filed in quadruplicate in form EA-3

as prescribed under Rule 6 of Central Excise(ppeal) Rules, 2001 and shall be accompanied against (one which at least should be accompanied by a fee of Rs.1,000/-, Rs.5,000/- and Rs.10,000/- where amount of duty / penalty I demand

/ refund is upto 5 Lac, 5 Lac to 50 Lac and above 50 Lac respectively in the form

of crossed bank draft in favour of Asstt. Registar of a branch of any nominate public sector bank of the place where the bench . of any nominate public sector

bank of the place where the bench of the Tribunal is situated. Application made for grant of stay shall be accompanied by a fee of Rs.500/-.

31-1- 71 1) 4)4 +1r1 311 0 e1)1 '1 4-114 6)c-11 t c1)W-71) 1c 311q1 c d7 1Thti

1= 1-1 -ffl3-cit-OTt- -&{ f -zrr Q-11-11 -ct t) q-St 3

3711-ATI ,--arzi-rf -c-h--Tui ch I c h 3rcitc -Err ---41-zr ,t1 k ch I chi l ch 311q-1

ftzfl TIT t I

In case of the order covers a number of order-in-Original, fee for each 0.1.0. should be paid in the aforesaid manner not withstanding the fact that the one

appeal to the Appellant Tribunal or the one application to the Central Govt. As

the case may be, is filled to avoid scriptoria work if excising Rs. 1 lacs fee of

Rs.100/- for each.

(4) TI Ic1u lc-to 31-11 q41 1970 TRIT 3171-1. 3-1 ed57 3ivk

311q-1 T1-1- 3fraT TTP-TFR ftu1717 Wrq-Wit 311 /T 1) 3) 1;1TFT

-v..6.50 13) 0)1 7-T-11-41-6E1 f'd7.5Z r1 , 11 61-11 -111tq- I

One copy of application or O.I.O. as the case may be, and the order of the adjournment authority shall beer a court fee starr1p, of Rs.6.50 paise as prescribed under scheduled-I item of the court fee Act, 1975 as amended.

Tr[mt ct;t citc-) 3fR 11)- aiM 31-TT-WI f rr Q11c11

r Tir qezr)- , ci)-dtET .3c-4K -1 _trei) c1 st)elleM 31tARf (c 4)fkz:Ff,

1982 Ti t I •

Attention in invited to the rules contended in the Customs, Ex Rules, 1982.

( 3 )

(5)

0

4 ":•• a.* 7

* 1 P■0 *.V* JAB

<11,ER(A,„

111

d other related matter

ce T. Appellate Tribunal (Procedure)

4 F.No.V2 (32)12/EA2/201 1

ORDER-IN-APPEAL

The Revenue has challenged the Order-In-Original No. MP/11/AC/Dem/2011 dated

20.10.2011 [ here-in-after referred to as " the impugned orders" for the sake of brevity ] passed by

the Assistant Commissioner, Central Excise, Dn.-III Ahmedabad-I [ here-in-after referred to as " the

adjudicating authority " for the sake of brevity] passed against M/s. Pooja Industries. Plot 4615,

G.I.D.0 Industrial Estate, Phase-IV Vatva, Ahmedabad-382445 [here-in-after referred to as the

"respondent" for the sake of brevity].

2. The facts of the case in brief is the respondent is engaged in the manufacture of

PP/HDPE fabrics/bags and liner bags falling under Chapter 39 of the Central Excise Tariff Act, 1985.

The Preventive Wing of Ahmedabad-I have conducted search at the factory premises of M/s.Pooja

Industries on 29.09.2010 and on physical stock verification of the finished goods, they found the

excess quantity of stock i.e. 7386 Kg of laminated fabrics and 1763.7 Kgs of Polythene liner valued at

Rs. 7,38,700/- which was not entered in R.G.1 Register, and therefore the said excess finished goods

was seized under regular Panchnama dated 29.09.2010 and handed over the same to Shri Indrapal

Singh Tomar, Supervisor and authorized person for safe custody.

3. A statement of Shri Indrapal Singh Tomar recorded on 29.09.2010 wherein he interalia

admitted that the finished goods were not entered in their RG-1 Register with an intention to clear

the same and without payment of Central Excise duty. A statement of Shri Sunil Agarwal Sharma,

proprietor of the respondent was also recorded on 29.09.2010 wherein he also accepted the facts

deposed by Shri.Indrapal Singh Tomar, Supervisor and stated that the finished goods lying

unaccounted in the RG-1 register has been kept ready for dispatch with an intention to clear the

same illicitly in cash payment without preparing invoice and without payment of Central Excise duty

as soon as any buyer approached them. In his further statement dtd.23.02.2011 wherein Shri Sunil S.

Sharma, proprietor of the said unit reiterated the same facts.

3. 1 Therefore, a Show Cause Notice bearing F.No. MP/PI-II/INQ-09/2010-11 dated 28.02.2011

was issued to M/s. Pooja Industries wherein they were called upon to show cause as to why:

i) The seized goods valued at Rs. 7,38,700/- as per Annexure-A to the Show cause Notice

should not be confiscated under Rule 25 of the Central Excise Rules, 2002 and if the same

are not produced and made available why redemption fine on the goods should not be ‘,0

imposed , in lieu of confiscation of the s ;Fog' r 4.r

1.11

MTN

* •* are.;BPi.z,'

5 F.No.V2 (32)12/EA2/201 1

ii)The Central Excise duty of Rs.76,086/- on finished goods which were manufactured and

kept ready for clearance without payment of central excise duty by not accounting in

R.G.1 register, should not be demanded and recovered under Section 11A(1) of Central

Excise Act, 1944 at the time of release of seized goods by invoking the extended period

of five years under proviso to Section 11A(1) of the Central Excise Act, 1944

iii)Penalty under Section 11AC of the Central Excise Act, 1944 and under Rule 25 of the

Central Excise Rules, 2002 should not be imposed on them.

4.The Assistant Commissioner, Central Excise, Division-III, Ahmedabad-I adjudicated the said

Show Cause Notice vide Order-In-Original No: MP/11/AC/Dem./20 11 dated 20.10.11, wherein he

vacated the entire proceedings and noted in his finding that the onus to establish the clandestine

removal is on the revenue and nothing is brought on the record in the SCN and has placed reliance

on the decision and findings in the case of CCE Chandigarh v/s M/s.Nachiketa Paper Ltd reported at

2008(225) ELT 194(P&H) which is irrelevant with the present case.

5.Being aggrieved by the Order-In-Original No: MP/11/AC/Dem./2011 dated 20.10.11, passed

by the Assistant Commissioner, Central Excise, Division-Ill, Ahmedabad-I, Revenue filed an appeal

under Section (2) of the Section 35-E of the Central Excise Act, 1944 on the following grounds:-

5.1 Under Rule 10 of the Central Excise Rules, 2002, every assessee is required to maintain

proper record on a daily basis, in a legible manner indicating the particulars regarding the description

of the goods produced or manufactured, opening balance, quantity produced or manufactured,

inventory of goods, quantity removed, assessable value, the amount of duty payable and particulars

regarding amount of duty actually paid. Hence, there is a breach of the provisions of Rule 10 of the

Central Excise Rules, 2002.

5.2 As per rule 25(1) (b) if the manufacturer does not account for any excisable goods produced

or manufactured or stored by it, such goods would be liable to confiscation and penalty can be

imposed on manufacturer as stipulated in the said provision. The clause (b) of Rule 25(4 does not

specify the requirement of any intent to evade payment of duty, as is specified in the residuary

clause (d) of Rule 25(1). In this regard, reliance is placed on the decision of Hon'ble Tribunal in the

case of M/s PNP Castings Pvt Ltd Vs Commissioner of Central Excise, Lucknow, reported at 2006 (194)

ELT 250 (Tri-Del.) wherein it is held that Excisable goods not accounted for in statutory record in

terms of Rule 10 of Central Excise Rules, 2001/2002, is liable to confiscation and there is no

requirement to prove intention to evade payment of duty , and redemption fine and penalty is

imposable under Rule 25(1) (b) of the Cent ccise , I , 2001/2002. so,ER (elPpC

0 "n"

* *16'^•^EDABP'° *

6 F.No.V2 (32)12/EA2/2011

5.3 The admissions made by Shri.Indrapal Singh Tomar, Supervisor in his statement dated

29.09.2010 and Shri. Sunil Agarwal Sharma, proprietor of M/s. Pooja Industries in his statements

dated 29.09.2010 and 23.02.2011 that the finished goods were not entered in their RG-1 Register

with an intention to clear without preparing invoice and without payment of Central Excise duty,

have never been retracted. The written submission made by Shri. Sunil Agarwal Sharma, proprietor

of M/s.Pooja Industries on 06.04.2011 in response to the SCN that the Statements were recorded

under pressure was an afterthought.

5.4 The adjudicating authority quoted the decision of H'ble High court of Punjab and Haryana in

the case of CCE Chandigarh V/s M/s Nachiketa paper Ltd. 2008(225) ELT 194(PNH). In the above

case the demand of duty on raw material found short is based on the presumption that the raw

material must have been used in manufacturing final products, which was ultimately cleared without

payment of duty. The tribunal has noticed the undisputed fact that demand of duty on raw material

is based on the quantification of the production, which is worked out on the basis of input and

output ratio and in any case the assessee respondent had paid the duty on the shortage immediately

after the ascertainment. Whereas in the instant case, there was excess of finished goods which

were placed under seizure and the same was not entered in their RG-1 Register, the intension of the

assessee was crystal clear, to remove the same illicitly . Thus the said case law is not relevant to the

present case.

5.5 It is evident from the above cited facts of the of the assessee, it appears that there was

suppression of production and clearance of finished goods with intention to evade payment of duty.

The contention of the assessee that they kept the excess stock physically, which could not accounted

for in the statutory records. The extended period as provided for under section 11 A of CEA,1944 is

rightly evocable and the assessee is also liable for penalty under Section 11AC of CEA,1944 read with

Rule 25 of CER,2002.

5.6 In view of the above facts Revenue is of the view that the Adjudicating authority has erred

in setting aside the proceedings initiated vide Show Cause Notice issued under F.No-MP/PI-II/Inq-

09/2010-11 dated 28.02.2011 and passed the above impugned Order-In-Original is not legal and

proper and requires to be set aside on above grounds of appeal.

6. Personal hearing was held on 10.01.2012 wherein the respondent appeared and they

reiterated the same as per written submission.

7. I have gone through the records of the case inC1,5= pf appeal, respondent's submission at

the time of PH as well as case laws submitted durgq1, 5 0tylifictings are given below. ht,

0 9-

st. RPM.

* _*1'.6146DABAC)*.3*

'16)11

7 F.No.V2 (32)12/EA2/201 1

8. The ground of appeal taken by the Department against the order of the Asst

Commissioner is that he should have imposed penalty under rule 25 of the Central Excise rules 2002

as the appellant had not maintain proper records as required under rule 10. The Asst Commissioner

on the other hand has not imposed any penalty under rule 25 for the reason that mere shortage of

goods did not indicate any evidence of clandestine removal by itself and in the absence of sufficient

evidence to prove the allegation, by the department, he was not in a position to sustain any of the

charges leveled against the respondent, in his impugned order. The perusal of the rule 25, under

which the Department has, in appeal, proposed to impose penalty for contravention of rule 10 of the

Central Excise rules 2002, substantiates the finding of the Asst Commissioner. This rule clearly states

that subject to the provisions of section 11AC of the Act, if any producer, manufacturer, registered

person of a warehouse or a registered dealer... (b) does not account for any excisable goods

produced or manufactured or stored by him; then, all such goods shall be liable to confiscation and

the producer or manufacturer or registered person of the warehouse or a registered dealer, as the

case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of

which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d)

has been committed, or [rupees two thousand], whichever is greater. Section 11 AC has the

ingredients of fraud or collusion or any willful mis-statement or suppression of facts, or

contravention of any of the provisions of this Act or of the rules made there under with intent to

evade payment of duty. My view is substantiated by the view of the honorable Gujarat High Court

also, in a case reported in 2010 (260) E.L.T. 73. (Guj.), in the case of COMMISSIONER OF C. EX. &

CUSTOMS Versus SAURASHTRA CEMENT LTD. In this case it was ruled that "Rule 25 ibid evocable

subject to Section 11AC of Central Excise Act, 1944 - Ingredients like suppression or willful mis-

statement mentioned in Section 11AC ibid to be considered while determining penalty under Rule 25

ibid." Therefore if the Department wanted to impose a penalty for non-maintenance of records, they

should have proposed penalty accordingly under the appropriate section/rule of Central Excise.

8.1 I will now examine whether they was an element of any of the ingredients of section

11AC of the CEA, 1944. Here again, I have no option but to go with the findings of the AC that there is

a total absence of any evidence which substantiates the allegation of clandestine evasion by the

respondent. No further corroborative evidence has been produced by the department in the form of

any excess electricity bills, excess Labor charges, money flow back, to prove clandestine removal. In

cases of clandestine removal, the onus lies on the department to prove the same, by way of

corroborative evidence. There is no statement taken by the departmental officers of any of the staff

of the appellant with regard manufacture/clearance of clandestine goods. There is no statement

taken from the buyers of these clandestine goods. This has been the view of Ahmedabad Tribunal

also in the case of M/s S T TEXTURISER & SHRI ASLAM A K KAPADIA Vs COMMISSIONER OF CENTRAL

EXCISE, SURAT — I, reported in 2006 (200) ELT 0234 . In this appeal in fact there is no allegation of

shortage of raw material even. If the reapon at was` Iging in clandestine removal, where did he

7, A)

0..21 (A Ppe

get his raw materials from? x

F.No.V2 (32)12/EA2/201 1

Ei incumbit probation qui dicit, non qui negat or the burden of proof lies upon him who affirms, not he who denies.

8.2 The sole evidence for alleging clandestine removal is the statement of the proprietor

and supervisor of the respondent. Now this raises the question of whether a case can be simply

based on the statement of 2 persons. Many times the statements on the day of search are given in

stressful circumstances. Statements recorded u/s 14 of the Central Excise Act, 1944 are not

comparable to the confession recorded u/s 164 of CRPC before Magistrate and as such are required

to be corroborated by evidence of removal without payment of duty. The said statement is devoid of

probative value and cannot be considered to be supportive charges of clandestine removal.

8.3 The department has also alleged that in the absence of any retraction, these

statements have evidentiary value. Here I would like to add that even if the statements had been

retraced, that would not have helped the respondent if there were other corroborating evidences

against him. A case reported in 2007(220) ELT 3 holds that confession cannot be treated as

substantive evidence and must be supported by corroboration from independent sources. Same ratio

has been held in the case law reported in 2003(161) ELT 882 and 1986 (23) ELT 507. In departmental

cases preponderance of probability is required. Once that is proved even retraction is not helpful to

the evader has been held in case of Devi Dass Garg reported in 2010 (257) ELT 289. However, in the

appeal before me, there is a serious dearth of corroborative evidence.

8.4 Therefore for the lack of evidence; I find that the Assistant Commissioner has rightly

dropped the SCN against the respondent.

ORDER

9. In view of the above discussions and findings, I reject the appeal of the department

and uphold the impugned order.

(MALLIKA MAHAJAN COMMISSIONER (APPEALS- CENTRAL EXCISE, AHMEDABAD.

ATTE TED

(1<. Ch an) SUPERINTENDENT (APPEALS-V) CENTRAL EXCISE, AHMEDABAD-I. BY REGD. POST A.D.

To,

M/s. Pooja Industries.

Plot 4615, G.I.D.0 Industrial Estate, Phase-IV Vatva, Ahmedabad-382445

Date: 25/01/2012

The Chief Commissioner, C. Ex., Ahmedabad Zone, Atifn—e-The Commissioner, Central Excise, Ahmedab •

The Assistant Commissioner, C. Ex. Div.-III, 4. Guard file.

•.•5 P. A. file.

Copy to:

1.

2.

3.