[Order per : Archana Wadhwa, Member (J)]. - M/s. Lucky Dyeing Mills (P) Ltd. are engaged in the manufacture of man-made fabrics on job work basis and Shri O.I. Baluwala is the director of the said manufacturing unit.

2. As per the facts on record, the appellant’s factory was visited by Central Excise officers on 6-2-98, who conducted the various checks and verifications in the presence of independent panchas and Shri O.I. Baluwala, Director of the mill. As a result of such verification, 360 pieces of stock of grey fabrics was found short than the recorded balance. On enquiry, Shri Onibhai admitted that the said 360 pieces of grey fabrics were fully processed by them and were cleared without cover of any Central Excise invoice and without payment of duty in the open market. He also expressed his willingness to pay the duty leviable on the said clearance. A statement of Shri Onibhai was recorded on 7-2-98 agreeing to the above fact.

3. It is further stated seen that the other two units M/s. Lucky Steel and M/s. Goodluck Trading Co., which belongs to the appellant’s family were simultaneously put to search on 6-2-98. The appellant’s brother Shri Sadik Ismail Baluwala is the partner in M/s. Lucky Steel as well as in M/s. Goodluck Trading Co. He is also a director of the appellant-unit M/s. Lucky Dyeing Mills (P) Ltd. During the course of search of the said two units, incriminating documents like file containing job cards with delivery challan, loose papers, computer print-out etc. were recovered from the said premises. On interrogation, Shri Sadik Ismail Baluwala stated that the same were details of production and clearances of processed man-made fabrics by M/s. Lucky Dyeing Mills (P) Ltd. and further deposed in his statement recorded by the officers that all these incriminating documents have been kept in the factory premises of M/s. Lucky Steel and M/s. Goodluck Trading Co., to avoid detection by Central Excise officers. He further gave the details of various entries made on the job cards, delivery of the goods on Kachcha delivery challan and summary of illicit removal, as reflected in the loose sheets and the entries made in the computer. He also offered to pay the Central Excise duty leviable on the said illicit clearances during the period Nov.’97 to 5-2-98.

4. Further, the premises of one M/s. Manoj Kirana Stores, Surat was also put to search simultaneously on 6-2-98. Shri Manoj Patil, son of the owner of the house stated that the premises have been given on rent basis to Shri Bhavarlal and Shri Vijubhai have been doing the work of M/s. Lucky Dyeing Mills (P) Ltd. Various incriminating documents including fictitious invoices related to assisting M/s. Lucky Dyeing Mills (P) Ltd. were recovered from the said premises.

5. In his further statement recorded on 10-2-98 and 19-5-01, Shri Onibhai Baluwala admitted that the various records seized by the officers related to various clearances from his mill and from other places. He further deposed in the said statements that the two units M/s. Lucky Steel and M/s. Goodluck Trading Co. belongs to them and were being run from the same premises and computer prints seized from the said premises actually belonging to them.

6. On scrutiny of the seized records, Revenue found that the total 101 merchant-manufacturers are involved. Revenue made efforts to get in touch with the said merchant-manufacturers and conducted investigations at the end of few of them. Their statements were recorded, which stands reflected and reproduced in the impugned order of the Commissioner in detail. We do not feel inclined to deal with the detailed statement of each and every person concerned but think it suffice to observe with the gist of all the statements recorded by the officers is to the effect that man-made fabrics were got processed by them from M/s. Lucky Dyeing Mills (P) Ltd. and payments have been made in cash to the persons, who came from the mill. Some of them have also deposed that the rough challans were being destroyed by them, after making payment. Some of them also offered to deposit the duty involved.

7. On the basis of statements of various persons recorded and the scrutiny of the documents recovered and the statements of Shri Onibhai Baluwala and Shri Sadik Ismail Baluwala, directors, proceedings were initiated against the appellant alleging clandestine removal and consequent confirmation of demand of duty along with confirmation of interest. Notices also proposed imposition of personal penalty. The said show cause notice stands adjudicated by the Commissioner vide which he has confirmed demand of duty of Rs. 1,82,13,824/- along with imposition of personal penalty of identical amount, under provisions of Section 11AC of Central Excise Act, 1944. In addition, personal penalty of Rs. 20,000/- was imposed on Shri Onibhai Ismail Baluwala under Rule 209A of the erstwhile Central Excise Rules, 1944. The said order is impugned before us.

8. We have heard Shri Hardik Shah, authorized representative appearing for the appellant and Shri D.S. Negi, learned SDR for the Revenue. Written submissions also stand filed by the appellant which have been gone through by us.

9. After appreciating the submissions made by both sides and after going through the impugned order, we find that as regards the shortages of grey fabrics, detected by the officers at the time of their visit in the appellant’s factory that the same were admitted by the directors. There is no other explanation put forth by the appellant to justify the said shortages. Apart from that, we find that number of incriminating documents in the nature of job cards, kachcha delivery challans and computer retrievals were found by the officers in the other two factories belonging to Baluwala family who are also located in the same premises. It has also come on record in the shape of statement of Shri Sadik Ismail Baluwala that the said documents were kept in other factories so as to avoid detection by the Central Excise officers. Shri Onibhai in his various statements recorded on 7-2-98, 10-2-98, and 19-5-01 has admitted the fact of illicit removal of the goods. The said statements duly stands corroborated by his brother Shri Sadik in his various statements recorded during the course of investigations. Not only that. the Revenue has also been able to record the statements of merchant-manufacturers admitting the fact of receipt of such man-made fabrics without cover of Central Excise invoices and against cash payment. As such, the appellant’s contention that there is no corroborative evidence on record to show illicit removal is against the ample evidence available on record. The contention that no corroborative evidence was found in the shape of procurement of raw material, the electricity consumed and the payment made etc. does not appeal to us inasmuch as when the grey fabrics have been sent by the merchant-manufacturers without any challan, there cannot be any documentary evidence to that effect. Similarly, as admitted by most of the merchant-manufacturers, the payments were made in cash and delivery challans were torn thereafter, no evidence of any money transaction would be available. It is not a simple case of confirmation of clandestine removal based upon the uncorroborative statements of the director or his authorized representative. Sufficient corroboration in the shape of seizure of incriminating documents and in the shape of statements of various merchant-manufacturers as also statements of appellant’s brother Shri Sadik, who was also a director in the company is on record. It is seen that not only in his initial statements recorded on 7-2-98 and 10-2-98 that Shri Onibhai has admitted the offence, but even in his statement recorded on 19-5-01 i.e. as late as after a period of 3-4 years, he has again admitted offence of clandestine removal. In this scenario, even the fact that the statements were retracted by filing an affidavit before the notary, will not help the appellant especially when the said affidavit after having been sworn in before the notary, was never placed before higher officers of the department. Under these circumstances, the Commissioner has rightly concluded that the explanation given by the appellant is in the nature of a simple denial, no effective rebuttal to the voluminous documentary evidence has been put on record.

10. The appellants have strongly contended that the cross-examination of Panchas witnesses, of Shri Manoj Patil and various traders was not afforded and as such it has resulted in denial of principle of natural justice and the demand should be set aside on this ground alone. We find from the impugned order that the Commissioner has effectively dealt with the appellant’s request for cross-examination of the various persons. As regards the cross-examination of Pancha witnesses, he has recorded that the appellants has not disputed the validity of the panchnama, which stands duly signed by the two directors on the date of search itself. As such, no purpose is going to be solved by cross-examination of witnesses.

As regards the cross-examination of Shri Manoj Pail, proprietor of the Manoj Kirana Stores, from where the incriminating documents stands recovered, he has observed that the statements of said person is only to the effect that the premises have been given on rent to the two persons. This fact does not stand denied by the appellant. The Revenue’s case is based upon the recovery of incriminating documents from the said premises and not on the basis of statements made by Shri Manoj Patil. As such, we are of the view that the cross-examination stands rightly rejected by the adjudicating authority.

11. As already observed, the Revenue’s case in based upon the documents recovered from the premises of M/s. Lucky Steel Co., M/s. Goodluck Trading Co. and Manoj Kirana Stores. It has been contended by the appellant that these documents do not belong to them. While discussing the above plea of the appellant, the Commissioner (Appeals) observed as under :

“Obviously, M/s. Lucky Dyeing Mills have secreted incriminating documents in premises outside their mill so that they may not be recovered by the department during the course of investigation. They cannot use this as a defence to disown the recovered documents. Their submission that the authorship of the documents is unknown is not acceptable since Shri Omnibhai I. Baluwala, Director of the mill has stated on 10-2-98 that they were written by Shri Brij Kishore, their Excise clerk. Unfortunately, Shri Brij Kishore, has been untraceable during investigations. It is also noticed that Narmada Notebook No. 5 as well as international notebook No. 27 has the same stamp of the mill and Shri Omnibhai I. Baluwala has confirmed that the parties mentioned in the said diaries have received processed fabrics from their mill. The notice has nowhere explained how these records have the stamp of the bill if they have no connection with M/s. Lucky Dyeing Mills. It is also seen from the panchnama of the search of M/s. L.D.M. on 6-2-98 that Shri Onibhai Baluwala sought permission from the Central Excise officers to go for “namaz” at 20.35 hrs on 6-2-98, and remained absent upto 11.00 hrs on 7-2-98. This is not the behaviour to be expected from Shri Onibhai if the officers were really threatening or coercing him in any way. Further, as late as 19-5-01, (nearly 3 years after the search), Shri Onibhai in his statement before the Central Excise Officers admitted the validity of the investigations.”

As is seen from the above observations made by the adjudicating authority, that not only Shri Onibhai has admitted that the said documents belonged to them but Shri Sadik who is the director in the appellant’s company and partner in the other two units has also admitted in his statement that the said documents as well as computer retrievals belonging to M/s. Lucky Dyeing Mills (P) Ltd. Apart from that Shri Onibhai has also explained in his initial statement that their excise clerk Shri Brij Kishore was the author of the said documents. Further, diary and other documents were bearing the stamp of the appellant’s mill. No. explanation is coming forth from the appellant as to how the said documents bore the name of the appellant, if they do not belong to them. The said fact stands admitted by Shri Onibhai even in his statement dated 19-5-01, which was recorded almost after a period of 3 years. As such, we find no merits in the above contention of the appellant.

12. Appellants has relied upon the Tribunal’s judgment in case of Parshuram Cement Ltd. v. CCE, Lucknow - (Tri-Delhi) as also in case of CCE, Chennai v. Murugan Enterprises - (Tri-Chennai), laying down that the findings of clandestine removal cannot be arrived at based upon the un-proved or un-authenticated entries made in the register. We observe that every case of clandestine removal has to be adjudged in the light of the evidence available in that case. As already noticed the ample evidences produced on record by the Revenue only leads to one inevitable conclusion of the processed fabrics having been cleared without payment of duty. In any case, we find that the charge of clandestine removal in case of Parshuram Cement Ltd. was based only upon the entries made in the notebook, when the Tribunal concluded that no inference of excess production and clearance of the goods can be drawn on the basis of difference in production figures as reflected in RG-1 and as shown in the notebook. Similarly, in the case of Supreme Fire Works Factory v. CCE, Tirunelveli - (Tri-Chennai), Tribunal has observed that the corroborative evidence in the shape of purchase of the raw material, sale of final goods clandestinely is necessary and inasmuch as the Revenue did not examine the customers who purchased the goods, the benefit of doubt has to be extended. The ratio of the said decision is also not applicable to the fact of the instant case. Inasmuch as it has come on record in the shape of statement of merchant-manufacturers that all the grey fabrics i.e. raw material was being sent to the appellant without the cover of documents and the payments were being made in cash. As such, the evidence as regards purchase of the raw material and sale of final goods stands produced on record by the Revenue.

13. In view of our foregoing discussion, we find that sufficient evidence exists on record to lead us to only one and inevitable conclusion that the appellant was indulging in the clandestine activity and has cleared processed man-made fabrics without payment of duty. Accordingly, we find that no justification to interfere in the impugned order.

14. Both the appeals are, accordingly, rejected.

(Pronounced in Court on 22-10-2007)