ORDER
V.K. Ashtana, Member (T)
1. These appeals are against four Orders-in-Original passed by the Commissioner of Central Excise as indicated below: –
Name of the Party Appeal No. Order-in-Original No. Date ----------------- ---------- --------------------- ----- Jeyadevi Industries E/314/95 4/95 21.2.95 Sowbagyalakshmi Silicate E/315/95 5/95 21.2.95 Manohara Saraswathy E/316/95 7/95 21.2.95 Glassworks Mahasree Aruna Chemicals E/317/95 6/95 21.2.95 Briefly, the issue adjudicated upon is the charge of clandestine removal of unaccounted production of Sodium Silicate both in glass form (solid and liquid form) by these four assessees, who were SSI units but had opted for Modvat scheme. 2. Heard Sri R. Ramakrishnan, learned Consultant for all the appellants and Sri S. Sudarsan, learned DR.
3. Learned Consultant submits that since the charge is of clandestine removal, the onus is on the department to prove the same through reliable evidence. He submits that all the four assessees were having substantial Modvat credit available in their R.G. 23A Part-II account, which remained unutilised because duty paid on raw materials was at the higher rate on the finished products and therefore, there was no intention for clandestine removal for the sake of evading duty because unutilised credit in substantial amounts was available on records. Hence, he submits, there was no motivation to evade duty. He further submits that while M/s. Sowbagyalakshmi Silicate and M/s. Manohara Saraswathi Glass Works cleared Sodium Silicate both in solid as well as liquid form, M/s. Jeyadevi Industries and M/s. Mahashree Aruna Chemicals only cleared the Sodium Silicate in liquid form. He further submitted that the normal ratio of raw materials which are Soda Ash and Silica Sand used to produce sodium silicate is as follows: –
1 M.T. of Soda Ash gives 1.8 M.T. of Sodium Silicate glass form (solid); and
1 M.T. of Soda Ash gives 3.4 M.Ts of Liquid Sodium Silicate.
As against this, the order impugned has accepted the ratios which are much higher in the case of M/s. Sowbagyalakshmi Silicate during the year 1991-92 of 1: 5.675 and in the case of M/s. Manohara Saraswathi Glass Works for the same year as 1 : 4.708. He refers to exhibit 6 & 7 of the paper book Volume III. He submits that these statements incorporated figures which were contained in the show-cause notice and these statements at page 12 & 13 of Volume III of the paper book had been extracted there from only to show the nature of error committed by the department in computing the output. He submits that while arriving at the ratio in both these cases, where soda ash is first used to make solid sodium silicate which is then converted into liquid sodium silicate, the quantity of sodium silicate in liquid form as per column No. 5 has been added to the ratio, thus inflating the final ratio artificially and illegally. Thus, the value of alleged clandestine clearance has been wrongly increased by Rs. 35 lakhs approximately and duty amount of Rs. 7.1 lakhs has been wrongly confirmed. He submits that the department’s charge is that whatever the soda ash was received in various invoices by these four units, which were not accounted for in the raw material account, have been represented the raw materials received and used in unaccounted production which was clandestinely removed. However, he submits that 20 invoices, details of which are available in his statements in paper book I at pages 202 to 207 and which are listed in paper book 3 at page 126 have been clearly shown to have been accounted. He further submits that at page 8 of paper book III, the 12 invoices considered have not been invoices to the present appellants but to some other dealers and yet the total quantity of soda ash has been considered to work out the duty which works out to 1278 bags contained 95.850 MTs., this is clearly incorrect. In this connection, he also refers to para 28 of the show-cause notice, wherein one of the units, in whose name, the soda ash purchased was M/s. Andavar Agencies, whereas the four invoices pertain to M/s. Andavar Industries and these are not the same and should have been excluded. Similarly, there is dichotomy in the name of Balaji Chemicals v. Balaji Chemical Industries with respect to the subsequent four invoices. He further submits that the department has only relied on invoices not only in the name of the appellants units but also in the name of other traders and have alleged that these appellants had purchased soda ash and these invoices made out in the name of other dealers. He submits that there is no evidence to connect these invoices in the name of other traders to the present appellants because there is no evidence to show in which vehicle number these goods had arrived at the premises of the four appellants and no drivers thereof have been interrogated and no evidence regarding verification of these consignments by various Commercial Tax Offices check posts has been adduced to show actual receipts of these goods in the appellants factory. He further submits that during the cross-examination many of these dealers, who have given statements and supplied the soda ash to the appellants had resiled from the statements and this has not been considered by the learned Collector in the Order-in-Original. He further explains that the statements taken from the appellants and the voluntary payments alleged to have been made were extracted by the department under threat and force. Therefore, he submits that on the one hand, there is no proper evaluation of the evidences relied upon by the department in the Order-in-Original, on the other hand, wrong ratios have been applied in the cases of two out of four appellants. He further submits that as per para 43 of the Order-in-Original, the learned Commissioner has chosen to rely on the weighment at the check post of Puzhal near Chennai, yet they have not given any evidence in the form of copies of such weighment records in the show-cause notice. Therefore, the reliance thereupon by the learned Collector in the order impugned is against the principles of natural justice. Therefore, the learned Consultant submits that there is a great error in the Orders-in-Original and the same should be set aside.
4. Learned DR submits that the Order-in-Original is a very detailed and exhausted. The department has relied on the inculpatory statements made by the appellants as well as by the alleged suppliers of the soda ash, when this is viewed in the light of subsequent sums were deposited even before the issue of show-cause notice by the appellants. Therefore, it is clear that the entire defence now put before the Bench is an after-throught. He submits that there is no question of time bar involved in this case, as the show-cause notice has been issued within five years. He further submits that a detailed working out has been given to show the unaccounted quantity of raw materials received and the quantity of final products manufactured. He, therefore, prays for dismissal of the appeals.
5. On a careful consideration of these submissions and records of the case, we find that the matter needs to be remanded back to the original authority for de novo consideration of the entire issues for the following reasons: –
(a) The ratio for arriving at the estimated production of sodium silicate in this case of appellants M/s. Sowbagyalakshmi Silicate and M/s. Manohara Saraswathi Glass Works appears to have been erroneously jacked up by first calculating the total quantity of sodium silicate in solid form which will be produced from the raw materials and then by again adding extra quantity of sodium silicate in liquid form cleared. There is substantial force in the submissions of learned Consultant in this respect and therefore, this matter needs to be properly re-examined in the light of his submissions. It is not possible for this Tribunal to do this arithmetical work in relation to the primary documents involved.
(b) There is no consideration in the order of the 20 invoices which have been shown to have been recorded in their form IV raw material accounts as submitted by the learned Consultant above. This issue also needs to be reconsidered.
(c) The learned Collector has relied upon the weighment done at weigh bridge near Chennai, yet there is no evidence relating to the same which has been supplied to the appellants as can be seen from the annexures to the show-cause notice. Therefore, we are of the considered opinion that this decision to rely on the weighment has been taken without disclosing proper evidence relating thereto to the appellants, which is against the principles of natural justice.
(d) The ground taken by the learned Consultant that some of the invoices were in different names that those referred to in para 28 of the show-cause notice also needs re-consideration.
(e) While it is not disputed that the appellants had been allowed cross-examination of some witnesses relied upon by the department during the original proceedings, the submissions of learned Consultant to the effect that the result thereof was in the appellant’s favour, as the witnesses have resiled from their earlier deposition and this needs to be re-considered as the only evidence mainly used by the department is that the invoices were issued by such persons.
6. In view of the above findings, the Orders-in-Original are set aside and the matter remanded for de novo consideration to the learned Commissioner after giving due opportunity to the appellants to be heard in detail and after due consideration of not only the above points but also any other arguments that the appellants may choose to place before him during the proceedings. As the matter is sufficiently old, it is expected that the learned Commissioner shall expeditiously complete this de novo proceedings, preferably within six months from the date of receipt of this order.
7. The appeals are allowed by way of remand in the above terms.