By TIOL News Service

ALLAHABAD, SEPT 08, 2014: THE appellant/assessee is a private limited company and was engaged in the manufacturing of ordinary Portland Cement , which was subject to Central Excise duty. The Department received an anonymous complainant indicating therein that during the period 9.2.1993 to 27.9.1995 about 3839.350 MT, ordinary Portland cement was illegally sold which involved central excise duty amounting to Rs.7,20,154/-, by using parallel documents like GP 1s, invoices, challans , Bills, cash memo and GRs, etc. The Commissioner (Appeals) set aside the demand and the Tribunal allowed the appeal of the department and restored the demand. The assessee is before the High Court aggrieved by the order of the Tribunal.

It is the case of the appellant that the documents based on which the demand was raised were fabricated by one of the former directors of the company who was removed from the company because of mis -appropriation of funds.

After hearing both sides, the High Court held:

The Government Examiner of questioned documents, Shimla gave his written opinion dated 12.6.1998, wherein he has stated that “the documents of this case have been carefully and thoroughly examined. The enclosed writings and signatures stamped and marked were all written by one and the same persons”.

From the above, it appears that all the documents were written by one and the same persons, though the dates and the name of the parties are different. When it is so then the genuineness of the documents cannot be accepted.

Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects:

(i) To find out the excess production details.

(ii) To find out whether the excess raw materials have been purchased.

(iii) To find out the dispatch particulars from the regular transporters.

(iv) To find out the realization of sale proceeds.

(v) To find out finished product receipt details from regular dealers/buyers.

(vi) To find out the excess power consumptions.

In the instant case, no investigation was made by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties.

In the result, all the appeals filed by the appellants are allowed.

(See 2014-TIOL-1527-HC-ALL-CX)