A show cause cum demand notice bearing C.No.

V(15)25/CE/AE/Cal-II/98 dated
20/1/99 was issued against M/s AGV International for alleged removal of 65.734 MT
unmachined casting & cast articles of iron falling under the S.H. 7325.10 accounted
for in RG 1 register without payment of duty. Our reply to the above show cause
notice was submitted via letter no. AGVI/CE(TECH)/11/99-2000 dated 2nd July,1999.
We further make following submissions :-

1) The above case was built entirely on the basis of statement obtained from Mr.
Sankar Kumar Mandal. However Mr. Sankar Kumar Mondal in his affidavit
before the notary public affirmed that the above statement was obtained from him
under considerable pressure and fear of arrest. Moreover he has stated in the
affidavit that he tried to lead them to the moulding floor where heaps of material
was lying. But they refused to accompany him to the moulding floor. In fact no
physical verification was undertaken by the visiting central excise officers &
signature of Mr. Mondal was forcibly taken on physical verification report.
Statement before superintendent of central excise, Anti Evasion under section 14
of Central Excise & Salt Act,1944 was also written as directed by him which
could be evidenced from the write up above his signature on the statement.
2) There is no other corroborative documentary evidence to suggest that there had
been a clandestine removal. It has been decided in a number of cases that in case
of clandestine removal the burden is on the department of revenue to establish
such removal. However no records was found by the visiting officer to suggest
that the goods have been removed without payment of duty.
3) Further evidentiary value of statement of Sri Shankar kumar Mondol should be
considered in the light of his overall responsibilities in the factory and his
expertise to conduct physical verification of the stock. He was not a technical
person who could have make out the difference between unmachined casting and
railway/tramway construction material. Further he was not a senior staff in
physical control of the factory who could have guided them to the location of
storage of finished goods. He was merely an accountant who used to make entry
in the RG1 register on the basis of production chit but he was not always aware of
the storage of the goods. Still to the best of his knowledge he tried to lead them to
the moulding floor which they refused saying that material should be stored in the
bonded store room only. However considering the heavy nature of material it was
not always possible to carry them from moulding floor to storage room. In the
show cause notice itself it is stated Mr. Mondal was not in a position to explain the
shortage of unmachined casting detected at the time of stock verification. But the
Central Excise officer did not take any help of some senior staff in charge of the
storage of finished product in the factory as well as of any technical staff who
could have explained the difference in various types of product in the factory &
could have lead them to the proper place of storage.
4) It is not possible to have nil stock in a running foundry which could be ascertained
from the daywise stock position from 1/7/97 to 31/3/98 which shows that we
never had nil stock in our foundry.
5) It is a common knowledge that any assessee with a malafide intention to remove
finished product without payment of duty will not make a entry in RG1 as once a
entry is made of the production in the RG1 register it is not possible to reduce the
balance in the above register without following statutory formalities.
6) We could not have derived any benefit out of removal without payment of duty as
we being an SSI unit were already clearing our finished product on concessional
rate whereas we were availing modvat on our raw material at full rate of duty
which always resulted in a surplus of credit balance in RG23A Part II. So we
never had to pay any duty through PLA. As we always had surplus credit balance
in RG23A Part II so if we had any malafide intentions we would have purchased
the raw material without payment of duty through unscrupulous means and clear
the products manufactured out of such purchase without payment of duty rather
than clearing the product entered in RG1 register without payment of duty and
inviting trouble.
7) The central Excise officers made their entry into the factory at around 14.10 hrs.
and took the statement of Mr. Sankar Kumar Mondal at around 16.30 hrs. So it
suggests that they completed their investigation within a time span of 2hrs. 20
minutes which involved physical verification of records as well as stock. The
short time span taken by them to complete the investigation shows their
predetermined intention to frame charges then determine the facts.