2015 (4) TMI 853 - AT - Central Excise

Tribunal upholds excise duty evasion charges against Surya Cotspin Ltd., penalties confirmed

CCE. Chandigarh Versus M/s. Surya Cotspin Ltd. M/s. Avinash Sales Corporation Shri Rajesh Kumar Goel M/s. Anand Nylons Industries M/s. BB. Rampaul & Company Sharma M/s. Goel Sons M/s. Vijay Anand Traders Shri Madan Lal M/s. Ultra Wear M/s. Arihant Yarn Agency M/s. Saurab Yar Agency M/s. Shiva Yarn House, Shri Praveen Kumar M/s. Goel Yarn Agency M/s. Surya Cotspin Ltd., Kailash Hosiery Company

CCE. Chandigarh Versus M/s. Surya Cotspin Ltd. M/s. Avinash Sales Corporation Shri Rajesh Kumar Goel M/s. Anand Nylons Industries M/s. BB. Rampaul & ... Issues Involved:1. Jurisdiction and procedural aspects.2. Allegation of excise duty evasion by M/s. Surya Cotspin Ltd.3. Evidence of clandestine removal of goods.4. Adjudication by the original authority and subsequent appeal.5. Validity and reliability of evidence.6. Decisions cited by the respondents.7. Tribunal's analysis and conclusion.Issue-wise Detailed Analysis:1. Jurisdiction and Procedural Aspects:The appeals arose from a common cause and were initially before the division bench. Due to the enhancement of pecuniary jurisdiction from Rs. 10 lakhs to Rs. 50 lakhs, the appeals were reassigned to a single bench. The division bench had directed that a copy of the final order in a related case be kept on record for these appeals.2. Allegation of Excise Duty Evasion by M/s. Surya Cotspin Ltd.:The respondent, M/s. Surya Cotspin Ltd., was accused of evading excise duty amounting to Rs. 22,61,821/-. The investigation revealed that the company had removed 2,76,050 kgs of unaccounted cotton yarn without payment of duty under certain invoices issued to different dealers. Penalties were imposed on the company and its directors, as well as on the dealers who were buyers of the duty-evaded goods.3. Evidence of Clandestine Removal of Goods:The investigation found unaccounted cotton yarn in the factory, discrepancies in invoice books, and recovered photocopies of parallel invoices. Statements from key individuals, including a supervisor who admitted to the issuance of parallel invoices for clandestine removal, supported the allegations. The investigation also corroborated the evidence with octroi receipts and transporters' records, revealing the movement of unaccounted goods.4. Adjudication by the Original Authority and Subsequent Appeal:The adjudicating authority examined the evidence and concluded that the respondent habitually cleared goods clandestinely, resulting in excise duty evasion. However, the Commissioner (Appeals) exonerated the respondents, citing the non-production of original invoices and violation of natural justice principles. The Revenue appealed this decision, arguing that multiple factors, not just the parallel invoices, contributed to the adjudication.5. Validity and Reliability of Evidence:The respondents contended that photocopies of invoices were unreliable and that findings based on the sales tax department's report were not binding. They argued that the evidence, including the blank invoices and statements, was insufficient to prove the case against them. However, the Tribunal found that the evidence gathered, including statements, octroi records, and the report of the Govt. document examiner, was credible and supported the case of clandestine removal.6. Decisions Cited by the Respondents:The respondents relied on various judicial decisions to argue that the adjudication was flawed. However, the Tribunal noted that the probative value of the other evidence could not be ruled out and that the respondents failed to rebut the evidence presented by the Revenue.7. Tribunal's Analysis and Conclusion:The Tribunal concluded that the clandestine removal of goods was proven by multiple factors, including the recording of higher production quantities after the investigation, corroborated by octroi records and statements. The Tribunal held that the Commissioner (Appeals) erred in ignoring vital evidence and material facts. It emphasized that fraud and justice are sworn enemies and that the evidence gathered unambiguously proved the evasion of excise duty. The Tribunal allowed all the Revenue appeals, affirming the adjudication's findings and penalties.Conclusion:The Tribunal's judgment reinstated the findings of the adjudicating authority, holding that M/s. Surya Cotspin Ltd. and its associates were guilty of excise duty evasion through clandestine removal of goods. The appeals by the Revenue were allowed, and the penalties imposed by the original authority were upheld.