TaxTMI 
TaxTMI 
2012 (10) TMI 418
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....f Central Excise Rules. 2. As per facts on record, M/s. Shreeji Aluminum Pvt. Ltd having its factory at Dadra (UT) (M/s. Shreeji for short) are engaged in manufacture of aluminum profiles/sections from the raw materials such as aluminum scrap, ingots, billets etc. Their factory premises were put to search by the DGCEI officers on 16/17-3-2005 who conducted various checks and verifications. As a result of physical stock verification, quantity of 13,878.800 kgs of finished extruded product was found to be in excess of the quantity recorded in RG-1 register. Further, the quantity of 24,497.640 kgs of raw material i.e. aluminum scrap was found in excess of the quantities recorded in RG 23A Part I account. Inasmuch as the said appellants could not give any satisfactory explanation for the excess found finished goods and raw material, the officers made them enter the excess found finished goods in the statutory records i.e. RG-1 register. The raw material found in excess was put under seizure. The officers also seized some private records/documents maintained by the said appellant for further investigation. 2.1 The searches were also conducted at the office-cum-godown of one ....
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....ills issued by other firms, tax bill and CST/Service Tax registration etc. However, he submitted before the officers that he had only issued sales bills without any physical purchase of such goods and as such no purchase documents were available with him. 2.4 Based upon the scrutiny of the documents seized from the premises of M/s. Shreeji and M/s. New Era Metals and Shri Ajay Lalji Ashar, the officers also visited the premises of three of the buyers located at New Delhi and Indore, who had purchased aluminum extrusion profiles through Shri Ajay Ashar on cash basis. The goods purchased by the said buyers were found in the premises and were put under seizure for further investigation. 2.5 Based upon the scrutiny of documents seized from the factory premises of M/s. Shreeji, Dadra, the statements of various representatives of said assessee were recorded. In respect of seized notepad which was maintained for recording the quantities of aluminum scrap charged into the furnace and the date wise and cast wise quantities of aluminum logs manufactured there from Shri Shekhar Kumar Singh, Production Supervisor of M/s. Aluminum Extrusion, in his statement recorded on 7-3-2005 rev....
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....oods. After clearance from octroi, consignment was sent to premises of M/s. New Era Metals. 2.9 Similarly, the documents recovered from residential premises of Shri Ajay Lajji Ashar, Production Manager of M/s. New Era Metals were also scrutinized and it was found that certain work orders were placed by him to M/s. Shreeji for manufacture of aluminum profiles. Certain packing slips recovered from his premises were also believed to be the packing slips of M/s. Shreeji. 2.10 The officers also obtained certain documents from Ratnakar Bank and UCO Bank, Mumbai as also from CKP Bank Mumbai. 2.11 During the course of further investigation, statements of various persons were recorded, which stand relied upon by the adjudicating authority in his impugned order. The relevant portion of such statements would be adverted to into the finding portion of the order as and when necessary. Based upon the scrutiny of the documents and statements recorded during the course of investigation, proceedings were initiated against the appellant by way of issuance of show cause notice proposing to confirm duty of Rs. 2,94,85,960/- on the allegations and findings of clandestine manufacture a....
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....ing firms who have issued the bills to them and the consideration for the same stand paid by M/s. New Era Metals to the trading firms by way of cheque. Sales Tax stand paid on such transactions and assessment by Sales Tax authorities is also final. The trading firms have further paid their suppliers out of the money received by them from M/s. New Era Metals. As such, entire transaction of M/s. New Era Metals with trading firms being on statutory documents, genuineness of the same cannot be doubted and held against M/s. Shreeji on the basis of certain statements given by co-noticees/representatives of various persons. 4.1 In any case, submits the ld. Advocate that such inculpatory statements stand retracted by the deponents. Such retractions stand brushed aside by the Adjudicating Authority by holding that the nature of coercion is not explained in the affidavit. He submits that the Adjudicating Authority has further held that said deponents in the subsequent statements have submitted that the earlier retraction was on the advice of advocate. This, according to the ld. Advocate, reflects upon the fact of use of pressure by Department inasmuch as no reasonable prudent person wo....
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....raders are not in a position and have means to verify as to who has manufactured the goods. They have made payments to the supplier of the goods by way of cheque and confirmation of demand of duty on the basis of their statements, is not proper. 4.6 The demand on the basis of private production slips/logs is not sustainable. That due to the very nature of product in question, which passes through various processes, the online rejection rate is very high. The demand on this count is duplicated more than once, inasmuch as the very same item is melted and re-melted again and again. That production records of such melting furnace is not a substantial evidence to show actual production of finished excisable goods. In any case, no evidence is adduced regarding procurement of excess raw materials and excess power consumption etc as regards demand of duty on this count as well. 4.7 There is no basis for considering entire sales undertaken by M/s. New Era Metals as having been manufactured by M/s. Shreeji only. The demand on this count is entirely on the basis of assumptions, not supported by any evidence. The inculpatory statements in this regard have already been retracted. It....
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....a is, however, without prejudice to the other contentions raised in defence. 4.11 That personal penalty under Rule 26 on partners of trading firms is uncalled for, since as per the allegation, no goods exist, and thus they had no occasion to deal with any goods, much less goods liable for confiscation. He referred to and relied upon the decisions of Hon'ble Tribunal in the case of Ekta Enterprises & Ors - 2005 (180) E.L.T. 219 (Tri - Mumbai). Further, the penalty on buyers is also uncalled for inasmuch as they are not concerned with the actual manufacture of goods and no evidence is brought on record to show the buyers were instrumental in dealing with goods liable for confiscation with knowledge of the same. 4.12 Personal penalty on Directors and employees of M/s. Shreeji and partners and employees of M/s. New Era Metals are not sustainable for the above reasons. Also, personal penalty cannot be imposed on M/s. New Era Metals under Rule 26 when separate penalty is imposed on the partners and since partnership firm is independent entity, the same does not attract the rigors of Rule 26, as held in the case of Steel Tubes of India - 2007 (217) E.L.T. 506 (Tri.-LB). Furthe....
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....ity against the appellant are being reproduced in a tabulated form. S. No. Quantity (Kgs) Duty (Rs.) Basis 1 2.24 lakhs 37,23,764/- On the basis of statement of 3 buyers stating that they procured the goods from M/s. Shreeji, although their records show procurement from other sources, including payment through bank to other sources. 2 1.87 lakhs 26,20,792/- On the basis of private production records such as logs, slips etc. 3 12.33 lakhs 2,25,82,462/- On the basis of entire sales of M/s. New Era on presumption that the same were manufactured by M/s. Shreeji. 4 28,057 5,25,526/- On the basis of goods seized in godown of M/s. New Era on presumption that the same were manufactured by M/s. Shreeji. 5 2,604 33,425/- On the basis of names "Laxmi" and "Crystal" appearing in private packing slips found in M/s. Shreeji's factory on presumption that the goods were cleared clandestinely to such parties. Total 16.75 lakhs 2,94,85,968/- 8. We will discuss the various imputations and the basis for arriving at the quantum of duty based upon the allegations and the findings arrived at by Adjudicating Authority in respect of each imputation. 8.1. Duty ....
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....ce to show the manufacture of the said goods by M/s. Shreeji is against the established principles of law. The other statements referred to and relied upon by Adjudicating Authority while confirming on said counts are the general statements of various persons not referring the said consignment. As such, we are of the view that confirmation of demand of duty of Rs. 37,23,764/- on the above counts is not justified. 8.3 Demand of duty of Rs. 26,20,792/- stand confirmed against the appellant based upon the various private registers including two note books recovered and seized from M/s. Shreeji. The said notebooks contained details of production of aluminum extruded profiles such as quantity, weight and length etc and the quantity of raw material used during the month of Dec. 03 to Nov. 04. The production recorded in the said record was not entered in RG-1 register. This has been admitted by Shri A.K. Mondal, Excise incharge of M/s. Shreeji, who has explained that such production was manufactured out of unaccounted quantities of re-metted scrap and were sold through Shri Ajay Lalji Ashar and sale proceeds were received in cash. Shri Ajay Lalji Ashar has also admitted receipt of t....
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....Era Metals and the sales details, submitted by letter dated 6-8-2005, M/s. New Era Metals has sold 1232744.450 kgs of aluminum extruded product valued at Rs. 16,16,21,101/- involving Central Excise duty (including education cess) of Rs. 2,25,82,462/- illicitly cleared by M/s. Shreeji, as detailed in computation sheet No. 3." 8.6  It is seen that the Adjudicating Authority, for the purpose of confirmation of above demand, has concluded that M/s. New Era Metals was created artificially to camouflage illicit clearances of M/s. Shreeji. Though he has not given his opinion on the various pleas raised by the appellant and has not discussed the various evidences, he has arrived at finding of clandestine removal based upon the allegations made in the show cause notice. 8.7 Undisputedly, we find that M/s. New Era Metals was engaged in trading activities. They have procured aluminum profiles from seven other trading units. As such, the purchase of aluminum profiles by M/s. New Era Metals was on the basis of bills raised by said trading units. It is also on record that said trading units have paid sales tax on the transaction involved and the sales tax assessment by the authoritie....
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....e earlier retraction was under the advice of advocate, is itself indicative of pressure by the officers. 8.10 In any case, we find that such statements by itself cannot be made the basis for upholding finding of clandestine removal of huge quantity of 12.33 lakhs. It has to be kept in mind that for removal of final product, same are required to be manufactured. The manufacture of such high quantity of final product needs equivalent or more quantity of raw material, working capacity and consumption of power. Whereas the evidence brought on record nowhere reflects upon all above facts. As contended by the appellant, they are using imported aluminum scrap for manufacture of their final product. There is not an iota of evidence on record to show that as to how huge quantity of raw material either imported or indigenous, stand procured by M/s. Shreeji. Revenue proceed on a hypothetical presumption that all the sales made by M/s. New Era Metals to its customers were, in fact, manufacture of M/s. Shreeji without establishing as to how such manufacture was done by M/s. Shreeji. 8.11 We find that the evidences collected by Revenue in the shape of statements are general in nature....
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.... blank copies of the invoices of various trading firms were being given to the person accompanying the consignment. The said person use to make invoices before crossing the municipal limits. Such invoices of the trading firms were being represented to Octroi check post. The said depositions made does not appeal to be the true reflection of fact inasmuch as instead of giving a blank cheque book to be filled in by the person accompanying the goods immediately before crossing the check post, such filled and fully prepared invoices of the trading firms could be handed over to said person. 8.14 In any case, we find that documentary evidences of invoices issued by the trading firms having crossed the octroi/sales tax check post etc do not stand rebutted by Revenue, except the statement of various persons. It is well settled law that such documentary evidences are required to be given preference over the oral statements. As we have already discussed the evidentiary value of the statements and in absence of any other evidences to reflect upon the fact of manufacture of huge quantity of final product by M/s. Shreeji, we are of the view that such fact by itself does not advance t....
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....193) E.L.T. 471 (Tri.-Bang), it was observed that consumption of one raw material is insufficient in absence of any evidence of procurement of main raw material along with clandestine sale of final product and electricity consumption. 9.3 The case law on the issue of clandestine removal was discussed by the Tribunal in the case of M/s. Godavat Pan Masala Products Ltd. v. CCE, Pune as reported in 2004 (62) RLT 891 (CESTAT-Mum) = 2004 (175) E.L.T. 182 (Tri. - Mum.). The Tribunal tabulated the various precedent decisions with the gist of the conclusions and ratio of the law declared in the said judgments, which for ready reference, are reproduced below. 1. 2001 (42) RLT 532 (CEGAT) = 2001 (130) E.L.T. 228 (T), Commissioner of C. Ex., Patna v. Universal Polyethylene Industries Clandestine removal and clearance is a serious charge against manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. 2. 2001 (130) E.L.T. 334 (T), Chennai M.T.K. Gurusamy v. CCE, Madurai Clandestine removal - Evidence Standard of - No positive evidence to establish clandestine removal adduced by department - Quantity alleged removal calculate....
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....moval in the absence of any corroborating evidence. 15. 2000(116) E.L.T. 618 (T) = 1999 (34) RLT 662 (CEGAT) Grauer &. Weil (India) Ltd. v. CCE, Meerut. Circumstantial evidence not sufficient to establish clandestine removal - More positive evidence is necessary to sustain charge. 16. 1999 (114) E.L.T. 537 (T) = RLT 1999 (35) 162 (T) - Arti Steels Ltd. v. CCE, Chandigarh No cogent reasons given for figures of production - Co-relation between various other documents - Gap in power consumption - No sufficient materials for establishing clandestine removal. 17. 2000 (117) E.L.T. 659 (T) - 1999 (35) RLT 654 (T) Pepsico India Holding v. CCE, Meerut All other parameters as laid down in Rule 173E should also have been taken into consideration. The list is non-exhaustive and un-ending. The ratio of the law is that the findings of clandestine removal are required to be based upon strong evidences and not on the basis of assumptions and presumptions leading to doubt against the manufacturer. Clandestine removal must be established beyond doubt. 9.4 At this stage, we may take note of the recent decision of this Bench dealing with almost all identical set of allegations and cir....
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....annot make its case on the basis of statement in the absence of any independent evidence to corroborate the same. The said decision was confirmed by Hon'ble High Court of Gujarat as reported in 2009 (234) E.L.T. 242 (Guj.), when the appeal filed by the Revenue was dismissed, by observing that even in the absence of any corroborative evidence brought on record by the Revenue, the findings recorded by the Tribunal do not call for interference. 9.5 It is further seen that the ratio of the decision in the case of IOC [2003 (158) E.L.T. 49 (Tri.-Kol.)] is that the doubt, however strong, the same cannot take the place of proof. The distance between "must be true" and "might be true" is a long distance required to be travelled by the Revenue with sufficient and un-impeachable evidence. They came to a finding of "must be true" on the basis of "might be true" is not legal and proper. 9.6 Note can be taken of another decision in the case of M/s. Nav Karnataka Steels Pvt. Ltd. v. CCE, Belgaum as reported in 2008 (225) E.L.T. 454 (Tri.-Bang), laying down that the incriminating documents recovered can be taken as evidence only for removals represented by them and there cannot be an ....
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....l in the case of M/s. Swati Chemicals & Others - 2009 (94) RLT 684 (CESTAT) = 2009 (248) E.L.T. 421 (Tri.) and Hon'ble High Court of Gujarat in the case of M/s. Exotic Associates v. CCE, - 2010 (252) E.L.T. 49 (Guj.), has held that where no such option stand extended by the authorities below, the same can be extended by appellate authority. We, accordingly, while imposing penalty of Rs. 26,20,792/- on M/s. Shreeji, give an option to the said appellant to pay entire duty along with interest (if already not paid), along with 25% of the penalty within 30 days from the passing of the present order, in which case penalty shall stand reduced to 25% of the duty of Rs. 26,20,792/- confirmed against them. The balance confirmed demand on various grounds as observed above, is dropped and that part of the impugned order confirming the same is set aside. 13. That brings us to the question of penalties against various persons. As only part of demand of Rs. 26,20,792/- stand confirmed against M/s. Shreeji along with imposition of penalty of identical amount (with option), and balance demand of duty is being dropped against them, the imposition of penalty upon them to the extent of ba....
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....penalty imposed upon all the appellants is set aside. 15. All the appeals are disposed off in above terms. (Pronounced in Court on_____ Sd/- (B.S.V. Murthy) Member (Technical) Sd/- (Archana Wadhwa) Member (Judicial) 16. [Per : B.S.V. Murthy, Member (T)]. - I have gone through the order proposed by the learned Member (Judicial) and I find myself unable to agree with the order proposed and hence, propose to record a different order as under. 17. Facts of the case have been reproduced in great detail and therefore the same are not reproduced. However, certain aspects which may not have been covered would be brought out wherever necessary. 18. Similarly the arguments advanced have also been reproduced and hence the same are not being reproduced. 19. Before I proceed to consider the five bases for demand of duty, I would like to record some preliminary observations. 20. This is a case based on records recovered in the factory of M/s. Shreeji Aluminium Pvt. Ltd. (hereinafter referred to as M/s. Shreeji) office/godown of M/s. New Era Metals, search of M/s. Siddharth Trading Co., search of M/s. Hari Metals, enquiries made with the banks, search....
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....hed from the factory premises up to the outskirts of Mumbai. Investigation revealed that lorry receipts were reused for transportation up to the outskirts of Mumbai and fresh lorry receipts were prepared to cover the transportation of goods via Dahisar Octroi check post to the premises of M/s. New Era Metal. 24. Photocopies of packing slips contained in File A/19 seized from the factory of M/s. Shreeji were found during the search of premises of M/s. New Era Metal which would show the connection between M/s. Shreeji and M/s. New Era Metals. Seized register marked A/24 contains details of production of aluminium extrusions. Seized register shows details of production of aluminium extrusions in metric tonne, quantity of inputs used and recovery in percentage. This record is available for the period from December 2003 to November 2004. Shri Virendra Kumar Mishra, Production Manager worked out the quantities of aluminium extrusions manufactured from December 2003 to November 2004 after making adjustments on account of various process losses. 25. Seized register A/29 seized from factory bearing title as production report contained details of finished aluminium extrusions man....
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.... paid through Shri Kiritbhai Patel in cash and they had not accounted for the same. Shri Kiritbhai Patel in the statement subsequently recorded also admitted this. 32. Seized file A/11 recovered from office premises of M/s. Shreeji Aluminium at Mumbai contained a letter addressed to Assistant General Manager, Syndicate Bank, Mumbai informing that Shri Ajay Lalji Ashar was looking after marketing of the company of M/s. Shreeji. 33. Investigation was extended to various banks to find out how the accounts were opened by various trading firms and how manipulation was done by them. 34. The above details have been extracted to show that the contention of the learned counsel for the appellants that the whole case was based on conjectures and surmises and few packing slips recovered here and there does not appear to emerge from the records and from the show cause notice. The recovery of none of these documents has been challenged. Without challenging the recovery of documents and without questioning its genuineness of the documents, the appellants are relying upon retractions of statements and denial of cross-examination, lack of investigation of raw material suppliers et....
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....Shri Kamlesh Sapra, various documents recovered from M/s. New Era Metals such as photocopies of packing slips, originals of which were available in the factory; the bills from the trading firms, who had not purchased aluminium to supply; and the fact that Shri Ajay Ashar was marketing the products of M/s. Shreeji though was a Marketing Manager of M/s. New Era Metals, would show that cross-examination would not have substantially made any difference to the case. Therefore, even though the Commissioner has not explained the reasons for denial of cross-examination, a perusal of the records recovered and the statements recovered would show that the statements were invariably recorded with reference to documents recovered and their correctness. In such a situation without showing that the documents were not genuine or without challenging recovery of documents, it cannot be said that the case is made on the basis of conjectures and surmises. Moreover not all deponents have retracted from their statements. Statements therefore are supported by documents and records and unretracted statements leading to the conclusion that statements can be relied upon. 36. The learned counsel also m....
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....ese statements have been retracted. He also admitted that since they were not supplying the goods but they were actually not purchasing the goods also, however to show purchases in the books, they were showing such purchases from their other firms. He also admitted that after depositing the cheques in the account, they were issuing a bearer cheque in the name of related firms to show the payment against mutual purchase and such cheques were not deposited in the bank account of the firms in whose name it was shown to have been issued. They got such cheques discounted and cash was paid to M/s. New Era Metals after claiming commission of 0.75%. He also gave the details of sales made by him. 39. It can be seen from the records recovered that the work orders were duly connected by packing slips and therefore, the claim that work orders may not have been executed also has no basis. 40. The department's case is built on the basis of registers, files, packing slips, work orders, statements of various persons, lorry receipts and not merely on the basis of statements or without corroborative evidence. It is well settled that in the case of clandestine removal, 100% proof will nev....
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....rtner of M/s. R.K. Enterprises, Shri Rupesh Vyas, Ex-Manager of Unique Decor, Shri Rameshchandra Goyal of M/s. Goyal Aluminium House, admitted that aluminium sections ordered by them were actually manufactured and cleared from M/s. Shreeji but the bills were received from M/s. Hari Metals and M/s. Virtual Metals. They further disclosed that sales proceeds in respect of those goods were handed over in cash. The above discussions would show that the confirmation of demand is entirely based upon the statements of three buyers is not correct. There is no evidence produced by the appellants to show that M/s. Hari Metals and M/s. Virtual Metals had aluminium extrusions to supply. On the other hand, the work orders, packing slips have been recovered from M/s. Shreeji premises and statements have been recorded on the basis of documents. Appellants did not seek cross-examination of these three buyers at all. In view of the above, I find that the demand of Rs. 37,23,764/- has to be sustained. 43. The demand for duty of Rs. 26,20,792/- is based on production records for the period from 12/2003 to 3/2004. The appellant submitted that this demand was based on various private registers and....
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....s reproduced below. 33.1. The notice in their defence contended that during the course of investigation, the confessional statements of persons who are alleged to have been involved in the alleged clandestine manufacture, removal and disposal of finished goods have been recorded under Section 14 of Central Excise Act, 1944. The persons of M/s. Shreeji Aluminium Pvt. Ltd., Dadra viz. Shri Babubhai K. Patel, Director, Shri Paresh B. Patel, Managing Director, Shri A.K. Mondal, Excise Clerk, Shri Jashubhai Chauhan, Packing Department, Shri Paresh Mody, Gen. Office Staff, Shri Gopal Das, Gen. Office Staff, Shri Pritesh Gandhi, Gen. Office Staff whose confessional statements have been recorded have retracted their statements by way of Affidavit duly sworn under oath and as such allegations framed on the basis of confessional statements cannot be relied upon; that Shri Ajay Ashar, Marketing Manager of M/s. New Era Metal had also retracted his statement and as such his statements cannot be placed as evidence to establish the charges of clandestine removal. I have gone through the statements of the above said persons and find that all of them have given their statements which contain....
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....t, 1944, Shri Babubhai stated that the same were filed by him, as per the advice offered to him by his advocate, defending his case before the Hon'ble Sessions judge, Silvassa. Further, in his above statement, he was also shown his earlier statement dated 17-3-2005 and after going through the said statement and other evidences in form of seized records of M/s. Shreeji, Dadra he re-confirmed the facts mentioned therein as true and correct and in token of the same he also placed his dated signature. Also, on being asked regarding retraction filed by Shri Gopaldas, Shri Paresh Atul Modi, Shri Pritesh Pradip Gandhi, all three Office Assistants of their company, Shri Babubhai Kanjibhai Patel stated that, the same were filed by the above named persons, on his instructions, as per the advice offered to him by his advocate defending his case before the Hon'ble Sessions Judge, Silvassa. Similarly, Shri Paresh B Patel, Managing Director also, during recording of his further statement on 17-10-2005, was shown his earlier statement dated 13-6-2005, and he had gone through the said statement and other documents in form of seized records of M/s. Shreeji, Dadra and re-confirmed the facts mentione....
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....by various evidences as discussed above in the foregoing paras. Further, the said statements contained plethora of the facts, which are in the knowledge of the persons only and are duly corroborated by various evidences. Also, the statements the above said persons clearly bring out the modus operandi adopted by them which can be in their own knowledge and cannot be dictated. Further, the statements of above said persons were recorded over a period of time and during that period the persons whose statements were recorded have again given confessional statements and did not complain of any threat or duress, therefore claiming duress and threat is an afterthought. As such it has to be concluded that the retraction was only mechanical and has no effect on the admissibility of the statement as an evidence. My above findings also find support from the judgment in the case of M/s. Ureka Polymers Ltd. v. CCE, New Delhi - 2001 (127) E.L.T. 618 (Tri. - Del) wherein it was held that complaints of threat or duress not made during recording but submitted along with reply to Show Cause Notice are not acceptable. Also in case of Surjeet Singh Chhabra v. Union of India - 1997 (89) E.L.T. 646 (S.C.....
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....on of orders placed by Shri Ajay Ashar. This statement admitting exclusive furnace and its production has not been retracted. There was clear admission on the basis of packing slips and production records by the Excise In-charge, Production Supervisor, six assistants, two Directors of M/s. Shreeji Aluminium, owners of trading firms and owner of M/s. New Era Metals. According to the appellants, each one of these: persons were forced to give statements and not once but several times. Every time they gave a statement and retracted the same and subsequently admitted the very same contents in the subsequent statement only to retract again. In the case of Director Shri Babubhai K. Patel, the Commissioner has clearly explained why the statement was recorded in October 2005 and why he was provided the assistance of his Excise Clerk to write the statement. In some of the cases, the statements have been written by the concerned persons. Shri Ajit Kumar Mondal has prepared the worksheet in his own hand based on documentary evidences such as production register or packing slips. In the case of clearances to M/s. New Era Metals, it is based on the sales made to M/s. New Era Metals by the fictit....
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....e was no unaccounted production in the subsequent period especially in view of the evidence which I have discussed above. The question is only of quantification, since clandestine production is established. As regards the quantification, in view of the observations of the Commissioner regarding retractions with which I agree and also in view of the documentary evidences recovered which have been discussed above, sales records forming basis for arriving at clandestine removal of M/s. Shreeji by taking into account the purchases from trading firms who have admitted having issued only the bills and not the goods is the only alternative to arrive at the correct quantity or at least the actual quantity removed by the appellant. As regards reuse of central excise invoices, appellant's submission is that the trading firm's invoices could have been used by the appellants for the whole, transportation. This could have been done. I do not think it is our job to speculate as what could have been done and why it was not done if it was not done, on a hypothetical basis to come to the conclusion. Fact remains that production register shows excess production trading firms have issued only bills w....
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.... in conformity with the Evidence Act The evidence must be germane and relevant to the facts in issue. In grave cases like forgery, fraud, conspiracy, misappropriation etc seldom direct evidence would be available. Only the circumstantial evidence would furnish the proof...... There must be evidence direct or circumstantial to deduce necessary inferences in proof of the facts in issue. There can be no inferences unless there are objective facts, direct or circumstantial from which to infer the other fact which it is sought to establish...... The standard of proof is not proof beyond reasonable doubt 'but' the preponderance of probabilities tending to draw an inference that the fact must be more probable. Standard of proof cannot be put in a strait jacket formula. No mathematical formula could be laid on degree of proof. The probative value could be gauged from facts and circumstances in a given case. The standard of proof is the same both in civil cases and domestic enquiries." 47.2 We can never forget the decision of Hon'ble Supreme Court in the case of D. Bhoormull, 1983 (13) E.L.T. 1546 (S.C.), wherein with regard to the smuggling, the Hon'ble Apex Court observed as follows....
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.... seized have been corroborated by the statements of Karumbaiah and Kabbur. It is true that Thomas Mathew's statement has not been recorded moreover, there is no evidence of any investigation conducted abroad. No doubt there are certain deficiencies in the investigations on account of the above facts. It should be borne in mind in the case of undervaluation like this, it is extremely difficult to attain mathematical precision. DRI officers do not possess a magic wand which would unfold the entire events which had taken place. On the basis of the available documents and the statements recorded during investigation, they have to come to a conclusion. In a quasi-judicial like this, we are concerned more with a preponderance of probability rather than proof beyond reasonable doubt, as held by various judicial fora. On the basis of the available records, we are convinced that undervaluation to the extent of 65% has taken place. Shri Thomas Mathew has played a crucial role in this nefarious activity. After considering his submissions, we find he is trying to wriggle out of this case on the ground that the Show Cause Notice has not been served on him as per law. The Commissioner has dealt ....
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....f Rajasthan v. Mohan Lal as reported in 2009 (237) E.L.T. 435 (S.C.), Hon'ble Supreme Court observed as under : "36. Doubts would be called reasonable if they are free from a zest for abstract speculation. Law cannot afford any favourite other than truth. To constitute reasonable doubt, it must be free from an overemotional response. Doubts must be actual and substantial doubts as to the guilt of the accused persons arising from the evidence, or from the lack of it, as opposed to mere vague apprehensions. A reasonable doubt is not an imaginary, trivial or a merely possible doubt, but a fair doubt based upon reason and common sense. It must grow out of the evidence in the case. 37. The concepts of probability, and the degrees of it, cannot obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt. There is an unmistakable subjective element in the evaluation of the degrees of probability and the quantum of proof. Forensic probability must, in the last analysis, rest on a robust common sense and, ultimately, on the trained intuitions of the Judge. While the protection given by the crimina....
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.... every case. {(See : Divl. Forest Officer v. G.V. Sudhakar Rao reported in [(1985) 4 SCC 573]}. In any event, on a plain reading of Sections 8(1) and 71(1) it is clear that the Authorised Officer was required to be satisfied that an offence under the Act had been committed. That the confiscation proceedings were separate and distinct from prosecution under the Act. However, that difference did not entitle the Authorised Officer to proceed arbitrarily in making an order for confiscation." The above observations would once again show that the standard of proof required in trial in the Court of law, is entirely different when compared with the standard of proof required before a quasi-judicial authority. This decision would again show that the prosecution need not prove the case beyond doubt or beyond reasonable doubt, but what is required to be proved is only of preponderance of probabilities in quasi-judicial proceedings. 47.8 In case of T. Shankar Prasad v. State of Andhra Pradesh as reported in 2004 (164) E.L.T. 143 (S.C.), the Hon'ble Apex Court observed as follows : "11. Proof of the fact depends upon the degree of probability of its having existed. The standard req....
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....presume that "a man who is in the possession of stolen goods soon after the theft is either the thief or has received the goods knowing them to be stolen, unless he can account for his possession". That illustration can profitably be used in the present context as well when prosecution brought reliable materials that there was recovery of money from the accused. In fact the receipt, and recovery is accepted. The other factor is the acceptability of the plea of loan, which the High Court itself has not held cogent or credible." The observations of Apex Court would show that the Court has to adopt a process of intelligent reasoning which the mind of a prudent man would do under similar circumstances. The presumption in law of evidence is a rule indicating the stage of shifting the burden of proof. Therefore, on the basis of a set of facts and evidences, a conclusion has to be reached which is that of conclusion what a prudent man would have reached in similar circumstances. In a criminal trial, the Court may see whether such a conclusion is beyond reasonable doubt, in a quasi-judicial proceeding, the authority is required to see whether it is proved by preponderance of probabilities....
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....xamination was not sought leads to the conclusion that the department has not been able to unearth the full quantum of duty evaded and whatever has been found has definitely happened. In this case there is no extra polation; actually clandestine removal has been worked out based on the quantity sold by M/s. New Era Metals which were purchased from traders who had issued only bills and who admitted the same and I have already discussed other evidences. In this case, there is no demand for removal for a period of five years based on isolated evidences. 50. Under these circumstances, based upon the evidences available on record, documents, statements recorded and analysis of the same and taking into account all the facts and circumstances, the obvious conclusion is that the demand of duty of Rs. 2,25,82,462/has to be sustained. 51. Now I take up the demand for Rs. 5,25,526/- being the demand in respect of goods seized in the godown of M/s. New Era Metals on the ground that the same were manufactured by M/s. Shreeji. These goods were placed under detention initially for further investigation. Shri Ajit Kumar Mondal, Excise In-charge in his statement submitted that these goo....
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....to be upheld on M/s. Shreeji in terms of provisions of Section 11AC and in terms of law declared by the Hon'ble Supreme Court in the case of UOI v. Dharamendra Textile Processors as reported 2008 (231) E.L.T. 3 (S.C.). Further, as observed by learned Judicial Member, the adjudicating authority has not extended the option to the appellant to pay the said duty along with 25% of the penalty within the period of 30 days from the date of passing of order by him in which case penalty shall stand reduced to 25% in terms of proviso to Section 11AC. The Tribunal in the case of M/s. Swati Chemicals & Others - 2009 (94) RLT 684 (CESTAT) = 2009 (248) E.L.T. 421 (Tri.) and Hon'ble Gujarat High Court in the case of Exotic Associates v. CCE - 2010 (252) E.L.T. 49 (Guj.) has held that where such no option has been extended by the authorities below, the same can be extended by appellate authority. I accordingly, while imposing penalty equal to duty on M/s. Shreeji, give an option to them to pay the entire duty along with interest (if not already paid) along with 25% of the duty towards penalty within 30 days from the date of receipt of this order in which case penalty shall stand reduced to 25% of ....
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....ting in evasion of Central Excise duty by M/s. Shreeji. Even though M/s. New Era Metal has sold all the goods under bills and on payment of Sales Tax, by doing so on fictitious purchases from trading firms, the evasion of Central Excise duty by M/s. Shreeji was facilitated. Therefore, both M/s. New Era Metal and Shri Kamlesh Sapra are liable to penalty. It has to be taken note of the fact that substantial amount of evasion of duty, has been confirmed on the basis of sales of M/s. New Era Metals amount to Rs. 2,25,82,462/-. Shri Kamlesh Sapra, Partner of M/s. New Era Metals was also clearly involved in the whole affair. The submission by the appellant that M/s. New Era Metals and Shri Kamlesh Sapra were not involved in clearance of goods but only obtained fictitious bills cannot be accepted in view of the fact that M/s. New Era Metal is the firm which sold the goods on which Central Excise duty has not been paid and therefore, it cannot be said that they were not involved in any way with clearance of goods and therefore, penalty is not imposable under Rule 26 of Central Excise Rules, 1944. A penalty of Rs. 50 lakh imposed on M/s. New Era Metals is reduced to Rs. 20 lakh (Rupees Twen....
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....as very well aware of the fact that lorry receipts were utilized for effecting clandestine removal by M/s. Shreeji. Accordingly, he is also liable to penalty under Rule 26 of Central Excise Rules, 2002. However penalty of Rs. 10 lakh imposed on Shri Salim Saheb Patel Kindimani is reduced to Rs. 1 lakh (Rupees One Lakh Only). Sd/- (B.S.V. Murthy) Member (Technical) POINTS OF DIFFERENCE OF OPINION (i) Whether the demand for Rs. 37,23,764/- being the duty on aluminium cleared to three buyers has to be upheld as held by Member (Technical) or has to be set aside as held by learned Member (Judicial). (ii) Whether the duty demand of Rs. 2,25,82,462/- has to be upheld as held by Member (Technical) or has to be set aside as held by learned Member (Judicial). (iii) Whether duty demand on the goods seized in the godown of M/s. New Era Metals amounting to Rs. 5,25,526/- has to be upheld as held by Member (Technical) or has to be set aside as held by learned Member (Judicial). (iv) Whether the duty demand of Rs. 33,424/- on the goods cleared on the basis of names "Lakshmi" and "Crystal"....
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....p; Whether the demand for Rs. 37,23,764/- being the duty on aluminium cleared to three buyers has to be upheld as held by [Member (Technical) or has to be set aside as held by learned Member (Judicial). (ii) Whether the duty demand of Rs. 2,25,82,462/- has to be upheld as held by Member (Technical) or has to be set aside as held by learned Member (Judicial). (iii) Whether duty demand on the goods seized in the godown of M/s. New Era Metals amounting to Rs. 5,25,526/- has to be upheld as held by Member (Technical) or has to be set aside as held by learned Member (Judicial). (iv) Whether the duty demand of Rs. 33,424/- on the goods cleared on the basis of names "Lakshmi" and "Crystal" appearing in private packing slips has to be upheld as held by Member (Technical) or has to be set aside as held by learned Member (Judicial). (v) Whether penalty of Rs. 75 lakhs (Rupees Seventy Five Lakhs Only) imposed on Shri Paresh Babubhai Patel, Managing Director and penalty of Rs. 50 lakhs (Rupees Fifty Lakh Only) imposed on Shri Babubhai K. Patel, Director have to be reduced to Rs. 75,000/- each as held by learned M....
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....Trader - NIL NIL ***Shri Kirit Patel, Trader - NIL NIL Shri Tarun Khanuja, Buyer - 50,000/- (Rule 26) NIL Shri Ramesh Goyel Buyer - 50,000/- (Rule 26) NIL Shri Salim Saheb Kindimani, Transporter - 1,00,000/- (Rule 26) NIL * Rs. 26,20,792/- duty and equal penalty confirmed by both Hon'ble Members and no difference lies in this regard. ** Penalty on Shri Mondal confirmed by both Hon'ble Members, equal to Rs. 10,000/- and no difference lies in this regard. *** Penalties on traders set aside by both Hon'ble Members equal to Rs. 10,000/- and no difference lies in this regard. 64. In the written submission of the appellants they have waived the right to hearing in the matter and requested that the matter be decided in the light of the contentions related therein. 65. Shri J.S. Negi, learned A.R. appeared before me. He also has made written submission which is taken on file. It was contended by him while reiterating the arguments given in his written submission that certain incrimin....
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.... the Hon'ble Member (Judicial) who recorded the findings that the demand is solely based on statements and in the absence of any tangible and sufficient evidences the demand is not sustainable. It was argued that the finding of Hon'ble Member (Technical) in this regard wherein the demand stands confirmed were on the grounds of general work orders found in the premises of Shri Ajay Ashar, Marketing Manager of M/s. New Era Metals and copies of general packing slips and its copies and general packing slips were found in the premises of M/s. Shreeji. Statements of the suppliers that they did not actually supply goods have not been retracted. Shri Ajit Mondal and Shri J.D. Chauhan, both employees of M/s. Shreeji admitted to the production and clearance of goods. They argued that the statements of Shri Ajay Ashar, Shri Ajit Mondal and Shri J.D. Chauhan were retracted and the request for cross examination was not allowed. The documentary evidences adduced by the appellants, it was contended, were not rebutted by the Revenue. The appellants submitted that the entire issue is as to whether on the basis of handful of evidences which at best can raise some suspicion and the inculpatory statem....
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....E, Chandigarh as reported in 2002 (150) E.L.T. 290 (Tri.-Del), it was held that in the absence of any evidence of excess consumption of raw material or of electricity to support the allegation of excess production and their removal, the demand cannot be upheld on the basis of clandestine removal. The said decision was again upheld by Hon'ble High Court of Punjab & Haryana as reported in 2010 (255) E.L.T. 221 (P & H), reiterating the necessity of production of positive evidence of clandestine removal. To the similar effect are the Tribunal's decisions in case of M/s. Chemco Steels Pvt. Ltd v. CCE, Hyderabad-I as reported in 2005 (191) E.L.T. 856 (Tri.-Bang), M/s. Andra Cements Ltd. v. CCE, Guntur as reported in 2005 (191) E.L.T. 1046 (Tri.-Bang), M/s. Ruby Chlorates (P) Ltd v. CCE, Trichy as reported in 2006 (204) E.L.T. 607 (Tri.-Chennai), laying down that in the absence of any evidence showing excess consumption of raw materials or of electricity or receipt of sale consideration, the charges of clandestine removal cannot be upheld. Hon'ble High Court of Gujarat in the case of CCE v. M/s. Vidya Laminates Pvt. Ltd as reported in 2007 (211) E.L.T. 382 upheld the findings of the Trib....
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....me can be extended by appellate authority and gave an option to pay entire duty along with interest along with 25% of penalty within 30 days. The penalty imposed on trading units, marketing manager of New Era were set aside as per the law declared by the Tribunal in the case of M/s. Ekta Enterprises as reported in 2005 (180) E.L.T. 219 (Tri.-Mumbai). Hon'ble Member (Judicial) reduced penalty imposed on others also. 70. In the context of clandestine activity, Hon'ble Member (Technical) has opined that he is not able to agree that clandestine removal must be established beyond doubt. He has relied upon the judgments in the following cases : 1. Maharashtra State Board of Secondary and Higher Education v. K.S. Gandhi & Ors. - (1991) 2 SCC 716. 2. D. Bhoormull - 1983 (13) E.L.T. 1546 (S.C.) 3. Gulabchand Silk Mills v. CCE, Hyderabad-II [2005 (184)] E.L.T. 263 (Tri. - Bang.) 4. Carpenter Classic Exim Pvt. Ltd. v. CC Customs [2006 (200) E.L.T. 593 (Tri. - Bang.) 5. CCE v. International Cylinders Pvt. Ltd. [2010 (255) E.L.T. 68 (H.....