TaxTMI 
TaxTMI 
2012 (10) TMI 418
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.... etc. in terms of provisions of Rule 26 of 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 al....
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....on. He produced all the relevant documents viz. bills 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....
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....sar Octroi authority to suppress the real identity of the goods. 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. 2,94,85,9....
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....urchase of aluminum products and has bought the goods from various trading 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 ....
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....ed by M/s. Shreeji. He submits that the buyers who have procured the goods from traders 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 an....
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....ss of proof of manufacturing undertaken by them (from private production records). This plea 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....
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....rity, the various imputations, on the basis of which the duty stands confirmed by Adjudicating Authority 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 a....
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.... case on the statements of co-noticees without any other independent evidences is risky. Confirmation of demand on such basis without there being an iota of evidence 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 qu....
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.... admitted that actually, the goods were received from M/s. Shreeji, Dadra. As per the sales register marked as A/10 seized from the office-cum-godown premises of M/s. New 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 ....
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....for the second time, would detail such advice by his advocate on his own unless he is pressurized by Revenue. The fact that Shri Patel, Director, in his statement, deposed that the 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 ....
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....ed the invoices of trading firms for the entire transportation of the goods in respect of initially clearing goods under re-used Excise invoices. As per the statements of various persons, 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 an....
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.....-Bang), it was held that benefit of doubt is to be extended to the assessee when investigations by Revenue are not thorough. In the case of M/s. Abba Rubbers v. CCE, Cochin as reported in 2006 (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. ....
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....tigation with traders who returned the scrap. Clandestine removal not established. 14. 2000 (120) E.L.T. 505 (T) K.J. Diesels (P) Ltd. v. CCE., Kanpur Difference in RG 1 closing stock and monthly statement alone is not sufficient to a duty demand on alleged clandestine removal 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 stron....
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....y concrete and clear evidence. The list is un-ending and we do not intend to multiply the same. However, a special reference may be made to the majority decision in the case M/s. Tejal Dyestuffs Industries v. CCE, Ahmedabad as reported in 2007 (260) E.L.T. 310 (Tri.), wherein it was held that the Revenue cannot 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 prope....
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....er, we find that the adjudicating authority has not extended the option to the appellant to pay the said due along with 25% of the penalty within a period of 30 days from the date of passing of the order by him, in which case, the penalty shall stand reduced to 25%, in terms of the 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 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 b....
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....and issued bills and there were no accompanying goods. Though we have not accepted above stand of Revenue, but even if the same is held to be correct, no penalty can be imposed upon them in view of the law declared by Tribunal in the case of M/s. Ekta Enterprises as reported in 2005 (180) E.L.T. 219 (Tri.-Mumbai). As such, the 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 d....
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....details such as section numbers, weight, number of pieces and length of aluminium profiles and most of the packing slips were prepared without the name of M/s. Shreeji, so that the manufacturer's identity could not be found. 23. File A/16, A/52 seized from M/s. Shreeji's factory contained lorry receipts containing details of aluminium extrusions dispatched 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....
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....vide seized file No. A/19 and A/33. 31. File A/1 & A/2 recovered from premises of Shri Ajay Lalji Ashar contained copies of work orders in respect of three buyers viz., M/s. R. K. Enterprises and two other purchasers. M/s. R.K. Enterprises admitted that goods were received actually manufactured by M/s. Shreeji but the bill was received by M/s. Hari Metal and amount was 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 th....
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....t able to understand how the appellants would have shown that these documents cannot be relied upon. Similarly in the case of Shri Virendra Kumar Mishra, Production Supervisor he has admitted the genuineness of the documents and the details given therein. Once again, the documents recovered, their authenticity, their recovery and their maintenance have not been questioned. As regards 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....
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....him in his name or in his relative's name and he was handling all the business. He also admitted that he had prepared bills and supplied the same to M/s. New Era metals without receiving/supplying any aluminium products. In the case of M/s. Munish Metal, he had not prepared the bills but had given book containing blank invoices to M/s. Shreeji Aluminium. There is no evidence to show that these 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 slip....
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.... of Shri Mondal, Excise Clerk and Shri J.D. Chauhan, Packing Supervisor were generated in nature and not specific. Shri Kirit Khimjibhai Patel/Thumer in his statement dated 9-9-2005 admitted that M/s. Hari metal was opened only to facilitate transactions between M/s. Shreeji and M/s. New Era Metals. Further, Shri Ramesh Khanuja, Purchase In-charge of M/s. R.K. Enterprises and Shri Tarun Khanuja, Partner 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....
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....der the advise of advocate itself is indicative of pressure by the officers. In this case it is not the only ground on which the learned Commissioner has rejected the retractions filed by various appellants. For the purpose of convenience and better appreciation, it would be proper to reproduce the observations of the Commissioner with regard to retraction. This is contained in para 33.1 and the same is 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 alle....
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.... English by Shri Ajit Kumar Mondal, and tendered to the officers recording of the said statement, and the same had been typed on computer on his request. In his above statement' dated 14-10-2005, on being asked regarding the filing of a retraction before the Advocate & Notary, AT & Post Dadra, inter alia retracting his statement dated 17-3-2005, which had been recorded under Section 14 of Central Excise Act, 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 ad....
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....urther proof required to corroborate the admitted position. An admitted fact need not be put to proof by other evidences. The allegation that admission of above said persons was taken under duress or coercion. The Managing Director of the factory is a seasoned person and there is no reason to infer any coercion or duress as these statements are not only the evidences of the case, these are also corroborated 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 st....
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....or of M/s. Shreeji. Further, officers have also recovered a letter written by the Director to the Assistant General Manager, Syndicate Bank wherein he has stated that Shri Ajay Ashar is doing the marketing of M/s. Shreeji, which is established by documentary evidences such as work orders recovered from his residence. The register recovered from the factory of M/s. Shreeji shows one furnace was earmarked for production 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 ....
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.... sister in her order above. At this juncture, it is necessary to note that this register covers the period from December 2003 to November 2004, for which the details of unaccounted production is available. Having upheld the demand for the earlier period on the basis of very same production register, we cannot come to the conclusion that there were no clandestine removals or there were no clandestine clearances or there 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, a....
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.... Maharashtra State Board of Secondary and Higher Education v. K.S. Gandhi & Ors - (1991) 2 SCC 716, it was observed as follows : "37. It is thus well settled law that strict rules of the Evidence Act, and the standard of proof envisaged therein do not apply to departmental proceedings or domestic tribunal. It is open to the authorities to receive and place on record all the necessary facts though not proved strictly 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. ....
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.... much less than the actual value. When Ravi Karumbaiah and Sanjeev Kabbur were confronted with the documents seized the entire modus operandi was revealed. Shri Karumbaiah has accepted that the undervaluation is to the extent of 65%. This has been corroborated by Sanjeev Kabbur. There is no evidence to show that the statements recorded under Section 108 of the Customs Act have been retracted. In other words, the contents of the documents 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 pr....
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....hase document of aluminium products and in reality no aluminium product was bought or sold but bills were raised for 0.75% commission. Bill books of three firms were found in M/s. Shreeji. Copies of same packing slips were found in M/s. Shreeji and New Era. Excise clerk and all others admitted. Production register for December 2003 to November 2004 shows unaccounted production. 47.6 Even in case of criminal appeal, in the case of State of 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 ....
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....ing an order on conviction of an accused under Section 85(1) and that mere acquittal in the trial before the Magistrate, in every case, cannot result in setting aside, ipso facto, of the orders of confiscation passed by the competent authority under the Act. That merely because there was acquittal in the trial before the Magistrate, due to paucity of evidence or otherwise, would not entail nullification of the order of confiscation of the seized articles in 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....
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....prudence we have to observe that it may be unsafe to use that presumption to draw yet another discretionary presumption unless there is a statutory compulsion. This Court has indicated so in Suresh Budharmal Kalani v. State of Maharashtra - 1998 (7) SCC 337. "A presumption can be drawn only from facts - and not from other presumptions - by a process of probable and logical reasoning". 15. Illustration (a) to Section 1.14 of the Evidence Act says that the Court may 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 presumpt....
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.... this matter was heard on 3-2-2011. 49. I also find that the submission that the department has failed to travel the distance between "must be true" and "might be true" is not correct. In my opinion, the results of the investigation covered by the revenue are sufficient to show that there was clandestine removal by the appellants and in this case voluminous records, documents, registers, unretracted statements, statements of deponents, who did not retract and whose cross examination 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 a....
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....tement is based on two packing slips containing the details and the instance of packing slips would mean that the goods have been produced. The statement of Shri Ajit Kumar Mondal has to be accepted as true and demand has to be sustained. In the result, the impugned order passed by the learned Commissioner as regards the duty demand on various accounts is fully sustainable and accordingly I uphold duty demand of Rs. 2,94,85,968/-. 53. Penalty to the extent of 100% of duty is also 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....
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....p;However, in view of the conclusion reached by me, the penalty imposed on the Directors and the Excise Clerk was excessive, some reduction is warranted in the case of other parties also and taking into account the role played by them, gravity of the offence, etc., I propose to reduce penalty on all these persons/firm. 57. As regards the penalty on M/s. New Era Metal, I find that the firm knowingly accepted bills raised by trading firms while receiving goods from M/s. Shreeji thereby abetting 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 Kamles....
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....rds the penalty imposed on Shri Salim Saheb Patel Kindimani, Proprietor of M/s. B. S. Patel Roadways, I notice that he has played a significant role in the evasion of duty by M/s. Shreeji. He provided entire blank lorry receipts books to M/s. Shreeji to facilitate clandestine removal. Further he did not account for all the transport transactions carried out through this vehicle to M/s. Shreeji and arranged only for such transaction as per the instructions of Shri Ajit Kumar Mondal, Excise In-charge. He was 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)&....
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....e the matter before Hon'ble President for consideration and orders for reference to 3rd Member to resolve the differences of opinion. (Pronounced in Court on_____) Sd/- (B.S.V. Murthy) Member (Technical) Sd/- (Archana Wadhwa) Member (Judicial) DIFFERENCE OF OPINION 62. [Per : Dr. P. Babu, Member (T)]. - This case has been placed before me for decision due to the difference of opinion between Member (Judicial) and Member (Technical) which is reproduced as below : 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)&nbs....
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....968/- (Sec. 11AC) 26,20,792/- 26,20,792/- Shri Paresh Patel (MD of Shreeji) - 30,00,000/- (Rule 26) 75,000/- (sic) - 75,000/- **Shri A.K. Mondal (employee of Shreeji) - 10,000/- (Rule 26) 10,000/- M/s. New Era Metals (Partnership firm) - 25,00,000/- (Rule 26) NIL Shri Kamlesh Sapra Partner of New Era - 10,00,000/-(Rule 26) NIL Shri Ajay Ashar (employee of New Era) - 10,00,000/-(Rule 26) NIL ***Shri Keshrimal Jain, Trader - NIL NIL ***Shri Chandu Jain, Trader - NIL NIL ***Shri Harshad Parmer, 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 ....
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....by M/s. New Era Metals as procurements from various trading firms. No goods were ever supplied by the trading firms to M/s. New Era Metals and the transactions were merely on paper. The main basis of allegations of clandestine clearances were the statements of employees of New Era transporters and partners of such trading firms. The statements were subsequently retracted. The Revenue mainly relied upon certain packing slips procured from the office/godown of M/s. New Era Metals and certain work orders stated to be signed by Shri Ajay Ashar found in the factory premises. Certain blank LR books and invoice books of two trading firms were found in M/s. Shreeji Aluminium Pvt. Ltd.'s factory. 67. In the written submissions, the appellant contended that 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....
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....nt portion is as below : 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 circumstances, the Bench, by taking note of the majority decision of the Tribunal in the case of M/s. Shree Nathjee Industries & Others (being Order No. A/215-22l/WZB/AHD/2011, dated 4-2-2011) allowed the appeal by observing that there is no concrete evidence on record to show manufacture of the goods by the appellant in that case and its clearance through a trading firm. The ratio of the above decision is applicable to the facts of the present case also. For ready reference, one relevant paragraph from the said order is reproduced below. "Similarly, in the case of M/s. Shingar Lamps Pvt. Ltd v. CCE, 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), reiterat....
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....ng documents recovered can be taken as evidence only for removals represented by them and there cannot be an extrapolation of it for the entire 5 year period. In the absence of corroboration, it is very difficult to establish clandestine removal for a period of 5 years as there is no finding with regard to the consumption of electricity. 69. Hon'ble Member (Judicial) in her order had confirmed the demand of Rs. 26,20,792/- against Shreeji Aluminium. However, relying upon the judgment of the Tribunal in the case of M/s. Swati Chemicals & Others 2009 (94) RLT 684 (CESTAT) and Hon'ble High Court of Gujarat in the case of M/s. Exotic Associates v. CCE - 2010 (252) E.L.T. 49 (Guj), it was held that where no such option stand extended by the authorities below, the same 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. ....