TaxTMI 
TaxTMI 
2014 (8) TMI 851
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.... The H.R. Coils are purchased from primary steel manufacturers such as SAIL, TISCO, Essar Steel, etc. or are imported from foreign countries. The high grade zinc for galvanizing is procured from M/s. Hindustan Zinc Ltd. or is imported. Since the manufacturing process carried out by the Appellant Company involves cutting, slitting and trimming of the H.R. Coils and also subjecting the same to the processing of pickling, skin pass, cold rolling into sheets of various thickness, and galvanizing, if required, there is waste to the extent of 7 to 8% including 1% process loss. The waste in form of trimmings, cut pieces of H.R. Sheets/C.R. Sheets and the zinc waste in form of zinc ash and zinc dross is also sold on payment of duty. During the period of dispute from 1.10.1996 to 31.12.2000, they were selling the goods directly from the factory as well as through their depots located at 11 stations viz. Dera Basi, Chandigarh, Varanasi, Delhi, Parwanu, Ludhiana, Kanpur, Kolkata, Guwahati, Bombay and Jaipur. 1.2 On receipt of an intelligence that BSSL are evading central excise duty on large scale by either clearing their finished products clandestinely or under declaring the value of the ....
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....T respectively. The documents marked A-2 and A-3 appeared to be the ledgerisation of the transactions recorded in A-1. The document marked A-4, A-5 and A-6 appeared to contain party-wise and datewise details of despatches of the excisable goods from the factory. The document marked A-12 appeared to be containing the details of under invoiced clearances from the BSSL during the period 1.8.2000 to 21.09.2000 to their dealers. The document marked A-13 appeared to be containing sales to M/s. Amit Ram Rakhyani of Jodhpur. The document marked A-14 contained details of transactions with M/s. Aksar Trading Company, Veeramgaon including the amounts to be collected over and above the invoice price. The document A-15 and A-27 were the credit note registers maintained by Shri Arun Gupta, AGM, BSSL, containing details of the credit notes issued by BSSL on account of quantity discount, cash discount, etc. and in respect of some of such credit notes, there were remarks' adjusted in R Account' and on comparison with the statutory records, it was found that no discount had been passed on to the customers in the statutory records, while the same had been considered in the reconciliation of the accou....
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....ments in respect of which were being received in cash or by under-declaring the value, mostly in respect of sheet waste, zinc ash and dross, and recovering the balance amount in cash from the customers, and that the cash recoveries were being monitored by the Management through the Accounts Section. Accordingly in respect of various transactions recorded in the documents, A-1 to A-41 seized from the Accounts Section, the investigating officers determined that the central excise duty amounting to Rs. 14,29,69,371/- has been short paid on the above counts during the period from 1.10.1996 to 21.09.2000. 1.5 Some of the seized documents were credit notes issued to the Appellant Company by their raw material suppliers in respect of short received quantity. Since in respect of the short received quantity Cenvat Credit amounting to Rs. 6,07,745/- had been taken, the investigating officers were of the view that the Appellant Company are not eligible for this credit. 1.6 During the period from 01.10.96 to 30.09.2000, in respect of the goods cleared from the factory to the Depots from where the same were to be sold, the duty was required to be paid during the period prior to 01.07.2000....
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....ted by the Commissioner vide order-in-original no.02-03/COMMR/GZB/2010 dated 9.3.2010. 1.8.1 In respect of the adjudication proceedings, it is necessary to highlight a development which took place just before the issue of adjudication order on 9.3.2010. Shri Suresh Upreti, the then Dy. Manager (Accounts) is one of the key witnesses in this case, as it appeared that the documents A-1 to A-41 recovered from the Account Section of the Appellant Company had been prepared by Shri Suresh Upreti. But after recording of his statement dated 21.09.2000, wherein only a few questions had been put to him regarding some of the documents i.e. A-1 to A-41 recovered from his Section and wherein he had admitted only to writing in his own hand writing the documents marked A-I and A-2, he had stopped cooperating with the investigating officers. Though, initially, he was sick and was admitted in the hospital, but long after his discharge from the hospital, inspite of being summoned, he was not appearing before the investigating officers. However, on 21.01.2010, after about 9 years, he filed an affidavit claiming that though the documents A-1 to A-41 recovered from the Accounts Section had been....
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....n respect of under invoiced clearances. However, he treated this amount as cum duty and accordingly as against the duty demand of Rs. 14,29,69,371/- on this count, confirmed the duty demand of Rs. 12,47,27,529/- along with interest thereon under Section 11 AB. Besides this, he also confirmed the Cenvat Credit demand of Rs. 6,07,745/- holding that this amount of Cenvat Credit has been taken without actually receiving the goods. 1.8.3 As regards the total duty demand of Rs. 15,34,52,215/ (Rs.14,09,82,58/- +Rs.1,24,69, 624/-) raised on the ground of higher depot prices, the commissioner accepting the appellants contentions held that:- (a) the correct short payment on this count during the period from1.10.2000 to 31.12.2000 is Rs. 1,65,58,691/- against which differential duty of Rs. 1,26,38,283/- has already been paid by the appellant; and (b) For the period 1.7.2000 to 31.12.2000 the appellant would be eligible for deduction of freight expenses from the factory to the depot, as during this period, 'place of removal' did not include depot and accordingly, the duty demand of Rs. 32,72,527/- is not sustainable; Accordingly he confirmed the duty demand of Rs. 6,47,926/-as aga....
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....he appellant mainly pleaded in respect of the allegation of clandestine removal, Shri S. Ganesh, the learned Senior Counsel made submissions in respect of the allegation of under valuation. 3.1 Shri Rajesh Chhibber, Advocate, pleaded that out of the total duty/Cenvat Credit demand of Rs. 29,70,29,329/- made in the show cause notices against the Appellant Company, the duty demand of Rs. 14,29,69,371/- is on the basis of the allegation of clandestine removal and under valuation and is based on the documents marked A1 to A41 recovered from the Accounts Section of the Appellant Company, the demand of Rs. 6,07, 745/- is in respect of Cenvat Credit, which according to the department had been taken without actually receiving the goods and the remaining duty demand of Rs. 15,34,52,213/- is on the basis that in respect of clearances to depots during the period from 01.10.96 to 31.12.2000, the duty has not been paid on the actual 'normal price'/transaction value prevailing at the respective depot at the time of removal, but has been paid on much lower price. 3.1.1 In respect of Cenvat Credit demand of Rs. 6,07,745/-, Shri Chhibber pleaded that the same is based on the certain documents....
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....xamine him, the Commissioner could not draw a contrary conclusion; (ii) Out of total duty demand of Rs. 7,83,39,361/- based on the allegation of clandestine removal, the customers had been identified in respect of duty demand totalling Rs. 6,76,10,665/- and in respect of demand amounting to Rs. 1,07,28,696/- the customers have not been identified at all and accordingly the duty demand of Rs. 1,07,28,696/- is not sustainable on this basis only. Out of the identified customers, only certain customers had been contacted and inquiry had been made with them and the total duty demand in respect of sales to such customers is Rs. 5,07,34,084/- out of which the statements of only certain customers were relied upon and they were allowed to be cross-examined. The duty demand in respect of sales to such customers is Rs. 2,39,30,327/-. Duty demand of Rs. 2,68,03,757/- is in respect of sales to M/s P.D. Steels. Inquiry has been made with Shri Beriwal, Director of M/s P.D. Steels, but the same was neither relied upon nor he was made the party to the show cause notice and his deposition in course of his cross examination is against the department. The duty demand of Rs. 2,39,30,327/- is in resp....
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....inc Ltd. is possible nor any such evidence has been unearthed by the department. No documents showing unaccounted purchase of the HR Coils and Zinc have been found and similarly no discrepancy in the stock of these items has been detected while the purchase of such a huge quantity of raw material and movement of final product would involve movement of over 4000 trucks, but there is no evidence to such effect. Moreover, production of 17,990 M.T. of GP/GC Sheets would result in generation of about 1400 M.T. of scrap, while there is no case of the department regarding clandestine removal of the scrap, there is no evidence also in this regard. Therefore, without any evidence regarding purchase of HR Coils and Zinc Ingots required for manufacture of 17,990 M.T. of GP/GC Sheets alleged to have been cleared without payment of duty, the confirmation of duty demand on this quantity merely on the basis of certain accounts fabricated by Shri Suresh Upreti is not sustainable at all. (v) the appellant were availing Cenvat Credit of excise duty paid on the indigenous HR Coils and Zinc Ingots and additional customs duty paid on the imported HR Coils and Zinc Ingots and as such Cenvat Credit av....
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....ke Arising and Zinc Ash/Dross. The department has interpreted the 'L-3', 'L-5' and 'L-10' as the transactions where an amount @ Rs. 3,000/- per M.T., Rs. 5,000/- per M.T. and Rs. 10,000/- per M.T. respectively had been collected from the buyers in cash over and above the invoice price. Here also, out of total duty demand of Rs. 5,56,12,785/- in respect of sales to 182 buyers, the demand of Rs. 1,39,93,358/- based on the document A-40, is in respect of sales to parties who have not been identified and, as such, in respect of which no inquiry was possible. The remaining demand of Rs. 2,90,40,204/- is in respect of sales to parties which had been identified, but they have not been contacted at all and, as such, no inquiry has been made with them to ascertain as to whether or not they had paid any amount in cash over and above the invoice price to the appellants company. The demand of Rs. 1,25,79,223/- pertains to the sales to the parties which were contacted and with whom the inquiry was conducted, out of which the duty demand of Rs. 8,58,673/- pertains to the sales to M/s P.D. Sales. Though the statement of Shri Ashwini Beriwal, Director of M/s P.D. Sales had been recorded, but neit....
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....ased on the department's interpretation of the code letters - 'W', 'R', L-3', 'L-5' and 'L-10' used by Shri Upretti in the records written by him. According to the department, the transactions marked with code 'W' represent the sales without invoice and without payment of duty, the transactions marked with code letter 'R' represent the transaction which are either without payment of duty or where part of the payment was to be received in cash and the transactions with code L-3, L-5 and L-10 represent the transactions where part of the amounts @ Rs. 3,000/- per M.T., Rs. 5,000/- per M.T. and Rs. 10,000/- per M.T. respectively was received in cash over and above the invoice price. While no question as to what the code letters - 'R', 'W', 'L-3, 'L-5' and 'L-10' stand for, had been put by the department to Shri Upretti either during investigation or during personal hearing in course of his cross examination, this question was put to other employees and they have given the explanations from which no adverse conclusion can be drawn against the Appellant Company. No deponent, in their statements, have admitted that the said words represent either clandestine removal or under valuation. On....
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....egation of under valuation is without any basis as the same has been alleged in respect of only a small fraction of transactions of certain goods mainly Trimming (Arising) while the department has raised no objection to the sale of the same goods at the same price to the other buyers. When certain goods were being sold to the buyers at certain price which had not been objected to by the department and, as such, in respect of those sales there is no allegation of under valuation, the department cannot allege under valuation in respect of sale of the same goods during the same period to certain buyers alleging that the Appellant Company was collecting certain amounts (L-3/L-5/L10) over and above the invoice price in cash, just because Shri Upreti, the then Dy. Manager (Account) in some private records prepared by him, has mentioned collection of L-3/L-5/L-10 amounts in respect of those transactions. This is not only impracticable for any businessman but is also impossible to sell the same very goods to different buyers at such huge price difference. He emphasized that during period till 30.06.2000, in term of Section 4 of Central Excise Act, 1944, the assessable value was the 'normal....
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....the period of dispute, in respect of clearances of the finished products from the factory to the depots on stock transfer basis, the Appellant Company was required to pay duty at the time of clearance of the goods from the factory at the prevailing prices at the respective depots at the time of removal, the duty has been paid on the prices which are much lower than the prevailing prices of the same goods at the depot at the time of removal or at the time of closest to the time of removal. He mentioned that out of duty of Rs. 14,29,69,371/- on account of undervaluation and clandestine removal based on the documents recovered from the factory/office premises etc., the Commissioner has confirmed the demand of Rs. 12,47,24,529/- after permitting abatement of duty from the value on which duty had been demanded by treating the value as cum-duty and besides this, the Commissioner also confirmed the Cenvat Credit demand of Rs. 6,07,745/- on account of short-receipt of the inputs. As regards the duty demand of Rs. 15,34,52,213/-, the Commissioner has confirmed the demand only of Rs. 6,47,926/- and has dropped the demand for the balance amount and this portion of the order of the Commissione....
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....office, that in the documents marked A-1 to A-41, the transactions with code letter 'W' represent the sales made without payment of duty and without issue of invoices, that this conclusion is inevitable in view of the fact that in respect of the transactions/sales marked 'W' in the private records of the Appellant Company prepared by Shri Upreti, there are corroborative entries at gate register maintained by the security personnel of the Appellant Company while there are no central excise invoices issued by the appellant in respect of such clearances; that besides this, in respect of such removal there are loading slips marked - 'R' prepared in the dispatch section; that the appellants plea that loading slips marked 'R' represent the cases where the goods have not been found as per specifications and had been unloaded and had not been cleared, is absolutely incorrect; that the entries at the gate register made by the security personnel clearly show that such consignments had been cleared from the factory; that all the entries in the documents with code letters 'L-3', 'L-5 and 'L-10' represent the cases where the appellant had charged extra amount at the rate of Rs. 3,000/- PMT, Rs....
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....d how much payment is to be made by cash; that this statement of Shri Soneji has not been retracted by him; that one of the dealers of the Appellant Company is M/s Shree Umiya Steel Corporation, Veeramgaon whose partner is Shri H.R.L Desai; that Shri Desai was confronted with a letter dated 30.9.2000 written by him to the Appellant Company, which had been recovered from the accounts branch of the Appellant Company and he stated that this letter was in respect of H R side trimming and that while the actual rate was Rs. 9,500/- PMT, the rate shown in the invoice was Rs. 6000/- PMT, and the difference was paid in cash and that the above documents show that in respect of sale of non-standard products like arising, full sales price was not being mentioned in the central excise invoices and the differential between the actual agreed price and the price shown in the invoices was being recovered in cash. 4.2 Shri A.K. Raha pleaded that the Appellant Company was indulging in undervaluation mainly in respect of non-standard items like arising , trimming etc. and the difference between the price shown in the invoices and the price actually charged was being recovered in cash. He also menti....
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....med by the appellants based on the deposition of Shri Upretti and his affidavit. He once again emphasized that while on one hand in terms of the provisions of Section 36A of the Central Excise Act, 1944, the contents of these documents recovered from the account branch of the Appellant Company and, which admittedly, have been written by Shri Upreti, an employee of the Appellant Company, have to be presumed to be true unless contrary is proved by the appellant, the Appellant Company has not produced any evidence to prove that these documents are fabrications and on the contrary these documents are corroborated by the other evidence on record, as discussed above. 4.4 With regard to the plea of Shri S. Ganesh, ld. Senior Counsel for the appellants, that during the period till 30th June, in terms of the provisions of Section 4, the assessable value of the goods was 'normal price' at which such goods are ordinarily sold in course of wholesale trade for delivery at the time and place of the removal to un-related buyers, the price being the sole consideration for the sale and a large number of sales of 'Arising/Trimming to other buyers at such normal price were not questioned by the De....
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....of Rs. 15,34,52,213/- for the period from October 1996 to December, 2000 , out of which the Commissioner has confirmed the demand only of Rs. 6,47,926/- and has dropped the remaining demand, he pleaded that the duty demand of Rs. 15,34,52,213/- for the period from October 1996 to December, 2000 is based on hard evidence viz. ex-depot invoices of the dates closest to the dates of ex-factory clearances and not in dispute by the Appellant and which show ex-depot sale at much higher prices than the prices at which duty had been paid. He pleaded that during the period w.e.f. 01.07.2000 in respect of the clearances made by the appellant to the depots from where the goods were sold, the Appellant Company was required to pay duty on the goods at the time of clearance from the factory at the price prevailing in the respective depots at the time of clearance and if on that date there was no clearance from the depot, prevailing depot price on the date closest to the date of clearance was to be adopted, but the price at which duty was paid at the time of clearance from the factory is much lower than the price of the goods prevailing at the respective depots at the time of clearance or at the t....
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....se Rules, 1944, the same cannot be allowed to the assessee. He pleaded that throughout during the period of dispute, the Appellant Company was selling its finished products from Depots as per the private price lists circulated by the Headquarter among the Depots and whose copies were recovered in the files A-9 and A-37 seized from the Appellant's Company's premises, while duty was being paid on much lesser 'depot prices' declared for the Department. Shri Raha pleaded that in this regard, the defence plea of the Appellant Company that the prices mentioned in the private prices lists found in file A-9 and A-37, mentioned only the target prices and were not actual sale prices, is totally false, but without giving any finding on this point and without discussing the private price lists, the Commissioner has simply accepted the Appellants calculation declaring their net duty liability as Rs. 6,47,926/-. He, therefore, pleaded that the impugned order dropping the duty demand of Rs. 15,28,04,287/- is totally wrong. 4.7 As regards penalty under Rule 209A of Central Excise Rules, 1944 and Sh. Neeraj Singhal- MD, and Sh. H.C. Verma , Vice President of the Appellant Company and other empl....
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....ll such letters addressed by him to various authorities including the Chief Justice of India and a number of politicians have been produced by him before the Tribunal. It is also seen that Sh. J.K. Bansal filed an application to intervene in the matter which was rejected by the Devision Bench presided by the then Hon'ble President. 5.2 During the course of hearing before the Tribunal Sh. J.K. Bansal tried to interfere in the matter by repeatedly requesting the Bench to be allowed to argue the case against the Appellant Company as intervene, he again wanted to intervene on 01.01.14 and be heard on the merits of the case and insisted that since he is the claimant of reward, as an informer, he has right to intervene and advance arguments against the assessee, though the Revenue was being represented by the Special Counsel, Shri A.K. Raha. On being questioned, Shri Raha fairly agreed that Sh. Bansal has got nothing to do with the case except for reward and is not authorised to represent the Department's case before the bench. 5.3 Ultimately the Bench had to pass an order on 03.01.2014 bringing the entire facts on record and taking a view that such type of intervention by J.K. Ban....
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....Then same were sent to both the Members individually by name through courier. When the matter came up for argument today morning, the above development was brought to the notice of the assessee as also to Shri Raha, learned Senior Advocate engaged by the Revenue for representing the matters. Both the sides expressed their anguish on the activities of Shri Bansal and submitted to ignore the said developments. It was explained by the learned advocate for the appellant that since Shri Bansal is an interested party, on account of his claim for reward money, he is interested in failure of the assessees case. It was also brought to our notice that lot of litigation was going on between the appellant and Shri Bansal - civil as well as criminal. Our attention was drawn to the Hon'ble Delhi High Court order vide which a decree was passed against Shri Bansal for recovery of dues which were pending to be paid by him to the assessee. It also stand clarified that section 138 proceedings were initiated against the said person by the appellant, which are pending in a Court of law. As such, it was insisted that Shri Bansal, who is in litigation with the appellant in his personal capacity and i....
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..../ documents/ representations in future and not to interfere in the proceedings, in any manner or to influence out coming of the proceedings in any way. Though, we feel strongly about writing of such letters by the informer Shri Bansal and are of the view that same amounts to pressurizing the Bench to arrive at the conclusion in a particular manner and are of the view that same amounts to contempt of Court, for which action can be taken against Shri Bansal but keeping in view the undertaking given by Shri Bansal that no such further interference would come from his side, we deem it fit to close the matter and to move ahead with proceedings inasmuch as hearing is at the last leg and number of days stand already devoted to the matter. However, we deemed it fit to bring the above fact on record so as to reflect upon the above developments. Though the above interference of Sh. J.K. Bansal has got no relevance on the final findings required to be arrived at by us, but for the sake of just and fairness we deem it fit to bring above development on records. Undeterred, with the above tactic pressuring of the bench, we proceed to decide the matter in accordance with law. 5.5 Before ....
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.... upon by the Revenue. It is further pleaded that even during the recording of 1st Statement on dt. 21.09.2000, Sh. Upreti was shown records A-1 to A-4 only and no records from A-5 to A-41 were ever shown to him. Further Sh. Upreti was also cross-examined during the course of adjudication in terms of the permission granted by the Commissioner wherein he clarified that all the records were maintained by him in connivance with Sh. J.K. Bansal, who made complaint to DGCEI with the ulterior matter of sharing the Reward Money. The Adjudicating Authority did not examine Sh. Suresh Upreti, after his deposition in the cross-examination and no questions were put to him. As such the result of cross-examination of Sh. Upreti became final, having not been controverted by any other evidence on record and could not have been ignored by the Adjudicating Authority. The Adjudicating Authority has chosen to ignore the result of cross-examination for the reason best known to him and has given no findings, much less any adverse findings on the same. It was therefore, pleaded that the cross-examination result of Sh. Upreti clearly reveals the fabricated and forged nature of the documents recovered from ....
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....ing regard to the facts and circumstances of the case, we do not find it to be a fit case for exercise of our jurisdiction under Article 136 of the Constitution of India. 6.4 Tribunal in case of CCE, Surat-I Vs. Umiya Chem Industries, reported in 2005(185) ELT-410 (Trib.) held that in view of the provisions of Section 36A, when incriminating documents were found in the presence of the Assessee, the truth of such documents can be presumed unless contrary is proved by the Assessee and this judgment of the Tribunal has been affirmed by Hon'ble Gujarat High Court vide judgment reported in 2009(239) ELT-429(Guj.). 6.5 Since in this case, the documents A-1 to A-41 have been recovered from the Accounts branch of the Appellant Company and have, admittedly, been prepared by Sh. Upreti, the then Dy. Manager(Accounts), in view of the Provisions of Section 36A and the judgments of Hon'ble Allahabad High Court and Hon'ble Gujarat High Court mentioned above, the contents of these documents would have to be presumed to be true and the burden of proving that contents of these documents are not true and the same do not represent actual transactions would be on the Appellant Company. In this r....
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....t higher price as such higher prices in some isolated transactions, do not represent the 'normal price'. Therefore, it is pleaded that even if the contents of the documents A-1 to A-41 are treated as true, the duty demand for period from 01.10.96 to 30.06.2000 based on the allegation of under valuation which, in turn, is based on the entries in their documents indicating collection of amounts in cash over and above the invoice price, is not sustainable. In respect of allegation of clandestine removal without payment of duty and without invoice based on entries on the documents A-1, A-4, A-5, A-10 and A-40, it is pleaded that these entries by themselves do not establish clandestine removals as the same are not corroborated by the unaccounted purchase of raw-material - H.R. Coils and Zinc, evidence in form of statements of the customers confirming the receipt of the goods or of the transporters confirming transportation and delivery of the goods to the customers, while entries in the above mentioned documents not only mention the customer's names but also the Truck Nos. in which the goods were transported. The Appellant Company in this regard have produced affidavits from a number of....
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....o prove the allegation of undervaluation and clandestine clearances without payment of duty; of the same need some independent, positive and tangible evidence. 7. Duty demand based on the allegation of Clandestine Removal 7.1 The appellant have challenged the confirmation of demand of Rs. 7,83,39,361/- on the allegations and findings of clandestine removal of the goods during the period 01.10.96 to 30.09.2000. It is based on the documents A-1, A-4, A-5, A-6 A-10 & A-40 recovered from Account Section. Duty Demand of Rs. 2,37,92,847/- is based on 'W' entries in documents A-1, A-4, A-5, A-6 read with documents G-6, G-7 and F-4 recovered from despatch section and security department. Duty Demand of Rs. 3,84,58,859/- is based on documents A-10 and duty demand of Rs. 1,60,87,655/- is based on document A-40. It is submitted before us that the appellant is a leading manufacturer of cold rolled coils/sheets galvanized plates falling under chapter 72 of the Central Excise Tariff Act, 1985 which are being cleared by them from factory gate as also through their depots located at various place like Chennai, Mumbai, Chandigarh, Jaipur, Kanpur & Ludhiana. They are procuring their raw-materi....
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....s. No cash recovery has been made by Revenue. Though the Revenue has, during the investigation, recorded the statement of various persons, they have chosen not to rely upon the statements which were in favour of the assessee and against the Revenue. Our attention has been drawn to the said statements procured subsequently by the appellant, under RTI Act. They further contended that out of 182 buyers, Revenue neither made investigation from 174 buyers nor from transporters or truck owners. On the contrary the appellant had filed affidavit of the buyers as also of the transporters. As such it stands contended that there is virtually no corroboration to the charges of clandestine removal. 7.2 After carefully appreciating the facts, we find that entire case of the Revenue is based upon the entries made in the recovered records and the assumed interpretation of the same. As rightly contested by the appellant, the allegation of clandestine removal are required to be arrived at on the basis of positive and tangible evidences including the evidences relating to procurement of raw-materials, conversion of the same to final products, clearances of the same and identification of the buyers....
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....annot be confirmed on the basis of assumptions and presumptions. 7.3.1 In the case of Radha Madhav Corporation Ltd., Dham Vs. CCE reported in 2012 (284) ELT-369 (Tri. Ahmd.) by majority decision, held that the charges of clandestine removal and under-valuation are to be established on the basis of evidences and the same cannot be merely upheld on the basis of presumptions and assumptions. Suspicions, however, grave cannot replace the proof and the link between documents, recovered in search and alleged activities of the appellant in their factory is required to be proved. 7.3.2 In the case of Shree Nath Ji Industries Vs. CCE, Surat reported in 2011(267) ELT-241 (Ahmd.), it was held that in the absence of any evidence to show:- (i) movement of raw-material to or final product from the assessees factorys (ii) use of more electricity, water, labor and (iii) flow back of money to suppliers of un-accounted raw-material, and in the absence of in-culpatory statement regarding huge un-accounted manufacture of the final product, findings of clandestine removal cannot be upheld. Similarly in the case of Plama Board Pvt. Ltd. Vs. CCE reported in 2010(262) ELT-1058 wh....
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.... cannot be used to prove clandestine removal even if there were statements of the Directors and Authorised Signatory regarding receipt of raw-material for manufacture and removal of finished goods there from in as much as the same cannot be held to be a conclusive evidence in the absence of any other material/tangible evidences. 7.3.6 In the case of Ghodavat Pan Masala Product Pvt. Ltd. Vs. CCE, Pune reported in 2004(175) ELT-182 (Tri. Mumbai) it was observed that conclusion based on consumption of some minor inputs without tangible, strict, positive, direct and corroborative evidence to show that goods produced in excess were removed or transported and in the absence of confirmation from buyers and receipt of un-accounted cash, clandestine removal cannot be proved. 7.3.7 In the case of Jayajothi & Company Pvt. Ltd. Vs. CCE reported in 2002 (141) ELT-676 (Tri. Chennai) observed that private register by itself is not sufficient to corroborate the charge of clandestine removal unless there are evidence of clearance of the goods in the form of seizer etc. To the same effect is the Tribunal's decision in the case of Shree Chemicals Vs. CCE Kolkata reported in 2001 (130) ELT-271 (....
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....e peculiar facts of case, there is sufficient, cogent, relevant and credible material evidence so as to establish the case against the assessee applying the preponderance of probability test. Although we agree with the learned counsel appearing for the Revenue that every link of the clandestine process is not required to be prove beyond doubt but the Revenue also cannot be relieved all together from the burden of producing credible evidence in a particular case. 7.5.1 With the above criteria we proceed to decide the various issues in succeeding paragraph as under:- 7.6 The Duty demand of Rs. 2,37,92,847/- in the Show Cause Notice dt.02.11.01 based on the allegation of clandestine removal, is in turn, based on 'W-entries' in the documents A-1, A-4, A-5 and A-6 out of which the Commissioner has confirmed the duty demand of Rs. 2,05,11,074/- after giving cum duty benefit. These 'W-entries' are supported by loading slips prepared by despatch section and entries in the gate register maintained by security personnel at the factory gate. As per the appellant these consignments had not left the factory and the loading slips had been returned to despatch section with R sign. For the....
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....so procured, Cenvat Credit of central excise duty/Additional custom duty is taken. The Appellants Companys plea is that the clearances of the high grade zinc, in question, had been made to their sister companies under job-work challans for alloying the same with Aluminium and return and hence there is no question of demand of duty in respect of the same. We agree with the appellant that in as much as Zinc is not being manufactured by the appellant, the duty in respect of the same on the findings of clandestine removal cannot be upheld, as there is no allegation that any quantity of zinc sent out for alloying under on job-work challans was not returned back. Therefore duty demand of Rs. 32,90,482/- in respect of zinc is not sustainable. As such the total duty in respect of which the matter is being remanded would be Rs. 1,72,20,592/- (Rs. 2,05,11,074 Rs.32,70,482). 7.9 Duty demand of Rs. 3,46,02,198/- confirmed after giving cum duty benefit out of gross duty demand of Rs. 3,84,58,858/- is based on contents of the document A-10 recovered from the accounts section. The calculation of this demand is explained in detail in chart III (A) of the Show Cause Notice. The record A-1....
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...., A-5 & A-6 is Rs. 1,28,90,130/- out of which duty demand of Rs. 1,11,12,181/- has been confirming after giving cum duty benefit and duty demand of Rs. 1,81,19,498/- is based on 'R Collector Report' from Calcutta, Guwahati, Chandigarh & Ludhiana depots out of which demand of Rs. 1,56,20,257/- has been confirmed after giving cum duty benefit. Duty demand of Rs. 2,03,03,089/- is based on document A-40 out of which the demand of Rs. 1,75,02,662/- has been confirmed after giving cum duty benefit. Duty demand of Rs. 43,00,068/- is based on documents A-39 & A-41 out of which demand of Rs. 37,34,061/- has been confirmed after giving cum duty benefit. The basis of these duty demands totalling Rs. 5,56,12,785/- is that during the period from Oct.'96 to Sept.'2000, the Appellant Company in respect of sales of trimming/arising zinc ash/dross and also their main final products galvanized Sheet, G.C. Sheets etc. were under declaring the value in the invoices and were recovering the balance amount over and above the invoice price in cash. The duty demand has been made on the amount over and above invoice price which the Appellant Company is alleged to have recovered from their customers in cash ....
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....uantum of sales to independent buyers without any consideration other than the price have takes place and the same was deemed to the assessable value. However, the situation changed w.e.f. 01.07.2000 and the basis of assessment became the 'transaction value' which was the price actually paid or payable and this transaction value was to be determined for each transaction and as such could vary from transaction to transaction. 8.3 In the present case the duty has been demanded in respect of the period from 01.10.96 to Sept.'2000 as if during the entire period of the dispute the transaction price could be adopted as assessable value, which is not the case, as the transaction value could be adopted only in respect of period w.e.f. 01.07.2000. Therefore in respect of period w.e.f. 01.07.2000 if, for example, it was found that while the duty on the goods cleared was paid at transaction value of say Rs. 6000 per MT, and later on the assessee had charged an extra amount of Rs. 3500 per MT in cash over and above the invoice price, the correct transaction value would be Rs. 9500 per MT, not Rs. 6000 per MT, as it is Rs. 9500 per MT which is the price actually paid or payable by the buyer ....
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....tion report' in respect of Calcutta, Guwahati, Chandigarh and Ludhiana depots for the period from 01.04.2000 to 31.08.2000 in documents A-30 seized from the Accounts Section. This 'R' collection is alleged to be in respect of sale of GP/GC/CR sheets from the depots and is alleged to be amount collected in cash over and above the invoice price. Since this duty demand is in respect of depot sale of finished goods from certain depots, and the basis of the demand is that amounts over and above the invoices price were collected in cash and since the duty demand of Rs. 15,34,52,203/- is also on the basis of allegation that in respect of the finished goods stock ;transferred to depots during Oct.'96 to Dec.'2000, the actual sale price based on private price lists were higher than the price at which the duty was paid, the duty demand of Rs. 1,81,19,478/- in Chart 1(D) of the Show Cause Notice and out of which the duty demand of Rs. 1,56,20,257/- has been confirmed by the Commissioner, appears to be duplication. This aspect has to be checked and if the duty demand of Rs. 1,81,19,478/- in Chart 1(D) of Show Cause Notice is included in the duty demand of Rs. 15,34,52,203/- the same cannot be ....
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....' Account as on 01.04.2000 as pertaining to clandestine removals without invoice. In view of this, the duty demand of Rs. 77,73,470/- based on Chart 1(E) is not sustainable. CENVAT CREDIT DEMAND 10. Coming to the allegation of wrong availment of Cenvat Credit of Rs. 6,47,926/- this allegation is based on the certain credit notes recovered from the factory which had been issued by the raw materials suppliers to the Appellant Company against the appellant's complaints of short receipt of raw materials based on weighment of the material received by the Appellant Company and on this shortage being pointed out by the Appellant Company to the suppliers, they had issued credit notes. But still the appellant have availed the Cenvat Credit on full quantity including the quantity as per their weighment was short received and according to Department they would not be entitled to Cenvat Credit in respect of this quantity. The appellant's plea is that this shortage is not real shortage, as the same may be on account of difference in weighment on different machines and in this regard, they rely upon the judgment of the Larger Bench of the Tribunal in the case of CCE, Chennai Vs. Bhuwalka S....
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....e finished goods circulated by Appellant Company from time to time. In respect of this allegation, in the appeal filed by the Revenue and on the submissions made by Shri A.K. Raha, ld. Sr. Special Counsel for the Department, the following points have been raised:- (i) The adjudicating authority has failed to discuss the private records of the BSSL i.e. A-9 and A-37 which contained area wise/ depot wise price lists of the finished goods sold through various depots in different areas and in course of inquiry, it had been found that the price mentioned in these private list was fixed by Shri B.K. Gupta, General Manager and Shri Neeraj Singhal, Managing Director in advance. In this case, the contention of the appellant that the prices mentioned in the private price lists found in A-9 and A-37 mentioned only the target price is totally incorrect and misleading. The above evidence show that the prices declared by the Appellant Company in the price declarations filed by them from time to time under Rule 173C were not the actual prices and had been grossly under-declared with intent to evade the duty. The Commissioner has erre....
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....31.12.2000 has given the trade discounts like cash discounts, quantity discounts, etc. to its customers in respect of which the discount policy had been circulated among the depots from time to time and as such, these trade discounts were known prior to clearances of the goods and hence, the deduction of the same from the assessable value has to be allowed. The duty demand involved in respect of these discounts is Rs. 98,33,183/-. (ii) During the period w.e.f. 1.7.2000 to 31.12.2000, the definition of 'place of removal' as given in Section 4(3)(c) of the Central Excise Act, 1944 covered only the factory or any other place or premises of production or manufacture of excisable goods and warehouse or any other place wherein excisable goods can be deposited without payment of duty and as such, the depot was not included in the 'place of removal' and, therefore, the freight expenses from the factory to depot would not be includible in the assessable value. The duty involved on freight from factory to the depots during this period is Rs. 32,38,527/-. ....
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....s calculation which is based on the above mentioned submissions which has been accepted by the Commissioner. 11.3 The Commissioner on the question as to whether the deduction of various trade discounts like quantity discounts, cash discounts, and other discounts, etc. if given by the Appellant Company to their customers in respect of depot sales would be admissible for deduction or not, has held that in view of the judgement of the Apex Court in case of Bombay Tyre International reported in 1983 ELT-1896, deduction of such discounts, if known prior to the clearances, and actually passed on to the buyers, would be admissible. The Commissioner in the impugned order has considered the evidence produced by the appellant in support of their plea that the discount policy had been circulated among depots and was known prior to clearance and that these discounts had actually been passed on, and on this basis has permitted the deduction of the same. According to the department, these deductions are not admissible as the trade discounts as the same had not been mentioned in the marketing pattern declarations and that the appellant had misdeclared their depot price. In our view, just becau....
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....same stood during this period, the assessable value of the goods was - 'transaction value' of the goods sold by the assessee for delivery at the time and place of removal where the assessee and buyers are not related and the price is the sole consideration for sale. The 'transaction value' is defined in Section 4(3)(d). This transaction value is to be determined for each transaction and could be different for different transactions so far as it satisfies the parameters for the same mentioned in clause (a) of Section 4(1) and conforms to its definition as given in Section 4(3)(d). However, during the period prior to 01.07.2000, in terms of Section 4, as it stood during that period, the assessable value of the goods was deemed to be the 'normal price', that is to say, the price at which such goods are ordinarily sold by the assessee to a buyers in course of wholesale trade for delivery at the time at place of removal, when buyer is not a related person and the price is the sole consideration for sale. During the period from Sept.'96 to 30.06.2000, the 'place of removal', besides the factory or bonded ware house, also included a depot, consignment agent's premises or any other place f....
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....1944 and had been accepted by the Department. In respect of this period, the department's allegation is that though the Appellant Company had declared in respect of clearances to depots, the depot wise normal price from time to time and had paid duty on the clearance to depots on that basis, the actual sale prices of the goods from depots were much higher and as per the private lists circulated among the depots from time to time, the copies of which were found in the documents A-9 and A-37, recovered from the Accounts Section and accordingly the department's allegation is that the Appellant Company, with intent to evade the duty, has misdeclared the 'normal price' and that the assessment of duty should be done on the prices at which the goods were actually sold from the Depots. However, the defence of the Appellant Company is that the prices mentioned in the price lists circulated among the depots and which have been found in the files A-9 and A-37 are the target prices of their products and not the prices at which the same had actually been sold. 11.7.1 From the duty calculation chart, it is clear that for the entire period from 01.10.96 to 31.12.2000, the duty has been demande....
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....sp; * By way of illustration, if an assessee transfers a consignment of paper to his depot from Delhi to Agra on 05.07.2000, and that variety and quality of paper is normally being sold at the Agra depot on 05.07.2000 at transaction value of Rs. 15000/- per Ton to unrelated buyers, where price is the sole consideration for sale, the consignment cleared from the factory at Delhi on 05.07.2000 shall be assessed to duty on the basis of Rs. 15000/- per Ton as the assessable value. If assuming that on 05.07.2000 there were no sales of that variety from Agra depot but sales were effected on 01.07.2000, then the normal transaction value on 01.07.2000 from Agra depot to unrelated buyers, where price is the normal consideration shall be the basis of assessment. 11.7.3 After observing so, he observed that as the assessee, at the time of clearance of goods from the factory could not determine the actual prevailing price at a given depot, they have opted for clearance of provisional assessment basis and have subsequently deposited the differential duty of Rs. 1,26,38,234/-. He has also observed that the assessee have once again undertaken the ....
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....enalty under section 11AC shall be determined by the Commissioner after determining the quantum of duty demand. 13. As regards interest, on duty under section 11 AB, as the matter in respect of part demand on clandestine removal as also the entire demand on under valuation is being remanded, the Commissioner would decide the interest issue accordingly based upon the outcome of re-adjudication. 14. As regards penalty under Rule 209A of Central Excise Rules, 1944, the same has been imposed on three categories of persons as mentioned below on:- (i) Managing Director of the Appellant Company (Shri Neeraj Singhal) who was the person overall in charge of running day to day affairs of the company starting from raw-material procurement to production and marketing. (ii) Various employee of the Appellant Company from Vice President to Assistant Manager/Marketing Executives; and (iii) Certain dealers who are alleged to have purchased under valued goods cleared by the Appellant Company without discharge of full duty ....
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....Company who were acting only as per the decisions taken by the Board of Directors and the same has to be set aside. 15. In view of the above discussions, we pass the following order: 15.1 (1) The demand of Rs. 6,47,926/- which was confirmed by denying the Cenvat Credit in respect of their received inputs stands set aside along with setting aside the penalty. (2) The duty demand on the basis of findings of clandestine removal, based on the seized documents A-1, A-4, A-5, A-6 A-10 & A-40 is set aside along with setting aside of penalty except for the part of duty demand of Rs. 1,72,20,592/- based on the documents A-1, A-4, A-5 & A-6, which is remanded for re-adjudication as per our direction in this order. (3) The duty demand relatable to under valuation based on the seized documents A-1, A-4, A-5, A-6, A-14, A-39, A-40 & A-41 is set aside and the matter is remanded for re-adjudication in term of our directions in this order. (4) The duty demand of Rs. 77,73,470/-, based on opening balance of R Accounts in seized documents A-2/A-3 is set aside along with setting aside of penalty on the said account. (5) Revenue's appeal is rejected. 15.2 The issue of imposition....