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2016 (12) TMI 1266
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....he respondent, M/s S.K Industries has been challenged. 2.2 Revenues seventh appeal No.E/1109/2008 is against the Commissioners Order-in-Appeal dated 9.4.2008, where refund of Rs. 6 lakhs sanctioned to the respondent No.1, M/s S.K. Industries has been challenged. 3. The impugned Order-in-Original No.49/Commr/ CEX/ND/2004 dated 30.6.04 (against which first five apepals No.E/2614 to 2618/2005 have been filed) decided the Show Cause Notice dated 26.02.1998, issued by CCE, Indore-I, where the following five respondents are the noticees:- (i) M/s. S.K. Industries, Gwalior (ii) Shri Sunil Kumar Jain, Partner, M/s. S.K. Industries; (iii) Shri Suresh Kumar Jain, Manager, M/s. S.K. Industries; (iv) Shri Jagdish Singh Rana, Proprietor, M/s. Parasnath Traders, Gwalior; (v) Shri Hari Krishna Agrawal, Manager, M/s. Motor Transport of India P. Ltd., Gwalior. 3.1 Meanwhile, when the demand of Rs. 6,99,31,414/- had been dropped by the impugned adjudication order dated 30.06.2004, the respondent, namely, M/s. S.K. Industries filed the refund claim for Rs. 6 lakhs as the said Rs. 6 lakhs had been paid vide PLA entry No.70/1997, dated 16.09.1997 by....
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....Commissioner sanctioned interest of Rs. 79,989/- in pursuance of the Order-in-Appeal dated 10.01.2007. 3.3 The appellant, namely, CCE, Indore (Revenue) prayed that above appeals filed by them and registered as E/2614 to 2618/2005 and E/881/2007 be tagged together for decision. 3.4 The Revenues appeal No.E/1109/2008 after the hearing held on 22.6.2010 was ordered by the Tribunal to be linked with the main appeal Nos.E/2614 to 2618/2005. Thus it is a third round of litigation before the Tribunal. 4. Briefly the facts are that the main matter, formally started with the issue of the Show Cause Notice (SCN) dated 26.02.1998 to the five noticee respondents after the interception of two mini trucks on 08.07.1997 by the officers of Central Excise, Gwalior Division. The said trucks were carrying gutka/pan masala of Mahak brand. The officers of Central Excise recorded the statements of various persons under Section 14 of the Central Excise Act, 1944 and found that said two mini trucks carried 233 bags of gutka / pan masala valued at Rs. 27,88,200/-, which had been cleared without issue of invoices and without payment of duty. These goods along with the trucks were seized by the Reve....
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....f the high central excise duty rates. Cumulatively, these factors have resulted in a very high degree of evasion in these commodities. (d) While on one hand, evasion is very high, on the other, it is very difficult to establish evasion on the basis of records simply because either no records are maintained or whatever kuccha records kept are destroyed within a short time. (e) The financial transactions are invariably made in cash with no legitimate records whatsoever. Most of the inputs also come from the unorganised sector. (f) The investigations into cases of evasion are, therefore, limited and circumscribed by the extent of recovery of incriminating documents and collation of circumstantial evidence. This background and realities of pan masala/gutka trade have to be borne in mind while collectively appreciating the evidences unearthed and adduced in any investigation into evasion of duty. ii (a) The courts repeatedly have recognised and accepted the difficulty of establishing a case of clandestine clearance with mathematical precision in view of the very surreptitious nature of this activity, with secrecy and stealth being its covering guards ....
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....raders. (h) In the course of search operation conducted at various premises of the transport company, several GR and challans were recovered vide which gutkha had been transported by M/s. Parasnath Traders/Raja Sales Agency from Gwalior to New Delhi consigned to self. In some of these challans the description of goods was given as Mahak brand gutkha and in others as only gutkha (i.e. similar to the description given in documents accompanying the seized consignments. (i) None other than Shri SK Jain, partner of M/s. SK Industries, honoured the search warrant that was issued for the search of premises of M/s. Parasnath Traders. (j) It was categorically admitted by Shri Bhagirath Kushwah, godown in-charge of the transporter in his statement dated 08.0.1997 that the seized document had come from the factory of the respondent, M/s. SK Industries and that the documents or bills of M/s. Parasnath Traders did not accompany the consignment. This was also affirmed by Shri Ravindra Sharma, Branch Manager of Motor Transport Company (MTC) in his statement dated 08.07.1997 wherein he, inter alia, stated that the goods transported under bills of M/s. Parasnath Traders c....
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.... evasion of Rs. 36.57 lakhs), the consignors name was shown as Parasnath Traders (PNT) and description of goods was specifically given as Mahak / Sahara Brand Gutkha (Sahara being another brand being manufactured by the respondent only). Shri SK Jain, in his statement dated 16.09.1997 has admitted that the pan masala / gutkha transported on these 20 challans was cleared from their factory without payment of duty and the party had also deposited Rs. 6 lakhs vide PLA entry No.70 dated 16.09.1997 as part payment for these clearances and he promised to deposit the remaining amount on a later date as there was no balance in their PLA on that date. (ii) On 334 challans (evidencing duty evasion of Rs. 6.26 crores) consignors name was also given as Parasnath Trader / Raja Sales Agency (RSA) and description of goods was given only as gutkha without specific mention of the brand name which was consigned to self at New Delhi. In respect of these challans listed in Annexure B although the description of goods transported was mentioned as gutkha, a very reasonable conclusion had been drawn in the Show Cause Notice (SCN)that it was Mahak brand gutkha that was transported under these cha....
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....branch office of the transporter that correspond to the challans on which the description of goods was given as gutkha. While on the crossing account statements the brand Mahak was mentioned, the money receipt that could be recovered evidenced that the payment of freight for such consignments at destination was being done by the respondent, M/s. SK Industries. (ii-g) The godown in-charge, i.e., Shri Bhagirath Kushwah as well as the manager, Shri Ravinder Sharma of the Gwalior branch of the transporter have categorically stated in their statement recorded on 08.07.1997 that goods were transported on the invoices of M/s. Parasnath Traders was gutkha of brand manufactured by the respondent, M/s. SK Industries and that these goods used to come from the factory of the respondent, M/s. SK Industries directly. The godown incharge Shri Bhagirath Kushwah and Shri Ravinder Sharma, Manager have not been cross-examined by the party and hence the facts stated in these two statements remain undisputed and irrefuted. (ii-h) Shri Ravinder Sharma, Branch Manager of the transporter in his statement dated 08.07.1997 had also stated that although the goods transported by them were gu....
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....s first statement recorded on the date of seizure, i.e., 08.09.1997 had categorically stated that the code CZ denoted gutkha dispatches. This was also affirmed by Shri Hari Krishna Aggarwal, another manager of the transporter in his statement recorded on 30.09.1997. Moreover, M/s. Parasnath Traders were not registered in Sales Tax Department for trade in supari dust and from the registration certificates regarding State and Central Sales Tax, relied upon as Annexure K to the Show Cause Notice, it is clear that M/s. Parasnath Traders were registered only for trade in pan masala chutney and mineral water only. (iii) On 62 challans listed in Annexure-C to Show Cause Notice (evidencing duty evasion of Rs. 36.52 lakhs) consignors name was M/s. Raja Sales Agency and goods were consigned to self at New Delhi and description was given as gutkha, but delivery was taken by the respondent, M/s. SK Industries at New Delhi. (iii-a) Regarding these 62 challans there is clear cut evidence that these were of Mahak Brand as delivery of goods was taken by the respondent , M/s. SK Industries themselves. This fact of delivery being taken by the respondent party is evident not only fr....
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.... finished gutka in pouches. (i) There can be absolutely no reason / motive for clearance and transportation supari dust in the guise of gutka. The converse may be true, clandestinely cleared gutka may be transported by mis-declaring the same as supari dust or anardana etc. with a view to evading duty as supari dust / anardana do not attract any Central Excise duty. 5.3 Ld. Departmental Representative also submits that Revenue has not been arbitrary or unreasonable while computing the value as for three different periods three different values have been taken which range from Rs. 4,500/- per bag to Rs. 9,600/- per bag depending on the average value per bag cleared during that period. 5.4 The ld. A.R. emphasises that clandestine manufacture and removal of goods namely, Mahak brand Pan Masala without payment of duty, has been proved by the facts and circumstantial evidence on record; therefore, the impugned order is to be quashed and the show cause notice has to be sustained. 6. The respondents have been represented by ld. Sr. Advocate, Shri C. Hari Shanker and ld. Advocate Shri Prem Ranjan. They reiterate the findings given in the impugned order and further inter al....
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.... appeal before CESTAT. The CESTAT vide its final Order No.A/1104-8/99-NB(DB) dated 3.12.99 remanded the case for fresh adjudication. 9.2 Commissioner of Central Excise, indore vide Order-in-Original No.52/Commr./CEX/IND/2001 dated 28.9.2001 again confirmed the demand for recovery and imposed penalties on the noicee-respondents No.1 to 5.. The respondents being aggrieved by the said order dated 28.9.2001 preferred appeal before CESTAT. The CESTAT vide its Final Order No.A/1104-08/99-NB(DB) dated 3.12.99 remanded the matter to the adjudicating authority for deciding afresh. The then Commissioner , Central Excise, Indore decided the show cause notice by dropping the demand and not imposing any penalties on any of the noticee-respondents. Revenue is now in appeal before this Tribunal against the said adjudication order dated 30.6.2004. 10. It is to be noted that that the show cause notice was issued on 26.2.98 and the impugned order No.49/COMMR/CEX/IND/2004 dated 30.6.2004 mentions that the said show cause notice dated proposed the following: (i) Recovery of duty of excise amounting to Rs. 6,99,31,440/- from Noticee No.1 and for adjustment of amount already paid vide PLA....
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....made not by Shri Jagdish Singh Rana, who is proprietor of M/s Parasnath Traders, Gwalior through whom suparidust was sent further via Transport company to Delhi. We find that the entries made by the Munshi of Shri Jagdish Singh Rana are correct as per the other evidences available. It is evident that the entries were not made personally by Shri Rana, who is the proprietor of Parasnath Traders but he states that the goods were booked by them for transportation to Delhi and the challans available for said goods with them belonged to Mahak brand gutkha only. 11.3 The respondents M/s S.K. Industries and others also argue that M/s Parasnath Traders were selling supari dust. However it is on record that they did not have any registration with States Department of Sales Tax for sale of supari dust. Other circumstantial evidences do not indicate that under the guise of Mahak brand gutkha, supari dust was being sold by Parasnath Traders or by the respondent M/s S.K. Industries. 11.4. Show cause notice on pages 5 6 mentions that Gautam Singh, booking clerk of Motor Transport of India (P) Ltd. (MTIPL), New Delhi clearly admits in his statement recorded under Section 14 of Central Excise....
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....and clandestine clearance, such activities in factory premises are done with elaborate planning. Whenever during surprise check, they are caught red handed doing unaccounted manufacturing and such activities, it cannot be accepted that said manufacturer is not regularly involved in such illegal activities. Here the Revenue got enough records in the form of challan and documents with the respondent, M/s S.K. Industries, main dealer namely, M/s Parasnath Traders. Therefore, the charge of unaccounted manufacture and clandestine clearance cannot be denied by the respondents. 11.8 The respondents argue that the entire demand was made on the basis of third party documents. They further state that none of the documents have been recovered from their own premises. We have come to the considered view that the respondents M/s S.K. Industries are very clever in the illegal activity of duty evasion. It is their modus operandi to keep the factory premises completely clear and clean of adverse and incriminating documents. Now they have been caught red handed in the form of seizure made on 8.7.1997of unaccounted/clandestinely removed goods during the transit check by the officers of the Centra....
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....s paid initial duty deposit of Rs. 6 lakhs in this regard. 11.9.3 in case of goods at Annexure B to SCN concerning 334 challans (recovered from office of M/s Motor Transport of India P. Ltd. Gwalior) involving duty of Rs. 6.26 crores also there are sufficient evidences to sustain the charge of unaccounted manufacturing and clandestine clearance without payment of duty against the respondent, M/s S.K. Industries and others. These evidences are - i) On the documents again the consignors name is PNT and Raja Sales Agency (RSA), which is the old name of PNT. ii) description of goods given in the documents again is Gutkhaonly. iii) Goods were consigned to self only and the delivery in Delhi was take by the respondent, M/s S.K. Industries only. iv) Description of the goods given in the transport challans was based on the invoices issued by PNT/RSA only. v) Both the godown in-charge, Shri Bhagirath Kushwah, and Manager of Gwalior Branch of Transporter, Shri Ravinder Sharma admitted in their statements dated 8.7.1997 recorded under Section 14 of the C.Ex. Act, 1944 that subject goods, Gutkhawere received from the factory of the respondent, M/....
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....ang.)] wherein it inter alia observes as under : 9. The entire statement of Shri Gopal Gupta is very revealing. On the point of manipulation of invoice, Shri Bhavani Kishore, Accountant of M/s. GSML, has elaborated in great detail, which, in our view could not have been the imagination of the Investigation Officers. Shri Bhavani Kishore has clearly stated that the duty is paid on only 10% of the actual quantity cleared. He has also stated that the practice of putting a decimal and showing lesser duty is as per the directions of the Managing Director Shri Gopal Gupta. Shri Subash Agarwal, Proprietor of M/s. SNT has also stated that they received processed fabrics from M/s. GSML with bills and without bills. In respect of goods purchased without bills the payments are made in cash. 10. Shri Nirmal Kumar Gupta Proprietor of M/s. KT in his statement has stated that they do not receive any delivery challan or invoice along with the processed fabrics received from M/s. GSML. The consignment will be sent on a kutcha bill showing the quantity of processed fabrics and number of packages. Such type of kutcha bills are available from the files recovered from his residence un....
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....hankar Gupta does not vitiate the proceedings. [Emphasis supplied] 11.12 Based on above discussions and observations of the Tribunal quoted above, we are of the considered view that there is no force and justification in dropping the demand of Central Excise duty in case of the goods mentioned in Annexures A, B & C of the SCN by the Commissioner in the impugned order. The submissions and arguments given by the respondents in this regard are more in the nature of an after-thought and do not have sufficient substance for above conclusion in the present proceedings. For above conclusion in the present proceedings, we take further support from Honble Supreme Courts decision in the case of Collector of Customs Madras and others vs. D. Bhoormull 1983 (13) ELT 1546 (SC) and and the Honble High Court of Himachal Pradeshs decison in the case of Commissioner Central Excise Vs. International Cylinders Pvt. Ltd. [2010 (255) E.L.T. 68 (H.P.) al where Honble High Court observes that no law can be interpreted in a manner so as to give premium to illegal and criminal activities; it is a basic common sense that no person will maintain authentic records of the illegal activities or manufacture be....
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....th Edn. Article 320, page 291), the presumption of innocence is, no doubt, presumptio juris : but every days practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property,though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may sight.[Emphasis supplied] In the present proceedings also, the activities and the transactions perpetrated by the respondents are unaccounted manufacture and clandestine clearances to evade payment of Central Excise duty and these are definitely in the nature of white collar crimes like smuggling, evasion of taxes/duties of State etc., and observations of the Honble Supreme Court made in the above decision are aptly applicable to th....
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....at it exists. It is the evaluation of the result drawn by applicability of the rule, which makes the difference. The probative effects of evidence in civil and criminal cases are not however always the same and it has been laid down that a fact may be regarded as proved for purposes of a civil suit, though the evidence may not be considered sufficient for a conviction in a criminal case. BEST says : There is a strong and marked difference as to the effect of evidence in civil and criminal proceedings. In the former a mere preponderance of probability, due regard being had to the burden of proof, is a sufficient basis of decision : but in the latter, especially when the offence charged amounts to treason or felony, a much higher degree of assurance is required. (BEST, S. 95). While civil cases may be proved by a mere preponderance of evidence, in criminal cases the prosecution must prove the charge beyond reasonable doubt.(See Sarkar on Evidence, 15th Edition, pp. 58-59) In the words of Denning LJ (Bater V.B, 1950, 2 All ER 458, 459) It is true that by our law there is a higher standard of proof in criminal cases then in civil cases, but this is subject to the qualification that the....
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.... High Court of H.P..are rightly applicable here. 15. CESTAT, Bangalore in the case of Ramachandra Rexins Pvt. Ltd. Vs. Commissioner of Central Excise, Bangalore-I [2012 (295) E.L.T. 116 (Tri.-Bang.) also holds that only yardstick is preponderance of probabilityand not mathematical precision and on this yardstick departments present case sustains. It follows from the case law cited above that the department need not prove the case with mathematical accuracy. So long as the department has established the case with such a degree of preponderance of the existence of a fact, it is sufficient. 16. It is observed that the case laws and the observations made by the higher judicial fora quoted above provide the basis, support and sustenance for the conclusions drawn here regarding the charges of unaccounted manufacture and clandestine clearances without payment of duty of Central Excise against the respondents. 17. Along with conclusions drawn above, it is to be observed again that the activities like unaccounted production and clandestine removal without payment of due taxes to the National Exchequer gravely hurts the economy of the Nation. In other words, these kinds of activitie....
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....d items/goods, and then there cannot be any question of imposing any redemption fine in this regard. (iv ) Considering the roles played by the concerned noticee-respondent(s) respective penalties are imposed on the on them as under: (a) Sunil Kumar Jain is the partner in the respondent No.1 unit,, M/s S.K. Industries. He has admitted his role in unaccounted manufacture and clandestine removal of the subject goods and owns responsibility for the involvement in the act of evasion of central excise duty of Rs. 6,99,31,440/- by the respondent No.1 M/s S.K. Industries. A penalty of Rs. 5 lakhs (five lakhs) is, therefore, imposed in terms of the SCN on Shri Sunil Kumar Jain, partner of M/s S.K. Industries for his role and involvement in the evasion of central excise duty by the respondent No.1. (b) Shri Suresh Kumar Jain, son of Shri Ghanshyam Das Jain, is the Manager with the respondent No.1, M/s S.K. Industries. He was looking after the entire works of manufacturing of gutkha and pan masala and also the matters relating to labour, sale/marketing of the goods from the factory of the respondent No.1. From the facts, it is clear that he being in-charge of day to....