TaxTMI 
TaxTMI 
2017 (4) TMI 426
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....irst Appellant Appellant No.2 Penalty Rs. 1,00,000/- 3. E/450/2006 Shri. R. Palanisamy, 12, NGGO Colony 7^th Street, Erode Yarn Broker and depot in-charge of the first appellants Appellant No.3 Penalty Rs. 50,000/- 4. E/477/2006 Shri. P. Dhandapani, Prop. Of M/s. Sakthi Reeling Unit, no.13, Pasu Pon Nagar, Thadicombu Road, Chennamanaicken patti Post, Dindigul Job Worker (Reeling Unit) for first appellants. Appellant No.4 Penalty Rs. 25,000/- 2. Show Cause Notice reveals the following basis for the purpose for its issue: "Scrutiny of the records sized from the above premises and further investigations conducted with various other job workers / customers of RRM appeared to reveal the following i) M/s. Raja Rajeswari Spinning Mills (RPM) are manufacturers of cotton yarn in various counts (ranging from 10's to 42's count) in cone form as well as in hank form. ii) RRM had 12248 spindles, seven double sided reeling machines a three single sided reeling machines. iii) RRM manufactured cotton yarn in plain reel hanks within the factory as well as through various reeling units viz. Sakthi Reeling, M/s. Arasan Textiles etc. by sending t....
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.... conversion work in their accounts. xiv) Similarly the capacity for reeling available with the job workers viz. M/s. Arasan Textiles and M/s. Sakthi Reeling Unit, Dindigul indicated bogus conversion of cone yarn into hank yarn. xv) The records seized from the residences of Shri. Palanisamy indicated that RRM have cleared cone yarn in the guise of hank yarn to evade payment of duty. xvi) Verification conducted with various customers of RRM indicated unaccounted clearance of cotton yarn in cone form and clearance of cone yarn in the guise of hank yarn through SVA / Shri. Palanisamy. 3. Upon adjudication by original authority following consequence arose: ORDER i) Demand of duty liability of an amount of Rs. 49,24,207/- (BED/CENVAT of Rs. 42,81,920/- & AED(T&TA) of Rs. 642287/-) (Rupees Forty nine lakhs twenty four thousand two hundred and seven only) from M/s. Raja Rajeswari Spinning Mills (P) Ltd., Vedasandur, on the cotton yarn removed illicitly during the period from 5/99 to 9/02, under the proviso to Section 11A(1) to the Central Excise Act, 1944. ii) Penalty of Rs. 49,24,207/- was imposed on M/s. Raja Rajeswari Spinning Mills (P) Ltd. Vedasandur, under Sectio....
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....rchase of cotton was not accounted by RRM in their books of accounts. The unaccounted purchase of cotton and non-accounting of the same in their books of accounts has been admitted by Shri. Subramanian, Accountant of RRM in his statement dated 17.09.2002. b. The Worker-wise production note book, mixing cost details. Yarn Realization Statements (Chit Nos.78, 79 and 156) contained in the made up file recovered from RRM indicates the actual production of cotton yarn at RRM. On comparing the same with their accounted production it appeared, that RRM have suppressed the actual production in their books of accounts, as below: (Qty in kgs) Month Accounted production in RG-1 Actual production As per the production note book As per the Mixing cost details As per the Yarn Realization statement June, 02 5327 13728 10684 ------ June, 02 51966 59689 ---- 79594 c. From a comparison of the cone winding production details files, shift-wise spinning production and production log book recovered from RRM with the RG-1 it appeared that RRM had accounted the cone production as hank production during the period from 2/2002 to a....
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.... Agency (SVA in short) mostly. Shri Palanisamy in turn sold such goods without any bills to his customers. The above mode of clearance is evident from the fact that most of the invoices for hanks were raised in the name of the individuals without indicating full address or Sates Tax RC No. etc. as illustrated below: 'Thangam Textiles, Weaver Colony, Kumarapalayam' This is further proved by the fact that the torn pieces of invoices No.81/15.09.2001 and 82/15.09.2002 issued in the name of M/s. Laxmi Textiles, Bhavani and M/s. Valli Textiles, Edapadi found available at SVA were raised in the name of unidentifiable persons but delivered to Shri Palanisamy, Agent of RRM. Further summons issued to various weavers as also to Thangam Textiles, Kumarapalayam, Lakshmi Textiles, Bhavani, P. Chinnasamy, Pallipalayam, Krishnamoorthy, Pallipalayam, Valli Textiles, Edapadi, Vijay Tex, Erode and M/s. RG Textiles, Erode were returned with postal remarks that no such person available clearly shows that all the above persons were fictitious ones and the invoices were raised on such fictitious names to cover up the actual sales of cone yarn by RRM through Shri Palanisamy. Further though the invo....
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.... As per the dairy of Shri Palanisamy Accounted clearances 1/2001 to 3/2001 3047 bags of cone yarn 50 bales of hank yarn 608 bags of cone yarn 1335 bales of hank yarn 4/2001 to 8/2001 1335 bales of hank yarn 48 bales of hank yarn 1131 bags of cone yarn 2452 bales of hank yarn From the entries found in the diary of Shri Palanisamy it is seen that RRM had sent cone yarn in the guise of hanks. This modus is further corroborated by the sale pattern adopted by SVA for clearance of cone yarn in the guise of hank yarn. In his statement dated 5.10.2002, Shri Palanisamy has admitted that even though they received cotton cone yarn, bills were raised by RRM as hank yarn in the names of various parties. 12. We find that the lower authority has correctly analyzed all such facts in this regard and come to a proper conclusion that RRM had indulged in the clearance of cotton cone yarn in the guise of hank yarn to evade payment of duty. It is pertinent to note that the admissions made by Shri Palanisamy in his statement have not been since retracted by him or denied at any stage, including during adjudication process. From these evidences, the stark picture th....
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.... extra casual laborers. However, no proof of such additional employment has been adduced. We are also not able to understand how additional naan power employed, on the same number of reelers, which have a maximum rated capacity, can in any way increase their production. 15. Appellants have further contended that statements of factory staff/Director are uncorroborated in the absence of any tangible evidence regarding clandestine receipt of raw materials, manufacture of finished goods out of these materials and clandestine removal of the same to the buyers without payment of duty. We do not find merit in this argument, considering that the investigation had yielded a cache of incriminating documents including worker-wise production note book, yarn realization statement, cone winding production detail files, shift-wise spin production file, diary of Sh. M. Mohan Kumar, Factory Manager, records retrieved from M/s. Arasan Textiles, M/s. Shakthi Reeling Unit etc., diary and note books retrieved from Sh. Palanisamy/SVA containing interalia details of receipt of cotton yarn from RRM fictitious invoices raised by RRM, etc. These documents have enabled corroboration of modus operandi and ....
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....roduction of cone yarn as hank yarn in their books of accounts iv) RRM had shown bogus reeling work in their factory well in excess of their production capacity. v) RRM had also used the job workers such as M/s. Arasan Textiles and M/s. Sakthi Reeling Unit as a platform to show fictitious conversion of cotton cone yarn into hank yarn. vi) RRM had cleared cotton yarn without issue of invoices and without payment of duty. Vii) RRM had cleared cotton cone yarn to various parties through their broker Shri. Palanisamy and through SVA, managed by Shri Palanisamy and raised invoices as hank yarn to evade payment of duty since till 29.02.2002, cotton yarn in hank form attracted nil rate of duty. viii) There was a clear nexus between RRM and Sh. Palanisamy/SVA and that invoices as cotton hank yarn was raised in the name of many fictitious persons and in actual cotton cone yarn was cleared by RRM to Sh. Palanisamy/SVA and the same was in turn sold by the latter to various customers. However tine variety of cotton yarn, whether cone or hank, is deliberately not mentioned in the bills raised by SVA. ix) RRM have received the sale proceeds directly from the broker Shri. Palani....
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....onclusion as the most probable position. The above principle has gained legislative recognition in India when Section 114 is incorporated in the Evidence Act. It empowers the court to presume the existence of any fact which it thinks likely to have happened. In that process court shall have regard to the common course of natural events, human conduct etc. in relation to the facts of the case". The Hon'ble High Court of Madras in the case of Alagappa Cement Ltd Vs. CEGAT [2010(260) ELT 511 (Mad)] has categorically laid that plea of absence of positive proof of commitment of offence is not a defence for the author of such plea. It is settled principle of law that law does not insist upon an impossible threshold of proof to establish allegations, but if on probabilities the statutory authorities can establish evasion, the legal standards are adequately met with. 18. Viewed in the totality of the facts and circumstances of the appeals before us, in our considered opinion; the contentions of the appellant manufacturer (RRM) fail on all counts. This being so, the duty liability of Rs. 49,24,207/- evaded through such subterfuge by the appellants and demanded by the original auth....
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....M, during adjudication proceedings. Shri M. Ramamoorthy was not cross examined nor or for that matter none of the other persons who were cross examined have brought out any new facts to support the present contentions of the appellant in this appeal filed by him. In the circumstances, the acts and commissions committed by the appellant Shri M. Ramamoorthy definitely attract the provisions of Rule 26 of the Central Excise Rules, 2002 and in consequence, the penalty imposed of Rs. 1,00,000/- on the said appellant by the original authority and upheld by the Commissioner (Appeals) in the impugned Order, does not merit interference in our view. 20. In Appeal No.E/450/2006, appellant Shri R. Palanisamy has submitted that he was not responsible for the malafide transactions of RRM; that lower authority as well as the Commissioner (Appeals) have imposed/upheld penalty on him which is excessive and unwarranted; that no SCN was issued to M/s. SVA that though he is a person acting as independent cotton yarn procurer as well as depot in charge of RRM, there were no specific charges against him in the capacity of yarn procurer; that in the absence of guilt, personal penalty could not be impo....