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TaxTMI 
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2017 (7) TMI 1027
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....ISC/70122/2017 E/70232/2017 E/MISC/70123/2017 E/70233/2017 E/MISC/70124/2017 E/70234/2017 E/MISC/70125/2017 E/70235/2017 E/MISC/70126/2017 E/70236/2017 E/MISC/70127/2017 E/70237/2017 E/MISC/70128/2017 E/70238/2017 E/MISC/70129/2017 E/70239/2017 E/MISC/70130/2017 E/70240/2017 E/MISC/70131/2017 E/70241/2017 E/70127/2017 S G Gupta, New Empire Plastic, A K International, Sgm Paper Product, Kumar Sons Industries, Guideman Tape Industries, Wadhumal & Sons, Eastern Rainwear, Zeeshan Enterprises, Jayanti Cottex, Batra Rexine Co, Siddharth Brothers, J R Bhatia & Co, Mobil India Marketing Co, Modern Enterprises, Ram Bhagat Ashok Kumar, J S Seat Maker, Bajaj Plastic, Mayur Plastic, Rosla Waterproof Works, Popular Stores Mumbai, Brahmputra Enterprises, Techno Trade, Nidhi Elastomer India Pvt Ltd, Agarwal Cloth Stores, Gulshan Agencies, Chowdhary International Limited, Raja Plastic House, Chowdhary Waterproof Works, Mukesh Raj Gobind Lal, P J International, Shakti Enterprises Versus CCE & ST Noida ORDER Per : Anil Choudhary These appeals are arising out of Order-in-Original No. 46-47/COMMSSIONER/NOIDA-II/2016-17 dated 31 December, 2016 passed by the learned Commissi....
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....0 40530 5. NPPX 18900 20000 1100 97075 6. Epoxy 5400 5600 200 18000 7. ADCL 1150 1175 25 5875 Total 139060 4. In the second show cause notice dated 26 April, 2013, it was alleged that on the basis of intelligence that RMG Polyvinyl India Limited (RPIL for short) is engaged in clandestine removal of goods and also undervaluation of the goods the department conducted search on 12/13 April, 2012 at the factory premises located at industrial area Sikandrabad, District Bulandshahar (U.P.). The search was conducted in presence of Shri. S.G. Gupta, Executive Director and Dwarika Dhish Sharma, Store Manager as well as two independent witnesses. The Panchnama was drawn on 13/14 April 2012. As per the Panchnama the search started at 18:00 hours, on 13.04.2012. At the time of search Shri S.G. Gupta who was present in the factory cooperated with the search team. In the process of search, the store in charge Dwarika Dhish Sharma accompanied the search team. It was informed that RPIL have been manufacturing Polyvinyl sheeting of different dimensions and thickness from the PVC Resin, DOP, DBP, Calcite, Dolamite, CPO, Epoxy, rejected PVC Sheets....
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.... handed over to Shri D.D. Sharma for its safe custody under the Supurdnama and instructed him not to disposed off. It is further mentioned in the Panchnama that the statement of Shri D.D. Sharma and Shri S.G. Gupta were recorded before the Superintendent(AE), Central Excise Noida including replies of certain questions/queries put by the officers. The seized goods were released on 20 September, 2012 on furnishing of bond with security. 6. On scrutiny of the seized private ledgers in Sr. No. 90 and 91 to the Panchnama it was noticed that the said ledgers were properly indexed. Accounts were opened in different names. However, the names were written in abbreviated form namely viz. PJ, MR, or Mulak Raj, Bajaj Plastic, Batra, JRB, WM, Mobile India, Dalmia etc. The Ledger at Sr. No. 91 pertains to the year 2010-11 and Ledger at Sr. No. 90 pertains to the year 2011-12. The accounts of particular party run from ledger 91 to ledger 90. The entries mentioned in the said ledgers have only bill numbers but do not have details of quantity, its rates, description of goods and name and place of the consignee. It was noted that large number of cash entries were booked in these ledgers which appea....
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....ifference in value was charged by RPIL from the buyer in cash. These entries indicated that RPIL was under-invoicing their goods. The value of goods shown in statutory invoices was much below the value shown in writing pad. It appeared to Revenue that the entries mentioned in the said records i.e. private ledger 91 and 90 were the transactions related to the clandestine removal of finished goods. RPIL prima facie removed the goods over and above the statutory invoiced quantity and payment of this excess quantity, received in cash and the same was recorded in these resumed private ledgers. It also appeared in some instances that RPIL was clearing their clandestinely manufactured goods on parallel invoices. On the basis of preliminary scrutiny of records resumed, follow up searches were conducted at different places namely:- (a) RPIL- accounts office at Ansal Plaza, Vaishali, Ghaziabad, (b) M/s Premier Polyfilm Limited, Industrial Area Sahibabad, Ghaziabad (Associate Company of RPIL), (c) RPIL office at Kailash Colony, Zamrudpur, New Delhi, (d) M/s Bajaj Plastic Nabi Karim, Delhi, (e) M/s Batra Rexine House, Nabi Karim, Delhi, (f) Residence of Shri S.G. Gupta, Executive Directo....
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....ers were purchasing goods from RPIL. It appeared that RPIL was clearing the goods over and above the quantity mentioned in statutory invoices against cash and the cash so collected was accounted for in the kachcha records/private ledgers. The firms appearing in the said private ledger viz. Bajaj Plastic, Mulak Raj, Batra etc. appear to be their actual buyers/dealers. Though, the invoices show the name of others, which appear to be fictitious/bogus/dummy buyers. It appeared that RPIL was manipulating the statutory invoices to facilitate the actual buyers, namely Bajaj Plastics, Mulak Raj, Batra etc. As the description of goods and quantity was not mentioned in the said private ledgers, the only comparison was possible with value of the goods cleared and the corresponding bill numbers. The date shown in these private ledgers, was the date of its entries. The firms in the private ledgers, according to Revenue, may be categorised in three categories (i) Dealers, (ii) Dealers cum buyers and (iii) Buyers. 9. Under the category of dealers firms like Bajaj Plastic, PJ international, Modern, Rama Handloom, Mulak Raj Govind Lal, Batra etc., are categorised. Most of the dealers shown in priv....
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....s shown in Mobile India Marketing Sheeting account mentioned at page 21-22 of ledger No. 90, were compared with statutory invoices, it was found that the same were issued in different names. However, in both accounts the value of goods shown in statutory invoices was much below the value shown in private ledgers. The next category is that category of buyers in which M/s J.S Seat, Delhi is categorised. The invoice numbers shown in private ledger in the account of M/s J.S Seat were compared with the same number of statutory invoices and it was noticed that the said invoices were issued in their name only but the value shown in the invoices was much below the value shown in the private ledger. For example at page no. 30 of ledger No. 91 in J.S Seats account, on 27.07.2011, a bill No. 1409 for a value of Rs. 1,11,496/- is entered. On comparison with the statutory invoice of even number and date, it was found that the said invoice was issued in the name of M/s J.S. Seat for value of Rs. 34,588/- only. It clearly shows that actual value of the goods cleared by them was Rs. 1,11,496/- which was much higher than the value mentioned in the statutory invoice. The excess amount so received in....
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....invoice No. 2369 is appearing in Bajaj Plastic account at page 59 of private ledger 91 against date, 16 October, 2010 and the same invoice no.2369 also appearing in the account of Mulak Raj and Sons at page 79 in the same private ledger against date 19 October, 2010. Similarly, invoice number 3018 is appearing in Bajaj Plastics account at page 69 of private ledger 91, on 15 December, 2010 and same invoice number appearing in the account of Mulak Raj and Sons at page 87 in the same private ledger, on 14 December, 2010. Examples indicated clandestine removal on the part of RPIL. RPIL also use the number of actual invoices issued in the name of M/s Premier Polyfilm Limited, Sahibabad, Ghaziabad and M/s Indian Oil Corporation Limited, to clear the goods clandestinely. For example invoice no. 2052 is mentioned against date 19 September, 2011 in the account of PJ at page no. 2 of private ledger 90, on scrutiny it was found that invoice no. 2052 dated 07 September, 2011 was issued in the name of M/s Premier Polyfilm Ltd. which is associate company of RPIL. Similarly invoice no. 2232 dated 3 October, 2011 is written at page no. 31 of private ledger 90 in the account of Popular, on in....
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....re not given on the date of search, he stated that due to long working hours, he could not co-ordinate with all the company staff at the relevant time. It appeared to the Revenue that the explanation was not tenable as each and every aspects were considered during the physical stock taking and duly mentioned in the Annexure to the Panchnama dated 13/14 April, 2012. It further appeared to the Revenue that the excess/shortage in stock of finished goods and raw material indicated towards clandestine removal of goods, to evade Central Excise Duty. It was also noticed that in some accounts, some receipts were shown against Cheque/RTGS/DD in the private ledgers. In some entries, cheque numbers were also mentioned. Efforts were made to trace out the cheque numbers/RTGS/DD in the bank statement in January 2010 to April 2012 submitted by RPIL. Only few entries of the cheques/RTGS/DD could be traced out in the bank statement as annexed vide Annexure-A to the SCN and not considered for calculation of Central Excise Duty treating them accounted receipts. However, Cheques/RTGS/DD without number/reference, which could not be traced in the bank statement, have been taken as sale proceeds for calc....
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....alleging collusion in dealing/receiving clandestinely cleared goods from RPIL. 11. The SCN was adjudicated upon and the proposed demand was confirmed by the learned Commissioner vide the impugned order in original. Following are the findings of the learned Commissioner :- 11.1 It is observed that RPIL and all the co-noticees requested for cross examination of Shri S.G. Gupta, Executive Director of the appellant RPIL, which was allowed and cross examination was conducted on 6 September, 2016. The proceedings of cross examination were recorded. Thereafter appellant RPIL submitted an addditional reply on 16 September, 2016. Crux of the cross examination is as follows:- (a) There was no entry in the private ledger Nos. 90, 91, 92 and 93 where goods were cleared without issue of invoices. (b) In his statement dated 12.02.2013, 18.3.2013 and 10.04.2013 he had given reply to the questions in Hindi and officers translated in English and recorded, and there were deficiency in the said translation. (c) Shri S.G. Gupta was an Executive Director and he was never directed by Shri Arvind Goenka Director of RPIL or by any other person to clear the goods without issuing of invoice or without....
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....to the statement of Shri S.G. Gupta dated 12 February, 2013, 18 March, 2013, and reference were also made to the statement of other persons including Shri Arvind Goenka-Director of RPIL who has stated that he is responsible for overall management of the company and heads of the department report to him. On being asked about the cash receipts which were not accounted for in the companys account book, he stated that as per his knowledge Shri S.G. Gupta had already explained it. Learned Commissioner further observed that from the examination of the private ledgers as well as the writing pads, RPIL was adopting a well mannered practice to evade the duty by way of clandestine removal as well as under invoicing. In some cases RPIL was issuing invoices. The buyers as mentioned in the private ledgers and writing pads were placing orders to purchase the goods from RPIL through Shri S.G. Gupta, over and above the quantity and value mentioned in invoices. All the proceedings were collected in cash only and the cash so collected was shown/accounted in the kachcha records/private records. It is further observed that some of the buyers as mentioned in the private record were their actual buyers/....
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....to appropriate the bank guarantee against the redemption fine. It is further observed that the appellant have violated Rule 14 of CCR, 2004, Rule 10 of CER, 2002 and accordingly, duty is recoverable on the finished goods and Cenvatable Raw Material which were found short at the time of inspection. Learned Commissioner has placed reliance on the ruling in the case of CCE, Lucknow v/s Kumar Industries reported at 2010 (261) E.L.T 546 (Tribunal Delhi) and also ruling of Bombay High Court in the case of Kirloskar Brothers v/s Union of India reported at 1988 (34) E.L.T 30 (Bombay), has held that mere non-recording of production in RG-1 Register would attract confiscation and penalty and in this regard mens rea is not required to be proved. In the present case the presence of mens rea to evade duty intentionally, exists and is clearly evidenced. He further observed that the methodology adopted in quantifying the duty in the show cause notice is right and the appellant RPIL is liable to pay the duty of such shortage. It was further observed that RPIL deliberately suppressed their production and was involved in clandestine removal as well as undervaluation of the goods. Further observed th....
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.... as under:- Shri Pradeep Jain and Shri Amit Awasthi advocates appeared on behalf of M/s RMG and the main answers are given by Shri Gupta are as below: - I was working under Shri Arvind Goenka. - Shri Goenka was looking after both the companies as director i.e. M/s RMG and M/s Premier Polyfilm. I was looking after sales on the directions of Shri Goenka for both the companies. - I was not maintaining excise records for any of the firm. - I was keeping records related to sales of both the firms in diaries. - The private records/diaries were recovered by preventive branch on 13/14.04.2012 from my briefcase. - In reply to question whether any other documents were recovered by officers, he replied I dont know. - Some buyers were common for both the firms. I used to keep records party wise and respective invoice wise, for both the firms. - I used to enter the details of both the firms in diaries, as per directions of Shri Goenka. - The details of invoices issued from both the companies, will match the records of both the companies. The details of some buyer and value may differ. - There is no entry in the diary, where the clearance has been affected without invoice. - I rend....
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....tions remained unrecorded from the stage of procurement of raw materials till the realization of sales proceeds of the manufactured products, therefore, it was not possible for any Audit Team to know about the quantum of evasion. It is further observed that RPIL were manufacturing and removing all goods without mentioning in the stock record. The learned Commissioner has further placed reliance on the ruling in the case of D. Bhoormull v/s CC Madras 1983 (13) E.L.T. 1546 wherein it is provided that revenue is not required to prove its case with mathematical precision, but sufficient facts giving to preponderance of probability, in such cases Revenue is exempted from proving its case with mathematical reason as in the facts any person would believe the conclusion as probable. Further observing that the appellant RPIL have themselves accepted the documents marked as R (as submitted by RPIL in Settlement Commission) as documents representing the clandestine removal of goods by them. It was observed that the dominating evidences emerging out of the private records maintained by them gets corroborated beyond doubt by the facts that they had not objected to the accuracy of the stock taki....
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....hi 0.43 Lakhs 40,000/- (Forty Thousand) 11. 14 M/s Eastern Rain Water, Mumbai-28 0.14 Lakhs 10,000/- (Ten Thousand) 12. 15 M/s Empire Plastic, Bombay-3 0.69 Lakhs 50,000/- (Fifty Thousand) 13. 16 M/s SGM Paper Products, Gurgoan (Haryana) 0.56 Lakhs 50,000/- (Fifty Thousand) 14. 17 M/s A K International, Kolkata 0.32 Lakhs 25,000/- (Twenty Five Thousand) 15. 18 M/s Guideman Tape Industries, Delhi 1.74 Lakhs 1,00,000/- (One Lakhs) 16. 19 M/s Rosla Water Works, Kolkata 1.45 Lakhs 1,00,000/- (One Lakh) 17. 20 M/s J.R. Bhatia & Company, Delhi 19.73 Lakhs 4,00,000/- (Four Lakhs) 18. 21 M/s Gulshan Agencies, Delhi 8.44 Lakhs 2,50,000/- (Two Lakhs Fifty Thousand) 19. 22 M/s Kumar sons Industries (Birco), Delhi 0.86 Lakhs 75,000/- (Seventy Five Thousand) 20. 23 M/s Techno Trade, Chennai-79 2.70 Lakhs 1,00,000/- (One Lakh) 21. 24 M/s Mayur Plastic, Kolkata 0.27 Lakhs 25,000/- (Twenty Five Thousand) 22. 25 M/s Wadhumal & Sons, 81/J Lehri House, Mumbai 9.51 Lakhs 2,50,000/- (Two Lakhs Fifty Thousand) 23. 26 M/s Chowdhary Water Proof Works, Kolkata 15.24 Lakhs 4,00,000/- (Four Lakhs) 24. 27 M/s Ram Bhaghat Ashok Kumar, Kolka....
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....r are of other companies/units. Q.21. Name of the said other companies appearing in the said ledgers and writing pads. Ans: The other company whose invoice are entered in the said book, is M/s Premier Polyfil, Sahibabad. Q.22. Why the said entries are figuring in the said books and how the same were communicated and on whose directions it were made? Ans: As I have already replied that these entries are of M/s Premier Polyfil. The details of these entries were communicated to us by the concerned dealer/buyers who are also selling goods of M/s Premier Polyfil. Therefore, as per directions, these entries are also being made in the said books. Referring the statement dated 18 March, 2013 attention is drawn towards- Q.4. Please see the statement dated 28 February, 2013 of Shri Satish Bajaj, partner of M/s Bajaj Plastic, statement dated 7 March, 2013 of Shri Nitin Jain, Authorised Signatory of M/s PJ International, statement dated 11 March, 2013 of Shri Anil Takkar, partner of M/s Mulak Raj Govind Lal and statement dated 12 March, 2013 of Shri Kapil Sharma, proprietor of M/s J.R.D. International, statement dated 15 March, 2013 of Shri Naval Batra, proprietor of M/s Batra Rexi....
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....M/s Dalmia, at page no. 41, in resumed ledger No. 90, there is a cheque No. 618402. Shri Gupta in his statement stated that Dalmia stands for M/s Siddharth Brothers, Hyderabad. The same cheque number is also mentioned in your bank statement on 3 November, 2011 for Rs. 5 lakhs. Please explain. Ans: We are selling goods to M/s Siddharth Brothers, Hyderabad who is also known as Dalmia in trade. The cheque was given by him against our sale made to him. Q.12. Why the cash reflected in said kachcha records do not reflects in your bank statements. Ans: The cash is not being reflected in bank statement, as normally we receive accounted payments through cheque/RTGS/DD. Q.13. Please give specific reason for not taking cash into your account books. Ans: As per my knowledge Shri S.G. Gupta has already explained it. 19. Further referring to the cross examination of Shri S.G. Gupta in the course of adjudication proceeding on 6 September, 2016, the learned counsel points out, that Shri Gupta has stated that there is no entry in the diary/private ledgers where clearances have been affected without any invoice. Further, it has been stated that the statement was made in Hindi and there appeare....
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....here was no clandestine dealing and or receipt of goods clandestinely from the appellant RPIL. Further they have not paid any amount in cash to the appellant RPIL. Some of the customers have denied any transaction with the appellant RPIL during the period in dispute. Further, some of the customers in their reply to notice had categorically stated that they were having dealing with Premier Polyfilm. In fact RPIL had produced detailed evidence at the time of hearing before the lower authority showing detail of invoices in the private records of Shri S.G. Gupta, as found mentioned in records of Shri S.G. Gupta to counter the case of department, that said transactions were of RPIL. Learned counsel have also urged that out of the 32 parties aforementioned, the Department made enquiries only from 4 of such parties. 22. So far the statement of Shri Satish Kumar Bajaj, partner of M/s Bajaj Plastic recorded on 28.02.2013, Shri Nitin Jain the Authorized Signatory of M/s PJ International whose statement were recorded on 7.03.2013, Shri Anil Takkar, partner of M/s Mulak Raj Govind Lal whose statement was recorded on 11.03.2013, and Kapil Sharma the proprietor of M/s JRD International whose st....
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....corded by the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence have been produced before such Central Excise Officer or held or recorded by him in the course of the proceedings before him, on fair reading of Section 32L of the Act, whatever is admitted by the assessee while submitting the application before the Settlement Commission, submitted under Section 32 E(1) of the Act, straightway cannot be said to be admission on behalf of the assessee accepting the liability. Whatever material is produced along with the application and/or any material and/or other information produced by the assessee before the Settlement Commission or the result of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it, can be used by the adjudicating authority as if such material information, inquiry and evidence have been produced before such Central Excise Officer, while adjudicating the show cause notice and the proceedings. If the contention on behalf of the appellant is accepted, in that case, there is no question of further adjudication by the Central Excise Officer with r....
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....nal product and there was not even a single evidence to show contrary. It was emphasized by the Counsel that all inputs of appellant being cenvatable and the value addition at their end being around 10%, there was no incentive to evade duty. Further, there is no case made out by the Revenue that the appellant had acquired raw materials clandestinely or from some other source which was not recorded in the Statutory records. Thus the allegation of clandestine manufacture and removal falls. 26. The learned counsel also referring to the show cause notice points out that the search team had visited the company and resumed records from several departments of company. But, there is no whisper in the show cause notice of any anomalies found in any of such records scrutinized. The Department resumed computer and hard disk from the factory in which also nothing incriminating was found. The learned counsel further points out that under the State Sales Tax Act provision, for transporting any truck load of goods, pre authenticated road permits are required and the appellant manufacturer is required to maintain a proper record of use of such road permits in the prescribed register and account f....
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....atement of the appellant RPIL, the same was considered as receipts on account of clandestine clearance. It is urged that this is wholly erroneous in view of the statement of Shri S.G. Gupta who has categorically stated that said records were in respect of more than one party, which in fact were mainly of Premier Polyfilm Ltd. It was emphasized by the Counsel that in no circumstances any person would make payment by cheque, for purchase of goods, in a clandestine manner. Thus, without any proper investigation into the entries and its bifurcation, the conclusion drawn are erroneous and fit to be set aside. 28. The learned counsel further states that so far the discrepancies in the stock taking noted at the time of search, it is stated that the cogent explanation given by Shri Dwarika Dhish Sharma, in his statement recorded have been discarded, without any contrary findings. Shri Sharma has fully explained that certain finished goods which are not according to the prescribed quality and specification, the same are not entered in the Register (RG-I), and such defective finished goods are either subsequently entered and disposed of as they are again consumed in the process of productio....
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....se during the search, no unaccounted cash was recovered. There is no evidence produced to establish that there has been flow back of any funds to establish under valuation and therefore under valuation is also not established in the present case. Therefore, while setting aside the demand of duty raised on account of clandestine removal or under valuation, we also set aside the impugned order. As regard confiscation, we found that the Panchnama does not refer to any method of verification of stock, which was otherwise not possible in such a short span of time. Further, the show cause notice referred to statements of Shri Dwarika Dhish Sharma and Shri S.G. Gupta on the spot in this regard whereas no such statement was produced or found on record (RUD). The goods were very well in the factory and not even a single roll was found kept outside or in concealed manner or loaded on vehicle for removal without duty. Mere holding of the explanation as afterthought was not sufficient to confiscate the goods. 31. As regard demand of duty on account of shortage during stock verification, we set aside the same also on the basis of observation made above. We also set aside the confiscation and w....