TaxTMI 
TaxTMI 
2017 (11) TMI 1502
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....t to remand, order in original dated 15 May, 2009, have been passed confirming excise duty amounting to Rs. 29,71,483/- on the finished goods allegedly removed clandestinely, the duty of Rs. 10,210/- have been demanded leviable on 160 numbers of Godrej brand mortise locks allegedly found short at the time of physical verification, the duty of Rs. 2,00,249/- have been confirmed being leviable on 'Secur' brand locks removed clandestinely by the appellant, further Rs. 151/- have been confirmed as duty leviable on two number of locks removed clandestinely. Further, duty of Rs. 4,17,471/- have been confirmed on the goods undervalued and removed during the year 1998 - 99. Further an amount of Rs. 6,19,281/- have been confirmed on secur brand goods cleared at Nil rate of duty under Notification No. 7/97 dated 1st March, 1997 under the erstwhile Rule 57 CC of CER, 1944. Further penalty of Rs. 42,18,845/- have been levied on appellant Secur Industries, under Section 11 AC read with Rules, 9(2), 52A, 53, 173Q of CER, 1944. Further personal penalty of Rs. 30 lakhs is imposed upon Shri Ashutosh Agrawal, Managing Director of Secur Industries Ltd and further proposed penalty under Rule 209A of C....
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.... for short) for manufacturing locks under Godrej brand and for supplying locks to the said company. Some invoices were also recovered, raised in the name of Godrej & Boyce on which it was noticed that duty of Central Excise was not paid. On follow-up action at the premises of Godrej, Mumbai, the invoices issued by the appellant to Godrej were resumed alongwith payment particulars made to appellants, by Godrej for last five years. On scrutiny of records so acquired, it was observed that there were two sets of invoices bearing same serial numbers. It was noticed that the invoices bearing same serial numbers in a particular financial year were having different dates of removal of goods. However, the quantity of goods dispatched and name of the consignees shown on all such invoices were the same but on different dates. It was also noticed that these two sets of invoices were properly pre-authenticated by the appellants. It was further noticed that there were the two invoices bearing same serial No. i.e. 333, one invoice shows date of removal as 07 September, 1996 and another showing date of removal as 20 September, 1996. On both the invoices the name of consignee was shown as Godrej, B....
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.... M.D. of the said unit further accepted that Shri Lal Singh was authorized to authenticate the invoices also. 6. Shri Lal Singh the authorized signatory, in his statement recorded under Section 14 before the Superintendent (Preventive) on 29 December, 1999, inter-alia stated that he had been serving in Secur Industries Ltd since August, 1992. He also informed that he was still authorized signatory, the party had not served any notice for termination of services. Shri Lal Singh also submitted a letter dated 6 September, 1999 endorsing the fact that he was authorized signatory of the appellant at least up to 06 September, 1999. The authenticity of the above letter was got verified from the concerned Deputy Commissioner, Central Excise Division, Ghaziabad. In his previous statement dated 20 December, 1999 Shri Lal Singh had stated that he was entrusted with the work relating to excise and clearance of goods and in this connection, Shri Agrawal M.D. of the company, used to give him verbal directions, which he had to follow. He was reporting to Shri Ashutosh Agrawal. In response to query, Shri Lal Singh accepted that two sets of invoices bearing the same serial number having differen....
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....s as arrived from the bills were Rs. 91.10 lakhs and Rs. 128.95 lakhs (including an amount of Rs. 1.35 lakhs, which was reported by them vide their letter dated 17 May, 2000) respectively. 8. On scrutiny of the file resumed from the factory regarding correspondence with Godrej, it was noticed that a letter dated 6 October, 1998 (Annexure - K to the SCN) was served to Shri H.P. Agrawal of Secur Industries Ltd, by Shri Kartik N. Modi, General Manager purchase of Godrej alleging therein that the appellant had openly started selling cylindrical locks with the packing in the name and style of Godrej in Delhi market. They further implicated them for selling the locks with Godrej brand name in open market in Delhi. Further, the same file at page number 287, minutes of meeting between Shri K.N. Modi, Shri M.R. Shenai and Shri K. Nair all belonging to Godrej and Shri Ashutosh Agrawal M.D. of Secur on 8 October, 1998. It was recorded that Godrej brand of cylindrical and mortise locks were available in the market without AFL logistics marking and their inspector's signature, which was a statutory requirement as per their agreement. It was also recorded that one case of ENT REG BRASS lock w....
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....ecur Industries, Sahibabad, which was not a part of invoices issued by the depot at Loni Road. Through this invoice 400 number of Godrej locks valued at Rs. 1,48,700/- were consigned to M/s Natani Traders, Mumbai and no duty was paid against these goods. But there was another invoice no.35 dated 07 May, 1998 which shows clearance of these GNSSRND ENT locks sets of value 855 to Shri Sushil Kumar on payment of duty. Therefore, it was alleged that the goods dispatched vide invoice no.35 dated 2^nd May, 1998, consigned to Natani Traders was without payment of duty. From this it was also alleged that the appellant was engaged in clandestine removal of Secur brand goods too by issuing parallel set of invoices. It further appeared that so far manufacture of own brand locks namely Secur, since 1997, majority of Secur brand locks were shown transferred to the depot at Ghaziabad. Thereafter, the said goods are cleared to different customers. In some cases, they cleared above goods from the factory directly to customers. In his statement dated 06 July, 1999, Shri Ashutosh Agrawal accepted that they manufactured goods of the own brand after 1998 and transferred the same to the depot at Loni Ro....
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....pertaining to Loni Road, which were required by the Department. Thus, it appeared that the appellant had deliberately not submitted the records required for investigation, lest the actual price charged is known by the Department. For illustration a particular variety of Secur brand locks namely GN brand RND PTC locks is taken. The appellant had cleared 1855 numbers of locks to various customers, out of which 932 locks were supplied to genuine customers on an average price of Rs. 361.55/- per piece, the maximum price charged was Rs. 420.30/- and 923 pieces were supplied in the name of fake customers on an average price of Rs. 164.07/-, which is less than 50% of the depot prices. Thus, it appeared that the appellants had undervalued their goods, in order to evade duty. Further, the appellant, it appeared, started production of Secur brand locks from November 1997 and filed declaration under Rule 173 B of the Rules claiming thereby duty exemption upto the value of clearance of Rs. 30 lakhs under notification no.7/97. As per their records clearance of Secur brand goods during the period 1997-98 was Rs. 22,30,274/- on which they had not paid any duty as per the above notification. Furth....
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.... further urged that these allegations are based solely on the statement of Shri Lal Singh ex-employee of the appellant company, a letter dated 06 October, 1998, which was served upon the appellant by officers of Godrej, namely, Shri K.N. Modi, General Manager purchase, alleging that appellant had openly started selling cylindrical luggage locks with the packaging in the name and style of Godrej in Delhi market. Minutes of meeting held amongst Shri K.N. Modi, Shri M.N Shenai and Shri K Nair (all belong to Godrej) and Shri Ashutosh Agrawal M.D. of the appellant company held on 08 October, 1998, wherein it was recorded that Godrej brand of cylindrical and mortise locks were available in the market without AFL logistics marking and their inspector's signature, which was a contractual requirement as per their agreement and physical existence of 901 Godrej cylindrical locks in excess and shortage of 160 Godrej mortise locks after 31^st October, 1998, when appellant had stopped production for Godrej. The learned counsel further urges that the appellant had requested for cross examination of Shri Lal Singh, Shri K.N. Modi, Shri M.R. Shenai and Shri K Nair. Vide office order dated 10 Novemb....
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.... power to summons persons to give evidence and produce documents in inquiries under the Act and particularly sub Section 3 of Section 14 provides, every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of Section 193 and section 228 of the Indian Penal Code, 1860. Thus, all the powers of a court are vested in the adjudicating authority to enforce appearance of the person and or evidence in any proceedings under the Act. Thus, the learned Commissioner have erred in not exercising the jurisdiction vested in him in ensuring the attendance of the witnesses for their examination and cross-examination as required under Section 9D of the Act. The learned counsel further urges that in absence of any corroborative evidence the allegation of clandestine removal is not established. Relying on the ruling of this Tribunal by Division Bench in Arya Fibres Private Ltd v/s CCE reported at 2014 (311) ELT 529, it is urged that this Tribunal have laid down the fundamental criteria to be established by the Revenue for establishing clandestine removal, wherein this Tribunal have observed - (i) There should be tangible evidence of clandestine manufacture and cl....
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....g the period of dispute. Thus, the allegation of the clandestine removal made by revenue have got no legs to stand and is fit to be set aside. So far the minutes of the meeting held between the personnel of Godrej and the Managing Director, Shri Agrawal of the appellant - it mainly alleges Godrej brand locks were being sold in the open market. That apart, the said minutes of the meeting was not signed by the appellant, who in his letter dated 31^st October, 1998 have clearly denied the allegations. Further, the appellant had much prior thereto, written to Godrej on 11^th May, 1996 expressing concern on the fact that Godrej brand locks were being surreptitiously sold in the open market. The learned Commissioner have erred in ignoring these material facts and as such the impugned order is vitiated as the learned Commissioner have selectively relied on the evidence on record. Accordingly, the learned counsel prays for allowing the appeal with consequential benefits. 15. The learned AR for revenue Shri P.K. Singh Superintendent have urged that the impugned order is just and proper and the appeals are fit to be dismissed. The allegations of clandestine removal inter alia based on doc....
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....f issuing parallel set of invoices. The first one being issued for clearance with fake PLA entry/RG 23(II) entries as payment of duty while actually they did not have any balance in their accounts. Hence, in view of the admission of the illegal activity and admission to have made clearances without payment of duty, they cannot escape the liability by throwing the burden of evasion and illegal activity on the employee and on the plea that they were misguided by misplaced advice of their own authorized representative whose cross-examination have been sought. The learned AR also relies on the ruling of the division bench of this Tribunal in Shalini Steels Private Ltd v/s CCE reported at 2010 (258) ELT 04/05/1945 wherein the allegation of clandestine removal based on contents on paper, written by loading supervisor of the assessee and the same accepted by the Managing Director, it was held that evidentiary value of the document could not be lost for absence of cross-examination of that employee. Also as assessee, is a person, its employee could not be labeled as third-party witness. Documents found to reflect true account of removal of goods and charge of clandestine removal was upheld....
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....actors of production required for the alleged clandestine manufacture and clearance. Further I find no study have been made with respect to the capacity of production whether the appellant had such capacity to produce such alleged clandestine quantities. I further find that as relied upon by the counsel for the appellants on the ruling of Hon'ble Punjab and Haryana High Court in the case of Ambika International and others being judgment dated 17 June, 2016 in CWP No.12615 of 2016. The Hon'ble High Court have laid the following guidelines to be followed by judicial authorities with respect to reliability of statements in evidence: - (i) In the event that the Revenue intendes to rely on any of the statement, recorded under Section 14 of the Act and referred to in the Show Cause Notice issued to Ambika and Jay Ambey, it would be incumbent on the Revenue to apply to Respondent No 2 to summon the makers of the said statements, so that the Revenue would examine them in chief before the adjudicating authority, i.e., before Respondent No.2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the makers of any of the statements on which the Revenue chooses to re....