TaxTMI 
TaxTMI 
2018 (5) TMI 820
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....orroborated by the reports of the test samples and in turn setting aside the order of the Adjudicating Authority? In D.B. Central/excise Appeal No. 27/2017 (i) Whether in the facts, circumstances and in law the ld. CESTAT, New Delhi has erred in deleting the penalty levied upon the assessee respondent under Rule 26 of the Central Excise Rules, 2002? " 4. For convenience of the Court, the facts of the case are taken from Appeal No. 26/2017 according to which M/s. Mittal Pigment Pvt. Ltd, Kota (Rajasthan) (hereinafter called as the 'assessee') is inter- alia engaged in the manufacture of zinc oxide. During the course of investigation carried out by the Anti-Evasion team of the Central Excise Commissionerate, Jaipur at the factory premises of the assessee respondent, the Director of the assessee respondent Unit, Shri Ramesh Agarwal stated in his statements that yield of zinc oxide from zinc is @120% and that minimum content of the zinc in various forms imported by them was 70%. As per Test reports of two samples of raw material also, the zinc content was 81.50% and 96.40%. Thus, it was logically inferred that minimum output should have been 84% (i.e. 120% ....
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....posed of Zinc and Iron' Zinc contents 96.4% Iron contents 02.51% Test Memo No. 3 'The sample is in the form of grey coloured friable lump. It is composed of Zinc, oxide of zinc & Aluminium with silicious matters'. Zinc contents 81.51% From the Chemical Examiner's reports given above it is evident that the assessee was using zinc dross of higher purity. 5. That the Director of the unit Shri Ramesh Kumar Agarwal in his statement dated 2.12.2006 tendered under Section 14 of central Excise Act, 1944 stated that the percentage yield of zinc oxide would be 120.6% if the zinc ingots of 99.95% purity is used foi manufacture of zinc oxide as raw material. He stated that they used zinc dross, zinc scrap and zinc ingots as raw material jointly and zinc ingots having 99.95% purity are less used. He further stated in his statement dated 4.6.2007 that they use zinc bearing waste, dross & zinc ingots as raw material for the manufacture of zinc oxide and the raw material used are mostly, imported. It is further clarified that zinc dross, zinc scrap scribe, zinc scrap score, seal, zinc dross scrub, zinc remelted ingots, zinc dross a....
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.... 35177.58 - - - - - 2006-07 40,228.31 33719.78 25861.87 7929.91 12800 10,15,02,848 1,62,40,456 3,24,809 Total 2,26,03,014 4,36,588 TOTAL DUTY:- Rs. 2,30,39,602/- 3.7 He has taken us to the finding of CIT(A) wherein it has been observed as under: "19. I first take up the issue of raw material/finished stock found short during the stock verification of the unit by the visiting Central Excise Officers. From the statement of Shri Ramesh Kumar Agarwal, Director tendered under Section 14 of the Central Excise Act,1944. l observe that he admitted the shortage in raw material/finished stock as pointed out by the Officers and tried to explain the reason of non- making the entries in their record for issue of raw material as well as finished goods due to the facts that he was out of station for last few days and there was shortage of staff due to holidays for Dusherra festival. The duty of Rs. 1,29,311/- and Cess Rs. 2,586/- total Rs. 1,31,897/- involved ....
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....gots, zinc dross ash, zinc ingots and zinc alloy for manufacture of zinc oxide which are mostly imported. He further confirmed that zinc content in zinc scrap scribe, zinc dross shelf, zinc scrap sables, zinc scrap seal and in zinc dross scrap is almost equal and the purchase rates of the same are also almost equal. He further affirmed that the raw materials used by them for manufacture of zinc product, contain at least 70% zinc content. From the above averment of the director of the unit, it is almost clear they had used various types of raw materials which at least contain 70% zinc. The production of zinc oxide is based on the contents of zinc in the raw materials used as the zinc contents only converted into zinc oxide due to oxidation process and the yield come to 120.6% of the zinc contents' As such the production of zinc Oxide would be 120.6% or 120% of 70% i.e. 84% as alleged in the Show cause Notice, I thus observe that the department has correctly worked out the total production of zinc Oxide 1972.906MT the Financial Year 2003- 04, 2799.343 MT in 2004-05 and 3379.178 MT in the Financial Year 2003-04, 3458.418 MT in 2004-05 and 3379.178 MT&nbs....
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....score used normally in the manufacture zinc Oxide. As such the case law cited is of no help to the assessee. 25. This is a case of suppression of production and clandestine removal of goods without payment of duty. In the cases of clandestine removal all that would be sufficient is to establish to such a degree of probability that a prudent man may, on its basis, believe in the existence of the facts in issue. If there is a chain of events which lead to the only irrefutable conclusion that the party was engaged in suppression of production and evasion of duty. The same set of events/evidence may substitute for direct evidence, In the present case the yield of zinc Oxide is based on the contents of zinc in the raw materials used for the manufacture and the 70 percentage of zinc contents taken for calculating the suppressed production is proved from literature of ISRI, statement of the director and the raw material found short at the time of the visit of Central Excise Officers. The Quantity of suppressed production had been cleared clandestinely without payment of duty and without issue of invoices." 5. Counsel for the appellant contended that the tribunal has seriously ....
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.... in Qty. of Sada Pan Masala & Gutkha actually mfd. in the factory & shown in our records but I cannot explain the difference & I have no reply for this shortage. Q.9. Are you excepting that you have suppressed the production of Pan Masala & Gutkha as described in Q. No. 8? A. Yes, there is a suppression but I cannot explain the same. Q.11. Are you prepared to deposit Central Excise duty on the Qty. of Sada Pan Masala & Gutkha not accounted for in your statutory records as discussed above? A. We have already pre-deposited Rs. Twenty five lacs only as Central Excise Duty on the Qty. of Gutkha & Pan masala not entered in our records which is voluntarily." 12. In our view, the Tribunal has erred in ignoring material evidence and has not recorded any finding for setting aside the penalty imposed by the Adjudicating Officer. No reason has been recorded for setting aside the penalties. 13. After careful consideration of the matter, we are of the view that the finding of the Tribunal, setting aside the penalties imposed by the Adjudicating Officer needs to be interfered with. Accordingly, it is set aside. [The matter is remitted to the ....
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....the company who was responsible for the day-to-day functioning of the company had in unequivocal terms admitted the clandestine removal of the goods without payment of Excise Duty. Matching entries were found in their diaries which did not form part of the final records. Raw material was purchased in cash. Clearances were made without raising bills or invoices. Significantly and admittedly these statements were never retracted. The authorities were, therefore, entitled to rely on such statements. When the adjudicating authority and two appellate authorities found that there was enough evidence of clandestine removal of goods, in our opinion, the appeal does not give rise to any question of law. We are prepared to accept the appellant's contention that the question of additional consumption of electricity and procurement of raw material was raised before the lower authorities or that it could have been raised for the first time before the Tribunal. However, such question was not germane at all. When there was overwhelming evidence of unretracted unequivocal confessional statements, mere failure on the part of the Excise authorities to produce additional evidence of extra consump....
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....e to produce the evidence with respect to the actual consumption of gold in final product of ornaments which were exported. However, considering the evidences from the paper book produced, which according to the assessee are new evidences, we are of the opinion that as rightly observed by the learned ITAT none of the evidences can be said to be contemporaneous and/or the evidences to suggest the actual consumption of gold. Most of the evidences and the material produced can be said to be the correspondences and/or general requirement of use of gold. None of the documents/materials show the actual consumption of gold. Under the circumstances, the learned Tribunal has rightly observed and held that the evidences (new evidences) are not contemporaneous and/or the evidences to suggest actual consumption of gold. 6.2 As such the issue has been concluded by the Division Bench of this Court in the case of very assessee but with respect to A.Y. 1989-90 when similar question arose. The additions were made by the Assessing Officer on the basis of the discrepancy in quantity of gold recorded in the Books of Accounts at the time when the ornaments were manufactured and received from t....
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...." 1. 22.3 Carat gold: It shall be of fineness not less than 970. 2. 22 Carat gold: It shall be of fineness not less than 916.6. 3. 21 Carat gold: It shall be of fineness not less than 875. 4. 18 Carat gold: It shall be of fineness not less than 750. 5. 14 Carat gold: It shall be of fineness not less than 583.3. 6. 12 Carat gold: It shall be of fineness not less than 500. 7. 9 Carat gold: It shall be of fineness not less than 375. 7.1 Counsel therefore urged that the gold ornaments manufactured and exported by the assessee retained the same purity of 22 Carat [or other specifications as the case may be] irrespective of whether it had purity standard of 93.37% or 91.66%. 7.2 Counsel contended that as per the importers' requirements, the assessee would export ornaments of 22, 20, 18 or 14 carats and charge the importers according to the agreed percentage of gold for such ornaments. However, in order not to breach the stringent requirement of international standards of purity of gold, the assessee would prepare ornaments with slightly higher purity then what was the minimum standard asked for ....
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....The assessee owed an explanation and had a duty to reconcile this discrepancy. The authorities found that the assessee failed in doing so. This was on the premise that the assessee's explanation was found unacceptable and inadequate. The assessee's only explanation was that the ornaments actually carried purity of 93.37% but were reflected in the export documents having purity of 91.66%. This according to the assessee was done because the importers had desired such level of purity whereas the assessee to err on safer side, used more gold so that the stringent international standards were not even unintentionally breached, which would incur liability of rejection of the consignment. 8.2 Such explanation of the assessee was rejected by the three authorities below. We are also unable to fathum why an exporter would declare lesser purity of gold than what was being actually exported. As rightly observed by the CIT[A], if the gold ornaments were carrying greater purity value, and therefore, greater content of gold, the assessee had no reason to make a misdeclaration. In either case, assessee was meeting with the minimum standard of 22 carat gold. What the assessee had t....
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....t form part of the assessee's exports. The only conclusion, therefore, available to the authorities and therefore rightly reached at was that the gold was subjected to local sale. All in all, the issues considered by the Revenue authorities at a greater length, referring to and analyzing the evidence on record and once which were confirmed by the Tribunal by giving cogent and detailed reasons, in our opinion, do not suffer from any perversity. In the result, the questions are decided in negative - against the assessee. The appeal is, therefore, dismissed." 6.3 Therefore, as such the issue is concluded in the case of very assessee in A.Y. 1989-90. As observed hereinabove, the new evidences which according to the assessee were not there while deciding the assessment for A.Y. 1989-90, as observed hereinabove cannot be said to be contemporaneous and/or the evidences to show the actual consumption of gold. It cannot be said that the learned ITAT has at all not considered the said evidences. After considering the evidences as such there is a finding recorded by the learned ITAT that the evidences are not contemporaneous and/or evidences to suggest actual consumption. ....
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....by the Tribunal by holding that the Department has not proved that these parts were specifically designed for manufacture of Water Chilling Plant in question. The Tribunal has noted the Technical details supplied by the Respondents and the letter of the Respondents dated 30th November, 1993 giving details of how these parts are used in the Chilling Plant. The Tribunal has still strangely held that this by itself is not sufficient to show that they are specifically designed for the purpose of assembling the Chilling Plant. We are unable to understand this reasoning. Once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use there is no need for the Department to prove the same. It is a basic and settled law that what is admitted need not be proved. 6. The Judgment of the Tribunal thus needs to be set aside. It was however urged, on behalf of the Respondents that there are circulars of the Board which should really have been considered by the Tribunal. 7. We, therefore, set aside the impugned Judgment and remit the matter back to the Tribunal for decidi....
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....ontraband was concealed. This fact becomes more relevant when we consider that after concealment of the contraband in the compound one would ensure that others having access to the compound may not indulge in digging and carrying away the same. As soon as the Appellant and/or the members of his family had sight of such visitor or movement by others, they would immediately catch hold of such person or would charge them. Obviously, therefore, it would be the Appellant who had concealed 200 gold biscuits of foreign marking in his compound at a place always visible from his bed room window. Therefore, the High Court was right in its conclusion, though for different reasons, that Ex. PA is a voluntary statement and was not influenced by threat, duress or inducement etc. Therefore, it is a voluntary statement given by the Appellant and is a true one. 20. The question then is: whether the retracted confessional statement requires corroboration from any other independent evidence? It is seen that the evidence in this case consists of the confessional statement, the recovery panchnama and the testimony of PWs 2, 3 and 5. It is true that in a trial and propria vigore in a criminal t....
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....secution case. Each case would, therefore, require to be examined in the light of the facts and circumstances in which the confession came to be made and whether or not it was voluntary and true. These require to be tested in the light of given set of facts. The high degree of proof and probative value is insisted in capital offences. 21. In Kashmira Singh's case the co-accused, Gurcharan Singh made a confession. The question arose whether the confession could be relied upon to prove the prosecution case against the Appellant Kashmira Singh. In that context, Bose, J. speaking for Bench of three Judges laid down the law that the Court requires to marshal the evidence against the accused excluding the confession altogether from consideration. If the evidence de hors the confession proves the guilt of the Appellant, the confession of the co- accused could be used to corroborate the prosecution case to lend assurance to the Court to convict the Appellant. The Court considered the evidence led by the prosecution, de hors the confession of co-accused and held that the evidence was not sufficient to bring home the guilt of Appellant Kashmira Singh of the charge of murder. The....
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....he retracted confession is true, that part of the inculpatory portion could be relied upon to base conviction. However, the prudence and practice require that Court would seek assurance getting corroboration from other evidence adduced by the prosecution. 32. It is true that in criminal law, as also in civil suits, the trial Court and the appellate Court should marshal the facts and reach conclusion, on facts. In a criminal case, the prosecution has to prove the guilt beyond doubt. The concept of benefit of doubt is not a charter for acquittal. Doubt of a doubting Thomas or of a weak mind is not the road to reach the result. If a Judge on objective evaluation of evidence and after applying relevant tests reaches a finding that the prosecution has not proved its case beyond reasonable doubt, then the accused is entitled to the benefit of doubt for acquittal. The question then is: whether the learned Single Judge of the High Court has committed any error of law in reversing the acquittal by the Magistrate. Not every fanciful reason that erupted from flight of imagination but relevant and germane requires tested. Reasons are the soul of law. Best way to discover truth is thro....
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....ported into India, was similar and reasonably pointed towards the conclusion drawn by the Collector. There was no violation of the rules of natural justice. The Collector had given the fullest opportunity to Bhoormull to establish the alleged acquisition of the goods in the normal course of business. In doing so, he was not throwing the burden of proving what the Department had to establish, on Bhoomiull. He was simply giving him a fair opportunity of rebutting the first and the foremost presumption that arose out of the tell tale circumstances in which the goods were found, regarding their being smuggled goods, by disclosing facts within his special, knowledge. 5.2 Counsel for the respondent has tried to raise the preliminary objections regarding limitation and maintainability of theses proceedings. However, in view of the admission of the appeal we refrain ourselves from entering into these questions. 5.3 Counsel for the respondent has relied on the following judgments :- (1) In Continental Cement Company vs. Union of India 2014 (309) ELT 411 wherein it has been held as under: 12. Further, unless there is clinching evidence of the nature of purchase of raw....
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....authority, alongwith the reasons mentioned herein. (2) Commissioner of C. Ex., Meerut-I vs. R.A. Castings Pvt. Ltd. 2011 (269) ELT 337 wherein it has been held as under: 3. Being aggrieved by the impugned orders, the respondents filed appeals before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The Tribunal observed that it is settled principle of law that the electricity consumption can not be the only factor or basis for determining the duty liability, that too on imaginary basis, especially when Rules 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. The Tribunal further observed that no experiment have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing on MT of steel ingots. Tribunal also observed that the electricity consumption vari....
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.... we are of the opinion that the impugned judgment does not suffer from any legal infirmity. (4) Collector of Customs, Bombay vs. Swastic Woollens (P) Ltd. and Ors. 1988 (37) ELT 474 wherein it has been held as under: 9. The expression "wool wastes" is not defined in the relevant Act or in the notification. This expression is not an expression of art It may be understood as in most of financial measures where the expression are not defined not in a technical or any preconceived basis but on the basis of trade understanding of those who deal with these goods as mentioned hereinbefore. The Tribunal proceeded on that basis. The Tribunal has not ignored the Technical Committee's observations. We have noted in brief the Tribunal's handling of that report. The Tribunal has neither ignored the observations of CCCN nor the Board's Tariff Advice. These observations have been examined in the light of the facts and circumstances of the case. One of the basic factual disputes was long length of sliver tops. Having regard to the long length, we find that the Tribunal was not in error. Whether a particular item and the particular goods in this case are....
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.... clearance of the goods mentioned therein. The clearance of the final product is only about percentage of such quantities shown in order Booking Forms which is dependent upon various factors. In the absence of any evidence to support Revenue allegation, I am of the view that the appellant authority has correctly set aside the demand. Accordingly, Revenue appeal is rejected on the above ground also." (6) Hindustan Processors Ltd. vs. Union of India 2014 (300) ELT 23 wherein it has been held as under: 9. In the first place, what is involved in the case is a pure question of fact and not any question of law much less substantial question of law. Secondly, this Court cannot again in this appeal undertake the examination of factual issues nor can draw factual inferences on the basis of explanation offered by assessee. Thirdly, once the explanation is accepted by Tribunal as last court of appeal on facts, then in such event, a finding of fact recorded on such explanations by the appellate court would be binding on the High Court. 10. Perusal of the impugned finding recorded on the issues in question by the Tribunal would go to show that Tribunal did examine the....
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....these calculations certainly involve some assumptions. The first is that the difference of 56 maunds noticed by the Assistant Chemical Examiner during the two and quarter hours test conducted by him on May 7, 1957 was uniform for every 2-1/4 hours working throughout the working hours of the crushing season which began on November 4, 1956 upto May 7, 1957 when the test was conducted. 11. If any one of these assumptions breaks down, then the ultimate conclusion will have to be rejected as incorrect. It has to be borne in mind that human element is involved at certain stages of the operation such as time of commencement of the day's working, the rapidity or slowness in feeding cut sugarcane into the crusher and mills, accurately adding the same quantity of water in the crusher and mills, stopping the inflow of mixed juice into the tanks at a uniformly higher level than that indicated by the mixed mark, allowing a uniform time lag between the emptying of the tanks and starting inflow into them again and so on. It is also unsafe to rely on the average of 10.11% of sugar recovery for the entire period because it involves the assumption that even during the periods when the gross....
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....nted assumptions cannot form legal basis for a finding that more juice than what was recorded in the register has gone into the production of sugar. 15. It was, however, contended on behalf of the respondent that at the personal hearing given by the Central Board of Revenue, Shri C.M. Dalmia, Assistant Secretary of the Appellant and Shri, J.M. Shah, Superintendent Technologist employed by the Appellant had conceded that there had been "some erroneous accounting" on their part in showing the weight of mixed juice on an average of 7.5 tons and that their only plea was that this was not intentional or deliberate nor did it signify any mala fides on their part. No reliance has, however, been placed upon this confession in the Respondent's statement of the case. We may however point out that the gross annual turnover of sugar manufactured in the factory is in the neighbourhood of 12 lakhs of maunds and the amount of excise duty the appellant pays to Government runs into about a crore of rupees per annum. It would therefore be a little far-fetched to infer that what happened at the time of the inspection was something more than an error occasioned perhaps by carelessness nor cou....
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....ellants in this case. 6.2 The department has not gone beyond the approximation and the statement of Shri Agarwal. Any prudent person would not so conclude on extra production by approximation and by a mere statement of the Director of the company. Unless there are further corroborations in the form of documentary evidences, which could be like despatch details for the production, receipt details of the said material, transactions of the sale money, transportation details of such goods, details of additional consumption of electricity for such suppressed production a prudent individual would not agree with the present conclusions of the Revenue. There is nothing on record from the Revenue side to come to a reasonable conclusion to say that there has been preponderance of probability of such suppressed production on the part of the appellant. The evidences in the form of approximation and averaging production as 77.6% and one statement of Shri Agarwal, Director of the appellant company cannot be called a prudent conclusion of the production estimate 6.3 Consequently, we are of the considered view that the department has not discharged its burden of conclusively prov....