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TaxTMI 
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2018 (5) TMI 820
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....n 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% of 70%) of the inputs used in manufacture of zinc oxide. However, based o....
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....able 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 ash, zinc ingots and zinc alloy are used as raw material for manufacture of zinc oxide which are mostly imported and zinc content of raw material differ to each other: viz zinc content in zi....
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..... 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 on the shortage was reversed vide entry no. 940 to 943 dated 22.03.2007 in RG-23A Part- ll Register on the spot by the assessee. It is therefore clear that there was shortage in the stock which had been cleared by the assessee without issue of invoices and payment of duty and admitting the act the assessee paid the required duty immediately which is clearly liable to be appropriated into Government Account. 20. Now. I take up the main issue of suppression of production of zinc oxide to the tune of 1545.047 MT worked out by the department on the basis of minimum contents of Zinc in the raw material used for the production as admitted....
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....inc 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 in 2006-07. The assessee had however reconded production of zinc oxide 1879.925 MT in 2003-04, 2799.343 MT in 2004-05 and 2586.187 MT in 2006-07. As such total production of 1545.047 MT was suppressed by the assessee during above mentioned three Financial Years. 22. l further observe form the charts showing the pattern of consumption of raw materials produced by the assessee along with their reply to the Show Cause Notice that they had used following raw materials. (i) 2003-04 zinc Dross Scrap, zine Scrap Scribe, zinc Scrap Score. (ii) 2004-05 zinc Dross. Zinc Scrap Scribe. Zinc Dross shelf, score. zinc ingot etc. (iii) 2006-07 Zinc Scr....
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....e 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 committed an error in relying on judgment of Allahabad High Court, in the matter of Continental Cement Company vs. Union of India reported in [2014] 49 taxmann.com 374 (Allahabad) wherein it has been held as under :- "We have heard the learned counsel for the parties and gone through the material available on record, from which it appears that Shri Shubhashis Dev, Government Examiner of questioned documents, Shimla gave his written opinion dated 12.6.1998, wherein he has stated that "the documents of this case have been carefully and thoroughly examined. The enclosed writings and signatures stamped and marked were all written by one and the same persons. From the above, it appears that all the documents were written by one and the same perso....
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....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 Tribunal to reconsider the matter on the question of penalties and duties afresh. 14. The appeal is, accordingly, disposed of. There shall be no order as to costs. (3) In Tulip Lamkraft Pvt. Ltd. vs. Commissioner of Central Excise 2015 (316) E.L.T. 417 (Gujarat) wherein it has been held as under: 3. In our opinion, however, it does not give rise to any substantial question of law. The entire issue is based on appreciation of evidence. The Excise authorities during the raid on the premise of the manufacturing unit of the appellant, as noted earlier, recorded two confessional statements. One was of Shri Maheshbhai Thakkar, an employee of the company who admitted that he was the dispatch supervisor. He would load the manufactured goods for dispatch. As per the kachha note details of which he would note down in his small diary....
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....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 consumption of electricity or source of procurement of raw material would pale into insignificance. The Tribunal's remarks were merely in the nature of passing thoughts. Vulnerability of such observations would not vitiate the order itself. (4) In Subodhchandra and Co. vs. Dy. Commissioner of Income Tax [2017] 80 taxmann.com 70 (Gujarat) wherein it has been held as under: 6. Heard the learned Counsel appearing for respective parties at length. Considering the submissions made by Shri Shah, learned Counsel appearing on behalf of the assessee it appears that the main grievance is that though new evidences were produced for the year under consideration, which were not there in A.Y. 1989- 90, without considering the same and solely relying upon the decision of this Court for A.Y. 1989-90, the learned ITAT has materially erred in dismissing the appe....
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....vision 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 the artisans, as compared to gold actually exported by the assessee to its foreign importers. In the year 1989-90, it was found that the assessee received gold ornaments, according to its records, having purity of 93.37%, however, some ornaments when were exported, the assessee recorded its purity as 91.66% (similar is the case in the years under consideration also). Before the High Court the assessee's explanation that ornaments actually carried purity of 93.37% but were reflected in export documents having purity of 91.66% because the importers had desired such level of purity whereas the assessee to air on safer side used more gold so that stringent international standards were not even unintentionally breached, which would incur liability of rejection of consignment. Such explanation by the assessee was found unacceptable and inadequate and came to be reject....
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.... 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 by the importers. The value of difference of gold was recovered in the form of higher labour charges. 7.3 Referring the first question of law framed, counsel contended that in any case there was no proof that the excess gold was sold in the local market. The same must therefore be considered as the assessee's additional export sale, which as per the tax policies of the Government was in any case exempt from payment of income tax. 7.4 As against that learned counsel Shri M.R. Bhatt for the Department took us through the evidence on record to contend that the revenue authorities and the Tribunal had concurrently come to the conclusion that there was sizeable discrepancy in the consumption of gold reflected by the assessee in its own books of account. The assessee was unable to explain such discrepancies. The assessee's explanation that it exported gold of greater purity and thereby greater quantity than what was reflected in the assessee&#....
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....lue, 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 to charge from its importers had nothing to do with what the assessee may declare in the export documents regarding the purity of gold. As per the by lateral understanding, even if the importers would have paid the assessee for the gold purity at 91.66%, there was no reason why the assessee should shy away from declaring that the correct purity of the gold ornaments is 93.37%, if that was the real case. The CIT[A] also made a significant point in observing that the assessee could import only that much quantity of gold that was exported. By making misdeclaration therefore, the assessee was seriously reducing quantity of gold that would be available for import against the export undertaken by it. The analysis made by the Customs authorities also matched with that of the assessee's own declaration regarding purity of gold. 9. Had the revenue relied solely on the Customs analysis, we would have further examined the assessee's contention that such analysis was based on the touchs....
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....ering 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. We are of the opinion that there is no material change with respect to 1989-90 (which came to be confirmed by the Division Bench of this Court) and the years under consideration, as the new evidences cannot be said to be the evidences to show actual consumption of gold. There are concurrent findings of fact recorded by all the Authorities below, which are on appreciation of evidence on record. (5) In Commissioner of Central Excise vs. Kalvert Foods India Pvt. Ltd. and Ors. 2011 (270) E.L.T. 643 (S.C.) wherein it has been held as under: 18. During the course of arguments learned Counsel appearing for the Respondent submitted before us that although the aforesaid statements of Managing Director of the Company and other persons were recorded during the course of judicial proceedings but the same were retracted statements, and therefore, they cannot be relied upon. However, the statements were recorded by the Central Excise Officers and they were not police officers. Therefore, such statements made by the Managing Di....
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....idered by the Tribunal. 7. We, therefore, set aside the impugned Judgment and remit the matter back to the Tribunal for deciding the same on merits on the basis of above admitted position. The Appeals are allowed accordingly. There will be no order as to costs. (7) In K.I. Pavunny vs. Asstt. Collr. (HQ), C.Ex. Collectorate, Cochin 1997 (90) E.L.T. 241 (S.C.) wherein it has been held as under: 19. Next question for consideration is: whether such statement can form the sole basis for conviction? It is seen that, admittedly, the Appellant made his statement in his own hand- writing giving wealth of details running into five typed pages. Some of the details which found place in the statement were specially within his knowledge, viz., concealment of the 200 biscuits in his earlier rented house till he constructed the present house and shifted his residence and thereafter he brought to his house and concealed the same in his compound; and other details elaboration of which is not material. The question then is: whether it was influenced by threat of implicating his wife in the crime which is the sole basis for the claim that it was obtained by threat by PW-2 and PW-5? In that behalf....
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....ery panchnama and the testimony of PWs 2, 3 and 5. It is true that in a trial and propria vigore in a criminal trial, courts are required to marshal the evidence. It is the duty of the prosecution to prove the case beyond reasonable doubt. The evidence may consist of direct evidence, confession or circumstantial evidence. In a criminal trial punishable under the provisions of the Indian Penal Code it is now well settled legal position that confession can form the sole basis for conviction. If it is retracted, it must first be tested whether confession is voluntary and truthful inculpating the accused in the commission of the crime. Confession is one of the species of admission dealt with under Sections 24 to 30 of the Evidence Act and Section 164 of the Code. It is an admission against the maker of it, unless its admissibility is excluded by some of those provisions. If a confession is proved by unimpeachable evidence and if it is of voluntary nature, it when retracted, is entitled to high degree value as its maker is likely to face the consequences of confession by a statement affecting his life, liberty or property. Burden is on the accused to prove that the statement was obtaine....
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....dence was not sufficient to bring home the guilt of Appellant Kashmira Singh of the charge of murder. The Appellant was acquitted of an offence under Section 302 Indian Penal Code but was convicted for the offence under Section 201 Indian Penal Code for destroying the evidence of murder and sentenced him to seven years rigorous imprisonment. This decision was considered by a four-Judge Bench in Balbir Singh v. State of Punjab [MANU/SC/0101/1956 : AIR 1957 SC 216] wherein it was held that if there is independent evidence, besides the confession, the rule that the confession could be used only to corroborate the other evidences losses its efficacy. Therefore, it was held that if the retracted confession is believed to be voluntary and true, it may form the basis of a conviction but the rule of practice and prudence requires that it should be corroborated by independent evidence. Therein also,, for the charges of capital offence, the trial Court did not accept the confessional statement of co-accused containing inculpatory and self-exculpatory statement. The High Court reversed the acquittal and convicted the accused, accepting that part of the confessional statement of the accused ....
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....ane requires tested. Reasons are the soul of law. Best way to discover truth is through the interplay of view points. Discussion captures the essence of controversy by its appraisal of alternatives, presentation of pros and cons and review on the touchstone of human conduct and all attending relevant circumstances. Truth and falsity are sworn enemies. Man may be prone to speak falsehood but circumstantial evidence will not. Falsity is routed from man's proclivity to faltering but when it is tested on the anvil of circumstantial evidence truth trans. On scanning the evidence and going through the reasoning of the learned Single Judge we find that the learned Judge was right in accepting the confessional statement of the Appellant, Ex. P-4 to be a voluntary one and that it could form the basis for conviction. The Magistrate had dwelt upon the controversy, no doubt on appreciation of the evidence but not in proper or right perspective. Therefore, it is not necessary for the learned Judge of the High Court to wade through every reasoning and give his reasons for his disagreement with the conclusion reached by the Magistrate. On relevant aspects, the learned Judge has dwelt upon i....
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....nce of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects: (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. 14. In the instant case, no investigation was made by the Department, even the consumption of electricity was not ex....
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.... another and even from one heat to another within the same date. Therefore, no universal and uniformly acceptable standard of electricity consumption can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the Revenue with no other supporting record, evidence or document to justify its allegations. The Tribunal has also considered the report of Dr. Batra, which has been relied upon for making the allegations that there was higher electricity consumption. It appears that Dr. Batra in his report has observed that for the production of 1 MT of steel ingots, 1046 units electricity required. 4. So far as the various after allegations relating to the fictitious firms and the income from the share trading, the Tribunal recorded the finding that since the incriminating statements of share brokers etc. have been relied upon in the proceedings, it was incumbent upon the Revenue to produce them as well as the investigating officer for cross- examination by the appellants, as was repeatedly requested by them. In the absence of the same, the statements of the share brokers etc. cannot be relied upon. The Tribunal further observed that ....
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.... decision on such a question of fact must be arrived at without ignoring the material and relevant facts and bearing in mind the correct legal principles. Judged by these yardsticks the finding of the Tribunal in this case is unassailable. We are, however, of the view that if a fact finding authority comes to a conclusion within the above parameters honestly and bona fide, the fact that another authority be it the Supreme Court or the High Court may have a different perspective of that question, in our opinion, is no ground to interfere with that finding in an appeal from such a finding. In the new scheme of things, the Tribunals have been entrusted with the authority and the jurisdiction to decide the questions involving determination of the rate of duty of excise or of the value of goods for purposes of assessment. An appeal has been provided to this Court to over-see that the subordinate Tribunals act within the law. Merely because another view might be possible by a competent Court of law is no ground for interference under Section 130E of the Act though in relation to the rate of duty of customs or to the value of goods for purposes of assessment, the amplitude of appeal is ....
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....ance of other two companies. This was examined keeping in view the evidence and explanation given by assessee in detail. Such finding when impugned would not constitute any substantial question of law within the meaning of Section 35G ibid in an appeal arising out of such order at least so far as this case is concerned. 11. In our opinion, therefore, once the Tribunal upheld the current finding of adjudicating authority and that of CCT (Appeals), then it would not involve any substantial issue of law as such and it would be binding on this Court. In other words, this Court in its appellate jurisdiction under Section 35G ibid, would not again de novo hold yet another factual inquiry with a view to find out as to whether explanation offered by assessee and which did not find acceptance to the Tribunal is good or bad, or whether it was rightly accepted, or not. It is only when the factual finding recorded had been entirely de hors the subject, or that it had been based on no reasoning, or based on absurd reasoning to the extent that no prudent man of average judicial capacity could ever reach to such conclusion, or that it had been found against any provision of law, then a ca....
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....gar content of sugarcane even grown in the same area is ot constant but is variable according to the time of the year. Again it has to be borne in mind that the recovery of sugar must necessarily depend upon the milling performance. It cannot be assumed that even in a ordinarily well run factory the performance would be uniformly good or uniformly the same. 13. Again the value of fibre percentage in cane is very difficult to determine directly and accurately. For calculations, only indirect values are taken which may at the most be only approximate and, therefore, no absolute conclusion should be drawn. They then say: "A formula which does not apply to Indian conditions because of wide diversity in case varieties, milling performance etc. cannot therefore be used to establish under weighment of juice only because our mixed juice % does not correspond to it. Moreover inferential method of calculation merely gives rough idea of the value of data collected by other means and cannot be used to overrule actually found results." Apparently, their contention is that the particular ratio upon which a part of the calculations of the Assistant Chemical Examiner was based is founded o....
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....aintaining the registers properly as required by Rule 83 does not amount to a contravention of that rule; the only reason why we mention this is that in a factory where the turnover of sugar is so considerable and the operations conducted in which the human element lays a significant part it would not be right to base calculations on the surmise that over filling of the tanks was being practised systematically. No doubt, during the test, the tanks were slightly over filled on nine out of ten occasions as pointed out by the Assistant Chemical Examiner. But this could be attributed to a slight failure of the human element resulting from the fact that a special operation was being conducted by the operators in the presence of a Government official. We would, however, make it clear that these observations are just incidental and are not the basis of our decision." 6. Taking into consideration, we are of the opinion that the view taken by the Allahabad High Court is required to be accepted inasmuch as in the statement of Director and laboratory report, there is nothing on record to establish that the manufacturing process has taken place either by way of electricity bills, labour charg....