TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 893
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....ontaining details of payments made to production contractor and maintenance contractor; (iv) One notebook containing details of despatch for the period 01.07.2006 to 11.07.2006; (v) A notebook containing details of cash transaction by the company; (vi) Notepads showing date-wise production in respect of M/s. PRPL and M/s. PAPL and partially used sales invoice without authentication. However, no discrepancy was noticed in the physical stock. Follow up search was conducted at the premises of M/s. Prince TMT Steels Pvt Ltd. (PTSPL) and M/s. Bee Path Castings Pvt Ltd (BPCPL) on 13.07.2006. 4.544 MT of M/s. ingots found to be excess were seized from M/s. PTSPL. Statements of various officers of the companies, contractors and transporters were recorded. On conclusion of the investigation, a SCN was issued seeking the following: (i) Demand of duty of Rs. 57,35,887 on the 2014.15 MT of ingots alleged to have been clandestinely manufactured and cleared by them during the period 16th February, 2006 to 11th July, 2006. (ii) Confiscation of 4.544 MT of M/s. ingots seized from M/s. PTSPL. (iii) Imposition of penalty under Section 11AC of Central Excise Act, 1944 and Rules 25 & 27 o....
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....ver, Department did not rely on these even though their existence was confirmed in Para 101 of the SCN. The Ld. Commissioner confirmed the demand on the basis of notebooks allegedly written by the chemists which were neither authenticated nor were the contents therein proved. Moreover, Sh. Sibi Raj & Sh. Anbu retracted during cross examination on 06.11.2008. Thus, Ld. Commissioner has relied upon uncorroborated statements. Para 12 of the SCN acknowledges that Sh. Abdul Karim, MD, Sh. Ahmed Faizal Sha, Director, Sh. Anub Sha, Director, Sh. Sibi Raj, Chemist, Sh. C.K. Abdurahiman, GM and Sh. Premildeep, GM have moved Civil Petitions before Hon'ble Session Court, Palakkad on 14.07.2006, on various grounds including physical abuse, seeking bail. As observed by Hon'ble Supreme Court in the case of Suresh Synthetics 2016 (332) ELT 385 (SC) charge of clandestine manufacture and removal cannot be established on the uncorroborated statements of persons. They have also relied on the following case laws: * Vinod Solanki Vs UOI, 2008 (233) ELT 157 (SC). * K.J. Pavunnny Vs ACCE, Cochin, 1997 (90) ELT 241 (SC). * Pascoal Dias Vs ACC (P), Goa, 2003 (157) ELT 132. * Hunsur Plywo....
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....ssioner while discussing the above SCN recorded his finding that the SCN did not rely on the statement of Sh. Anoof. A, Sales Manager. This finding is erroneous and perverse as it is clear that in Para 5 of SCN dated 23.05.2007 issued to M/s. BCPL relies on the statement of Sh. Anoof. A, Sales Manager. 2.4 The Ld. Counsel further submitted that it is obvious from the proceedings initiated by the Department against M/s. PTSPL and M/s. BPCL that there is no material evidence to substantiate the allegation of manufacture and clandestine removal of 2014.185 MT of MS ingots by PRPL to Prince TMT Steels and Beeptah Castings. The Department itself is not relying on the evidence contained in SCN dated 05.06.2007 by way of notebooks allegedly written by the Chemist in the present proceedings alleging clandestine removal of 2014.185 MT of MS ingots by PRPL while initiating proceedings subsequently against the buyer units. 2.5 The Ld. Counsel further submitted that the Department relied upon the alleged payments made to the Production Contractor. The Ld. Commissioner recorded that there is reference to entries in the notebooks captioned contractor payment alleged to have been maintained by ....
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.... a finding at Para 143 & 144 that the average power consumption for accounted and un-accounted production was 988.62 units per MT and 697.132 units per MT of MS ingots. However, Ld. Commissioner has selectively shown the power consumption from March 2006 to June 2006 which is differently given at Para no. 58 of the SCN. Commercial Taxes Department has issued a demand notice alleging that 800 units were required for 1 MT of ingot. The Appellate Tribunal of VAT directed the officers to determine power consumption practically. On a direction given by Kerala High Court in Writ Petition C. No. 2371/13(V) concluded on the basis of study got conducted that 1103.64 units were required for 1MT ingot. Accordingly, the adjudicating authority has dropped the proceedings. Therefore, the allegations in the SCN, on the basis of power consumption, are not maintainable. 2.8 The SCN alleges that the appellants have not maintained record of raw material. The appellants submitted that they did not avail any CENVAT Credit on small quantity of scrap procured locally. Therefore, the question of not maintaining proper account does not arise. Therefore, the findings of Ld. Commissioner in Para 126 & 127 w....
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....no finding in the impugned order that the above persons have personally dealt with the excisable goods having reasons to believe that they are liable for confiscation, as per Rule 26 of Central Excise Rules, 2002, penalties cannot be imposed as held by Hon'ble High Court of Karnataka in the case of CCE, Bangalore Vs. Vijaya Steels Pvt Ltd. 2012 (282) ELT 215 (Kar.) 3. The Ld. AR for the Revenue has elaborately taken through the findings of the Ld. Commissioner in the OIO. He further submitted that the details of corroborative evidences relied in the original order that were not countered by the appellant are as follows: (i) Private Production Slip, showing heat-wise production, reflecting actual production, including unaccounted production; Notebook maintained by Cashier on actual production, including unaccounted production; Admission statement of unaccounted production and clearance by Director and General Manager of the Appellant. (ii) Suppression of furnace capacity. (iii) Admission statements of transporting drivers towards unaccounted clearance of MS ingots without proper bills. (iv) Statements of Scrap dealers and scrap weighment slips towards unaccounted purch....
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....ht out in original order. The demand of Sh. Aftab Alam was made on separate ground of non-payment of Service Tax for supply of manpower and the same was made by another investigating officer based on service charges received in his account from the appellant. Therefore, the submissions on non-consideration of the records of impugned case in other proceedings are irrelevant to this appeal. 3.3 Ld. AR has relied upon the following case laws: (i) CCE, Indore vs. Pithampur Alloys Castings Ltd.- 2014 (314) E.L.T. 113 (Tri.-Del.) wherein it was held that it was not necessary for the Revenue to identify each and every buyer of final product and establish case in each and every case. (ii) Gulabchand Silk Mills Pvt Ltd. vs. CE, Hyderabad - 2005 (184) E.L.T. 263 (Tri.-Bang.) wherein it was held that admissions/statements having been supported by the recovery of non-duty paid goods as well as incriminating documents, such admission does not need further corroboration. (iii) Somani Iron and Steels Ltd. vs. CESTAT - 2011 (270) E.LT. 189 (All.-HC) wherein it was held that assessee has the burden to prove the documents were wrong and did not belong to them. (This case was affirmed by Supre....
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..... 4.2 Coming to the note books maintained by the Chemist, it was alleged that they are relate to date-wise production of figures of MS ingots in different heats by M/s. PRPL and M/s. PAPL. It was alleged that Shri C.K. Abdurahiman, General Manager PRPL has accepted the same. On a comparison of the above records with statutory RG-I figures, the officers concluded that there was unaccounted production of 2014.185 MT of ingots. The Commissioner has given a finding that Shri Sibiraj, Chemist and Shri C.K. Abdurahiman, General Manager have accepted the maintenance of records. The Commissioner also found that the above production is corroborated by the note books/pads which evidence payments to production contractor and the fact that the appellants have not accounted for 152.690 MT of MS scrap received (as against 170.150 MT) during 5.7.2006 to 11.07.2006 as per the vehement slips seized from the appellants. The cash book also indicated a payment of Rs. 31,17,504 including that of 95.840 MTs scrap purchased for PAPL also. The learned Commissioner found that Shri Anbu, Cashier in his statement dated 28.03.2006 has stated that the entries made in red ink relate to unaccounted clearance of....
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....43/2007 dated 6.12.2007 issued to M/s. PTSPL alleges that M/s. PRPL have cleared 265.178 MT of MS Ingots to M/s. PTSPL. The confirmation of this show-cause notice has been set aside by Commissioner (Appeals) vide order 52-55/2010 dated 13.07.2010. 4.5 A combined look that all the show-cause notices issued to M/s. PRPL, PTSPL and BPCPL shows that the Department has taken the figures differently for different show-cause notices. While the impugned order alleges that M/s. PRPL have cleared 2014.185 MT of MS Ingots to their sister concerns M/s. PTSPL and M/s. BPCPL, the quantity for which those sister concerns were asked to show-cause, though at a later date, comes to about only 276 MT. It is not understood as to what happened to the balance quantity of 1740 MT. Even if it is felt that most clandestine clearances were to their sister concerns, by no stretch of imagination 276 MT cannot constitute most of 2014.185 MT. It is very pertinent to note that neither the impugned order nor the show-cause notice mentions any other party/person, not even one, to whom the appellants have allegedly cleared MS Ingots clandestinely. The appellants have alleged that the Department is not sure of the ....
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.... statements. In fact issues raised and were not answered or attended. Shri Sibiraj, Chemist claimed that he did not maintain those records but one Armugham may have maintained. No efforts seem to have been made to find out if such Person existed. No findings contradicting the claim were also given in the impugned order on cross examination. We find that Ld. Commissioner has not given any findings on the cross-examination. Appellant's submission with regard to contradiction between the statement of P.K. Moideen Koya and Shri Anoof, Sales manager of M/s BCPL the OIO simply mentions that the statement of sales manager was relied upon. Ld. Commissioner concluded saying that the retraction of statements has no relevance as the statements were corroborated by the documents and records. We do not find any such corroboration. In fact as mentioned above, the records were not relied upon by the department itself in the proceedings against M/s PTSPL, M/s BCPL and Shri Aftab, the production Contractor. Therefore, the corroboration with respect to one of the two facts i.e. production is to be held not corroborated. As stated earlier, clandestine removal is a serious charge and requires to b....
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....voice mentioned the furnace to be 6 MT, it is evidenced by the drawings supplied by M/s. Inductotherm (India) Pvt. Ltd that the furnace was of 8 MT. The appellants submitted that the invoice No. 3618/21.10.2005 issued by Inductotherm (India) Pvt. Ltd was for 6 MT only. The furnace was of 6 MT only but with lining as applicable to 8 MT furnace. Heat registers maintained by them prove that the capacity was 6 MT only. The appellants contended that they were not provided with a copy of this statement of Shri Sriram P. Vaidya, Product Manager of M/s. Inductotherm (India) Pvt Ltd though it was relied upon in the SCN as per Sl. No.42 of the Annexure III to the show-cause notice. We find that the department has not produced any other evidence than the alleged drawings attached to the invoice. It was not confirmed as to whether the payment was made by the appellants for 6 MT furnace or 8MT furnace. No trial run was conducted in the presence of experts to ascertain the actual capacity of the furnace. No report of any action taken by the jurisdictional Central Excise authorities on M/s Inductotherm (India) Pvt Ltd for suppression of capacity and thus understandably the value of the furnace cl....
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....y cannot be made the basis of establishing clandestine manufacture and removal of the fabrics. It has been repeatedly held by the Courts that clandestine manufacture and clearance cannot be readily inferred from few documents and statements unless the allegations are also corroborated and established on evidences, relatable to or linked with actual manufacturing operations. As far as the present demand is concerned, there is no such evidence forthcoming in the records before us to suggest clandestine manufacture and clearance by the appellants. Mere reliance on note books/ diaries or statements cannot be considered as enough evidence for clandestine manufacture and clearances. Accordingly, duty demand Rs. 30,18,378/- is not sustainable against the appellant Mahesh Silk Mills, and the same is set aside. Consequently, neither any penalty is imposable upon Mahesh Silk Mills nor their land, plant nor machinery is liable to confiscation under Rule 173Q of the Central Excise Rules, 1944. Appeals filed by the appellants are allowed by setting aside the Order-in-Original dated 5-3-1999." 4.11 We find that in the instance case, the evidence whatever was heavily loaded towards only one asp....
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....Cashier showing payments to production contractor cannot be relied upon. As a matter of fact, Revenue did not rely on these records while issuing SCNs to their sister concerns i.e. M/s PTSPL and M/s BCPL. Whereas the sister concerns M/s PTSPL and M/s BCPL were alleged to have received about 166 MT and 11 MT of MS ingots from the appellants respectively. Therefore, private records alleged to evidence production were not relied upon by the department themselves. Even these SCNs though confirmed by lower authorities were set aside by Commissioner Appeals. The department is said to have withdrawn the appeals on litigation policy. Therefore, the order passed by Commissioner (A) has attained finality. Similarly, it was alleged that as per records maintained by the cashier, the production contractor Shri Aftab was paid huge money during the impugned period, the SCN issued to him for recovery of service tax mentioned small and altogether different figures. The SCN was also dropped by lower authority. No appeal appears to have been filed on the same. As the department itself did not find these records reliable, the only conclusion that can be drawn is that these records are not reliable. We....