TaxTMI 
TaxTMI 
2018 (11) TMI 825
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....nt of Rs. 7,21,000/- (Rupees Seven Lakhs Twenty One Thousand Only) paid voluntarily, being deposit towards duty on the goods removed without payment of duty should be appropriated against the duty demanded thereon. ii. I impose a penalty of Rs. 7,21,243/- (Rupees Seven Lakhs Twenty One Thousand Two Hundred Forty Three Only) on M/s Air Carrying Corporation (I) Pvt Ltd. under the provisions of Section 11AC of Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002. iii. Interest at the appropriate rate should is ordered to be recovered from them under the provisions of Section 11AB of Central Excise Act, 1944 read with Rule 8 of Central Excise Rules, 2002. iv. The goods i.e. CTD bars weighing 261.320 MT valued at Rs. 60,10,360/- are held liable for confiscation under the provisions of Rule 25 of Central Excise4 Rules, 2002. However, since the goods are not available, I do not order for confiscation of the same. v. As the goods are held liable for confiscation, hence, I impose a penalty of Rs. 5,00,000/- (Rupees Five Lakhs only) on Shri Manoj Arya, Director M/s Air Carrying Corporation (I) Pvt Ltd under the provisions of Rule 26 of the Central Excise Rules, 20....
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....ome cases he had given the challans but mostly the challan was arranged by the trader. Goods locally were transported by him in trucks arranged by him from Shri Ghanshyam Pandey of M/s Alok Transport. He had brokered such deals without payment of Central Excise for about 1670 MT per month during the period January 2005 to March 2005. 2.4 From the records resumed during the search of the premises of Shri Sanjay Mittal names of certain manufacturer including Air Carrying Corporation Pvt Ltd were revealed. In his statement, Shri Manoj S Arya Director with M/s Air Carrying Corporation (I) Pvt Ltd admitted to have cleared the said goods without payment of Central Excise Duty through the said broker. They also deposited the amount of Rs. 7,27,000/- towards Central Excise Duty vide TR-6 Challan No 06 dated 28.03.2005. 2.5 Statements of some buyers and traders were also recorded, who inter alia admitted that they are mainly supplying material to the builders/ Contractors in construction lines. They also admitted to have purchased the steel bars through the said broker from these units. The admitted to have made payments against the said purchases in cash and also that they did not receiv....
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....rom Jaina in some particular vehicle which I was to meet on the way and transfer the goods from the outstation vehicle coming from Jaina to my vehicles for delivery as per instructions of Shri Sanjay Mittal." 2.8 On the basis of the above investigation a Show Cause Notice dated 31st January 2007 has been issued to the Appellants and also Shri Sanjay Mittal demanding the duty short paid in respect of these goods cleared clandestinely from the unit and for imposition of penalty on all concerned. The said show cause notice has been adjudicated by the Joint Commissioner as per his order dated 31.01.2008 holding as in indicated in para 1 supra. Commissioner (Appeal) has by the impugned order upheld the order of the adjudicating authority. Hence this appeal. 3.0 Appellants have filed these appeals challenging the order of Commissioner (Appeal) stating that- i. Order is based on assumptions and presumptions and hence not sustainable. In support they relied upon the decisions of tribunal in following cases; a. Sharma Chemicals Vs Commissioner of Central Excise Calcutta II [2001 (130) ELT 271 (T)] b. CCE Shillong Vs Shree Narotam Udyog Pvt Ltd [2003 (158) ELT 40 (T)] c. CCE Raipur Vs....
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....noj Arya Director of Appellant Unit also has admitted the fact of making the clandestine clearance and has also voluntarily deposited the duty due against the goods clandestinely cleared. No one has till date ever retracted the statements made. Thus by giving the details of diary entry and the statements of Shri Sanjay Mittal Proprietor M/s Balaji Steels and Shri Manoj Arya Director in the Appellant unit revenue has discharged the burden of evidence to allege clandestine clearance against the appellant unit. In the present case appellants have not been able to put forth anything to rebut the case of department on basis of these evidences. Both Adjudicating Authority and Commissioner (Appeals) have independently examined the fact and evidences in the case and have concluded that the case of clandestine clearance has been well established against the appellants. Accordingly he argued for upholding the order. 5.1 The case of the department is based on the evidences recovered during the search of the premises of M/s Balaji Steels on 24.03.2005. During the course of search certain incriminating documents evidencing the clandestine clearance of the goods by various units were recovered.....
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....sible to prove the payment of loan given. The suit was decreed by the trial Court and the appeal preferred against it was dismissed by the High Court. In setting aside the decree this Court observed that in the face of the positive case made out by Chandradhar that he did not ever borrow any sum from the Bank, the Bank had to prove that fact of such payment and could not rely on mere entries in the books of account even if they were regularily kept in the course of business in view of the clear language of Section 34 of the Act. This Court further observed that where the entries were not admitted it was the duty of the Bank, if it relied on such entries to charge any person with liability, to produce evidence in support of the entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. The same question came up for consideration before different High Court on a number of occasions but to eschew prolixity we would confine our attention to some of the judgments on which Mr. Sibal relied. In Yesuvadiyan Vs. Subba Naicker [A. I. R. 1919 Madras 132] one of the learned judges constituting the Bench had this to s....
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....ch the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts. The evidentiary value of entries relevant under Section 34 was also considered in Hiralal Mahabir Pershad (supra) I.D. Dua,]. (as he then was) speaking for the Court observed that such entries though relevant were only corroborative evidence and it is to be shown further by some independent evidence that the entries represent honest and real transactions and that monies were paid in accordance with those entries. A conspectus of the above decisions makes it evident that even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the other b....
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....ily, a person cannot be made responsible for the acts of other unless they have been instigated by him or done with his knowledge or consent. This section provides an exception to that rule, by laying down that an overt act committed by any one of the conspirators is sufficient, (on the general principles of agency) to make it the act of all. But then, the opening of words of the Section makes in abundantly clear that such concept of agency can be availed of, only after the Court is satisfied that there is reasonable ground to believe that they have conspired to commit an offence or an actionable wrong. In other words, only when such a reasonable ground exists, anything said, done or written by any one of them in reference to their common intention thereafter is relevant against the others, not only for the propose of proving the existence of the conspiracy but also for proving the existence of the conspiracy but also for proving that the other person was a party to it. In Bhagwan Swarup vs. State of Maharashtra [ A. I. R 1965 S. C. 682], this court analysed the section as follows:- "(1) There shall be a prima facie evidence affording a reasonable ground for a Court to believe th....
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....he modus operandi adopted by the party along with the broker to clear the goods clandestinely. 5.4 Further In his statement recorded on 28.03.2005, Shri Manoj S Arya, Director with M/s Air Carrying Corporation (I) Pvt Ltd stated "On being asked I state that all our purchases as well as sales are through Market Brokers & our brokers for purchases are Vijay Jindal. Harsh Gandhi. Similarly our major broker for sale are Sanjay Mittal, Harshad Modi & .... Gandhi. Now being asked by you as to whether any clearances of our CTD bars have been made by us without payment of Central Excise Duty & the details thereof, I state that during the period Jan 05 & March 05, we have cleared our CTD Bars without payment of Central Excise duty in respect of certain transactions due to market pressure. Though I do not remember exact quantum of the same it is around 250 MT. all these transactions were brokered by above mentioned Shri Sanjay Mittal & all these sales were affected to different parties. Our sale pattern is such that the parties are arranged by the broker & as such we do not generally know the parties. On being asked as to how we receive the payment when we do not know the parties. I state ....
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....261320 A-11 5.5 Thus from the above statements it is quite evident that all three Shri Sanjay Mittal, Shri Ghanshyam Pandey and Shri Manoj S Arya were interrelated to each other in conducting their business. In fact Shri Manoj S Arya has admitted to have been conducting his business through Shri Sanjay Mittal. This fact is further substantiated by the fact that the details of those clearances which were made on payment of duty were also found entered in the records of M/s Balaji Steels. The business dependence and relationship between the two is quite evident from the records and also has been admitted by both in their statements. In the case of Jain Hawala Diary, referred above supra, Supreme Court found nothing of that sort as is evident from the para reproduced below, and which is the basic reason for the said decision. "At the outset we may point out that no charge was framed against the Jains from having entered into a criminal conspiracy amongst themselves (even though such was the allegation in the charge sheet). We need not, therefore, consider the materials collected during investigation from that perspective. Indeed, according to the charges of conspiracy all t....
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....articular person, is in that person's handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested; (b) admit the document in evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence." 5.8 The Appellants before us have been confronted with these documents during the course of investigation and have been allowed opportunity to disapprove of the contents of document. In their statement the Appellants have after examining the document have admitted the correctness of entries in the said documents. Hence in view of the said Section 36A read along with the decision of the Apex Court in case of Jain Hawala Diaries supra, we are of the view that department has prima facie discharged the burden of establishing the case of clandestine clearance against the appellants. 5.9 It is also not the case of appellants, that the statements of recorded, were recorded under threat or duress and have been retracted by them immediately on the first available opportunity. In fact the statements made have never been retracted and on the repea....
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.... for the purpose of taking further steps for confiscation of contraband and imposition of penalty. (6) The self-same evidence is admissible in evidence on the complaint laid by the Customs Officer for prosecution under Section 135 or other relevant statutes. 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, the High Court has held that it could not be considered to be induced by threat that his wife will be implicated in the crime and accordin....
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.... Act as he had attempted to export foreign exchange out of India. The statement made by another person inculpating the petitioner therein could be used against him as substantive evidence. Of course, the proceedings therein were for confiscation of the contraband. In Surjeet Singh Chhabra v. Union of India - 1997 (89) E.L.T. 646, decided by a two-Judge Bench to which one of us, K. Ramaswamy, J., was a member the petitioner made a confession under Section 108. The proceedings on the basis thereof were taken for confiscation of the goods. He filed a writ petition to summon the panch (mediator) witnesses for cross-examination contending that reliance on the statements of those witnesses without opportunity to cross-examine them, was violative of the principle of natural justice. The High Court had dismissed the writ petition. In that context, it was held that his retracted confession within six days from the date of the confession was not before a Police Officer. The Custom Officers are not police officers. Therefore, it was held that "the confession, though retracted, is an admission and binds the petitioner. So there is no need to call Panch witnesses for examination and cross-exami....
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....ugh the interplay of viewpoints. 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 in detail and recorded the disagreement with the Magistrate and reached his conclusions. The....
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....f tin containers by the appellant, which did not reflect in the statutory record. The details of production and clearance of tin containers were also shown in the note-book 'Daily production report' separately in respect of the appellant firm which tallied with the figures shown in the 'Daily report tin factory' which contained figures both for the 'new' tin factory as well in the name of the appellant. In this context, it will be noticed that the managing partner Shri Yogesh Garg confirmed in his statement recorded on 29- 9-1998 that the documents recovered under the panchnama on 1-9-1998 were pertaining to production and clearance of tin containers by their factory. He stated that these documents consisted of daily production reports written in note-books, delivery challans, stock record of tins etc. The documents recovered pertained to production and clearance of tin containers. He also stated that amongst other supervisors, even Awadesh Kumar Saxena, Electronics Engineer looked after the production and clearance of the goods of the factory. The authorized signatory of the appellant Girijesh Kumar Rai, confirmed in his statement recorded on 28-9-1998 that the records shown to hi....
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.... supervisors of the appellant, and which is proved to have been maintained in the factory, from the statements of the partner Shri Yogesh Garg, the Electronics Engineer, Shri Awadesh Kumar Saxena who has made several daily reports in the said book, and the authorized signatory, Shri Girijesh Rai in whose presence the note-books were recovered under a panchnama. In answer to question No. 18, Shri Awadesh Kumar Saxena who was shown the Daily production reports, stated in his statement dated 29-9-1998 that all these pertained to the appellants who manufactured the tin containers and that these contained information regarding production and clearance. He also stated in reply to question No. 19 that all challans were prepared by Shri Rajeev Agarwal and others whose signatures he recognized. The authenticity of the recovered documents was admitted by the partner Yogesh Garg [noticee No. (2)] and noticee No. (6) (Girijesh Rai) who also admitted that the record pertained to unaccounted for production and clearance of the tin containers by the appellant. Any subsequent retraction by Shri Awadesh Kumar Saxena has been rightly held to be an afterthought to protect the noticees. This is not a ....
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....n in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on the person concerned : and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in `Law if Evidence' (12th Edn. Article 320, page 291), the "presumption of innocence is, no doubt, presumptiojuris: but every day's practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property," though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in....
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....s innocent and lacked the requisite incriminating knowledge, then it will be for him to explain or establish those facts within his peculiar knowledge, failing which the prosecution will be entitled to take advantage of the presumption of fact arising against him, in discharging its burden of proof. 44. These fundamental principles, shorn of technicalities, as we have discussed earlier, apply only in a broad and pragmatic way to proceedings under Section 167(8) of the Act. The broad effect of the application of the basic principle underlying Section 106 Evidence Act to cases under Section 167(8) of the Act, is that the Department would be deemed to have discharged its burden if it adduces only so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of the facts sought to be proved. Amba Lal's case was a case of no evidence. The oily circumstantial evidence viz., the conduct of Amba Lal in making conflicting statements, could not be taken into account because he was never given, an opportunity to explain the alleged discrepancies. The status of Amba Lal viz. that he was an immigrant from Pakistan and had come t....
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....hat the order passed by the Tribunal does not warrant any interference as purely findings of fact has been arrived at by the Tribunal and there is enough evidence available about manufacture and removal of goods and about clandestine manufacture and removal of Gutkha and the Tribunal has rightly arrived at conclusion based upon the evidence discussed in appeal that goods was cleared without the payment of Excise Duty. 6.4 In case of Lawn Textile Mills Pvt. Ltd., Hon'ble Madras High Court has vide its order dated 4th September 2018 in Civil Miscellaneous Appeal No.1011 of 2017, has in case of clandestine clear, held as follows: "16. We have heard the learned counsels for the parties and carefully perused the materials placed on record. 17. The sum and substance of the argument of the learned counsel for the assessee is that the Department has not proved the allegation of clandestine removal. There has been no investigation into the material aspects, which are required to be proved for establishing an allegation of clandestine removal. Further, it is submitted that a case cannot be drawn against the assessee solely based upon uncorroborated diary notings without any independent ....
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....thout payment of duty. Therefore, the decision in Saakeen Alloys Pvt. Ltd. (supra) is distinguishable on facts. 23. So far as the decision in Continental Cement Company (supra) is concerned, the Court came to the conclusion that there was no clinching evidence of the nature of purchase of raw materials, use of electricity, etc. and came to the factual conclusion that there was no clandestine sale of consumption by two various parties. Thus, to apply the said decision to the assessee's case, necessarily we need to look into the factual position, which weighed in the minds of the Adjudicating Authority to confirm the proposal in the show cause notice, which order was confirmed by the first appellate authority as well as the Tribunal. 24. On a perusal of the Order-in-Original dated 27.09.2002, one can easily come to the conclusion that a thorough inspection has been conducted in the factory premises of the assessee, in the presence of the factory Manager and in the presence of two independent witnesses. Mahazar was drawn and sent by the factory Manager, who also gave a statement under Section 14 of the Act. During the relevant time, the Managing Director was away from India an....
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....ining two sets of invoices; one with pre-printed running serial number and other without any serial number which fact was not denied by the assessee during the personal hearing. 27. The learned Standing Counsel produced a photostat copy of one such invoices which did not contain any serial number, nor details, but contained the seal of the company along with the signature of the Managing Director. Thus, the Adjudicating Authority, on facts, concluded that the assessee failed to account for the goods manufactured as required under the provisions of the Central Excise Laws. The Adjudicating Authority also referred to each of the decisions relied on by the assessee and assigned reasons as to why those decisions will not apply to the facts of the assessee's case. With these findings, the proposal in the show cause notice was confirmed. The Appellate Authority, while considering the grounds raised before him, passed a speaking order by framing a point for consideration viz., whether the assessee had indulged in manufacture of cotton yarn cones without accounting them in the statutory records and clandestinely removed them without payment of duty and without statutory documents dur....