AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 369
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..... Shri Mahadev Goel and Shri Lalit Goel are in appeals against imposition of penalties. 4. The brief facts of the case M/s. SSP and M/s.JKP were engaged in the manufacture of plywood, block board, etc. and availing the benefit of SSI exemption Notification No8/03-CE dt.1.3.2003. M/s.SSP was proprietary concern and also engaged in trading of the goods whereas M/s.JKP was owned by Shri Mohan Goel was engaged in trading of the impugned orders. On the basis of intelligence gathered by the DGCEI, it was found that M/s. SSP and M/s.JKP were engaged in the clandestine manufacture and removal of plywood without payment of duty having with intent to evade the duty to remain within exemption limit as provided in the SSI exemption notifications and did not account for their actual production of final products in their records. On the basis the said intelligence, searches were conducted on 9.1.2006 on the following premises:- (i) the factory premises of M/s.SSP at Sampla, Haryana (ii) the factory premises of M/s.JKP, Najafgarh, Delhi (iii) the residences of Shri Amrit Goyal, Proprietor of M/s/. SSP and his brother Shri Mohan Lal Goyal, Rohini, Delhi. (iv) The residence of Shri Mahadev Goy....
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....ntral Excise Rules, 2002 for the reasons discussed above. (v) I impose a penalty of Rs. 5,00,000/- (Rupees Five Lacs only) upon Shri Mahadev Goel, Key functionary of M/s Shiv Shankar Plywood, Sampla, Dist. Rohtak under Rule 26 of the Central Excise Rules, 2002. (vi) I confirm the demand of Central Excise Duty including Cess amounting to Rs. 75,21,297/- (Rupees Seventy Five Lacs Twenty One Thousand Two Hundred Ninety Seven only) jointly and severally against M/s Shiv Shandkar Plywood, Sampla, Dist. Rohtak and M/s Jai Krishna Plywood, Nazafgarh, Delhi and order its recovery from them under the proviso to Section 11A(1) of the Central Excise Act, 1944. (vii) I confirm recovery of interest at the appropriate rate from M/s Shiv Shandkar Plywood, Sampla, Dist. Rohtak and M/s Jai Krishna Plywood, Nazafgarh, Delhi jointly and severally on the amount of demand confirmed at (vi) above under Section AB of the Central Excise Act, 1944. (viii) I impose a penalty of Rs. 75,21,297/- (Rupees Seventy Five Lacs Twenty One Thousand Two Hundred Ninety Seven only) jointly and severally against M/s Shiv Shandkar Plywood, Sampla, Dist. Rohtak and M/s Jai Krishna Plywood, Nazafgarh, Delhi under Se....
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....w materials suppliers, buyers, dealers and transporters. No incriminating/objectionable documents were recovered from the business premises of SSP and JKP and from residential premises of Shri Amirt Goel. No variation in raw material stocks/no stock of decorative plywood was found. The case has been made out against M/s. SSP on the basis of incriminating documents allegedly recovered indicating unaccounted receipt of raw materials, unaccounted sale of finished goods and unaccounted receipt of sale proceeds from the residential premises of Shri Mahadev Goel, Manager of the appellant. In fact, Shri Goel was working as Manager in appellant No.1 unit since 2003. The challans resumed from residential premises of Shri Goel alleged show the description and quantity of goods cleared. The goods shown in challan were in mm (thickness) and length and width was shown in feet and it was sold in square feet. Shri Mahadev Goel stated that in invoices less quantity and less value was shown but actual quantity indicated on challans were dispatched and the actual value written in cash book. The cash book was recovered from Shri Mahadev Goel were written by him. The cash book was maintained in party-....
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....during the year 2005-06 from M/s.SSP and M/s.JKP. It is his contention that M/s.SSP sold goods to 35 buyers as per statutory records and statement of only two buyers recorded, therefore, it revealed that the goods sold to the other buyers were as per invoices. The cross examination of buyers sought by the appellant but the same has been denied without any lawful reasons. Even no show cause notice was issued to these two buyers. During the period 2005-06 and 2006-07, the appellant made clearances of Rs. 75,23,594/-. If the said clearance is taken into account then also the total value of clearance will be within threshold limit of SSI exemption (2006- 07). The value of purchase of Rs. 64,08,271/-, which is also within the threshold limit of exemption under Notification No.8/03-CE dt.1.3.2003. 14. He further submits that the statements of two buyers were relied upon by the adjudicating authority, namely, Shri M.M. Kuershi and Shri Narinder Pahwa. Shri M.M. Qureshi Industries stated that they received Rs. 58,69,768/- from SSP during the period 13.10.2005 to 14.4.2006 towards sale of total value from M/s. Quershi Industries allegedly was Rs. 99,76,478/- during the impugned period. The....
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....roprietor recorded under pressure, he denied documents recovered from residential premises of Shri Mahadev Goel pertains to M/s.SSP. To support his contention, he relied upon the decision of this Tribunal in the case of Manoj Kumar Pani-2010 (260) ELT 92 (T). 16. No evidence of actual consumption of raw material on record to be used in manufacture of goods clandestine cleared by M/s.SSP and JKP. To support, he relied upon the Raipur Forgings Pvt.Ltd.-2016 (335) ELT 297 (T) to say that the demand rested on private records and admission statements regarding clandestine removal being starting point of investigation and could not be sole basis for deciding against assessee in absence of other evidence indicating clandestine removal like transportation. He also relied upon the decision of this Tribunal in the case of Kamar Ali & Sons- 2006 (200) ELT 104 (T) to say that no evidence other than entries in private records produced -register alone not sufficient to establish clandestine removal. He also relied upon the decision of this Tribunal in the case of Annapurna Industries Ltd.-2003 (153) ELT 586 (T) to say that clandestine removal not supported by any evidence regarding actual consu....
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....was no physical verification of actual production of appellant No.1 carried out by the dependent, therefore, in the absence of production capacity, it cannot be alleged that the appellants were engaged in clandestine manufacture and clearance of the goods. 20. He further submits that M/s. JKP was proprietary concern engaged in manufacturing of Plywood and Block board and the demand has been conformed jointly and several on the basis of investigation, the same is not sustainable as held by this Tribunal in the case of Sree Aravindh Steels Limited-2007 (216) ELT 332 (T) and Shri Rajes Kumar Agarwal-2015 (321) ELT 313(T) to say that the demand cannot be confirmed against both the appellants and penalties cannot be imposed on them. He also relied on the decision of this Tribunal in the case of Arya Fibres Pvt.Ltd.-2014 (311) ELT 529 (Tri.-Ahmd.). Therefore, the impugned order is to be set aside and the appeals by the appellants are to be allowed. 21. On the other hand, ld. AR supported the impugned order and submits that it is a case of clandestine manufacture and clearance of the goods which has been made on the basis of records recovered from the possession of Shri Mahadev Goel, wh....
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....cussed above, and also violated the principles of natural justice. In that circumstance, we set aside impugned order." 25. Admittedly, in this case, the statements of the suppliers and buyers which have been relied upon by the adjudicating authority have never been examined in chief and denied cross examination of witness whose statement has been relied without any lawful reason. We take note of the fact that provisions of section 9D have not been followed by the adjudicating authority, therefore, on this sole ground, the impugned order is not sustainable. 26. We take note of the fact that the statements of various buyers and suppliers have been relied upon by the adjudicating authority and in their statements they have stated they have supplied the goods without cover of invoices or they have purchased the goods from the appellant without cover invoices which means they were involved in the evasion of payment of excise duty but they were not made party to the show cause notice which shows that investigating team adopted pick and choose method as the persons who were involved in evasion of duty were not made party to the show cause notice creates doubt on the statements of these....
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.... that contained as per the statutory records; (b) instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty; (c) discovery of such finished goods outside the factory; (d) instances of sale of such goods to identified parties; (e) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him; (f) use of electricity far in excess of what is necessary for manufacture of goods otherwise manufactured and validly cleared on payment of duty; (g) statements of buyers with some details of illicit manufacture and clearance; (h) proof of actual transportation of goods, cleared without payment of duty; (i) links between the documents recovered during the search and activities being carried on in the factory of production; etc. Needless to say, a precise enumeration of all situations in which one could hold with activity that there have been clandestine manufacture and clearances, would not be possible. As held by this Tribunal and Superior Courts, it would depend on the facts of each case. What one could, however, say with some certainty is that inferences ca....