AI Drafter 
TaxTMI 
TaxTMI 
2020 (3) TMI 594
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....passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eyes of law and on facts. 2. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the addition of Rs. 2010567/- made by the AO by applying the rate of 1.60% of gross profit on the alleged clandestine removal of goods worth Rs. 125660484/- from the premises of the appellant. (ii) That the learned CIT(A) has erred in sustaining the above addition by arbitrarily rejecting the explanations and evidences brought on record by the assessee. (iii) That the ld. CIT(A) has erred in relying on the order of the AO with respect to his reliance on the findings of the Excise Department ignoring the detail explanations filed before him and ignoring the fact that the assessee has filed an appeal and has challenged the action of Excise Department before the Honorable CESTAT, New Delhi. 3. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the addition of Rs. 7564761/- made by the AO by applying an estimated rate of 6.02% of stock turnover ratio on ....
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....lected for scrutiny by issuance of notice u/s 143(2) of the Act. During the course of assessment proceedings, it came to the knowledge of the Assessing officer that the assessee company was indulged in evasion of Central Excise duty by resorting to clandestine manufacture and clearance of finish goods. DGCEI conducted search operations at the assessee's factory premises and other premises of its associates. During the course of search, certain incriminating documents and assets were recovered and physical verification of finished goods and raw material was also conducted which resulted in detection of various discrepancies. Statement of Shri Sunil Khurana, Director of the assessee company was also recorded. Thereafter, Additional Director General, DGCEI, Delhi Zone issued a show cause notice to the assessee on 11.03.2011 and 25.11.2011. Thereafter, Commissioner Central Excise, Jaipur adjudicated the case of the assessee and held that the assessee was indulged in evasion of Central Excise duty by resorting to clandestine manufacture and clearance of finished goods. As per show cause notice dated 25.11.2011 of DGCEI, the assessee has removed goods from his factory premises wort....
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....he question arises that for making this much of production and sales how much stock investment would be made by the assessee and how much profit would arise to the assessee. To ascertain the undisclosed investment in stock the assessee was asked to submit stock turnover ratio as reflected in regular financial statements as on 31.03.2010 and 31.03.2009. As per the financial statements of the assessee, the stock turnover ratio of manufactured finished goods for 31.03.2010 was 6.52% and for 31.03.2009 was 5.52%, therefore, the average of both i.e. 6.02% can reasonably taken as undisclosed investment made in stock by the assessee for achieving production and sale of Rs. 12,56,60,484/-. Therefore, the undisclosed investments in stock is worked out at Rs. 75,64,761/- ( 12,56,60,484*6.02%) and the same is added to the total income of assessee. 10. Further, from the perusal of manufacturing account of the assessee, it reveals the assessee declared Gross Profit rate of 1.60% on sales. Therefore, a G.P. rate of 1.60% can be reasonably applied on undisclosed sales of Rs. 12,56,60,484/- which comes to Rs. 20,10,567/- resulting in addition of Rs. 20,10,567/- to the total income of the ....
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....mmissioner (Appeals), who gave the following relief to the assessee, vide his order No. 80-81/2012/C.EX/JPR-II-COMMISSIONER, dt. 31.12.2012: Clandestine removal of goods Rs. 5,15,23,781/- Resulting in duty thereon Rs. 51,47,390/- Thereafter, the assessee went in further appeal before the CESTAT against this order of the Commissioner (Appeals). The CESTAT passed the final order dt. 20.10.2017 in Appeal No. A/57285-57299/2017- EX[DB], deleting the whole demand raised by the Excise department and reference can be drawn to Para 44 of the order of the CESTAT wherein the following directions are given: " (a) the demand of Rs. 7,33,57,221/- is set aside; (b) the demand of Rs. 16,00,60,335/- is set aside" It was submitted that in this manner, a relief of total Rs. 23,34,17,556/- (7,33,57,221+ 16,00,60,335), has been granted by CESTAT. A relief of Rs. 51,47,390/- was already granted by the Commissioner (Appeals). In total, a relief of Rs. 23,85,64,946/- (23,34,17,556+ 51,47,390), has been granted, which was exactly the amount of total demand raised by the Excise department. In view of the above, it may be seen that all the allegations levied on the assess....
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....ssued to the assessee as to why Rs. 15,13,68,615/- should not be added to the assessee's income being unrecorded sale made out of the books. In response, the assessee filed its submissions stating that action of Central Excise Department is not acceptable and the assessee is in the process of challenging the same by way of filing an appeal before CESTAT and a request was made to keep the proceedings in abeyance till the decision of CESTAT. The assessee also submitted that in any case, the total sales cannot be added in its hands and in support certain decisions were cited before the AO. The same so filed was considered but not found fully acceptable to the Assessing Officer. The Assessing officer finally determined undisclosed production and sale of Rs. 12,56,60,484 where 4585.145 MT was valued at Rs. 27,406/-. Here, it is noted that as against value of Rs. 33,012.83 per MT, the AO finally applied value of Rs. 27,406/- per MT as submitted by the assessee. On such undisclosed production and sales, the AO determined an amount of Rs. 75,64,761/- on account of undisclosed investment in stock and another addition of Rs. 20,10,567/- was made on account of profit on sales of undisclosed s....
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....an Steels Rs. 1,00,00,000/- Rule 25 of CER, 2002 9 E/56619/2013 Rajasthan Commercial House Rs. 1,00,00,000/- --do-- 10 E/56620/2013 Rajasthan Steel Redemption Fine- Rs. 2,00,000/- Confiscation of Currency of Rs. 13,00,000/- Confiscation under Rule 25 of CER, 2002 [Panchnama dated 14.09.2010 (RUD-6)] 11 E/56621/2013 Mr. Surendra Kumar (Authorized Signatory) Rs. 5,00,000/- Rule 26 of CER, 2002 12 E/56687/2013 Mr. Prateek Garg Rs. 50,000/- --do-- 13 E/56688/2013 Mr. Suresh Garg Rs. 50,000/- --do-- 14 E/56689/2013 Mr. Sanjay Garg Rs. 50,000/- --do-- 15 E/56670/2013 Department's Appeal against Raghuveer Metal Industries Ltd. Rs. 51,47,390/- Charge of clandestine clearance dropped on account of duplication of demand. As all these appeals arise from the same investigation and are interconnected/common issue, are accordingly taken up together for disposal. 2. The main appellant-M/s. Reghuveer metal Industries Limited (RMIL for short) are engaged in manufacture of TMT bars under the brand name of "KAMDHENU" and MS ingots classifiable under chapter 72 of Centre Exc....
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....ecovered and resumed. Further statements of proprietor/partner/manager/authorised person/s etc. were recorded. Some of them admitted to have cleared unaccounted raw material without bills to the appellant and having received payment in cash. Some of the buyers of the finished goods Admitted to have received the final products without invoice or bills and without payment of duty of excise. 7.Investigations were also done at the premises of two transporters of the appellant, namely M/s Khawaja Garib Nawaj Transport Company, Ajmer and M/s Vikas Transport Company, Ajmer. No corresponding invoice/bill was found to be issued against some of the entries in the booking register of the said transporters. Further, for some of the GR's, no corresponding invoice was found to be issued. In respect of information collected from the commercial tax Department revealed that entry in respect of 162 vehicles as per sale entries were not found recorded in appellant's records. Further appellant purchased material through three vehicles, which were not recorded in their records. 8. As per the agreement dated 01/07/2006 and 22/09/2009 between the appellant-RMIL and Kamdhenue Isp....
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....29,441/-, as against royalty payment of Rs. 4 lakhs only recorded in the appellant's account. There is no substance in the submission that payment of Rs. 4 lakhs on 04/04/2008 was advance against the actual 'royalty due' entry of Rs. 4,28,104/- made on 30 April, 2008, since the appellant have not produced any vouchers in support of such contention. It was further observed by the Commissioner that it is highly unlikely that the appellant would show any royalty payment on paper, with respect to clandestinely removed 'KAMDHENU' brand TMT Bars, since it would enhance their chances of being caught during scrutiny. Such excess payment of royalty would only have been available in the records/books of KIL. The learned counsel states that the appellant's account in the books of KIL seized by the Department - RUD 88, reflects the entries for royalty due and paid. When the royalty amount is actually paid by the appellant during the month, it's account, in KIL books is credited and when the royalty income is recognised/due in the books of KIL, the appellant's account is debited. This is how the account of appellant is maintained by KIL in its books of ....
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....he Department based on such Panchanama will not be sustainable. The cross-examination of Shri Daualt Ram also supports the credence to retractions made by the directors/employees of the appellant on 16.09.2010. 18. He further emphasized that there is no corroborative evidence to prove that the actual stock taking was undertaken by the officers in absence of weighment slips, details of vehicles used for weighment, payments to labour used for weighment, etc. 19. In such circumstances, no charge of shortage/excess of finished goods, or of clandestine clearance thereof, is sustainable. In this regard, reliance was placed on the following judgments:- * CCE, Raipur, v. Devi Iron & Power Pvt. Ltd., 2015 (321) E.L.T. 270 ( Tri. Del.) * CCE, Meerut-I V. Silvertone Papers Ltd., 2013 (287) E.L.T. 478 ( Tri. Del.) * Hissar Pipes Pvt. Ltd. V. CCE, rohtak, 2015 (317) E.L.T. 136 ( Tri. Del.) 20. He also asserted that even the expertise of the employees could not have led to weighment of around 2200 MT of stock within the short span of 15 hours, taken in the Panchanama proceedings, since the time required to load, unload and weigh the ....
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.... M/s. S.H. Haryana Wires Ltd. & Ors. v. CCE, Faridabad, 2016 (10) TMI 449 - CESTAT NEW DELHI 24. That the entire finding is legally untenable on account of the fact that the Ld. Commissioner at the end of para 16 ( of orderin- original) has held that no cenvat credit demand could be confirmed against the appellant on this ground in the absence of any attempt from the department to quantify the amount. Thus, the investigation on this point appears to be way-ward and mis-directed. 25. Further, there is no logic in buying scrap without bills from a party, and thereafter, in subsequent invoices inflating the quantity vis-a-vis the scrap supplied. This finding in itself destroys the case of the department. There is no evidence regarding how the scrap without invoices was transported to the Appellant. 26. He also pointed out that for the alleged clandestine production and clearance of 42,300 MT of finished products, the Appellant would have required around 47,000 MT of scrap. The impugned order vaguely and without evidence merely could uphold only 2230 MT, as unaccounted procurement of scrap. There is no evidence led by the department to prove such hug....
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....sions: * Bhawani Moulders Pvt. Ltd. 00 Ors. v. CCE, Raipur, 2017 (1) TMI 493 - CESTAT NEW DELHI * M/s. N.R. Sponge Pvt. Ltd. v. CCE&ST, Raipur, 2015-TIOL-1600- CESTAT-DEL * Albright Steel Industries Ltd. v. CCE, Raipur, 2015 (322) E.L.T. 542 (Tri. - Del.) * Sakeen Alloys Pvt. Ltd. V. CCE, Ahmedabad, 2013 (296) E.L.T. 392 (Tri. - Ahmd.), as maintained by the Hon'ble Gujarat High Court in CCE v. Sakeen Alloys Pvt. Ltd., 2014 (308) E.L.T. 655 (Guj.) * CCE, Indore v. Rajratan Synthetics Ltd., 2013 (297) E.L.T. 63 (Tri. - Del.) 30. Ld. AR have reiterated the findings in the impugned order. Regarding royalty he submitted that payments of Rs. 4,00,000/- on 04.04.2008 as royalty by the appellant to Kamdhenu and again debit of Rs. 4,28,104/- on 30.04.2008 in Appellant's Account with Kamdhenu shows that the total royalty payment for the month of April 2008 was Rs. 8,29,441/-, as against royalty payment of Rs. 4,00,000/- only recorded in the Appellant's account. There is no substance in the submission that payment of Rs. 4,00,000/- on 04.04.2008 was advance against the actual royally due entry of Rs. 4,28,104/- made on....
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....nd did not witness the physical stock taking, this does not mean that stock taking did not take place. The employees of the Appellant had expertise in weighment which must have been relied upon by the officers. 36. He further submitted that as detailed in Para 19-24 of the SCN dated 25.11.2011, it has been clearly brought out from the `Payal Export Quality Ex. Note Book (RUD-22)' that the Appellant was taking more heats from the induction furnaces than what they were reflecting in their statutory records, thus, this reflects clandestine production by the Appellant. 37. As per Para 63 of the SCN, certain suppliers have confirmed that they supplied non-cenvatable scrap without bills to the Appellant on cash basis and were raising invoices for three times the quantity of scrap actually supplied under the cenvatable invoices. 38. As per Para 36-61 of the SCN, it comes out that the Appellant was procuring Cenvatable scrap by showing higher quantity of scrap than what was actually supplied by raw material suppliers and non cenvatable scarp from market without bills by making cash payments and without recording the scrap so obtained in their statuto....
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....bit column as well as credit column in one single Column and then totaled it, which is nearly doubled because of wrong merging of the Debit side and credit side column. In our view any confirmation of demand based on such doubling of amount(s) cannot be sustained. There is no plausible reasoning given by, Revenue in support of totaling of debit amount and credit amount, while calculating demand of duty because of difference in royalty. Further, not recording of statement of kandhenue Ispat Ltd, on such resumed ledger account, also shows that here is no substance in the finding ofthe Revenue that alleged difference in royalty leads to clandestine clearances. 44. To sum up, the appeal No. E/56611 of 2013 is allowed in part of follows- (a) the demand of Rs. 7,33,57,221/- is set aside; (b) the demand of Rs. 16,00,60,335/- is set aside and remand to the learned Commissioner, for re-verification, in terms of directions and observations hereinabove; (c) order of confiscation of cash and goods is set aside; (d) all penalties stand deleted; (e) Appellant is entitled to consequential benefit(s). 45. All other appeals are allowed ....