TaxTMI 
TaxTMI 
2021 (7) TMI 891
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.... gone into liquidation and therefore the matter was argued on behalf of the company by the learned counsel for the official liquidator before us. 2. The appellant/assessee was a manufacturer of Alkyd, Phenolic and Malleic Resins (herein after referred to as "resins") falling under Chapter heading 3907.50/3909.51 of the First Schedule to the Central Excise Tariff Act, 1985. Shri Sama Rajasekhar was the Managing Director of the appellant/assessee and is the appellant in the appeal E/387/2012. Officers of DRI conducted searches and seizures, investigated and came to the conclusion that the appellant was clearing resins in excess quantity which were being booked for transportation under fictitious bills issued in the name of M/s Kalyan Chemicals, M/s Prasad Chemicals and M/s Priya Chemicals. It was further found that the goods in such invoices were declared as Orthoxylene, MTO, Xylene, etc. During searches they found 10 barrels of chemicals at the premises of the transporter M/s SRMT Ltd issued under the cover of two bills of M/s Kalyan Chemicals, Vijayawada and the goods therein were declared as orthoxylene. Further investigation by the officers showed that the goods were ind....
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.....2003 N. Nagarajan, Proprietor, M/s Balaji Enterprises, Anna Nagar East, Chennai 11. 22.10.2003 M. Mohan of M/s Sujatha Paints, Washermanpet, Chennai 12. 21.10.2003 30.12.2003 V. Veera Raghavan, Proprietor, M/s Vee Kay Jay Paints & Chemicals, Chennai 13. 21.10.2003 R. Radhakrishnan, Proprietor, M/s Star Paints, Tondiarpet, Chennai 14. 03.08.2004 R. Karthick (alias) R. Daniel Karthick, Proprietor, M/s Raja Colour Tech and formerly Proprietor of M/s Raja Paints, Old Washermanpet, Chennai 15. 14.07.2005 25.08.2005 Smt S. Shanti, W/o Late Sri P. Sekhar, Proprietrix of M/s Vivek Paints, Muthugounderpalayam, Erode 16. 18.07.2005 T. Kalyanasundaram, Managing Director, M/s Veena Paints Pvt Ltd, Solaialagupuram Street, Madurai 17. 29.08.2005 K. Nagaraj, Partner, M/s Nirma Paints & Chemicals, Bellary 18. 10.07.2005 Sri Rajesh Mehta, Partner of M/s Oilchem India, Indore 5. Of the above, cross examination of S.No.1, 3, 8, 11, 15 & 18 could not be completed. S.No.11 above had died and therefore, could ....
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....the purposes of this Act. A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned. (2) All persons so summoned shall be bound to attend, either in person or by an authorised agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required : Provided that the exemptions under Sections 132 and 133 of the Code of Civil Procedure, 1908 (5 of 1908) shall be applicable to requisitions for attendance under this section. (3) Every such inquiry as aforesaid shall be deemed to be a "judicial proceeding" within the meaning of Section 193 and Section 228 of the Indian Penal Code, 1860 (45 of 1860). Section 9D. Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a Gazette rank duri....
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....is regard, including the principles of natural justice, in the following manner: (i) In the event that the Revenue intends to rely on any of the statements, recorded under Section 14 of the Act and referred to in the Show Cause Notices issued to Ambika and Jay Ambey, it would be incumbent on the Revenue to apply to Respondent No 2 to summon the makers of the said statements, so that the Revenue would examine them in chief before the adjudicating authority, i.e. before Respondent No 2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the makers of any of the statements on which the Revenue chooses to rely, would have to be made available to the assessee, i.e. to Ambika and Jay Ambey in this case. (iii) Statements recorded during investigation, under Section 14 of the Act, whose makers are not examined in chief before the adjudicating authority, i.e. before Respondent No 2, would have to be eschewed from evidence, and it would not be permissible for Respondent No 2 to rely on the said evidence while adjudicating the matter. Neither, needless to say, would be open to the Revenue to rely on the said statements to su....
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.... booked in the name of M/s Kalyan Chemicals. This confirms the modus of misdeclaration of the nature of the goods and also of booking the consignment in the name of front companies. (c) In the case of Inter City Cargo Movers, Shri S.S. Abrar, Proprietor, in his statement dt.28.07.2005 said that they were clearing the material from the consignor's godown only. However, Shri Abrar has negated his own statement during the cross examination although there was no specific retraction by him before the cross examination. (d) Private books of accounts maintained by the employees of the appellant contained references to the consignment notes, quantities and actual quality/grade of the goods and the realisation actually done. In some cases, the books contained entries other than those transported by the above two transporters viz., M/s SRMT and M/s Inter City Cargo Movers. These entries were explained by the authors of the books in their statements under section 14 of the Central Excise Act. The two authors who made the entries were Shri V. Srinivas Mahesh, Marketing Representative of the appellant and Shri V.B.S. Durga Prasad, Sales Executive of the appellant. ....
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....s out of sale proceeds collected by him under different names including the name of the assessee/appellant and the DDs were sent by courier along with the covering letter; that he sent an amount of Rs. 70,00,000/- in this manner. 12. The assertion of the learned counsel for the appellant before us is that the entire case is based on assumptions and presumptions and does not hold water. The only physical evidence which the officers have collected were some barrels of Chemicals which the transporter M/s SRMT booked in the name of M/s Kalyan Chemicals and which were described as orthoxylene which on testing proved to be resin. These barrels are not related to them. All documents showed that they pertain to M/s Kalyan Chemicals. Therefore, clearance of these barrels cannot be attributed to them. 13. He would argue that although the seizure was with respect to these barrels, the case was made out to be much larger and this case was built on the basis of statements of 18 persons and several relied upon documents. Of the 18 persons, 6 were not examined/cross examined by the adjudicating authority even during the denovo proceedings and hence their statements cannot be rel....
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....f the assessee/appellant was the fourth piece of evidence relied upon by the revenue. These were maintained by Shri V. Srinivas Mahesh, Marketing Representative, who gave his statement on 21.10.2003, 03.12.2003 & 24.12.2003. Shri V. Srinivas Mahesh was not cross examined and therefore, in terms of section 9D his statement is not relevant and cannot be considered in these proceedings. Shri V.B.S. Durga Prasad, Sales executive has stood by his earlier statement that he is an employee of the assessee/appellant and that he opened a unit in the name of M/s Prasad Chemicals on instructions of Shri S. Rajasekhar within the factory of the assessee only. The firm was run in his name from the same premises as the assessee and it does not have any independent business. Only documents are signed in the name of Prasad Chemicals. Similarly, Shri Kalyana Chakravarthy, another employee of the assessee has confirmed that Kalyan Chemicals was a unit opened in his name and he was actually only an employee of the assessee and only papers are drawn in the name of M/s Kalyan Chemicals. Both Shri Kalyana Chakravarthy and Shri V.B.S. Durga Prasad have affirmed their statements during the cross examination....
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....rms. Two of these were opened in the premises of the assessee by their own employees. The so called owners of M/s Kalyan Chemicals and M/s Prasad Chemicals were actually the employees of the assessee. When examined, they have confirmed that they are only employees and they have affirmed this position during the cross examination made by the assessee's own advocate. Thus, there cannot be any doubt that these are dummy firms. The third company M/s Priya Chemicals was opened in the name of the wife of the owner of the assessee firm which was also a dummy firm. 16. Statements were also records from other transporters such as Shri S.S. Abrar of M/s Inter City Cargo Movers. Statements of the buyers of the chemicals who were mainly the paint manufacturers were also recorded. None of these people have retracted their statements. The buyers as well as Shri S.S. Abrar have negated their statements during the cross examination which was conducted after several years. The learned adjudicating authority has correctly held that such negation during cross examination without having retracted their statements made several years ago cannot be accepted and their original statements mu....
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....he present case is concerned, the alleged buyers of the clandestinely removed goods have negated their own statements when cross examined before the adjudicating authority. Without such examination/cross examination before the adjudicating authority their statements are not relevant and cannot be relied upon. The learned adjudicating authority has observed that although they negated their statements, such negation is only an afterthought as they have not retracted their statements before. We find that the admissibility of the statements itself depends upon the examination/ cross examination of the person making the statement under section 9D. If the statement has been negated during such cross examination, the evidentiary value of such statement is in doubt. Similarly, the statement of Shri S.S. Abrar, Proprietor of M/s Inter City Cargo Movers also has been negated by him during the cross examination. Thus, the evidence, as far as the transportation of the goods alleged to be clandestinely manufactured and removed as well as their sale to the prospective buyers has not been established to a reasonable degree of certainty in this case. As far as the manufacture and clearance are con....
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....revenue could not establish the case based on the preponderance of probabilities and statements which are admissible in terms of section 9D that the assessee/appellant has clandestinely removed goods without paying Central Excise duties. 23. In view of the above, we find that the impugned order needs to be set aside and we do so. 24. The appeals are allowed and the impugned order is set aside with consequential relief, if any. (Pronounced in the open court on ________________________) (separate order) (ANIL CHOUDHARY) MEMBER (JUDICIAL) (P. VENKATA SUBBA RAO) MEMBER (TECHNICAL) ANIL CHOUDHARY: I have the benefit of going through the order recorded by learned brother Shri P. V. Subba Rao, Member (Technical) but I am unable to agree with the same. I hereby record my separate order as follows:- Revenue had intelligence of evasion of duty by the appellant company and accordingly parallel search was organised in the premises of the appellant and also in the premises of some of the suppliers as well as buyers of finished goods, as well as transporters. Search was also conducted at....
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....ure of resin. He further stated that the purchasers made payment of the actual value, as per the slips annexed to the bills, either by cash or demand draft through the employees/ agent of M/s HRPL situated at Chennai or were deposited in the account held in Global Trust Bank in his name or in the name of other employees. On being questioned by Revenue as to the non accountal of the sale transaction, despatched through the transporter SRMT or ICCM in his books, he replied that sale bills and sale tax return of M/s Kalyan Chemicals were also prepared as per the instruction of Shri S. Rajsekhar and he did not know any details, etc. Further, purchase invoices in the name of M/s Kalyan Chemicals were also arranged by Shri S. Rajsekhar. He also stated that he has done all these activities on the instruction of his employer - Shri S. Rajsekhar to save his job, without any other consideration. 26. Shri Kalyan Chakraworty was cross examined on 08.12.2010, and he stood by his earlier statement given during investigation. He also filed written submission being reply to the show cause notice, wherein he also reiterated the facts as aforementioned and affi....
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.... staff of M/s HRPL used to give the bills in the name of M/s Kalyan Chemicals also, which were signed by M. Kalyan Chakraworty, a Clerk of HRPL. 31. Usually the number of barrels despatched by HRPL, which were loaded at the same time from its factory, were spilt by issue of separate invoices by HRPL and M/s Kalyan or M/s Prasad Chemicals. As per instructions, he took two or more sets of LRs for booking. Such LRs usually had continuous or consecutive sl. Numbers. He further pointed out that the LR numbers were available on the bills and the LRs were prepared by him, both for M/s HRPL and M/s Kalyan Chemicals. He also identified and explained the contents of the 'outward register' maintained by M/s SRMT and identified the pages /entries made by him and other staff. On being queried as to the name of M/s Prasad Chemicals, appearing in the outward register of M/s SRMT (till June, 2001), Shri Durga Prasad explained that prior to giving bills of M/s Kalyan Chemicals, M/s HRPL use to give the bills under the name of M/s Prasad Chemicals in the same/ similar manner as in the name of M/s Kalyan Chemicals. He also stated that the address of M/s Pr....
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....icals were brought by M/s HRPL staff only. 34. Revenue also searched Room No. 20 at Shivkasi Nadar Mansion at Chennai which was taken on rent by Shri V. B. Durga Prasad, Sales Executive of M/s HRPL who looked after the sales, collection of sales proceeds by visit to the outstation customer(s) at Chennai and other places. Certain documents were found and recovered which included 'Executive Diary -2003' containing handwritten entries. The entries contained details of payment receipt/ collection from different parties, party name, outstanding balance and noting etc. Diary appears to be maintained in regular course of business showing particulars of (a) party name/ short name (b) a multi digit Sl. No. followed by (c) an encircled number (d) coded description of goods, (e) quantity in number of barrels and weight per barrel, and (f) rates/ price per kg. On verification, the aforementioned particulars at (a) to (e) were found to match with the details of consignee name, LR No., the quantity in barrels and total weight respectively of the consignment booked for transport from Vijayawada in the name of M/s Kalyan Chemicals also corroborated with record of t....
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....sins indicated as RMD-LAV plus one barrel consisting of Malleic Resin denoted as 'MM' beneath these entries and the total value was arrived at as Rs. 91,580/- against which the payment of Rs. 49,580/- was deducted and the balance indicated as Rs. 42,000/- (which was also indicated as subsequently paid on 04.06.03). The details of payment of Rs. 49,580/- were also written with details of the Demand Draft number and date, etc. 35. Thus, the aforementioned Executive Diary - 2003 was found to be a privately maintained record, showing the actual description and value of resin that were supplied to various parties under the fictitious bills of M/s Kalyan Chemicals during the period from January, 2003 to October, 2003. Further, in respect of various consignments/ parties, the datewise detail of payment receipt were also found available in this diary, and the noting 'PAID' was written against the specific consignmentwise entries. This diary contained despatches made both in the name of M/s Kalyan Chemicals as well as M/s HRPL. It was also found that certain despatches by M/s HRPL purportedly as trading despatches, example - vide invoice No. T-36....
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....ining to the party 'BHARANI', such entry dated 09.06.2003 is RMD 5 barrels x 190 kg.- 475.00. But, in page for 09.06.2003 in the Executive Diary-2003, the supply of 5 barrels of 190 kg. each of RMD @ Rs. 50/- is equal to Rs. 47,500/- supplied vide LR No. 1144296 to BHARANI was mentioned. Similarly, in folio 50 of the pocket ledger against ten barrels @ Rs. 49/- per kg. was mentioned. Thus, the debit apparently pertains to the value of supplies and credit for the payments received against the supplies. 37. The record recovered vide Mahazar Sl. No. 4 was a small notebook containing various notings including datewise details of expenses apparently incurred by Shri V. B. Durga Prasad in the course of his duty and also certain notings showing the actual description, quantity and value/ rate of certain consignments, which was on verification, pertained to those cleared under the bills of M/s Kalyan Chemicals. 38. Further, various loose sheet slips including computer printed partywise account - statement of M/s HRPL, letters/ correspondence of M/s HRPL, M/s Priya Chemicals etc. were found and recovered and placed in a file at Sl.....
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....Mahesh book and boss book' appeared to be self-indicative that the details pertained to a reconciliation between the amounts reflected in the privately maintained ledger of Sri V. Srinivas Mahesh, the employee of HRPL at Chennai and the amounts as per the 'boss-book' an obvious reference to Sri Sama Rajasekhar, M.D. of HRPL. (e) More importantly, page 299 of the above said file was a printed List of products i.e. Resins manufactured by HRPL (with the printed company name and address). In this sheet, prices were handwritten against many items and in addition notings/ remarks were written as the prices being effective from 1st August, 2002 and also that the rates are including CST. The said handwriting was identical to that appearing in the small slips (showing the actual description and price/ rates), as also the other privately maintained documents including those showing the consignment-wise details of the actual description and values corelatable to the bills of Kalyan Chemicals. It thus appeared that the above documents pertained to and showed the actual sales of Resin by HRPL, (including those made under the bills of Kalyan Chemicals, with mi....
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....i vide LR No. 1009160 of SRMT for door delivery. Sheet 66 is the small slip, stapled to sheet No. 64 and 65 containing handwritten details as follows:- 20.06.2003: Ranga Paints, Chennai, RML (LAV)- 10x 190 kg. @ 49/-; SRMT - Door delivery. Thus, from the matching of the particulars and date, consignee, quantity and transporter's name in the bill and LR with the small slip, it is apparent that the goods supplied were resins (EML-LAV denoting Resonated Medium Linseed Resin with Low Acid Value) at a price of Rs. 49/- per kg., while the corresponding bill was issued showing supply of orthozylene @ Rs. 10/- per kg. 41. Similarly, sheet No. 57 to 62 consist of set of LR of SRMT, Vijayawada and corresponding small handwritten slip confirming supply of Resin @ Rs. 50/- or Rs. 51/- whereas as per the invoice of M/s Kalyan Chemicals and in LR the description was orthozylene @ Rs. 10/- per kg. Sheet No. 53 and 54 of the file consist of photocopy of various cheques received during June and July, 2003 all payable to M. Kalyan Chakraworty. Further, counterfoils of bank deposit slips and demand draft application forms were also found as mentio....
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....warding the same to HRPL, receiving the LR and collecting the sale proceeds from the buyers. Normally he communicated the orders for sale to Shri S. Rajsekhar over phone and raisin was despatched generally by door delivery through SRMT, Vijayawada. That after dispatch of resin Shri S. Rajsekhar used to send the third copy of the LR alongwith a chit and bill of Kalyan Chemicals or Prasad Chemicals or Priya Chemicals. That the chit contained details of the buyers name, description of goods, quantity and actual rate at which the resin was supplied. That the set of documents i.e. LR, chit and bill was received by courier and were handed over by him to the respective buyers, who in turn issued a chit being an acknowledgement of receipt of goods and in these chits also the actual rate, quantity and total value of the goods were indicated. That on due date of payment, he contacted the buyers and collected the amount as per the chit and returned the chit issued by the buyer on receipt of the full value/ amount. He also identified that sheet No. 57 and 66 of the made up file No. 1 recovered from his residence where some of the chits and LRs received....
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....in the above account. Also we are going to close V. Durga Prasad A/c. So please do the necessary action immdtly". 45. On requisition, Global Trust Bank, Vijayawada furnished the copies of the Account- Statements of the above said accounts alongwith copies of the Account-Opening forms and related documents. The relevant details as per these documents, are as follows: Name S/Shri Account Number Period operated Total amounts deposited Ch. Siva Durga Prasad 29000 - 18190 October, 2001 to March, 2002 Rs. 27.54 lakhs (excl. Transfers) V. Durga Prasad 29011 -01075 July, 2002 to May, 2003 Rs. 62.64 lakhs M. Kalyana Chakravarthy 29011- 01142 March, 2003 to October, 2003 Rs. 1.1 crores approx. M. Kalyana Chakravarthy 29011-01248 October, 2003 to November, 2003 For the above accounts, the introduction for the account opening in the name of V. Durga Prasad was given by Ch. S. Durga Prasad (who held the account operated in the immediately preceding period), while in respect of Shri M. Kalyan Chakraworty account, the introduction was given by Sri V. Durga Prasad. T....
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.... S. Rajsekhar further confirmed that Plot No. R.S. 409/2 which was the address of M/s Prasad Chemicals belongs to him and the address of M/s Kalyan Chemicals D. No. 25-52/1, Kabela Road was a room in a corner of the plot which was used by the Watchman who stayed there and rared cattle. He also identified and admitted the rent receipts of M/s Kalyan Chemicals as issued by him. He also affirmed that all the letters in the name of M/s Kalyan Chemicals were delivered at HRPL factory (located nearby). 47. Thus, it is evident that M/s Prasad Chemicals and M/s Kalyan Chemicals were created and registered with the Sales Tax Authority in the name of employees of HRPL to clandestinely purchase raw materials for HRPL and also clandestine clearance of the finished goods of HRPL for the purpose of evading Central Excise duty and other taxes. Further, bank accounts were opened in the name of the said employees namely Shri M. Kalyan Chakraworty, V. B. Durga Prasad, C. S. Durga Prasad etc. to facilitate the receipt of flow back of money for the clandestinely cleared finished products. The transaction of large amounts reflected in these bank accounts, hereinabove me....
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....structed by Shri S. Rajsekhar, and he did not know anything or any details. He also stated that the purchase invoices for M/s Kalyan Chemicals were also arranged by Shri S. Rajsekhar and he did not know the manner of disposal of the purchases. Further, he categorically stated that he has done all activities in the name of M/s Kalyan Chemicals on the instruction of Shri S. Rajsekhar, being the employee and have not received any additional consideration for the same. 49. Shri V. B. Durga Prasad, Sales Executive of M/s HRPL in his statement dated 09.08.2004 deposed, that in connection with his duty he used to visit Chennai and other places frequently for procuring orders and collection of payment from the customers. That the amount(s) collected were deposited in the account of M/s HRPL and also in the account of Shri M. Kalyan Chakraworty in Global Trust Bank, and sometimes the customer deposited the payments directly in the accounts as per the instructions of Shri S. Rajsekhar. He used to note down the details of despatches of resin and collection of payment. He had taken a room on rent in Shivkasi Nadar Mansion, Chennai for his stay. He a....
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....bsp; He further admitted that he created the proprietorship concern M/s Prasad Chemicals at the instance of Shri S. Rajsekhar, obtained the Sales Tax registration, opened the bank account, signed the blank cheques and everything at the instance of Shri S. Rajsekhar. He has no personal interest in M/s Prasad Chemicals or in the bank account No. 29000 -18190 opened in Global Trust Bank, Vijayawada. He further affirmed that the said account was used for depositing the unaccounted amounts (flow back) from the sale of resin removed clandestinely by M/s HRPL under the invoices of M/s Prasad Chemicals or M/s Kalyan Chemicals. He also stated that he has not received any additional consideration in this matter. 51. In the course of enquiry made with M/s Oilchem India, they admitted that they have supplied raw materials to M/s HRPL as well as M/s Prasad Chemicals on receipt of payment by way of demand draft. 52. Further, the clandestine purchase of raw materials by M/s HRPL, is also established from several payments made from the aforementioned bank accounts of Shri V. B. Durga Prasad and Shri M. Kalyan Chakraworty during the year 2002-2003 in the name of ....
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....rocurement of 30 barrels during 2003 for which no bills were issued and he had scored out the entries, as HRPL clandestine confirmed the receipt of amount in cash. He also accepted the clandestine transactions recorded in the resumed private records vide Mahazar from V. S. Mahesh and V. B. Durga Prasad. 54. Similar confirmation was made by other buyers of clandestinely removed goods namely - M/s Sujatha Paints, Chennai through its Partner Shri M. Mohan, by M/s Vee Kay Jay Paints & Chemicals, Chennai through its prop. V. Veeraraghavan, M/s Star Paints, Chennai through its Prop. Shri R. Radhakrishnan, M/s Raja Paints, Chennai through its Prop. R. Karthikeyan etc. 55. From the aforementioned documentary facts which were revealed in the course of investigation and enquiry, I find that the statements of various persons are supported by documentary evidence. Such documentary evidence have been admitted by the concerned employees of M/s HRPL and also admitted by Shri S. Rajsekhar, the Managing Director of M/s HRPL. Both clandestine purchases of raw materials, clandestine removal of finished goods, evidence of transport, flow back of sale proceeds of the....
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....d in the open court on 18.11.2020) (Anil Choudhary) Member (Judicial) (P. Venkata subba Rao) Member (Technical) INTERIM ORDER No. I/8-9/2021 Per Ms. SulekhaBeevi C.S. 57. I have gone through the orders recorded by brother Member (Judicial) as well brother Member (Technical). Since the facts and evidence have already been narrated in detail in both the orders, I do not think it necessary to repeat the same in this order. Brother Member (Technical) after his finding of facts in para 21, has reached the conclusion that the Revenue could not establish the case based on preponderance of probabilities and statements. He thus set aside the impugned order allowing the appeals. On the contrary, brother Member (Judicial) after considering the evidence has held that there is enough evidence apart from the statements recorded and therefore held against the appellant by dismissing the appeals. 58. The questions referred to me are based on the above discussions and conclusions made by both the Members. 59. The appellant company had Central Excise registration both as 'manufacture' and 'dealer' and was clearing goods by paying duty at concessional ra....
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....and samples were drawn for chemical analysis. The Chemical Examiner's report revealed that the barrels contain 'resin' and not 'orthozylene' as declared. This fact of seizure of the goods belonging to M/s. Kalyan Chemicals and mis-description of goods would sufficiently establish the allegation that the appellant company was clearing finished product (resin) in the guise of other products on lesser value through their dummy unit in order to evade excise duty. The link of transportation is clear as the goods were seized at the premises of the transporter M/s. SRMT. The register recovered from this transporter also reveals various instances where goods have been lifted in the name of Kalyan Chemicals and Prasad Chemicals. Para 6.2 and 6.3 and 7.4 of Show Cause Notice dated 31.10.2005 explains this in detail. Further, the proprietor of M/s. Kalyan Chemicals is Mr. Kalyan Chakravarthy who is a clerk cum typist of appellant-company. It is also revealed from evidence that this unit M/s. Kalyan Chemicals was functioning within the premises of appellant-company. 61. M/s. Kalyan Chemicals was started only in 2001. Prior to June 2001, the other firm Prasad Chemicals was started by the app....
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....s.) Advocate: Did you file Sale Tax Returns and Income Tax Returns during that period? Ans.) Ch. Siva Durga Prasad: The auditor may file as, the unit is group of companies of M/s. Harika Resins." 62. It is seen that the proprietor of both these units are employees of the appellant-company and also that these units were dealing on goods similar to the goods manufactured by the appellant-company. When it is established that these are dummy units operated by employees of the appellant, the strong inference that can be drawn is that these dummy units were used by the appellant-company for clandestine removal of finished goods so as to evade payment of excise duty. The appellant company was availing SSI exemption and the aggregate turnover was suppressed by clearance of goods through these dummy units. 63. With regard to the evidence of the transportation, as mentioned earlier, during the search, 10 barrels were seized from premises of M/s. SRMT Ltd., Chennai which is also a transporter for appellant company. The fact that the goods in the bills seized at the premises of transporter were declared as 'orthozylene' instead of 'resin' and also as these bills were raised in t....
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.... tactics to cover up the purchase of raw materials to avoid detection of clandestine clearance. They adopted the practice by which buyers of finished products obtained demand drafts directly favouring the raw material suppliers / agents and these amounts would be payment made indirectly to appellant company towards clandestine supply of resin / finished product.The notebook maintained by Shri V. Srinivas Mahesh and also the notebook maintained by Shri V.B.S. Durga Prasad indicates various instances of clandestine clearance of resin. From the totality of the facts and evidences, I am of the view that the department has succeeded in establishing the allegation of clandestine clearance of finished products by appellants by raising fictitious invoices bills in the name of dummy units. 65. The two types of standards of proof applied in proceedings are 'proof beyond reasonable doubt' and 'proof of preponderance of probability. The appreciation of evidence in either of these types of standards of proof differs depending on the facts involved. In a serious case such as evasion of duty by fraud, the degree of appreciation of evidence has to be higher than in a case of allegation of mere ....