TaxTMI 
TaxTMI 
2022 (1) TMI 1302
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....ils the dropping of demand of Rs. 5,70,44,458/-. 3. M/s. Bansiwala Iron and Steel [Assessee] filed Excise Appeal No. 53572/2015 assailing the confirmation of demand of Rs. 38,89,972/- along with interest and imposition of penalty under Section 11AC. 4. Excise Appeal No. 53549/2015 is filed by Shri Murtaza Authorised Representative, assailing the personal penalty of Rs. 1,00,000/- imposed upon him under Rule 26 of the Central Excise Rules, 2002. 5. Excise Appeal No. 53550/2015 is filed by Shri Bansilal Jadiya, Manager, of the assessee assailing the personal penalty of Rs. 2,00,000/- imposed upon him under Rule 26 of the Central Excise Rules, 2002. 6. Appeal No. 53551/2015 is filed by Shri Abdul Hafiz, Partner of the assessee assailing the personal penalty of Rs. 1,00,000/- imposed upon him under Rule 26 of the Central Excise Rules, 2002. 7. Excise Appeal No. 53573/2015 is filed by Shri Amit Ghai working Partner, assailing the penalty of Rs. 10,00,000/- imposed upon him under Rule 26 of the Central Excise Rules, 2002. 8. Excise Appeal No. 53574/2015 is filed by Shri Saurabh Ghai, Authorised Signatory assailing of the assessee assailing the personal penalty of Rs. 5,....
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....2010 27.3 MT 8,42,503/- 87,778/-(duty @ 10.3 %) Goods cleared on Trade invoice without payment of duty. G January, 2010 81,16,116/- 6,68,736/- (duty @ 8.24%) As per the case booked by Commercial Tax Department Jaipur TOTAL 53,21,78,463/- 6,09,34,430/- 11. The Commissioner has, in the impugned order dropped demand with respect to A of the above table against which Revenue is in appeal. He confirmed the demand with respect to B to G of the above table against which the assessee is in appeal. Since each of these components of the demand is based on separate, distinct evidence, they were examined separately in the impugned order and each component was also argued individually by both sides before us. 12. Section 11A of the Central Excise Act is similar to Section 28 of the Customs Act, 1962 and Section 73 of Chapter V of the Finance 1994 (which deals with Service Tax) inasmuch as all these provide for recovery of duty/tax. However, this power is given to 'the proper officer' unde....
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....were also held to be not 'proper officers' to issue notices under Section 28. 15. The nature of powers under section 11A of the Central Excise Act and Section 73 of the Finance Act, 1994 are similar to the power under Section 28 of the Customs Act. However, this power has been conferred on 'the proper officer' under the Customs Act and on 'the Central Excise officer' in the other two Acts and this dissimilarity implies that the Central Excise officer need not be 'proper officer' and the similarity lies in the use of the definite article 'the' instead of 'a' or 'any' or 'any of the', etc. The meaning of the definite article 'the' when used in any law was explained by the Supreme Court in Consolidated Coffee Ltd. and others vs. Coffee Board, Bangalore (1980) 3 SCC 358 and it was held as follows: "14. Secondly, and more importantly, the use of the definite article 'the' before the word 'agreement' is, in our view, very significant. Parliament has not said 'an agreement' or 'any agreement' for or in relation to such export and in the context the expression 'the agreem....
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....e' in the section which has been held consistently by the Supreme Court to mean a particular thing or person. 18. However, the issue of jurisdiction was not a ground in any of the appeals before us nor was it argued before us. We, therefore, now proceed to discuss the arguments on merits from both sides and record our findings with respect to each of the demand above. Both sides relied on various case laws which apply to more than one component of the demand. Therefore, before we proceed to discuss the facts of each component of the demand, we proceed to discuss the case laws relied upon and the ratio laid down therein. 19. Learned Departmental Representative of the Revenue relied on the following case laws: i) National Boards vs. Commissioner of Central Excise, Calicut 2014 (313) ELT 113(Tri-Bang) wherein it is held that no standard formula can be applied across the board and each case is unique and the entirety of the particular material facts of the case. ii) Commissioner of Central Excise, Salem vs. CESTAT Chennai 2019 (366) ELT 647 (Mad) in which it has been held that if the department is able to prima facie establish a case of clandestine removal, ....
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....ourt held that all the materials on which the Customs Authorities have relied was set out and it was then for the appellant to give a suitable explanation. xii) Jethamal Pithaji vs. Assistant Collector of Customs, Bombay and another 1983 (13) ELT 1524 (SC) in which the Supreme Court held that if two parts of the statement are inextricably linked together, they must be read together but if they are severable, one part can be accepted which the court finds no reason to disbelieve. 20. Learned Counsel for the assessee relied on the following case laws: (i) Ambika International vs. UOI 2016-TIO-1238-HC P & H in which the High Court held that procedure prescribed under Section 9D of the Central Excise Act, 1944 is mandatory and must be followed to admit statements made before the officers of Central Excise. (ii) Commissioner of Central Excise, Delhi-I vs. Vishnu & Co. Pvt. Ltd. 2016 (332) ELT 793 (Del) in which Delhi High Court distinguished Bhoormull and said that it was passed in the context of Sea Customs Act where the initial onus of proof on the Department can be sufficiently discharged by circumstantial evidence and then the onus shifts on to the pers....
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.... e) Allegations of statements being made under threat, duress or coercion must be supported by the facts. If a person is under coercion and forced to make a statement, as soon as the coercion or threat is removed, it is reasonably expected that the person would complain. Therefore, belated retractions must be examined with circumspection. f) Merely because the statement is retracted, it does not nullify the statement completely. It must be appreciated in the context of the other evidence available on record. g) If cross-examination is held, the results of the cross-examination must also be considered. h) If documents in the form of Computer printouts are relied upon, then they must be accompanied by the necessary certificates to render them admissible as evidence. i) Demand cannot be raised presuming clandestine removal simply based on electricity consumption or figures in the balance sheets. They must be examined along with the other documentary evidence. 22. To sum up, every case of alleged clandestine removal must be examined based on the evidence available produced by the department. It is true that everything is recorded in the offi....
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....enever a truck is supplied to a party he issued a GR and made entries in the GR wise register. The trucks provided to the noticee are also entered in the GR wise register. The GR wise registers were resumed from his office by the DGCEI officers but they were later released to him. As regards the statements which he made before the inquiry officers, he submitted that they were not voluntary but given under pressure. He said that he had deposed true facts before the inquiry officers but he was not allowed to write them. He further stated that his original statements were, therefore, not correct and the statement made during cross-examination is true. (b) The RUD 24 (booking registers) are third party documents. (c) The booking register is a rough record maintained by the staff of Shri Moin Khan according to his convenience and the statements made by Shri Moin Khan during the investigation. During cross-examination he did not support the allegation of clandestine removal. (d) GR wise registers maintained by Shri Moin Khan were, according to him, the records of actual transport of goods. These GR wise registers were resumed by the officers from him but they w....
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....any unaccounted money recovered from the assessee. (l) The assessee has submitted statements from 135 of its buyers who deposed that they received excisable goods from the assessee only on duty paid central excise invoices. (m) For all the reasons the demand of duty made in the SCNs based on RUD-24 (booking registers) of the transporter alone is not sustainable as it is a third party document, not authentically maintained, contrary to customary practice and there are no backward and forward linkages by way of documentary evidences such as investigation pertaining to purchase of raw-material financially flow back. 26. The assessee supports this part of the impugned order. Revenue is aggrieved by this part of the impugned order and has appealed against on the following grounds: (i) Booking registers resumed from the transporters indicate date wise entries destination for trucks provided by the transporter to the assessee. When the entries of trucks in these registers were compared with the invoices, it is found there were invoices against some entries and no invoices against others. On some dates even all entries matched with the invoices. Therefore, the....
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....ve the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue." 27. It is, therefore, the submission that Revenue has proved the clandestine removal of the activity, with sufficient evidence in the form of booking registers, Statements of Shri Moin Khan and Shri Hussain Khan and the electricity consumption that there was indeed clandestine manufacture. It is the submission of the Revenue that the Commissioner was not correct in dropping the demand on this account. 28. Learned Counsel for the appellant vehemently contends the Department's appeal and supports the impugned order so far as this part of the demand is concerned. He submits as follows: (i) The six booking registers were seized from New Vikas Transport Company on 14.09.2010, i.e., 22 months earlier while investigating a case of another company. (ii) Of the four statements dated 14.09.2010, 04.10.2010, 20.07.2012 and 16.11.2012 of Shri Moin Khan, proprietor of M/s. Vikas Transport Company, two, i.e., statements dated 14.09.2010 and 04.10.2010 were recorded while investigating a case ....
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....nd demand has been made against all entries made in the booking registers treating them as clandestine removal even in cases where there is corresponding invoice number and evidence of duty having been paid. (vi) So far as the statements of Shri Moin Khan are concerned, they were tested during adjudication through cross-examination and Shri Khan clarified to position as above. Further, it is to be noted that the adjudicating authority had dropped penal proceedings under Rule 26 of Central Excise Rules, 2002 against Shri Moin Khan for abetement. And this dropping of penalty against Shri Khan has not been assailed by the Revenue. (vii) So far as the alleged consumption of power as reported by AVVNL is concerned, this pertains to months of May, June and July of 2012 whereas the demand, based on the six booking registers covers the period 1.12.2007 to 14.09.2010. Therefore, the allegation of excess power consumption does not support the alleged clandestine manufacture and removal. (viii) Shri Hussain Khan, Labour Contractor is said to have stated that manufacture is being done in full force on Sundays by the assessee and the labour for the same is being paid ....
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....nder the Customs Act Section (138 B) lay down the circumstances under which the Statements made before the officers are relevant in either a prosecution in the court or any other proceedings under the Act to prove a fact are relevant only if the procedure laid down under Section 9D of the Central Excise Act is followed. 32. In this case, the statement of Shri Moin Khan was relied upon in the SCN and he was cross-examined during the adjudication proceedings. In his statements before the investigating officer Shri Khan had said that trucks were supplied against all the entries in the booking register to the assessee/appellant. During cross-examination he said that those statements were made under duress and that he was not allowed to write the correct facts by the Department at the time of recording the statements. He further explained that whenever a truck owner approached him, he would enter his details on the left side of the booking register and if he can find a suitable load for the destination, he would arrange. On the right side of the register, he would write details of customers who want trucks to transport goods. He further clarified that he has two types of registers on....
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.... relevant only if the pass through the procedure prescribed under section 9D of the Central Excise Act and pass the test of cross-examination. Clearly the statements could not stand the cross examination. It was open for the revenue to declare him a hostile witness and re-examine him to establish that his original statement was true and whatever was stated in the cross-examination was not correct. We do not find from the records that Revenue had done so. Therefore, insofar as the statement of Shri Moin Khan is concerned, the Commissioner has, in the impugned order, correctly relied upon on the clarification provided by Shri Moin Khan during the cross-examination before him. 35. The next argument of the Revenue is that in respect of those entries in the booking register against which there is no corresponding invoice number there were clandestine clearances. The best person to explain the entries in the register is the one who maintained it, i.e., Shri Moin Khan himself. He clarified as to why there were invoice numbers against some entries in the booking registers but not against others. He also said that he told the correct position to the officers but he was not allowed to rec....
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....t required to do something impossible to prove clandestine clearances. All that is required is that production of evidence of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. We agree with the learned Departmental Representative. In matters of such as clandestine removal it is impossible to establish the mathematical decision the modus operandi and the documents. If everything is recorded that it will not be clandestine manufacture. Revenue cannot be expected to do the impossible. However, we find ourselves in agreement with the Commissioner that if there were entries in the booking register without corresponding invoice numbers, and the truck numbers and the mobile phone numbers of the drivers were also given, the least Revenue could have done without any difficulty was to ask the drivers if they had transported the goods on those dates and if so, the details. This could have led to further evidence if there was any clandestine removal. The officers could also have cross checked the GR register with the booking register to see against which entries there were no invoice numbers and confined their investigations and c....
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....008 to 28.6.2012 43. This part of the demand was raised in the SCN and confirmed in the impugned order based on 42 Triplicate copies of GRs recovered from bound books of New Vikas Transport Co. which when compared with the original copy of the GR and the invoice issued by the assessee showed discrepancies. 44. The case of the Revenue is that in respect of these 42 GRs which were found in the office of New Vikas Transport Co., goods were transported but there is no corresponding excise invoice to evidence payment of duty. The case of assessee is that there were some typographical errors resulting in discrepancies but it does not demonstrate that another set of goods were cleared as reflected in the Triplicate copy of the GRs without invoices and without paying duty in addition to clearing the goods on the strength of the original copy of the GRs which are supported by the invoices. The findings of the Commissioner with respect to B is a sub-paragraph of paragraph 132 which is reproduced below: "B. Investigation on the basis of statements of Shri Hussain Khan, Labour Contractor, Electricity Consumption Meter reading provided by AVVNL for the month of three months i.e.,....
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.... 27 different buyers of which statements of 9 were recorded by the department. They were cross examined during the adjudication during which they clarified that they have never received any non-duty paid consignments. Of the remaining 18, most have filed affidavits to the effect that they had not received any non-duty paid consignments. GR is a third party document prepared by the transporter over which the assessee has no control and if there are any discrepancies in them, it cannot be held against them. During cross examination before the adjudicating authority, Shri Moin Khan, the owner of New Vikas Transport Company clarified that it is their practice that the name of the consignor, truck number and date are entered in the GRs using carbon paper but details of the consignee and the actual weight are obtained at the time of loading and entered in the original and duplicate copy of the GRs which accompany the goods along with the invoice. These details are obtained by the transporter on phone and entered in the triplicate copy of the GR (the office copy). Therefore, these details are not entered using carbon copy. At times, in noting down the details on phone some errors may occu....
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....there is nothing clandestine about it. Evidence of clandestine removal most usually comes from other records - formal or informal. What is important is whether those documents provide sufficient evidence to hold that there was clandestine removal or not. The allegation of clandestine removal in this case was upheld by the Commissioner based on: a) The discrepancies between the original and triplicate copies of GRs b) Power consumption details from the AVVNL which showed that power consumption on Sundays during three of the months was at par with the consumption on other days of the week but no production was recorded in the RG-1 register by the assessee. Thus, the inference was that the goods so clandestinely manufactured on Sundays were cleared against the triplicate copies of the GRs. c) Statements of the labour contractor Shri Hussain Khan and part time accountant of the assessee that production does take place on Sundays. d) So far as the discrepancies between the original and triplicate copies of GRs and the explanation for the discrepancies provided by the assessee were dismissed as an afterthought. 49. We find that the primary evidence ....
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....the discrepancies leaving no room for a presumption of clandestine removal of goods by the assessee. This part of the demand, therefore, cannot sustain and needs to be set aside and we do so. C. Demand of Rs. 2,92,846/- on 85.125 MT of goods valued at Rs. 29,52,213/- based on the discrepancies between seven (7) invoices and the original copies of the corresponding GRs and the statements of the consignees 50. The findings of the Commissioner in the impugned order with respect to this part of the demand is as follows: "C. The next part of demand of duty pertaining to Serial No. C of the table amounting to Rs. 2,97,846/- is for alleged clandestine clearances of 85.125 MT goods, from the factory of the notice, based on the statement of three consignees, namely, Sudhir Kumar, Proprietor of M/s. Udai Ram and Sons, Balotra, dated 5.11.2012 of Shri Arpit Bhatia of M/s. Jugal Industries, Jaisalmer dated 21.11.2012 and of Shri Murtaza of M/s. Almadar Traders, Pratapgarh dated 25.10.2012 wherein they have admitted that the main noticee has cleared the different consignments of excisable goods on the strength of GRs and invoices mentioned in this table separately. The noticee ha....
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....d out if there was any fraud or evasion but errors are not conclusive proof of clandestine removal. The Commissioner has, in the impugned order, relied on the statements of the consignees recorded during the investigation wherein they said that they received separate consignments on the GRs and Invoices. The consignees were cross examined during examination and they denied having received separate consignments on the GRs and invoices. While recording that the consignees were cross-examined, the Commissioner is surprisingly silent on what was said during cross-examination. He, however, indirectly records that they have denied receiving double consignments by mentioning that the assessee has relied on the cross examination. In other words, the learned Commissioner has found it proper to rely on the original statements made during investigation and ignore the cross examination before him without any giving any reason. He also recorded that the assessee argued that no inquiry was conducted with the authors of the GRs and the truck drivers and held that it is not necessary because the consignees had stated that they had received separate consignments under the cover of GRs and invoices.....
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....g cross examination, however, he said that the entries (on the left side of the slip) related to supplies made by M/s. Bagherwal Traders, Kota to third parties on which they (i.e., Bajrang Iron Store) received commission. In support of this statement, Shri Jadiya submitted 13 invoices issued by M/s. Bagherwal Traders, which clearly indicated the quantities and truck numbers in the slip. He said that these were supplied directly to the customers by M/s. Bagherwal on instructions of M/s. Bajrang Iron Steel who received a commission. In the impugned order, the Commissioner has recorded this fact but declined to accept the invoices submitted by the noticee (M/s. Bansiwala) and co-noticee (M/s. Bajrang) on the ground that M/s. Bagherwal had not submitted an affidavit along with the invoices and in the absence of such an affidavit, third party documents cannot be considered. He rejected the clarification given during the cross-examination as well as the invoices produced in support of the clarification and confirmed the demand based on the original statement before the authorities. 55. Learned counsel submits that the Commissioner rejected the invoices without verifying their genuinen....
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....produced before him on the sole ground that the invoices were not accompanied by an affidavit. If the original hand written slip and all the other documents used as RUDs in the SCN could be accepted without any affidavits, there is no reason why the invoices could not be accepted so. The slip recovered from M/s. Bajrang is not in dispute. What the figures therein represent was explained in the original statement of Shri Jadiya which must pass through the procedure under Section 9D of the Central Excise Act to be admissible. On passing through this procedure, cross examination has negated the explanation given before the officers and has also provided invoices in support of such a negation. Further, the report of NHAI produced by the assessee also support its case that the trucks did not move from its place, Ajmer to Chittorgarh but moved from Kota (where Bagherwal is located) to Chittorgarh (where Bajrang is located) Thus, there is no basis left for this part of the demand and it cannot sustain and needs to be set aside. E. Demand of Rs. 37,476/- on 7.580 MT of goods valued at Rs. 3,03,200 seized from M/s. Rajasthan Enterprises, Chittorgarh 57. Steel Bars weighing 7.580 MT we....
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....ce of two police officers. He denied having ever purchased goods without bill from the assessee. 59. The Commissioner has, in the impugned order, rejected the contentions of the assessee. He held that although the Panchnama was drawn in English, it also contains the statement by Shri Abdul Hafiz in his own handwriting in Hindi. During cross examination, Shri Hafiz said that he procured the seized goods in exchange of sale of TMT bars of other brand but has not given the details of the dealer or details of invoice. Therefore, it was held that the seized goods do not lose their evidentiary value. He also held that the toll nakas do not indicate that goods manufactured by M/s. BRM have not crossed the toll nakas during the period and have not gone to the premises of Shri Hafiz. Therefore, the Commissioner has upheld this part of the demand. 60. Learned counsel reiterates the submissions made before the Commissioner and argues that the department has not produced any clinching evidence of the goods having been clandestinely cleared by the assessee. Learned departmental representative supports the impugned order in respect of this part of the demand. 61. We have considered the ....
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....t the report from NHAI only says that particular truck has not passed that route and it does not say that BRM branded goods have not passed that route. Therefore, the implication is that even if the particular truck has not passed, goods could have still been removed and he confirmed this part of the demand. We disagree with this reasoning. Even if BRM branded goods had passed that route during the five day period, it does not prove that they were removed clandestinely from the assessee's premises to the premises of M/s. Rajasthan Enterprises. There could be other movement of BRM branded goods from the assessee or anybody else from Ajmer to anybody in Chittorgarh during the five day period. What is important is to establish whether the seized goods were transported without paying duty from the assessee's premises to the premises of M/s. Rajasthan Enterprises. The burden of proving, of course, rests on the Revenue which asserts so. The evidence produced by the Revenue is the statement that they were carried in the truck of the particular number which has not even passed that way during the relevant period. Therefore, this part of the demand cannot be sustained and needs to b....
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.... The entire quantity of 27 MT of goods was not brought into the factory but are said to have been kept in the transporter's premises for a period of seven months until 11.11.2010. It is also said that the returned goods were not even entered into the assessee's books of accounts for seven months and were entered only on 11.11.2010. There is no satisfactory account of where the goods were stored this long and if the transporter had kept them for the entire seven months free of cost. The assessee is both a manufacturer and a trader of the goods and we find it unbelievable that if goods are returned by the buyer after four months, they accept the rejection and thereafter do not enter the details of the goods for another seven months and do not sell the returned goods for seven months. The day the next invoice is issued, they entered the goods returned seven months before. Given the factual matrix of this case, we find that the Commissioner was right in concluding that the assessee's explanation was not acceptable and that there is no corresponding purchase invoice for the goods sold on 11.11.2010 on a trading invoice and hence, it was a case of removal without paying duty.....