TaxTMI 
TaxTMI 
2024 (10) TMI 892
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in the facts and circumstances of the case? (iii) whether, in facts and circumstances of the case, the department has discharged the burden of establishing beyond reasonable doubt the clandestine manufacture and removal of alleged assembled T.V. sets from the warehouse/godown at Bhiwandi? 3. The facts leading to the filing of the instant Appeal are stated in brief as follows. The appellant, a partnership firm, is engaged in the business of importing parts of TV sets, which, after import, are stored in their godown at Bhiwandi and from there sold as such. Apart from this, they are also engaged in importing, buying/selling complete TV sets in the domestic market. They had a factory located at Bicholim, Goa where they used to manufacture LED/ TV sets of different specifications and sizes by assembling the parts/components imported by them and were clearing the assembled TV sets on payment of central excise duty and were availing Cenvat credit of the CVD paid on the said imports. According to the appellant, the manufacturing operations in the Goa factory were stopped w.e.f. September, 2015 and thereafter the appellant was engaged only in trading activity from their godown premises....
X X X X Extracts X X X X
X X X X Extracts X X X X
....omplete LED TV sets and not parts or components of TV sets and in order to avoid any litigation, the appellant approached the Settlement Commission and it was settled vide order dated 11.7.2017 of the Settlement Commission. According to learned counsel once the imported components/parts of TV sets were assessed as complete TV sets in SKD [Semi knocked down] form and customs duty was paid thereon, question of manufacture of any TV sets does not arise. Learned counsel also submits that they imported the complete TV sets and kept it in their warehouse/godown at Bhiwandi and neither did they assemble the TV sets in their warehouse nor cleared them clandestinely as manufactured goods. According to learned counsel the goods were sold as such, in the form in which those were imported and that the allegation are based on assumptions/presumptions only without any evidence to support. The only evidence, which has been relied upon in the SCN, is that in the godown of the appellant at Bhiwandi, the officials found some wooden tables adjoining each other, which were covered with plastic for smooth and soft surface alongwith certain electrical points at regular intervals on the walls facing the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vailability of the TV sets, panels, its spare parts and the availability of the required facility for the assembly of the LED TV at the godown premises of the appellant coupled with the statement of the employees u/s. 108 ibid clearly establish that the appellant was carrying out manufacturing activities at its Bhiwandi godown premises. Learned Authorised Representative also relied upon the purported statement of Mr. Moti Bhatia, partner of the appellant to the DRI officials in which he allegedly admitted that the consignments imported by him was LED TV panels and parts of TV in SKD conditions which used to be assembled as TV sets at his factory for sale and for the said purpose he employed two technicians at his warehouse for assembling the TV sets out of the imported consignments. 8. We have heard learned counsel for the appellant and learned Authorised Representative for the Revenue and perused the case records including the cross-objection and written submissions/case laws placed on record by the respective sides. In the instant appeal everything revolves around the issue whether the appellant is carrying out manufacturing/ assembling activities at their Bhiwandi godown. If th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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." In nutshell it can be said that the theory of preponderance of probability would be applicable only when there are strong evidences heading to one and only conclusion of clandestine activities. The said theory cannot be adopted in cases of weak evidences of a doubtful nature. The department has to prove the allegation of clandestine removal on the basis of cogent corroborative evidence. 11. To establish the theory of clandestine manufacture and removal, the department has to produce the evidence of import or otherwise acquiring of alleged compon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....officials in DRI office on their official computer and cannot be said to be voluntary. Even if for the sake of arguments we accept the findings of learned Commissioner, still such statements, in the absence of any corroborative evidence cannot be made the sole basis to hold against the appellant. Mr.Subhash Gamare, during the relevant time, was working as loader doing loading/unloading work. His purported statements were recorded in English language. Generally one cannot expect such person (a loader) to know or understand English language. During cross-examination when it has been asked from him what has been written in his statement which he gave to DRI, he replied that he doesn't know as he doesn't understand English language and that nothing was explained to him in Hindi language. The said cross-examination is as under:- "Q.1: I am showing your statement dated 05/02/2016, it has signature of Subhash Gamare, Is it your signature? Ans. Yes Q.2: What is written in the statement? Ans.:I do not know Q.3: Did someone explain the statement to you? Ans.: No Q.4: Was Mr.Moti Bhatia was present, during the statement? Ans.:No Q.5: Were you were present during the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion, by the gazetted Central Excise officer or customs officers or DRI, has every chance of having been recorded under coercion or compulsion therefore one has to be very careful and must take all precautions while admitting such statements and should not accept any in which doubt exits about voluntary nature. We all are aware that, on various occasions, such gazetted officers of Central Excise/Customs/DRI etc. resort to certain measures in order to get the confessional statements and it is only in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D (1) ibid mandates that the evidence of the witness to be recorded before the adjudicating authority in order to evaluate the truth out in such type of statements. It is the first principle that justice need not only be done but must also be seen to be done. As per section 3 of the Indian Evidence Act, 1872, a fact is proved only when the Court believes its existence so probable that a prudent man, under the circumstances of the particular case, act upon the supposition that it exists. It is pertinent to mention here that although on the one hand the learned Commissioner perm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l steps against the appellant under I.P.R. or Copyright Act and would have also initiated criminal proceedings, but nothing of that sort has come on record anywhere in the proceedings. 17. We take note that the notice has suggested a conspiracy to evade duties in which Mr. Moti Bhatia allegedly colluded with M/s. Sunder International. At different places in the impugned order, M/s. Sunder International has been referred to as firm and at other Mr. Bhatia referred to as director/partner. It would appear that the adjudicating authority, in disposing off the proposition in the notice has failed to account for the distinction that precedes such designation. If the appellant is a company, there cannot be a conspiracy or collusion for an artificial person has no cognitive ability to conspire or collude. We fail to see how Mr. Bhatia would, by himself, have conspired or colluded to evade duties. If M/s. Sunder International is a firm in which Mr. Bhatia is a partner, it surely does not stand to reason that such a combination can conspire or collude and, in any case, with penalty imposed on the firm, there cannot be a separate penalty on a partner and if the firm is liberated from such de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....verify most of the invoices. But as we find, the case records suggested a different story. The appellant alongwith their reply to the show cause notice had submitted the list of buyers alongwith their ledger accounts, copies of tax invoices and Form 'C' issued by the buyers wherein complete details of the buyer, to whom parts/components were sold, have been mentioned. Those were also submitted before the learned Commissioner during adjudication proceedings but it seems they were not looked into. The Appellant had also placed them on record before us for our perusal and we have taken note of few of them. Learned Authorised Representative also submits that those two customer viz. Vibgyor Photos and Komal International, who only responded to the query sent by the department, also supported the case of the department by stating that they have not purchased any TV panels or parts from the appellant. Here the learned Authorised Representative tried to suggest that it means that those two persons must have purchased complete assembled TV sets and not any parts or TV parts from the appellant. We must not forget that when a specific query has been sent to anyone then generally response come....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are meant only for a particular TV set then it cannot be used in any other TV set. If it is true then in case some part of a particular TV set becomes defective, while in warranty, then the entire TV set would have to be discarded as the spare part of that bar code will not be available. The reason for putting bar codes is that it pertains to a particular model of TV sets and the appellants are trading in complete TV sets as well as its parts and if some TV sets become defective during warranty period or if some customer asked for some spare parts of a particular model then the appellant would require that particular part which would be made easily available with the help of bar code. In our opinion the spare parts with bar codes rather strengthens the case of the appellant that the TV sets were tested in their godown for quality control or breakage of the panels etc. It is the consistent stand of the appellant that the imported goods were sold as such, in the form those were imported, without undertaking any activity of assembling the TV sets in its godown. The department has failed to produce any evidence on record to prove the contrary therefore we accept the stand of the appel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification, under-valuation or inapplicability of exemption notification or otherwise and such application shall be disposed of in the manner hereinafter provided: Xxx xxx xxx" 22. Section 127B ibid extends the jurisdiction of the Settlement Commission to cases in "which the assessee admits short levy on account of misclassification, undervaluation or inapplicability of exemption notification or otherwise." The provisions of Chapter-XIVA of the Act were introduced for settlement of cases involving mis-classification to facilitate disputes resolution expeditiously without going through hierarchy of appellate provisions provided in the said Act. Settlement of cases is an exception to the normal procedure of adjudication of duty liability and other deterrent provisions i.e. levy of penalty and prosecution. The word '....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t to full and correct disclosures having been ascertained. Once the issue has been settled by the Settlement Commission on an application filed by an assessee, the adjudicating authority in different proceedings for different show cause notice concerning same assessee cannot base its adjudication on the findings recorded by the Settlement Commission. Therefore, in our view the Adjudicating Authority is not justified in recording the following findings while relying upon the observations made by the Settlement Commission:- '27 i) I now refer to the Order No. 118/FINAL ORDER/CUS/DRK/2017 dated 11/07/2017 issued by Hon'ble Settlement Commission (WZB) in the case of Noticee, M/s. Sunder International. In the said order, at para 9.4 the Hon'ble Settlement Commission has observed that ..... Xxx xxx xxx 27. iii) In view of above discussion, I observe that it had been comprehensively concluded by the Hon'ble Settlement Commission in their Order that M/s. Sunder International had imported the parts of TV sets in disassembled form. Further, the investigation had brought forth the fact that these parts of TV sets with same Bar code, on assembly brings a complete 'TV set' in existence.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eclaring the same as part of TV instead of TV with an intent to evade Central Excise Duty thereon. Further they have suppressed the correct description of the said goods manufactured by them and also suppressed the correct value of the said goods and not disclosed the said facts to the department. They have not obtained Central Excise Registration for the said place of manufacture located at Bhiwandi. The assessee has admitted the said facts regarding the manufacturing activity carried out at the said premises and clearance of the manufactured goods from the said premises, during the investigation by DRI, thereby they have evaded payment of Central Excise Duty amounting to Rs. 9,93,80,686/-.emphasis supplied] 26. In view of above, there is no dispute that the fact about alleged mis-declaration was within the knowledge of the department in the year 2016 itself when DRI initiated investigation and show cause notice therein was also issued to the appellant by DRI on 15.7.2016. As per case records, the basis of the instant show cause notice is the information received from DRI in the year 2016 itself but still the instant show cause notice came to be issued much belatedly in the year....