TaxTMI 
TaxTMI 
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2025 (5) TMI 54
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.... Director, some of the key employees, dealers, suppliers of raw materials were also recorded. 3. Based on the investigation, the SCN dt.08.03.2007 was issued, inter alia, demanding duty on excisable goods cleared clandestinely, availment of irregular credit without receiving goods, availment of irregular credit on raw material which is not a raw material. The appellants approached settlement commission in relation to the said SCN, however, the settlement commission referred the case back to the Adjudicating Authority on the grounds of complexity. On adjudication, a total demand of Rs.1,08,48,682/- (Demand of Rs.71,48,792/- (+) Cenvat credit of Rs.36,99,890/-) was confirmed and penalty of Rs.1,08,72,463/- was imposed. In addition, penalty of Rs.5,00,000/- was also imposed on Mr. M.V. Sekhar Rao, Managing Director of appellant company, under Rule 26 of Central Excise Rules, 2002 (CER). Mr. M.V. Sekhar Rao is in appeal against imposition of penalty on him vide Appeal No.E/267/2009. In the same impugned order, the Adjudicating Authority has also imposed penalty of Rs.1,00,000/- each on certain individuals being proprietors and managers of the dealers, dealing with clandestinely remove....
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....der the cover of invoice on the strength of which credit has been taken, she has submitted that the department has not examined the employees of the factory or the transporter to establish whether the goods were actually received in the factory or not. She further argued that the department has relied on various presumptions including the fact that raw material issued shown in RG23A Part-I should match with consumption shown in the private records. However, it ignored the fact that there was balance of raw material also available on the date of seizure, which is indicative that all issues shown in RG23A Part-I were not consumed and therefore, there was difference in issue and consumption of raw material. This submission was not at all examined by the Adjudicating Authority and he has only relied on entries in private records treating them as sacrosanct. 6. On the other hand, learned AR for the department submits that based on the search carried out at the factory premises of the appellant and recovery of various incriminating documents relating to production, clearance, receipt of payment in cash, etc., and subsequent investigation from dealers, suppliers, etc., to corroborate the....
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....nd cash, etc. The diary has information relating to the name of the dealer to whom the goods were sold without invoices and the amount collected in cash against such unaccounted sales. Mr. K. Chinna Rao has accepted that the sales were made without invoices and the payment was collected in cash against such sales. His statement is further corroborated by the statements recorded from Mr. M. Venkat Rao, Manager (Finance) and authorized signatory of the appellant, Mr. D.V. Satish Kumar, Accountant of the appellant. Further, the dealers or the distributors whose names were found in the diary, viz., M/s Renuka Agencies, Ongole, M/s Prakash Traders, Vijayawada, M/s Rohit Plastics, Hyderabad and M/s Pavan Agencies, Karimnagar, in their statements given under section 14 of the Central Excise Act, 1944 admitted the fact of receipt of goods without invoices as indicated in the diary. Thus, there is sufficient corroboration. c) The private records B-58 & B-59 contains different manuscript papers containing the details of removal of finished goods for which no duty paid invoices were available. The authenticity of the entries in the private records is corroborated by the admission of the dis....
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....V. Satish Kumar for accounts of the appellant with ICICI Bank, SBI and GTB and contain entries of transactions in the respective bank accounts of the appellants. In addition, against certain entries, for deposit of cash with above three banks, the author of these books mentioned as 'Gowra' or 'g' or 'G'. Mr. D.V. Satish Kumar, Accountant of the appellant firm, Mr. Gowra Subba Raju, Director of M/s Gowra Petrochem, in their statements, corroborated the version that the inputs were diverted against cash payments and not actually received by the appellant. 8. He has further argued that factory personnel including the Managing Director of the appellant company never retracted the statements. He is relying on the following case laws:- a) Ramachandra Rexins Pvt Ltd Vs CCE, Bangalore [2013 (295) ELT 116 (Tri-Bang)] b) CCCE & ST, Hyderabad-II Vs Peers Technologies Pvt Ltd [2019 (27) GSTL 701 (Tri-Hyd)] c) CCE, Mumbai Vs Champion Confectionery [2010 (262) ELT 865 (Tri- Mumbai)] d) Moontex Dying & Printing Works Vs CCE, Surat [2007 (215) ELT 46 (Tri-Ahmd)] e) Gopal Industries Ltd Vs CCE, Indore [2007 (214) ELT 19 (Tri-LB)] f) Ranjit Bakshi Gupta Vs CCE, Calcutta-III [2007 (149) ....
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....t is contesting that demand is not sustainable because it is not known how Mr. Anand Rao obtained these figures and that they are denying figures recorded under category 'business done'. Whereas, the Adjudicating Authority has observed that the record maintained by the Regional Manager, who is responsible person, contains broad category of articles like chairs, stools, names of the dealers and distributors. The record also contains invoice figures and actual removals and net difference is taken for duty demand. The author of this document i.e., Mr. Anand Rao, vide his statement dt.20.12.2005 and the MD Mr. M.V. Sekhar Rao, vide his statement dt.05.01.2007, have accepted the contents of this document. In fact, we note that MD has admitted that there were certain discrepancies in recording of consumption of raw materials, accountal of finished products produced and clearances and had voluntarily paid an amount of Rs.10 lakhs towards discharge of their duty liability and he admitted that he has obliged to take up the responsibility for any violation of law and co-operate with investigation. Thus, we find that the observation of the Adjudicating Authority that private documents is comp....
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....case of their own brand goods and that difference was possible due to non-consideration of rejections in the production. He stated that he was not able to explain the huge variation. Therefore, we find that the relevancy of private record relied upon by the Adjudicating Authority has not been disputed or contested by the MD of the appellant. We also note that MD has not been able to given any explanation for the variation despite accepting its recording by the concerned people in his factory. In view of the same, we find no infirmity in the conclusion drawn by the Adjudicating Authority in relation to demand covered under Annexure-D3. iv) As far as Annexure-D4 for the period 05/2004 to 02/2005 involving an amount of Rs.17,79,346/- is concerned, we find that in this case also the appellants have mainly contested the same on similar grounds as contested in relation to demand under Annexure-D3. Therefore, for the reasons discussed supra, we find no infirmity in the order of the Adjudicating Authority in this regard. v) As regards demand covered in Annexure-D5 to SCN based on private record maintained by Mr. D.V. Sathish Kumar relating irregular credit amounting to Rs.9,58,918/-, a....
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....f Rs.4,64,991/- irregularly on HDPE granules without using the same in the manufacture of FG. The appellants are mainly contesting that HDPE granules were sent to SPM polymers who were using it for manufacturing furniture parts. In the issue slips, since there was no column printed for HDPE granules, as such, the same was not shown. The Adjudicating Authority has observed that even if HDPE granules were sent to their job worker, that should have been under proper procedure and accounting and therefore, the reply is not tenable. We find that it is an admitted position that HDPE granules cannot be an input which has been used for manufacture of chair by the appellant. Though the claim of the appellant is that it was sent for manufacturing of certain furniture parts but there was neither any evidence to that effect nor any prescribed procedure was followed. Therefore, in the absence of any tangible and cogent evidence, the defence of the appellant is not tenable and therefore, we find no infirmity in the order of the Adjudicating Authority in this regard. viii) Annexure-D8 covers the demand of Rs.1,68,384/- in respect of irregularly availed credit with regard to certain inputs clear....
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....uty paid furniture received from the appellant but in cash. 14. We find that the various objections taken by the appellant are having one common theme that the entire case is based on self incriminating statements and there is no corroborative evidence. We fail to understand that when the Managing Director himself has admitted the veracity of all the documents relied upon, as also the relied upon statements recorded under section 14 of the Central Excise Act, where is the room for doubting the conclusion drawn based on those documents. It is also an admitted fact that none of these statements have been retracted. 15. We have also perused the judgments relied upon by the Revenue in support of their arguments. In the case of Ramachandra Rexins Pvt Ltd Vs CCE, Bangalore (supra), the Coordinate Bench, inter alia, upheld the demand based on establishment of unaccounted production and other related evidence suggesting clandestine removal and relying on the statements of the employees. It was also observed that in the case of clandestine activity involving suppression of production and clandestine removal, it is not expected that such evasion has to be established by Department in mathe....
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.... said observation of the original authority is quite convincing and acceptable. If really the inspecting officials did not make proper verification of the stock at the time of inspection, it is quite normal that the aggrieved assessee would have immediately objected to any such improper method of verification of stock then and there. When two of the officials gave their statements expressing their ignorance about the shortage of clinkers, it was for the appellant to satisfactorily explain the said defect in the maintenance of records or the actual availability of stock. Moreover, the stock verification disclosed a book stock of 1214.579 metric tons when the physical stock available was only 123.500 metric tons of clinkers. That apart, the unloading of coke breeze to the extent of 1445.325 metric tons during the period from 8.4.93 to 13.4.93, as against the quantity of 232.2 metric tons disclosed in Form IV register, only shows that such irregular maintenance of stock in the appellant's manufacturing premises was a usual phenomenon. That apart, when the difference in the quantity of limestone was noted, it also showed the excess quantity of removal of limestone by the appellant.....
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.... chosen to delete the penalty, that itself was a grace shown to the appellant while passing the order impugned in this appeal." 18. The Larger Bench of the Tribunal in the case of Gopal Industries Ltd Vs CCE, Indore (supra), examined, inter alia, the issue of clandestine manufacture and removal based on certain evidences. The relevant para is reproduced below for ease of reference:- "18.1 The "Daily report tin factory" note-book contained details of production and issue of tin containers by the appellant, which did not reflect in the statutory record. The details of production and clearance of tin containers were also shown in the note-book 'Daily production report' separately in respect of the appellant firm which tallied with the figures shown in the 'Daily report tin factory' which contained figures both for the 'new' tin factory as well in the name of the appellant. In this context, it will be noticed that the managing partner Shri Yogesh Garg confirmed in his statement recorded on 29-9-1998 that the documents recovered under the panchnama on 1-9-1998 were pertaining to production and clearance of tin containers by their factory. He stated that these documents consisted of d....
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....ed to the appellant. The nature of particulars contained in this private record clearly go to show their intrinsic authenticity about the clandestine production and removal of the excisable goods by the appellants who had obtained the excise registration for the manufacture of such goods in the firm name. There cannot be more authentic evidence than recovery of the said private record from the appellant's factory which admittedly was prepared and bears the signatures of the supervisors of the appellant, and which is proved to have been maintained in the factory, from the statements of the partner Shri Yogesh Garg, the Electronics Engineer, Shri Awadesh Kumar Saxena who has made several daily reports in the said book, and the authorized signatory, Shri Girijesh Rai in whose presence the note-books were recovered under a panchnama. In answer to question No. 18, Shri Awadesh Kumar Saxena who was shown the Daily production reports, stated in his statement dated 29-9-1998 that all these pertained to the appellants who manufactured the tin containers and that these contained information regarding production and clearance. He also stated in reply to question No. 19 that all challans were ....
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....tted before us that although the aforesaid statements of Managing Director of the Company and other persons were recorded during the course of judicial proceedings but the same were retracted statements, and therefore, they cannot be relied upon. However, the statements were recorded by the Central Excise Officers and they were not police officers. Therefore, such statements made by the Managing Director of the Company and other persons containing all the details about the functioning of the company which could be made only with personal knowledge of the respondents and therefore could not have been obtained through coercion or duress or through dictation. We see no reason why the aforesaid statements made in the circumstances of the case should not be considered, looked into and relied upon. 19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of their own volition and there is no allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corroborated each other. Besides, the Managing Director of the Company on his own volitio....
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.... an open transaction. At times, in such cases of clandestine removal, clinching documents will be available. Thus, if the department is able to prima facie establish a case of clandestine removal, violation of excise procedure, the burden shifts on the assessee to prove that he is innocent. Thus, the standard and degree of proof which is required in other cases may not be the same as that of the case, where the allegation is one of clandestine removal. Similar view was taken in the case of M/s. Lawn Textile Mills Pvt., limited vs. CESTAT and others in CMA No.1011 of 2017, dated 04.09.2018." The Hon'ble High Court also upheld the conclusion of the Adjudicating Authority to the effect that there are good and sufficient reasons as to why the assessee had effected clandestine clearances observing that majority of buyers of the yarn from the assessee have given statements under section 14 of the Act stating that they are manufacturing terry towels from the goods purchased from the assessee in their power looms, which goes to show that they cannot use hank yarn and this evidence was also brushed aside by the Tribunal. Therefore, the order of the Tribunal was set aside being perverse and....