TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 1671
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....akh towards the duty, I order to appropriate the said amount to Government exchequer. II) I confirm the demand of interest leviable at the appropriate rate, on the aforesaid amount and order for recovery of the same from M/s KCPL under Section 11AB read with present Section 11AA of the Central Excise Act, 1944 for delayed payment of duty leviable on clandestinely removed goods. III) I impose an equal penalty of Rs. 3,43,89.580/- (Rupees Three crores forty three lakhs, eighty nine thousand five hundred and eighty only) under Section 11 AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. IV) I also impose a penalty of Rs. 50,00,000/- (Rupees Fifty Lakhs only) on Shri Navin Jain, Director of M/s Kundan Casting Pvt. Ltd., B-52, 53 UPSIDC Industrial Area, Malwan, Distt Fatehpur under Rule 26 of the Central Excise Rules, 2002 .. " 2.1 The Appellant is engaged in the manufacture and clearance of M.S. Ingots falling under Chapter Sub Heading 72061090 of the Central Excise Tariff Act, 1985. 2.2 Searches were conducted in the factory and adjunct premises of Appellant No.1 under Panchanama dated 14.12.2012. Searches were also conducted at premises o....
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....day to day work of the three factories and was in full knowledge of their complete activities; → there may be some documents of unaccounted transactions on which duty was not paid. Appellant 1 informed vide letter dated 01.04.2013 that they had deposited Rs.5 lakh on 15.12.2012 and Rs.5 lakh on 31.03.2013 vide e-receipts 2.6 During search at the residential premises of Shri Sanjay Tewari, 80 loose papers were resumed for further scrutiny vide panchnama dated 14.12.2012. Statement of Shri Sanjay Tewari was also recorded on 14.12.2012 wherein he stated that → he was employed in M/s SCL as Liasioning Officer; → in addition he used to look after store and raw material related work assigned to him; → mainly Shri Navin Jain looks after the work of the three factories (M/s SRRIPL M/s SCL and M/s KCPL) and accordingly, he also looks after the work of the three factories on the orders of Shri Navin Jain; → he has seen the panchnama and the records resumed thereunder: → the resumed records relate to the firms for which he works: → page no. 2 is related to purchase of sponge iron by Appellant 1 and M/s Sigma Castings during 25.04.2010 to 29.0....
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....ock of sponge iron & scrap Shri Navin Jain stated that pulled iron 25 MT is actually a part of raw material and is melted in forming ingot; → pulled iron comes under sponge iron and scrap. However, he could not explain the shortage. Shri Jain also could not explain the shortage of 1.468MT in the stock of silico manganese 2.10 Shri Sanjay Tewari in his statement recorded on 24.12.2013 stated that,- → the documents resumed from his house on 14.12.2012 were prepared by him and were in his own handwriting → that he looks after the work of M/s Sigma Casting Ltd and Appellant 1 as per the directions of Appellant 2; → he explained page No.9 & 10 of the resumed documents that this is production material list for the period from 01.04.2010 to 21.03.2011 of Appellant 1; → that page no.12 contains details of month wise receipts of consumables and raw materials by Appellant 1 for year 2010-11 and total quantity of Silico Manganese is 242.340 MT which is the same as mentioned on page no.9 by pencil against entry at SI.No.21; → page no.29 contains 2 parts of double columns, over one column 'K' is written which is for Appellant 1 and S written i....
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....e factory records, and on being asked to comment he stated that he cannot explain the documents resumed from the residence of Shri Sanjay Tewari; → on being asked about the letters sent to their raw material suppliers viz. M/s Shri Mahakali Trading Co., Allahabad and M/s Shri Krishna Steels, Lucknow which have been returned undelivered Shri Jain stated that they had procured raw material from these suppliers who were existing at the given addresses at the relevant period of time and that he cannot comment about the return of letters 2.13 On the basis of above investigations, it was observed that as per the records resumed from the various premises, Appellant has evaded payment of duty as indicated in the chart below :- A. Duty evaded on MS Ingots manufactured from less quantities of Silico Manganese and Sponge Iron shown as received during 2010-11 Silico Manganese Quantity in MT Quantity received as per records (page no. 12) of Shri Sanjay Tewari (RUD- 9) 242.340 Quantity received as per Form-IV register (RUD-20) 94.89 Short shown in Raw material stock register Form-IV 147.450 Production of MS Ingots from unaccounted Silico Manganese as per page no. 17 which shows....
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....ules, 2002 for contravention of the provisions of the Central Excise Act, 1944 and rules made thereunder, as discussed in the foregoing paras. (iv) Shri Navin Jain, Director of M/s Kundan Castings Pvt. Ltd., B-52,53 UPSIDC Industrial Area, Malwan, Fatehpur is further required to Show Cause to the Commissioner, Central Excise, 7A, Ashok Marg, Lucknow within thirty (30) days of the receipt of this notice as to why penalty should be imposed on him under Rule 26 of Central Excise Rules, 2002." 2.16 The Show Cause Notice has been adjudicated as per the impugned Order-In-Original mentioned at Para 01 above. 2.17 Aggrieved, Appellant No.1 & 2 have filed these appeals. 3.1 Have heard Shri Amit Awasthi and Shri Ashish Kumar Shukla, Advocate for the Appellant and Shri A.K. Choudhary, Departmental Representative for the Revenue. 3.2 Arguing for the Appellant learned counsel submits that: - → the induction furnace works at 1600ºC and following raw materials are fed to produce the ingots; o Sponge Iron o Mild Steel Scrap o Grey Iron Castings o Ferro Alloys o Pig Iron o Sand Mould → The case has been made against the Appellant only on the basis of the certain....
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.... against the clandestinely cleared goods, the demand made solely on the basis of certain documents recovered from the premises of Shri Sanjay Tiwari, has no basis in law, as has been held in following decisions: o Ramesh Kumar Baid and Sons [2020 (374) ELT 879 (Pat)] o Jai Mata Ji Enterprises [Order Dated 22.10.2020 in Writ tax No 573/2020] 3.3 Authorized Representative reiterates the findings recorded in the impugned order. 4.1 We have considered the impugned order alongwith the submissions made in the appeal and during the course of argument. 4.2 We find that the impugned order records findings as follows :- "27. Now I proceed to decide the case. In order to arrive at the correct conclusion I have thoroughly examined the records of the case, Show Cause Notice and its Annexure, Relied Upon Documents to the show cause notice, defense replies, written submissions filed by the parties from time to time and the submissions made by them during personal hearing. The grounds taken by both the party's to challenge the subject Show Cause Notice is summarized as under: → maintainability of Panchnama dated 14.12.2012 drawn in the factory premises of M/s Kundan Castings Pv....
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.... production of ingots, procurement of raw material and clearance of ingots as per his own admission in his statement. I find that having made him authorized signatory for signing of invoices and responsible to look after day to day work of the company, the contention of the party that he is not a technical person and who may not be conversant with the actual weighment of MS. Ingots is only a cover up effort to shun the responsibility of non accountal and clandestine removal of the finished goods. The statement of Shri T.S. Pandey was not recorded under duress and he never retracted from his statement. Further, on perusal of Panchnama, I find that relevant description viz. detailed description of the premises to be searched, introduction of Panch witnesses, introduction of the persons available during search and the introduction of the officers, places from where the document recovered, detailed list of documents resumed etc. Each and every activity has been recorded in detail in the Panchnama. Shri T.S. Pandey, in his statement dated 14.12.2012 expressed satisfaction over the manner of the search and verification and drawing of Panchnama. This fact has also been incorporated in....
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....2.12 (RUD No 5 and 10 respectively) Shri Navin Jain, Director and Authorised Signatory of M/s KCPL agrees with: → the contents of the panchnamas dated 14.12.2012 drawn at the factory premises of M/s Kundan Casting Pvt. Ltd. Malwan (RUD 1). → office premises at 122/235, Plot No. 17, Fazalganj, Kanpur (RUD 4). → Residential premises of Shri Sanjay Tewari at 112, Meerpur, Cantt., Kanpur (RUD 7). Further, on being shown the statements dated 14.12.2012 of Shri Triveni Shankar Pandey (RUD 2) and Shri Sanjay Tiwari (RUD 8), he agreed with its contents as well and appended his signatures on the same. He has neither challenged the above statement to be made under duress nor retracted upon Therefore, on the basis of foregone discussion, the allegation of the party regarding maintainability of Panchnama dated 14.12.2012 drawn in the factory premises of M/s Kundan Castings Pvt. Ltd. (RUD No 1); statement of Shri T.S.Pandey (RUD No 2); Panchnama dated 14.12.2012 drawn at the residential premises of Shri Sanjay Tewari, 112, Meerpur Cantt. Kanpur (RUD No 7), statement dated 14.12.2012 by Shri Sanjay Tiwari (RUD No 8) is accordingly rejected. 30. Regarding opportunity of....
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....le. The Hon'ble Tribunal in case of Liyakat Shah Vs. CCE, Bhopal (2000 (120) ELT 556 (T.)] had observed in para 13 and 14 of its order that: In the facts and circumstances of the case we therefore find that refusal to allow cross-examination of the seizing officers did not amount any failure of principles of natural justice an to and in view of the detailed reasons given by the adjudicating officer for rejecting the said request, it cannot be said that he had arbitrarily dismissed the prayer for cross examination of the seizing officers. In the above view of the matter we do not find that the failure to cross examination of the seizing officer has resulted in any mis- carriage of justice or contravention of the principles of natural justice ...... I also find that the Hon'ble Allahabad High Court in Ashish Kumar Chaurasia vs Commissioner CESTAT reported in 2015 (325) E.L.T 250 (All.) followed the order of the Hon'ble Supreme Court in case of Surjeet Singh vs Union of India reported in AIR 1997 SC 2560 where the Hon'ble Supreme Court held that "........... the confessional statements of the Appellant who made them are binding on them ......" This decision of ....
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....out has been challenged to be barred from being admitted as evidence under Section 36-B sub section 2 of Central Excise Act, 1944 read with Indian Evidence Act, 1872. They contend that on the basis of a third party private document recovered from third party premises, how can the product Mild Steel M.S.Ingots can be manufactured and that too from alleged Silico Manganese which is only one of the petty raw material and therefore the charge of clandestine removal can not be upheld on the basis of such document. Several case laws of Hon'ble Tribunal have been cited by the noticees in support of their argument. In this regard. I would like to quote the statements of Shri Sanjay, Tiwari dated 24.12.2013 (RUD-14) from whose premises the said document was recovered and the statement of Shri Navin Jain dated 01.05.2015 (RUD-17) recorded under section 14 of the Central Excise Act, 1944. Shri Sanjay Tiwari has stated that he boks after the work of M/s SCL and M/s KCPL, Malwan as per the directions of Shri Navin Jain, Authorised Representative of M/s KCPL. Shri Navin Jain in his statement to Question No 1 has stated that Mr. Sanjay Tiwari is an employee of M/s Sigma Castings Ltd, howeve....
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.... Duty amounting to Rs. 79,542/ -. The recovered private documents have been proved to be genuine and reliable having evidentiary value as per Section 36A of Central Excise Act, 1944 as nothing has been proved otherwise. In this regard, I would like to cite the judgment of the Hon'ble Tribunal in case of CCE, Surat-I Vs. Umiya Chem Industries The Hon'ble Tribunal in case of CCE, Surat-I Vs. Umiya Chem Industries [2005 (185) ELT 410 (T.)] which has held that " ......... as per Section 36A of Central Excise Act, 1944 the truth of such documents can be presumed to be true unless the contrary is proved ....." Further, Hon'ble Supreme Court In case of Khet Singh Vs. UOI [2002 (142) ELT 2013 (SC)], in Para 16 of its judgment has held that the evidence collected as above will not become inadmissible as follows; "... law on the point is very clear that even if there is any sort of procedural illegality in conducting the search and seizure, the evidence collected thereby will not become inadmissible and court would consider all the circumstances and find out whether any serious prejudice had been caused to the accused .... " Hence, in view of the Hon'ble Supreme Cou....
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....ion. Simple recovery of these documents does not establish the case against the Appellant. 4.5 Incidentally we also observe that Shri Sanjay Tiwari, from whose possession and premises these documents were recovered, has not been made noticee/ co-noticee in the matter. Not making him co-noticee in the matter the validity of these documents in evidence needs to be looked with pinch of suspicion. Not only he is not co-noticee, Appellants have not cross examined him during the adjudication proceedings. 4.6 Further we notice that the clandestine has been alleged on the basis of receipt of the one of ingredients (Silico Magnese) by the Appellants, of the finished goods manufactured and cleared by the Appellant. The consumption of the said ingredient as per the statement of Appellant No.2, and relied in show cause notice is about 10 kgs per ton of the finished goods, which works out to be 10*100/1000= 1%. No evidence has been produced in respect of any other ingredient used in the process of production. 4.7 From the discussions as above we are not in a position to make out how these documents recovered from the premises of Shri Sanjay Tiwari, become relevant for alleging clandestine cl....
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.... the issue of establishing case clandestine manufacturing and clearance of excisable goods. We find that in the matter of Rajasthan Foils Pvt. Ltd. V. Commissioner of Central Excise, Jaipur [2005 (183) E.L.T. 101 (Tri .- Del.)], relied upon by the Appellant, CESTAT held as under : "6. From the record, we find that the company is engaged in the manufacture of aluminium foils/sheets. The factory premises of the company was inspected by the Central Excise officers on 19-2- 2000 and certain notebooks detailed at Sl. Nos. 1 to 5 of the resumption memo prepared on the date, at the spot, were seized. The entries contained in these notebooks had been tabulated in chart marked Annexure A, to the show cause notice which according to the Revenue, depicted details of clearances in condensed manner during the period in dispute to various buyers and also of the material sent for weighment and the raw material received for the manufacture of the goods during that period by the company. All the entries detailed in Annexure A, had also been shown in Annexure B. The details of the raw material received by the company had been given in Annexure C prepared from the notebook mentioned at Sl. No. 4 of....
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....ria have to be established by Revenues which mainly are the following : (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions; (ii) Evidence in support thereof should be of : (a) raw materials, in excess of that contained as per the statutory records; (b) Instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty. (c) Discovery of such finished goods outside the factory (d) Instances of sales of such goods to identified parties. (e) receipt of sale proceeds, whether by cheque o by cash, of such goods by the manufacturers or persons authorized by him; (f) use of electricity for in excess of what is necessary for manufacture of goods otherwise manufactured and validity 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 document recovered during the search and activities being carried on in the factory of production; etc. Needless to say, a precise enumeration of ....
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.... the Tribunal [Pan Parag India v. CCE, 2013 (291) E.L.T. 81] it has been held that the theory of preponderance of probability would be applicable only when there were strong evidence heading only to one and only one conclusion of clandestine activities. The said theory, cannot be adopted in case of weak evidences of a doubtful nature. Where to manufacture huge quantities of final products the assessee require all the art materials, there should be some evidence of huge quantities of raw materials being purchased. The demand was set aside in that case by this Tribunal." 9. In view of the above legal position and facts available on record, we are constrained to reiterate that evidence of only one diary cannot be made the basis of establishing clandestine manufacture and removal of the fabrics. It has been repeatedly held by the Courts that clandestine manufacture and clearance cannot be readily inferred from few documents and statements unless the allegations are also corroborated and established on evidences, relatable to or linked with actual manufacturing operations. As far as the present demand is concerned, there is no such evidence forthcoming in the records before us to sugg....
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.... in clandestine removal activities, it is very likely that some cash would have been seized. There is not a single instance where either seizure of cash is made or any clandestinely removed goods are seized or raw materials/finished goods were found either short or in excess in the factory premises of the Appellant or at any other place. As per the Panchnama drawn at the factory premises it is shown that there was no excess/shortage of the raw materials or finished goods found. The documentary evidences collected from the business premises of M/s. Sunrise Enterprise and the statements recorded by investigation, can at the most raise a reasonable doubt that some clandestine removal activities are undertaken by the Appellant. However, such a suspicion or doubt has to be strengthened by positive evidences which seem to be lacking in this case. Any suspicion whosoever cannot take the place of evidence regarding clandestine removal of excisable goods. Moreover, after having positive evidences, quantification of duty on clandestinely removed goods also becomes essential. As already mentioned above, the stock lying in the stock yard of M/s. Sunrise Enterprise, Mehsana was found containing....
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....so drawn the attention of the Court to a decision of the CESTAT in Arya Fibres Pvt. Ltd. v. CCE, Ahmedabad-II - 2014 (311) E.L.T. 529 (Tri .- Ahmd.) where the entire law concerning clandestine removal has been discussed and the legal position has been summarised as under : (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions; (ii) Evidence in support thereof should be of : (ii) raw materials, in excess of that contained as per the statutory records; (iii) instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty; (iv) discovery of such finished goods outside the factory; (v) instances of sale of such goods to identified parties; (vi) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him; (vii) use of electricity far in excess of what is necessary for manufacture of goods otherwise manufactured and validly cleared on payment of duty; (viii) statements of buyers with some details of illicit manufacture and clearance; (ix) proof of actual transportation of....
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....anted. Reference can be made to majority decisions in the case of Bhillai Conductors (P) Ltd. v. CCE, Raipur [2000 (125) E.L.T. 781 (Tri)] as also to Tribunal's decision in the case of A. Kumar industries v. CCE Daman, Vapi [2010 (261) E.L.T. 486 (Tri-Ahmd)]. It stands held in the said decision that a simple failure of non-accounting of goods in the RG1 register do not invite confiscation of the same or imposition of penalty unless there is evidence to show that goods were meant for clandestine removal." 4.14 In case of Shiva Steel Rolling Mills [2005 (186) ELT 326 (T) ] Kolkata bench observed as follows: 5. In the present case, no actual physical verification was done by the Anti Evasion Team. No actual weighments of the goods were done by the authority concerned and no such slips were provided to the Appellants even after their request. Whereas the physical stock report conducted on 20th July, 2000, represents the actual weighment of the shortages. How the authority arrived at such conclusion is not clear. They have not disclosed the basis on which the deficiency was arrived at. No doubt, the physical weighment is not the only method of verifying the stock but there must b....
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....hat onus is on Revenue to prove otherwise with cogent evidences that the goods have been removed by the manufacturer without the duty paying invoices as was held in the case of Bharat Seats Ltd. v. CCE - 2009 (242) E.L.T. 308 (Tri. - Delhi). 8. The documents as relied upon by adjudicating authority below, while confirming the demand are delivery challan, estimated invoice, outgoing sheet etc. but these documents admittedly and apparently have not been co-related with the documents submitted by the Appellant. Perusal of said documents with the delivery challans recovered by the Department, as found annexed on record as well, it is abundantly clear that the delivery challans are in the name of Sona wires Pvt. Ltd. and document of Appellant are proving that Sona Wire were their job worker and the shortage as noticed by the Department at the time of investigation was purely on account of the goods being given to said job worker. This perusal makes it clear that the Department has ignored the supportive documents which are sufficient enough to falsify the opinion of the Revenue formed at the time of the investigation. 9. The another ground for confirming the demand is the shortage n....
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....l is to be established on the basis of preponderance of probabilities, it cannot be merely on the basis of assumptions and presumptions. Clandestine removal has to be established beyond doubt by adducing strong, sufficient and positive evidence and the burden of proving the same is on the Department. 11. I further observe that there is no evidence of procurement of raw-material and consumption thereof. No single payment detail of clandestine sale has been discussed. Nor there is any evidence of any excessive power consumption which is otherwise required for the alleged large scale production. Nor there is any record of recruitment of workers or staff required for alleged massive production with no payment of record of salary and wages to such workers. No document in the form of receipts of any cash or kind on account of clandestine clearance and sale of goods has been seized from the parties. No evidences of removal of excisable goods or procurement of raw materials and its consumption are on record. I rely on the decision of Hon'ble Apex Court in the case of Continental Foundation Joint Venture v. CCE, Chandigarh-I - 2007 (216) E.L.T. 177, while hearing about decision of All....