TaxTMI 
TaxTMI 
2024 (10) TMI 1671
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....this amount the party has already deposited Rs 10 lakh 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 u....
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....ntative of Appellant 1; → administration and accounts office of M/s KCPL, M/s SCL and M/s SRRIPL is in the same building 122/235 Fazalganj, Kanpur; → he looked after 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 pan....
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....n the quantities verified and the quantities as per records. Shri Navin Jain, Authorised Signatory in his statement recorded on 19.12.2013 stated that → weight of Ingot has been taken as 95 Kgs per pc. As weight of ingot varies per piece this might be the reason for difference. → Regarding shortage of 170.560 MT in the stock 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; → ....
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....acture of MS Ingots in their factory: → on being asked that in the documents of Shri Sanjay Tewari, a quantity of 192.330 MTs of sponge iron has been shown as receipt on various dates during 2010-11 and in his statement dated 24.12.2013 he stated that the entries of receipt and consumption in the documents resumed from his house do not match with the factory records and that it appears that the purchase of sponge iron in the resumed records is not accounted for in the 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 i....
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....om them by invoking extended period under the proviso to erstwhile Section 11A(1) read with present Section 11A(4) of the Central Excise Act. 1944 and Rs 10 Lakhs deposited by M/s KCPL during investigation should not be appropriated towards duty payable by them, (II) interest under erstwhile Section 11AB read with present Section 11AA of the Central Excise Act, 1944, should not be recovered from them on delayed payment of duty leviable on clandestinely removed goods; and (iii) penalty should not be imposed upon them under Section 11AC of the Central Excise. Act, 1944 read with Rule 25 of Central Excise Rules, 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 impug....
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....clone resumed, sealed, unsealed and data retrieved by the technical expert. → Demand is based on reasonable suspect, bald and opaque allegations, wild inferences → Such demand is not sustainable in view of the following decisions: o Flevel International [2016 (332) ELT 416 (Del)] o Arya Fibres Pvt Ltd. [2014 (311) ELT 529 (T)] o Raghunath Interenational Ltd. [Final Order No 70006-70059/2022 dated 18.01.2022] affirmed at [2023 (2) CENTAX 216 (ALL)] o Synergy Steels Ltd [2020 (372) ELT 129 (T-Del)] o Shakeen Alloys Pvt Ltd [2013 (296) ELT 392 (T)] upheld at [2014 (308) ELT 655 (Guj)] and affirmed at [2015 (319) ELT A 117 (SC)] → Thus in absence of any investigations in respect of consumption of electricity, excess labour used, transport vehicles, payments made or amounts received 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 ....
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....ited by them in support of their argument. 28. Regarding maintainability of Panchnama dated 14.12.2012 drawn in the factory premises of M/s Kundan Castings Pvt. Ltd. and statements of Shri T.S. pandey (RUD No 1 and 2 respectively): On perusal of records it is seen that the entire search in the factory premises of M/s Kundan Castings Pvt. Ltd. under Panchnama dated 14.12.2012, was conducted under the authority of valid search warrants issued by the competent authority and in presence of Shri T.S.Pandey, authorized signatory of the party, who in turn reported to the owner of the company Shri Navin Jain. In their own submissions in the defense reply, the party had accepted the fact that Shri T.S.Pandey is the in charge of the office for maintenance of records. It is clear therefore that Shri T.S.Pandey is not only responsible/authorized for signing on invoices but also looks after day to day work of the company like 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 com....
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....ises belongs to the firm in which he works .. He also submitted that Shri Navin Jain, primarily looks after the work of all the three firms namely, M/s KCPL, M/s SRRIPL and M/s SCL, all with a common office premises at 122/235, Plot No. 17, Fazalganj, Kanpur, where he works and looks after the work of all the aforementioned factories as per the directions of Shri Navin Jain. In this case also, the statement of Shri Sanjay Tiwari was not recorded under duress and he never retracted from his statement. Again, 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 On the contrary, I find that, in his statement dated 14.12.2012 and 18.12.12 (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 o....
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....ut they did not respond. However on the date of cross examination, the party did not turn up again as it has done in the past and instead submitted an adjournment letter dated 13.10.2016 producing a list of witnesses in addition to Shri Sanjay Tiwari, for cross examination on a later date. Shri Sanjay Tiwari also did not appear for cross examination and requested adjournment from appearance for cross examination. I find that the party has been using the adjournments for its benefit to buy time in the past as well and in the same corollary, the demand of cross examination at this stage is nothing but a delaying tactics to avoid adjudication proceedings and to delay justice. I also find that proper procedure for effecting search and detention of documents were followed and the Panchnama proceedings and the statements recorded on the spot had not been challenged within reasonable time. The allegation that Panch witnesses were not independent is found to be vague, indefinite and devoid of any material evidence and therefore, not acceptable. 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: ....
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....of Shri Sanjay Tiwari and further explains, admitted and acknowledged the statement of Shri Sanjay Tiwari in his own statement. Shri Navin Jain further explained the quantum of inputs required for manufacture of finish product. Shri Naveen Jain neither retracted his statement nor alleged any coercive method while taking his statement. Therefore, at the stage of adjudication, Shri Jain being responsible for the operation of the company cannot be aggrieved against his very own admitted statement which has not been countered by any documentary proof from his side. Thus the stand of the party that cross examination is required to be given has no basis. Even when an opportunity was given, the party preferred to stay away from the proceedings. In view of the observations and in the circumstances of the case, I therefore, proceed to decide the case on the basis of facts, records and merits of the case. 31. Regarding maintainability of RUD No 9 and calculation of duty: The calculation of duty evasion in the show cause notice on the basis of Page No. 12 of RUD No 9 which is a computer printout has been challenged to be barred from being admitted as evidence under ....
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.... be a stretch of imagination by anyone unless they are well versed with the day to day working of the unit. On being asked about the entries of receipt and consumption of a quantity of 192.330 MTs of sponge iron on various dates during 2010-11 in the documents resumed from the house of Shri Sanjay Tiwari which do not match with the factory records, Shri Navir Jain canrot explain anything, However he stated that the recovery from sponge iron is approx. 90% (ninety percent) in the manufacture of MS Ingots in their factory. Letters were 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 which also proves the non accounted raw material received from fake suppliers and proves that the partys willfully suppressed the actual production of MS Ingots and its clearance without entering them in their statutory records with intent to evade payment of Central Excise Duty amounting of Rs. 11,40,106/ -. Similarly, MS Ingots found short in the factory was also not explained and have been clandestinely removed evading Central Excise Duty amounting to Rs. 79,542/ -. The recover....
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....loyee and authorized person of the Appellant 1; → Shortages of finished goods detected during search of the factory premises 14.12.2012 → Shortages of some of the raw materials detected during search of the factory premises 14.12.2012 4.4 Though Shri Sanjay Tiwari is an employee and authorized person of the Appellant still he cannot in any way step into the shoes of Appellant. Appellant No.2 has not accepted the truth of such documents during the investigation and has refused to comment on said documents or the statements recorded from the Shri Sanjay Tiwari in respect of these documents. It is also evident that Shri Sanjay Tiwari from whose residential premises these documents have been recovered, has not been made party to these proceedings and no penalty under Rule 26 of the Central Excise Rules, 2002 was proposed against him or imposed by the Adjudicating Authority. The presumption under Section 36A with regards to the truth and correctness in respect of the documents recovered from such premises has been negated by various Courts and Tribunals. The truth of these documents needs to be established by way of corroborative evidence gathered during t....
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....tion of demand of duty against the assessee based upon the allegations of clandestine removal leading to the financial burden to the assessee as also resulting in criminal prosecution of the authorized persons is required to be done on the basis of evidences which generates confidence in the prosecution case. As observed in the majority order of the Tribunal in the case of M/s. Kuber Tobacco Products P. Ltd., the mathematical procedure to the last extent may not be required but the distance between "might have" and "must have" is required to be travelled and filled by the Revenue by producing independent evidences on record, which can lead to inevitable conclusion of clandestine activities. As already discussed in the preceding paras, we find absence of such evidences on record, in which case, confirmation of demand against the Appellant and imposition of penalty on various persons would not be justified. We accordingly hold that confirmation of demand to the extent of Rs. 18,33,83,943.00 and imposition of penalty on the said count is unsustainable. 4.10 In case of Mahesh Silk Mills [2014 (304) E.L.T. 703 (Tri .- Ahmd.] Ahmedabad bench observed as follows: "7. Appellant....
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....pute. No material/evidence has been collected from the transporter M/s. Baba Transport Company through whom the goods were allegedly booked on the basis of GRs in question. Only statement of Shri Vijaypal Singh, Proprietor of that transport company was recorded on 2-5-2001 who simply stated that he used to arrange the trucks from outside as and when required by the company for transportation of the goods and had been getting Rs. 25/- as commission from the driver of the vehicle. He had nowhere admitted that the goods booked did not accompany the invoices. No statement of any driver of the vehicle had been recorded who transported the goods. Shri Vijaypal Singh himself had no knowledge about the destination at which the goods were sent by the company." 8. Similarly, in the matter of Nova Petrochemicals v. CCE, Ahmedabad-II, this Tribunal in its Final Order Nos. A/11207-11219/2013, dated 26-9-2013 this bench has held as under in Para 40 : "After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well settled that, in cases of cland....
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....the law, as laid down in the cases, some of which now have been placed before us. The crux of the decision is that reliance on private/internal records maintained for internal control cannot be the sole basis for demand. There should be corroborative evidence by way of statements of purchases, distributor or dealers. Record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. A co-ordinate Bench of this Tribunal has, in another decision, reported in the E.L.T. issue of 5-8-2013 (after hearings in the present appeals were concluded), once again reiterated the same principles, after considering the entice case law on the subject [Hindustan Machines v. CCE, 2013 (294) E.L.T. 43]. Members of Bench having hearing initially differed, the matter was referred to a Third Member, who held that clandestine manufacturing and clearances were not established by the Revenue. We are not going into it in details, since the learned Counsels on either side may not have had the opportunity of examining the decision in the light of the facts of the present case. Suffice it to say that the said decision has also tabulated the entire case law, includi....
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....ded has not been made available to them by the adjudicating authority. In view of the various judgments relied upon, it was also argued that no investigation has been extended to the suppliers of raw materials or purchasers of finished goods to establish whether such clandestine removal of excisable goods have actually been undertaken by the Appellants or not. It was emphasized that cross-examination of the persons whose statements have relied upon is obligatory to be provided especially when the statements are retracted by the Appellants. 11.From the above settled law, it is clear that in a clandestine removal case, the facts of clandestine removal of excisable goods cannot be established only on the basis of certain statements which are retracted later but there has to be positive evidences like purchase of excess raw materials, shortage/excess of raw materials/finished goods found in the stock/factory premises of the Appellant, excess consumption of power like electricity, any seizure of cash during the investigation when huge transactions are made in cash. In the present case also, it is observed, from the annexures to the show cause notice dated 1-5-2009 issued to the....
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.... be positive evidences for establishing the evasion, though contended by the Revenue. In absence of any material reflecting the purchase of excessive raw material, shortage of finished goods, excess consumption of power like electricity, seizure of cash, etc., the Tribunal noted and held that there was nothing to bank upon except the bare confessional statements of the proprietor and of some of the persons connected with the manufacturing activities and such statements were retracted within no time of their recording. The Tribunal also noted the fact that the requisite opportunity of cross-examination was also not made available so as to bring to the fore the true picture and therefore, it concluded against the Revenue observing that not permitting the cross-examination of a person in-charge of records of M/s. Sunrise Enterprises and absence of other cogent and positive evidences, would not permit it to sustain the demand of Rs. 1.85 Crores raised in the Demand notice and confirmed by both the authorities below. Appeal filed by the revenue against the decision of Hon'ble Gujarat High Court has been dismissed as reported at [2015 (319) E.L.T. A117 (S.C.)] 4.12 In case of F....
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....rtages have been detected on the basis of eye estimation and not on the basis of actual weighment of the stocks of raw material or finished goods. In absence of any physical verification of the stocks by actual weighment, the demand made alleging clandestine clearance cannot be upheld in view of the decisions referred by the Appellant during the course of arguments. In case of Nitin Ispat, supra, Delhi Bench has observed as follows: "5. After hearing both sides, I find that Appellants are mainly objecting to recording of panchnama on the ground that it is not practical to weigh the goods without creating the inventory. Inasmuch as there was quite huge stock of ingots available in the factory. I find force in the above contention of the learned advocate. In the absence of inventory, it is neither possible nor practical to weigh such huge quantum of final product. As such, there is every possibility of occurrence of an error in the physical verification of stock. Otherwise also, I find that there is virtually no evidence on record that such excess stock was not entered in the records with any mala fide to clear the same without payment of duty. There is no inculpatory statem....
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....of of shortage - Unless the department is in a position to clearly demonstrate the fact of shortage through actual physical weighment of entire stock, allegation of shortage of stock and consequent illicit removal of finished goods not sustainable - Section 11A of Central Excise Act, 1944 read with Rule 9(2) of erstwhile Central Excise Rules, 1944 - Rule 4 of Central Excise Rules, 2002. [para 5)] - Appeal allowed." The present case is squarely covered by the ratio rendered in the case of M/s. Micro Forge (I) Pvt. Ltd 4.15 In case of Surya Wires Pvt. Ltd [2021 (376) E.L.T. 550 (Tri. - Del.) ] Delhi Bench held as follows: 7. From the above, it becomes clear that the stock verification on the basis of eye estimation and the statements recorded at the time of investigation are the only source of reliance for the adjudicating authority to confirm the demand. Though the documents as recovered at the time of search are also been held to be the evidence proving the clandestine removal by the Appellant, but I observe that documents explaining the noticed shortage were submitted by the Appellant at the very initial stage of replying the show cause notice. There is no den....
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....any other corroborative evidence of removal of inputs cannot be the evidence for the quantity of inputs to be short or to have been clandestinely removed. Tribunal Delhi in the case of Sanco Plastics Pvt. Ltd. v. CCE, Delhi - 2004 (176) E.L.T. 740 has categorically held that allegations for inputs to have been disposed of as such and to have not been used in the manufacture of duty paid finished goods have to be proved with the cogent evidences. The onus is solely of the Revenue to prove as to how much inputs have been used or disposed of. In the absence thereof no charges of clandestine removal survives. The document as relied upon by the Department is absolutely insufficient to prove the removal of inputs clandestinely. No question arises of the confirmation of the demand. The explanation given by the Appellant in their reply to the show cause notices, that too twice, have totally been ignored by the adjudicating authority which otherwise contained the sufficient explanation with supporting documents to prove the case of the Appellant. Resultantly, it stands established on record that the demand has been confirmed merely on the basis of the presumption, which is absolutely not su....