TaxTMI 
TaxTMI 
2024 (10) TMI 1670
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....ings Ltd. Since out of this amount the party has already deposited Rs 5 lakh towards the duty 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 Sigma Castings Ltd under erstwhile 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. 2,15,51,887/ -. (Rupees Two crores fifteen lakhs fifty one thousand eight hundred and eighty seven 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 Sigma Castings Ltd., B/19 & 20 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 ....
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.... 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 28.01.2013 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: ....
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.... 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 in second part which stands for Sigma Castings Ltd. → this page contains comparison of quantity and cost of various raw materials consumed per unit in the two factories, and at S. No. 2 quantity of 10.5 in Appellant 1 and 10.2 Kgs in Sigma of S Manganese is mentioned this detail is for the year 2010-11; → he compared the entries of page no.2 with RG 23 A Part-1 for sponge iron and the entries do not match → in page no. 17 cost of Silico Manganese @ Rs.61000 PMT for 10 Kgs. has been worked out as. Rs.610/ -; → on being asked about the presence of records of factory in his house, he stated that the ....
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.... 2.12 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 :- Silico Manganese received during FY 2010-11 Quantity in MT Quantity received as per records (page no. 11) of Shri Sanjay Tewari (RUD-9) 176.284 Quantity received as per Form-IV register (RUD-17) 80.78 Short shown in Raw material stock register Form-IV 95.504 Production of MS Ingots from unaccounted Silico Magnese as per page no. 17 which shows consumption of Silico Magnese in the production of Ingots as 10 Kg. per Ton and statement dated 01.05.2015 of Shri Navin Jain, Director 9550.4 Assessable Value @21909.2 PMT 209241624 Cenvat duty @ 10% 20924162 Education Cess @2% of 10% 418483 Secondary & Higher Education Cess @ 1% of 10% 209242 Total 21551887 2.13 Thus revenue was of the view that Appellant No.1 has evaded the payment of Central Excise duty and cesses amounting to Rs. 2,15,51,887/- contradicting the provisions of Rule 4, 6, 8, 10, 11 & 12 of the Central Excise Rules, 2002. Appellant 2 who is the person in charge of the operati....
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.... receipt of any other raw material and their use in production the demand made alleging clandestine clearance is bad in law as has been held in the following decisions; o Mohan Steel [2004 (177) ELT 668 (T-Del)] o Auto Gallan Industries (P) Ltd [2015 (317) ELT 139 (T-Del)] o Amba Cement & Chemicals [2000 (115) ELT 502 (T- Del)] o Balashri Metals Pvt Ltd. [2017 (345) ELT 147 (Jhar)] o Triveni Rubber & Plastics [1994 (73) ELT 7 (SC)] o Galaxy Indo Fab [2010 (258) ELT 254 (T-Del)] o Dashmesh Castings [2010 (257) EL 225 (P & H)] → Shortage detected during panchnama proceedings is based on eye estimation only. Such shortage determined on the basis of eye estimation cannot be basis for demand as held in following cases: o Nitin Ispat (P) Ltd. [2014 (306) ELT 483 (T-Del)] o Shiv Steel Rolloing Mills [2005 (186) ELT 326 (T- Kol)] o Raghuveer Ispat Pvt Ltd. [2018 (360) ELT 535 (T- All)] o Kasha Laminators Pvt Ltd. [Final Order No 70434- 70438/2017] o Shree Hanuman Loha Pvt Ltd. [2016 (337) ELT 311 (T-Del)] o KL Steels Ltd. [1998 (100) ELT 406 (T)] &rarr....
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....ounds of interested witnesses. → maintainability of RUD No 9 on the grounds that the calculation of duty evasion in the show cause notice is on the basis of Page No.12 of RUD No 9 which is a computer printout barred from being admitted as evidence under Section 36 B sub section 2 of Central Excise Act, 1944 read with Indian Evidence Act, 1872.It has been contended that how can it be deciphered that 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 cannot be upheld on the basis of such document. Several case laws of Hon'ble Tribunal have been cited by them in support of their argument. 31. Regarding maintainability of Panchnama dated 14.12.2012 at the residential premises of Shri Sanjay Tiwari, 112, Meerpur Cantt, Kanpur; statement dated 14.12.2012 by Shri Sanjay Tiwari (RUD No 7 and 8 respectively) The search of the residential premises of Shri Sanjay Tiwari, 112, Meerpur Cantt, was also conducted under the authority of valid search warrants issued by the competent authority under Panchnama dated 14.12.2012 (....
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....12 by Shri Sanjay Tiwari (RUD No 8) is accordingly rejected. 32. Regarding opportunity of cross examination and the allegation that Panch witnesses therein were not independent: After issuance of Show Cause Notice No DGCEI/LZU/KRU/B/CEX/47/2015 dated 08.05.2015 the party sought extension of six weeks for filing defense reply through its letter dated 28.05.2015. The party again submitted a request letter dated 25.07.2015 to further extend the time of submission of defense reply by another two months which was finally submitted only on 19.01.2016 as interim defense reply in which they requested for cross examination of certain witness. The case was scrutinized and the personal hearings were fixed twice in the matter on 14.07.2016 and 29.07.2016 to listen to the party in person so as to decide whether the cross examination is relevant or not in the present case. However, the party again sought adjournments on both the occasions and finally the personal hearing could be held only on 29.08.2016 when the parties again requested for cross examination of the witnesses without giving any proper reason to do the same. It clearly appeared to be an afterthought and d....
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....l 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 Allahabad High Court has been upheld by Supreme Court in 2016 (333) ELT A231. Further it is to mention that the Kerala High Court in the case of N.S. Mahesh vs. Commissioner of Customs, Cochin reported in 2016 (331) ELT 402 (Ker.) had held that " ...denial of cross examination of witnesses where specific reasons are not given for cross examination will not vitiate the proceedings The CESTAT in SAN Internation vs Commissioner of Customs, New....
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....e charge of clandestine removal cannot be upheld on the basis of such document. Several case laws of Hon'ble Tribunal have been cited by them in support of their argument. In this regard, I would like to quote the statements of Shri Sanjay Tiwari dated 14.12.2012 (RUD-8) and statement dated 24.12.2013 (RUD No 13) In which he states that he has been working in M/s SCL as liaison officer and works as per the directions of Shri Navin Jain, who is Director of M/s SCL. Shri Sanjay Tiwari acknowledged the documents recovered from his residential premises as belonging to the firm M/s SCL where he works and looks after the work of stores and raw materials besides any other work assigned to him as liaison officer. He was able to explain all the entries from these documents. In his statement dated 01.05.2015 (RUD-16) recorded under section 14 of the Central Excise Act, 1944, Shri Navin Jain in reply to Question No 2 has stated that Mr. Sanjay Tiwari is an employee of M/s Sigma Castings Ltd, and he also looks after the work of M/s SCL related to purchase of raw materials apart from any other work assigned to him by Shri Navin Jain. It is therefore amply clear that Shri S....
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....n dated 01.05.2015 is exhaustive and by no means, it can 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 176.284 MT 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 Navin Jain cannot 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. 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-l 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 ...... " Furthe....
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....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 the investigation. 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.....
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....rmation 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. Appellants have relied upon several case laws on 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 ....
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....ochemicals 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 clandestine manufacture and clearances, certain fundamental criteria 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 aut....
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....rred 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, including most of the decisions cite before us now, considered them and come to the above conclusion. In yet another decision of a co-ordinate Bench of 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 const....
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....s 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 Appellants, that there were huge cash transactions to the tune of Rs. 11.23 Crores. When such large number of transactions involving huge amounts are being undertaken 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 r....
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....ds 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 Flevel International [2016 (332) E.L.T. 416 (Del.)], Hon'ble Delhi High Court has observed as follows: "55. Mr. Hari Shanker, learned Senior counsel for the Appellant, has also 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 finishe....