TaxTMI 
TaxTMI 
2024 (10) TMI 1670
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....lready 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 adjunct premises of Appellant No.1 under Panchanama dated 14.12.2012. Searc....
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....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: → page no. 2 is related to purchase of sponge iron by Appellant 1 and M/s KCPL during 25.04.2010 to 29.03.2011 → sponge iron was purchased from out of U.P .; → purchase receipt of Appellant 1 is 192.330 MT &....
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....e 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 documents of 2010-11 were left in his house which were resumed by the officers on 14.12.2012 under panchnama; → the records do not match with the factories records 2.10 Appellant No.2 in his statement recorded on 20.03.2014 expressed his inability to comment on the statement of Shri Sanjay Tewari dated 24.12.2013. 2.11 In his statement dated 01.05.2015 Appellant No.2 stated that....
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....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 operations in the unit has devised the modus opearndi and was actively involved in the said evasion of duty. 2.14 A Show Cause Notice dated 08.05.2015 was issued to the Appellant No.1 and Appellant No.2 and others asking them to show cause as to why :- "(1) Central Excise duty amounting to Rs.2,09,24,162/-, Education Cess Rs.4,18,483/-, Secondary & Higher Education Cess Rs.2,09,242/- (total Rs.2,15,51,887/-) (Rs. two crore fifteen lakh fifty one thousand eight hundred eighty seven only) should not be....
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....eedings 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)] → No investigations have been done from any transporter etc. → No documents to the contrary alleged or shown to be recovered from the computers which were 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 ....
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....12 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 (RUD-7) and in the presence of Shri Anil Tiwari, elder brother of Shri Sanjay Tiwari. Statement of Shri Sanjay Tiwari was also recorded on 14.12.2012 (RUD-8) under section 14 of the Central Excise Act, 1944 wherein he stated that he is working as liaison officer in M/s Sigma Casting Pvt. Ltd., and the documents recovered from the premises belongs to the firm in which he works. He also submitted that Shri Navin Jain is the Director of M/s Sigma Casting Ltd. who 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. Shri Sanjay Tiwari had submitted in his statement that he works and looks after the work of all the aforementioned factories as per the directions of Shri Navin Jain. The statement of ....
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....evant 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 delaying tactics at this stage and also at the time of filing of interim defense reply dated 19.01.2016 which in itself was filed very late after the issuance more than nine months from the issuance of Show Cause Notice 08.05.2015. However, on the principle of natural justice, the party's request for cross examination was acceded to and letters were sent to them for cross examination of witness Shri Sanjay Tiwari on 14.10.2016. They were also informed telephonically several times about the said opportunity of cross examination and to submit the details of the witnesses they want to cross examine but 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 ....
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.... " ...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 Delhi reported in 2016 (337) ELT 92 (Tri. Del.) also held that " ..... .it is a settled law that the denial of cross examination which does not cause any prejudiced to the final outcome is not violative of the principle of natural justice and it shall not vitiate the proceedings ... ". In this case I find that the party did not give any specific reason for cross examination of Shri Sanjay Tiwari or any person. Shri Sanjay Tiwari is their own employee working under Shri Navin Jain, Director, SCL. Shri Sanjay Tiwari clearly admitted the factual position in his statement which was only within his personal knowledge regarding the entries in the document recovered from him. He has neither alleged that such statement was taken under duress nor he had retracted his statement. Shri Navin Jain confirmed the statement of Shri Sanjay Tiwari and further explains, admitted and acknowledged the statement ....
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....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 Sanjay Tiwari has been actively involved in the working and activities of purchase of raw materials for M/s SCL as well as the firms M/s KCPL, M/s SRRIPL and M/s SCL have common office premises at 122/235, Plot No. 17, Fazalganj, Kanpur. Regarding the contention of the party regarding RUD NO 9 being computer printout 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, I am of the view that though the Page No 11 of RUD No 9 which is a computer generated sheet containing details of month wise receipts of consumables and raw materials for year 2010-11 showing total quantity of raw material Silico Manganese as 176.284 MT, but it has been correlated with page no. 2 containing date wise receipt of the same in respect of M/s SCL, Lucknow. The quantity of 176.284 MT of Silico Manganese shown as received during 2010-11 was verified from the stock register form-IV....
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....(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 judgement 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 Court's judgement referred above and the presumption of truthfulness of documents in terms of Section 36A of Central Excise Act, 1944, I hold that the documents recovered and resumed by the officers on 14.12.2012 from the premises of Shri Sanjay Tiwari are not sourced or fabricated and their truthfulness and genuineness is not questionable as they are well explained and have enough evidentiary value. The allegation of the p....
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....se) 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 clearance by the Appellant. 4.8 The basic input in any unit having induction furnace for production of ingots, is electricity, sponge iron and scrap. No investigation has been done in respect of these basic inputs or with regards to the furnace installed in the factory premises. The impugned order is totally silent on this aspect. In absence of any such evidence with regards to reheating furnace we are not in a position to determine the quantum of clandestine clearance alleged in the notice or confirmed by the Adjudicating Authority. 4.9 In absence of any corroboration about the factum of production, consumption of raw ma....
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....ese 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 the resumption memo. But it is quite evident even from the impugned order itself that certain entries made in all the five seized notebooks tallied with the invoices issued under Rule 52A, by the company at the time of clearances of the goods. The entries in the notebooks mentioned at Sl. Nos. 4 and 5 of the resumption memo, pertains to goods sent for weighment by the company to the Dharamkanta and from these entries, it could not be inferred that these goods were cleared to the buyers without payment of duty specially when there is no evidence/statement of any buyer of having received the goods without cover of invoice o....
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....r 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 all situations in which one could hold with activity that there have been clandestine manufacture and clearances, would not be possible. As held by this Tribunal and Superior Courts, it would depend on the facts of each case. What once could, however, say with some certainty is that inferences cannot be drawn about such clearances merely on the basis of note books or diaries privately maintained or on mere statements of some persons may even be responsible official of the manufacture or even of its Directors/partners' who are not even permitted to be cross-examined, as in the present case, without one or more of the ev....
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....ilable 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 suggest clandestine manufacture and clearance by the Appellants. Mere reliance on note books/diaries or statements cannot be considered as enough evidence for clandestine manufacture and clearances. 4.11 In case of Sakeen Alloys Pvt Ltd. [2013 (296) ELT 392 (T- Ahmd)], Ahmedabad bench held as follows: "5.We have carefully gone through the rival submissions and perused the records. In this case, the case of clandestine removal has been made out against the Appellant M/s. Sakeen Alloys Pvt. Limited on the basis of records/pen-drive recovered from the business premises of M/s. Sunrise Enterprises. In the statements of Managing....
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....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 the goods received from M/s. Sakeen Alloys Pvt. Limited under proper invoices. When the goods received under proper invoices are found in the stock yard of M/s. Sunrise Enterprise, then it is possible that out of such goods certain quantities were sold to various customers by accepting payment in cash. In such a situation, the quantification undertaken by the investigation becomes doubtful and incorrect. For this purpose cross-examination of the person Incharge looking after the records of M/s. Sunrise Enterprise was must, which was not allowed by the adjudicating authority. In view of the above observations, the demand o....