TaxTMI 
TaxTMI 
2025 (6) TMI 1876
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....ly) upon M/s Hariom Industries Ltd., Arazi 841 & 825, Bengali Purwa, Bhauti Pratappur, Kanpur, under the proviso to Section 11A(4) of the Central Excise Act, 1944 read with Section 174 of the CGST Act, 2017, against clandestine production and clearance of kraft paper, ii) I hereby appropriate Central Excise duty amounting to Rs. 25,00,000/- (Rupees Twenty Five Lakhs Only) deposited during investigation by M/s Hariom Industries Ltd., Arazi 841 & 825, Bengali Purwa, Bhauti Pratappur, Kanpur, against the liability confirmed at S.No. (i) above; iii) I hereby confirm the demand of CENVAT Credit of Service Tax, taken and utilized wrongly, amounting to Rs.3,19,176/- (Rupees Three Lac Nineteen Thousand One Hundred Seventy Six Only) from M/s Hariom Industries Ltd., Arazi 841 & 825, Bengali Purwa, Bhauti Pratappur, Kanpur, under section11A(4) of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004 and Section 75 of the Finance Act, 1994, read with Section 174 of the CGST Act, 2017; iv) I hereby confirm the demand of Central Excise duty the amount of Rs.74,827/- (Rupees Seventy Four Thousand Eight Hundred Twenty Seven Only) from M/s Hariom....
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....6.2015, 23.06.2015 & 24.06.2015. 2.3 During search in the factory premises of Appellant 1, the officers resumed various statutory/ private records along with 02 CPUs as detailed in Annexure- B to the Panchnama dated 22.06.15. 2.4 The officers also physically verified the stock of M.G. Kraft Paper, Waste paper & HDPE Roll (packing material) available in the factory. Since, the party could not produce the records showing correct balance of raw materials and finished goods as on the date of search, the stock physically verified was detained under the said panchnama. Later on, party vide their letter dated 01.12.2015 provided balance of stock position of goods as on 22.06.15. Comparison of stock of goods physically verified on 22.06.15 and the book balances as on 22.06.15 as provided by the party, revealed an excess in stock of goods of 51.523 MT of M.G. Kraft Paper and shortage of 5050.8 Kg of HDPE Roll from its book balances. Further, excess found Kraft paper was seized and SCN issued under F.No. DGCEI/KRU/INV/47/Part- 1/2015/1025-30 dated 15.12.15. 2.5 The records resumed at office premises of Appellant 1& residential premises of Appellant 2 also included records of M/s M.G....
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....iod May, 2015 to July, 2015. As regard the billing process adopted in the factory, he stated that excise invoices were prepared by him on the computer as per the details and orders given by Appellant 2. After loading of the goods, the Invoices prepared were printed and the four copies of the Invoices were sent to Appellant 2 for his signature. the parallel invoices resumed from residence of Appellant 2 during search on 22.06.15, were prepared & printed by him under the directions of Appellant 2. After editing invoices, other invoices of the same serial numbers in the name of different parties were prepared by him. 2.8 During search at the premises of M.G. Craft Corporation, located at Shop No.6, Chakarpur, Kanpur, on 22.06.2015, a restaurant was found running by the officers on the said address. Shri Vinod Kumar, Proprietor of the restaurant informed the officers that he was running restaurant at Shop No. 5 & 6, Chakarpur from the year 2011 and no firm in the name of M.G.Craft Corporation existed at the given address. Accordingly, a Panchnama dated 22.06.2015 was drawn on the spot by the officers. Later on, on being asked M.G.Craft Corporation vide let....
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....r through dealers for supply of Kraft paper directly to actual consumer (buyer) on commission basis. In any case, orders procured were recorded in the form of 'Purchase Order' (a fixed format) containing Order No., Dealer Name, Billing Address, Delivery Address, Specification & Quantity of kraft paper ordered, etc. When kraft paper of desired specification became ready for dispatch, the same was loaded, weighed and removed under 'Sales Invoice' and 'Sales Challan'. Invoices were issued to the person given in the Billing Address and delivery was made at the delivery address. Reel wise detail of Kraft Paper removed under sales invoice were mentioned in Sales challan. Neither in the format of Purchase Order, any space for corresponding invoice number had been specified; nor on the sales invoices, respective purchase order numbers were mentioned by them. However, to corelate kraft paper cleared against a purchase order; after clearances of Kraft Paper, they record removal details on respective purchase order and order number on the triplicate/ quadruplicate copy of corresponding invoice/ challan issued, by pencil/pen. Month wi....
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....nt documents on the basis of which it was prepared, Shri Virendra Kumar Gupta verified the Chart and found as per the said documents & correct. He has put his dated signature on the chart in token of his satisfaction regarding its correctness. 2.16 In the Statement dated 26.02.2018 Appellant 2 stated that:- He had carefully gone through the page no. 17 & 18 of print-outs taken under panchnama dated 23.03.017 which were scanned copies of writings and found that it contained date wise entries of Kraft paper removed from the factory detailing quantity of Kraft paper removed, name of consignee and total amount payable by the buyer. For example, first entry noted on 10.01.2015 at page no. 17 written as "10/1/ GM 3713K 16 105687/- 3713° means 3713 Kg of Kraft paper of 16 BF was removed to G.M. Paper Products Co. PVL Ltd. for total amount of Rs. 1,05,687/- under commission of Rs.3713/-. Similarly, entry noted on 28.01.2015 at page no. 17 written as "28/1/ GM 13467 18 383327/-13467/-" means 13467 Kg of Kraft paper of 18 BF was removed to G.M. Paper Products Co. Pvt. Ltd. for total amount of Rs. 3,83,327/- under commission of Rs. 13,467/-. Out of t....
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.... consignment out of the aforesaid 04 paper slips had been removed without issuance of any invoice, whereas 03 paper slips were related to the said 03 trucks. However, since neither the letter dated 23.06.2015 mention registration number of loaded trucks nor cancelled copy of prepared invoices are available to prove that Kraft paper mentioned in the 03 paper slips were related to the trucks mentioned in the said letter, he accepted the liability of duty on the Kraft paper mentioned on all the 04 paper slips at page number 56, 57, 58 and 59. 2.18 During further scrutiny of seized records, certain other purchase orders (generated by Appellant 1), packing lists, weighment slips of Paper' (of outside dharamkanta), hand- written parchies, notings and bilties of Kraft paper showing M.G.Craft Corporation as 'consignor', suggesting removal of Kraft paper from the factory, were found placed in the files resumed under Sl.no. 19 & 27 of the panchnama dated 22.06.2015 drawn at the factory premises of Appellant 1& the files resumed under Sl. Nos. 49, 51 & 52 of the panchnama dated 22.06.2015 drawn at the residential premises of Appellant 2 and in the sorted-out papers/ documents p....
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...., 786 & 749 and respective bilties and confirmed removal of Kraft paper from the factory against these purchase orders/ packing lists. The weighment slips and respective bilties shown to him pertain to such removal of Kraft paper from their factory. He had carefully seen the weighment slip no. 674/14.06.2015 showing removal of 15010 Kg of Kraft paper by vehicle number UP21/BN6060 along with corresponding bilty number 977 dated 14.06.2015 against which he had admitted removal of Kraft paper from the factory and the hand-written parchi on which 14.06.2015 15010 Kg UP21/BN6060" was written by pen and accepted that the said parchi was prepared in the factory on the basis of the weighment slip. The * details recorded on the parchi means 15010 Kg of Kraft paper has been removed from the factory on vehicle no. UP21/BN6060 on 14.06.2015. He had carefully examined weighment slips of 'Paper bearing nos. 889, 859, 643 & 900 and several hand written parchies placed at page no.7, 8, 9, 10, 14 & 15 in the file resumed frnm the factory of Appellant 1 under S. nos. 19 of Annexure B' to Panchnama dated 22.06.1205 and agreed that these weighment slips and hand- written parc....
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.... of waste paper, Appellant 2 provided purchase detail of accounted for waste paper receipts in the Chart Itself; and, in Ans. No.11, stated that purchases against only some receipts had been accounted for in the records. He further stated that purchase of waste paper pertaining to the other torn receipts had been made out of the books for utilization In manufacture of kraft paper meant for clandestine removal. Stock of waste paper found In excess of book balance during physical verification at the time of search was due to such purchases. 2.22 The total Central Excise Duty not paid/short paid by Appellant 1 on different issues detected has been summarized as below : - N o Issue Period Involved Chart/ Annexure quantifying the duty Central Excise Duty Short paid/ not paid CENVAT Ed Cess SHE Cess Paper Cess Total 1 Clandestin e Removal of Kraft Paper Septemb er 2014 to March 2015 Annexure 1 132353.43 0 0 2757.36 135110.79 Annexure 2 115041.71 2300.84 1150.42 2396.70 120889.67 Annexure 3 67946.28 0 0 1415.55 69361.83 Annexure 4 1937402.46 435.....
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....val of HDPE fabric 'as such', should not be demanded & recovered from them under section 11A (4) of the Act, read with Rule 14 of the Cenvat Credit Rules. 2004; (iv) Interest under section 11AA of the Central Excise Act. 1944 payable at the rates fixed by the Central Government on the Central Excise duty of Rs.33,77,422/- not paid/ short paid on removal of kraft paper, Cenvat credit of Rs.3,19,176/- taken & utilized wrongly and amount of Rs.74,827/- not paid on removal of HDPE fabric, for the period of delay should not be demanded & recovered from them; (v) penalty should not be imposed upon them under the provisions of rule 25 of the Central Excise Rules, 2002 and rule 15 of the Cenvat Credit Rules, 2004 read with section 11 AC of the Act for the reasons discussed In para-34 above. (vi) penalty should not be imposed upon Appellant 2 under rule 26 (1) of the Central Excise Rules, 2002. 2.24 The show cause notice has been adjudicated by the original authority as per order in original referred in para 1 above. 2.25 Aggrieved appellants filed appeals before the Commissioner (Appeals), which have been dismissed as per the impugned order referred....
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....in the case to support the allegations as leveled is either inadmissible or utterly lacking corroboration and is unable to stand on its legs independently, through reliable, materially affirmative and tangible evidences; process of manufacturing involves the primary raw material in addition to waste paper, in electricity and steam, further the product cannot be brought to the level of being marketed without Core Pipes and HDPE bags, and before, taking the allegations as gospel truth, though not admitting, if the department proceeds on such flimsy ground of creation of liabilities, on such weak and secondary evidences, lacking legal tenability, it is a must for the Department, to show surreptitious procurement of all the raw material, along with excess consumption of electricity, clandestine receipt of raw husk for generation of steam and the operation of boiler, and last but not the least, the transportation of all the material and the operation of the boiler happens to be monitored by a proper Inspector of the Boiler, wherein the entire line of the boiler along with the nozzle point of dissemination, is strictly under supervision of the Department, which monitors and mand....
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.... contended that searches taken at the premises of the factory/office/residential premises and the entire action taken and conclusions drawn therein are highly questionable and therefore creditability thereof require strict proof. They have also challenged seizures made at their premises, data-retrieval from electronic devices after search. They have also stated that statements of the Director and Accountant recorded during investigation were all along remained uncorroborated and unsubstantiated and the statement being involuntary computer typed wherein Mr. Virendra Kumar Gupta does not even know how to operate the computer, no credence can be given to such statement which are not corroborated by any tangible affirmative and credible evidence. 5.4 I find that acting on an intelligence received by DGCEI (now DGGI) that. Appellant 1 was indulged in purchasing mostly unaccounted waste paper (basic raw material) in the shape of old & discarded corrugated boxes & other paper scrap and on cash payment basis; and they were also removing M. G. Kraft paper clandestinely under fake & parallel Invoices without payment of duty, which were finally destroyed after such clearances and con....
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....n would not vitiate the proceedings and recovery of computer and data storage devices. Thus, the plea put forth by the appellant 5.7 I find that the page no. 17 & 18 of print-outs taken under panchnama dated 23.03.17 which were scanned copies of writings contained date wise entries of Kraft paper removed from the factory detailing quantity of Kraft paper removed, name of consignee and total amount payable by the buyer. For example, first entry noted on 10.01.15 at page no. 17 written as "10/1/ GM 3713K 16 105687/- 3713° means 3713 Kg of Kraft paper of 16 BF was removed to G.M. Paper Products Co. Pvt Ltd. for total amount of Rs. 1,05,687/- under commission of Rs.3713/-. Similarly, entry noted on 28.01.15 at page no. 17 written as "28/1/ GM 13467 18 383327/-13467/-" means 13467 Kg of Kraft paper of 18 BF was removed to G.M. Paper Products Co. Pvt. Ltd. for total amount of Rs. 3,83,327/- under commission of Rs. 13467/-. Out of the removals of Kraft paper mentioned in the aforesaid print-outs, the removals on 12.01.2015, 29.01.2015, 07.02.2015, 12.02.2015, 14.02.2015, 16.02.2015, 24.02.2015 and 27.02.2015 were made without issuing any invoice and no duty had been paid on t....
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....iple of exclusion of hearsay evidence and cross examination of witnesses is not necessary in each and every case. These statements, relied upon in the instant case, are primarily based on documentary evidences collected/seized during investigations and, therefore, are relevant also in terms of provisions under Section 32(2) of the Evidence Act. The facts stated therein do not necessarily require the test of cross examination. 5.11 I find that the Statement of Shri Virendra Kumar Gupta, Director of Appellant 1 was recorded under Section 14 of the Act vide summons dated 13.07.15, wherein he stated that Shri Sudhanshu Dixit, accountant was issuing the invoices pertaining to Appellant 1. All the invoices were issued as per the directions given by him in his statement dated 20.07.15, Shri Sudhansu Dixit S/o Shri Durga Shankar Dixit, Accountant in his statement dated 18.11.15, recorded under Section 14 of the Central Excise Act, 1944, has also accepted that he was doing billing work in APPELLANT 1 during the period May, 2015 to July, 2015. As regard the billing process adopted In the factory, he stated that excise invoices were prepared by him on the computer as per the details ....
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....appellant at the time of stock checking Appellant was unable to give any suitable explanation for shortage of finished goods - Thus, appellant admitted that goods found short had been removed without payment of duty Method for clandestinely removal of goods not required to be explained - Provisions of Section 11AC of Central Excise Act, 1944 and Rule 26 of Central Excise Rules, 2002 for levy of penalty on authorized signatory would be attracted. [paras 10, 11] 5.14.2 I also find that in a similar case, the Hon'ble High Court of Madras in the case of Goyal Ispat Ltd. reported as 2015 (324) E.L.T. 392 (Mad.), held, as under : Demand Clandestine removal - Evidence - Stock taking conducted on eye estimation whether fatal to the case of Department - Order of Tribunal not on the basis of visual inspection, but based on mahazar records recording the shortage of goods which has been done in the presence of independent witnesses and such shortage was supported by unretracted statement of Manager of assessee company - Thus non-recording of the correct quantity of goods in the statutory records, viz. RG-1 register maintained by assessee establishes the case for demand of....
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.... Cenvat Credit Rules, GTA services used by manufacturer for transportation of final products from factory of manufacturer up to the place of customer does not fall under the ambit of "Input service"; and, therefore, in terms of rule 3(1) of the Cenvat Credit Rules, 2004, cenvat credit of service tax paid by the manufacturer under reverse charge on outward freight for transportation of final products from factory to place of customer is not available to manufacturer. In view of above, I hold that Appellant 1 was not eligible for cenvat credit of service of Rs 3,19,176/- tax paid by them on outward freight in cases of FOR sales and has wrongly taken CENVAT credit of service tax paid by them in respect of GTA services under reverse charge on outward freight paid by them in case of F.O.R. sales (excluding consignment sales) during 2013-14 to 2017-18 (up to June, 2017) detail of which has been provided by them in the Charts submitted vide their letter dated 22.03.18. 5.17 I place reliance on the Hon'ble Supreme Court judgment in the case Commissioner of Central Excise and S.T. versus Ultra Tech Cement Ltd reported in 2018 (9) G.S.T.L. 337 (S.C.) which has been affirmed in 2....
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....e ER-1 returns for the month of June. 2013. Apparently Ms HIL has not paid duty on the removals of the Kraft paper of the month of June' 2013 having value equal to value of returned goods. Thus, I find that the appellant have suppressed the invoice value in the month of June'13 and are required to pay short paid duty of Rs. 2430/-. 5.19 Thus in view of the foregoings paras 5.13 to 5.18 above, the appellant is required topay the Central Excise duty of Rs. 37,71,425/- (2303781+74827+1071211+319176 +2430). 5.20 On the issue whether the extended period of limitation was invocable for the demands of duty, I observe that when the Department alleged suppression of facts and clandestine removal of their final products against the appellant in the show cause notice, the burden was on the latter to disprove the allegation by bringing in documentary evidence of sufficient facts and informations having been furnished to the Department with regard to the manufacture and removal of the goods during the relevant periods. No such evidence was adduced by the appellant. Appellant 1 have suppressed the material facts of (i) removal of their finished goods(Kraft paper) withou....
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.... the reasons and also to spell out clearly as to the applicability of the decision to the facts of the case. There is always peril in treating the words of a judgment as though they are words in a Legislative enactment and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case. Circumstantial flexibility, one additional or different fact may make a difference between conclusions in two cases." 5.22 Similarly, the Hon'ble Supreme Court in the case of CCE, Bangalore vs. Srikumar Agencies 2008 (232) E.L.T. 577 (S.C.), inter alia, held, as under: "Precedents - Court decision not statute - Reliance thereon without discussion of facts - Decisions not to be relied upon without discussing similarity of facts - Judgments of courts not to be construed as statutes Circumstantial flexibility, additional or different fact may make a world of difference between conclusions in two cases." 5.23 On examining the facts of the instant case in terms of Section 11AA of the Act, I find that where any amount is payable as tax but not paid/paid belatedly, it results in financial loss to the exchequer and corresponding financ....
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....tatement dated 20.07.15, recorded under Section 14 of the Act, Shri Virendra Kumar Gupta admitted that he was looking after all works of the unit. Purchase Orders were generated by him and all the invoices were issued as per the directions given by him. From the above, Shri Virendra Kumar Gupta was personally and knowingly involved in the evasion of central excise duty by his company and has definite role in the said offences making the offended goods liable to confiscation. 6.2 In his statement dated 18.11.2015, recorded under Section 14 of the Act, Shri Sudhansu Dixit S/o Shri Durga Shankar Dixit, has interalia accepted that he was doing billing work in Appellant 1 during the period May, 2015 to July, 2015. As regard the billing process adopted in the factory, he stated that excise invoices were prepared by him on the computer as per the details and orders given by Virendra Kumar Gupta, Director of Appellant 1. After loading of the goods, the Invoices prepared were printed and the four copies of the Invoices were sent to Shri Virendra Kumar Gupta for his signature. On being asked about the parallel invoices resumed from residence of Virendra Kumar Gupta during search on ....
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.... slip. The details recorded on the parchi means 15010 Kg of Kraft paper has been removed from the factory on vehicle no. UP21/BN6060 on 14.06.2015. 6.6 In view of the above, I hold that Shri Virendra Kumar Gupta is liable to penal action under Rule 26 (1) of the Central Excise Rules, 2002, as he has admitted in his confessional statements recorded under Section 14 of the Act, that he was engaged in day-to-day business of the appellant No. 1 Appellant 1 and accepted his role and various modus operandi adopted in the clandestine removal of the kraft paper by way of issuing parallel invoices etc. 6.7 I find that the Cestat, Ahmedabad in the case of R.A. Shaikh Paper Mills Pvt. Ltd. Versus Commissioner of C. Ex., Daman reported in 2009 (238) E.L.T. 125 (Tri. Ahmd.) has held that in the case of clandestine removal, penalty is imposable on the Director actively involved in such activities:- "Clandestine removal - Proof - Parallel set of invoice books, delivery challans and note books - Duty liability based on parallel Central Excise invoices not disputed - Contention that in respect of delivery challans, not all consignees admitted having received goods - When ....
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....ignment agents, traders of the appellant and also their customers were searched simultaneously. However no corroborative evidences have been brought on record on the basis of such searches made. Neither any of such person have been made co-noticee in these proceedings. I find that it is settled position in law that charges of clandestine clearance etc., need to be established on the basis of sufficient and independent corroboration of the evidences recovered during the search and investigation. Reliance is placed on the decision of Hon'ble Delhi High Court in case of ASP Metal [2024 SCC Online Del 8546] holding as follows: 12. The charges of clandestine removal of goods connotes accusations of serious nature. If the charges are of serious nature, evidence should also be equally strong to substantiate the charges, and therefore, the evidence needs careful scrutiny and appreciation. 13. In criminal cases, the standard of proof as required to prove the charges in a criminal trial is "proof beyond doubt", whereas, the adjudication proceedings are in the nature of civil proceedings and not criminal proceedings and therefore, the standard of proof of civil proceedings i....
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....nce of excisable final product." 16. The mode of verification i.e. by eye estimation, if true, is no verification and no demand can be based on such eye estimation. 17. Revenue had placed strong reliance on the documents and statements of Sh. Girish Chand and Sh. Devender Kumar Sharma, stated to be the employees of the respondent-assessee. CESTAT found that Sh. Girish Chand was a labour contractor, supplying labourers to the assessee. He used to supply labourers to his various other clients also. Sh. Devender Kumar Sharma is a dealer of copper items and scrap. Assessee claimed that both of them were not its employees and had placed reliance on the salary and employees register as also their affidavits. CESTAT took note that this aspect had not been examined by the Original Authority except stating that the affidavits were filed belatedly, and therefore, cannot be considered. As regards the statements of Girish Chand and Devender Kumar Sharma, CESTAT took note of the retraction letters sent by them to the Excise authorities. The observation of the CESTAT as contained in Para No. 8 of the final order are pertinent and are reproduced below:- "8. We note that....
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....ade by him was because of threat, coercion, etc. but the requirement is that it may appear to the court as such." "35 ............ It is one thing to say that a retracted confession is used as a corroborative piece of evidence to record a finding of guilt but it is another thing to say that such a finding is arrived at only on the basis of such confession although retracted at a later stage." "37 ............. The inference that burden of proof that he had made those statements under threat and coercion was solely on the proceedee does not rest on any legal principle. The question of the appellant's failure to discharge the burden would arise only when the burden was on him. If the burden was on the revenue, it was for it to prove the said fact. The Tribunal on its independent examination of the factual matrix placed before it did not arrive at any finding that the confession being free from any threat, inducement or force could not attract the provisions of Section 24 of the Indian Evidence Act." 19. CESTAT observed that although the Officers of the Department did get some details regarding sale of copper ingots to various buyers which was alleged to....
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.... 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 sale of such goods to identified parties; (e) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him; (f) use of electricity far in excess of what is necessary for manufacture of goods otherwise manufactured and validly 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 documents recovered during the search and activities being carried on in the factory of production; etc." 23. As regards the dropping of the demand for unaccounted clearance of copper wire rods, CESTAT noted that on physical verification of the premises of the assessee, no rolling mill was found installed in the factory and no evidence was placed in the proceedings before the lower authority to the effect that assessee got wire rods manufactured by usin....
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....der Section 24. The statements would be inadmissible in criminal trial if it is proved that they were caused by inducement, threat or promise. However, on the facts in that case it was held that the statements were not obtained by any threat. inducement or promise. The conviction on the basis of the retracted confession was upheld. The question then is: whether by reason of the authority under the Act in particular Section 108, the statement of the appellant is inadmissible under Section 24 of the Evidence Act? In Percy Rustomji Basta V/s. The State of Maharashtra [AIR 1971 SC 1087], a Bench of two-Judges considered the question whether by reason of the recording of the evidence during the course of the inquiry under the Act the statement would be construed to be compulsive statements emanating from persons in authority so as to become inadmissible under Section 24 of the Evidence Act. In para 20 of the judgment it was held that it was not disputed that P.W. 5 who recorded the confession, was a person in authority within the Act. But the question was whether, when P.W. 5 drew the attention of the appellant to the fact that the Inquiry was a judicial proceeding to which Sec....
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....sbelieved by both the trial Court and the High Court. Therefore, it was held that even assuming that there was an inducement or threat, the appellant therein had no basis for supposing that by making the statement he would gain any advantage or avoid any evil with reference to the proceedings in respect of which an inquiry was being conducted by the Customs Officers. Therefore, even on this ground also Section 24 of the Evidence Act had no application. The above ratio squarely applies to the facts in this case. The appellant was under legal duty to state the facts truthfully lest he would be liable to prosecution. The threat emanates from and is that of the statute and the officers merely enforced the law. the allegations as to threat of implication of his wife was an afterthought and he did not mention the same when he appeared before the magistrate and obtained bail. In Poolpandi etc. etc. V/s. Superintendent, Central Excise and Ors. etc. etc. (1992) 3 SCR 247] a three-Judge Bench was to consider whether the appellant therein was entitled to the presence of a counsel at the time of recording of his statement under Section 108 of the Act. In that context....
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....ed by seizure of the documents. A case was registered on November 8, 1971 under Section 154 of the Code and on November 25, 1971 an order permitting further investigation was obtained from the Chief presidency magistrate. The FIR disclosed offence under Section 420, IPC and Section 423 of the FERA etc. When summons were issued on April 17, 1972, it was contended that he was an accused and that he could not be compelled to give evidence against himself violating Article 20 (3) of the constitution. On those facts, it was held that testimonial compulsion was prohibited under Article 20 (3). It would thus be clear that the object of the Act empowering Customs Officers to record the evidence under Section 108 is to collect information of the contravention of the provisions of the Act or concealment of the contraband or avoidance of the duty of excise so as to enable them to collect the evidence of the proof of contravention of the provisions of the Act so as to take proceedings for further action of confiscation of the contraband or imposition of the penalty under the Act etc. By virtue of authority of law, the officer exercising the powers under the Act is an authority within ....
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....details running into five typed pages. Some of the details which found place in the statement were specially within his knowledge, viz., concealment of the 200 biscuits in his earlier rented house till he constructed the present house and shifted his residence and thereafter he brought to his house and concealed the same in his compound; and other details elaboration of which is not material. The question then is: whether it was influenced by threat of implicating his wife in the crime which is the sole basis for the claim that it was obtained by threat by PW-2 and PW-5? In that behalf, the High Court has held that it could not be considered to be induced by threat that his wife will be implicated in the crime and accordingly disbelieved his plea. It is seen that admittedly after the appellant gave his statement, he was produced before the magistrate though no complaint was filed and was released on bail. He did not complain to the magistrate that Ex. P-4 statement was given under inducement, threat or duress. It was raised only subsequently making accusations against PW-5, the Inspector of Customs. Therefore, obviously it was only an afterthought. The High Court, therefor....
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....the commission of the crime. Confession is one of the species of admission dealt with under Sections 24 to 30 of the Evidence Act and Section 164 of the Code. It is an admission against the maker of it, unless its admissibility is excluded by some of those provisions. If a confession is proved by unimpeachable evidence and if it is of voluntary nature, it when retracted, is entitled to high degree of value as its maker is likely to face the consequences of confession by a statement affecting his life, liberty or property. Burden is on the accused to prove that the statement was obtained by threat, duress or promise like any other person as was held in Bhagwan Singh V/s. State of Punjab [AIR 1952 SC 214, para 30]. If it is established from the record or circumstances that the confession is shrouded with suspicious features, then it falls in the realm of doubt. The burden of proof on the accused is not as high as on the prosecution. If the accused is able to prove the facts creating reasonable doubt that the confession was not voluntary or it was obtained by threat, coercion or inducement etc., the burden would be on the prosecution to prove that the confession was made by the accuse....
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.... was held that if the retracted confession is believed to be voluntary and true, it may form the basis of a conviction but the rule of practice and prudence requires that it should be corroborated by independent evidence. Therein also, for the charges of capital offence, the trial court did not accept the confessional statement of co-accused containing inculpatory and self-exculpatory statement. The High Court reversed the acquittal and convicted the accused, accepting that part of the confessional statement of the accused which was corroborated from other evidence. This Court upheld the conviction and held that it is not necessary that each item of fact or circumstance mentioned in the confessional statement requires to be corroborated separately and independently. It would be sufficient if there is general corroboration. The ratio in Kashmira Singh's case was referred to. In Hem Raj V/s. The State of Ajmer [1954 SCR 1133] a three-Judge Bench to which Bose, J. was a member, was to consider whether retracted confession of an accused could be corroborated from the material already in the possession of the police prior to the recording of the confession. Therein the conf....
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....tatement were accepted to confirm the conviction of the capital offence. The law laid down by a three-Judge Bench in Chandrakant Chimanlal Desai's case is not inconsistent with the above exposition of law. It would thus be seen that there is no prohibition under the Evidence Act to rely upon the retracted confession to prove the prosecution case or to make the same basis for conviction of the accused. The practice and prudence require that the Court could examine the evidence adduced by the prosecution to find out whether there are any other facts and circumstances to corroborate the retracted confession. It is not necessary that there should be corroboration from independent evidence adduced by the prosecution to corroborate each detail contained in the confessional statement. The Court is required to examine whether the confessional statement is voluntary; in other words, whether it was not obtained by threat, duress or promise. If the Court is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true. If the Court on examination of the evidence finds that the retracted confession is true, that part of the inculpa....
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....ection 135 etc., separate procedure of filing a complaint has been provided under the Act. By necessary implication, resort to the investigation under Chapter XII of the Code stands excluded unless during the course of the same transaction, the offences punishable under the IPC, like Section 120-B etc., are involved. Generally, the evidence in support of the violation of the provisions of the Act consists in the statement given or recorded under Section 108, the recovery panchnama (mediator's report) and the oral evidence of the witnesses in proof of the offences committed under the Act has consistently been adopting the consideration in the light of the object which the Act seeks to achieve." 4.5 Thus I proceed to examine the voluntary nature of the statements recorded from the Appellant 2, which have formed the sole basis for proceeding against the appellants. From the statements it is observed that these statements of Appellant 2 were recorded over period of three year, and all the statements are in respect of documents recovered during the search operation in the year 2015. Appellant 2 appears to be having some RAM fitted in his mind so as to recollect and reply to queri....
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....f Gutkha and Khaini was procured by the respondents. Tribunal also found no tangible evidence of removal from the factory of unaccounted goods allegedly manufactured by loading from factory and transportation there from. Tribunal found no reliable evidence of the actual customer/recipient of the clandestinely removed goods with their confirmation of unauthorized payment towards unaccounted purchase of goods allegedly manufactured and removed in a clandestinely manner from the factory of the respondents. Tribunal also found no recovery of any unaccounted sale proceeds or substantial cash in the factory or office premises or anywhere else in control of the respondent company, backed by any confirmation, oral or written, from the person giving such cash against the goods removed in clandestine manner without payment of duty from the factory of the respondents. 33. The Commissioner in his impugned order answered the charge of clandestine removal of goods against the respondents on the basis of capacity of machines installed in the factory of the respondents, the electricity generated by gen-sets, number of labourers employed by them in the factory and the raw materials consume....
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....e absence of details of supply being submitted by them, the Commissioner was of the view that they must have supplied the required number of bags. Similarly, the other supplier M/s. Alliance Overseas also denied the supply of liquid Paraffin and Glycerin but Commissioner took the view that the six invoices clearly disclosed the sale of liquid Paraffin which was arranged by him through a dealer to the respondents. He was also of the view that as regards tobacco, the loose sheets refer to 37330 kgs tobacco which was sufficient to manufacture lakhs of pouches of Gutkha. 34. Learned CESTAT (majority view) took the view that working of the machines in the respondents' factory was not tested or certified to ascertain the production capacity of the machines. There is no Panchnama drawn to ascertain as to how many machines in the factory of the respondents were in working condition or were actually working and what was the production capacity of each of those machines. No records were available to hold that respondents were working in three shifts. It was for the department to ascertain and establish the same. The burden in this regard was on the department to prove the allega....
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....s continuously running for three shifts, more machines than declared were installed, and that the actual production was grossly suppressed. 1. (ii) Although, the stock of raw material found on physical verification at factory at 31-K, Siraspur, under panchnama dated 9.10.1998 'was found as per record, and there is no evidence of purchase of main raw materials 'Betel Nuts' (which constitutes 85% of the raw materials), Catechu, Perfume and Lime, it is to be assumed that all these raw materials were purchased in cash, brought to factory, and used in unaccounted manufacture of Pan Masala / Guthka in the factor premises. 2. (iii) Despite the fact that the panchnama do not describe or identifies in its annexure which enlists the documents stated to have been recovered from the premises, recovery of any 'hisaba book' or 'Kachha Challans' or 'loose sheets with written pages', it is to be assumed that the same were recovered under the panchnama drawn at Premises 4130, Gali Barna, Delhi. (v) It is to be assumed that Shri Bothra would have keys to the said premises, although not recorded in the Panchnama. (vi) Although th....
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....e appellant company. (xvi) It is to be assumed that there must be receipt of cash amount over and above the sale amount recorded in statutory records to sustain the charge of under-valuation. (xvii) Despite retractions having been filed, and the veracity of alleged voluntary statements was effectively assailed in cross- examination, it is to be assumed that all the statements relied by the Revenue were voluntary." 36. The burden of proving the clandestine removal was on the Revenue. The credibility of the documentary evidence i.e. seizure memos, the loose sheets, Hisaba Books for proving the involvement of respondents in the clandestine activities was required to be duly established. The authors of the loose sheets and the Hisaba Books were not examined. The main evidence relied upon by the Revenue consisting of Hisaba Book, Kachcha Challans and loose sheets are duplicate copies, raising questions about their authenticity. There is no proof that the contents of the documents are accurate. Further, the proper procedures for the seizure of the documents to ensure the authenticity and integrity of the seized material has also not been followed by the Revenue....
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....e and the requirement for the burden of proof to be satisfactorily met by the party alleging the wrong doing. There is no dispute with regard to the principle of law laid down in the authority cited by the learned Standing Counsel on behalf of the appellant. However, they are distinguishable and applicable in the facts and circumstances of the said cases. 40. On a careful perusal of the reasons assigned and the case law relied upon in the impugned order, it is evident that learned President (Judicial) and Member (Judicial) conducted a meticulous exercise to examine and appreciate the evidence on record in the light of the settled principles and came to a categorical finding that in the absence of cogent evidence on record, charges of clandestine removal against the respondents cannot be said to have been proved. 41. In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the factory premises of the respondents, in the facts and circumstances of this case, we hold that the impugned majority order of the CESTAT does not suffer from serious error and does not merit any interference. The appea....
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....as recorded as dictated by the officers. The findings returned by the Adjudicating Authority that Sri Rajesh Agarwal in his various voluntary statements and acceptance had confirmed his active involvement in the tax evasion by management of raw materials and managing removal of clandestinely manufactured ''Sir' Brand Gutkha/Pan Masala to various destinations, thus, suffers from apparent perversity. 18. On the basis of the said findings and in view of the statement of Sri Rajesh Agarwal, the Authorized Signatory of three manufactures in his cross-examination, it cannot be accepted that his statement recorded by the Central Excise Officers was voluntary. The question is not of admissibility of the statement recorded under Section 14. The admissibility of the evidence recorded by the investigating authority, when the persons making statements were examined as a witness before the Adjudicating Authority is not under question. The issue is about the weight of the evidence appreciated by the Adjudicating Authority. 19. Clandestine removal is a serious charge as held by the Division Bench in Continental Cement Company (supra). Clinching evidence are required ....
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....ing aside the findings of the Adjudicating Authority based solely on the retracted confessional statements recorded during investigation under Section 14 of the Act by the officers of the Central Excise Department. None of the questions framed in the memo of appeal or raised during the course of arguments arise for consideration. The appeals, thus, cannot be entertained. 4.8 In view of the discussions as above I do not find any merits in impugned order to the extent of making demand in respect of clandestine removal of finished goods and packing material as the fact of clandestine removal cannot be substantiated. 4.9 On the issue of denial of CENVAT Credit in respect of the GTA services received by the appellant 1, in respect of outward transportation of the finished goods I find that the issue is squarely covered by the Circular No 1065/4/2018 dated08.06.2018 issued by the CBIC, wherein following has been clarified: "3. General Principle: As regards determination of „place of removal‟, in general the principle laid by Hon‟ble Supreme Court in the case of CCE vs Ispat Industries Ltd 2015(324) ELT670 (SC) may be applied. Apex Court, in this ....
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....urt on the basis of facts of the cases." From the above circular it is clear that in case of the for destination sales effected by the manufacturer the CENVAT Credit of GTA on outward transportation is admissible to the point of the delivery of the goods. However for determining taking note of the decision of the Hon'ble Apex Court on the issue Board had directed that this fact whether the sales were effected on FOR basis needs to be verified in each case. Impugned order do not record any finding in respect of the nature of the sale made, as to whether they were made on FOR basis or at factory gate. I also find that Board has specifically clarified against invocation of extended period of limitation in all such cases. 4.10 In view of the above clarification issued by the Board the matter needs to be remanded back to the original authority for determination of nature of sale for the normal period of limitation and thereafter rendering a finding in respect of the admissibility of CENVAT credit only that is within normal period of limitation from the date of Show cause notice. 4.11 With regards to the demand made by referring to Rule 7 of the Central Excise Valuation (Determi....