TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 411
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....mgee Cables & Communication Ltd. Emgee and to six others including Shri Dilip Shah Dilip, Shri Jayesh Mehta Jayesh, Shri Sripal Chaudhary Sripal, Shri Sanjay Pujwani Sanjay and Shri Kushal Raj Jain Kushal. 2. All these appeals were earlier allowed by this Tribunal's Final Order No. 50487-50492 of 2015 dated 20.2.2015 the relevant portion of which is as follows: "5. Heard the parties and considered the submissions. 6. On perusal of the records, we find that in whole of the adjudication, it is not coming out from the cords recovered from the possession of Shri Dilip Shah, whether those goods cleared in the name of M/s. Emgee Cables and Communication have been manufactured by M/s. Emgee Cables or not. Admittedly, the excise duty is payable or recoverable from the manufacturer/producer of the goods. From the documents recovered from the custody of Shri Dilip Shah, it is not proved that who is the manufacturer/producer of goods The only presumption can be made out that the goods are traded goods. Therefore, we find that show cause notice has been issued only on the basis of Income Tax Department, and without any investigation done by the Central Excise Department. 7. In view ....
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....y of the appellants. 6. We have heard learned authorized representative for the Revenue and perused the records. 7. In the impugned order, the Commissioner confirmed demand of Central Excise duty Rs. 68,16,137/- under section 11A(2) of the Central Excise Act, 1944 Act with interest under section 11AB of the Act on Emgee and imposed an amount equal to the duty demanded as penalty under section 11AC of the Act. He also imposed penalties on the other appellants. We proceed to first decide the appeal filed by Emgee and then decide the other appeals. Appeal 3679 of 2006 filed by Emgee 8. In this appeal, Emgee assailed the confirmation of demand of duty with interest and penalty under section 11AC of the Act. The case of the Revenue is that during investigation by Income Tax authorities, it came to light that Emgee had clandestinely removed certain goods without paying duty. The case of Emgee is that there is no evidence of any clandestine removal and therefore, the confirmation of demand of duty and penalties cannot be sustained. 9. The facts of the case are that Income Tax officers investigated Emgee, recovered some documents including floppies which contained various files. Incom....
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.... accounted and unaccounted collection of amounts from various parties. A third folder named „alphabetical list‟ had details of 47 customers showing the bill amount, cash amount and total amount. The income tax authorities conducted enquiries from some of the customers and recorded their statements under the Income Tax Act (RUD-4, 5, 6 and 7). 16. Examination of hard copies of the above documents and the statements made before the income tax authorities under the Income Tax Act, 1961 indicated that during the period 3.4.2002 to 5.10.2002, Emgee had sold goods worth Rs. 8,94,74,714/- but raised bills for only Rs. 4,77,06,551/- and collected the remaining Rs. 4,17,68,163/- in cash. The SCN in this case was issued demanding duty accordingly. 17. Emgee had contested before the Commissioner the demand of duty on the ground that the printouts cannot be relied upon without following the procedure prescribed under Section 36B of the Central Excise Act. The Commissioner did not accept this contention for the reason that the printouts were not taken out from any computer but were taken from the CD on to which the floppies seized by the income tax authorities were copied. Therefo....
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....tral Excise duty. This allegation in the SCN and the finding in the impugned order is not based on any independent investigation by the Central Excise Department but based on whatever documents were received in the form of CD and otherwise and the Statements recorded by the income tax authorities under the Income Tax Act, 1961. Only one statement of Shri Mahendra Choudhary, Director of Emgee was recorded under section 14 of the Central Excise Act. 23. The first question to be examined is if the Statements made by various persons can be used as evidence in this case. As per section 9D, statements made before a Gazetted officer of Central Excise are relevant to proving a case either in a court or in any other proceeding if such a statement is admitted in evidence after following the procedure prescribed therein. Section 9D reads as follows: Section 9D. Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a gazette rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts....
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.... **** (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. 132. Search and seizure.-(1) Where the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that- (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any book....
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....other valuable article or thing; (iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing: ***** (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to b....
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....r its predecessor Act namely Income Tax Act, 1922. 27. Nothing in any of these sections of the Income Tax Act states that the statements so recorded can also be used as evidence to prove any case under the Central Excise Act, 1944. Nothing in the Central Excise Act, 1944 also says that the statements record under the Income Tax Act by the income tax officers can be used as evidence in the proceedings under the Central Excise Act. 28. Similarly, the documents recovered under an income tax investigation cannot, as such, be used to demand duty of central excise. Therefore, none of the RUDs to the SCN in this case are of any evidentiary value to prove the case of the Revenue. 29. It must also be pointed out that four elements are necessary to charge any tax or duty (a) the taxable event must take place; (b) it must be clear who is responsible to pay tax/duty; (c) the rate at which the tax/duty is to be paid; and (d) the measure of tax. The taxable event is „manufacture or production‟ for levy of central excise. It is the earning of income for levy of income tax. If there is manufacture but no income (or if there is loss), excise duty has to be paid but no income tax has....
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....not be sustained, these consequential personal penalties also need to be set aside. We also find that the Rules under which the penalties were imposed also do not provide for penalties even if the demand against Emgee was upheld. 35. It must be pointed out that Central Excise Rules, 1944 were superseded by Central Excise Rules, 2001 which were further superseded by Central Excise Rules, 2002. Rule 209A of the Central Excise Rules, 1944 corresponds to Rule 26 of the Central Excise Rules, 2001 which corresponds to Rule 26 of the Central Excise Rules, 2002. The three Rules read as follows. Rule 209 A of the Central Excise Rules, 1944 Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding three times the value of such goods or five thousand rupees, whichever is greater. Rule 26 of Central Excise Rules 2001 26. Penalty for certain offences :- Any person who acquires possession of, or is in any ....
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....refore, no penalty can be imposed under any of the three Rules. 37. We now proceed to examine the reasons for imposing penalties recorded in paragraph 37 of the impugned order. Sri Pal Chaudhary 38. The findings against Shri Chaudhary in the impugned order are as follows : - "I find that Shri Sri Pal Chaudhary, Director, M/s Emgee Cables and Communications Ltd., Jaipur, inspite of 7(seven) summons issued by the Superintendent (AE), Jaipur, did not turn up to tender his statements and he intentionally avoided his presence before the investigating officer. He has admitted before the Income Tax Officers that he owned the income computed form the documents found (which is related to under valuation/unaccounted sale of goods) from Shri Dilip Shah‟s residence, an employee of the assessee. He has also accepted that certain payments, as mentioned in paragraph 32 above, had been made on his behalf. I am, therefore, of the view that said Shri Sri Pal Chaudhary, Director was responsible for evasion of Central Excise Duty by undervaluing the goods and in turn collecting additional consideration and as such penalty could be imposed on him under rule 209A/26 of the erstwhile Central E....