Custom, Excise & Service Tax Tribunal
M/S. N.P.Agro Industries Ltd vs C.C.E. Meerut Ii on 19 December, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI.
Date of Hearing:11.10.2013
Date of decision:
Appeal No. E/685/2005-EX[SM]
[Arising out of Order-In-Appeal No. 243-245-CE/MRT-II/2004 dt.04.10.2004 passed by Commissioner (Appeals),Customs & Central Excise, Meerut-II]
For approval and signature:
Honble Mr. Rakesh Kumar, Member(Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. N.P.Agro Industries Ltd. Appellant
Vs.
C.C.E. Meerut II Respondent
Present: - Sh. Bipin Garg, Advocate - for the appellant Sh R.K.Verma, DR - for the Respondent Coram : Rakesh Kumar, Member (Technical) FINAL ORDER NO: 58643/2013 /2013 Dated:19.12.2013 Per Rakesh Kumar:-
The facts giving rise to this appeal are, in brief, as under:-
1.1 The appellant in their factory at Faridabad, Bareilly, are engaged in the manufacture of HDPE/PP bags falling under sub-heading no.3923.90 of the Central Excise Tariff. The bags are used mainly for the packing of the fertilizers. On 17.8.98, the jurisdictional central excise officers visited the appellants factory and conducted search of the factory premises and checked the stock of the finished products. In the stock of finished HDPE bags, there was an excess of 5,000 bags vis-`-vis a balance in the RG-I Register. The excess bags valued at Rs.26,500/- were placed under seizure. In course of the search of the factory premises, two computer generated charts one for May, 1998 and the other for July, 1998, along with a statement Highlights: Month July98 were recovered from the office located at the first floor of the factory. The charts contained customer-wise details of the sales of the HDPE/PP bags during May, 1998 and July, 1998. The Highlights statement for July98 mentioned the total sales during the month as valued at Rs. 75,15,089/-. On going through the charts, it was found that in respect of clearances to certain customers, the column of invoice no. was blank, though the other particulars like the quantity of the goods sold and the value were mentioned. Total of such clearances during May, 1998 was Rs.13,56,153 and total of such clearances during July, 1998 was Rs.9,05,711/-. Since the concerned employees of the appellant company could not give any explanation for this, it appeared that the goods valued Rs.13,56,153/- during the month of May, 1998 and the goods valued at Rs.9,05,711/- during July, 1998 had been cleared without payment of duty.
1.2 On further scrutiny of the above mentioned charts, it was found that even in the cases where invoice nos. were mentioned, the actual invoices of those numbers and dates had been issued to parties other than those mentioned in the chart and in some cases the quantity/value of the goods did not tally. Total value of such clearances during May, 1998 was Rs.9,81,598/- and the total value of such clearances during July, 1998 was Rs.19,61,804/-. Since the concerned employees of the Appellant company could not give any satisfactory explanation for this discrepancy, it appeared that the goods of the value mentioned above covered under various invoices have been cleared without payment of duty under parallel invoices i.e. the invoice bearing same number as the invoices on record but issued to different parties.
1.3 The total duty involved on the above mentioned clearances was Rs.11,64,378/-. Accordingly, a show cause notice dated 11.02.99 was issued to the appellant company for recovery of the above mentioned duty along with interest, confiscation of the excess stock of HDPE/PP bags and also for imposition of penalty on the appellant company under Section 11 AC and penalty on Shri Sunil Mehta, General Manager and Sh. A.K.Agrawal, an employee under Rule 209A of the Central Excise Rules, 1944.
1.4 The show cause notice was adjudicated by the Addl. Commissioner, vide order-in-original dated 28.8.2001. In the course of adjudication proceedings before Addl. Commissioner, the appellant gave an entry wise explanation explaining that there were no clearances without payment of duty. With regard to the entries in the charts, where there were no invoice numbers, it was pleaded that in some cases, though the supply orders had been received by the Sales Department, subsequently, on cancellation of the orders, the goods were not dispatched and in other cases of absence of invoice numbers, the goods had been cleared under invoices on payment of duty. With regard to the discrepancy in the names of the buyers, it was pleaded that the names appearing in the charts are of their commission agents through whom the orders had been received, but since the goods had been sent directly to the customers, the invoices have been issued in the name of the customers, while the chart mentions the name of the parties through whom the order had been received. It was pleaded that some of the discrepancies between the particulars given in the charts and those given in the invoices are due to mistakes committed by the persons preparing the charts. The Addl. Commissioner, after considering the appellants submissions, confirmed the duty demand of Rs.7,77,256/- along with interest and dropped the remaining duty demand of Rs.3,87,122/-. He also ordered confiscation of the seized goods with option to redeem the same on fine of Rs.6,000/- . Besides this, he imposed penalty of Rs.7,77,256/- on the appellant company under Section 11 AC, a penalty of Rs.50,000/- on Shri Sunil Mehta, General Manager and a penalty of Rs.5,000/- on Shri A.K. Agarwal, employee under Rule 209 A of the Central Excise Rules.
1.5 On appeals being filed by the appellant company and its employees before the Commissioner (Appeals), the Commissioner (Appeals) vide order-in-appeal dated 11.10.2004 upheld the duty demand and imposition of penalty against the appellant company and also upheld confiscation of the excess bags. However, penalty under Rule 209 A of the Central Excise Rules, 1944 on Shri Sunil Mehta and Shri A.K. Agarwal was set aside.
1.6 Against the above order of the Commissioner (Appeals), this appeal has been filed by the appellant company challenging the Commissioner (Appeals)s order upholding the duty demand along with interest and penalty under Section 11 AC and also confiscation of the excess stock.
2. Heard both the sides.
3. Sh. Bipin Garg, Advocate, the learned Counsel for the appellant, pleaded that entire duty demand is based on the computer generated charts regarding dispatches during May 98 to July98 and also a document titled as Highlights Month July98 recovered from the factory, that while the two computer generated charts containing details of dispatches of the finished goods during May98 and July98, the third document titled Highlights: Month-July98 contain the figures regarding total value of sales during July98, that the duty demand has been raised in respect of sale entries in the dispatch charts for May98 and July, 1998 where either there were no invoice nos. mentioned or in the cases where the invoices were mentioned but there was difference between the name of consignees as mentioned in the chart and as mentioned in the invoices or difference in the quantity/value, as mentioned in the charts and as mentioned in the invoices, that all the cases where invoice nos. are not mentioned are either those cases where on account of cancellation of the sales order, the goods had not been dispatched or goods mentioned are included in the other invoices and had been cleared on payment of duty, that these charts had been prepared by the Sales Department on the basis of the sales orders procured and the same do not always tally with the actual dispatches and therefore merely on the basis of missing invoice numbers in the charts duty can not be demanded, that the Department had conducted inquiries with the customers and the result of the same have neither been disclosed nor relied upon, which indicates that the customers clarifications were in appellants favour, that in any case, without evidence of transporters of the goods regarding transport of the goods to the customers against whose names in the charts, no invoice number is mentioned and without confirmation from the customers regarding receipt of the goods, it can not be concluded that the goods had been dispatched without payment of duty, that as regards the cases where invoice number is mentioned but there is discrepancy either in the name of customer or in the quantity/value of the goods, in this regard the appellant had given serial numberwise clarification in their reply to the Show Cause Notice, but appellants clarifications in most of the cases has been wrongly rejected, that in the cases where there is difference in the name of customer as mentioned in the charts and as mentioned in the invoices, the same is mainly on account of the fact that while the charts mention name of the persons through whom the orders had been received, the invoices mention the name of customers to whom the goods had actually been supplied, that without inquiry with the customers whose names are mentioned in the charts and in the invoices, it cannot be concluded that against the same invoice number, the goods have been cleared more than once to two persons the persons mentioned in the charts and the persons mentioned in the invoices and such cases cannot be treated as cases of clearances of goods more than once against the same invoice, that as regards the figure of sale given in the document Highlights: Month July98 as this document had been prepared by the Sales Department, it also included the cases where on account of cancellation of the orders, the goods had not been supplied and that, in any case, merely on the basis of details of the dispatches given in the computer generating chart, it cannot be concluded that these goods had actually been cleared without payment of duty when there is no confirmation in this regard from the customers. He, therefore, pleaded that the impugned order is not sustainable.
4. Sh. R.K.Verma, the learned Department Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that the appellants reply to the Show Cause Notice had been considered by the Original Adjudicating Authority as well as by Commissioner (Appeals) and after considering the same, their clarifications had not been found satisfactory and that in view of this there is no infirmity in the impugned order.
5. I have considered the submissions from both the sides and perused the records. The allegation against the appellant company is clandestine clearances without payment of duty of HDPE/PP Bags involving the duty of Rs. 7,77,256/-. The basis of this duty demand confirmed by the Additional Commissioner and upheld by the Commissioner (Appeals) is three documents recovered from the office of the appellant company in their factory premises in course of search. The first two documents are in form of computer generated charts giving details of dispatches during May98 & July98 and the third document is titled Highlights: Month July98 and the same gives total figures of sale of HDPE/PP bags fabrics and waste during July98 as Rs. 75,15,089/-.
6. In the two charts giving details of dispatches for the month of May98 & July98, it is seen that against certain serial numbers, there are no invoice numbers mentioned though the details of the buyers, quantity of the goods sold and the value are mentioned. The total value of such clearances during May98 & July98 is Rs. 13,56,153/- and Rs.9,05,711/- respectively. The Departments allegation is that the clearances in respect of which there is no mention of the invoice number in the charts have been made without issuing invoices and without payment of duty. The duty demand of Rs. 5,65,466/- is on this basis. The Appellants contention is that these charts had been prepared by the Sales Departments Team which procures the orders either directly or through commission agents and that in the charts for May98 & July98, where no invoice numbers are mentioned, either there were no dispatches (Sl. No. 15 & 23 in chart for May98 and Sl. No. 8,11,14,16 and 26 in the chart for July98), or the goods mentioned are covered under other invoices and had been cleared on payment of duty. It is also pleaded that in these cases, enquiry had been made with the customers but the clarification given by the customers has not been relied upon by the Department which indicates that the customers replies, were in the appellants favour.
6.1 As regards the cases where the appellants claim is that though the orders had been placed by the customers but there was no supply, the allegation of dispatch of the goods without payment of duty would be sustainable only if enquiry had been made with the customers and it had been confirmed by the customers that the goods had been received or there was evidence of the transporters confirming the dispatch of the goods. In this case neither there is evidence of the transporters nor there is any evidence of receipt by the customers of the goods mentioned in the chart, based on any enquiry conducted with them. While the Appellant plead that enquiry had been conducted with customers but the result of the same has not been relied upon by the Department or disclosed to them and this indicates that the clarifications given by the customers are in the appellants favour, there is no response of the Department on this point. Therefore, in such cases (i.e. Sl. Nos. 15 & 23 in the chart for May98 and Sl. Nos.8,11,14,16 & 26 in the chart for July88) it would not be correct to presume that the good had been cleared without issue of invoices and without payment of duty.
6.2 In respect of the dispatches mentioned against serial number 11, 12, 21 & 22 in the chart for the month of May98 where there is no invoice number mentioned, it is pleaded by the appellant that though there is no mention of the invoice number, the goods are covered by invoice number 69 dt. 23.05.98 issued to M/s. Khandelwal Cement Limited, Rithora, Invoice No. 60 issued to M/s. Shree Ramji Bhardwaj Traders (who had placed the order through M/s. Sitaram), Invoice No. 70 issued to M/s. Asian Cement (who had placed the order through M/s. Sitaram) and invoice number 71 & 73 to M/s. Shree Ramji Bhardwaj Traders (who had placed the order through M/s. Sita Ram), respectively. Similarly in respect of the dispatches at serial Nos. 20,22 & 23 in the chart for the month of July98, where there is no invoice number mentioned, it is pleaded that the quantity mentioned in the chart is covered by the invoice No 145 & 146 dt. 23.07.98 issue to M/s. Swastik Polypack, Kanpur; Invoice No 149 dt. 25.07.98 issue to M/s. Kunwal Polypack, Bareilly and Invoice No. 151 dt. 25.07.98 issue to M/s. Mukesh Khandelwal, Bareilly respectively and that in this invoice no.151 dated 25.7.98 instead of Ajay Khandewal, the name was wrongly mentioned in the chart as Mukesh Khandewal 6.2.1 On going through the Invoice No. 60 dt. 19.05.98 issued to M/s. Shree Ramji Bhardwaj Traders, for sale of 10,000 HDPE/PP bags, it is seen that it covers the consignment mentioned against the Sl. No.12 of the chart for May98. The difference in the partys name is for the reason that the order has been placed by M/s. Shree Ramji Bhardwaj Traders through M/s. Sita Ram. Similarly the Appellants plea that the goods covered against Sl.No.11 of the chart for May98 (9500 bags) are covered by the Invoice No. 69 dt. 26.05.98 for 24,825 bag sold to M/s. Khandelwal Cement Ltd. (9500 bags valued at Rs. 41,325 mentioned against S.No. 11 of May98 chart plus 15,325 bags valued at Rs. 66,664/- sold to the same party mentioned against S. No. 17 of the May98 Chart) and the goods covered by S.No. 21 of the chart for May98 (1700 PP bags) with customers name as Sita Ram are covered by Invoice No.70 dt. 29.05.98 issued to M/s. Asian Cement is also acceptable. The particulars of Invoice No. 71 dt. 29.05.98 & 73 dt. 30.05.98 issued to M/s. Ramji Bhardwaj Traders for 2000 bags and 5000 bags respectively tally with the details against Sl. No. 22 of the dispatch chart for May98.
6.2.2 Coming to the cases where in the dispatch chart for July98 where there are no invoice number and it is claimed that the goods are covered by other invoices, it is seen that on going through the invoice No. 151 dated 25.07.98 issued to Ajay Kumar Khandelwal, this invoice is for supply of 19000 bags valued at Rs. 1,39,800/- which matches with the quantity and value of the goods mentioned against S.No.23 of the July98 chart and in this regard Appellants plea that in the chart instead of Ajay Kumar Khandelwal the name Mukesh Khandelwal has been wrongly typed is acceptable. Against Sl.No.20 in July98 chart pertaining to the dispatch to M/s. Goenka Poly Pack of the goods value at Rs.2,18,970/-, no invoice number mentioned. The appellants plea is that in respect of these goods, the invoice no.145 and 146 each dated 23.7.98 had been issued for goods totally valued at Rs.2,18,940/-. On comparing the particulars of the invoices nos. 145 and 146 each dated 23.7.98 issued to M/s. Goenka Poly Packs with the details of the goods mentioned in Sl.No.20, I am of the view that the appellants plea is acceptable, as the total value of the goods comes to Rs.2,18,970/-, which almost matches with the value of the goods covered under invoice no.145 and 146. As regard the S.No. 22 of the dispatch chart for July98 in respect of supply of goods valued at Rs. 1,21,293/- to M/s. Kunwar Polypack, it is seen that in respect of these goods, invoice No. 149 dt. 25.07.98 has been issued to M/s. Kunwar Polypack.
7. In view of the above discussion, the duty demand of Rs.5,65,466/- in respect of the entries in the dispatch charts for the month of May, 1998 and July, 1998, where no invoice numbers are mentioned, is not sustainable as the omission to mention the invoice number is either due to mistake of the person, who had prepared these charts as the goods were covered by other invoices or there were no dispatches as the sale orders had been cancelled.
8. The remaining amount of duty demand based on the dispatch charts for May, 1998 and July, 1998 is on the basis that though the charts mention the invoice nos. and the customers name, in the invoice of those Sl. Nos., either the customers name is not matching or quantity or value of the goods is not matching. In respect of these discrepancies, the appellant in their reply to the show cause notice have given detailed serial number wise explanation, which has not been accepted by the department. One objection of the department is that while as per the chart, the customers names are mentioned as M/s.Sita Ram, Bareilly or M/s.Swastick Polypack, Kanpur, but the name of the Customers as mentioned in the invoices are different. The appellants plea is that M/s. Sita Ram, Bareilly and M/s. Swastick Polypack, Kanpur are the persons through whom the orders had been received and the invoices were actually issued to the persons to whom the goods were actually supplied. In my view this explanation of the appellant is acceptable, as there is no evidence that the goods had been received both by M/s. Swastick Polypacks/ M/s.Sita Ram, the persons, who according to the appellant, had procured the orders and also by the persons mentioned in the respective invoices. In some cases like Sl. No. 4 of the dispatch chart for May, 1998 against which four invoices nos. 48, 49, 50 and 51 are shown against M/s. Sita Ram, the departments objection is that not only the customers names in the invoices issued are different, but the value of the goods are also different. However, it is seen that the total value of the goods covered under invoice no.48, 49, 50 and 51 as given in the chart and as per the value given in the invoices is the same Rs.2,70,540/- and as regards the customers name, the appellants explanation is that M/s. Sita Ram is the person through whom the orders have been received for supply to various customers and the goods were actually dispatched to those customers and invoices were issued to them. This explanation is acceptable and such cases cannot be said to be cases of parallel invoices. In some cases, the invoices nos. have been incorrectly mentioned in the chart. For example against sl.no.18 in the dispatch chart for July 1998 in respect of dispatch to IFFCO, Anola, invoice no.142 shows dispatch of bags valued Rs.6,24,037/- . However, the invoice no.142 dated 21.7.98 has been issued to M/s. Rajiv Kumar Sita Ram for sale of HDPE bags valued at Rs.1,27,820/- while it is the invoice no. 143 dated 22.7.98 which has been issued to IFFCO, Anola for sale of 75000 bags valued at Rs.6,24,037/-. Thus, the dispatch chart for July, 1998 incorrectly mentioned the invoice no. as 142 in respect of sale of bags worth Rs.6,24,037/- to M/s. IFFCO while the same should be 143. Thus, the discrepancy between the details mentioned against various sl. no. in the dispatch chart for May, 1998 and July, 1998 and the details given in the respective invoices are either due to mistake of the person who prepared the charts or due to orders for supply to a person having been received through another person and the chart mentioning the name of the person through whom the orders had been received and the invoice bearing the name of the person to whom the goods had actually been sold. Thus, after going through the appellants plea regarding each case of discrepancy between the customers name and particulars of the goods as mentioned in the chart and as mentioned in the invoices, I am of the view that this is not the case where under the same invoice no. the goods have been cleared more than once. Moreover, no evidence has been produced to show that the customers as mentioned in the chart as well as the customers as mentioned in the invoices had received the goods. As mentioned above, in this regard the appellants plea is that enquiry had been conducted with the customers but the same has not been relied upon and on this basis, the appellants plea is that the result of the enquiry with the customers must be in the appellants favour. But on this point, there is no response from the department. In view of this, the duty demand based on the discrepancy between the customers name and the quantity, etc. as mentioned against various Sl. no. in the dispatch chart for May, 98 and July, 98 and as given in the respective invoices is not sustainable.
9. However, as regards the allegation of non-accountal of 5,000 bags, it is seen that the appellant packed 500 bags in one bale and 10 such bales were in excess of the balance recorded in RG-I register. There is, thus, non-accountal of 5,000 bags in RG-1 register and hence, the same have been correctly confiscated. In view of this, confiscation of the bags not accounted in the RG-I register and imposition of redemption fine in lie of confiscation has to be upheld. However, no penalty would be imposable on this count as there is no evidence indicating that non-accountal was with the intention to clear the goods clandestinely.
10. In view of the above discussion, except for confiscation of 5,000 bags and redemption fine imposed in respect of the same, rest of the order is set aside with consequential relief. The appeal stands disposed of as above.
[order pronounced on ..].
(Rakesh Kumar) Member (Technical) Ckp 1