Custom, Excise & Service Tax Tribunal
M/S. North-West Switchgear Ltd vs Cce, Delhi on 19 February, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
COURT NO. III
Excise Appeal No. 1998-1999/2010-Ex[SM]
[Arising out of Order-In-Appeal No.44-45/CE/APPL/DLH-IV/2010 Dated 13.04.2010 passed by CCE, Delhi]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. North-West Switchgear Ltd. Appellant
2. P.D. Agarwal
Vs.
CCE, Delhi Respondents
Appearance:
Shri R.C. Gupta, Advocate for the Appellant Shri B.B. Sharma, AR for the Respondent Coram: Honble Ms. Archana Wadhwa, Judicial Member Date of Hearing: 24.01.2014 Date of Decision: 19.02.2014 FINAL ORDER NO. 50592-50593/2014_ Per Ms. Archana Wadhwa:
The appellant is engaged in the manufacture of Switchgear of North-West brand falling under chapter heading 85.36 of the schedule to Central Excise Tariff Act, 1985. The appellant is factory was visited by the DGCEI Officers, who conducted various checks and verifications. During the course of search, the officers recovered certain loose papers having some calculation in respect of plastic brass, M S and other scrap sold on different dates during the period 02.08.2000 to 28.11.2003. Some papers allegedly containing details of removal of finished goods were also recovered.
2. Statement of Shri Praveen Kumar Arora, the Deputy General Manager as also of Shri P.D. Aggarwal, Chairman and Managing Director were recorded. As per deposition made in the said statements, they could not offer any explanation for the enteries made in the loose papers. However, it may be mentioned here that there is no confession by the said deponents to the effect that the details and calculations shown in the loose papers relates to the clandestine clearance of either the scrap or the final product.
3. On the above basis proceedings were initiated against the appellant alleging clandestine clearance of the scrap generated in their factory and raising demand of duty of Rs. 7,13,527/- (seven lakh thirteen thousand five hundred twenty seven). The notice also proposed confirmation of duty of Rs. 30,468/- (Thirty thousand four hundred sixty eight) alleged clandestine clearance of finished goods.
4. The said show cause notice was confirmed by the original adjudicating authority upholding the proposed confirmation of demand as also imposition of penalties on the manufacturing unit as also on the managing director.
5. On an appeal against the above order, Commissioner (Appeals) vide his order in appeal dated 12.01.2007 set aside the same on the ground that the entries made on the loose papers cannot to be considered to be a proper evidence for clandestine removals. Accordingly he set aside the confirmation of demand and imposition of penalties on the appellant.
6. Being aggrieved with the said order of Commissioner (Appeals) revenue filed an appeal before the Tribunal, which was disposed of vide final order No. 392/2009 SM(BR) dated 12.03.2009. The relevant part of the said order is being reproduced as under:-
4. Learned Advocate on behalf of the respondents reiterates the findings of the Commissioner (Appeals). He drew the attention of the Bench to the statement of clearance of scrap during the relevant period. He submits that the statement indicates that during the relevant period, scrap was generated approximately 30%. He further submits that as per quantity mentioned in the SCN the removal of scrap would be approximately 57% to 82% generated during the process of manufacture of finished goods, which is absolutely impossible. On a query from the bench, the learned advocate fairly submits that this fact was not considered by the original authority.
5. I find from the order of the Commissioner (Appeals) that he has proceeded on the basis that the Central Excise Officer failed to make proper enquiry. But, I find force in the submission of the learned advocate in respect of generation of scrap from 58% to 82% as mentioned in their statement was not examined by the lower authorities. In my view, the matter requires to be examined on this issue also. Accordingly, impugned order is set aside. The matter is remanded back to the original authority to examine the cash afresh after considering the submissions of the appellants as above amongst others. The respondents are at liberty to produce any other evidence with their submissions. Appeal is allowed by way of remand.
7. As is seen from the above order of the Tribunal, matter was remanded to examine the assessees plea that if the allegation of the revenue as regards clandestine removal of the scrap are accepted, the generation of scrap would be to the tune of 58% to 82%, which is not possible. However the original adjudicating authority as also Commissioner (Appeals) in remand proceeding did not take into consideration the verification report and confirmed the demands and imposed penalties.
Hence the present appeal by the appellant.
8. When the matter come up on the previous occasion, a direction was given to the revenue to place on record the relevant report as regards the quantum of generation of scrap. The same stands produced under the cover of letter dated 20.09.2013 vide which the relevant report dated 16.01.2006 addressed by the Assistant Commissioner of the Joint Commissioner stands produced on record. For better appreciation the said report is being reproduced below:
In this connection, the verification report of then Superintendent, sent to Joint Commissioner with signature of Assistant Commissioner, with regards to verification of generation of scrap amongst others is enclosed herewith. This is for further necessary action at your end.
On scrutiny of the record, it reveals that figure of scrap as shown in column B of annex. l & ll for the relevant years is as per RG-1 register. The office of the D.G. Anti Evasion, N. Delhi incorporated the additional figure of different scrap in the figure of already shown in RG-1 Register on the assumption that it is an additional scrap shown in the kachha slips collected by the Anti Evasion.
The practice followed by the Party is that they initially collect the scrap for a day or week as per quantum of the scrap and prepare slip and then consolidated entry is made in the register (RG-l) and clear accordingly on payment of duty.
In the way, Anti Evasion pointed out scrap generation comes from 57% to 88% which is on higher side. The value of scrap is lower than the value of finished products on which finally the C. Ex. Duty is paid.
The party is manufacturing Electrical Switches. If the Party clears 86% scrap out of 1Kg material then the Party would be benefited in this way as the finished goods would remain 14% only which is not feasible then appears to be incorrect.
In view of above, it is not understood how the Anti Evasion has added the Kachha slip figure in the figure shown in the RG-1 register.
The consolidated figure of Kachha slips and Annex. l & ll are enclosed for perusal and necessary action please.
9. As is clear from the above report that as per the allegation made by the Revenue, the scrap generated by the appellant would be to the tune of 57% to 88%. In a unit manufacturing electrical goods, generation of scrap to the extent of 86% is not only difficult but is an impracticable approach of business. If the said allegation is accepted, the same would lead to the emergence of finished goods to the tune of 14% only, which no businessmen can afford to do.
10. Appeal from the above, I find that the entire case of the revenue is based upon the loose slips recovered during the searched. Admittedly the clandestine removal charge is a serious allegation and has to be established by adducing some positive and cogent evidence, corroborating the same. In the absence of any other evidence, allegation of clandestine removal can not be upheld.
11. In view of the foregoing, I set aside the impugned order and allow the appeal with consequential relief to the appellant.
(Pronounce in the open Court on 19.02.2014) (Archana Wadhwa) Member (Judicial) Jyoti* ??
??
??
??
5