Custom, Excise & Service Tax Tribunal
M/S. Krishna Steel Industries vs Commissioner, Central Excise & ... on 27 March, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/ 809, 810 & 887/10-MUM [Arising out of Order-in-Appeal No. AKP/57-59/NSK/2010/1739 dtd. 18/2/2010 passed by the Commissioner (Appeals) of Central Excise & Customs, Nashik] For approval and signature: Honble Mr. P.K. Jain, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
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 : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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1. M/s. Krishna Steel Industries
2. Todermal G. Mundhara
3. Pravesh R. Gautam
:
Appellants
VS
Commissioner, Central Excise & Customs, Nasik
:
Respondent
Appearance
Shri. Ashok Kumar Singh, Advocate for the Appellant
Shri. Ashutosh Nath, Asst. Commissioner(A.R.)for the Respondent
CORAM:
Honble Mr. P.K. Jain, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 27/3/2015
Date of decision: /4/2015
ORDER NO.
Per : P.K. Jain
Brief facts of the case are, based upon an intelligence that certain manufacturers (M/s. Shri. Salasar Ispat Pvt. Ltd. and M/s. MITC Rolling Mills Pvt. Ltd.) based in Nashik were indulging in large scale evasion of Central Excise duty by clearing finished goods clandestinely through a broker namely Shri. Umesh Modi, searches were conducted on 18/12/2006 on various places which included the factory of M/s. Shri. Salasar Ispat Pvt. Ltd. and that of M/s. MITC Rolling Mills Pvt. Ltd. Searches were also conducted in the office premises of M/s. Shri Salasar Ispat Pvt. Ltd. located in Mumbai as also the premises of broker, Shri. Umesh Modi in Mumbai.
1.1 From the premises of Umesh Modi besides other documents two hand written note books were recovered. One of the note book contains details of the sale, purchase and dispatches for the period from 8/11/2006 to 9/12/2006 and other one contained similar details for the period from 9/12/2006 to 18/12/2006(Date of searches). It was found that each page of these note books contained details of single consignment of TMT Bar, date of dispatch of goods, name of the customer and destination, description of the goods, quantity and rate, overall value of the goods and also name of the supplier. These note books give details of various suppliers which includes Appellant No. 1 in the present case as also details of the customers. These goods were originally cleared by the manufacturers without payment of duty through broker Shri. Umesh Modi during the said period. In addition to these two note books, four other palm sized diaries were recovered which have similar details for the period from Apr 2006 and from 1/7/2006 to 16/12/2006. These note books were detailing both types of clearances i.e. with bills as also without bills. Thus in these four note books clearances (by manufacturers) made on payment of duty were also included in addition to the clearances (by manufacturers) made without payment of duty. The details given in these documents were pertaining to not only of the present appellant No. 1 but many similar companies/firms, who were also clearing the goods clandestinely and transacting through the said broker. Details in the said books were explained in detail by Shri. Umesh Modi, Broker.
1.2 In addition to above, search was also conducted at the office of M/s. Shri Salasar Ispat Pvt Ltd (M/s. SSIPL) in Mumbai. From the said premises also, certain incriminating documents were recovered, which includes two transaction book records mentioned at Sr. No. 23 and 24 of the panchanama and one cash book record mentioned at Sr. No. 26 of the Panchanama. These books also contain details of clandestinely cleared goods without payment of duty similar to that in the case of Shri. Umesh Modi, Broker. Here also, the details of the supplier, rate, quantity in metric ton, receipt date etc, were written. Here again, details were not only in respect of the present appellant No. 1 but also in respect of other suppliers who were also clearing the goods clandestinely without payment of duty and transacting through appellant No. 3. The statement of Shri. Pravesh Gautam, Director, M/s. SSIPL were recorded on various dates viz. 18/12/2006, 2/1/2007, 5/1/2007, 6/1/2007, 20/4/2007, 6/5/2008, 7/5/2008, 9/5/2008, 9/6/2008 and 3/7/2008 wherein he confessed the receipt of M.S. Ingots purchased from various manufacturers as recorded in statement for the period from 27/3/2006 to 16/12/2006. The transaction book records indicated the clandestine removal of CTD Bars in addition to M.S. Ingots by various manufacturers, wherein transactions were done through Appellant No. 3.
1.3 Appellant No. 1 is a partnership company. The main partner Shri. Todarmal. G Mundhara in his statement admitted the clandestine clearance of the goods (both as tabulated from records recovered from Shri. Umesh Modis office and that of M/s. SSIPL)and also admitted that these goods were cleared without payment of duty without recording the details in statutory books. After investigation show cause notice was issued to three appellants besides Shri. Umesh Modi which was adjudicated by the original authority who confirmed the demand, interest and penalties. The appellant filed appeal against the said order and first appellate authority after considering in detail various submissions, dismissed the appeals of all the three appellants. Aggrieved by the said order the appellant are before this Tribunal.
2. Ld. Counsels main contention for the appellant No. 1 is that the demand has been confirmed without any solid, direct evidence available with the Revenue. Revenue has not produced any documents i.e. procurement of raw material, transportation details of the clandestine goods, electricity consumption etc. In absence of these documents demand can not be confirmed. On behalf of appellant No. 2, who is partner in the firm appellant No. 1, it was submitted that there is no justification to impose penalty as penalty was already imposed on partnership firm. On behalf of appellant No. 3, it was submitted that his statements were retracted and cross examination of appellant No. 2 was not permitted. Ld Counsel for the appellant quoted the following case laws in support of various contention:-
(a) J& K Cigarettee Ltd. Vs. Collector of Central Excise[2009(242) ELT 189(Del)[
(b) Sloto Steel Products Pvt. Ltd. Vs. CCE [2012(281) ELT 193(Del)]
(c) Basudev Garg Vs. CC [2013(294) ELT 353(Del)]
(d) CCE Vs. Parmarth Iron Pvt. Ltd[2010(260)ELT 514 (All.)]
(e) Centurian Laboratories Vs. Commissioner of C.Ex. Mumbai[2013(293) ELT689(Tri- Ahmd)]
(f) Galaxy Indo Fab. Ltd. Vs. Commissioner of Central Excise, Lucknow[2010 (258) ELT 254(Tri.Del)] It was also emphasized that appellant No. 3 has retracted the statement therefore retracted statement cannot be relied upon.
3. Learned A.R. on the other hand reiterates various findings in the impugned order and also in the original order. Learned A.R. submitted that the details as were evident from records maintained and recovered from broker Shri. Umesh Modi and that from the office of M/s. SSIPL were shown to the appellant No. 2 who was main partner in firm-appellant No. 1 and in various statements they have admitted clearances of the goods clandestinely without payment of duty. It was further submitted that in case of iron and steel product main raw material is scrap. It is well known that Bazari scrap is available and there are no duty paying documents for such scrap and such transactions normally are in cash and therefore there is no question of getting any records relating to movement of such scrap. Moreover final product i.e. TMT/CTD Bar is used in construction industry and by individuals and it is sold in cash without bills in the market. Under these circumstances it is not possible for the department to get such documents. Transport documents are also not possible because these are destroyed or transportation is within the city or in the near by area. Learned A.R. further submits that case laws submitted by Ld. Counsel are altogether in different circumstances. In the present case the documents recovered are only for a very limited period. Documents recovered provides precise and complete details of goods, name of the customer, quantity, rate, specifications, name of supplier etc. The main appellant have admitted the details in his statement and such statement have not been retracted. Ld. A.R. also submitted that in view of settled legal position of law that what is admitted need not be proved, there was no need for further investigation. As far as appellant no. 3 is concerned it was submitted that some of the statements have been retracted belately. It was also submitted that in none of the retraction, reasons for incorrect statement or correct details are given. In fact in the subsequent statements appellant No. 3 has admitted the contents of the earlier statements. It was further admitted this continued not in one statement but for all the statements. As many as 10 statements were recorded over a period of one and half years. Appellant No. 3 could have stated the correct position in subsequent statement. It is thus very clear that the retraction were based upon legal advise and it was not based upon factual position/inaccuracy. In these circumstances, retraction is of no consequences. It was also submitted that the Honble Supreme Court in the case of Commissioner of Central Excise, Mumbai Vs. M/s. Kalvert Foods India Pvt. Lt[2011-TIOL-76-SC-CX] has held that the statements recorded by the Central Excise officers should be relied upon. Honble Supreme Court also held that the statement made by the Managing Director of the Company and other persons containing all the details about the functioning of the company which could be made only with personal knowledge and therefore could not have been obtained through coercion or duress or through dictation. No reasons have been advanced why the aforesaid statements made in the circumstances of the case should not be considered, looked into and relied upon. Ld. A.R. also submitted following case laws:
(a) Ahmednagar Rolling Mills Pvt. Ltd. Vs. CCE, [2014(300)ELT119(Tri. Mumbai)]
(b) S.M. Steel Ropes Vs. CCE[2014(304) ELT 591(Tri. Mumbai)]
(c) Markas Engineering Pvt. Ltd. Vs. CCE [2014(310) ELT. 431(Bom.)]
(d) Somani Iron & Steels ltd. Vs. CESTAT [2011(270) ELT 189(All.)
(e) Somani Iron & Steels ltd. Vs. Commissioner[2012(277)ELT A26(S.C)]
(d) Sanjay Vimalbhai Deora Vs. Cestat [2014(306) ELT 533(Guj.)] Ld. A.R. Submitted that this Tribunal in the case of M/s. Mahajan Steel Rolling Mills Pvt Ltd. Vs. CCE, Ludhiana[2011-TIOL-1680-CESTAT-DEL] has confirmed the demand on the final product based upon unaccounted inputs.
4. We have considered the rival submissions. We have also carefully gone through show cause notice which provide scanned copy of certain pages from the note books recovered from Shri. Umesh Modi and also record seized from the office of M/s. SSIPL. From the records seized from office of Shri. Umesh Modi demand of is Rs. 19,80,855/-, while that from office of M/s. SSIPL demand is Rs. 25,18,599/-. Duty, interest and penalty have been adjudicated on first appellant while second and third appellant only penalty.
4.1 During the argument Ld. Counsel has submitted that the said office of M/s. SSIPL is common office of M/s. SSIPL, M/s. Gautam Enterprises, M/s. Shri Ganesh Parwati Steel and it was submitted that the said books contained the record of all the firms and therefore statement of Shri. Roshanlal Gautam who was proprietor of M/s. Gautam Enterprises should also have been recorded. We do not find any strength in this argument. The fact is that the said documents were recovered from an office is not in dispute. This place definitely was the office of M/s. SSIPL. Shri. Pravesh Gautam, appellant No. 3 is the Director of M/s. SSIPL, Proprietor of M/s. Shri. Ganesh Parwati Steel was present in the office at the time of search. The fact that place was also used by M/s. Gautam Enterprises will not make any difference in the present case as records recovered gives precise details of other manufacturers also who have clandestinely cleared goods and each record contains very very precise details, like name of supplier, quantity, rate, specification etc. Demand of duty is on appellant No 1 and not on appellant No. 3. Appellant No. 1 and 2 have admitted details. We also note that from the statements of Appellant No. 3 viz. Shri. Pravesh Gautam, Director of M/s. SSIPL were recorded and in each of the statement he has confessed the details of Shri. Pravesh Gautam could have explained which are the entries relating to them and which are for other firms. In fact in the show cause notice in Annexure I, para 3.3.1.2 it is clearly sated that record No. 23 and 24 do not contain any entry relating to Gautam Enterprises and M/s. Shri Shiv Ganesh Parvati Steel while record No. 26 contains entries of all the three entities. Duty has been demanded based upon record No. 23 and 24 alone.
4.2 We also note that in each statement, Shri. Pravesh Gautam has confirmed details given in earlier statement. We note that Appellant No. 3 viz. Shri. Pravesh Gautam sent retraction of statement almost on all the occasions after recording of the statements. However in none of these retraction correct details were enumerated. On the contrary, in subsequent statements he confirms content of the earlier statements. Under these circumstances we see no reasons to give any importance whatsoever to the retraction and we also hold that contents of the statements can be relied upon.
4.3 As held by the Honble Supreme Court in the case of Commissioner of Central Excise, Mumbai Vs. M/s. Kalvert Foods India Pvt.(supra) statements, recorded by Central Excise officer can be relied upon. As far as first appellant and its partner are concerned, statements have never been ever retracted.
4.4 Ld. Counsel has also spoken about denial of cross examination. This request is from appellant No. 3 to cross-examine appellant No. 2. In the present case, penalty has been imposed on appellant No. 3 under Rule 26. Revenues case is that appellant No. 3 has purchased clandestinely cleared goods (i.e. without payment of duty) by appellant No. 1 and appellant No. 2 is partner of firm-appellant No. 1. Revenues allegation is based upon the documents recovered from the office of appellant No. 1 itself and explanation of such documents as also confession by appellant No. 3 himself. Under these circumstances, even if statements of appellant No. 2 are completely ignored in the context of penalty on appellant No. 3, there can not be any different conclusion. Under these circumstances, we do not find any force in the argument of appellant No. 3 about denial of cross-examination.
4.5 The final statements were recorded after showing the details and appellant No 1 and 2 have admitted of having clandestinely cleared goods without recording in the statutory records. It is well settled position in law that whatever has been admitted need not be proved. The admission of clandestinely clearance was admitted and continue to be admitted till date. The argument that Revenue has not produced any direct evidences is therefore irrelevant in the present facts and circumstances. In fact, appellant No. 1 have also deposited part of the duty during investigation. Under the facts and circumstances of the present case, we do not have any doubt whatsoever about clandestine clearance of the goods itss quantity or the value. We therefore uphold the duty and interest liability.
4.6 We also note that the penalty under Section 11AC is imposable on the Appellant No. 1 as this is a case of suppression of fact with willful intention to evade payment of duty. We also note that appellant No. 2 has submitted that penalty cannot be imposed on him being partner of appellant No. 1 and penalty has been imposed on the appellant No 1. We find from the order that on appellant No. 1 penalty imposed is under Section 11AC of the Central Excise Act, 1944, while in case of appellant no. 2 penalty has been imposed under Rule 26 of Central Excise Rules, 2002. Purpose of Rule 26 and Section 11AC are different. We therefore do not find any force in this contention.
4.7 In case of appellant No. 3, penalty has been correctly imposed under Rule 26 as the ingredients are satisfied. We note that the duty evaded is substantial and as against that penalty imposed on appellant No. 2 and 3 is less than 5%, which cannot be considered on higher side.
4.8 We also note that both the sides(Appellants and Revenue) have cited number of judgments, we have gone through the said judgments and we do not consider it necessary to discuss these judgments. In view of the above findings, we do not find any merit in the appeals of the appellants and we therefore dismiss all the three appeals.
(Order pronounced in the court /4/2015)
Ramesh Nair
Member (Judicial)
P.K. Jain
Member (Technical)
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