Custom, Excise & Service Tax Tribunal
Commissioner, Central Excise & Service ... vs M/S Mahesh Dyeing & Printing Mills (P) ... on 9 October, 2015
/In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad Appeal No.E/633,634/2007-SM; E/CROSS/97/2007 [Arising out of OIA No.RS/150-151/SRT-I/2006, dt.11.12.2006, passed by Commissioner (Appeals), Central Excise & Service Tax, Surat] Commissioner, Central Excise & Service Tax, Surat-I Appellant Vs 1. M/s Mahesh Dyeing & Printing Mills (P) Ltd. 2. Shri Radheshyam T. Rathi Respondents
Represented by:
For Appellant: Shri Jitendra Nair, Authorised Representative
For Respondent: Shri P.M. Dave, Advocate,
Shri N.J. Gheewala, Consultant
For approval and signature:
Honble Mr. P.K. Das, Member (Judicial)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
CORAM:
HONBLE MR. P.K. DAS, MEMBER (JUDICIAL)
Date of Hearing/Decision: 09.10.2015
Order No. A/11403-11404/2015, dt.09.10.2015
Per: P.K. Das
Revenue filed these appeals against the order of the Commissioner (Appeals), whereby the Adjudication order was set aside and the appeals filed by the Respondents were allowed with consequential relief, if any, as per law.
2. The relevant facts of the case, in brief, are that M/s Mahesh Dyeing & Printing Mills (P) Ltd (Respondent Company) were engaged in the processing involving dyeing and printing of Man Made Fabrics (MMF) on job work basis and cleared on payment of duty. On 18.10.2003, the Central Excise officers visited the factory premises of the Respondent Company and conducted stock verification and no discrepancy was found. Thereafter, the Central Excise Officers recovered various records and documents and also recorded the statement of Shri Joginder Sharma, Excise Supervisor and Shri Radheshyam T. Rathi, Chairman & Director of the Respondent Company. A Show Cause Notice dt.23.11.2004 was issued, proposing demand of duty of Rs.25,47,084.00 along with interest and to impose penalties on the Respondent Company and its Director. The Adjudicating authority confirmed the demand of duty of Rs.25,47,084.00 alongwith interest and imposed penalty of equal amount of duty on the Respondent Company. It has also imposed a penalty of Rs.2 lakhs on Shri Radheshyam T. Rathi, Director of the Respondent Company (Respondent No.2). By the impugned order, the Commissioner (Appeals) set aside the Adjudication order. Hence, the Revenue filed these appeals against the Respondent Company and its Chairman-Cum-Director (Respondent No.2).
3. The learned Authorised Representative on behalf of the Revenue reiterates the grounds of appeal and the findings of the Adjudicating authority. He submits that in this case, one chit was recovered from the pocket of Shri Joginder Sharma, Excise Supervisor of the Respondent Company, wherein details of clandestine removal for a particular period 01.10.2003 to 17.10.2003 were mentioned. He submits that the Excise Supervisor, in his statement, admitted the clearance of the goods clandestinely. It is further submitted that Respondent No.2 had also accepted the statement of the Excise Supervisor. The Commissioner (Appeals) proceeded merely on the basis that the demand was based on the basis of the statement and no further investigation was conducted. It is also erroneously proceeded that there was retraction of the statement. It is further submitted that Respondent has not disputed the Panchnama. The main contention of the learned Authorised Representative for the Revenue is that the Respondent No.2 had admitted the clandestine clearance of the goods and therefore, there is no requirement of further investigation. He relied upon the decision of the Tribunal and Hon'ble High Court as under:-
i) Shalini Steels Pvt.Ltd Vs CCE Hyderabad 2010 (258) ELT 545 (Tri-Bang.)
ii) Shalini Steels Pvt.Ltd Vs CCE Hyderabad 2011 (269) ELT 485 (A.P.)
iii) Chandan Steel Ltd Vs CCE Vapi 2014 (312) ELT 479 (Tri-Ahmd.)
iv) Ganapati Rollings Pvt.Ltd. Vs CCE (Appeals), New Delhi 2015 (315) ELT 91 (Tri-Del.)
4. On the other hand, the learned Advocate appearing on behalf of the Respondents submit that the Commissioner (Appeals) proceeded on the basis of the statement and the retraction of the statements and overall facts and circumstances of the case, as there is no material available except one chit recovered from the pocket of the Excise Supervisor. It is submitted that the Central Excise Officers seized 73 files as recorded in the Panchnama and no material was available of clandestine removal of the goods. It is further submitted that there is no discrepancy during the stock verification, which primarily indicate that there is no clandestine removal of the goods. He particularly drew the attention of the Bench to the grounds of appeal filed by the Revenue. It is submitted that the Respondent filed retraction of statement to the investigating agency, which is not disputed by the Revenue. He relied upon the decision of Hon'ble High Court and Tribunal as under:-
i) CCE Vs Saakeen Alloys Pvt.Ltd 2014 (308) ELT 655 (Guj.)
ii) Suntrek Aluminum P. Ltd Vs CC, Rajkot 2013 (288) ELT 500 (Guj.)
iii) CCE Vs Vishwa Traders Pvt.Ltd.
2013 (287) ELT 243 (Guj.)
iv) CCE Vs Omkar Textile Mills Pvt.Ltd.
2010 (259) ELT 687 (Guj.)
v) Commissioner Vs Vikram Cement (P) Ltd 2014 (303) ELT A 82 (All.)
vi) Arya Fibres Pvt.Ltd Vs CCE Ahmedabad-III 2014 (311) ELT 529 (Tri-Ahmd)
vii) Laxmi Engg. Works Vs CCE Delhi 2002 (239) ELT 573 (Tri-Del.)
viii) Rawalwasia Ispat Udyog Ltd Vs CCE Delhi 2005 (186) ELT 465 (Tri-Del.)
5. After hearing both the sides and on perusal of the records, I find from the impugned order that the Respondents were engaged in the manufacture of Man Made Fabrics on job work basis. According to the Revenue, the Respondent cleared clandestinely a quantity of 1107428 L.Mtrs. fabrics within 17/18 dates. The entire case was made out on the basis of one chit recovered from the pocket of Excise Supervisor of the Respondent Company. The main contention of the learned Authorised Representative for the Revenue is that the Excise Supervisor and Respondent No.2 in their statements accepted the clearance of the goods on the basis of chit. On perusal of the impugned order, it is seen that the Central Excise Supervisor and the Respondent No.2 had retracted the statements. The findings of the Commissioner (Appeals) on this issue are as under:-
The Appellants have placed before me the affidavits of retraction of statements from which it appears that statement of Shri Sharma was retracted on 20.10.2003 and the statements of Shri Rathi, recorded on 18.10.2003 was retracted on 20.10.2003 and other dt.15.05.2004 was retracted on the same day. The first two statements have been retracted after two days of recording and the other one on the same day. It is submitted that affidavit for retraction were sent by the Appellants to DGCEI (investigating agency) also. In support of that, they produced a U.P.C. Acknowledgment, dt.29.10.2003 addressed to Shri J.M. Dave, Intelligence Officer, DGCEI, Vadodara and Cash Memo Receipt of Maruti Courier, dt.17.05.2004.
6. The Revenue in the grounds of appeal stated that the point of retraction of statement raised by the Revenue is only an after-thought and should not have been considered by the Commissioner (Appeals). Revenue had not accepted the retraction of statement as observed by the Commissioner (Appeals) and it is an after-thought. But, it is revealed from the impugned order that statements were not retracted within a short period. The learned Advocate on behalf of the Respondent submitted that they have filed the retraction of statement to the investigating agency. So, I find force in the submission of the learned Advocate on behalf of the Respondent on this issue.
7. The learned Authorised Representative on behalf of the Revenue contended that the Commissioner (Appeals) erroneously proceeded on the sole reliance has been placed on the chit recovered from the possession of Excise Supervisor which is not a sufficient evidence to establish the clandestine removal of the goods, as no enquiry regarding the supplier of material etc had been conducted, nor the statement of any of the Dyeing Master of Printing Master were recorded. In my view, the important issue is that charge was framed against the Respondent during the period from 01.10.2003 to 17.10.2003 within 17/18 dates, they have clandestinely removed the MMF to the quantity of 1107428 L.Mtrs. from their factory. It is significant to note that the very next day the Central Excise Officers visited the factory premises and conducted stock verification and no shortage/excess of goods was available from the stocks in the event of clandestine removal of the goods. The entire case was made on the basis of one chit recovered from the pocket of Excise Supervisor. It is noticed that the Excise Supervisor had retracted his statement. In this situation, it is difficult to accept the clandestine removal of the goods on the basis of the said chit, without any corroborative evidence. The Commissioner (Appeals) has also examined the case in the context of that no statement was recorded of the Dyeing Master or Printing Master. The relevant portion of the findings of the Commissioner (Appeals) are reproduced below:-
16. It is alleged that the details on paper slip reflect that illicit clearances of goods manufactured under the supervision of different Dyeing Masters such as Murali Master, Gupta Master etc., but there is complete silence in the investigation regarding the source of figures, reflected on the paper. It has not been brought out in investigation whether the Dyeing Masters verbally communicated those figures to Shri Joginder Sharma for recording in alleged page or the figures were communicated on the basis of some written statement. It is further not understood, when the officers were able to convince Shri Joginder Sharma to decode the information written on the page under question, why they could not be able to know the source of the information written on that page. I intend to agree with the point put up by Appellants that if the figures reflect the illicit clearances of goods manufactured in the supervision of the Dyeing Masters/Printing Masters, then it was essential to enquire from those Dyeing Masters/Printing Masters, to prove the authenticity of the revelations made by Shri Joginder Sharma. It is further noted from the statement of Shri Rathi that the Page No.1 to 23 of the sized file A/I contained various challans showing receipt of grey (unprocessed MMF) from various parties which were received through various Dyeing/Printing Masters. In spite of this revelation, the investigating officers neither extended the inquiry to the raw material suppliers nor the statement of any of the Dyeing Master or Printing Master was recorded.
17. It has been repeatedly held in very plain language by the Higher Judicial bodies that the charge of clandestine removal has to be proved with the help of tangible, concrete, direct and authoritative evidence. Unauthenticated entries in a paper written by a lower staff are not dependable evidence to establish clandestine removal. The allegation of clandestine removal in the present case involves a quantity of 1107428 L.Mtrs of MMF (P), which is alleged to have been manufactured and cleared within a short span of 17/18 days. Definitely, it is a case of evasion of serious in nature and should have been investigated properly and at least sources of receipt of raw material, the recipients of the processed fabrics, and the amount of money which flowed into should have been diged out. For want of such an enquiry, the Revenue has not brought on record an important factor regarding the receipt of goods by the persons/firms whom the same were said to have been dispatched from the factory of the Appellants without payment of duty.
8. It is well settled by the various decisions of the Hon'ble High Court and the Tribunal that the confessional statement cannot form a foundation for levying Excise duty, much less the retracted statement. In the case of Saakeen Alloys Pvt.Ltd Alloys Pvt. Ltd (supra), the Honble Gujarat High Court, observed as under:-
7. As can be noted from the decision of the Tribunal,? it has extensively dealt with the entire factual matrix presented before it. The Tribunal rightly concluded that in the case of clandestine removal of excisable goods, there needs to be positive evidences for establishing the evasion, though contended by the Revenue. In absence of any material reflecting the purchase of excessive raw material, shortage of finished goods, excess consumption of power like electricity, seizure of cash, etc., the Tribunal noted and held that there was nothing to bank upon except the bare confessional statements of the proprietor and of some of the persons connected with the manufacturing activities and such statements were retracted within no time of their recording. The Tribunal also noted the fact that the requisite opportunity of cross-examination was also not made available so as to bring to the fore the true picture and therefore, it concluded against the Revenue observing that not permitting the cross-examination of a person in-charge of records of M/s. Sunrise Enterprises and absence of other cogent and positive evidences, would not permit it to sustain the demand of Rs. 1.85 Crores raised in the Demand notice and confirmed by both the authorities below.
8. As could be noticed from the material on record that? for the remaining amount of Rs. 8.25 lakhs from the transporters premises, the parallel invoices were recovered which not only were confirmed by the proprietor of the said transporter but independent evidences also affirmed the same. The Tribunal has chosen to sustain such amount levied in order-in-original and in the appellate order of the Commissioner.
9. Penalties imposed on some of the persons being the? Managing Director, the proprietors and others on the basis of such material also hardly requires any indulgence.
10. All the appeals are based predominantly and? essentially on factual matrix. The Tribunal elaborately and very correctly dealt with the details furnished by both the sides and rightly not sustained the demand of Rs. 1.85 Crores, which had no evidences to bank upon. Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements. To the extent there existed substantiating material, Tribunal has sustained the levy. No perversity could be pointed out in the approach and treatment to the facts. 8.1 In the case of Suntrek Aluminum P. Ltd Vs CC, Rajkot (supra), the Honble Gujarat High Court, observed that confessional statement of the Director of the Assessee Company giving impression that it was recorded by force and subsequently retracted within reasonable time. In that case, confession of clandestine removal of the goods was in realm of proposition/supposition and not sustainable.
8.2 In the case of Vishwa Traders Pvt. Ltd (supra), the Honble Gujarat High Court, observed that on the date of visit of Revenue Official, stock of raw material and finished goods were tallying with the recorded goods. There is no material available to show that unrecorded raw material were purchased or consumed or that the Assessee manufactured or removed the goods clandestinely, on which duty was payable.
8.3 In the case of Omkar Textile Pvt. Ltd (supra), the Hon'ble Gujarat High Court observed that the evidence to support the clandestine removal except statement of Director, subsequently retracted and no shortage of goods found, Revenue was not able to furnish evidence to prove the charge of clandestine removal.
The above case laws would be applicable in the facts and circumstances of the present case.
9. The learned Authorised Representative on behalf of the Revenue relied upon the decision of the Tribunal in the case of Shalini Steels Pvt.Ltd. In that case, the Tribunal proceeded on the basis that the contents written on paper by loading supervisor of the Assessee, accepted by the Managing Director. There was no retraction of the statement. In the case of Chandan Steel Ltd (supra), the Tribunal observed that when the stock is taken by the officer in the presence of the Assessee and he does not object the method of stock checking, the Assessee cannot later challenge the plea as any representation made afterwards, will be considered only as an after-thought to dispute the duty liability. In the present case, there was no discrepancy found during the stock verification by the Central Excise officers.
10. In the case of Ganapati Rollings Pvt.Ltd. (supra), the Tribunal rejected the appeal filed by the Assessee on the ground the clandestine manufacture and removal admitted, later on retracted and again admitted, and such repeated retractions rightly held by the authorities as infructuous and of no consequence. In that case, there was a shortage of goods worth Rs.1 Crore. Hence, none of the case laws relied upon by the learned Authorised Representative on behalf of the Revenue would be applicable in the present case.
11. In view of the above discussion, I do not find any reason to interfere the order of the Commissioner (Appeals). Accordingly, the appeals filed by the Revenue are rejected.
(Dictated & Pronounced in Court) (P.K. Das) Member (Judicial) cbb ??
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