Customs, Excise and Gold Tribunal - Delhi
Melton India (P) Ltd. And Ors. vs Cce on 2 December, 2004
Equivalent citations: 2005(99)ECC277, 2005(181)ELT129(TRI-DEL)
ORDER P.S. Bajaj, Member (J)
1. The above captioned appeals have been directed by the appellants against the common Order-in-Original vide which the adjudicating authority (Commissioner of Central Excise) has confirmed the duty demand and penalties on them. The duty demand has been confirmed against the company appellant No. 1 for having indulged in the clandestine removal of finished goods (polyester fabrics) during the period 1.5.2000 to 31.8.2000 through certain invoices. The penalties have also been imposed not only on the appellant No. 1 but also on other appellants who were at that time employees.
2. The learned Counsel has contended that there is no tangible evidence on record to prove the manufacture and clandestine removal of the goods through 58 invoices and two challans referred in the show cause notice, to various buyers without payment of duty by the appellants and that these invoices were prepared only for getting financial assistance from the bank without there being any movement/clearance of the goods. Regarding the clearances through two challans the Counsel has submitted that duty had already been paid before the passing of the adjudicating order and this fact stands admitted by the adjudicating authority in the impugned order. He has further submitted that the officers on 19.10.2000 at the time of visit, detected no discrepancy in the inputs and the finished goods lying in stock of the factory of the appellants as against the balance recorded in statutory record. He has also contended that no evidence of extra receipt of raw material, consumption of electricity, employment of labour had been brought on record by the Department and no customer has admitted the receipt of goods from the appellant's company without the over of invoice and without payment of duty. Therefore, the impugned order deserves to be set aside.
3. On the other hand, the learned SDR has reiterated the correctness of the impugned order. He has contended that from the invoices recovered from the factory premises of the appellants, it could safely be inferred that they had cleared the goods without payment of duty and that the appellant No. 3 Shri K.B. Goswami had also admitted the removal of goods in an clandestine manner by his company appellant No. 1. He has referred to the ratio of law laid down in Haryana Acrylic Manufacturing Co. Pvt. Ltd. v. CCE, New Delhi 2000 (130) ELT 562 and Bute Cosmetics v. CCE, Trichy, 2001 (135) ELT 886 and Majestic Auto Ltd. .
4. We had heard both the sides and gone through the record.
5. From the record, it is evident that factory premises of the company appellant No. 1 was raided by the Central Excise Preventive staff on 19.10.2000 and 58 invoices were seized from their factory. The statement of appellant No.2 Shri P.K. Vasukutty, the officer-in-charge present in the factory at that time was recorded, wherein he categorically stated that these were prepared only for having transaction with the bank and no goods were cleared to any customer through these invoices. Similarly, statement of Shri K.B. Goswami, representative of the appellants company was also recorded and he nowhere admitted of having cleared the goods through these invoices to any customer in a clandestine manner without payment of duty. He only admitted the non-payment of duty in respect of the two challans Nos. 96-97 dated 18.10.2000 but the same was deposited by the company and this fact also stands admitted by the adjudicating authority in the impugned order itself. The credit of duty of Rs. 33,05,332 on account of shortage of 1569 kgs of polyester chips (inputs) was also debited by the company appellant No.1.
6. There is no evidence whatsoever on record to prove the clearances of the finished goods in a clandestine manner through the seized 58 invoices from the factory premises by the appellants. None of the consignee named therein had come forward to admit the receipt of the goods under any of these invoices from the appellants. No evidence regarding the excess receipt of raw material i.e. polyester chips from the manufacturer/supplier by the appellants had been collected and brought on record. The inputs had been purchased by the appellants from manufacturing companies M/s. Reliance, IPCL, Polysleep, etc. and no enquiry had been made from any of these manufacturers of having supplied the inputs to the appellants without the cover of invoice. There is also no evidence to prove that the inputs were bought by the appellants from the open market also.
7. No discrepancy in the finished goods and the balance entered in the statutory record, was detected in the factory premises. The officers also did not find unaccounted goods in the factory premises. There is also no evidence to prove the extra consumption electricity, employment of labour by the appellants for the manufacture of extra finished goods. None out of appellants No. 2 and 3 had also in their statements admitted the clandestine receipt of inputs and manufacture of the finished goods out of these inputs and the subsequent clearance of the goods without payment of duty to any customer. The Appellant No. 3 Shri K.B. Goswami admitted only the non-payment of duty in respect of two challans No. 96 and 97 as observed above and duty payable on those challans of Rs. 89,904 had already been paid by the appellants. No enquiry from any transport company or from the driver who transported the goods in a clandestine manner from the factory premises of the appellants has been made. No. statement of any other worker working in the factory was recorded in respect of the invoices in question. No seizure of the finished goods during the course of transportation was ever made by the officers.
8. Therefore, under these circumstances, from the simple preparation of the invoices in question by the appellants, no conclusion can be drawn that they had indulged in clandestine manufacture and removal of the goods without payment of duty. The fact that the appellants conducted themselves in a manner which was not conducive to ethics by preparing the invoices in question for the purpose of getting financial assistance from the bank, they could not be burdened with the duty and penalty. It is well settled that the charge of clandestine removal of goods has to be proved by the department by adducing cogent and tangible evidence. Such a charge cannot be based on assumptions and presumption or on a simple bank record prepared by the assessee showing inflated production figures. In this view, we find corroboration from the ratio of law laid down in the case of the State of Tamil Nadu v. Indian Crafts and Industries (1970) 25 STC 466; Mac Designers v. CCE New Delhi 2000 (71) ECC 864 and Kalvert Foods India (I) Ltd. v. CCE Mumbai wherein it has been so observed.
9. The law laid down in Haryana Acrylic Mfg Co and Bute Cosmetics (supra) referred by the SDR, is not attracted to the facts of the case. In the first case, Senior Executive of the company handling the production admitted the clearance of the goods without accountal in the record. In the second case, there were corroborative statements of the persons from the dealers who purchased the goods from the appellants therein without payment of duty. Under these circumstances, in both the cases, the Tribunal observed that the charge of clandestine removal of the goods was proved. In the instant case in hand, there is no admission of any of the appellants and there is no evidence to prove the actual clearance of the goods through invoices in question by the appellants in a clandestine manner as observed above. Similarly, law laid down in Majestic Auto (supra) referred by the SDR has no application to the present case. In that case, shortage of fully finished goods was found and no explanation was offered for the same by the assessee, even the correctness of panchnama was also not disputed by him. For these reasons, the Tribunal observed that the short found goods were disposed of by the assessee without payment of duty. But such an evidence is lacking in the present case as observed above.
10. In view of the discussion made above, in our view, the charge of clandestine manufacture and removal of finished goods by the appellants does not stand proved. Therefore, the impugned order against all the appellants cannot be sustained and is set aside. The appeals of the appellants are allowed with consequential relief, as per law.