Custom, Excise & Service Tax Tribunal
M/S Radha Madhav Industries Pvt. Ltd vs Cce, Raipur on 24 February, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I DATE OF HEARING/DECISION : 24/02/2014. Excise Stay Application Nos. 58935-58936 of 2013 in Appeal Nos. 58278-58279 of 2013 [Arising out of the Order-in-Original No. COMMISSIONER/RPR/ CEX/54/2013 dated 31/03/2013 passed by The Commissioner of Customs & Central Excise, Raipur.] For Approval and signature : Honble Shri Justice G. Raghuram, President Honble Shri 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 would 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 : Department Authorities? M/s Radha Madhav Industries Pvt. Ltd. ] Appellants Shri R.K. Agrawal, Director ] Versus CCE, Raipur Respondent
Appearance Shri Somesh Arora, Advocate for the appellants.
Ms. S. Bector, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 51033-51034/2014 Dated : 24/02/2014 Per. Rakesh Kumar :-
The facts leading to filing of these appeals alongwith stay applications are, in brief, as under.
1.1 The appellant company M/s Radha Madhav Industrial Pvt. Ltd., Bodari, Bilaspur, Chhattisgarh, are engaged in manufacture of sponge iron from iron ore. Shri R.K. Agrawal, is the Director of the appellant company. While iron ore is the principal raw material for manufacture of sponge iron, other raw material used is coal and dolomite. On receipt of an intelligence that the appellant are procuring illegally mined iron ore from various sources and are receiving the same without accountal in their records and clearing the sponge iron manufactured out of such unaccounted iron ore without payment of duty, the jurisdictional Central Excise authorities started inquiries in this regard. It was found that the iron ore procured by the appellant was being transported through railways up to the nearest railway siding of Uslapur at Bilaspur and from there, the iron ore was being transported by road through a transporter M/s Gyan Singh. The transportation of iron ore up to the Uslapur by Railways was under the documents called Railway Receipts (RRs) issued by the Railways. As per the practice being followed by the Railways, the rakes assigned to a particular consignee of iron ore could also carry the iron ore of some other person and in that case, the RR is endorsed by the consignee to the person to whom the consignment of iron ore belonged. The Jurisdictional Central Excise officers obtained the information regarding the consignments of iron ore received by the appellant company through railways either under their own RRs or under the RRs of other consignees who had endorsed the same in favour of the appellant company. When the quantity received by the appellant company on the basis of the records of the railways RRs, was compared with the quantity of iron ore accounted as receipt in the records maintained by the appellant company at their factory, it was found that a huge quantity of iron ore received by them had not been accounted for. Inquiry was made with M/s Gyan Singh, the transporter, who was transporting the iron ore from the railway siding of Uslapur to the factory of the appellant company. His premises were also searched from which certain documents relating to transportation of iron ore from the railway siding to various factories of sponge iron manufacturers were taken over for further scrutiny. Detailed statements of Shri Dilip Kumar Markam, Accountant of M/s Gyan Singh, were also recorded on 22/06/07 and 16/07/07 after being questioned about various documents recovered from the office premises of M/s Gyan Singh. In course of investigation it was found that certain RRs had been endorsed by the appellant company to M/s Jai Ambey Minerals, but on inquiry this entity was found to be non-existent. On inquiry with Shri Dilip Kumar Markam, he disclosed that the iron ore covered under RRs endorsed to M/s Jai Ambey Minerals had been transported to the factory premises of the appellant company.
1.2 On the basis of the inquiry, the Investigating Officers found that there is difference of 43,198.92 M.T. of iron ore between the quantity which the appellant company is supposed to have received on the basis of the Railways RRs and the quantity which has been accounted for by them in their records. By assuming that 160 M.T. of iron ore yields 100 M.T. of sponge iron, the officers estimated the quantum of unaccounted production of sponge iron. Beside this, it was also found that the appellant company had received Goods Transport Agency (GTA) service from M/s Gyan Singh but had not paid the service tax as service recipient in respect of the same and total service tax payable by them was Rs. 1,40,846/-. It is on this basis that a show cause notice dated 08/1/10 was issued to the appellant company and its Director Shri R.K. Agrawal and M/s Gyan Singh for
(a) recovery of Central Excise duty of Rs. 4,59,81,117/- alongwith interest thereon under Section 11AB ;
(b) recovery of service tax amounting to Rs. 1,40,856/- alongwith interest thereon under Section 75 of Finance Act, 1994 ;
(c) imposition of penalty on the appellant company under Section 11AC of Central Excise Act, 1944 and Section 76, 77 and 78 of the Finance Act, 1994 and
(d) imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on Shri R.K. Agrawal and M/s Gyan Singh.
1.3 The above show cause notice was adjudicated by the Commissioner, Central Excise, Raipur vide order-in-original dated 31/03/03 by which
(a) the above-mentioned demands of Central Excise duty and service tax were confirmed alongwith interest thereon ;
(b) penalties of equal amount were imposed on the appellant company under Section 11AC of Central Excise Act and Section 78 of Finance Act, 1994 ;
(c) penalty of Rs. 200/- per day under Section 76 of the Finance Act, 1994 was also imposed on the appellant company, besides penalty of Rs. 5,000/- on them under Section 77 of the Finance Act, 1994 ; and
(d) penalty of Rs. 1,50,00,000/- was imposed on Shri R.K. Agrawal under Rule 26 of the Central Excise Rules, 2002. No penalty was imposed on M/s Gyan Singh.
1.4 Against the above order of the Commissioner, these appeals alongwith stay applications have been filed.
2. Heard both the sides.
3. Though these matters were listed for hearing of the stay applications only, after hearing the same for some time, the Bench was of the view that the matters can be taken up for final disposal. Accordingly, with the consent of both the sides, the matters were heard for final disposal.
4. Shri Somesh Arora, Advocate, the learned Counsel for the appellants, pleaded that the main duty demand is the demand of Central Excise duty of Rs. 4,59,81,117/- from the appellant company alongwith interest and equivalent amount of penalty, that this duty demand has been confirmed on the basis of assumption that during the period of dispute, the appellant company have received 43,198.92 M.T. of unaccounted iron ore which has been used by them in manufacture of unaccounted sponge iron, that the quantity of unaccounted sponge iron alleged to have been manufactured by the appellant company has been estimated on the basis of formula that 160 M.T. of iron ore yields 100 M.T. of sponge iron, that there is absolutely no basis for adopting the above formula, that there was no unaccounted receipt of iron ore, as in respect of a number of RRs, the same had been endorsed to other parties and the iron ore transported under those document had actually not been received by the appellant company, that simply on the basis of the name of the appellant company as consignee in the RRs, the department has assumed that the iron ore transported under those RRs had been received by the appellant company, which is not true in every case, that in spite of the appellants request, the RRs have not been made available to the appellant, that the allegation that the iron ore covered under the RRs endorsed to M/s Jai Ambey Minerals had been received in the premises of the appellant company, is based on the statement of Shri Dilip Kumar Markam and while his cross examination had been requested, the same had not been allowed, that besides railway receipts, a number of other relied upon documents have not been supplied, that there is thus denial of natural justice to the appellant and, hence, the impugned order is not sustainable.
5. Ms. S. Bector, the learned DR, defended the impugned orders by reiterating the findings of the Commissioner and emphasized that the quantity of the iron ore actually received by the appellant company had been determined on the basis of the RRs procured from the railways, that in the RRs wherever the consignments had been received in the name of other persons but the same were meant for the appellant company, those persons have endorsed the RRs in the name of the appellant company, that in some cases the RRs originally in the name of the appellant company have been endorsed by them in the name of others, that the quantity of iron ore received has been determined on the basis of the RRs which are in the name of the appellant company and have not been endorsed by them to others or the RRs which had been endorsed to the appellant company, that in the case of RRs endorsed to M/s Jai Ambey Minerals, the company was found to be fictitious and the employee of the transporter Shri Dilip Kumar Markam, has stated that iron ore covered under those RRs had been transported to the factory premises of the appellant company, that there is no denial of natural justice, and that in view of the Apex court judgment in the case of Kanungo & Co. vs. CC, Calcutta and others reported in 1983 (13) E.L.T. 1486 (S.C.) Cross Objection of Shri Dilip Kumar Markam was not required, as his statement stands corroborated by the fact that M/s Jai Ambey Mineral is a fictitious company. She, therefore, pleaded that there is no infirmity in the impugned order.
6. We have considered the submissions from both the sides and perused the records.
7. The main duty demand of Rs. 4,59,81,117/- is the demand of Central Excise duty on about 27,000 M.T. of sponge iron alleged to have been manufactured by the appellant out of unaccounted iron ore received by them. The allegation of receipt of unaccounted iron ore is based on the difference between the iron ore accounted for by the appellant company in their records and the receipt of iron ore on the basis of the RRs in the name of the appellant company or endorsed by others to them. The appellants plea is that in respect of a number of RRs which are in their name for the reason that the iron ore had been transported in the rates assigned to them, the iron has not been received by them but has been received by others against the endorsements on the RRs by them and these facts can be clarified only when the RRs are made available to them but the same have not been made available by the department in spite of their request. We find that the department had supplied only a chart prepared by the Investigating officer showing the receipt of iron ore based on the Railways documents (RRs) and the receipt of iron ore accounted for by the appellant in their records and, as such, the railways records RRs have not been supplied. Since, the departments case is based on the documents received from the railways and also recovered from the transport company, all these documents have to be supplied and non-supply of these documents would result in denial of natural justice. Similarly, when in respect of the RRs endorsed to M/s Jai Ambey Mineral it is being alleged on the basis of statement of Shri Dilip Kumar Markam that the consignments of iron ore have been transported to the factory premises of the appellant and when the request for cross examination of Shri Dilip Kumar Markam had been made, his cross examination has to be allowed. In view of this, the impugned order is not sustainable. The same is set aside. The matter is remanded to the original Adjudicating Authority for denovo adjudication after supply of the relied upon documents including RRs and the documents recovered from M/s Gyan Singh. The Adjudicating Authority during adjudication proceedings shall permit the cross examination of the persons whose statements have been relied upon in support of the allegation of duty evasion against the appellant. The appeals as well as stay applications stand disposed of, as above.
(Operative part of the order pronounced in the open court.) (Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) PK ??
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