Rajasthan High Court - Jaipur
Commissioner Of Central Excise ... vs Ramesh Kumar Agarwal on 2 May, 2018
Author: K.S.Jhaveri
Bench: K.S.Jhaveri
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Central/excise Appeal No. 26/2017
Commissioner Of Central Excise And Service Tax,
Commissionerate Udaipur, 142-B, Hiranmagri, Sector 11,
Udaipur In The State Of Rajasthan.
----Appellant
Versus
Mittal Pigment Pvt. Ltd, A-203, Indraprasth Industrial Area, Road
No. 5, District Kota In The State Of Rajasthan.
----Respondent
Connected With D.B. Central/excise Appeal No. 27/2017 Commissioner Of Central Excise Service Tax, Commissionerate Udaipur, 142-B, Hiranmagri, Sector 11, Udaipur In The State Of Rajasthan.
----Appellant Versus Ramesh Kumar Agarwal, A-203, Indraprasth Industrial Area, Road No. 5, District Kota In The State Of Rajasthan.
----Respondent For Appellant(s) : Mr. Siddhartha Ranka with Mr. Saurav Harsh For Respondent(s) : Mr. Sameer Jain with Mr. Arjun Singh HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE BANWARI LAL SHARMA Judgment 02/05/2018
1. In both these appeals, common questions of law and facts are involved, hence they are decided by this common judgment.
2. By way of these appeals, the appellant has challenged the judgment and order of the tribunal whereby the tribunal has partly allowed the appeals of the assessee.
(2 of 36) [EXCIA-26/2017]
3. While admitting the appeals, this Court framed the following substantial question of law :-
In D.B. Central/excise Appeal No. 26/2017
(i) Whether in the facts, circumstances and in law the ld. CESTAT, New Delhi has erred in brushing aside the vital evidences in the form of voluntary statements of the Director of the assessee respondent Company which was corroborated by the reports of the test samples and in turn setting aside the order of the Adjudicating Authority?
In D.B. Central/excise Appeal No. 27/2017
(i) Whether in the facts, circumstances and in law the ld. CESTAT, New Delhi has erred in deleting the penalty levied upon the assessee respondent under Rule 26 of the Central Excise Rules, 2002? "
4. For convenience of the Court, the facts of the case are taken from Appeal No. 26/2017 according to which M/s. Mittal Pigment Pvt. Ltd, Kota (Rajasthan) (hereinafter called as the 'assessee') is inter- alia engaged in the manufacture of zinc oxide. During the course of investigation carried out by the Anti-Evasion team of the Central Excise Commissionerate, Jaipur at the factory premises of the assessee respondent, the Director of the assessee respondent Unit, Shri Ramesh Agarwal stated in his statements that yield of zinc oxide from zinc is @120% and that minimum content of the zinc in various forms imported by them was 70%. As per Test reports of two samples of raw material also, the zinc content was 81.50% and 96.40%. Thus, it was logically inferred that minimum output should have been 84% (i.e. 120% of 70%) of the inputs used in manufacture of zinc oxide. However, based on above averments of the Director and from comparison of records of inputs and output, it was found by the Anti-Evasion team that the assessee had suppressed the production of 1,545.047 MT of zinc oxide valued at Rs. 14,12,68,835/- during financial years 2003-04 (3 of 36) [EXCIA-26/2017] to 2006-07 and thus evaded central excise duty amounting to Rs 2,30,39,602/-.
3.3. During the course of investigation carried out by the Anti-
Evasion team of the Central Excise Commissionerate, Jaipur at the premises of the assessee respondent it was also noticed that inputs involving Cenvat Credit amounting to Rs. 1,31,898/- were also found short. On the basis of above-said investigation, a show cause notice was accordingly issued to the assessee respondent on 11.02.2008 demanding the duty evaded and interest thereon, proposing penalty and appropriation of the cenvat credit reversed by the assessee respondent on inputs found short.
3.5 Counsel for the appellant has taken us to the show cause notice wherein it has been stated as under:
"4. That the assessee is manufacturing zinc content finished goods zinc oxide, zinc ingots, zinc alloys from raw materials-zinc dross, zinc scrap, zinc ingots etc. Raw material is being imported by the assessee and also purchased from local market. The imported raw material viz. zinc dross/zinc scrap used in the manufacture of zinc oxide etc. is being described in Bill of entry as zinc dross/scrap in various names as 'Seal' or 'Scribe' or Scrub'. These codes are also given along with zinc contents in description provided in ISRI (Institute of Scrap Recycling Industries) which are reproduced below:
Code : ITEM Scribe: zinc scrap contain a maximum 5% unmeltables such as free iron, copper, aluminium and other metals.
Scrub: Zinc dross in slab form with a minimum zinc content of 92%.
Seal: Zinc Top dross with a minimum zinc content of 90%.
Shelf: Zinc dross content minimum of 85% The test results from the CRCL, New Delhi of the samples of raw material i.e. zinc dross drawn from the factory premises of the assessee on (4 of 36) [EXCIA-26/2017] 17.10.2006 vide Test Memo no. 2 & 3 dated 17.10.2006 have confirmed zinc content in scrap us under:Test Memo No. 2
'The sample is in the form of grey coloured metallic slab. lt is essentially composed of Zinc and Iron' Zinc contents 96.4% Iron contents 02.51% Test Memo No. 3 'The sample is in the form of grey coloured friable lump. It is composed of Zinc, oxide of zinc & Aluminium with silicious matters'.
Zinc contents 81.51% From the Chemical Examiner's reports given above it is evident that the assessee was using zinc dross of higher purity.
5. That the Director of the unit Shri Ramesh Kumar Agarwal in his statement dated 2.12.2006 tendered under Section 14 of central Excise Act, 1944 stated that the percentage yield of zinc oxide would be 120.6% if the zinc ingots of 99.95% purity is used foi manufacture of zinc oxide as raw material. He stated that they used zinc dross, zinc scrap and zinc ingots as raw material jointly and zinc ingots having 99.95% purity are less used. He further stated in his statement dated 4.6.2007 that they use zinc bearing waste, dross & zinc ingots as raw material for the manufacture of zinc oxide and the raw material used are mostly, imported. It is further clarified that zinc dross, zinc scrap scribe, zinc scrap score, seal, zinc dross scrub, zinc remelted ingots, zinc dross ash, zinc ingots and zinc alloy are used as raw material for manufacture of zinc oxide which are mostly imported and zinc content of raw material differ to each other: viz zinc content in zinc ash is 50 to 55% and 96% in zinc alloy. He further confirmed that zinc content in zinc scrap scribe, zinc dross shelf. zinc scrap saves, zinc scrap seal and in zinc dross scrap is almost equal and the purchases rate of the same are also almost equal. He further affirmed that the raw materials used by them for manufacture of zinc product, contain at least 70% zinc content. Based on these affirmations each types of scrap has been quantified from purchases bill description and details supplied by the assessee and it observed that in proportion of zinc content in each described raw material a quantification arrived at for each different raw material issued for manufacture of zinc product, they are showing (5 of 36) [EXCIA-26/2017] less production as detailed in Annexure "A" with compare to (percentage) yield 120.6% required as per zinc content in each type of Scrap.
6. That the value of clearance of suppressed production and clandestine removal of the zinc oxide has been calculated on average basis by calculating total value of clearances made by the assessee, divided by total clearance of zinc oxide in the particular year."
3.6 He has also taken us to the demand of total duty from the assessee through a chart which has been produced along with the show cause notice which reads as under:
M/s Mittal Pigments Pvt. Ltd. Kota Quantity in quintal Year Raw material Production Production Production Average sale Value on Cenvat 16% Cess issued for to be as per shown suppressed rate per which duty (Rs.) (Rs.) production % yield (Qntls.) (Qntls.) quintal not paid (Qntls.) recovery (Rs.) (Rs.) 70%-84% (Qntls.) 2002-03 8360.53 7022.84 7893.50 - - - - - 2003-04 23486.98 19729.06 18799.25 929.81 5200 48,35,012 7,73,602 - 2004-05 41,171.65 34584.18 27993.43 6590.75 5300 3,49,30,975 5,588,956 1,11,779 2005-06 39991.88 33593.18 35177.58 - - - - -
2006-07 40,228.31 33719.78 25861.87 7929.91 12800 10,15,02,848 1,62,40,456 3,24,809
Total 2,26,03,014 4,36,588
TOTAL DUTY:- Rs. 2,30,39,602/-
3.7 He has taken us to the finding of CIT(A) wherein it has been observed as under:
"19. I first take up the issue of raw material/finished stock found short during the stock verification of the unit by the visiting Central Excise Officers. From the statement of Shri Ramesh Kumar Agarwal, Director tendered under Section 14 of the Central Excise Act,1944. l observe that he admitted the shortage in raw material/finished stock as pointed out by the Officers and tried to explain the reason of non- making the entries in their record for issue of raw material as well as finished goods due to the facts that he was out of station for last few days and there was shortage of staff due to holidays for Dusherra festival. The duty of Rs. 1,29,311/- and Cess Rs. 2,586/- total Rs. 1,31,897/- involved on the shortage was reversed vide entry no. 940 to 943 dated 22.03.2007 in RG-23A Part- ll Register on the spot by the assessee. It is therefore clear that there was shortage in the (6 of 36) [EXCIA-26/2017] stock which had been cleared by the assessee without issue of invoices and payment of duty and admitting the act the assessee paid the required duty immediately which is clearly liable to be appropriated into Government Account.
20. Now. I take up the main issue of suppression of production of zinc oxide to the tune of 1545.047 MT worked out by the department on the basis of minimum contents of Zinc in the raw material used for the production as admitted by Shri Ramesh Kumar Agarwal. Director in his statement tendered under Section 14 of the Central Excise Act, 1944. The department has contended that the assessees were manufacturing zinc oxide from Zinc dross, Zinc scrap, zinc ingots etc. These raw materials either were imported or purchased from local market. The imported raw material viz. zinc dross/zinc scrap were described in Bill of entry as 'Seal' or 'Scribe' or 'Scrub'. The 'Seal, 'Scribe' and 'Scrub' codes have been provided in ISRI (Institute of Scrap Recycling Industries) which reads as under:
Scribe: zinc scrap contain a maximum 5% unmeltables such as free iron, copper, aluminum and other metals.
Scrub: zinc dross in slab form with a minimum zinc content of 92%.
Seal: Zinc top dross with a minimum zinc content of 90%.
Shelf: zinc dross content minimum of 85%. From the above definitions, it is clear that zinc Scribe, Scrub. Seal and Shelf means that this material contains zinc contents between 95% to 85%. Further samples from zinc dross lying were drawn on 17.10.06 and sent to the CRCI, New Delhi for test. The test results confirmed zinc content 96.40% in scrap under memo no. 2 and zinc contents 81.51% under test memo No. 3 Further chemical Examiner also opined that the assessee was using zinc dross of higher purity.
21. I further observe that Shri Ramesh Kumar Agarwal. Director of assessee unit. In his statement dated 02.12.2006 tendered under section 14 of Central excise Act, 1944 confirmed 120.6% yield of zinc oxide if the zinc ingots of 99.95% purity are used for manufacture. He also confirmed that they used zinc dross. Zinc scrap scribe, zinc scrap score, seal, zinc dross scrub, and zinc remitted ingots, zinc dross ash, zinc ingots and zinc alloy for manufacture of zinc oxide which are mostly imported. He further confirmed that zinc content in zinc scrap scribe, (7 of 36) [EXCIA-26/2017] zinc dross shelf, zinc scrap sables, zinc scrap seal and in zinc dross scrap is almost equal and the purchase rates of the same are also almost equal. He further affirmed that the raw materials used by them for manufacture of zinc product, contain at least 70% zinc content.
From the above averment of the director of the unit, it is almost clear they had used various types of raw materials which at least contain 70% zinc. The production of zinc oxide is based on the contents of zinc in the raw materials used as the zinc contents only converted into zinc oxide due to oxidation process and the yield come to 120.6% of the zinc contents' As such the production of zinc Oxide would be 120.6% or 120% of 70% i.e. 84% as alleged in the Show cause Notice, I thus observe that the department has correctly worked out the total production of zinc Oxide 1972.906MT the Financial Year 2003- 04, 2799.343 MT in 2004-05 and 3379.178 MT in the Financial Year 2003-04, 3458.418 MT in 2004-05 and 3379.178 MT in 2006-07. The assessee had however reconded production of zinc oxide 1879.925 MT in 2003-04, 2799.343 MT in 2004-05 and 2586.187 MT in 2006-07. As such total production of 1545.047 MT was suppressed by the assessee during above mentioned three Financial Years.
22. l further observe form the charts showing the pattern of consumption of raw materials produced by the assessee along with their reply to the Show Cause Notice that they had used following raw materials.
(i) 2003-04 zinc Dross Scrap, zine Scrap Scribe, zinc Scrap Score.
(ii) 2004-05 zinc Dross. Zinc Scrap Scribe. Zinc Dross shelf, score. zinc ingot etc.
(iii) 2006-07 Zinc Scrap Scribe, Saves, Dross, Scrub, Scope, Shelf, Score.
In view of above it is clear that the assessee used the type of scrap which at least contained zinc not less than 70% as per the norms prescribed by the Institute of Scrap recycling Industries (ISRI).
23. The assessee has contended that the production suppressed is mentioned to have been calculated at 70 to 84% of the yield recovery but the actual calculations have been made on 84%. it is not mentioned as to why the calculation at 84% has been done, why not at 70% contents of zinc in raw materials used in the manufacture which is the lowest contents accepted by the assessee. The 70% contents of zinc converted (8 of 36) [EXCIA-26/2017] into 120% yield comes to 84% of the weight of raw materials used in the production of zinc oxide, as such l do not find any substance in the contention of the assessee.
24. The assessee also relied upon the commissioner (Appeals) order on similar issue dated 24.09.2002 in the case Zinc-O-India, Alwar. I have gone through the above case and l observe that the commissioner (Appeals) had held in this case that during the period 10/95 to 6/96 a greater proportion of zinc Dross was used as input resulting in a lower yield than the period from 6/96 to 3/97 when a greater percentage of zinc Ingot were used as input. Therefore, Logically would in lower production of zinc oxide than what can be produced from zinc Ingot. The facts of the present case are altogether different as in the present case department had made out the case of suppression of production on the basis of minimum contents of zinc in the raw materials namely zinc Dross Scrap, zinc Scrap Scribe, Zinc Scrap score used normally in the manufacture zinc Oxide. As such the case law cited is of no help to the assessee.
25. This is a case of suppression of production and clandestine removal of goods without payment of duty. In the cases of clandestine removal all that would be sufficient is to establish to such a degree of probability that a prudent man may, on its basis, believe in the existence of the facts in issue. If there is a chain of events which lead to the only irrefutable conclusion that the party was engaged in suppression of production and evasion of duty. The same set of events/evidence may substitute for direct evidence, In the present case the yield of zinc Oxide is based on the contents of zinc in the raw materials used for the manufacture and the 70 percentage of zinc contents taken for calculating the suppressed production is proved from literature of ISRI, statement of the director and the raw material found short at the time of the visit of Central Excise Officers. The Quantity of suppressed production had been cleared clandestinely without payment of duty and without issue of invoices."
5. Counsel for the appellant contended that the tribunal has seriously committed an error in relying on judgment of Allahabad High Court, in the matter of Continental Cement Company vs. (9 of 36) [EXCIA-26/2017] Union of India reported in [2014] 49 taxmann.com 374 (Allahabad) wherein it has been held as under :-
"We have heard the learned counsel for the parties and gone through the material available on record, from which it appears that Shri Shubhashis Dev, Government Examiner of questioned documents, Shimla gave his written opinion dated 12.6.1998, wherein he has stated that "the documents of this case have been carefully and thoroughly examined. The enclosed writings and signatures stamped and marked were all written by one and the same persons.
From the above, it appears that all the documents were written by one and the same persons, though the dates and the name of the parties are different. When it is so then the genuineness of the documents cannot be accepted."
5.1 He contended that the said judgment is not applicable in the present case and he relied on the following judgments :-
(1) In Krishna Screen Art. vs. Commissioner of Central Excise 2015 (316) E.L.T. 534 (Guj.) wherein it has been held as under:-
"10. It can thus be seen that the findings and conclusions of the Tribunal were based on evidence on record. Such evidence was not confined to a single statement of the proprietor. It is true that reliance was placed on such a statement which was not impermissible since the statement was never retracted. However, it would be incorrect to suggest that the conclusions of the Tribunal were based on a single factor namely unretracted statement of the proprietor. As noted, the Tribunal based its conclusion on several factors and evidences noted above. "
(2) In Commissioner of Central Excise vs. Sarin and Sarin 2015 (316) E.L.T. 401 (Allahabad) wherein it has been held as under:
(10 of 36) [EXCIA-26/2017]
11. The Adjudicating Officer has considered the statement of the assessee and, in our view, the Adjudicating Officer has appreciated the material evidence correctly. The statements made by Sri Dipak Mehra and Sri Davi Sarin have a material bearing on the issue. For the sake of convenience, the relevant part of the statements is extracted herein below:
"A. I have seen this raw material register & signed in the same on today date it is the same register which is resumed from my factory on 20- 1-03, yet there is a difference in Qty. of Sada Pan Masala & Gutkha actually mfd. in the factory & shown in our records but I cannot explain the difference & I have no reply for this shortage.
Q.9. Are you excepting that you have suppressed the production of Pan Masala & Gutkha as described in Q. No. 8?
A. Yes, there is a suppression but I cannot explain the same.
Q.11. Are you prepared to deposit Central Excise duty on the Qty. of Sada Pan Masala & Gutkha not accounted for in your statutory records as discussed above?
A. We have already pre-deposited Rs. Twenty five lacs only as Central Excise Duty on the Qty. of Gutkha & Pan masala not entered in our records which is voluntarily."
12. In our view, the Tribunal has erred in ignoring material evidence and has not recorded any finding for setting aside the penalty imposed by the Adjudicating Officer. No reason has been recorded for setting aside the penalties.
13. After careful consideration of the matter, we are of the view that the finding of the Tribunal, setting aside the penalties imposed by the Adjudicating Officer needs to be interfered with. Accordingly, it is set aside. [The matter is remitted to the Tribunal to reconsider the matter on the question of penalties and duties afresh.
14.The appeal is, accordingly, disposed of. There shall be no order as to costs.
(11 of 36) [EXCIA-26/2017] (3) In Tulip Lamkraft Pvt. Ltd. vs. Commissioner of Central Excise 2015 (316) E.L.T. 417 (Gujarat) wherein it has been held as under:
3. In our opinion, however, it does not give rise to any substantial question of law. The entire issue is based on appreciation of evidence. The Excise authorities during the raid on the premise of the manufacturing unit of the appellant, as noted earlier, recorded two confessional statements. One was of Shri Maheshbhai Thakkar, an employee of the company who admitted that he was the dispatch supervisor. He would load the manufactured goods for dispatch.
As per the kachha note details of which he would note down in his small diary. Once the diary is exhausted, he would hand over the same to the Director of the company Shri Nileshbhai Thakkar. He was shown two diaries of such description and agreed that the same were such diaries. He admitted that the goods shown to have been dispatched in the said diaries were actually so dispatched. In his statement dated 13-12-2009, Shri Nilesh Thakkar, Director of the company admitted that he was engaged in the day-to-day functioning of the company. He was also shown such two spiral diaries which contained his signatures. He admitted that the goods described in such diaries were actually dispatched as mentioned in the diaries and such goods were dispatched without bills or invoices. He admitted that value of such goods would be approximately Rs. 91.92 lacs on which Excise Duty payable would be approximately Rs. 7.57 lacs. He admitted that no such Excise Duty was paid on the goods so dispatched. He also admitted that the goods were sold without bills or invoices or without making any entries in the records. Raw materials for such goods were purchased in cash without making any entries in the record. In his second statement dated 17-2-2011, in addition to admitting his previous statement, he further stated that the goods clandestinely removed as mentioned in the spiral diaries were sold to known people. He, however, could not produce the names and addresses of such purchasers since they were not mentioned in the register.
4. It can thus be seen that the Dispatch Supervisor as well as one of the Directors of the company who was responsible for the day-to-day functioning of the company had in unequivocal terms admitted the clandestine removal of the (12 of 36) [EXCIA-26/2017] goods without payment of Excise Duty. Matching entries were found in their diaries which did not form part of the final records. Raw material was purchased in cash. Clearances were made without raising bills or invoices. Significantly and admittedly these statements were never retracted. The authorities were, therefore, entitled to rely on such statements. When the adjudicating authority and two appellate authorities found that there was enough evidence of clandestine removal of goods, in our opinion, the appeal does not give rise to any question of law. We are prepared to accept the appellant's contention that the question of additional consumption of electricity and procurement of raw material was raised before the lower authorities or that it could have been raised for the first time before the Tribunal. However, such question was not germane at all. When there was overwhelming evidence of unretracted unequivocal confessional statements, mere failure on the part of the Excise authorities to produce additional evidence of extra consumption of electricity or source of procurement of raw material would pale into insignificance. The Tribunal's remarks were merely in the nature of passing thoughts. Vulnerability of such observations would not vitiate the order itself.
(4) In Subodhchandra and Co. vs. Dy. Commissioner of Income Tax [2017] 80 taxmann.com 70 (Gujarat) wherein it has been held as under:
6. Heard the learned Counsel appearing for respective parties at length. Considering the submissions made by Shri Shah, learned Counsel appearing on behalf of the assessee it appears that the main grievance is that though new evidences were produced for the year under consideration, which were not there in A.Y. 1989-
90, without considering the same and solely relying upon the decision of this Court for A.Y. 1989-90, the learned ITAT has materially erred in dismissing the appeals and confirming the additions made by the Assessing Officer. Therefore, it is the case on behalf of the assessee that the matter is required to be remanded to the learned ITAT to consider the new evidences produced which were not there for A.Y. 1989-90. Therefore, it is the case on behalf of the assessee that the decision of this Court for A.Y. 1989-90 shall not be applicable to the facts of the case on (13 of 36) [EXCIA-26/2017] hand for other assessment years i.e. 1990-91 to 1994-95.
6.1 To appreciate the above more particularly whether the learned ITAT has missed to consider new evidences produced for the years consideration, the grounds on which the Assessing Officer made the additions are required to be considered. It appears that the Assessing Officer noticed the gold content in the final product as per the Books of Accounts and as per the appraisal of customs authority. Therefore, the Assessing Officer worked out the excess consumption of gold which according to him had been actually sold in the local market. The Assessing Officer also noticed that similar modus operandi was done in the year 1989-90 also and there was no change in the modus operandi in the subsequent years under consideration. At this stage it appears that the assessee produced some further evidence which we have perused from the paper book produced and according to the assessee by producing such new evidences the case differs from 1989-90, as according to the assessee by using new evidences which were not there in the year 1989-90, they have been able to produce the evidence with respect to the actual consumption of gold in final product of ornaments which were exported. However, considering the evidences from the paper book produced, which according to the assessee are new evidences, we are of the opinion that as rightly observed by the learned ITAT none of the evidences can be said to be contemporaneous and/or the evidences to suggest the actual consumption of gold. Most of the evidences and the material produced can be said to be the correspondences and/or general requirement of use of gold. None of the documents/materials show the actual consumption of gold. Under the circumstances, the learned Tribunal has rightly observed and held that the evidences (new evidences) are not contemporaneous and/or the evidences to suggest actual consumption of gold.
6.2 As such the issue has been concluded by the Division Bench of this Court in the case of very assessee but with respect to A.Y. 1989-90 when similar question arose. The additions were made by the Assessing Officer on the basis of the discrepancy in quantity of gold recorded in the Books of Accounts at the time when the ornaments were manufactured and received from the artisans, as compared to gold actually exported by the assessee to its foreign importers.
(14 of 36) [EXCIA-26/2017] In the year 1989-90, it was found that the assessee received gold ornaments, according to its records, having purity of 93.37%, however, some ornaments when were exported, the assessee recorded its purity as 91.66% (similar is the case in the years under consideration also). Before the High Court the assessee's explanation that ornaments actually carried purity of 93.37% but were reflected in export documents having purity of 91.66% because the importers had desired such level of purity whereas the assessee to air on safer side used more gold so that stringent international standards were not even unintentionally breached, which would incur liability of rejection of consignment. Such explanation by the assessee was found unacceptable and inadequate and came to be rejected by all the lower Authorities which came to be confirmed by the High Court in Tax Appeal No. 346/2000 (A.Y. 1989-90). While confirming the additions made by the Assessing Officer after noting some submissions which are now made by the learned Counsel appearing on behalf of the assessee, the Division Bench has considered the submissions and observed and held as under in paras 7 to 10.1.
"7. As can be seen from the questions framed, there are two main elements of assessee's contentions. Learned counsel Shri J.P. Shah's first contention [relatable to Question No. 2 framed above] was that the entire procedure of manufacturing ornaments was controlled by the State authorities under the Gold Control Act. Raw gold supplied to the karigars for preparation of ornaments was recorded in the books of the assessee. To such gold, the karigars would add alloy @ 7.100 grams per 100 grams of gold to achieve desired purity of gold of 22 carat. Even when such ornaments were received back after preparation, they were tested, certified and recorded in the assessee's records. It was thereafter not possible for any mischief or modification, particularly looking to the certificate issued by the Gems & Jewellery Export Promotion Council. Counsel pointed out that 22 carat of gold or for that matter any other carats would not have precise purity and would have a range of fineness of gold. He drew our attention to the specifications laid down by the Bureau of Standards, which provides as under:"
1. 22.3 Carat gold: It shall be of fineness not less than 970.
(15 of 36) [EXCIA-26/2017]
2. 22 Carat gold: It shall be of fineness not less than 916.6.
3. 21 Carat gold: It shall be of fineness not less than 875.
4. 18 Carat gold: It shall be of fineness not less than 750.
5. 14 Carat gold: It shall be of fineness not less than 583.3.
6. 12 Carat gold: It shall be of fineness not less than 500.
7. 9 Carat gold: It shall be of fineness not less than 375.
7.1 Counsel therefore urged that the gold ornaments manufactured and exported by the assessee retained the same purity of 22 Carat [or other specifications as the case may be] irrespective of whether it had purity standard of 93.37% or 91.66%.
7.2 Counsel contended that as per the importers' requirements, the assessee would export ornaments of 22, 20, 18 or 14 carats and charge the importers according to the agreed percentage of gold for such ornaments.
However, in order not to breach the stringent requirement of international standards of purity of gold, the assessee would prepare ornaments with slightly higher purity then what was the minimum standard asked for by the importers. The value of difference of gold was recovered in the form of higher labour charges.
7.3 Referring the first question of law framed, counsel contended that in any case there was no proof that the excess gold was sold in the local market. The same must therefore be considered as the assessee's additional export sale, which as per the tax policies of the Government was in any case exempt from payment of income tax.
7.4 As against that learned counsel Shri M.R. Bhatt for the Department took us through the evidence on record to contend that the revenue authorities and the Tribunal had concurrently come to the conclusion that there was sizeable discrepancy in the consumption of gold reflected by the assessee in its own books of account. The (16 of 36) [EXCIA-26/2017] assessee was unable to explain such discrepancies. The assessee's explanation that it exported gold of greater purity and thereby greater quantity than what was reflected in the assessee's documents cannot be believed, and therefore, rightly not accepted by the authorities below. Counsel submitted that the onus was on the assessee to explain such discrepancies.
8. Having thus heard learned counsel for the parties and having perused the documents on record, it emerges that the revenue authorities as well as the Tribunal came to conclusion that there was considerable discrepancy in the quantity of gold recorded in the assessee's books at the time when the ornaments were manufactured and received from the artisans, as compared to the gold actually exported by the assessee to its foreign importers.
8.1 This is not even seriously disputed by the assessee. If we take as sample of such discrepancy that emerges in the category of 22 Carat gold ornaments, after supplying raw gold to the artisans and the artisans preparing gold ornaments after adding alloy in the specified quantity, the assessee received gold ornaments, according to the assessee's records having purity of 93.37%. The very same ornaments when were exported, the assessee recorded its purity as 91.66%. Some of these ornaments also were subject to actual test by the Customs authorities. The result also matches the assessee's claim of gold purity of 91.66%. Thus, in fact, there was considerable discrepancy between the two sets of documents pertaining to the same set of gold ornaments is undeniable. The assessee owed an explanation and had a duty to reconcile this discrepancy. The authorities found that the assessee failed in doing so. This was on the premise that the assessee's explanation was found unacceptable and inadequate. The assessee's only explanation was that the ornaments actually carried purity of 93.37% but were reflected in the export documents having purity of 91.66%. This according to the assessee was done because the importers had desired such level of purity whereas the assessee to err on safer side, used more gold so that the stringent international standards were not even unintentionally breached, which would incur liability of rejection of the consignment.
8.2 Such explanation of the assessee was rejected by the three authorities below. We are (17 of 36) [EXCIA-26/2017] also unable to fathum why an exporter would declare lesser purity of gold than what was being actually exported. As rightly observed by the CIT[A], if the gold ornaments were carrying greater purity value, and therefore, greater content of gold, the assessee had no reason to make a misdeclaration. In either case, assessee was meeting with the minimum standard of 22 carat gold. What the assessee had to charge from its importers had nothing to do with what the assessee may declare in the export documents regarding the purity of gold. As per the by lateral understanding, even if the importers would have paid the assessee for the gold purity at 91.66%, there was no reason why the assessee should shy away from declaring that the correct purity of the gold ornaments is 93.37%, if that was the real case. The CIT[A] also made a significant point in observing that the assessee could import only that much quantity of gold that was exported. By making misdeclaration therefore, the assessee was seriously reducing quantity of gold that would be available for import against the export undertaken by it. The analysis made by the Customs authorities also matched with that of the assessee's own declaration regarding purity of gold.
9. Had the revenue relied solely on the Customs analysis, we would have further examined the assessee's contention that such analysis was based on the touchstone method which may not yield highly accurate results. In the present case, however, assessee itself declared certain purity of gold which also considered with the random testing carried out by the Customs authorities.
10. The difference between the two sets of declarations was not minor or insignificant. It could not have been passed off as mixing of impurity or error in measuring standards. It was simply a case where the assessee utterly failed to explain the considerable difference in the gold quantity in two sets of documents maintained by itself.
10.1 It can therefore not be stated that the finding of the authorities below, as confirmed by the Tribunal, are perverse. It is also not true that in coming to such conclusions, the Revenue authorities ignored the presence of the certificate of the Gems & Jewellery Export Promotion Council. The contention that in absence of proof of local sale, it must be presumed to have been (18 of 36) [EXCIA-26/2017] exported, in our opinion, is fallacious. It is not even the case of the assessee, barring his explanation about the higher purity of gold being exported when lower purity gold is declared in the export documents, that such gold was in some form or the other, separately or independently exported. When the authorities did not accept the assessee's explanation, it comes to a situation where such differential quantity of gold did not form part of the assessee's exports. The only conclusion, therefore, available to the authorities and therefore rightly reached at was that the gold was subjected to local sale. All in all, the issues considered by the Revenue authorities at a greater length, referring to and analyzing the evidence on record and once which were confirmed by the Tribunal by giving cogent and detailed reasons, in our opinion, do not suffer from any perversity. In the result, the questions are decided in negative - against the assessee. The appeal is, therefore, dismissed."
6.3 Therefore, as such the issue is concluded in the case of very assessee in A.Y. 1989-90. As observed hereinabove, the new evidences which according to the assessee were not there while deciding the assessment for A.Y. 1989-90, as observed hereinabove cannot be said to be contemporaneous and/or the evidences to show the actual consumption of gold. It cannot be said that the learned ITAT has at all not considered the said evidences. After considering the evidences as such there is a finding recorded by the learned ITAT that the evidences are not contemporaneous and/or evidences to suggest actual consumption.
We are of the opinion that there is no material change with respect to 1989-90 (which came to be confirmed by the Division Bench of this Court) and the years under consideration, as the new evidences cannot be said to be the evidences to show actual consumption of gold. There are concurrent findings of fact recorded by all the Authorities below, which are on appreciation of evidence on record.
(5) In Commissioner of Central Excise vs. Kalvert Foods India Pvt. Ltd. and Ors. 2011 (270) E.L.T. 643 (S.C.) wherein it has been held as under:
18. During the course of arguments learned Counsel appearing for the Respondent submitted (19 of 36) [EXCIA-26/2017] before us that although the aforesaid statements of Managing Director of the Company and other persons were recorded during the course of judicial proceedings but the same were retracted statements, and therefore, they cannot be relied upon. However, the statements were recorded by the Central Excise Officers and they were not police officers. Therefore, such statements 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 of the Respondents and therefore could not have been obtained through coercion or duress or through dictation.
We see no reason why the aforesaid statements made in the circumstances of the case should not be considered, looked into and relied upon.
19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of their own volition and there is no allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corroborated each other. Besides, the Managing Director of the Company on his own volition deposited the amount of Rs. 11 lakhs towards excise duty and therefore in the facts and circumstance of the present case, the aforesaid statement of the counsel for the Respondents cannot be accepted. This fact clearly proves the conclusion that the statements of the concerned persons were of their volition and not outcome of any duress.
(6) In Commissioner of C. Ex., Madras vs. Systems and Components Pvt. Ltd. 2004 (165) E.L.T. 136 (S.C.) wherein it has been held as under:
5. The Appeal filed by the Department has been disposed of by the Tribunal by holding that the Department has not proved that these parts were specifically designed for manufacture of Water Chilling Plant in question. The Tribunal has noted the Technical details supplied by the Respondents and the letter of the Respondents dated 30th November, 1993 giving details of how these parts are used in the Chilling Plant. The Tribunal has still strangely held that this by itself is not sufficient to show that they are specifically designed for the purpose of assembling the Chilling Plant. We are unable to understand this (20 of 36) [EXCIA-26/2017] reasoning. Once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use there is no need for the Department to prove the same. It is a basic and settled law that what is admitted need not be proved.
6. The Judgment of the Tribunal thus needs to be set aside. It was however urged, on behalf of the Respondents that there are circulars of the Board which should really have been considered by the Tribunal.
7. We, therefore, set aside the impugned Judgment and remit the matter back to the Tribunal for deciding the same on merits on the basis of above admitted position. The Appeals are allowed accordingly. There will be no order as to costs.
(7) In K.I. Pavunny vs. Asstt. Collr. (HQ), C.Ex.
Collectorate, Cochin 1997 (90) E.L.T. 241 (S.C.) wherein it has been held as under:
19. Next question for consideration is: whether such statement can form the sole basis for conviction? It is seen that, admittedly, the Appellant made his statement in his own hand-
writing giving wealth of details running into five typed pages. Some of the details which found place in the statement were specially within his knowledge, viz., concealment of the 200 biscuits in his earlier rented house till he constructed the present house and shifted his residence and thereafter he brought to his house and concealed the same in his compound; and other details elaboration of which is not material. The question then is: whether it was influenced by threat of implicating his wife in the crime which is the sole basis for the claim that it was obtained by threat by PW-2 and PW-5? In that behalf, the High Court has held that it could not be considered to be induced by threat that his wife will be implicated in the crime and accordingly disbelieved his plea. It is seen that admittedly after the Appellant gave his statement, he was produced before the Magistrate though no complaint was filed and was released on bail. He did not complain to the Magistrate that Ex. P-4 statement was given under inducement, threat or duress. It was raised only subsequently making accusations against PW-5, the Inspector of (21 of 36) [EXCIA-26/2017] Customs. Therefore, obviously it was only an afterthought. The High Court, therefore, rightly has not given any weightage to the same. It is true that the Magistrate has given various reasons for disbelieving the evidence of PW-3, the panch witness who had also, at one point of time, indulged in smuggling. It is unlikely that PW-3 would bring 200 gold biscuits of foreign marking and conceal them in the compound of the Appellant without Appellant's knowledge for safe custody. It is not his case that he had facilitated FW-3 in concealing them in his compound. The place of concealment of the contraband is also significant at this juncture. It is just near and visible from the window of his bed-room through which he or family members could always watch anyone frequenting the place where the contraband was concealed. This fact becomes more relevant when we consider that after concealment of the contraband in the compound one would ensure that others having access to the compound may not indulge in digging and carrying away the same. As soon as the Appellant and/or the members of his family had sight of such visitor or movement by others, they would immediately catch hold of such person or would charge them. Obviously, therefore, it would be the Appellant who had concealed 200 gold biscuits of foreign marking in his compound at a place always visible from his bed room window. Therefore, the High Court was right in its conclusion, though for different reasons, that Ex. PA is a voluntary statement and was not influenced by threat, duress or inducement etc. Therefore, it is a voluntary statement given by the Appellant and is a true one.
20. The question then is: whether the retracted confessional statement requires corroboration from any other independent evidence? It is seen that the evidence in this case consists of the confessional statement, the recovery panchnama and the testimony of PWs 2, 3 and 5. It is true that in a trial and propria vigore in a criminal trial, courts are required to marshal the evidence. It is the duty of the prosecution to prove the case beyond reasonable doubt. The evidence may consist of direct evidence, confession or circumstantial evidence. In a criminal trial punishable under the provisions of the Indian Penal Code it is now well settled legal position that confession can form the sole basis for conviction. If it is retracted, it must first be tested whether confession is voluntary and truthful inculpating the accused in the (22 of 36) [EXCIA-26/2017] commission of the crime. Confession is one of the species of admission dealt with under Sections 24 to 30 of the Evidence Act and Section 164 of the Code. It is an admission against the maker of it, unless its admissibility is excluded by some of those provisions. If a confession is proved by unimpeachable evidence and if it is of voluntary nature, it when retracted, is entitled to high degree value as its maker is likely to face the consequences of confession by a statement affecting his life, liberty or property. Burden is on the accused to prove that the statement was obtained by threat, duress or promise like any other person as was held in Bhagwan Singh v. State of Punjab [MANU/SC/0035/1952 : AIR 1952 SC 214, para 30] If it is established from the record or circumstances that the confession is shrouded with suspicious features, then it falls in the realm of doubt. The burden of proof on the accused is not as high as on the prosecution. If the accused is able to prove the facts creating reasonable doubt that the confession was not voluntary or it was obtained by threat, coercion or inducement etc., the burden would be on the prosecution to prove that the confession was made by the accused voluntarily. If the Court believes that the confession was voluntary and believes it to be true, then there is no legal bar on the Court for ordering conviction. However, rule of prudence and practice does require that the Court seeks corroboration of the retracted confession from other evidence. The confession must be one inculpating the accused in the crime. It is not necessary that each fact or circumstance contained in the confession is separately or independently corroborated. It is enough if it receives general corroboration. The burden is not as high as in the case of an approver or an accomplice in which case corroboration is required on material particulars of the prosecution case. Each case would, therefore, require to be examined in the light of the facts and circumstances in which the confession came to be made and whether or not it was voluntary and true. These require to be tested in the light of given set of facts. The high degree of proof and probative value is insisted in capital offences.
21. In Kashmira Singh's case the co-accused, Gurcharan Singh made a confession. The question arose whether the confession could be relied upon to prove the prosecution case against the Appellant Kashmira Singh. In that context, Bose, J. speaking for Bench of three Judges laid (23 of 36) [EXCIA-26/2017] down the law that the Court requires to marshal the evidence against the accused excluding the confession altogether from consideration. If the evidence de hors the confession proves the guilt of the Appellant, the confession of the co- accused could be used to corroborate the prosecution case to lend assurance to the Court to convict the Appellant. The Court considered the evidence led by the prosecution, de hors the confession of co-accused and held that the evidence was not sufficient to bring home the guilt of Appellant Kashmira Singh of the charge of murder. The Appellant was acquitted of an offence under Section 302 Indian Penal Code but was convicted for the offence under Section 201 Indian Penal Code for destroying the evidence of murder and sentenced him to seven years rigorous imprisonment. This decision was considered by a four-Judge Bench in Balbir Singh v. State of Punjab [MANU/SC/0101/1956 : AIR 1957 SC 216] wherein it was held that if there is independent evidence, besides the confession, the rule that the confession could be used only to corroborate the other evidences losses its efficacy. Therefore, it was held that if the retracted confession is believed to be voluntary and true, it may form the basis of a conviction but the rule of practice and prudence requires that it should be corroborated by independent evidence. Therein also,, for the charges of capital offence, the trial Court did not accept the confessional statement of co-accused containing inculpatory and self-exculpatory statement. The High Court reversed the acquittal and convicted the accused, accepting that part of the confessional statement of the accused which was corroborated from other evidence. This Court upheld the conviction and held that it is not necessary that each item of fact or circumstance mentioned in the confessional statement requires to be corroborated separately and independently. It would be sufficient if there is general corroboration. The ratio in Kashmira Singh's case was referred to.
25. It would thus be seen that there is no prohibition under the Evidence Act to rely upon the retracted confession to prove the prosecution case or to make the same basis for conviction of the accused. The practice and prudence require that the Court could examine the evidence adduced by the prosecution to find out whether there are any other facts and circumstances to corroborate the retracted confession. It is not necessary that there should be corroboration (24 of 36) [EXCIA-26/2017] from independent evidence adduced by the prosecution to corroborate each detail contained in the confessional statement. The Court is required to examine whether the confessional statement is voluntary; in other words, whether it was not obtained by threat, duress or promise if the Court is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true. If the Court on examination of the evidence finds that the retracted confession is true, that part of the inculpatory portion could be relied upon to base conviction. However, the prudence and practice require that Court would seek assurance getting corroboration from other evidence adduced by the prosecution.
32. It is true that in criminal law, as also in civil suits, the trial Court and the appellate Court should marshal the facts and reach conclusion, on facts. In a criminal case, the prosecution has to prove the guilt beyond doubt. The concept of benefit of doubt is not a charter for acquittal. Doubt of a doubting Thomas or of a weak mind is not the road to reach the result. If a Judge on objective evaluation of evidence and after applying relevant tests reaches a finding that the prosecution has not proved its case beyond reasonable doubt, then the accused is entitled to the benefit of doubt for acquittal. The question then is: whether the learned Single Judge of the High Court has committed any error of law in reversing the acquittal by the Magistrate. Not every fanciful reason that erupted from flight of imagination but relevant and germane requires tested. Reasons are the soul of law. Best way to discover truth is through the interplay of view points. Discussion captures the essence of controversy by its appraisal of alternatives, presentation of pros and cons and review on the touchstone of human conduct and all attending relevant circumstances. Truth and falsity are sworn enemies. Man may be prone to speak falsehood but circumstantial evidence will not. Falsity is routed from man's proclivity to faltering but when it is tested on the anvil of circumstantial evidence truth trans. On scanning the evidence and going through the reasoning of the learned Single Judge we find that the learned Judge was right in accepting the confessional statement of the Appellant, Ex. P-4 to be a voluntary one and that it could form the basis for conviction. The Magistrate had dwelt upon the controversy, no doubt on appreciation of the evidence but not in proper or right perspective.
(25 of 36) [EXCIA-26/2017] Therefore, it is not necessary for the learned Judge of the High Court to wade through every reasoning and give his reasons for his disagreement with the conclusion reached by the Magistrate. On relevant aspects, the learned Judge has dwelt upon in detail and recorded the disagreement with the Magistrate and reached his conclusions. Therefore, there is no illegality in the approach adopted by the learned Judge. We hold that the learned Judge was right in his findings that the prosecution has proved the case based upon the confession of the Appellant given in Ex. P-4 under Section 108 of the Evidence Act and the evidence of PWs 2, 3 and 5. The prosecution proved the case beyond doubt and the High Court has committed no error of law.
34. Having reached the finding that the Appellant has committed the offences under Section 135(1)
(i) of the Act and Sections 85(1)(a) and 86 of the Gold (Control) Act, 1968 we think that instead of being committed to jail, the Appellant should be sentenced to pay fine of Rs. 10,000/- and Rs. 5,000/- respectively for the two aforementioned offences, within 4 months from today. In default, he shall undergo imprisonment for a period of 2 months and 1 months respectively which are directed to run consecutively.
(8) In Collector of Customs, Madras and Ors. vs. D. Bhoormall 1983 (13) E.L.T. 1546 (S.C.) wherein it has been held as under:
40. In the case before us, the circumstantial evidence suggesting the inference that the goods were illicitly imported into India, was similar and reasonably pointed towards the conclusion drawn by the Collector. There was no violation of the rules of natural justice. The Collector had given the fullest opportunity to Bhoormull to establish the alleged acquisition of the goods in the normal course of business. In doing so, he was not throwing the burden of proving what the Department had to establish, on Bhoomiull. He was simply giving him a fair opportunity of rebutting the first and the foremost presumption that arose out of the tell tale circumstances in which the goods were found, regarding their being smuggled goods, by disclosing facts within his special, knowledge.
(26 of 36) [EXCIA-26/2017] 5.2 Counsel for the respondent has tried to raise the preliminary objections regarding limitation and maintainability of theses proceedings. However, in view of the admission of the appeal we refrain ourselves from entering into these questions.
5.3 Counsel for the respondent has relied on the following judgments :-
(1) In Continental Cement Company vs. Union of India 2014 (309) ELT 411 wherein it has been held as under:
12. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects:
(i) To find out the excess production details.
(ii) To find out whether the excess raw materials have been purchased.
(iii) To find out the dispatch particulars from the regular transporters.
(iv) To find out the realization of sale proceeds.
(v) To find out finished product receipt details from regular dealers/buyers.
(vi) To find out the excess power consumptions.
13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department.
14. In the instant case, no investigation was made by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties. The statement of so called buyers, namely M/s. Singhal Cement Agency, M/s. Praveen Cement Agency; and M/s. Taj Traders are based on memory alone and their statements were not supported by any (27 of 36) [EXCIA-26/2017] documentary evidence/proof. The mischievous role of Shri Anil Kumar erstwhile Director with the assistance of Accountant Sri Vasts cannot be ruled out.
15. In view of the above, we are of the opinion that when there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible. No purchase of raw material out side the books have been proved.
16. In the light of the above discussions and considering the totality of the case, we are satisfied that no case is made out for extra so called clandestine sale of the Portland Cement to the said parties. We are satisfied that the first appellate authority has rightly deleted the addition and cancel the penalties. Hence we hereby set aside the impugned order passed by the Tribunal and restore the order passed by the first appellate authority, alongwith the reasons mentioned herein.
(2)Commissioner of C. Ex., Meerut-I vs. R.A. Castings Pvt.
Ltd. 2011 (269) ELT 337 wherein it has been held as under:
3. Being aggrieved by the impugned orders, the respondents filed appeals before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi.
The Tribunal observed that it is settled principle of law that the electricity consumption can not be the only factor or basis for determining the duty liability, that too on imaginary basis, especially when Rules 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. The Tribunal further observed that no experiment have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing on MT of steel ingots. Tribunal also observed that the electricity consumption varies from one heat to another and from one date to another and even from one heat to another within the same date. Therefore, no universal and uniformly acceptable standard of electricity consumption can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the Revenue with no other supporting record, evidence or (28 of 36) [EXCIA-26/2017] document to justify its allegations. The Tribunal has also considered the report of Dr. Batra, which has been relied upon for making the allegations that there was higher electricity consumption. It appears that Dr. Batra in his report has observed that for the production of 1 MT of steel ingots, 1046 units electricity required.
4. So far as the various after allegations relating to the fictitious firms and the income from the share trading, the Tribunal recorded the finding that since the incriminating statements of share brokers etc. have been relied upon in the proceedings, it was incumbent upon the Revenue to produce them as well as the investigating officer for cross- examination by the appellants, as was repeatedly requested by them. In the absence of the same, the statements of the share brokers etc. cannot be relied upon. The Tribunal further observed that even if, for the sake of argument, it is accepted that the income shown in the balance sheets is not the income derived form the sources declared by the appellants, there is nothing on record to link it with the so called clandestine removal of the goods.
5. On consideration of the aforesaid findings, we are of the view that the findings of the Tribunal are based on the material on record and they cannot be said to be without any material and perverse. We find that the Revenue has invoked the proviso to Section 11A(1)of the Act but no case has been made out in the show cause notices or in the adjudication order that there were any misstatement, suppression of fact or fraud on the part of the respondents. No substantial question of law arises from the order of the Tribunal.
(3) Paras Ship Breakers Ltd. vs. Commissioner of Central Excise 2007 (217) ELT 321 wherein it has been held as under:
18. In terms of Section 35G of the Central Excise Act, the High Court, thus, could entertain an appeal only if a question of law arose. No question of law having, thus, arisen for consideration before the High Court, we are of the opinion that the impugned judgment does not suffer from any legal infirmity.
(4) Collector of Customs, Bombay vs. Swastic Woollens (P) Ltd. and Ors. 1988 (37) ELT 474 wherein it has been held as under:
(29 of 36) [EXCIA-26/2017]
9. The expression "wool wastes" is not defined in the relevant Act or in the notification. This expression is not an expression of art It may be understood as in most of financial measures where the expression are not defined not in a technical or any preconceived basis but on the basis of trade understanding of those who deal with these goods as mentioned hereinbefore. The Tribunal proceeded on that basis. The Tribunal has not ignored the Technical Committee's observations. We have noted in brief the Tribunal's handling of that report. The Tribunal has neither ignored the observations of CCCN nor the Board's Tariff Advice. These observations have been examined in the light of the facts and circumstances of the case. One of the basic factual disputes was long length of sliver tops. Having regard to the long length, we find that the Tribunal was not in error. Whether a particular item and the particular goods in this case are wool wastes, should be so considered or not is primarily and essentially a question of fact. The decision on such a question of fact must be arrived at without ignoring the material and relevant facts and bearing in mind the correct legal principles. Judged by these yardsticks the finding of the Tribunal in this case is unassailable.
We are, however, of the view that if a fact finding authority comes to a conclusion within the above parameters honestly and bona fide, the fact that another authority be it the Supreme Court or the High Court may have a different perspective of that question, in our opinion, is no ground to interfere with that finding in an appeal from such a finding. In the new scheme of things, the Tribunals have been entrusted with the authority and the jurisdiction to decide the questions involving determination of the rate of duty of excise or of the value of goods for purposes of assessment. An appeal has been provided to this Court to over-see that the subordinate Tribunals act within the law. Merely because another view might be possible by a competent Court of law is no ground for interference under Section 130E of the Act though in relation to the rate of duty of customs or to the value of goods for purposes of assessment, the amplitude of appeal is unlimited. But because the jurisdiction is unlimited, there is inherent limitation imposed in such appeals. The Tribunal has not deviated from the path of correct principle and has considered all the relevant factors. If the Tribunal has acted bonafide with the natural justice by a speaking order, in our opinion, even if superior Court feels that another view is possible, that is no (30 of 36) [EXCIA-26/2017] ground for substitution of that view in exercise of power under the Clause (b) of Section 130E of the Act.
(5) Commr. of C. Ex., Jaipur-I vs. Welcure Drugs and Pharmaceutical Ltd. 2015 (317) ELT 436 wherein it has been held as under:
4. We have gone through the orders passed by the Appellate Authorities as well as the Tribunal, and find that the Tribunal has recorded a finding of fact in paragraph 8 of the order as follows:-
"8. It is seen from the above that the Revenue's only reliance is on the order forms recovered from the residential premises. All the respondents have clarified in their statement that such order are only for Booking of the goods and do not relate to clearance of the goods mentioned therein. The clearance of the final product is only about percentage of such quantities shown in order Booking Forms which is dependent upon various factors. In the absence of any evidence to support Revenue allegation, I am of the view that the appellant authority has correctly set aside the demand. Accordingly, Revenue appeal is rejected on the above ground also."
(6) Hindustan Processors Ltd. vs. Union of India 2014 (300) ELT 23 wherein it has been held as under:
9. In the first place, what is involved in the case is a pure question of fact and not any question of law much less substantial question of law. Secondly, this Court cannot again in this appeal undertake the examination of factual issues nor can draw factual inferences on the basis of explanation offered by assessee. Thirdly, once the explanation is accepted by Tribunal as last court of appeal on facts, then in such event, a finding of fact recorded on such explanations by the appellate court would be binding on the High Court.
10. Perusal of the impugned finding recorded on the issues in question by the Tribunal would go to show that Tribunal did examine the issue in relation to what is called clandestine removal of goods and the systematic manner in which the goods were removed with the active connivance of other two companies. This was examined keeping in view the evidence and explanation given by assessee in detail. Such finding when impugned (31 of 36) [EXCIA-26/2017] would not constitute any substantial question of law within the meaning of Section 35G ibid in an appeal arising out of such order at least so far as this case is concerned.
11. In our opinion, therefore, once the Tribunal upheld the current finding of adjudicating authority and that of CCT (Appeals), then it would not involve any substantial issue of law as such and it would be binding on this Court. In other words, this Court in its appellate jurisdiction under Section 35G ibid, would not again de novo hold yet another factual inquiry with a view to find out as to whether explanation offered by assessee and which did not find acceptance to the Tribunal is good or bad, or whether it was rightly accepted, or not. It is only when the factual finding recorded had been entirely de hors the subject, or that it had been based on no reasoning, or based on absurd reasoning to the extent that no prudent man of average judicial capacity could ever reach to such conclusion, or that it had been found against any provision of law, then a case for formulation of substantial question of law on such finding can be said to have been made out, such is not the case here.
(7) D.B. Central/Excise Appeal No. 120 / 2017 Commissioner of Central Excise Jaipur-I Vs. Tara Chand Naresh Chand decided on 6.12.2017 wherein it has been held as under:
8. Taking into consideration the ratio laid down by the Allahabad High Court, as quoted above, only on the basis of statement of Tara Chand who was the partner of the Company, case of the department is not sustainable.
9. In that view of the matter, in our considered opinion, the Tribunal has not committed any error in reversing the view taken by the Commissioner Excise. In that view of matter, no substantial question of law arises. However, we make it clear that since no other material was available as per judgment of Allahabad High Court, therefore, we are not interfering.
(8) Oudh Sugar Mills Ltd. Versus Union of India 1978 (2) E.L.T. (J 172) (S.C.) wherein it has been held as under:
(32 of 36) [EXCIA-26/2017]
7. Now, these calculations certainly involve some assumptions. The first is that the difference of 56 maunds noticed by the Assistant Chemical Examiner during the two and quarter hours test conducted by him on May 7, 1957 was uniform for every 2-1/4 hours working throughout the working hours of the crushing season which began on November 4, 1956 upto May 7, 1957 when the test was conducted.
11. If any one of these assumptions breaks down, then the ultimate conclusion will have to be rejected as incorrect. It has to be borne in mind that human element is involved at certain stages of the operation such as time of commencement of the day's working, the rapidity or slowness in feeding cut sugarcane into the crusher and mills, accurately adding the same quantity of water in the crusher and mills, stopping the inflow of mixed juice into the tanks at a uniformly higher level than that indicated by the mixed mark, allowing a uniform time lag between the emptying of the tanks and starting inflow into them again and so on. It is also unsafe to rely on the average of 10.11% of sugar recovery for the entire period because it involves the assumption that even during the periods when the gross weight of the tanks was 7.5 tons or less sugar content of the sugarcane crushed in the factory was such as could not have been yielded anything less than 10.11% For, it is well-known that the sugar content of sugarcane even grown in the same area is ot constant but is variable according to the time of the year. Again it has to be borne in mind that the recovery of sugar must necessarily depend upon the milling performance. It cannot be assumed that even in a ordinarily well run factory the performance would be uniformly good or uniformly the same.
13. Again the value of fibre percentage in cane is very difficult to determine directly and accurately. For calculations, only indirect values are taken which may at the most be only approximate and, therefore, no absolute conclusion should be drawn. They then say:
"A formula which does not apply to Indian conditions because of wide diversity in case varieties, milling performance etc. cannot therefore be used to establish under weighment of juice only because our mixed juice % does not correspond to it.
Moreover inferential method of calculation merely gives rough idea of the value of data collected by other means and cannot be used to overrule actually found results."
(33 of 36) [EXCIA-26/2017] Apparently, their contention is that the particular ratio upon which a part of the calculations of the Assistant Chemical Examiner was based is founded on analysis of Java cane and is, therefore, no guide for determination of the ratio in respect of Indian cane. However, the point raised is a highly technical one and counsel on neither side was able to throw any light upon it. We would, therefore, not base any conclusion upon it but only observe that this argument was not considered by the Collector or by the Central Board of Revenue or the Central Government. In the circumstances, therefore, we must hold that the finding that 11,606 maunds of sugar were not accounted for by the appellant has been arrived at without any tangible evidence and is based only on inferences involving unwarranted assumptions. The finding is thus vitiated by an error law.
14. The other finding that the registers were not properly maintained as required by Rule 83 is also an inferential finding based upon the calculations made by the Assistant Chemical Examiner. As we have already held those calculations being based upon unwarranted assumptions cannot form legal basis for a finding that more juice than what was recorded in the register has gone into the production of sugar.
15. It was, however, contended on behalf of the respondent that at the personal hearing given by the Central Board of Revenue, Shri C.M. Dalmia, Assistant Secretary of the Appellant and Shri, J.M. Shah, Superintendent Technologist employed by the Appellant had conceded that there had been "some erroneous accounting" on their part in showing the weight of mixed juice on an average of 7.5 tons and that their only plea was that this was not intentional or deliberate nor did it signify any mala fides on their part. No reliance has, however, been placed upon this confession in the Respondent's statement of the case. We may however point out that the gross annual turnover of sugar manufactured in the factory is in the neighbourhood of 12 lakhs of maunds and the amount of excise duty the appellant pays to Government runs into about a crore of rupees per annum. It would therefore be a little far-fetched to infer that what happened at the time of the inspection was something more than an error occasioned perhaps by carelessness nor could it be said that this shows that there was a deliberate attempt on their part to evade payment of duty on a mere 11,606 maunds and amounting to less tha a lakh of rupees. We are saying this not because an error due to carelessness in maintaining the registers properly as required by Rule 83 does not (34 of 36) [EXCIA-26/2017] amount to a contravention of that rule; the only reason why we mention this is that in a factory where the turnover of sugar is so considerable and the operations conducted in which the human element lays a significant part it would not be right to base calculations on the surmise that over filling of the tanks was being practised systematically. No doubt, during the test, the tanks were slightly over filled on nine out of ten occasions as pointed out by the Assistant Chemical Examiner. But this could be attributed to a slight failure of the human element resulting from the fact that a special operation was being conducted by the operators in the presence of a Government official. We would, however, make it clear that these observations are just incidental and are not the basis of our decision."
6. Taking into consideration, we are of the opinion that the view taken by the Allahabad High Court is required to be accepted inasmuch as in the statement of Director and laboratory report, there is nothing on record to establish that the manufacturing process has taken place either by way of electricity bills, labour charges, transport charges or any corroborative piece of evidence is available.
6.1 In that view of the matter, the view taken by that tribunal is just and proper and does not require interference. For ready reference, the finding of the Tribunal is quoted below:
"6.1 Further the department has not gone beyond the approximation of yield which they have shown as 70 to 84% in col.3 of Annexure-A attached to the show cause notice and average yield overall had been shown as 77.60% which has been made the basis for issuance of the show cause notice (SCN) as well as for confirming the duty of central excise by the impugned order dated 19.5.2009. The department confirmed the duty demand along with interest for the period of five years alleging suppression of clandestine removal of the final product and also imposed penalty mainly based on the production approximation and on the statement of Director of the unit, Shri Agarwal, who is one of the appellants in this case.
(35 of 36) [EXCIA-26/2017] 6.2 The department has not gone beyond the approximation and the statement of Shri Agarwal. Any prudent person would not so conclude on extra production by approximation and by a mere statement of the Director of the company. Unless there are further corroborations in the form of documentary evidences, which could be like despatch details for the production, receipt details of the said material, transactions of the sale money, transportation details of such goods, details of additional consumption of electricity for such suppressed production a prudent individual would not agree with the present conclusions of the Revenue. There is nothing on record from the Revenue side to come to a reasonable conclusion to say that there has been preponderance of probability of such suppressed production on the part of the appellant. The evidences in the form of approximation and averaging production as 77.6% and one statement of Shri Agarwal, Director of the appellant company cannot be called a prudent conclusion of the production estimate 6.3 Consequently, we are of the considered view that the department has not discharged its burden of conclusively proving the case of suppressed production and clandestine clearance by the appellants. In this regard we seek support from Hon'ble Allahabad High Court's decision in the case of Continental Cement Company Vs. Union of India 2014 (309) ELT 411 (All.) and Supreme Court's decision in the case of Oudh Sugar Mills Ltd. Vs. Union of India 1978 (2) ELT (J.172)(SC) and CESTAT's in the case of Punalur Paper Mills Ltd Vs. CCE- vide Final order No. 996- 997/2008 dated 26.8.2008. The Hon'ble High Court in the case of Continental Cement Company (supra) has inter alia observed as under:
13. ......to prove the allegation of clandestine sale, further corroborative evidence is also required.
For this purpose no investigation was conducted by the Department....
14.........
15. ......When there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible......."
7. Considering above discussions and the case laws cited above, we conclude that the Revenue has failed to reasonably prove suppressed production and clandestine clearance on the part (36 of 36) [EXCIA-26/2017] of the appellants. Consequently, the impugned order in respect of confirmation of duty for alleged suppressed production, and imposition of fine and penalty on the appellant No. 1 and imposition of personal penalty of Rs.40 lakhs on Shri Agarwal who is appellant No. 2 are hereby set aside. The appellants will get the relief accordingly.
8. The impugned order has confirmed another Central Excise duty of Rs.1,31,898/- on short found inputs which was deposited by the assessee and was appropriated to the government account. In this regard, there has not been any submissions by the appellants. Therefore, this part of the order confirming the said duty of Rs.1,31,898/- does not warrant any intervention from this Tribunal. It is hereby sustained."
7. Therefore, the issues are required to be answered in favour of the assessee against the department.
8. The appeals stand dismissed.
(BANWARI LAL SHARMA),J (K.S.JHAVERI),J //bmg 22-23