Custom, Excise & Service Tax Tribunal
S.M.Steel Ropes vs Commissioner Of Central Excise on 13 February, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.E/687 & 688/05 & E/783/06 (Arising out of Order-in-Original No.11/Commr/(AH)/05 dated 28/01/2005 passed by Commissioner of Central Excise (Adj.) Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Anil Choudhary, Member (Judicial) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
S.M.Steel Ropes Balkrishna Agarwal Appellant Vs. Commissioner of Central Excise, Respondent (Adj.) Mumbai Commissioner of Central Excise (Adj.) Appellant Mumbai Vs S.M.Steel Ropes Respondent Appearance:
Shri.Sanjay Dwivedi, Advocate for appellant Shri.Ahibaran, Addl. Comm. (AR), for respondent CORAM:
Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr.Anil Choudhary, Member (Judicial) Date of Hearing : 13/02/2014 Date of Decision : 13/02/2014 ORDER NO Per: P.R.Chandrasekharan
1. There are three appeals, one filed by the Revenue and two filed by the appellant, M/s.S.M. Steel Ropes, Mumbai and Shri Balkrishna Agarwal, partner of M/s.S.M.Steel Ropes, against Order-in-Original No.11/Commr/(AH)/05 dated 28/01/2005 passed by Commissioner of Central Excise (Adj.) Mumbai.
2. Vide the impugned order, the learned adjudicating authority has confirmed a duty demand of Rs.11,80,000/- against the appellant, M/s.S.M. Steel Ropes. He has further ordered confiscation of excisable goods seized under Panchnama dated 05/03/8 valued at Rs.2,15,490/- with an option to redeem the same on payment of fine of Rs.50,000/-. He has also ordered for confiscation of Indian currency totalling to Rs.11,01,300/- seized with an option to redeem the same on payment of a fine of Rs.2.5 lakhs. He has also confirmed the interest liability on the duty confirmed. He has also imposed a penalty of Rs.8.00 lakhs on main appellant, M/s.S.M. Steel Ropes and a penalty of Rs.1.00 lakh on Shri Balkrishna Agarwal, partner of the appellant firm. In the said order, the adjudicating authority has dropped a duty demand of Rs.10,64,404/-. The Revenue is in appeal against dropping of demand of Rs.10,64,404/- while the appellants are in appeal against confirmation of duty demand along with interest, confiscation of the seized goods and the currency and imposition of fine and penalties.
3. The Ld. Counsel for the appellant makes the following submissions.
3.1 The impugned order has been passed in pursuance to this Tribunal order No.C-II/814-17/WZB/2001 dated 24/03/2001 wherein the appeal was remanded with a direction that the documents requested by the assessee be supplied to them. However, as it can be seen from the impugned order only part of the documents have been supplied to the appellant and part of the documents seized could not be supplied as they have been mis-placed, which fact has been recorded by the adjudicating authority in para 12 of the impugned order. Therefore, it is contended that the principles of natural justice have been violated in view of the non-supply of documents.
3.2 The learned Counsel further contends that the entire confirmation of duty demand under the impugned order is based on the statement of Shri Balkrishna Agarwal, wherein he had admitted to having manufactured and cleared excisable goods, namely, steel wire ropes of various sizes and dimensions to various parties. There is no corroborative evidence adduced by the Revenue in support of the contention that the noticee has manufactured and supplied these goods without payment of duty. Therefore, without any corroborative evidences, the confirmation of duty demand on the basis of strength of statement alone is not sustainable in law It is also the contention of the learned Counsel that the appellant was a small scale manufacturer and the clearances made by the appellant were below the exemption limit. Therefore, the appellant was exempt from taking registration under Central Excise laws and maintaining statutory records. It was for these reasons, the appellant did not maintain any statutory records regarding the production and clearances of the goods. The Revenue has also not adduced any evidence regarding purchase of raw materials, receipt of goods by various customers and its transportation and therefore, in the absence of any tangible evidence, the confirmation of duty demand along with interest and imposition of penalties is not sustainable in law.
3.3 The learned Counsel also argues that confiscation of the currency under excise law is not sustainable and therefore, the same merits to be set aside. Lastly, the learned Counsel submits that Shri Balkrishna Agarwal passed away on 05/09/2005 and hence the proceedings against him should abate.
4. The Additional Commissioner (AR) appearing for the Revenue strongly refutes the contentions of the learned Counsel for the appellant. He submits that clandestine production and removal has been admitted to by Shri Balkrishna Agarwal who was the Managing Partner of the appellants firm and therefore, the confirmation of duty demand by the adjudicating authority is sustainable in law. However, he submits that dropping of part of demand to the extent of Rs.10,64,404/- by the adjudicating authority is incorrect in law as the computation of duty demands were made on the strength of worksheets annexed to show-cause notice and these worksheets were prepared based on the delivery challans recovered from the appellants premises during the Panchnama proceedings. Therefore, even though the delivery challans are not available at present, the computation of duty demand could not be faulted and therefore, the adjudicating authority should have confirmed the entire demand of Rs.22,44,404/- as against Rs.11.80 lakhs confirmed in the impugned order. As regards the seizure of currency the learned Additional Commissioner states that the currency seized from the premises of the appellant was the sale proceeds of the goods clandestinely removed and sold and therefore, they are liable to confiscation in terms of Section 121 of the Customs Act made applicable to Central Excise Act, vide notification issued under Section 12 of the Central Excise Act, 1944.
5. We have carefully considered the submissions made by both the sides.
5.1 As regards the confirmation of duty demand on the strength of statement alone, we notice that Shri Balkrishna Agarwal had clearly admitted in his statement dated 05/05/1998 that the turnover of his firm during 1993-94, 1994-95, 1995-96 and 1996-97 were Rs.50 lakhs, Rs.60 lakhs, Rs.65 lakhs and Rs.75 lakhs respectively. In this subsequent statement dated 18/08/1998 while confirming his previous statements, he further stated that the turnover for the period 1993-94, 1994-95, 1995-96, 1996-97 and 1997-98 were tune of Rs.50lakhs, Rs.60 lakhs, Rs.65 lakhs, Rs.75 lakhs and Rs.94 lakhs respectively and he had also undertaken to pay the duty payable on the said goods cleared voluntarily in terms of the aforesaid submissions. He also made payments of Rs.1.25 lakhs on 31/03/98 and Rs.50,000/- on 20/08/1998. In his statement dated 18/08/98 he had admitted that he was undertaking three types of sales. In one type of sale he used to prepare sales invoices and delivery challans for sale of goods at the factory gate to the genuine customers and the said sales was duly accounted for in the records. In the second type of sales, they were selling the goods at factory gate to various customers on payment of cash without any sales invoice and bills. In the third type of sales wherever they received orders for supply of goods over phone, the goods were lifted from the factory for delivery under delivery challans made in the name of genuine customers but the goods were sold to needy customers without any sales bills or delivery challans and against payment of hard cash. Thus the modus operandi adopted by the appellant firm stood clearly admitted in the aforesaid statement of Shri Balkrishna Agarwal, who was the Managing Partner of the appellant firm during the relevant period. None of the statements have been retracted at any point of time. Further, in his statement Shri Balkrishna Agarwal had also made a declaration that the statement was made voluntarily without any force, threat or coercion. The adjudicating authority has confirmed the demand only on the basis of figures given in the statements of Shri Balkrishna Agarwal. In the absence of delivery challans which were recovered and seized at the time of Panchanama proceedings, he has not taken the computation of demand based on such delivery challans as reflected in the annexure to the show-cause notice. Therefore, the adjudicating authority has strictly proceeded based on the evidences available which in the present case are the statements of Shri Balkrishna Agarwal. As to the question whether the demands can be confirmed on the strength of confessional statements, this position stands settled by the decision of the Honble Apex Court in the case of K.I Pavunny Vs. Asstt. Collector (HQ) Central Excise Collectorate, Cochin 1997 (90) ELT 241 (SC) wherein it was held that confessional statement of accused, if found to be voluntary, can form the sole basis for conviction. Only if it is retracted, the Court is required to examine whether it was obtained by threat, duress or promise and whether the confession is truthful. In the present case, we find that there is no retraction of the confessional statement by Shri Balkrishna Agarwal. As regards the lack of corroborative evidence, it is a settled position of law that admitted facts need not be proved as held by the Honble High Court of Madras in the case of Govindasamy Ragupathy 1998 (98) ELT 50 (Mad). In a recent decision in the case of Telestar Travels Pvt. Ltd., - 2013 (289) ELT 3 (SC), the Honble Apex Court held that reliance can be placed on statement if they are based on consideration of relevant facts and circumstances and found to be voluntary. Similarly in the case of CCE, Mumbai Vs. Kalvert Foods India Pvt. Ltd. -2011 (270) ELT 643 (SC) the Honble Apex Court held that if the statements of the concerned persons are out of their volition and there is no allegation of threat, force, coercion, duress or pressure, such statements can be accepted as a valid piece of evidence. In the light of the above decisions, we are of the considered view that the confirmation of duty demand based on the voluntary statements of the Managing Partner of the appellant firm is sustainable in law. Consequently, the interest and penal liabilities imposed on the appellants would also sustain.
5.2 As regards the confiscation of the currency, the same is permissible, in view of the provisions of Section 121 of the Customs Act read with Section 12 of the Central Excise Act, 1944, as the currency was the sale proceeds of the goods clandestinely removed without payment of excise duty.
5.3 Inasmuch as Shri Balkrishna Agarwal has passed away, the proceedings against him abates and therefore, the penalties imposed on Shri Balkrishna Agarwal is set aside.
5.4 As regards the appeal filed by the Revenue in the absence of documentary evidence, the dropping of duty demand by the adjudicating authority to the extent of Rs.10,64,404/- cannot be faulted at all and therefore, we find no merit in the Revenues appeal.
6. To sum up, we uphold the impugned order except for setting aside the penalty on Shri Balkrishna Agarwal who has passed away. Thus, the appeals of the main appellant and the Revenue are dismissed as devoid of merits.
(Operative part of the order pronounced in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 9