Customs, Excise and Gold Tribunal - Delhi
Cce vs Ram Shiv Industries Ltd. And Ors. on 24 March, 2004
Equivalent citations: 2004(97)ECC507, 2005(179)ELT289(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The Revenue has filed these three appeals, being aggrieved by the Order-in-Appeal No. 181-183/03 dated 23.7.2003 passed by the Commissioner (Appeals).
2. Shri Virag Gupta, learned DR, submitted that respondents, M/s. Ram Shiv Industries Ltd. & Ors., manufacture iron and steel products that on the basis of specific information that they were indulging in suppression of production of goods and their removal without payment of duty, the Central Excise officers visited their factory premises on 4.12.98 and detected shortage of 37.262 MT of M.S. Round and recovered 32 numbers of duplicate set of invoices showing clearances of 378.150 MT saria without payment of duty; that the officers also searched the residential premises of Shri P.N. Mishra, authorized signatory and recovered certain incriminating documents. The scrutiny of these documents revealed that the respondents had cleared 61.060 MT of saria without payment of duty and that they had not accounted for 127.165 MT of ingots received in their factory, which was received to manufacture saria; that the Department alleged that the respondents had manufactured 120.807 MT saria out of the said quantity of ingots and removed the same without payment of duty; that on scrutiny of invoice No. 12 dated 19.4.96, of M/s. Mawana Steels Pvt. Ltd., it was found that 12.340 MT of M.S. ingots was not accounted for in the statutory records and 11.723 MT of saria, manufactured out of the said ingots, had been removed without payment of duty; that the Joint Commissioner, under Order-in-Original No. 50/2000 dated 11.12.2000, confirmed the demand of duty of Rs. 9,16,601 and imposed an equal amount to penalty under Section 11 AC of the Central Excise Act read with Rule 173Q of the Central Excise Rules, 1944 besides imposing a penalty of Rs. 2 lakh on Shri Suraj Prakash, Director, a penalty of Rs. 10,000 on Shri P.N. Mishra, and a penalty of Rs. 5,000 on Shri D.P. Shukla; that on appeal, the Commissioner (Appeals'), under the impugned order, has dropped the demand of duty, set aside the penalties imposed and allowed the appeals with consequential relief on the ground that the documents were planted by Shri D.P. Shukla, an ex-employee of the company, who did not have good relations with the company; that statements had been retracted immediately after the same were being recorded; that hand-writing experts' opinion had been rejected by the Adjudicating Authority; that the Directors had expressed doubt at the time of initial investigation itself; that recovery of invoices from an insulated servant quarter of the company may not be conclusive piece of evidence to prove clandestine removal, particularly when scribe of the said invoices was not examined and mere recovery of invoices, showing despatch of ingots to the respondents, may not be the supporting evidence.
3. Learned DR, further, submitted that the documents were recovered from a room situated within the factory premises in the presence of witnesses; that the examination of these invoices reveal that the date of removal, quantity, value and duty had been filled in these invoices in the same manner as was done in their invoices duly accounted for in the statutory records; that P.N. Mishra had admitted that these invoices were pre-authenticated by Suraj Prakash, Director; that this fact was also admitted by Shri Naveen Kumar, another Director in his statement; that Suraj Prakash had also admitted to have pre-authenticated those invoices; that as the Directors and P.N. Mishra had not disowned their signatures appearing on the invoices, the demand on the basis of these invoices was rightly confirmed by the Adjudicating Authority; that no more evidence was required to support the clearances of the goods removed clandestinely; that other evidences are required only when the assessee disowns the duplicate invoices. He, further, mentioned that the respondents have not supported their contention that the steel ingots, received under Invoice No. 12 from M/s. Mawana Steels, were returned to the supplier; that on the basis of the records of M/s. Mawana Steels Pvt. Ltd., clearly show that the ingots were sold to the respondents; that onus to prove that the said ingots were returned back, is on the respondents, which has not been discharged by them; that Shri P.N. Mishra had filed retraction affidavit on 13.1.2000 after a gap of two years of his, statement, which is nothing but after thought; that no affidavit was submitted by both the Directors in relation to retraction of their statements. He also contended that the report of private hand-writing expert and that too in absence of any specimen signature, said to have been examined by the document expert, cannot be rejected. He, therefore, requested that order of the Joint Commissioner may be revived by setting aside the impugned Order-in-Appeal.
4. On the other hand, Shri Lajja Ram, learned Advocate submitted that during the relevant period, the respondents were paying duty on the basis of annual capacity of production under Section 3A of the Central Excise Act and as such there was no incentive to remove the goods on unauthorised documents or documents; that the authenticity of the recovery of 32 invoices was not verified; that the Adjudicating Authority has simply given a finding that mere fact of dispute with their ex-employee cannot ipso facto disprove authenticity of the documents; that Shri Rajender Prasad, handwriting expert has given his opinion that the signatures were not of Shri Suraj Prakash as they did not tally with the specimen signature of Suraj Prakash; that the Adjudicating Authority has dis-regarded the expert opinion simply by observing that it is a natural phenomenon that after every interval of time the construction of letters, writing and signatures of everybody change; that it is a well settled proposition of law that explanation and materials produced in defence cannot be rejected merely on the ground that the defence should explain its position during investigation. The learned Advocate also mentioned that in grounds of appeal, filed by the Revenue, no ground of appeal has been taken about the loose slips recovered from the residential premises of Shri P.N. Mishra on the basis of which duty of Rs. 2,94,352 was demanded. He relied upon the decision in the case of State of Kerala v. M.M. Mathew, 1978 (42) STC 348 (SC) wherein it has been held that strong suspicion, strange coincidences and grave doubts cannot take the place of legal proof. To establish the charges, it is essential for the prosecution to establish that the secret books of accounts relate to the business transactions carried on by the party and none else. Reliance has also been placed in the case of Essvee Polymers (P) Ltd. v. CCE, Chennai, 2004 (93) ECC 305 (Tri) : 2004 (165) ELT 291 (Tri) wherein it has been held that mere slips or statements are not sufficient for confirmation of demand and allegation of clandestine removal. Evidence in the form of receipt of raw-materials, shortage thereof, excess use of electricity, excess/shortage of inputs in stock, etc. are necessary.
5. We have considered the submissions of both the sides. In the appeal, filed by the Revenue, there is no averment about the loose slips recovered from the residential premises of Shri P.N. Mishra. In absence of any ground taken in respect of demand raised on the basis of these loose slips and subsequently set aside by the Commissioner (Appeals), the setting aside of the demand as such has not been challenged. To this extent, the impugned Order-in-Appeal stands unchallenged and, therefore, is upheld. We observe from the impugned order that the Commissioner (Appeals) has examined the submissions made by both the sides and came to the conclusion that Shri Suraj Prakash had expressed his doubt on the genuineness of the copies of 32 invoices recovered from the servant quarter located within the factory premises. It has been mentioned in the impugned order that in reply to Question No. 8, Shri Suraj Prakash, in his statement dated 16.12.98, has deposed that there was some conspiracy against the factory in regard to the recovery of copies of invoices and he could have explained the things only after enquiry and ascertaining the fact from the company officials. The Commissioner (Appeals) has also observed that neither Naveen Kumar nor Suraj Prakash were confronted with any of the statements of Shri P.N. Mishra, which was very essential to ascertain the truth. We also observe that it has not been controverted by the Revenue that the respondents had filed an FIR against Shri D.P. Shukla and prior to the visit of the Central Excise officers, Shri D.P. Shukla was arrested by the police also. The Revenue has also not brought on record the statements in support of their contention that Shri Suraj Prakash has admitted his signature on those 32 invoices. The Department has also not brought any material on record to controvert the finding of the hand-writing expert that the signatures on those invoices were not of Suraj Prakash. The onus to prove that the invoices were authenticated by Suraj Prakash was on the Department which has not been discharged in the present matter. Similarly, the Department has not succeeded in establishing that the ingots said to have been received from Mawana Steels Pvt. Ltd. were, in fact, used in the manufacture of saria, which had been subsequently removed without payment of duty. Mere receipt of ingot is not sufficient to reach the conclusion that the said ingot would have been used in the manufacture of saria and its subsequent removal without payment of duty. The suspicion, whosoever, big, cannot be a substitute for proof. We, therefore, find no infirmity in the impugned order and accordingly reject the appeal filed by the Revenue.