Custom, Excise & Service Tax Tribunal
Kawatra Papers Ltd vs Cce, Indore on 16 March, 2015
CUSTOMS, EXCISE & SERVICE TAXAPPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
SINGLE MEMBER BENCH
Appeal No.E/E/449-52/2007-EX(SM)
With E/Misc/54736-54739/2014
[Arising out of the OIO No.05/Commr/GZB/2006 dt.30.10.06 passed by the CCE, Ghaziabad)
Date of Hearing: 05.2.2015
Date of Order:16.03.2015
For Approval &signature:
HonbleMr.Ashok Jindal, Member (Judicial)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordships wish to see the fair copy of the order?
seen
4.
Whether order is to be circulated to the Department Authorities?
Yes
Kawatra Papers Ltd. Appellant
ShriY.P.Kawatra
Himgiri Paper Enterprises
ShriJoginder Kumar Kawatra
Vs.
CCE, Indore Respondent
Appearance ShriC.Harishankar, Advocate- for the appellant ShriR.K..Mishra, A.R. - for the respondent CORAM: HonbleMr.Ashok Jindal, Member (Judicial) FINAL ORDER NO.50620-50623/2015 Per Ashok Jindal :
The appellants are in appeals against the impugned order wherein the Commissioner has confirmed the demand of duty of Rs.25,74,737/- against M/s.Kawatra Papers Ltd. for the period 1.7.1994 to 31.3.1997, June,1997 and 1997 to 1998 alongwith interest and confiscation of building, plant and machinery of M/s.Kawatra Papers Ltd.which was allowed to be redeemed on payment of redemption fin of Rs.5 lakh and also confiscation of 108.7227 MT of paper which was allowed to be redeemed on payment of redemption fine of Rs.6 lakhs to M/s.Himgiri Paper Enterprises Pvt.Ltd. and imposition of penalties on M/s.Kawatra Papers Ltd,M/s.Himgiri Paper Enterprises Pvt.Ltd., Shri Y.P.Kawatra of M/s.Himgiri Paper Enterprises Pvt.Ltd.And Shri Joginder Kumar Kawatra of M/s.Himigiri Paper Enterprises Pvt.Ltd.
2. The brief facts of the case are that on the basis of investigation, it was alleged that M/s.Kawatra Papers Ltd (KP) is involved in the clandestine removal of paper to M/s.Himgiri Paper Enterprises Pvt.Ltd. (HP) during the period 1.4.1994 to 31.3.1997. To establish these charges, the documents which were relied upon as under:-
(a) records showing despatch by HP to different customers during the period 1.7.94 to 7.7.97
(b) records showing receipt of paper by HP during the period 1.7.1994 to 7.7.1994
(c) Stock register maintained by HP during the period 1.1.1995 to 7.7.1997
(d) challans issued on the letter head of HP for the period 1995 to June,1997, for which there was no corresponding invoices
(e) one page from a file, containing figures on the left hand side and right hand side, signed by a director of KP, for the month of June, 1997, of which the figures on the left hand side tallied with the RG-1 register maintained by KP but the figures on the right hand side did not tally, and
(f) production machine log sheets of KP for the period 1.4.1994 to 6.7.1997.
3. Apart from these documents, the statements of following persons were relied upon:
(i) ShriSatish Sharma, sales man with HP
(ii) ShriJagdishVerma, godown keeper, of HP
(iii) ShriGopal Singh Rawat, accountant with HP
(iv) ShriJoginder Kumar Kawatra, MD of HP
(v) ShriY.P.Kawatra, MD of KP.
3. In the earlier round of litigation, the demand was confirmed and said order was challenged by the appellant before this Tribunal and this Tribunal remanded the matter back to the adjudicating authority to examine the various contentions and pass speaking order specifically in regard to the capacity of the mills, machine log sheets and other contentions after providing reasonable opportunity to the appellant to the present their in defence. In the remand proceedings, the permission to cross examine Shri Jagdish Verma, Shri Satish Sharma and Shri Gopal Singh Rawat was sought by the appellant whose statements have been relied upon by the Revenue in the show cause notice but instead of giving cross examination, the adjudicating authority confirmed the demand on the ground that no cross examination was allowed by this Tribunal while remanding the matter and cross examination is not absolute right. It also held that there was corroborative statement by Shri Joginder Kawatra and also confirmed the allegations. It was held that report of the Institute of Paper Technology, Roorkee is not acceptable and machine log sheets could be easily manipulated. Aggrieved with the said order, the appellants are before me.
4. Shri C.Harishankar, ld.Counsel appearing for the appellants submits that rejection of cross examination by the adjudicating authority and after relying on the statements of Shri Jagdish Verma, Shri Satish Sharma and Shri Gopal Singh Rawat is ex facie untenable in law and the principle of ejusdem genris and harmonious construction have no application to understanding of the remand order of this Tribunal. He relies on the decision of Honble Delhi High Court in the cases of J.K.Cigarettes vs.CCE-2009 (242) ELT 189 (Del.), Govind Mills Ltd.-2013 (294) ELT 361 (All) and Arya Fibres Pvt.Ltd. vs. CCE-2014-TIOL-15-CESTAT-AHM. He submits that the statements could not be treated as relevant to prove the truth of the contents thereof, for failure to follow the procedure prescribed in section 9D of Central Excise Act, 1944. To support this, he relies on the decision of the Tribunal in the case of Swiber Offshore Construction Pvt.Ltd. vs. CC-2014 (301) ELT 119 (T). He further submits that the adjudicating authority has arbitrarily rejected the report of Institute of Paper Technology. He submits that the adjudicating authority has not examined the machine log sheets when it was specifically directed to examine in depth. Therefore, the impugned order is required to be set aside.
5. On the other hand, learned AR supported the impugned order and submits that in this case, corroborative statements and documents recovered during the investigation proved the charge against the appellants. Moreover the appellant was engaged in the activity of clandestine removal of the goods in the guise of clearance to HP and the same was corroborated by the statements of Shri Jagdish Verma, Shri Satish Sharma and Shri Gopal Singh Rawat which have been accepted by the Shri Joginder Kawatra. Therefore, the impugned orders are required to be upheld.
6. Heart the parties and considered the submissions.
7. In the earlier round of litigation, this Tribunal has recorded the contentions of the ld.Counsel for the appellants wherein this Tribunal has held in para 4 as under:
4. Learned Senior Counsel also submitted that log sheets in the year 1996-97 as submitted by the appellants disclosed that they contained day-to-day minutes of accounts of the paper produced in rolls; that the appellants had no opportunity to establish the genuineness of log sheets. Learned Senior Counsel submits that left and right sides figures on page 54 of record No.7 were totalled and on the assumption that left side figures represented clearances, not entered in RG-1 register; that no testimony has been elicited from any one to substantiate this assumption; that it was pointed out if the two figures were totalled, the resultant clearance would exceed 100% of the capacity utilization of the appellant, which was not correct. He submits that a number of points were raised before the Commissioner, Central Excise which were not attended to by him nor were commented upon. He, therefore, prays that the appeals may be remanded so that the matters may be examined by the authorities in the light of the various contentions raised as also on examination of the documents available on record.
8. Thereafter this Tribunal has concluded order in para 6 and remanding the matter back to the adjudicating authority for de novo adjudication for proper appreciation of the facts, para 6 is reproduced below:-
On careful consideration of the submissions made, we note that a number of points were raised by the appellants before the learned Commissioner in reply to the show cause notice as also at the time of hearing. We note that certain documents are very material for a decision in the appeals like machine, log sheets and the capacity of the paper mills, which were not considered adequately and examined in dept. We consider it a fit case for remand. In the circumstances, we remand the cases to the learned Commissioner to examine the various contentions and pass a speaking order specifically in regard to the capacity of the mills, machine long sheets and other contentions. No doubt, the learned Commissioner will provide a reasonable opportunity to the appellants to present their case in defence. Accordingly, the impugned order is set aside and the appeals are remanded.
9. In the remand proceedings, the adjudicating authority has held that remand order of this Tribunal should be harmoniously construed and read ejusdem generis with the words capacity of the mills and machine log sheets, would not include the plea for cross examination and as such this plea was not available to the appellant in the remand proceedings. It was also held that cross examination was not an absolute right, and it was open to the adjudicating authority to rely on the statements without allowing cross examination. It was also held by the adjudicating authority that private records also established the allegation and he did not rely on the report of the Institute of Paper Technology for consideration capacity of the mills. He also observed that the machine log sheets are fabricated/manipulated.
10. On limitation, he has held that the decision of Larger Bench of the Tribunal in the case of Nizam Sugar Factory vs. CCE, Hyderabad-1999 (114) ELT 429 (Tri.-LB) is not applicable as the earlier show cause notice was issued on specific evidence collected prior to issue of first show cause notice and second show cause notice was issued on the basis of further investigation. I find that while considering the appeals filed of the appellant in earlier round of litigation, this Tribunal has specifically remanded the matter back to the adjudicating authority to examine the various contentions made before this Tribunal. Admittedly learned Counsel for the appellants sought cross examination of Shri Jagdish Verma, Shri Satish Sharma and Shri Gopal Singh Rawat in the initial adjudication proceedings and that contention was not considered by the adjudicating authority at that time and in that context this Tribunal directed the adjudicating authority to examine the various contentions but such thing has not been appreciated by the adjudicating authority and the cross examination to the appellant has not been granted. This is clearly violation of principles of natural justice by the adjudicating authority as held by Honble Delhi High Court in the case of J.K. Cigarettes (supra) wherein Honble High Court held that in so far as general principles are concerned, there could be no denying that any statement is used against the assesse, an opportunity of cross examination of the persons who made those statements ought to have given to the assesse. Admittedly in this case, the statements of Shri Jagdish Verma, Shri Satish Sharma and Shri Gopal Singh Rawat have been relied on and cross examination was not granted by the adjudicating authority to the appellants. The same is held gross violation of principles of natural justice.
11. I further observe that the issue of clandestine removal of the goods came before this Tribunal in the case of Arya Fibres Pvt.Ltd. (supra) wherein this Tribunal has laid down certain fundamental criteria have to be established by the Revenue for confirming the charge of clandestine removal which are as follows:
(i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted presumption
(ii) Evidence in support thereof should be of:
(a) raw materials in excess of that contained as per statutory records;
(b) Instances of actual removal unaccounted finished goods (not inferential or assumed) from the factory without payment of duty;
(c) discovery of such finished goods outside the factory;
(d) instances of sale of such goods to identified parties
(e) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorised by him;
(f) use of electricity for in excess of what is necessary for manufacture of goods otherwise manufactured and validly cleared on payment of duty;
(g) statements of buyers with some details of illicit manufacture and clearance;
(h) proof of actual transportation of goods, cleared without payment of duty;
(i) links between the documents recovered during the search and activities being carried on in the factory of production; etc.
12. The Tribunal after relying on the principle hereinabove has held that inference can be drawn on the clandestine clearance merely on the basis of notebook which are properly maintained or on mere statements of some the persons may be even from responsible official of manufacturers or even its director/partner who are not permitted to cross examine and thereafter held charge of clandestine removal is not sustainable.
13. In this case charge of clandestine removal has been alleged against the appellants on the basis of certain records and statements of some persons relied upon were not allowed to be cross examined remained unproved. Moreover, report of the Institute of Paper Technology to determine the production capacity by the appellant was rejected by the adjudicating authority on the premise that the said report could not be applied to past period. The adjudicating authority is not an expert to determine the production capacity but an expert from the Institute of Paper Technology examined the production capacity of the appellant and after inspection of the factory of the appellants and collecting necessary data for production capacity, the expert determined the production capacity for working plant during the period 1996-97 and 1997-98. Therefore, without tangible evidence or without being obtaining experts opinion on the issue the said report determining the production capacity cannot be rejected by the adjudicating authority.
14. Moreover, machine log sheets were specifically directed by the Tribunal to examine in depth but the adjudicating authority rejected those machine log sheets on the ground that the same are manipulated and afterthought. In these circumstances, I hold that the adjudicating authority has not considered any defence taken by the appellant in remand proceedings. But pass the order by confirming the demand against the appellants and imposition of penalty in mechanical manner.
15. In view of above discussions, relying on the decision of Arya Fibres Pvt.Ltd. (supra), the charge of clandestine removal is not sustainable against the appellants rejecting production capacity without tangible evidence without granting cross examination of the persons whose statements have been relied upon and without considering machine log sheets which are maintained by the appellants and produced before the adjudicating authority for consideration.
16. In these terms, the impugned order is set aside and the appeals are allowed with consequential relief, if any.
(pronounced in the open court on 16.03.2015) (Ashok Jindal) Member (Judicial) mk 1