Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S Centurian Laboratories, M/S Aimco ... on 15 April, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT - I
Appeal No.E/937, 938/2008
Arising out of: OIO No.04/BRC-I/MP/2008, dt.31.03.2008
Passed by: Commissioner of Central Excise & Customs, Vadodara
For approval and signature:
Mr.M.V. Ravindran, Honble Member (Judicial)
Mr. H.K. Thakur, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
M/s Centurian Laboratories, M/s AIMCO Pharmaceutical Mfg.Co.
Respondent:
CCE Vadodara Represented by:
For Assessee: Shri Devan Parikh, Sr.Advocate For Revenue: Shri P.N. Sarvaiya, Astt. Commissioner (A.R.) CORAM:
MR.M.V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL) Date of Hearing:15.04.13 Date of Decision:
ORDER No. /WZB/AHD/2013, dt._____________ Per: M.V. Ravindran:
These two appeals are directed against Order-in-Original No.04/BRC-I/MP/2008, dt.31.03.2008.
2. The said Order-in-Original is passed by ld.Commissioner as an adjudicating authority in de-novo proceedings, as directed by this Tribunal vide Order dt.05.01.2006.
3. The brief facts involved in this case is that M/s Centurian Laboratories (hereinafter referred to as M/s CL) are having factory at Vadodara and are engaged in manufacture of P&P medicines falling under Central Excise Chapter Heading No.30 of first schedule of Central Excise Tariff Act, 1985 and are registered with the authorities. M/s CL has claimed and availed the SSI benefit in respect of payment of Central Excise duty on the goods cleared by them and were also availing the facility of credit of duty paid on inputs under the provisions of MODVAT/CENVAT rules as applicable during the material period. On an information received from DGCEI Vadodara that M/s CL were engaged in suppression of production of their final goods in the statutory accounts and subsequent clandestine removal of such un-accounted finished goods in large volume, search operations were conducted on 2nd/3rd July 2003 of the factory premises of M/s CL at Vadodara. During the search operation, large number of incriminating documents were recovered and placed under seizure. As a follow-up action, search operation was also conducted in the premises of second appellant M/s AIMCO Pharmaceuticals Mfg.Co (hereinafter referred to as M/s AIMCO), and during the course of search operation, no manufacturing activity were found to be carried out in the premises and M/s AIMCO were conducting the manufacturing activity of finished goods at the premises of M/s CL. No records were found in the premise of M/s AIMCO. During the course of investigation, DGCEI officers recorded statements of persons who are concerned with the facts relevant to the goods. After scrutinizing the seized documents and the statements recorded of various persons, show cause notice was issued to M/s CL, demanding the duty on the goods which were purportedly clandestinely manufactured and cleared from their factory premises, interest thereof and penalties under the provisions of Central Excise law and M/s AMICO was also issued a show cause notice for imposition of penalty on him. Both the appellants herein contested the issue in de-novo proceedings, on merit and on violation of natural justice and on limitation. The adjudicating authority did not agree with the contentions raised by both the appellants and came to conclusion that the demand of duty as raised in the show cause notice needs to be confirmed along with interest and imposed penalties on both the appellants.
4. Ld.Sr.Advocate Shri Devan Parikh along with ld.Advocate Shri Nirav Shah, argued on behalf of the appellant. Ld.Counsel, after submitting the overall activities of the appellant M/s CL and M/s AMICO, submits that the entire case of the Revenue is based upon the statements of the persons and private/parallel RG-1 register. He would try to explain the contents of the private/parallel RG 1 register. It is his submission that the said private/parallel RG-1 register, which has been relied upon by the Revenue, is nothing but a register maintained for the purpose of internal control. He would then submit that the said register contains the quantities in pack form as well as in loose form and has information regarding batch number, date of manufacturing, date of packing and to whom it was dispatched. It is his submission that internal records which have been maintained by the staff for the effective control of the functioning, cannot be considered as sole basis for demand of the duty. It is his submission that the said private/parallel register is not a document which remains exclusively in the Stores department but also moves from stores to various departments. It is his submission that the records which have been relied upon, is not maintained only by stores incharge, but many entries were recorded by other departments and department was informed about maintenance of this parallel register. For this submission, he would rely upon the letter dt.01.07.1998 and letter dt.30.03.2001, which are addressed to jurisdictional Assistant Commissioner, Central Excise, Division-IV, wherein the appellant had informed regarding maintenance of various records in their factory premises. He would submit that these letters are not denied by the adjudicating authority and the Departmental officers have been visiting their factory premises regularly and were also shown these registers. It is his submission that the appellants had shown various documents as regards purchasers of their final product in their documentary evidence and the said private registers also indicate the names of the purchasers. It is his submission that despite such information being on record, the investigating authorities have not recorded a single statement of any of the purchasers. It is his submission that the entire case of the Revenue is that the clearances made by the appellant are clandestine removal. It is his submission that, in fact, 80 to 90% of the suppliers to whom the final product has been cleared by the appellant, are the Government departments, for which he refer to Page No.49 of the paper book and submit that the percentage of total sale from the appellant to the Government departments is to the tune of 22% to 89% during the relevant period, which is a percentage of sale to the total sales as given in the balance sheet. It is his submission that them adjudicating authority has not controverted these submissions made by the appellant. He would also submit that the show cause notice and the impugned order placed heavy reliance on the various statements recorded during the course of investigation, but are un-reliable and not worthy of credence. He would submit that the statement recorded of Shri Mukesh Shantilal Shah, (Supervisor of Tablet department) has stated, has been relied upon by the Revenue to show that the registers/batch registers maintained by him were in respect of product manufactured by them. It is his submission that the Revenue has relied upon the said statement and the registers, to show that the appellant had clandestinely manufactured Verapamil 40 mg tablets and Chloroquin Phos. 250 mg tablets. It is his submission as regards Chloroquin Phos. 250 mg tablets, the said tablets are exempted from payment of duty and as regards Verapamil 40 mg tablets, he would submit that the said register indicate only theoretical batchsize and there is always a difference between the theoretical batchsize and the actual quantity packed. It is his submission the batch registers which have been shown to have been maintained by Shri Shah, in fact, contains only the quantity manufactured, does not contains the dispatches. For this submission, he would draw our attention to Page No.287 in Paper Book No.1 and submit that the said batch register does not indicate any dispatch figures and the said batch register is of tablets, ointments, liquid. It is his submission that Shri Shah was only in-charge of tablets and could not have answered any of the questions as regards liquid, ointment etc. It is his submission that as regards the statement of Shri Ashok Dayalal Parmar, Stores Incharge, the entire statement talks about the unaccounted production/removed and he has prepared the details of clearances of excisable goods fully manufactured by M/s CL; is without any basis, as Department has not brought on record even a single production report to corroborate the statement given by Shri A.D. Parmar. It is his submission that it is significant that the statement of Shri A.D. Parmar, has not been corroborated by any statement of dispatch personnel and the said statement is a stand-alone statement of stores incharge, not corroborated by any evidences. It is his submission the statement of Shri A.D. Parmar, is not even corroborated by the statement of Shri Shah. It is his further submission that the statements of Shri Ambalal V. Patel, which have been recorded on various dates i.e. 03.07.2003 and 29.07.2003 is nothing but confirmation of contents of panchnama, statements given by the employees. It is his submission on mere perusal of the statement of Shri A.V. Patel, it is very clear that the statement only is recorded that in Panchnama, the statement of Shri A.D. Parmar and Shri Shah is true and correct and also that Shri A.V. Patel has perused the statement of Shri Pillai who is the Administrative Manager of M/s M/s AIMCO. It is his submission all the 3 persons have retracted the said statements immediately by filing affidavit. He would draw our attention to the various affidavit dt.03.07.2003, which are enclosed at Page No.84, 87, 88, 92, 93 or paper book No.1. It is also his submission that the statements which were recorded by DGCEI authorities were, in a way, retracted by letter dt.3.7.2003, 22.12.2003, 30.10.03, 6.1.04. It is also submitted that the adjudicating authority has just summarily discarded this evidence of retraction by stating that the appellant has not produced these affidavits before the adjudicating authority in first round of litigation and hence cannot be considered in second round of litigation. It is his submission that in first round of litigation itself, these papers were available on record. It is his further submission that no independent evidence has been gathered by the Revenue for corroboration of statement given by 3 individuals in as much as there are no statements of suppliers of raw materials, any statement of purchasers, no statement of any production personnel or dispatch personnel and hence the entire order is liable to be set aside as the statement given by Shri Shah, Shri A.D. Parmar and Shri A.V. Patel have been retracted. It is his submission that this proposition is now well settled by the judgment of Hon'ble High Court of Gujarat in the case of Tejal Dyestuff Industries 2009 (234) ELT 242 (Guj.) and Vishwa Traders Pvt.Ltd. 2013 (287) ELT 243 (Guj.). He would submit that the order of the Tribunal in the case of Tejal Dyestuff Industries was a judgment wherein there was a difference of opinion and 3rd Member, on such reference, has categorically held that only confessional statement is not enough for coming to conclusion that there was clandestine removal of goods. It is his submission that in the case of Vishwa Traders Pvt.Ltd., Hon'ble High Court has upheld the order of the Tribunal as regards the findings that there was no other corroborative evidence, in any form of the purchasers of raw material or there was excess consumption of electricity. It is his submission that in the case in hand, identical situation exists.
5. Ld.Additional Commissioner (A.R.), arguing on behalf of the Revenue, would submit that the claim of retraction of statement as put forth by the ld.Counsel, is incorrect, as the claim of retraction was informed by them only in de-novo proceedings and was never informed earlier. It is his submission that Shri A.V. Patel, Proprietor of M/s CL has confirmed the facts narrated by him are in his personal knowledge in the statement recorded 6 months ago and hence the belated claim of the appellant that the statements were retracted is incorrect. He would submit that the statements are based on the seized documentary evidences and hence are reliable even if the same have been retracted through affidavits, which were never sent to investigating agency or the superior officers. For this proposition, he would rely upon the following decisions:-
a) Surjeet Singh Chhabra 1997 (89) ELT 646 (SC)
b) Illias Vs CCE AIR 1970 SC 1065 (SC 5 Member Constitution Bench)
c) Vaibhav Exports 2009 (244) ELT 527 (Bom.)
d) Montex Dyg. & Ptg. Works 2007 (208) ELT 536 (Tri-Ahmd) 5.1 It is his submission that when the proprietor of M/s CL had admitted and confirmed that P&P medicaments are manufactured and cleared clandestinely and hence there is no requirement of any further corroborative evidence. It is his submission as regards the claim of the appellant herein that such clandestine removal was without any corroborative evidence, is incorrect in as much as investigating authorities have recovered 2 sets of daily stock accounts in the form of RG-1 registers one maintained statutorily and another parallel register containing production and clearance details invoice-wise. It is his submission that M/s CL was availing SSI exemption for the first value of clearances of Rs.1 crore and it was found that M/s CL and M/s AIMCO were working under loan licencee agreement and M/s AIMCO has no machinery as recorded in the panchnama. It is his submission that various kachha books/sheets indicating clearance of goods to M/s AIMCO and various dealers both illicit as well as licit clearances indicating the amount collected/to be collected from various dealers were seized in the panchnama, is in itself is a corroborative evidence. It is his submission that Shri Shah Production Supervisor, Shri A.D. Parmar, Stores incharge and Shri A.V. Patel, Proprietor of M/s CL had confirmed that there was clandestine removal of the goods. It is his submission that the argument regarding no excess stores consumption, excess raw material, realization of amount in addition is allibi put forth and cannot be considered by this Bench, as the case of clandestine removal need not be established with mathetical decision. For this proposition, he would rely upon the decision of Shalu Dyeing & Ptg. Mills 2003 (162) ELT 352. It is his submission that electricity consumption, if any, was in relation to the production and hence clandestine clearance could not be established, the claim of the appellant is without any base as there cannot be one to one co-relation between the electricity consumption and production of P&P medicaments. It is his submission that the case of clandestine removal need not be always proved by referring to electricity consumption or purchase of excess raw material or collection of sale proceeds etc, as in the case in hand, there was a recovery of private RG 1 register, admissions of persons involved, indicating that M/s CL was always suppressing production and clearing the goods without payment of duty. It is his submission that the extended period was correctly invoked as there was clandestine removal of the goods. It is his submission that as regards the claim made by the assessee that the order is beyond the show cause notice is totally un-substantiated and there is no justifiable reason as to what is the appellants case and not to produce the affidavit of retraction filed by the appellant before the authority immediately. It is his submission the appeals filed by the appellant be rejected.
6. We have considered the submissions made by both sides and perused the records. The issue to be decided in this case is whether the allegation that M/s CL has engaged themselves in suppression of production and clearance of their final product - P&P medicaments in statutory account and subsequent clandestine removal of the said finished excisable goods during the period 1999-2000 to 2003-2004, is sustainable or otherwise on merit as well as on the aspect of limitation.
7. It is to be seen that the entire issue in this case started with the visit of the DGCEI officers to the premises of the appellant on 2nd/3rd July 2003. It has to be noted that the adjudicating authority has relied upon entirely on the statements recorded of Shri Shah, Shri A.D. Parmar and Shri A.V. Patel, for confirming demand of duty liability, nterest and consequent penalties under the charge of clandestine removal. First and foremost, we have to appreciate whether these statements which were relied upon by the adjudicating authority do have the evidentiary value or not. We find that it is the claim of the appellant before us that Shri A.D. Parmar, Shri Patel, Shri A.K. Shah, Shri Pillai all of them have in their affidavit dt.3.7.2003 have retracted all the statements made by them on 2nd/3rd July 2003. On perusal of the records, we find that the appellant herein M/s CL in their letter dt.3.7.2003, addressed to the DGCEI office, has specifically stated as under:
Date: 03.07.2003 To The Directorate General of C.Excise Intelligence, Vadodara 390 203 Dear Sir,
The officers from this branch had visited my factory premises on 02.07.2003 and had carried out detailed search, inquiries, etc. The officers have today (03.07.2003) recorded my statement also. The copy of statement is not given to me but read over to me. I filled that my statement is not recorded in the same sense or way as I stated.
It is my humble request to kindly to supply me a copy of my statement and obliged.
Thanking you, Yours faithfully, For Centurion Laboratories Sd/-
(A.V. Patel) Proprietor.
8. It can be seen from the above said letter on 3.7.2003 itself Shri A.V. Patel, who was the Proprietor of M/s CL, has very clearly stated that his statement recorded is not in same way as he has stated. The subsequent correspondence dt.30.12.2003, 22.12.2003 indicate that the appellant has sought for the records which have been recovered by the DGCEI officers for giving proper answers to the inquiries which have been conducted. It is also seen that on 06.01.2004, M/s CL had informed by letter to DGCEI officers which reads as:
Date: 06.01.2004 To The Directorate General of C.Excise Intelligence, Vadodara 390 203 Dear Sir, Sub: Enquiry against M/s Centurion Laboratories.
With reference to my statement dt.29.12.2003, I have to clarify that the statements of our Shri Ashok Parmar and Shri Ankesh Shah are not correct and not acceptable to me, as we have not evaded any duty.
Thanking you, Yours faithfully, For Centurion Laboratories Sd/-
(A.V. Patel) Proprietor.
9. It is also seen that the affidavit filed by the appellant categorically indicate that they are not standing by the statements which have been recorded by the lower authorities. Reliance placed upon the statement recorded by adjudicating authority of Shri Shah, Shri A.D. Parmar and Shri A.V. Patel, seems to be in a grey area, as there is no reference in the impugned order about the letters written by M/s CL as reproduced by us hereinabove. In fact, the adjudicating authority seems to have only gone by the records and has held that the affidavits were not produced by the appellant before adjudicating authority in the first round of litigation and hence there is no substance in their submission of retraction, in our considered view, is incorrect as the said letter indicate that the appellant had been stating right from the beginning that they are not accepting the statements recorded. Instead of dealing with the affidavit summarily rejecting the same by the adjudicating authority is not in not in consonance with the law.
10. We further find that the adjudicating authority, relying upon such statement of acceptance of Shri Shah, has held that there was mis-match of packed quantities produced by the appellant in the un-recorded in the batch registers and in the statutory records. We take up the example given by the adjudicating authority in the impugned order of Verapamil 40 mg tablets. The adjudicating authority has taken an example of these tablets of Batch No.426002 and held that the batch register of such batch number indicate the manufacturing quantity of 1,75,000 tablets. On perusal of the said batch card/note book maintained by Shri Shah, following details emerge.
11. It can be seen from the above reproduced details of note book which has been maintained by Shri Shah, it cannot be considered as batch card. It is also to be noted that the said note book only indicate about the quantity of materials consumed for manufacturing of batch number 426002 of batchsize of 1,75,000 tablets. It is common knowledge that the theoretical batchsize as indicated in the batch register need not necessarily give the same yield as there may be losses during the manufacturing activity. It is seen from the statutory RG-1 register maintained by the appellant for very same product, indicate that the tablets manufactured by them has given them a yield of 1,50,000 tablets, which is tallying with the quantity recorded in private RG-1 details also. In our view, the investigating authority has not taken the investigation to next level in as much as the appellant M/s CL being manufacturer of P&P medicaments has necessarily, in law, required to be registered with Food & Drugs Administration authorities. The appellant has to follow the stringent conditions of provision laid down by the Food and Drug Authority as regards manufacturing, storing and clearance of the medicaments manufactured under the FDA licence. It is also a common knowledge that the Food and Drugs Administrative authorities have prescribed specific records to be maintained, e.g. batch card and batch record which indicate the quantity manufactured, consumption of raw materials, time taken for manufacturing such product, dispatch details, purchases of raw materials, analysis of raw material, analysis of the product during the course of manufacturing, and final packing of the finished goods, and analysis thereof. All these details are statutorily required to be maintained by the manufacturer of medicines all over India. We find that neither the investigating authority nor the adjudicating authority has brought on record any evidence of such records which are maintained by the appellant are in variance of the quantity shown as manufactured and cleared by them in the statutory records. This vital evidence has not been relied upon, for the reasons best known, as it is evident from the panchnama, the investigating authorities had recovered voluminous records from the appellants premises, which included the batch registers maintained. In the absence of any reference to such statutory records to be maintained by M/s CL, for manufacturing of the pharmaceutical goods, as is directed by Food & Drugs authorities, we are unable to subscribe, the findings of the authority that the appellant has clandestinely manufactured and cleared the final product i.e. P&P medicaments.
12. Yet another angle to the case is that the appellant had been always indicating that they have been manufacturing and clearing the pharmaceutical goods mostly to the Government departments. This issue has also not been examined by the adjudicating authority in correct perspective. If the appellants clearances are mostly to the Government departments, the lower authorities could have easily recorded the statements of the purchasers of said pharmaceutical products from the appellant, tally the same with the records maintained by the appellant and could have come to a conclusion as to whether there was any clandestine manufacture or clearance of the final product. In our view, in the absence of any such corroboration from the purchaser, Revenues case cannot be held as correct. We find that the appellant has always stated before the lower authorities that they have cleared the consignments to various distributors/dealers. The investigating authorities have not bothered to record the statements of those persons within their jurisdiction also nor they have sought help from their counterparts in various places where the goods were dispatched. In the absence of any corroborative evidence from the purchasers of the medicines, we are of the view that the Revenue has failed to prove their case.
13. We also find force in the contentions raised by the ld.Counsel as to the fact that the appellants products which are manufactured are pharmaceutical goods and these pharmaceutical goods are covered by the statutory records to be maintained for procurement of the raw material, which are also covered by drug licences issued by FDA authorities. It is to be noted that the raw materials which are consumed by the appellant are always conforming to specification given in the Indian Pharmacoepia, British Pharmacoepia or United States Pharmacoepia. It is imperative that the manufacturer and supplier of such raw materials are required to maintain the manufacturing records of such raw materials which are procured and consumed by the appellant. In the entire case record, we find that there is not a whisper of any statement of the supplier of raw material as to indicate that the appellant M/s CL has procured any of these raw materials unaccounted. We also note that it is the case of the Revenue that the appellant has cleared clandestinely the tablets, syrup, and ointments. It is common knowledge that the tablets, cyrup, liquid and ointments are to be packed in as specified in the licences granted by FDA. There is nothing on record to show that the appellant procured unwanted packing materials like Aluminum foils, plastic films, bottles, PP caps, labels and ointment tubes, nor there is any finding as to the excess quantity of packing materials were found in the factory premises on the day of surprise visit of the authorities on 2nd/3d July 2003. In short, we find that there is nothing in record to indicate that on the date of visit of the appellant, there was any unaccounted raw material or packing materials in the factory premises of the appellant, to come to a conclusion that appellant M/s CL has engaged themselves in the clandestine manufacturing and clearing of finished goods. In the absence of any such evidence, we are unable to accept the contentions of the Revenue that the appellant had engaged himself in the manufacturing and clearing of finished goods i.e. pharmaceutical goods, without payment of duty.
14. We are fortified in our view by the judgment of Hon'ble High Court of Gujarat in the case of Vishwa Traders Pvt.Ltd. Their Lordship, while upholding the judgment of this Bench in the case of Vishwa Traders Pvt.Ltd. [2012 (278) ELT 362] has recorded in their order [reported at 2013 (287) ELT 243 (Guj.)] as under:
We have heard learned Standing Counsel Mr. Y.N. Ravani appearing for Central Excise and Customs Department and learned senior counsel Mr. Devan Parikh, assisted by learned Counsel Mr. Nirav P. Shah for the respondent.
2.?Learned counsel Mr. Ravani has stated that the civil application can be heard, only if the appeal is heard and if the appeal is admitted, then the question of grant of stay would arise. Learned counsel Mr. Parikh has no objection, if the appeal is heard on merits. With the consent of learned counsel for the parties, we have taken the civil application alongwith the appeal for hearing, at the admission stage.
3.?This Tax Appeal has been filed under Section 35-G of the Central Excise Act, 1944, challenging the order dated 1-11-2011 of the Customs Excise and Service Tax Appellate Tribunal (the Tribunal for short) passed in A/1846-1851/WZB/AHD/2011 [2012 (278) E.L.T. 362 (Tribunal)] on the following two proposed substantial questions of law, which are extracted below :-
(i)?Whether the order of the Honble Tribunal relying upon Tribunals own order dated 29-3-2007 [2007 (213) E.L.T. 64 (Tribunal)] passed in respect of one of the parties involved in the matter viz. M/s. Amar Ceramics Ltd. holding the retracted statement cannot be relied upon for the purpose of present order is legal and proper as the same appears to be an after thought and not in consonance with the law of retraction? And whether retraction after a period of 9 months can be considered to be valid ?
(ii)?Whether the Honble Tribunal has erred in holding that there were not sufficient evidence indicating clandestine manufacture, by ignoring the fact that the assessees themselves had admitted specifically in their application dated 5-10-2005 filed with the Settlement Commission ?
4.?The main grounds of challenge of the appeal are that the findings recorded by the Tribunal are perverse. It has not considered the available relevant materials and the respondent has manufactured goods from clandestine raw-material and removed the goods and evaded the payment of duty. It is further stated that fake invoices were used. It is further submitted that the Tribunal has not considered the statement of the transporters and the settlement made before the Settlement Commissioner.
5.?On the other hand, learned counsel for respondent has submitted that the appeal under Section 35-G of the Central Excise Act, 1944, would be maintainable only on substantial question of law. He has further submitted that the findings recorded by the Tribunal are just and proper.
6.?Learned counsel Mr. Ravani stated that before the Settlement Commissioner, the respondent had made an application and the Settlement Commissioner rejected the said application and relegated the matter for adjudication. However, the Department raised the demand of duty, which was challenged by the appellant by way of a writ petition being Special Civil Application No. 228 of 2009 before this Court, which was decided on 12-3-2009 [2009 (241) E.L.T. 164 (Guj.)]. This petition was allowed and in Paragraph No. 14 of the order, the Court directed the respondent-Authority to continue adjudication proceedings from the stage at which the proceedings before the Settlement Commissioner had commenced and further directed to issue notice of hearing to the respondent. The judgment is reported in 2009 (241) E.L.T. 168 (Bom.). For the aforesaid reasons also, the matter was to be adjudicated before the competent authority.
7.?The Tribunal in Paragraph Nos. 12, 13 and 16 has recorded clear finding that when the premises of the respondent were visited, the stock of raw-material and finished goods were tallying with the recorded goods. Further, nothing on record was found by the authority, which showed that unrecorded raw-materials were purchased or consumed by the respondent or that the respondent had clandestinely manufactured or removed the goods. It is necessary to extract Paragraph Nos. 12, 13 and 16 of order of the Tribunal, which reads as under :-
12.?Be that as it may be, it is to be noted that there is no dispute that to manufacture of said final product Frit requires the use of Quartz, Feldspar, Zinc, Borax Power, Calcium and Dolomite as inputs/raw material. On the date of visit of the officers to the factory premises of the appellant, it is undisputed that the stock of raw materials as well as finished goods was tallying with recorded balances. This conclusion can be reached from perusal of records, as there is nothing on record to indicate otherwise.
13.?On careful perusal of the entire records of the case, we find that there is nothing on record as to unrecorded purchases or consumption of various other raw material in the manufacture of Frit, there is also nothing on record to indicate that the appellant had purchased the Quartz, Feldspar, Zinc, Borax Powder, Calcium and Dolomite and without accounting them used for the manufacture of Frit for clandestine removal. There is also nothing on record nor there is any statement of the suppliers of other raw materials, which would indicate that the appellant had received unaccounted raw material from the suppliers of these raw materials. There is a solitary evidence in the form of statement of supplier of one of the raw material i.e. Borax Powder, who indicated that the appellant had procured Borax Powder and not accounted the same in his record; and the said entries and information were deduced from the documents of the premises of Shri Anil Jadav and whose evidence has been discarded for having not been produced for cross examination; in the absence of any other tangible evidence to show that the appellant had been procuring the other major raw materials required for manufacture of Frit without recording in books of accounts, we are unable to accept the contentions of the ld. AR appearing for the Revenue and the findings of the adjudicating authority, that there was clandestine manufacture and clearance of the finished goods. The investigation has not proceeded further to bring on record unaccounted purchases of all the raw materials required for manufacturing of Frit.
16.?In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the factory premises of M/s. VTPL, in the peculiar facts and circumstances of this case, we hold that the impugned order which confirms the demand on the appellant M/s. VTPL and imposes penalty on them is not sustainable and is liable to be set aside and we do so.
8.?From the aforesaid findings of the Tribunal, it is clear that the appellant has not made any clandestine manufacture, which he has removed clandestinely and on which the duty was payable.
9.?It is well settled that the findings of the Tribunal can be interfered only if it is perverse or some material evidence is ignored. In such circumstances, only the Court may exercise jurisdiction on issue which may give rise to any substantial question of law. In this appeal, no substantial question of law arises for consideration of this Court.
10.?We agree with the view taken by the Tribunal, and the appeal is devoid of any merits. Both the questions raised by the appellant do not involve any substantial question of law and therefore, the appeal is dismissed. We have heard learned Standing Counsel Mr. Y.N. Ravani appearing for Central Excise and Customs Department and learned senior counsel Mr. Devan Parikh, assisted by learned Counsel Mr. Nirav P. Shah for the respondent.
2.?Learned counsel Mr. Ravani has stated that the civil application can be heard, only if the appeal is heard and if the appeal is admitted, then the question of grant of stay would arise. Learned counsel Mr. Parikh has no objection, if the appeal is heard on merits. With the consent of learned counsel for the parties, we have taken the civil application alongwith the appeal for hearing, at the admission stage.
3.?This Tax Appeal has been filed under Section 35-G of the Central Excise Act, 1944, challenging the order dated 1-11-2011 of the Customs Excise and Service Tax Appellate Tribunal (the Tribunal for short) passed in A/1846-1851/WZB/AHD/2011 [2012 (278) E.L.T. 362 (Tribunal)] on the following two proposed substantial questions of law, which are extracted below :-
(i)?Whether the order of the Honble Tribunal relying upon Tribunals own order dated 29-3-2007 [2007 (213) E.L.T. 64 (Tribunal)] passed in respect of one of the parties involved in the matter viz. M/s. Amar Ceramics Ltd. holding the retracted statement cannot be relied upon for the purpose of present order is legal and proper as the same appears to be an after thought and not in consonance with the law of retraction? And whether retraction after a period of 9 months can be considered to be valid ?
(ii)?Whether the Honble Tribunal has erred in holding that there were not sufficient evidence indicating clandestine manufacture, by ignoring the fact that the assessees themselves had admitted specifically in their application dated 5-10-2005 filed with the Settlement Commission ?
4.?The main grounds of challenge of the appeal are that the findings recorded by the Tribunal are perverse. It has not considered the available relevant materials and the respondent has manufactured goods from clandestine raw-material and removed the goods and evaded the payment of duty. It is further stated that fake invoices were used. It is further submitted that the Tribunal has not considered the statement of the transporters and the settlement made before the Settlement Commissioner.
5.?On the other hand, learned counsel for respondent has submitted that the appeal under Section 35-G of the Central Excise Act, 1944, would be maintainable only on substantial question of law. He has further submitted that the findings recorded by the Tribunal are just and proper.
6.?Learned counsel Mr. Ravani stated that before the Settlement Commissioner, the respondent had made an application and the Settlement Commissioner rejected the said application and relegated the matter for adjudication. However, the Department raised the demand of duty, which was challenged by the appellant by way of a writ petition being Special Civil Application No. 228 of 2009 before this Court, which was decided on 12-3-2009 [2009 (241) E.L.T. 164 (Guj.)]. This petition was allowed and in Paragraph No. 14 of the order, the Court directed the respondent-Authority to continue adjudication proceedings from the stage at which the proceedings before the Settlement Commissioner had commenced and further directed to issue notice of hearing to the respondent. The judgment is reported in 2009 (241) E.L.T. 168 (Bom.). For the aforesaid reasons also, the matter was to be adjudicated before the competent authority.
7.?The Tribunal in Paragraph Nos. 12, 13 and 16 has recorded clear finding that when the premises of the respondent were visited, the stock of raw-material and finished goods were tallying with the recorded goods. Further, nothing on record was found by the authority, which showed that unrecorded raw-materials were purchased or consumed by the respondent or that the respondent had clandestinely manufactured or removed the goods. It is necessary to extract Paragraph Nos. 12, 13 and 16 of order of the Tribunal, which reads as under :-
12.?Be that as it may be, it is to be noted that there is no dispute that to manufacture of said final product Frit requires the use of Quartz, Feldspar, Zinc, Borax Power, Calcium and Dolomite as inputs/raw material. On the date of visit of the officers to the factory premises of the appellant, it is undisputed that the stock of raw materials as well as finished goods was tallying with recorded balances. This conclusion can be reached from perusal of records, as there is nothing on record to indicate otherwise.
13.?On careful perusal of the entire records of the case, we find that there is nothing on record as to unrecorded purchases or consumption of various other raw material in the manufacture of Frit, there is also nothing on record to indicate that the appellant had purchased the Quartz, Feldspar, Zinc, Borax Powder, Calcium and Dolomite and without accounting them used for the manufacture of Frit for clandestine removal. There is also nothing on record nor there is any statement of the suppliers of other raw materials, which would indicate that the appellant had received unaccounted raw material from the suppliers of these raw materials. There is a solitary evidence in the form of statement of supplier of one of the raw material i.e. Borax Powder, who indicated that the appellant had procured Borax Powder and not accounted the same in his record; and the said entries and information were deduced from the documents of the premises of Shri Anil Jadav and whose evidence has been discarded for having not been produced for cross examination; in the absence of any other tangible evidence to show that the appellant had been procuring the other major raw materials required for manufacture of Frit without recording in books of accounts, we are unable to accept the contentions of the ld. AR appearing for the Revenue and the findings of the adjudicating authority, that there was clandestine manufacture and clearance of the finished goods. The investigation has not proceeded further to bring on record unaccounted purchases of all the raw materials required for manufacturing of Frit.
16.?In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the factory premises of M/s. VTPL, in the peculiar facts and circumstances of this case, we hold that the impugned order which confirms the demand on the appellant M/s. VTPL and imposes penalty on them is not sustainable and is liable to be set aside and we do so.
8.?From the aforesaid findings of the Tribunal, it is clear that the appellant has not made any clandestine manufacture, which he has removed clandestinely and on which the duty was payable.
9.?It is well settled that the findings of the Tribunal can be interfered only if it is perverse or some material evidence is ignored. In such circumstances, only the Court may exercise jurisdiction on issue which may give rise to any substantial question of law. In this appeal, no substantial question of law arises for consideration of this Court.
10.?We agree with the view taken by the Tribunal, and the appeal is devoid of any merits. Both the questions raised by the appellant do not involve any substantial question of law and therefore, the appeal is dismissed.
15. We are also fortified in our view that mere confessional statement, are not enough to hold that the assessee has engaged in clandestine removal has been upheld by the order of Tribunal in the case of Tejaj Dyestuff (supra), wherein this Bench, in paragraphs No.53 and 54 has recorded that recording of confessional statements would not be an end to the investigation and Revenue officers should be careful to ensure that they are not tricked out of regular and detailed investigation by making strategical confession which are retracted by an affidavit soon after they are made and which affidavit are again strategically held from the Revenue officers so that they become complacent and do not carry out fuller investigation, thinking that the confessional statements are made and not retracted was already done. We find that the decision of the Tribunal was upheld by the Hon'ble High Court of Gujarat holding the judgment of the Tribunal.
16. In our view, in the absence of any corroborative evidence, as to there being clandestine manufacturing and clearance of P&P medicaments, for the foregoing reasons, the impugned orders in our view are not sustainable.
17. Since we have disposed of the appeals on merit, we are not recording any findings on various arguments put forth by both sides.
18. In the facts and circumstances of this case, for the foregoing reasons, we set aside the impugned order and allow the appeals with consequential relief, if any.
(Pronounced in Court on ______________________)
(H.K. Thakur) (M.V. Ravindran)
Member (Technical) Member (Judicial)
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