Custom, Excise & Service Tax Tribunal
Jindal Cables vs Commissioner (Central Tax) Gst Delhi ... on 8 March, 2022
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO. II
Excise Appeal No. 51107 of 2018
(Arising out of order-in-original No. 07-08/PK/GST/DE/2017-18 dated 31.01.2018
passed by the Commissioner, Central Goods & Service Tax, Delhi).
M/s Jindal Cables Appellant
1/536, C-11, Friends Colony
Industrial Area, Gali No. 4A
Sahdara, Delhi-110095.
VERSUS
Commissioner, Central Tax Respondent
Goods & Service Tax, C. R. Building, I. P. Estate New Delhi-110019.
WITH Excise Appeal No. 51109 of 2018 (Arising out of order-in-original No. 07-08/PK/GST/DE/2017-18 dated 31.01.2018 passed by the Commissioner, Central Goods & Service Tax, Delhi).
Deepak Kumar Gupta Appellant
1/536, C-11, Friends Colony
Industrial Area, Gali No. 4A
Shahdara, Delhi-110095.
VERSUS
Commissioner, Central Tax Respondent
Goods & Service Tax,
C. R. Building, I. P. Estate, New Delhi-110019.
WITH
Excise Appeal No. 51124 of 2018
(Arising out of order-in-original No. 07-08/PK/GST/DE/2017-18 dated 31.01.2018 passed by the Commissioner, Central Goods & Service Tax, Delhi).
M/s Jindal Metal Appellant
M-23, Mahavir Gali, New Mandoli Industrial Area
Near Shivani Dharamkanta
Delhi-110093.
VERSUS
Commissioner, Central Tax Respondent
Goods & Service Tax,
C. R. Building, I. P. Estate
New Delhi-110019.
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WITH
Excise Appeal No. 51155 of 2018
(Arising out of order-in-original No. 07-08/PK/GST/DE/2017-18 dated 31.01.2018 passed by the Commissioner, Central Goods & Service Tax, Delhi).
M/s Tirupati Industries Appellant
Khasra No. 36, Saboli
Near Mandoli Industrial Area
(Near Shivani Dharam Kanta)
Mandoli, Delhi-110093.
VERSUS
Commissioner, Central Tax Respondent
Goods & Service Tax,
C. R. Building, I. P. Estate
New Delhi-110019.
WITH
Excise Appeal No. 51223 of 2018
(Arising out of order-in-original No. 07-08/PK/GST/DE/2017-18 dated 31.01.2018 passed by the Commissioner, Central Goods & Service Tax, Delhi).
M/s Chandra Rolling Mills Pvt. Ltd., Appellant
J-I, Vishnu Gali
New Mandoli Industrial Area
Shahdara, Delhi-110093.
VERSUS
Commissioner, Central Tax Respondent
Goods & Service Tax,
C. R. Building, I. P. Estate
New Delhi-110019.
APPEARANCE:
Sh. Rajesh Jain & Sh. B. Bhushan, Advocates for the appellant Sh. Sanjay Kumar Singh, Authorised Representative for the respondent CORAM:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. C. J. MATHEW, MEMBER (TECHNICAL) FINAL ORDER Nos. 50223 - 50227/2022 DATE OF HEARING: 31.08.2021 DATE OF DECISION: 08/03/2022 ANIL CHOUDHARY:
The brief facts are that Revenue initiated enquiry and 3 investigation into the affairs of the appellants - M/s Jindal Metal and M/s Jindal Cables.
2. A search was conducted on 5.11.2011 wherein the officers while taking round of the factory premises of M/s Jindal Metals found furnace capacity of 6 tons, one generator, two fuel storage tanks etc. This unit is engaged in manufacturing copper ingots out of copper scrap and were registered with the Central Excise Department. M/s Jindal Metals alias JM is a proprietorship concern of Mr. Deepak Gupta son of Mr. Naresh Gupta. During physical stock verification the officers found copper ingots - 11,480 Kgs. valued at Rs. 49,36,400/- and copper scrap weighing 25.732 Kg. valued at Rs.1,06,78,780/-. As on demand the supervisor present - Mr. Rakesh Jain could not produce any documents in support of the stock. The same was seized and certain documents also resumed for further investigation.
3. Mr. Rakesh Kumar - Supervisor inter-alia stated that he is working in this unit for the last 6 months. The unit is run both on electricity as well as power from the generator. They receive copper scrap from various dealers. The accounts and management of the factory is looked after by Mr. Deepak Gupta. Most of the times they dispatch their finished product - copper ingots by vehicle No. DL1LB 5529 owned by one Mr. Pappu Puran. They have been receiving copper scrap from dealers like Mr. Pappu Puran, M/s Nalanda Metal, M/s Salim Metal. After manufacture of ingots they usually dispatch to the rolling Mills namely i) M/s Pappu Pal Rolling Mill, Mandoli, ii) M/s Raghupati Rolling Mills and iii) M/s Mahavir Rolling Mill. 4
4. The statement of Driver of the vehicle No. DL1LB5529 was also recorded namely Mr. Maan Singh, who inter-alia stated that he has been transporting the goods - copper ingots manufactured by M/s Jindal Metal weighing 5.5 to 6.0 tons in one trip, further stated that no papers are given to him for transporting said goods. Further stated that on 04.11.2011, approximately 5.5 to 6.0 tons of copper ingots were transported to M/s Pappu Pal Rolling Mill. During the search at the residential premises of Proprietor - Mr. Deeptak Gupta, cash amounting to Rs. 4.64 lakhs was found and resumed. The said amount was handed over to Mr. Naresh Chand Gupta under superdnama.
5. The statement of Proprietor Mr. Deepak Gupta was recorded on the same date wherein he inter alia stated that this unit have come into existence in July/August, 2010 and after manufacturing copper ingots from scrap these are sold to rolling Mills. Further, stated that he is also a partner in M/s Jindal Cabless. M/s Jindal Cabless is having its factory situated at Friends Colony Industrial Area, GT Road Shahdara, Delhi and is engaged in process of wire drawing from copper rods, i.e. manufacturing of copper wire and is also engaged in trading of copper wire and electric cables. M/s Jindal Cabless is not registered with the Central Excise Department and claims exemption as a SSI unit. The other Partners in M/s Jindal Cabless are Mr. Naresh Gupta, Mrs Nirmala Devi wife of Mr. Naresh Gupta and Mrs. Seema Agarwal.
6. On scrutiny of tax invoices for the financial year 2011-12 it appeared that M/s Jindal Cables have cleared copper wire valued at 5 Rs. 2,01,38,760/- (invoice No. 116 dated 02.04.2011 to invoice No. 146 dated 24.10.2011) but they have not obtained Central Excise registration even after crossing the SSI exemption limit of Rs. 1.50 crores.
7. From the aforementioned facts and inquiries conducted, it appeared to Revenue that M/s Jindal Metal had been clearing copper ingots to various rolling Mills. Mr. S. N. Bhutani have admitted in his statement that they have received copper ingots from M/s Jindal Metal on the dates shown in the resumed documents. Further, stated that he has dispatched copper wire rods after conversion from copper ingots to the person on the basis of direction of M/s Jindal Metal, further stated that they have been receiving copper ingots without any supporting challan or invoice. Further, the purchase bills submitted during investigation in support of the goods lying in the factory premises appeared to be bogus. Further it appeared that the physical stock found in the factory on 05.11.2011 is liable to confiscation under Rule 24 of Central Excise Rules, as such stock appeared to be unaccounted with intention to clear without payment of duty.
8. It further appeared that M/s Jindal Cables had intentionally not maintained any stock register to clear the goods without payment of duty. Further, Mr. D.B. Jain, Accountant of M/s Jindal Cables admitted in his statement, that they have been clearing copper wire manufactured without raising invoices. It further appeared that Indian currency Rs. 4.65 lakhs was liable to be confiscated as the same appears to be sale proceeds of the goods 6 manufactured and cleared by M/s Jindal Cables without payment of duty. It further appeared that both M/s Jindal Cables and M/s Jindal Metal have contravened the provisions of Rule 6, 4, 9, 10, 11 and 12 of Central Excise Rules. Accordingly, show cause notice dated 02.05.2012 was issued directing M/s Jindal Metal to file reply as to why not the goods valued at Rs.1,56,15,180/- found during the course of physical verification be not confiscated with further proposal to confiscate the cash found Rs. 4.64 lakhs at the residence of Mr. Deepak Gupta with proposal to impose penalty on Mr. Deepak Gupta under Rule 26. In the same show cause notice M/s Jindal Cables was required to show cause as to why total goods valued at Rs. 25,41,050/- being copper scrap, raw material, WIP and finished goods be not confiscated, with proposal to impose penalty under Rule 26 on Mr. Deeptak Gupta.
9. Further investigation was continued. It appeared to Revenue as per statement of Mr. Rajesh - Supervisor of M/s Jindal Metal that they were procuring copper scrap without proper invoices nor were making entries in their records. Further, copper ingots manufactured were also being cleared clandestinely. This was also found to be corroborated as per the statement of Mr. Maan Singh, Driver/owner of tempo.
10. A file was resumed (Sl. No. 1 of Annexure 'A' to the punchnama) containing kachhi parchi/slips pages 1 to 69 resumed from residence of Mr. Deepak Gupta. On seeing kachhi parchi at page 65, Mr. Deepak Gupta explained the contents, that copper ingots were manufactured using 22 moulds and each copper ingot consists 7 of 135 to 140 Kg. He further informed that M/s Mahavir is the name of rolling mill to whom he used to send copper ingot for rolling.
11. The officers also visited M/s Jindal Cables situated at Industrial Area Friends Colony, Shahdara on 05.11.2011 and conducted search proceedings. Supervisor cum Accountant Mr. Desh Bhushan Jain informed that Mr. N. C. Gupta looked after the overall work. M/s N. N. Lite (Prop. Mr. Naresh Gupta) was also manufacturing PVC cables of copper in the same premises. However, since September, 2011 the manufacturing activities of M/s N. N. Light have been closed.
12. Statement of Mr. D. B. Jain, Accountant of M/s Jindal Cables was recorded on 05.11.2011 wherein he inter-alia stated that M/s Jindal Cables was engaged in wire drawing out of wire rod. He has been working for the last eight hears as Accountant and drawing monthly salary of Rs. 10,000/-. The main raw material for manufacture of copper wire was copper rod and main raw material for manufacture of PVC cable were PVC dana, copper wire and copper rods. For manufacture of copper wire, wire rod was converted into smaller thickness i.e. 9 No. and thereafter copper wire of 9 No. was converted by utilising draw machines into copper wire of 60 No. which were sold in the market. They were also drawing copper wire of very thin diameter. Since the turnover of M/s Jindal Cables was less than Rs. 1.5 crore they were not paying Central Excise duty. On being asked that the turnover of M/s Jindal Cables as per the balance-sheet for the year 2010 - 11 was Rs. 2,24,36,447/- then why they have not got themself registered and paid duty. It was stated, this amount 8 includes trading turnover.
13. The officers also found documents of M/s G. N. Trading, Partnership concern of Mr. Naresh C. Gupta, which was in trading, also lying in the same premises. M/s G. N. Trading was the partnership firm and the other partner is Ms. Meenu Gupta daughter of Mr. Naresh C. Gupta. This firm was trading in copper wire and PVC wires etc.
14. Mr. D. B. Jain further stated that M/s Jain Trading Company (JTC), the documents of which (like account books, Ledger for the year 2009 - 10) were also found in the premises of M/s Jindal Cables, it was stated that JTC was actually a trading firm owned by him, which came into existence in 2008 and was engaged in trading of copper wire, aluminium wire and PVC wires. He further stated entries in note book - Neelgagan resumed and marked as No. 41 of Annexure 'A' to punchnama drawn in factory premises of M/s Jindal Cables, were the details of entries of copper scrap received by M/s Agarwal Metal, Mandoli. The entries were made by him on the basis of details given by Sh. N. C. Gupta. Actually M/s Agarwal Metal was a bogus firm, and actually the scrap which was mentioned in the said notebook was received in the unit of M/s Jindal Metal. After receiving the copper scrap, M/s Jindal Metal used to manufacture ingots. Thereafter copper ingots were sold. Thus, Mr. D. B. Jain, the Accountant of M/s Jindal Cables authenticated the kachhi parchi, and also accepted receipt of copper scrap, non-maintenance of proper records, clandestine removal of excisable goods without payment of duty and also accepted that the incriminating documents which were 9 reflecting receipt of raw material and clandestinely clearance of finished goods were true, which pertain to both the units. He also stated that M/s Agarwal Metals was created on paper only in order to suppress the production of finished goods actually manufactured by M/s Jindal Metal.
15. On scrutiny of records it appeared that M/s Jindal Metal had cleared copper ingots to M/s Srikrishna Rolling Mills, Mandoli, M/s Raghupati Rolling Mills, Mandoli. In follow-up enquiry at M/s Srikrishna Rolling Mills, Mr. S.N. Bhutani, Proprietor informed that they were registered with the Department and manufacturing copper wire rods of size 8 MM from copper ingots. He inter-alia stated that one of the main supplier of raw material was M/s Jindal Metal who were supplying copper ingots from September, 2011. He also stated that till the month of October, 2011 they have approximately received 110 tons of copper ingots from M/s Jindal Metal and have despatched copper wire rods after conversion, as directed by M/s Jindal Metal. Copper ingot were received from M/s Jindal Metal without any bill/challan and they also cleared copper rod without bill/challan. He also stated that the Pappu Pal was his alias name. Further it appeared to Revenue that Mr. S.N. Bhutani have admitted to have received copper ingots from M/s Jindal Metal on kachhi parchi without proper challan/invoice for job work.
16. In follow-up investigation the officers also visited the factory premises of M/s Raghupati Rolling Mills (RRM), New Mandoli Industrial Area, Shahdara. At the time of inspection, the factory was found closed and no worker was found. It further appeared that 10 although as per their records they were having stock of copper ingots
- raw material, copper wire rods - finished goods and copper scrap, but on physical verification no stock was found. Statement of Mr. Anil Kumar Goyal, Director was recorded who did not accept the fact that his company have done any job work for M/s Jindal Metal. Further RRM deposited Rs. 1,45,715/- towards the excise duty against shortage of goods found in their factory in physical verification valued at Rs. 13,97,780/-.
17. In follow-up investigation, the officers also visited M/s Chandra Rolling Mills, which was engaged in manufacture of copper wire rods from copper ingots/bar and were registered with the Department. During the proceedings, stock of finished goods was found tallied with the records. Further no incriminating documents were found. Further statement of Mr. Ashok Arora Director of M/s Chandra Rolling Mills was recorded who on being shown the photo copy of resumed documents from JM admitted that one gentleman has approached their unit for getting copper wire rods manufactured out of raw material to be supplied. Accordingly, one ingot weighing 140 Kg. was received for job work. Thereafter, they stopped having any further business with M/s Jindal Metal.
18. In further follow-up the officers visited the factory premises of M/s Tirupati Industries, New Mandoli Industrial Area, Delhi. The statement of Mr. Brijesh Kumar - Proprietor was recorded who inter-alia stated that he has never undertaken any job work activity for M/s Jindal Metal or M/s Agarwal Metal. Earlier he was managing one unit M/s Mahavir Steel Rolling Mills, and also stated 11 that he has no company in the name and style of M/s Maheshwari Rolling Mills. He also stated that on 19.12.2011 his firm had purchased copper ingots weighing 5006 Kg. vide bill No. 2 dated 23.12.2010 from M/s Jindal Metal and they had also sold copper scrap 1358 Kg. to M/s Jindal Metal vide bill No. 294 dated 27.12.2010. Further, he denied the facts stated by Mr. D. B. Jain Accountant of M/s Jindal Cables. He further stated that they have never received any materials like copper ingots, save and except as stated hereinabove. It appeared to Revenue that M/s Tirupati Industries have never undertaken any job work activity for M/s Jindal Metal, save and except the aforementioned two bills.
19. In further investigation at M/s Valson Rolling Mills Private Ltd., the statement of Mr. Arun Kumar, Director was recorded from which it appeared that M/s Valson Rolling Mills Private Ltd., have never undertaken any job work activity for M/s Jindal Metal. However, they accepted that they have purchased copper ingots under proper bill/invoices from them.
20. In follow up investigation at M/s Jaishree Ram Engineering Works Pvt. Limited, statement of Sh. G. C. Agarwal, Director was recorded who stated that they were registered with the Central Excise Department and were engaged in manufacture of copper wire from copper rod. Further, stated that they have stopped production since 01.08.2011. Further stated that they have never purchase copper ingot from M/s Jindal Metal and stated that they were engaged in manufacture of copper wire rod and have been charging job charges from the raw material supplier. On being shown 12 the note book resumed vide Annexure 'A' at Sl. No. 50 in the panchnama drawn at M/s Jindal Cables, showing that they have received copper ingots from M/s Jindal Metal, he stated that their company name is M/s Jaishree Ram Engineering and Sh. Naveen is employee of the company. Further, stated that they have not received any material from M/s Jindal Metal. Thus, M/s Jaishree Ram Engineering did not accept any receipt on kachhi parchi. In follow up investigation, Mr. Shobit Bansal from M/s B.P. International also stated that he has never received nor undertaken any job work activity for M/s Jindal Metal.
21. Statement of Mr. N. C. Gupta, Partner of M.s Jindal Cables was recorded who inter-alia stated that M/s Jindal Cables had come into existence in the year 2004-05 and they were engaged in manufacturing of copper wires as well as PVC cables. There were also trading in copper wires and PVC cables. They were not registered with the Central Excise Department as their turnover of dutiable goods was below the SSI exemption limit of Rs. 1.50 crores.
22. M/s Jindal Metal submitted a letter received by Revenue on 16.12.2011, inter alia stating/praying for release of the seized goods valued at Rs. 1,56,15,180/- stating that they have purchased copper scrap on various dates from scrap dealers as per list annexed to the letter, along with the invoices. It was also mentioned that the entries of the said goods could not be made in the stock register, being SSI unit, and the same was being updated/maintained by their part-time Accountant. The Revenue also received another letter from Mr. N. C. Gupta praying for release of the seized cash Rs. 4.64 lakhs 13 stating that Rs. 4 lakh was received as advance from one Shri Dharampal on 04.11. 2011 on account of sale agreement of his land and the rest amount of Rs.64,000/- was kept by him to meet day to day household expenses. To corroborate, Mr. N.C. Gupta also filed an affidavit alongwith receipt dated 4.11.2011 indicating advance taken for sale of land situated at Saharanpur.
23. In further follow-up investigation Mr. Ashwini Bansal of M/s Sai Udyog appeared and inter-alia stated that they were selling copper scrap to M/s Jindal Metal and payments were received through banking channel. They were making such sales since October, 2010.
24. Mr. Sachin Sehgal, Proprietor of M/s Kunj Metal Industries also appeared and his statement was recorded wherein inter-alia stated that they were not registered with Central Excise Department and they were a trading concern engaged in trading of PVC cables, copper wires, aluminium wires, copper scrap etc. They further admitted to have sold copper scrap to M/s Jindal Metal and payment for the same were received through banking channel.
25. Mr. Gobind Ram, Proprietor of M/s Ganpati Tempo Transport was also interrogated and his statement was recorded who inter alia stated that he was running business of transport for the last two years and have two Tata 407 vehicles and one Eicher 1059 vehicle bearing registration Nos. DL1LE1809, DL1LG9800 and DL1LM2080 (Eicher). He also stated that he hires vehicles from the market in case of more demand for the same. He confirmed that he has transported the goods as per the documents shown to him. 14
26. Mr. Dharampal S/o Mallah of Saharanpur in his statement recorded on 14.03.2012 inter-alia stated that he wanted to purchase Plot No. 205 and 210 at village Ugrahu, Dehradun from Mr. N.C. Gupta for Rs.12 lakh, for which he gave Rs. 4 lakhs as advance on 04.11.2011 as token money. The said amount was paid by him out of his past savings.
27. In further statement recorded from Shri N. C. Gupta, Partner of M/s Jindal Cables on 26.04.2012, he stated that being SSI unit they were not maintaining any stock register. On being shown the file resumed as Sl. No. 1 Annexure 'A' to punchnama drawn at residence containing handwritten kachhi parchi of various persons and asked to explain the entries made therein, he stated that those entries were related to dispatch of the goods, but he did not know much about the same. Further stated that the details will be given by Mr Deepak Gupta.
28. On being shown resumed file numbers at serial No. 42, 44 and 45 - Annexure 'A' to punchnama drawn at residence containing handwritten Kachhi Parchi, as well as print outs of accounts, on being asked to explain the entries therein, he stated that these related to receipt of the goods, entries in file No. 44 and 45 were related to miscellaneous expenditure. But he did not know much about the entries, and details may be asked from Mr. Deepak Gupta. It appeared to Revenue that Mr. N.C. Gupta denied to comment on most of the incriminating documents pertaining to M/s Jindal Metals and stated that Mr. D. K. Gupta could better comment on them. 15
29. Statement of Mr. D.K. Gupta was also taken on record on 27.04.2012. On being asked as to why the bills in support of the stock found on 05.11.2011 were submitted only vide letter dated 16.12.2011, found in the premises of M/s Jindal Metal or found in the factory premises of M/s Jindal Cables, he stated that they had given the invoices to their Accountant, Mr. Chouhan for accounting purpose, which has resulted in the delay. He further stated that Mr. Chauhan was working as an Accountant in many factories in Mandoli Industrial Area, having good reputation. On being asked as to why all statutory records like RG-23 Part-I and Part-II Register pertained to M/s Jindal Metal were not found at the time of search in the premises of M/s Jindal Metal, he stated that the records were kept in the premises of M/s Jindal Cables, for being sent to the Chartered Accountant, who was common for both the units.
30. On being shown File No. 43 resumed under punchnama from residence on 05.11.2011 containing printouts of account/ details for the period 31.07.2011 to 10.10.2011 for various persons and asked to explain the entries therein, he stated that those entries were related to the sales made by M/s N.N. Light, M/s Jindal Metal to various persons such as Mr. P. Roy, Amit Sehgal, Akki, who were all middlemen. Such middlemen give guarantee as the goods involved are of high value.
31. On being shown file No. 41 containing handwritten kachhi parchi of various persons and asked to explain, he stated that these entries were related to sales made by M/s N. N. Light, M/s G. N. Marketing and M/s Jindal Cables.
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32. On being shown file No. 40 containing handwritten kachhi parchi/printout of account details/purchase orders etc., he stated that these were details of miscellaneous expenditure, some purchase order and details of empty reels, which were received back after delivery of the goods.
33. On being shown file No. 1 resumed from residence containing handwritten kachhi parchi (of various persons), he inter alia stated that such parchies were not pertaining to him and he did not know about the said file. He further stated that the residential premises are common to other family members and consist of three floors, the ground floor back side was occupied by him.
34. On being shown file No. 44 and 45 resumed from residence on 5.11.2011 containing computerise slips of the dharamkanta and handwritten kachhi parchi, he stated that these are not related to him and his firm.
35. On being shown the statements of Mr. S. N. Bhutani proprietor of M/s Krishna Industries stating that he had received 116 MT of copper ingots without any valid documents from M/s Jindal Metal and thereafter converted them into copper wire rods which were dispatched according to directions of the M/s Jindal Metal. In reply he stated that he could not comment on the same.
36. On being shown the statement recorded on 05.11.2011 of Mr. Rakesh - Supervisor of M/s Jindal Metal, stating that they have dispatched 1078 numbers of copper ingots weighing 150.920 tonnes to Mr. Pappu Pal, RRM and MRM in the month of October and 17 November, 2011, without any valid documents from M/s Jindal Metal. In reply, he stated that he could not comment on the same.
37. In his further statement Mr. D. K. Gupta inter alia stated that the documents resumed from the residential premises on 05.11.2011, probably belong to M/s G. N. Marketing which is a trading firm of Mr. N. C. Gupta. He further stated that he does not look after any work of M/s G. N. Marketing. On being shown file resumed Sl. No. 37 from the residence, he stated that the handwriting on the loose papers appear to be of Mr. D. B. Jain who is also residing on 2nd floor on rent and also engaged in trading under the name and style of M/s Jain Trading Company. Similarly, Neelgagan notebook resumed at Sl. No. 43 also appears to be containing the affairs of Mr. D.B. Jain.
38. In his further statement Mr. N. C. Gupta, Partner of M/s Jindal Cables recorded on 05.03.2015 explained that from the common address / building both M/s Jindal Cables and M/s N. N. Lite were functioning and both were engaged in manufacturing and trading of copper wire and aluminium wire. However, earlier they were also engaged in manufacturing activity of PVC wire of copper/ aluminium. Further stated that M/s G. N. Marketing is a Proprietorship concern engaged in trading of electrical goods, he further stated that M/s Jindal Cables was carrying out its activity at basement, Ground Floor, 2nd floor of the building, whereas M/s N. N. Lite was functioning from first floor and mezzanine floor. He further mentioned that both the units have their separate plant and machinery. The electric meter is in the name of M/s Jindal Cables and 18 same is bifurcated with the help of sub-meter installed for usage by M/s N. N. Lite. He also submitted the bifurcation of turnover as to manufacturing and trading sale for the period 2009-10 to 2013-14. Further, statement of Mr. N.C. Gupta was again recorded on 31.03.2015 wherein he was confronted with the statement of Mr. D. B. Jain, Accountant. With regard to kachhi parchi contained in resumed document 58, 59 and 68, he explained that they use to raise the slips at store room of the factory premises after weighment or counting, to hand over the same to the invoice raising counter, before the clearance of the goods. As regard some other documents, which was resumed vide serial No. 90, 43 and 47, 44 and 48, 45 and 46 and 37, he explained that these do not pertain to him or his firm.
39. It appeared to Revenue that both M/s Jindal Cables and M/s N. N. Lite are different concerns, located at the same address, but there was no financial flow back between the two firms and it had different ownership. Accordingly, it appeared that their turnover cannot be clubbed.
40. On the basis of kachhi parchi which appear to be for clandestine clearance of copper wire by M/s Jindal Cables, further investigation was taken up with regard to the persons/ firms named therein. In the course of enquiry at M/s Omex Cable Industries who were engaged in manufacturing of PVC wire, Sh. Jitender Kumar, Proprietor inter alia stated that he had purchased raw material - copper wire of different sizes from M/s Jindal Cables without bill on kachhi parchi in the financial year 2011-12. Further, on being shown the transactions / clearances recorded in their name from the records 19 found at M/s Jindal Cables; He accepted that in the financial year 2011-12, he had purchased 14180.4 kg. of copper wire valued at Rs.66,11,139/- from M/s Jindal Cables without invoices. He further stated that he will pay duty and handed over a cheque dated 16.07.2015 for Rs. 4 lakhs towards his duty liability. However, Sh. Jitender Kumar within few days retracted his statement vide letter dated 04.08.2015.
41. Further enquiry was made at M/s Yash Cable Industries, Shahdara, who are engaged in manufacture of PVC insulated wire. The Proprietor is Amik Kumar Parak denied of having made any unaccounted purchases from M/s Jindal Cables. Similarly, Mr. Harish Chawla, Proprietor of M/s S. S. Cable Industries, Vishwas Nagar, New Delhi also denied having purchased any goods from M/s Jindal Cables without invoices.
42. In his further statement recorded on 27.07.2015, Mr. Deepak Kumar Gupta disagreed with the statement of Mr. Jitender Kumar of M/s Omex Cable Industries. Mr. Deepak Kumar Gupta also disputed the statement of Mr. Rakesh Jain - Supervisor of M/s Jindal Metal who had stated that they were making clandestine purchase of copper scrap from scrap dealer like M/s Saleem Metal, Pappu Puran, M/s Bakey Bihari, M/s Nandan Metal, etc. Disputing the contention Mr. Deepak Kumar Gupta stated that these are the names of wheighman (Tulaiya) and not the name of scrap dealer. Further, on being confronted with various documents etc. resumed from the factory / residential premises, he denied these documents are not related to him or M/s Jindal Metal. Though, he identified some of the 20 documents being in hand writing of Mr. Desh Bhushan Jain or Mr. Rakesh Jain, but stated that he could not explain the contents thereof and only the authors can explain the same.
43. From the resumed documents and investigation including the statements recorded it appeared that M/s Jindal Metal was receiving copper scrap from various scrap dealers without proper invoice and they did not enter the same in their record. Further, they melted the scrap and manufactured copper ingot and cleared the same without invoices on kachhi parchi/ challan to various customers/ rolling mills with intention to evade Central Excise duty. Further, M/s Jindal Metal was sending copper ingot to various rolling mills for conversion into copper rod and thereafter got the copper rod clandestinely cleared from the premises of rolling mills/ job workers.
44. It further appeared that M/s Agarwal Metal was a dummy firm created only to suppress the production of finished goods, i.e. copper ingot manufactured by M/s Jindal Metal. Further, the purchase bills submitted with regard to the goods lying in the factory premises on 05.11.2011, appeared to be bogus. These facts were corroborated by the statement of Mr. D. B. Jain, Accountant of M.s Jindal Cables and Mr. Rakesh Jain, Supervisor of M/s Jindal Metal.
45. Further, Mr. Deepak Gupta, Proprietor of M/s Jindal Metal in his statement after seeing the file containing kachhi parchi, No. 65 of documents No. 01 resumed from his residence, had stated that this parchhi indicates that 11 No. of copper ingot were sent to M/s Mahavir Rolling Mill. Thus, it appeared to Revenue that M/s Jindal 21 Metal was in the practice of clearing their finished product, ingot, on kachhi parchi without payment of duty.
46. Further, Mr. Maan Singh, Driver/ owner vehicle No. DL1B 5529 has stated that he have transported almost 100 trips for transporting of copper ingots manufactured by M/s Jindal Metal to various parties having weight of 5.5 to 6.0 MT in each trip. However, no papers were given to him for transportation.
47. Further, Mr. S. N. Bhutani alias Pappu Pal, Proprietor of M/s Krishna Rolling Mills had admitted in his statement that he has received approximately 116 tons of copper ingots from M/s Jindal Metal for converting to copper rods without proper invoices or challan.
48. It further appeared that though the affairs recorded in various kachhi parchi and other private records belong to clandestine manufacture and clearance by M/s Jindal Metal, but Mr. D. K. Gupta have denied the same as belonging to M/s Jindal Metal by stating that the author Mr. D. B. Jain and Mr. Rakesh Jain can explain these.
49. It further appeared to Revenue that at the time of inspection on 05.11.2011 production was going on in M/s Jindal Metal wherein the excise returns filed for the period April, 2011 to October, 2011, they have shown Nil turnover / production. The allegation of unit being in production for the last few months, seems to be corroborated with the attendance record as well as the statement of Mr. Man Singh, Driver/ Owner of transporter. Accordingly, demand of duty was calculated from M/s Jindal Metal at Rs. 1,83,99,597/- as per Annexure-1 to the show cause notice.
22
50. The demand of duty in respect of M/s Jindal Cables, after considering the declared sale of Rs. 1,03,24,083/- and also considering the SSI exemption available upto Rs. 1.50 crore, their duty liability was calculated at Rs. 89,95,002/- as per Annexure-II to the show cause notice. Further, penalty was proposed on M/s Raghupati Rolling Mills, Mr. N. C. Gupta, Mr. D. K. Gupta, Mr. D. B. Jain, Mr. Rakesh Jain under Rule 26 of Central Excise Rule. Duty of Rs. 1,45,715/- was also demanded from M/s Raghupati Rolling Mills as in the course of inspection on 16.11.2011, there was shortage of goods found on physical verification, which has been accepted by the assessee and the said amount was already paid and thus it was proposed to be appropriated. Further, penalty was proposed under Rule 25 of Central Excise Rules on M/s Shree Krishna Rolling Mills, M/s Valson Rolling Mills, M/s Tirupati Rolling Mills and M/s Chandra Rolling Mills Pvt. Limited. Demand of duty and penalty was proposed vide show cause notice dated 04.08.2016. Prior to this, show cause notice dated 02.05.2012 was issued with proposal for confiscation of the goods allegedly found unaccounted in the factory premises of M/s Jindal Cables and M/s Jindal Metal. With further proposal to impose penalty under Rule 26 as well as confiscation of Indian currency of Rs. 4,64,000/- resumed from the residential premises of Mr. N. C. Gupta and further proposal to confiscate cash resumed Rs. 4,65,000/- from the factory premises of M/s Jindal Cables. Both the show cause notices have been adjudicated on contest by common impugned order-in-original, confirming the proposed demands alongwith confiscation of the cash and goods vide impugned order-in-original dated 31.01.2018. Further, equal amount of penalty was also 23 imposed on M/s Jindal Metal and M/s Jindal Cables under Rule 25 read with Section 11AC of the Act. Raw material and finished goods valued at Rs.1,56,15,180/- lying in the premises of M/s Jindal Metal on the day of search were confiscated with option to redeem the fine of Rs. 10 lakhs. Similarly, raw material etc. amounting to Rs.25,41,050/- were confiscated from the premises of M/s Jindal Cables with option to redeem on payment of fine of Rs. 2 lakhs. Both the amounts of cash seized, were ordered to be appropriated with the redemption file. Further, duty of Rs. 1,45,715/- was confirmed on M/s Raghupati Rolling Mills and full appropriation of duty with amount already paid. Further, penalty under Rule 26 was imposed as follows:-
Sl. No. Name Amount (Rs.)
1. Sh. Deepak Kumar Gupta 2,00,000/-
2. Sh. Rakesh Jain 2,00,000/-
3. M/s Shree Krishna Rolling Mills 2,00,000/-
Prop. S. N. Bhutani
4. M/s Chandra Rolling Mills Pvt. Ltd., 2,00,000/-
5. M/s Tirupati Industries 2,00,000/-
6. Sh. Desh Bhushan Jain 2,00,000/-
51. Being aggrieved, the appellants are before this Tribunal.
52. Learned Counsel for the appellant urges that M/s Jindal Metal had filed interim reply and also additional submissions, denying all the allegation and they also prayed for cross-examination of panchas/ witnesses and the officials. However, the cross-examination was given only of few persons without any cogent reason. Thus, the appellant was prevented in contesting the allegations of Revenue, 24 leading to miscarriage of justice. He further urges that the case of Revenue is based on three documents
53. We have heard S/Sh. Rajesh Jain with Rishabh Jain and Bharat Bhushan, the Ld. Counsels for the Appellants and Sh. Sanjay Singh, Ld. AR for the Respondent. Ld. AR had reiterated the findings of the Respondent-Commissioner recorded in the impugned Order dated 31.01.2018 as well as in the Show Cause Notices.
54. We have perused the entire records placed before us by both the parties as well as the short-written submissions. We have also perused the allegations made in the show cause notice and the findings recoded by the respondent-Commissioner in the Order and observed that the entire case of the revenue is based on the resumed documents/kacchi parchies, seized from the factory premises and residential premises of the partner/proprietor of Jindal Cables and Jindal Metal and also on the statements of various persons recorded during investigation.
55. For better appreciation of facts, we consider it proper to deal with each Appeals separately since the facts and circumstances are different from each other.
M/s Jindal Cables:
56. Firstly, we deal with Appeal No. E/51107/2018 in Jindal Cables. It is an admitted fact that on 05.11.2011, officers searched the factory premises of the Appellant-Jindal Cables as well as the residential premises of the partner Sh. Deepak Kumar Gupta, at A-25, 25 Vivek Vihar-II. Panchnama Cum Seizure Memo both dated 05.11.2011 were drawn. In this regard, Ld. Counsel for the appellant has argued and stated that w.r.t. to the resumed/seized documents from factory is concerned, it is nowhere stated in the panchanama that from where these have been seized/resumed. It also does not mentioned which records were obtained from which portion of the building i.e., which was held by Appellant - Jindal Cables and held by M/s NN Lite. That w.r.t the panchnama drawn at residence, he states that said premise is the property of Sh. Naresh Chand Gupta and his wife. A panchnama was drawn with much callousness on the part of the officers as no indication was given as to wherefrom the documents were seized, which becomes essential in the current matter where more than one family shared the same premises. He further states that Panchnama also fails to mention to whom these documents pertained whether firm or individual. He also states that no steps have been taken by the officers to ensure proper sealing of documents so as to prevent tampering. We have perused the said Panchnamas both dated 05.11.2011. Panchnama drawn at the factory premises suggests that the factory is built up on 102 sq. yards approx. and has basement, ground, first with a mezzanine floor and second floor. Wire drawing machines and other machines were also found installed at basement, ground and first floor and one electricity meter was also used in factory premises. Sh. Desh Bhushan Jain, Accountant states in the Panchnama that one more firm in the name of M/s NN Lite is also functioning in the same premises and is also engaged in manufacturing of PVC cables of copper. Further, panchanama merely states that some incriminating documents 26 /kacchi parchies etc. annexed in (Annexure-A) were resumed. We find that the panchnama drawn at the factory premise is totally silent on the fact that wherefrom the incriminating documents/kacchi parchies has been resumed and seized whether from the portion occupied by the Appellant-Jindal Cables or from the portion occupied by M/s N.N. Lite. The investigating officers are expected to be true and fair while making investigation. It is necessary on the part of the investigating officers to differentiate the said documents so as to make a strong belief that evasion has actually taken place. A-25, Vivek Vihar-II, is a joint property of Sh. Naresh Chand Gupta and Smt. Nirmala Devi, having three floors in it i.e., Ground, First and Second. Rooms at the Ground Floor (back) are occupied by the partner Sh. Deepak Gupta and in front by his younger brother Sh. Rajesh Kumar Gupta, whereas on the first floor Mr. & Mrs. N. C. Gupta reside and two rooms one of which is used as office and other as store room. While the second floor is rented to Sh. Desh Bhushan Jain (Prop of M/s Jain Trading Co.) and Sh. Suresh Jain. From the perusal of the said Panchnama it is established that the seized documents (Annexure 'A') were resumed/seized from the office at first floor but it failed to establish that from where they have been seized, it also does not establish to whom they pertain, it is important because the said floor belong to Sh. Naresh Chand Gupta and it has been shared by other entities/firms i.e. Sh. Desh Bhushan Jain (Prop. of M/s Jain Trading Co.) and Sh. Suresh Jain who also have the access to the said premises. We have further seen that Annexure 'A' to the Panchnama clearly records the name of the files belonging to other firms who has no link with the appellant - Jindal Cabless such as M/s NN Lite, M/s 27 GN Marketing and M/s Jain Trading Co etc. Also, Revenue failed to establish that the said office premises on the first floor is used by whom. There was no mark/name plate of a particular firm using the office space, was also brought on record by the Department.
57. We further find force in the contention of the Ld. Counsel for the Appellant that out of 48 sets of documents/files/loose papers seized from A-25, Vivek Vihar, only 8 carry the name of the Appellant
- Jindal Cables. The said documents being neither recovered from the premises in exclusive possession of the Appellant - Jindal Cables nor from the possession of any of the partners of the appellant, at the best, they can be termed as third-party documents. It is a settled law that unless such documents are independently corroborated, the third-party documents cannot be admitted as evidence. The respondent-Commissioner should have conducted the independent examination/inquiry in respect of each of the documents.
58. From the perusal of loose-papers/note-books/kacchi parchies in Annexure-2(I), 2(II) & 2(III) referred as RUD-62, 63 & 64 (for appellant - Jindal Cables) and relied upon by the Revenue, it is noticed that few names, figures are appearing and were hand-written. We observe that the Ld. Commissioner has not carried out corroboration of the seized private records/kacchi pachies. He should have further summoned the persons whose names were appearing on the private records such as of Ashwani, Prithviraj, Manoj Gahlot, Vicky, Sunny Sehgal, Amit Singhal, Tiwari, Rajkumar and others, for corroboration. We find that only the statements of the three purchasers/persons whose names are appearing in the said private 28 records were taken i.e., Sh. Jitendra Kumar, Proprietor, M/s Omex Cable Industries; Sh. Amit Kumar Parak, Proprietor, M/s Yash Cable Industries and Sh. Harish Chawla, Proprietor, M/s S.S. Cable Industries were confronted with the details contained in the said documents. None of the said parties, except Sh. Jitendra Kumar, Proprietor of M/s Omex Cable Industries admitted clandestine receipt of material from appellant - Jindal Cables. Sh. Jitendra Kumar, too retracted his statement. The said documents remain uncorroborated and it is a settled law that demand cannot be confirmed on the basis of uncorroborated private records. Respondent-Commissioner has overlooked this vital aspect while confirming the demand on the basis of the entries in the said private records, he instead has recorded a perverse finding contrary to records by holding that the charges of the clandestine clearances have been corroborated by various evidences placed on record. Therefore, the Ld. Commissioner could not have solely relied upon these private records without testing the genuineness of the details stated in it by conducting investigation with the persons who were named in the said documents. Further, the charge of clandestine manufacture and removal cannot be based on private records unless the same are corroborated through some other independent evidence which is totally missing in the present case as no person named in the private records was inquired or investigated to confirm the authenticity of the entries recorded in the said documents.
59. Ld. Counsel for the Appellant - Jindal Cables states that the demand of Excise Duty is confirmed without taking into 29 account the crucial facts on the records. We find that it is a fact on record that at factory address of Appellant-Jindal Cables, one more manufacturing unit in the name and style of M/s N.N. Lite was functioning it is also mentioned in the panchanama dated 05.11.2011 drawn at factory premises of Appellant - Jindal Cables. Still, neither the visiting officers nor the Respondent-Commissioner in the Order, did make any effort to identify and account for the stock held by the two firms, separately. Since it is admitted that the two firms were functioning at the same premises, thus we feel that it was necessary for the Revenue to differentiate. We find nothing from the Revenue in this regard.
60. We are also surprised to find that the Ld. Commissioner in the Adjudication Order, instead of dealing with the contentions/reply and evidences given by the appellant - Jindal Cables, has tried to justify the entries recorded in the private records/clandestine removal, by merely relying upon the statement of Sh. Desh Bhushan Jain accountant of the Appellant - Jindal Cables. Ld. Counsel for the appellant has stated in its reply that reliance could not be placed upon the statement of Sh. Desh Bhushan Jain, being a Co-Noticee, who while inculpating the Appellant has exculpated himself. He further stated that Sh. Deepak Kumar Gupta and Sh. Naresh Chand Gupta had categorically denied any relation to the contents of the various documents and had specifically stated that those were in the writings of Sh. Desh Bhushan Jain and the documents might be containing details of business of his proprietary concern M/s Jain Trading Co., (Concern of Sh. Desh Bhushan Jain). This was also brought to the 30 notice in the reply dated 26.09.2017, that credence cannot be placed upon the statement of Sh. Desh Bhushan Jain. The Commissioner disregarded the statement of Sh. Deepak Kumar Gupta dated 04.09.2012, regarding the authenticity of the documents only on the basis that this statement was made almost a year after the statement of Sh. Desh Bhushan Jain was recorded, and as such was not given substantial evidentiary value by the Commissioner. Moreover, in cross-examination on 23.04.2017, Sh. Desh Bhushan Jain explained that his firm M/s Jain Trading Co. used to trade in various items like copper-wire, Scrap and PVC Wire. He further accepted that the bills (Invoices Nos. 77, 78, 82, 90, 60, 63, 65 & 69 of Book No.2) belonged to his firm. He even accepted that bill no. 82 tallies with the entry in Kacchi Parchi dated 20.10.2011. He further stated that he used scrap to make ingots and sold ingot/rod/wire and that the scrap was not sold as such. Statement of Sh. Desh Bhushan Jain is the basic premise on which the Commissioner has based his order. However, the Commissioner has also held that his cross-examination as not sustainable, grounds for which are briefly stated in the Adjudication Order, being that the cross-examination of Sh. Desh Bhushan Jain was done after a lapse of six years from his statement. He thus held it to be of not much relevance as there was sufficient time available with Appellant to manipulate the witness. We find that the Commissioner has passed the adjudication order relying upon statements of various persons. Whereas it is incumbent upon him to admit the evidence by examination in chief and then offering the witness for cross-examination by the party against whom the said statement may be used. The Commissioner should first summon the 31 witnesses if he chooses to rely on the statements, the Commissioner, however, did not call for the examination in chief of the witnesses, made no recordings and findings. From the perusal of impugned order, we find no mention that the Commissioner has stated that the statements of witnesses are relevant for the adjudication and therefore they need to be examined before admitting these statements as evidence. Despite the specific request of the appellant to summon the persons whose statements have been relied upon in the Show Cause Notice, and which the Commissioner proposes to rely upon in the adjudication, so that the statements can be admitted and cross-examination is allowed to noticee/ appellant against whom the said statements may be used. The Commissioner did not take any note of it. Thus, the Commissioner has ignored the mandatory provisions of Section 9D which render the statements without any evidentiary value and therefore could not be relied upon as held by the Hon'ble High Court of Delhi in the case of J. K. Cigarettes Ltd. Vs. CCE, 2009 (242) ELT 189 (Del) , Hon'ble Allahabad High Court in the case of CCE v Kurele Pan Products Pvt. Ltd. - 2014 (307) ELT 42 (All), CCE, Meerut-I v Parmarth Iron Pvt. Ltd. - 2010 (260) ELT 514 (T), Basudev Garg v CC - 2013 (294) ELT 353 (Del.).
61. We also find that there is no evidence on record brought by the Revenue to prove the flow back of money consideration in respect of the goods alleged to be clandestinely removed. There is no evidence as to how the alleged 92683 kgs of copper wire have been transported as no statement of any transporter has been recorded 32 and placed on record. It is settled proposition that that the demand of duty on goods alleged to be clandestinely removed have to be supported with evidence of procurement of inputs, employment of labour, freight, receipt of consideration, etc. i.e. evidence to corroborate, which is lacking in the present case. Therefore, the duty is levied only on assumption and presumption, as such is fit to be set- aside.
62. As per Annexure-A i.e., the list of documents resumed and seized from the factory as well as residential premises, it is seen that the records pertaining to other firms/parties 'were also found' like of M/s NN Lite, GN Marketing, M/s Jindal Metal, M/s Aggarwal Metal, M/s Jain Trading Co. Further, we have perused the VAT returns in form DVAT - 16 of the Appellant - Jindal Cables, annexed with the appeal paper book. While computing the sales turnover of the Appellant - Jindal Cables it is observed that, the Ld. Commissioner has presumed that all of the sales figures are of the Appellant whereas it is the fact that the records of other firms as mentioned above were also found from factory as well as residential premises. Revenue has not made any distinction between the sales figures of the said firms. Ld. Commissioner in his adjudication order should have clearly mentioned about these documents, and clearance of different companies cannot be clubbed together.
63. We will now decide whether the confiscation of goods/raw material etc seized amounting to Rs. 25,41,050/- was proper and legal? We find that the entire seizure was made at the factory premises of the Appellant - Jindal Cables and was seized since no 33 documentary evidence for proper accountal of raw material, semi- finished goods, finished goods and scrap was provided, and thus under a reasonable belief that the said goods were procured and manufactured in the clandestine manner for illegal clearances, said goods were seized and confiscated. In this regard, Ld. Counsel for the Appellant - Jindal Cables stated that is admitted that one more manufacturing unit M/s NN Lite was also functioning from the said premises, and the officers should differentiate them. 4960.65 kgs of goods belong to the Appellant-Jindal Cables. The said goods were duly recorded in their books of accounts. A copy of relevant page of stock register is also annexed with this appeal. Remaining 184.800 kgs., of goods were belonging to M/s NN Lite. The small variation of around 600-700 kgs is due to manner of stock taking conducted by way of mere eye estimation. The photocopy of stock register of M/s NN Lite was also annexed in appeal paper-book. He states that stock proposed to be confiscated was duly accounted for in the books. He further states that as per Rule 4 of the Rules, liability to pay the duty on the goods manufactured is only at the time of removal and not before that. Confiscation of the raw material under Rule 25 of the Rules is also not sustainable, when no specific clause of Rule 25(1) has been mentioned either in the show cause notice or in the impugned order. From the perusal of the show cause notice dated 02.05.2012, we have noticed that while making allegations for confiscation, specific ground of allegation is absent. Rule 25(1) contains four clauses i.e., (a) to (d), containing altogether different clauses/grounds but we find none of them invoked by the Revenue, it has merely stated as to why the goods be not confiscated under Rule 34 25 of the Rules, for this we rely on the ruling in case of Amrit Food Vs. CCE - 2005 (190) ELT 433 (SC). Therefore, confiscation of goods is bad and therefore liable to be set-aside.
64. Regarding the currency amounting to Rs. 4,65,000/- seized from the factory premises of the Appellant-Jindal Cables, it is apparent from the reply filed by the Appellant that out of the total amount Rs. 1,45,283/- belong to the Appellant-Jindal Cables and Rs. 1,78,844/- belonged to M/s NN Lite, Rs. 63,786/- belonged to M/s G.N. Marketing and the balance amount of Rs. 77,087/- could only be explained by Sh. Desh Bhushan Jain from whose custody the currency was seized. We find that the Appellant also provided relevant extract of its cash books and that of M/s NN Lite and M/s GN Marketing. From the perusal of the Order, we find, the cogent explanation given, is not found untrue. Ld. Commissioner should have taken into account the relevant documentary evidence on record and expected to give finding on it. He has also not rejected the said cash books/documentary evidence provided by the appellant nor has brought on record any other contrary evidence. We find the confiscation of Indian currency in violation of principles of natural justice and also against the evidence on record. Thus, the confiscation is set aside.
M/s Jindal Metal:
65. Now, we proceed to deal with Appeal No. E/51124/2018 of M/s Jindal Metal. In this we find that the entire demand is alleged to have been made on the basis of the entries made in the documents / kacchi Parchies /private records / note books referred as Document 35 No. 40 (RUD-53), No. 50 (RUD-54) and No. 01 (RUD-52) appearing in Annexure 1(I), 1(II) & 1(III) which was recovered from the residence of Sh. Deepak Kumar Gupta & Others, and from factory of M/s Jindal Cables. Ld. Counsel for the appellant submits that the exact location of the recovery is not mentioned in the panchanama, no reliance can be placed on the same. On the basis of said document (Doc. No.1) appellant-Jindal Metal is alleged to have supplied 149728 kgs copper ingots to various rolling mills. These rolling mills were visited and statements of their owners were recorded. None of the persons was confronted with the contents of the said documents. From the perusal of the above Doc. No. 40 & 50 referred as Annexure 1(II) & 1(III), we find the same are resumed from the premises of M/s Jindal Cables and bears some names, figures, date, amount and are hand written. We observe that the ld. Commissioner has not carried out corroboration of the seized private records/kacchi pachies. He should have further summoned the persons whose names were appearing on the private records such as Rajeev, Gupta POT, Nishant, Raju Sagar, Mayank, Ravinder, Vipin, Manoj etc. We find that the contents of the documents have remain uncorroborated and the law is well settled that the demand cannot be confirmed on the basis of uncorroborated private records.
66. We find considerable force in the point stated by the Ld. Counsel for the Appellant-Jindal Metal that vide the impugned order, duty of Rs. 1,83,99,597/- has been demanded. Out of the said demand, duty of Rs. 68,17,304/- has been demanded on the copper ingots which are alleged to be sold by the appellant. The remaining 36 duty of Rs. 1,15,82,293/- is confirmed on the ground that the copper rods were allegedly sold by the appellant directly from the premises of various rolling mills. The Commissioner has placed reliance upon the statement of the driver Sh. Maan Singh who is admitted to have said that he has been transporting copper ingots for the last three to four months, and he had transported approximately 5.5 to six tonnes of copper ingots to M/s Pappu Pal Rolling Mill, the preceding day. The appellant is alleged to have clandestinely cleared the copper ingots manufactured by him to various rolling mills for manufacture of copper rods on job work basis. The allegation that the appellant has cleared the said Copper rods directly from the premises of the rolling mills (job workers) to its buyers has been confirmed by the Commissioner in the impugned order. The said rolling mills are M/s Sh. Krishna Rolling Mills, (Pappu Pal), M/s Raghupati Rolling Mills, M/s Chandra Rolling Mills Pvt. Ltd. M/s Tirupati Industries and M/s Valson Rolling Mills Pvt. Ltd. who were registered with the Central Excise Department as manufacturers. Ld. Counsel specifically drew our attention to the fact that for the same period in question, show cause notices to various rolling mills have also been issued, but in none of them it is ever alleged that the said rolling mills have received the raw material i.e., copper ingot from the Appellant- Jindal Metal. The said rolling mills were working on principal-to- principal basis and there is no allegation or documentary proof to suggest that these rolling mills were working as job-workers of the appellant. Resultantly, the law settled on this score is that in such a situation, where job worker is the manufacturer, he alone is liable to pay Central Excise Duty. Raw material supplier has no such liability 37 for the goods manufactured by an independent manufacturer, even as a job worker. For this reliance is placed upon the Board Circular No.56/56/94-CX dated 14.9.1994. Even the benefit of notification No. 214/86-CE is not available to such rolling mills, and the duty liability cannot be shifted on the raw material supplier by extending the benefit of the notification. It has been so held in the case of Mettur Spinning Mills Ltd. Vs. CCE 2009 (246) ELT 705 (Tri.). Thus, we hold that since all the above rolling mills were registered with Central Excise Department and also as per the above Circular, liability of duty cannot be loaded on the raw material supplier when the job worker is an independent manufacturing unit.
67. Ld. Commissioner has relied upon the statement of Sh. Satya Narayan Bhutani alias Pappu Pal Proprietor of M/s Shree Krishna Industries, were recorded on 16.11.2011 and 17.11.2011. Statements of other rolling mill owners like Sh. Ashok Arora, Director of M/s Chandra Rolling Mills Pvt. Ltd. on 18.11.2011, Sh. Brijesh Kumar, Proprietor of M/s Tirupati Industries on 19.12.2011, Sh. Hulash Chand Aggarwal, Director of M/s Jai Shri Ram Engineering Works Pvt. Ltd. On 15.12.2011, Sh. Anil Kumar Goyal, Director of M/s Raghupati Rolling Mills Pvt. Ltd. on 23.12.2011, Sh. Arun Kumar, Director of M/s Valson Rolling Mills (P) Ltd. on 12.1.2012 and Sh. Shobhit Bansal, Partner of M/s V. P. International was recorded on 12.01.2012 respectively. We have perused all the statements including that of Sh. Deepak Kumar Gupta, proprietor dated 05.11.2011, 16.12.2011, 27.4.2012, 30.4.2012, 4.9.2012, 23.4.2015, 27.7.2015, 16.5.2016, and 06.06.2016 of Sh. Desh 38 Bhushan Jain, accountant of M/s Jindal Cables. We find that all the rolling mills, where follow up investigations were made, except for Sh. Satya Narayan Bhutani, denied receipt of Copper Ingots from the appellant-Jindal Metal clandestinely. All the other owners except Sh. Satya Narayan Bhutani (who later rescinded his statement) denied receipt of copper ingots from the appellant clandestinely. All these statements are duly incorporated in the show cause notice. We fail to understand as to why the statement of only one person is preferred over the others six mill owners. We observe that the ld. Commissioner have arbitrarily rejected the statement of other mill owners, which he shouldn't have.
68. Ld. Commissioner has relied upon the statement of Sh. Rakesh Jain. According to him Sh. Rakesh Jain, the Supervisor/Manager of the Jindal Metal in his statement dated 05.11.2011, has admitted that for manufacturing of copper ingots, appellant had received Copper scrap from M/s Perfect Metal, Sh. Pappu Puran, Sh. Nandan Metal and Shehjad Metal. He has also provided the details like names, mobile numbers etc. We are surprised to note that when whole case has been built up on the basis of the private note books seized from different premises and on the statements of various persons, then in the face of the statement of Sh. Rakesh Jain, that he had provided the telephone numbers of those persons (suppliers, etc.,), it is beyond any reason as to why no enquiry or investigation from those persons was made, given the fact that their details are with the Revenue right from the very beginning. We also find contradiction in the version given by Sh. Rakesh Jain and 39 Sh. Deepak Kumar Gupta. Sh. Deepak Kumar Gupta when confronted with the statement, about the procurement of copper scrap from the above parties, he has categorically stated that these are tulaiyas (weigh-men) and not the suppliers of copper scrap. Ld. Counsel also submitted that when investigating officers took no pains to summon the said persons to resolve the issues and the appellant had provided details of the suppliers of the scrap along with the copies of the invoices to the investigating officers on 16.12.2011 itself, (para 12) of the show cause notice, of that of M/s Sai Udyog, Kunj Metal Industries and Sh. Ganpati Metal Enterprises from whom the appellant had purchased the scrap and which firms were also investigated as summons were issued to them, who confirmed that they had supplied scrap to the appellant, there was no reason for the Commissioner to ignore these evidence and to rely on the statement of Rakesh Jain, without corroborating the facts from the other end. We agree with this contention, that there is lack of due diligence. Further, these suppliers have deposed, they received payment through banking channel.
69. We also observe that various scrap dealers from whom the copper scrap has been obtained by the Appellant-Jindal Metal were summoned by the Revenue i.e., M/s Sai Udyog, M/s Kunj Metal Industries and M/s Shri Ganpati Metal Enterprises. Statements of Sh. Ashwani Bansal, Partner of M/s Sai Udyog, Sh. Sachin Sehgal, Proprietor of M/s Kunj Metal Industries and Sh. Pawan Kumar Aggarwal, Proprietor of M/s Ganpati Metal Enterprises were recorded on 11.01.2012. M/s Sai Udyog, M/s Kunj Metal, M/s Shree Ganpati 40 Metal Enterprises all these firms have confirmed that they supplied scrap to Jindal Metal. Transporter has also confirmed the same. We noticed that the investigating officers while recording the statements of copper scrap dealers did not confront the said persons with the contents of kaccha parchies and notebooks. Thus, the contents of the said documents remain uncorroborated and as such it also loses its credibility.
70. We note that statements of various persons were recorded, viz., S/Sh. Deepak Kumar Gupta, Prop. - Rakesh Jain (Supervisor), Satya Narayan Bhutani, Anil Kumar Goel (Director in M/s Raghupati Rolling Mills Pvt. Ltd.), Ashok Arora (Director in M/s Chandra Rolling Mills Pvt. Ltd.), Brijesh Kumar (Proprietor of M/s Tirupati Industries), Arun Kumar (Director of M/s Valson Rolling Mills Pvt. Ltd.), Desh Bhushan Jain, Hulash Chand Aggarwal (Director- M/s Jai Shri Ram Engineers Works Pvt. Ltd.), Govind Ram C/o Ganpati Tempo & Transport Service & Naresh Chand Gupta (Partner of M/s Jindal Cables) etc. The entire case is based on private records/Kacchi Parchies the corroboration of which is sought to be achieved by the statements made by some of the above persons. It is also a fact on record that Sh. Deepak Jain, Sh. Satya Narayan Bhutani, Sh. Jitender Kumar, in their cross-examination denied their earlier statement and did not support the allegations of Revenue. But ld. Commissioner held otherwise. It seems that none of these persons were examined at the stage of adjudication before being put up for cross-examination. Thus, in the circumstances, the statements are held not reliable as evidence.
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71. Allegation of clandestine removal of copper ingots is for period from July, 2011 to 4.11.2011. Ld. Counsel for the appellant- Jindal Metal states that for manufacturing copper ingots, the appellant was using the blow furnace which used to work on furnace oil/diesel only. On 5.11.2011, when the factory premises of the appellant was visited, the officers had recorded statement of one Mr. Krishan Kumar driver of the tanker number HR 37 B-8247, who was unloading quantity of diesel on the premises of the appellant. For the said quantity of diesel, he was carrying the proper bill given to him by Haryana KSK Filling Station. So, not only the raw material lying at the premises on 05.11.2011 was properly purchased against the strength of invoices but diesel found in the premises of the appellant on 05.11.2011 was also purchased on the strength of invoice. But the said diesel was yet to be used whereas the allegation of clandestine clearances pertains to the period from July to 04.11.2011. Allegation against the appellant is that he has procured 650591 kgs of copper scrap clandestinely, out of this he had cleared copper ingots and copper rod, collectively weighing 3,99,122 kgs. This entire allegation is based on the recovery of some documents (slips etc.) from the premises. We also find that no investigation from filling station etc., was made in order to corroborate the receipt of fuel and other raw materials, required or consumed in the manufacture of said huge quantity of copper ingots. On the other hand, ld. Commissioner himself records, copper ingots could not be manufactured without the consumption of diesel which is essential in the entire process of manufacturing.
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72. As far as the confiscation of the goods, valued at Rs. 1,56,15,180/-, under Rule 25 is concerned, the same is held to be bad and is set aside for the reasons/facts stated herein above.
73. The Ld. Commissioner has also confiscated the Indian currency of Rs. 4,64,000/-. From the perusal of the panchanama it is clear that the same is seized from the residential premises of the proprietor and was recovered from an almirah at the first floor of A- 25, Vivek Vihar. Panchnama further revealed that keys of the said almirah were stated to be with Sh. Naresh Chand Gupta who opened the said almirah. Ld. Counsel for the Appellant-Jindal Metal states that, it is an undisputed fact that Sh. Naresh Chand Gupta was residing at the first floor of the premises whereas Sh. Deepak Kumar Gupta, the proprietor of the appellant was residing in the back portion of the ground floor of the house. Therefore, seizure of the cash being made from almirah at the first floor, it cannot be assumed that the same was recovered from the proprietor of the appellant - M/s Jindal Metal. We have perused the letter dated 30.12.2011 of Sh. Naresh Chand Gupta vide which he has explained that out of the said currency, Rs. 4,00,000/- was received as advance from one Sh. Dharam Pal for sale of the land at Saharanpur and the remaining Rs. 64, 000/- was kept by him for his day-to-day expenses. An affidavit dated 20.12.2011 was also filed by Sh. Dharam Pal.We agree with the above contention of the Ld. Counsel as also for another reason that Revenue has not led any contrary evidence on record, against the allegation, that the said currency was sale proceeds of the goods alleged to be clandestinely cleared by the appellant. 43
74. The Hon'ble High Court of Madhya Pradesh has held in the case of Union of India v M.S.S. Food Products Ltd. - 2011 (264) ELT 165 (MP) that under the Central Excise Act, 1944, excise duty is leviable on manufacture and production of excisable goods and the same is payable at the time of removal. Therefore, to establish the charge of clandestine removal of excisable goods, it is necessary to establish that the excisable goods were produced or manufactured by the assessee concerned and for attracting Section 11A of the Act, it is necessary to establish that the excisable goods were clandestinely removed without payment of duty. The Hon'ble Allahabad High Court in the case of Continental Cement v UOI - 2014 (309) ELT 411 (All) has held that the allegation of clandestine removal is a serious charge which is required to be discharged by the revenue by production of sufficient and tangible evidence. The Hon'ble High Court observed that following factors need to be investigated by the department to establish the charge of clandestine removal:
To find out the excess production details To find out whether the excess raw materials have been purchased. To find out the dispatch particulars from the regular transporters. To find out the realization (cash- flow) of sale proceeds. To find out finished product receipt details from the regular dealers/buyers.
To find out the excess power consumption
75. In the present cases, there is lack of sufficient evidence for establishing the above factors, as no sufficient evidence been brought on record by the Revenue. There is no evidence regarding the capacity of Jindal Cables as well as of Jindal Metal to manufacture 44 the quantities as alleged. Further, no inquiries have been conducted from the persons whose names are appearing in the loose papers/kacchi parchies/ private records, raw material suppliers, transporter or the buyers to establish clandestine manufacture and sale by the Appellants. It has been consistent view of the Tribunal that allegation of clandestine removal cannot sustain merely on the basis of uncorroborated entries in the private record as held in Kashmir Vanaspati (P) Ltd. v CCE - 1989 (39) ELT 655 (T), Raza Textiles Ltd. v CCE - 1989 (44) ELT 233 (T), Hindustan Lever Ltd. v CCE, Raipur - 1996 (87) ELT 385 (T), Krishna & Co. v CCE, Jaipur - 1998 (97) ELT 74 (T), Kothari Pouches Ltd. & Anr v CCE, New Delhi - 2000 (41) RLT 209 (T), Hindustan Coca Cola Beverages Pvt. Ltd. v CCE, Thane - 2006 (205) ELT 700 (T), Rina Dyeing & Printing Works v CCE, Surat - 2007 (209) ELT 190 (T) and Kuber Tobacco Products Ltd. v CCE, Delhi - 2013 (290) ELT 137 (T)].
76. In view of abovementioned facts and settled position of law, we hold that the allegation of clandestine manufacture and removal of finished goods by the Appellants, made in the show cause notice, is merely on assumption and presumption, without sufficient material evidence corroborating the said allegations. Therefore, we also set aside the penalty imposed, under Rule 26 of the Central Excise Rules, 2002 on other Appellants i.e., i) Deepak Kumar Gupta - Partner of Jindal Cables; ii) Prop./Director/Partner of M/s Chandra Rolling Mills Pvt. Ltd., and M/s Tirupati Industries, iii) Mr. Rakesh Jain and iv) Mr. D. B. Jain.
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77. We, therefore, set aside the impugned Adjudication Order dated 31.01.2018, passed by the Ld. Commissioner and allow all the Appeals filed by Appellants, with consequential relief.
(Pronounced on 08.03.2022).
(C. J. Mathew) (Anil Choudhary) Member (Technical) Member (Judicial) Pant