Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S. Rukmini Steel Industries Ltd on 13 February, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/261/2008-SM [Arising out of Order (De novo) No.1/2008 dated 22/01/2008 passed by the Commissioner of Central Excise, Bangalore.] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Commissioner of Central Excise, Customs and Service Tax BANGALORE-I POST BOX NO 5400, CR BUILDINGS, BANGALORE 560 001. Appellant(s) Versus M/s. RUKMINI STEEL INDUSTRIES LTD KADUGODI POST, WHITEFIELD, BANGALORE Respondent(s)
Appearance:
Mr. S. Teli, Dy.
Commissioner (AR) For the Appellant Mr. T. V. Ajayan, Advocate For the Respondent Date of Hearing: 13/01/2015 Date of Decision: 13/02/2015 CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER Final Order No. 20247 / 2015 Per : ARCHANA WADHWA Being aggrieved with the order passed by the Commissioner, in de novo proceedings, Revenue has filed the present appeal.
2. I have heard Shri S. Teli, Dy. Commissioner (AR) appearing for the Revenue and Shri T. V. Ajayan, Advocate appearing for the respondents.
3. As per facts on records, respondents are engaged in the manufacture of steel bars and rods, CTD bars and MS bullets, etc., falling under Chapter 72 of the Central Excise Tariff Act. Their factory was visited by the Central Excise Officers and various examinations were conducted. As a result, a private register marked as Register No. 7 was recovered from the respondents premises. By entertaining a view that the respondent was indulging in clandestine activities and the entries made in the Register reflected removal of their final products without payment of duty, further investigations were carried out. During the post seizure investigations, Revenue recorded the statements of various persons.
4. Based on the said investigations, proceedings were initiated against the respondents by way of issuance of show-cause notice for confirmation of demand of duty as also for imposition of penalty on various persons. The said show-cause notice culminated into an order passed by the Commissioner confirming the demand for duty of Rs.49,73,205/- against the respondent as also imposing penalty of identical amount under Section 11AC of the Act. Another penalty of Rs. Five Lakh was imposed upon the respondent in terms of Rule 173Q and 206 of the Central Excise Rules. Penalty of Rs. Five Lakh was imposed upon Shri Ashok Mittal, Managing Director of the Company under Rule 209A of the Central Excise Rules, 1944.
5. The said order of the Commissioner was appealed before Tribunal who vide its Final Order No.1181-1182/2006 dated 28.6.2006 set aside the same and remanded the matter for fresh consideration by observing as under:
5. We have gone through the records of the case carefully. It is always the responsibility of the Revenue to discharge the burden of proof when allegations re made against the party. When clandestine manufacture is alleged and when the party shows that there is no excess consumption of raw materials and consumables, it is for the Revenue to explain how the goods were manufactured in the absence of excess raw materials and consumables. In other words, the contentions of the appellant have to be carefully considered and rebutted if necessary. In the present case, the charges are mainly based on the Register No.7, which is a private record. It is the contention of the appellants that this record has not been maintained by the company but one Shri Nayak. Strangely, no statement has been recorded from Shri Nayak. The investigation appears to be shoddy. Even though the statements of the lorry owners Shri Imtiyaz Pasha, Mehboob Khan and Abdul Khadir Irshad has been relied, no opportunity was given to the appellant to cross-examine them. Even the cross-examination of Shri S. K. Chatterji, Counting Clerk was not allowed. Another point made by the appellant is that some of the goods were traded by M/s. Sudarshan Mercantile Corporation Pvt. Ltd. and such goods would not be manufactured by the appellants as they do not have a proper infrastructure to manufacture. Further it was stated that the power consumption in 1995-96 was high due to installation of induction furnace. All these factors have not been taken into consideration by the Adjudicating Authority. In these circumstances, we have no other option but to remand the entire issue to the Adjudicating Authority for de novo decision. All points are kept open. The Adjudicating Authority shall consider each contention of the appellants and give his proper finding after giving an opportunity of hearing to the appellants and for cross-examination of the persons whose statements are relied on by the Revenue. The de novo proceedings be completed within three months. The appeal is allowed by way of remand.
6. The present order has been passed by the Commissioner in de novo proceedings wherein, after considering all the submissions of the respondent and the evidentiary value of various statements, the Commissioner dropped the demand and vacated the show-cause notice.
Hence the present appeal by the Revenue.
7. After appreciating the submissions made by both the sides, I find that the matter was remanded by the Tribunal with directions as contained in para 5 of the Final Order, reproduced above. The Commissioner in his impugned order has considered the entire evidence on record and has come to a categorical finding that the Revenues entire case is based on the entries made in Register No.7, which is a private Register, without any further investigations. He has also recorded that the author of the said Register Shri Nayak has not been contacted by the Revenue and his statement has not been recorded. He has also seen the statements of other persons which are not inculpatory in nature. He has also examined the electricity consumption and after taking into account that the high consumption was on account of installation of induction furnace, has concluded in favour of the assessee.
8. It is well settled law that the charges of clandestine removal are required to be proved by the Revenue by production of sufficient, positive and tangible evidence. The same cannot be confirmed on the basis of doubts and assumptions and presumptions. It is seen that the Revenue has mainly relied upon the entries made in seized Register. It is not disputed that the said Register was not being maintained by the respondent in the ordinary course of their business but was a private Register being maintained by the respondents employee Shri Nayak. The first obligation on the part of the Revenue was to examine Shri Nayak and record his statement, seeking clarifications in respect of the entries. For the reasons best known to the Revenue officers, this has not been done. If the author of the entries made in the said private Register has not been examined by the investigating officers, the same proves fatal to the Revenues case.
9. I also find that the Tribunal while remanding the matter had directed the adjudicating officer to allow the cross-examination of various persons whose statements were recorded. The adjudicating authority had, in compliance with the said directions of the Tribunal, issued summons to various deponents of the statements, who did not appear for the same. As such, he has proceeded to examine the said statements. The adjudicating authority has recorded that the said statements of the holder of bank account, counting clerk, despatch clerk and contractor, etc., are not inculpatory in nature inasmuch as neither of the statements of the said deponents have admitted any misdeed on the part of the company. Statement of Shri Ashok Mittal, Managing Director of the Company has also not accepted the fact of clandestine removal of the goods. He has merely shown his inability to clarify as to whether the entries made in the said Register were clearances on payment of duty. I find that in the absence of any statement admitting clandestine activity on the part of the company, the said statements do not further the Revenues case.
10. Revenues case is that the goods were being manufactured by the respondents but were being cleared under the trading invoices of the other two companies i.e., M/s. Star and Steel Hardware, M/s. Mikson Corporation and M/s. Sudarshan Mercantile Corporation. The investigations conducted by the Revenue revealed that the said companies were not in existence. The respondents have contested the said allegation vehemently by submitting that the invoices of the said trading companies were in respect of the goods, which they are incapable of being manufactured by them. The said companies are in no way connected with the assessee company and there is nothing on record to show that they were fictitious firms and the consideration for sale of the goods by the said firms travelled to the assessee. The adjudicating authority has examined the said plea of the assessee and has categorically recorded that the goods cleared under their invoices were rib bars of 8 mm and 25 mm whereas the goods being manufactured by them were from 10 - 20 mm and they do not have machinery to manufacture the said goods. In the absence of any evidence to rebut the above findings of the Commissioner, I find no reasons to interfere in the same.
11. Further, the adjudicating authority has also examined the consumption of power during the relevant period and recorded that the same were high during the relevant period on account of installation of an induction furnace. In the absence of any other evidence to show that the high power consumption was on account of excess manufacture of goods, he has come to a finding that there is not even preponderance of probabilities as regards the excess manufacture of the goods.
12. The adjudicating authority has referred to various decisions of the Courts laying down that the charges of clandestine removal should be based upon the evidence, which inspire confidence in the Revenues case. As already discussed, the sole basis for the Revenue is entries made in Register-7, without any independent corroborative evidences. In the absence of any corroboration, I fully agree with the adjudicating authority that the said charges cannot be upheld against the assessee.
Accordingly, the Revenues appeal is rejected.
(Order pronounced in open court on 13/02/2015.) ARCHANA WADHWA JUDICIAL MEMBER rv 6