Custom, Excise & Service Tax Tribunal
M/S.Everest Rolling Mills Pvt. Ltd vs Cce, Jaipur on 21 February, 2013
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/ Decision:25.02.2013
For approval and signature:
Honble Shri Rakesh Kumar, Member (Technical)
1. Whether Press Reporters may be allowed to see the order for
Publication under Rule 27 of the CESTAT (Procedure) Rules, 1982.
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
authorities?
Excise Appeal No.972/2011-SM
(Arising out of Order-in-Appeal No.05(DKV)CE/JPR-I/2011dated 21.01.2011of the Commissioner of Central Excise, Jaipur).
M/s.Everest Rolling Mills Pvt. Ltd. Appellants
Vs.
CCE, Jaipur Respondent
Appearance: Ms. Sukriti Das, Advocate for the appellant.
Shri S.K. Panda, Joint CDR for the respondent.
Coram: Honble Shri Rakesh Kumar, Member (Technical) Final Order No.55716/2013 dated 25.02.2013 Per Rakesh Kumar:
The appellant are a rolling mill engaged in the manufacture of rolled steel products like M.S. Angles, Channels, Flats, Round Bars, etc. from M.S. Ingots. Their factory was visited by the jurisdictional central excise officers on 10.06.2008. In course of stock taking of the finished products, the officers found shortage to the tune of 3.374 M.T. in the stock of M.S. Flats and shortage of 2.562 M.T. in the stock of round bars vis-`-vis a balance in the RG-I register. The duty involved on the goods found short was Rs.29,740/-. Shri Suresh Agarwal, Director of the appellant company on being asked about the shortage, admitted the same and agreed to pay the duty which was paid on that day. In addition to this, in course of search of the factory, a notebook was found which was containing details regarding the entry and exit of the vehicles. In respect of the entries regarding the exit of the vehicles, the departmental officers were of the view that each of these vehicles was carrying finished products and since there were no invoices issued showing the clearances of the goods loaded in those vehicles, on those dates, the goods loaded in these vehicles have been cleared clandestinely without payment of duty. On the basis of average quantity of the vehicles assumed to have been cleared in each vehicle, the department prepared a chart alleging the clearance of 104.566 M.T. of finished goods without payment of duty amounting to Rs.4,28,451/- . Shri Suresh Agarwal, Director of the appellant company, on being asked signed the chart and agreed to pay the duty which was paid on that day. Besides this it was also found that appellant have availed excess cenvat credit of Rs.11,014/- in respect of rolls for the rolling mills as though the same are capital goods and canvat credit could be taken at the time of receipt only to the extent of 50% of the duty involved, balance amount of cenvat credit could be taken in the next financial year. The appellant took full cenvat credit of Rs.22,028/- at the time of receipt as against credit of Rs.11,014/- for which they were eligible. Accordingly, after issue of the show cause notice, the jurisdictional Dy. Commissioner vide order-in-original dated 4.3.2010 confirmed the duty demands of Rs.29,740/- and Rs.4,28,451/- alongwith interest and also confirmed the cenvat credit demand of excess availed cenvat credit of Rs.11,014 along with interest and imposed penalties of equal amount on the appellant under Section 11 AC.
2. The appellants filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) in this order while upholding the cenvat credit demand along with penalty, and also upholding the duty demand set aside the penalties of Rs.29,740/- and Rs.4,28,451/- on the ground that merely on the basis of shortage found in the stock of finished goods and merely on the basis of entries regarding exit of the some vehicle found in the diary found in the factory, the duty demands in question could not be confirmed, as there was no corroborating evidence that the goods found short i.e. 3.374 M.T. of M.S. Flats, 2.562 M.T. of Rounds have been clandestinely cleared and similarly, there is no evidence to show that finished goods have been clandestinely cleared in the vehicles mentioned in the diary as having left the factory on the various dates. Against the above order of the upholding of the duty demands and also the order upholding cenvat credit demand of Rs.11,014/- and equal penalty, the appellant have filed this appeal.
3. Ms. Sukriti Das, ld. Counsel for the appellant, pleaded that sofar as the cenvat credit of Rs.11,014/- in respect of the rolls is concerned, the appellant have availed the cenvat credit under the impression that the same are inputs, that even if the same are treated as capital goods, the balance amount of cenvat credit would become available in the next financial year and in view of this, there is no justification for confirmation of the cenvat credit demand and imposition of equal penalty, that as regards the duty demands of Rs.4,58,191/- and Rs.29,740/- in the Commissioner (Appeals)s order in para 14 has given a clear finding that there is no corroborative evidence to prove that the goods in respect of which the duty demand has been imposed have been clandestinely cleared and on this basis, the Commissioner (Appeals) has set aside the penalty, that this finding of CCE (Appeals) has not been challenged by the Department and in view of this, the part of the order upholding the duty demands also become unsustainable. She also pleaded that in any case the duty demand in respect of 104.566 M.T. of finished products is not sustainable as the diary recovered from the appellants factory contained only the vehicle numbers which had left the factory and there is no statement of any person stating that these vehicles were carrying finished products and as such, it cannot be assumed that these vehicles were carrying the finished products. She also pleaded that even the quantity alleged to have been cleared in these vehicles have been taken on presumption basis and as such, this duty demand, in any case is unsustainable. She also relied upon the decision of the Punjab & Haryana High Court in the case of CCE, Chandigarh Vs. Laxmi Engineering Works reported in 2010(254) ELT 205 (P&H) and the Tribunals decision in the case of Vikram Cement (P) Ltd. Vs. CCE, Kanpur reported in 2012 (286) ELT 615 (Tribunal-Delhi).
4. Shri S.K. Panda, learned Joint CDR, defended the CCE (Appeals)s order confirming the duty demands on the ground that the shortage of the finished goods had been admitted by Shri Suresh Agarwal, Director of the appellant company and similarly, when the officers had prepared a chart showing the alleged removal of 104.556 M.T. without payment of duty in the various vehicles, figuring in the diary recovered from the factory, Shri Suresh Agarwal, Director had not only signed the chart but had also given a cheque for payment of duty amounting to Rs.4,28,451/- on these goods which amounts to the admitting the charge of clandestine removal, and that the diary also contains entries regarding receipt of M.S. Ingots in various vehicles, which have not been entered in the statutory records, which is a clear evidence of clandestine removal of finished products by the appellants. In this regard, he, relying upon the Tribunals decisions in the case of Gulabchand Silk Mills Pvt. Ltd. Vs. CCE, Hyderabad-II reported in 2005 (184) ELT 263 (Tribunal-Bang.) pleaded that the duty demands have been correctly upheld. As regards the excess cenvat credit of Rs.11,014/- in respect of rolls, he pleaded that the rolls being capital goods cenvat credit could be availed only to the extent of 50% at the time of receipt and, therefore, demand of excess cenvat credit and imposition of equal amount of penalty has been correctly upheld. He, therefore, pleaded that as such there is no infirmity in the impugned order on the point of confirmation of duty demands in respect of the goods alleged to have been removed clandestinely and confirmation of cenvat credit demand of Rs.11,014/-.
5. I have carefully considered the submissions from both the sides and perused the records.
6. As regards the excess cenvat credit of Rs.11,014 in respect of rolls, which are capital goods, the appellant were required to take cenvat credit to the extent of 50% of the total duty, while in this case, the appellant have availed full cenvat credit. However, in any case, the appellant would become eligible for the balance amount of cenvat credit in the next financial year and as such, there is no justification for confirmation of the cenvat credit demand of Rs.11,014 to which the appellant would be eligible for the next financial year. Thus, cenvat credit demand of Rs.11,014 and penalty of equal amount upheld by the Commissioner (Appeals) is not sustainable.
7. As regards, the duty demand of Rs.29,740/- on 3.374 M.T. of M.S. Flats and 2.562 M.T. of .M.S Rounds. alleged to have been found short and duty demand of Rs.4,28,251/- at 10.566 M.T. of finished goods alleged to have been cleared clandestinely, I find that the findings of the Commissioner (Appeals) on this point are contradictory. At one place in para 14, the Commissioner (Appeals) on this point has given the following finding:-
In the instant case, shortage of 3.374 M.T. of M.S. Flats, 2.562 M.T. of M.S. rounds and 104.566 M.T. of finished goods is a fact which has also been admitted by the Director of the appellant company in his statement tendered under Section 14 of the Central Excise Act, 1944. It is legal maxim that an admitted fact need not be proved again. Thus, appellant has cleared 3.374 M.T. of M.S. Flats, 2.562 of M.S. Rounds and 104.566 M.T. of finished goods found short without payment of duty amounting to Rs.4,58,181/- which has rightly been demanded/deposited appropriated and I thus uphold the impugned order to this extent.
7.1 Having given the above findings, in the latter part of the same para, the Commissioner (Appeals) while setting aside the penalty of equal amount imposed on the appellant under Section 11 AC has recorded the following finding:-
I find that although the appellant has admitted the shortage of 3.374 MT of MS Flats, 2.562 MT of MS Rounds and 104.566 of finished goods, however the same has been retracted in the very first opportunity stating that there was no evidence on record to prove clandestine removal, however, the appellant has voluntarily deposited central excise duty amounting to Rs.4,58,191/- leviable thereon. Here, I observe that duty amounting to Rs.4,58,191/- on the shortage of 3.374 MT of MS Flats, 2.562 MT of MS Rounds and 104.566 MT of finished goods detected during the physical verification has been confirmed on the basis of the voluntary statement dated 10.06.2008 of the appellant wherein the appellant has nowhere admitted the clandestine removal thereof as such. I have also gone through the Annexure-A submitted by the appellant as prepared on the spot on the basis of Mayur Brand Note Book and find that though it contains in/out vehicle No.(Truck/Tractor/Pickup/Tempo) but has no mention of quantity and description of goods said to have been cleared therein. I also find that for arriving at the quantum of duty evasion, the Department has taken average weight i.e. 10 MT per truck, 2.5 MT per Tractor/Pickup and 1.5 MT per Tempo of finished goods which might have been cleared. Thus, the total quantity of 104.586 M.T of unidentified finished goods said to have been cleared clandestinely has been arrived at by multiplying the average weight per vehicle with total numbers of respective vehicles. Thus the above whole exercise of quantifying clandestine clearance is not supported by any corroborative evidences except the Mayur Brand Note Book.
In this connection, it is stated that Honble CESTAT in the case of Ambika Chemicals Vs. CCE, Chennai 2002 (148) ELT 101(Tribunal-Chennai) has held that note books maintained by chemist of the firm with regard to production of various leather chemicals not to be relied upon to establish clandestine removal not being supported by evidence with regard to purchase of inputs, production, source of funds, sale and receipt of consideration, demand not sustainable. The relevant para 17 is reproduced below:-
17. We have also? seen the comparative statement between the R.G.1 register and the production private note book, which have been produced before us, to show that entries in R.G.1 register were more in quantity for several days and there was no entry in the private note book. This aspect cannot be overruled and the Commissioner cannot proceed on the basis of average figures of the entire note book to arrive at the conclusion that there was production of various chemicals. For production of various chemicals, appellants are required to purchase inputs and use electricity and labour. No such evidence has been proved by Revenue to discharge their burden. There is no evidence collected to show the persons to whom the goods were sold. Mere reliance on a tainted book in which the entries are also incomplete and also in view of clearances noted in R.G.1 were more than what is entered in the note book, therefore we have to hold that the private note book cannot be accepted as a complete and reliable document for confirming the huge demands on all the appellants. The Honble CESTAT in the case of Gurpreet Ind. Vs. CCE 1996 (82) ELT 347 (CEGAT) has held that a demand cannot be sustained only on the basis of private diary without considering production capacity, raw material purchased, labour employed, power consumed etc. The relevant para 9 is reproduced below:-
9.In the light of the foregoing, it cannot be?concluded that the note book is an authenticative private record of production so as to raise demand based on the figures indicated therein. At the most, it may raise a doubt but that cannot take a place of proof. Even, there may be certain elements of truth in the prosecution story but between may be true and must be true there is a long distance to travel and the whole of the distance must be covered by the, legal reliable and unmatchable evidence before a person can be convicted. Similarly the Honble CESTAT in the case of CCE Vs. Tube Bend 2001 (136) ELT 839 (CEGAT) has held that the charges of clandestine removal are required to be proved beyond doubt by production of evidences and cannot be based only on comparison of private book and daily stock account. The relevant para 6 is reproduced below:-
6. We fully? agree with the above reasoning of the adjudicating authority. The charges of clandestine removal are required to be proved beyond doubt by production of evidence and cannot be based upon comparison of entries made in the Khatta and the RG-1 register, for which the respondents have adduced sufficient plausible explanation. On the contrary the Revenue has not rebutted the reasoning of the adjudicating authority in their memo of appeal. The reliance by the ld. adv. for the respondents on the Tribunals decision in the case of T.M. Indus. & Birla Tyres is well appropriate. We do not find any reasons to interfere in the impugned order of the Commissioner. Following the judgement of the Tribunals cited supra, I hold that the charge of clandestine removal in the instant case cannot be sustained in absence of corroborative evidence.
Moreover burden to prove the clandestine removal of the impugned goods is on the Department which has not been discharged by way of collecting supporting evidence to prove the impugned short found goods were clandestinely cleared. I further find that Honble High Court of Punjab & Haryana in the case of CCE Vs. Sigma Steel Tubes 2007 (218) ELT 657 (P&H) and Honble Tribunal in a case reported in 2009 (166) ECR 0124 has held that mere shortage of finished goods cannot be equated with clandestine clearance in absence of other evidence and in such a situation penalty under Section 11 AC of Central Excise Act, 1944 is not warranted. I thus hold that since there is no corroborative evidence that short found 3.374 M.T. of MS Flats, 2.562 MT of MS Rounds and 104.566 MT of finished goods were clandestinely cleared nor it has been so admitted by the appellant, the imposition of penalty under Section 11 AC of Central Excise Act, 1944 is not sustainable. Therefore, following the above said orders of the higher appellate authority, I set aside the impugned order imposing penalty amounting to Rs.4,58,191/- under Section 11 AC of Central Excise Act, 1944. 7.2 Thus, from the perusal of the Commissioner (Appeals)s finding, it is seen that in one para after upholding the duty demand, mainly on the ground that the Director had admitted the shortage and paid the duty, in the very next para, the commissioner (Appeals) has given the finding that the charge of clandestine removal is not proved as there is no corroborative evidence. Once the Commissioner (Appeals) gives this finding, his earlier finding of upholding the demand merely because the Director of the appellant company had admitted the same, would become unsustainable. Moreover, I also find that there is nothing in the statement of Shri Suresh Agrawal, Director of the appellant company that from which it can be inferred that he had admitted the clandestine removal of the goods found short or that he had admitted that the exit vehicles mentioned in the diary had carried finished goods removed without payment of duty. Mere signing of the chart alleging removal of 104.566 M.T. of finished goods cannot be treated as clear admission of the clandestine removal. Moreover, diary on which the reliance has been placed only contains of the vehicle numbers which had left the factory. There is no indication as to whether those vehicles had carried finished products and if so, how much quantity had been cleared. The quantity alleged to have been cleared has also been taken on presumption basis which is not permissible. In view of this, I hold that the duty demand of Rs.4,58,191/- upheld against the appellant is not sustainable.
8. In view of the above discussion, the impugned order upholding the duty demands against the appellant and also upholding the cenvat credit demand and penalty is not sustainable. The same is set aside. The appeal is allowed.
(Rakesh Kumar ) Member (Technical) Ckp.
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