Custom, Excise & Service Tax Tribunal
Maa Banjari Ispat Pvt Ltd vs Raipur on 10 August, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi - 110066.
Date of Hearing: 08/08/2018
Date of Decision: 10/08/2018
Appeal No. E/51262-51263/2018-EX(SM)
[Arising out of Order-in-Original No. RPR-EXCUS-000-COM-CEX-011-2018
dated 23/01/2018 passed by the COMMISSIONER OF CGST & CENTRAL
EXCISE-RAIPUR]
MAA BANJARI ISPAT PVT LTD
SHRI DILIP AGARWAL Appellant
Vs.
C.C.E. & S.T.-RAIPUR Respondent
Appearance:
Shri Manish Saharan, Advocate for the Appellant Shri P. Juneja, Ld AR for the Respondnet CORAM:
Hon'ble Mr. Ajay Sharma, Member (Judicial) Final Order No: 52757-52758/2018_ Per :Ajay Sharma The appeal has been filed from the impugned order dated 23/01/2018 passed by the Principal Commissioner, CT, CE & C, Raipur. By the impugned order, the ld. Commissioner confirmed the demand of Central Excise Duty of Rs. 20,24,031/- along with the interest and penalty on M/s Maa Banjari Ispat Ltd for clandestine removal of 683.630 MTs of MS ingots. Penalty has also been imposed upon Shri Dilip Agarwal in terms of Rule 26 of erstwhile Central Excise Rules, 2002.
2. Ld. Counsel for the appellants submit that the entire case of the department is based upon the entries in the diary recovered from one Mr. S.K. Pansari (proprietor of M/s Monu Steels) and also on the statement of the said 2 E/51262-51263/2018-EX(SM) Mr. S.K. Pansari, without their being any corroborative evidence. He also submitted that the said Mr. S.K. Pansari did not appear for cross examination. The Ld. AR appearing for the Department reiterated the findings in the impugned order. He also submitted that the ld. Commissioner in the impugned order has specifically recorded that Shri Dilip Agarwal, director of M/s Maa Banjari Ispat Pvt. Ltd. had acknowledged the clearance of 683.630 MTs of MS ingots in his depositions made in Section 14 of Central Excise Act but the same has not been retracted by him.
3. So far as the statement of Shri Dilip Agarwal is concerned, while going through the same, I found that he nowhere acknowledged the clearance of 683.630 MTs of MS ingots. Rather he stated as under and the same has also been recorded in show cause notice dated 03/02/2010 :-
"5.2. On being specifically asked during the course of recording of statement dated 23.10.2009, supra and upon his denial having any transactions, through M/s Monu Steels (Prop. Shri S.K. Pansari), Shri Dilip Agarwal was shown the copy of statement of Shri S.K. Pansari recorded under Section 14 of the Central Excise Act, 1944 on 15.01.2007, wherein Shri S.K. Pansari has stated that he has correctly entered in his records all the transactions of sale of MS Ingots undertaken through him by various manufacturers. Shri Agarwal was asked to clarify entries as recorded in the registers/ diaries recovered by the Central Excise officers which revealed that M/s Maa Banjari Ispat Pvt. Ltd. 123-C, O.P. Jindal Industrial Park, Punkipatra, Raigarh (C.G.) has removed M S Ingots to other units, as shown under the column" Diary No./ File No." of Annexure-A. Shri Dilip Agarwal was thus made aware of the documentary evidences available in the records of Noticee No. 2 which established that they had cleared/ removed a total quantity of 1456.015 MT MS Ingots from their factory as detailed in 3 E/51262-51263/2018-EX(SM) Annexure-A, clandestinely without discharging the central Excise duty due on the same and without issue of Central Excise invoice.
In reply Shri Dilip Agarwal, deposed that they never had any transactions with or through the said M/s Monu Steels (Prop. Shri S.K. Pansari), Raipur, and they had never paid any commission to the said trader.
To the specific query as to why their units name figure in the list of units recorded in the documents/ records recovered from M/s Monu Steel (Prop. Shri S.K. Pansari), Raipur, Shri Agarwal submitted that he has no idea as to how their name features in the diaries and that this aspect can very well be explained by Shri S K Pansari himself.
5.3. To the specific question as to why the name of his company has been mentioned in the diary of M/s Monu Steels, Prop Shri S K Pansari, when they had no transactions with them, Shri Agarwal submitted that this aspect can very well be explained by Shri S K Pansari themselves and that he did not have any idea as to how their name featured in their diaries.
5.4. Shri Dilip Agarwal was also made aware of the fact that in the diary of Shri S K Pansari the names of several Steel manufacturers have been mentioned and that some of the manufacturers have accepted these transactions as genuine and have discharged their duty liability, establishing thereby the authenticity of diary contents/ entries.
In spite of such clear evidences of the authenticity of diaries of Noticee No. 2, indicating therein transaction pertaining to Noticee no. 1, Shri Dilip Agarwal, emphatically refuted to have had any transaction with either of them and also expressed his unawareness as to why Noticee No. 1's name appear in such diaries. "
4. The finding of the Ld. Principle Commissioner about the statement of Shri Dilip Agarwal in para 3.5.24 of the impugned order is based upon the mis-
4 E/51262-51263/2018-EX(SM) interpretation of his following statement:-
" Further I submit that I have seen and gone through the relevant records/registers/ diaries recovered by the Central Excise officers on 15.01,2007 from the premises of M/s Monu Steels (Prop. Shri S.K. Pansari), Commission Agent, Raipur and after seeing the entries pertaining to my unit and satisfying myself that Annexure-A has been prepared on the basis of such entries I am affixing my signature on it, as a token of having seen and perused the same. "
5. Therefore, apart from the third party statement, no other corroborative evidence has been produced by the Department.
6. The said show cause notice is mainly based upon the entries recorded in the dairy of third party i.e. one Sh. S.K. Pansari proprietor of M/s. Monu Steel. The entire case of the Revenue is based upon the records recovered from the said Sh. S.K. Pansari proprietor of M/s. Monu Steel.
7. The ld. Advocate for the Appellant submitted that merely on the basis of diary entry of third party without any corroborative evidence, the department is not justified in proceeding against the Appellant. The ld. AR submitted that on the basis of dairy entries of Sh. S.K. Pansari proprietor of M/s. Monu Steel the department had initiated proceedings against some other manufacturer also i.e. M/s. Sh. Shyam Ingot and Casting Pvt. Ltd. and M/s. Nutan Ispat & Power Pvt. Ltd., Raipur and that they accepted their irregularity and admitted the duty liability, and therefore on the basis of the same dairy entry the department is justified in proceedings against the appellants in the present matter.
8. Since some of the manufactures i.e. M/s. Sh. Shyam Ingot and Casting Pvt. Ltd. and M/s. Nutan Ispat & Power Pvt. Ltd., Raipur, whose names were also found in the dairy recovered from Sh. S.K. Pansari proprietor of M/s. Monu 5 E/51262-51263/2018-EX(SM) Steel, accepted their irregularities and admitted the duty liability, therefore no corroboration was required in those cases. But in the present case the appellant did not admit the liability and rather submitted that the Revenue has not adduced any corroborative evidence to show the movement of the goods from the premises of the appellant to the premises of any buyers or the customers nor they brought on record any evidence as to whose is buyers of the goods allegedly sold through M/s Monu Steel. The ld. Counsel for the appellant also submitted that if the department's contention is accepted that there might be sale of clandestine removal of goods through M/s Monu Steel, then the onus is on the department to make an enquiry from at least some of those customers who might have purchased such goods. However, no such enquiry has been made from any of those persons.
9. In the impugned order nowhere it has been discussed as to how the demand of duty is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of the goods. The entire demand is based upon the records recovered from Sh. S.K. Pansari proprietor of M/s Monu Steel. There is no evidence expect the said statement and private diary entry of 3rd party i.e. of Sh. S.K. Pansari which contains the name of the appellant.
10. The law as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence on any corroborative evidence, is well settled. Only on the basis of statement of third party no demand can be made. The Hon'ble High Court of Judicature at Allahabad in the matter of Continental Cement Company Vs. Union of India; 2014 (309) ELT 411 (All.) and also this Tribunal in the cases of Raipur Forging Pvt. Ltd. Vs. CCE, Raipur, 2016-(335) ELT 297 (Tri.-Del.), CCE & 6 E/51262-51263/2018-EX(SM) ST Raipur Vs. P.D. Industries Pvt. Ltd.- 2016 (340) ELT 249 (Tri.-Del.) and CCE & ST, Ludhiana Vs. Anand Founders & Engineers- 2016 (331) ELT 340 (P&H), have categorically held that the findings of clandestine removal cannot be upheld based upon the third party documents unless there is clinching evidence of clandestine manufacture and removal of the goods.
11. In an identical matter this tribunal vide its order dated 04.04.2018 in Appeal No. E/50526-50527/2018 -SM titled as, Shree Consultants Pvt. Ltd Vs. C.C.E. & S.T. Raipur set aside the demand which was also made only on the basis of the entries made in the records of M/s. Monu Steel and held as under:
" xxx xxx xxx
4. I find that the entire case of the Revenue is based upon the records recovered from M/s Monu Steels. Even in those records, the appellant's name has not been spelt correctly and it is based upon the statement of the representative of M/s Monu Steels that the Revenue entertained a view that "S. Iron" refers to the appellant's clearances. When the Director of the appellant contacted by Revenue, he very clearly, in his statement recorded by the officers, deposed that he does not even know M/s Monu Steels. Further, the Revenue has not made any enquiries from the buyer M/s Sapna Steels and has solely relied upon the entries made in the record of M/s Monu Steels.
5. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. Reference can be made to Hon'ble Allahabad High Court decision in the case of Continental Cement Company Vs. Union of India - 2014 (309) ELT 411 (All.) as also Tribunal's decision in the case of Raipur Forging Pvt. Ltd. Vs. CCE, Raipur-I -
7 E/51262-51263/2018-EX(SM) 2016 (335) ELT 297 (Tri.-Del.), CCE & ST, Raipur Vs. P.D. Industries Pvt. Ltd. - 2016 (340) ELT 249 (Tri.-Del.) and CCE & ST, Ludhiana Vs. Anand Founders & Engineers - 2016 (331) ELT 340 (P&H). It stand held in all these judgments that the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods.
In the absence of any corroborative evidence and in view of the law declared in the above decisions, I find no justifiable reasons to uphold the impugned orders. Accordingly, the same are set aside and both the appeals are allowed with consequential relief to the appellants."
Similarly, this Tribunal in the matter of Excise Appeal No. E/50874/2018- Ex [SM] M/s. Ashok Ispat Udyo Vs.Comm. of C.Ex., CGST, Raipur & Excise Appeal No. E/50812/2018-Ex [SM] M/s. Vijay Chand Bothra Vs. Comm. of C.Ex., CGST, Raipur, on identical facts set aside the demand since the same was based only upon the diary entries of Sh. S.K.Pansari proprietor of M/s. Monu Steel without their being any corroborative evidence.
12. Recently also this Tribunal in the following decisions set aside the demand since the entire case of Revenue is based upon the entries made in the records of Ms Monu Steels (Prop. S.K. Pansari) without there being any corroborative evidence;
i. Final order No. - 52329-52330/2018, dated 28/06/2018 In Excise Appeal No. - E/50807 & 50848/2018- EX [SM] ii. Final order No. - 52331-52332/2018 dated 28/06/2018 In Excise Appeal No - E/50855 & 50862/2018- EX [SM] iii. Final Order No. - 52409-52410/2018 dated 02.07.2018 In Excise Appeal No. - E/51420 & 51371/2018- EX [SM] 8 E/51262-51263/2018-EX(SM) iv. Final order No. - 52417-52418/2018 dated 05.07.2018 In Excise Appeal No. - E/51430 & 51534/2018- EX [SM]
13. In view of the above discussions and findings and also in view of various decisions of this Tribunal on identical facts, the appeals are allowed and the impugned order is set aside. As a result the penalty imposed on Sh. Dilip Agarwal, Director is also set aside.
(Pronounced in the open court on 10/08/2018) (Ajay Sharma) Member (Judicial) Rekha