Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S Sangam Prints Pvt.Ltd., Shri Suresh ... on 25 August, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT - I
Appeal No.E/556-559,780/2007
Arising out of: OIO No.06/MP/2007, dt.23.02.2007
Passed by: Commissioner of Central Excise & Customs, Surat
For approval and signature:
Mr.M.V. Ravindran, Honble Member (Judicial)
Mr. H.K. Thakur, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
M/s Sangam Prints Pvt.Ltd., Shri Suresh Agarwal, Shri Brij Mohan Agarwal, M/s Neha Prints.
Respondent:
CCE Surat-II Represented by:
For Assessee: Shri J.C. Patel, Shri K.I. Vyas Advocates.
For Revenue: Dr. Jeetesh Nagori, Addl.Commissioner (AR) CORAM:
MR.M.V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL) Date of Hearing:15.07.14 Date of Decision:25.08.14 Order No.A/11536-11540/2014, dt.25.08.2014 Per: M.V. Ravindran
1. As all these appeals are directed against same impugned Order-in-Original No.06/MP/2007, dt.23.02.2007; they are being disposed of by a common order.
2. The relevant facts, after deleting unnecessary details, are that the officers of DGCEI searched the factory premises and office/godown premises of M/s Sangam Prints Pvt.Ltd. (hereinafter referred to as main appellant). Various documents were withdrawn including loose documents, diary, note book etc from the briefcase of Shri Suresh Agarwal, Director of the main appellant. On collating the information on documents, it revealed that the main appellant has clandestinely processed the grey fabrics received by them from merchant manufacturers under kacha delivery challans and clandestinely removed the processed fabrics without payment of duty. Statements were also recorded of various persons including purchasers of the processed finished goods. Based upon various information collated and statements recorded, show cause notice was issued to the main appellant as well as all other appellants to show cause as to why the demand of duty be not raised on them along with interest for clandestine removal of the goods, interest thereof and penalties be not imposed on all the appellants. The main appellant as well as the other appellants contested the issue on merit before the adjudicating authority wherein they challenged the panchnama and also calculation of duty on the charge of clandestine removal. The adjudicating authority, after following the due process of law, did not agree with the contentions raised by the appellant and confirmed the demand of duty, interest thereof and also imposed penalties on all the appellants herein.
3. Ld.Counsels Shri J.C. Patel and Shri K.I. Vyas appeared on behalf of the appellants. Ld.Counsel, after giving us an overall view of the issue involved, submitted that the demand can be split into two parts:-
i) July 2002 to September 2002
ii) October 2002 to December 2002 3.1 As regards the demand in respect of the period July 2002 to September 2002, ld.Counsel, after taking us through the various documents relied upon by the Revenue, would submit that the only basis for demanding duty for this period are on the certain figures which were mentioned for the months of July, August and September appearing at the bottom on Page No.9 of loose papers. He would draw our attention to said Page No.9. It is his submission that only the said three months are mentioned without any mention of the year, only figures are mentioned and there is no affix or suffix as to whether they are of linear Metre. Thirdly, there is no confessional statement of the appellants director in respect of these figures. It is his submission that there is no confirmation of these figures as to represent Linear Metres of processed fabrics cleared without payment of duty and there is no statement of any of buyers having purchased the processed fabrics alleged as clandestinely cleared during this period. It is his submission that Revenue has not adduced any further corroborative evidences of transportation and purchase of raw materials. Ld.Counsel would draw our attention to the statements of the Directors in respect of figures of these 3 months and submit that the statements categorically indicate that these figures are for the job charges which were outstanding from various parties and did not represent the figures in any form of linear metres of processed fabrics. It is his submission that the appellant rebutted this allegation by producing a ledger account of the parties in question. It is his submission that the adjudicating authority has summarily dismissed these evidences by recording that the figures do not match.
3.2 As regards the allegation in respect of clandestine removal during the period October 2002 to December 2002, it is his submission that the said allegation is also incorrect in as much as the document/diary/note book which were recovered from the Directors brief case, bore a rubber stamp of M/s Sangam Creation Pvt.Ltd. It is his submission that the said M/s Sangam Creation Pvt.Ltd is a trading company and they did not bear rubber stamp of the appellant i.e. M/s Sangam Prints Pvt.Ltd. He would draw our attention to the said documents which are annexed to the appeal memoranda. It is his submission that the appellants director during the course of his statement was made to strike out the word Creation from the said stamp and was made to write by hand the word Prints which itself prove that the document recovered did not pertain to any goods manufactured by the main appellant. It is his submission that the statements which were recorded on 9/10.1.2003 have been retracted by affirming an affidavit before the notary public (annexed at Page No.159 of the appeal) and was produced before the adjudicating authority during the course of personal hearing; not considered by the adjudicating authority. It is his submission that the contention of the Revenue as to such affidavit cannot be relied upon which was not submitted to the Department during investigation, is untenable in view of the fact that similar contentions were rejected by the Tribunal in the case of Tejal Dyestuff Industries 2007 (216) ELT 310 which has been upheld by Hon'ble High Court of Gujarat as reported at 2009 (234) ELT 242 and the same ratio was followed by this Bench in the case of Centurian Laboratories - 2013 (293) ELT 689 (Tri-Ahmd). It is his submission that apart from the said retraction, there is no evidence to show that the entire clearances which were clandestinely removed in as much as the documents which were recovered having the rubber stamp of Sangam Creations Pvt.Ltd were not mentioned in the panchnama and the panchnama itself is highly suspect as the said statement has been signed as on 9.1.03/10.1.03. It is his further submission that the Department has recorded statements of 3 alleged buyers viz. M/s Sangam Prints, M/s Neha Prints and M/s Karishma Prints (annexed at Page Nos.139 to 142 of the appeal memoranda); buyers Karishma Prints Ltd has stated that whatever goods they had purchased from the appellant were under the cover of duty paying documents. It is his submission that none of these buyers were contacted by the Revenue and nor any statements brought on record.
3.3 It is an alternative submission that the appellant has contested the veracity of the Panchnama on the ground that the Panchas were not present during the drawal of the Panchnama which clearly indicated was an activity undertaken during the whole night of 9.1.2003 till the late afternoon of 10.1.2003. It is his submission that no Panchas would remain present for the entire period of the panchnama and cross-examination of the Panchas has been denied to the appellant. It s also an alternative submission that even if any demand arises, the said demand has to be re-worked out based on the cum-duty value. It is further submitted that the adjudicating authority has not given them an option of payment of 25% penalty on the confirmed Central Excise duty as provided under Section 11AC of Central Excise Act, 1944 and personal penalties imposed on the individuals, is incorrect and needs to be set aside or reduced.
4. Ld.Departmental Representative, on the other hand, would draw our attention to the findings of the adjudicating authority and also to the records before us. It is his submission that as regards the demand of duty for the period July 2002 to September 2002, the main appellant could not show from the ledger account that the figures mentioned are of outstanding dues. It is his submission that on the contrary, the ledgers which were produced, indicated that there was excess dues in the ledger account as compared to the private records. It is his submission that the main appellant did not produce party-wise ledger earlier, later on they produced the same and the summary of party-wise ledger for these 3 months i.e. July to September, 2002 indicated that the outstanding amounts were not true and the amounts indicated in the ledger were more than the amount as recorded in the private register. It is his submission that there were various discrepancies and the figures did not tally with each other. He would submit that the statement of Shri Suresh Kumar Agarwal when recorded on 9/10.01.2003, did not mention about the details of the figures for the period July to September, 2002 and subsequently after a period of 10 months, it was claimed that these figures are to be of the amount of job charges due from customers. It is his submission that the main appellant did not give the names of the customers from whom the said amount was due.
4.1 It is his further submission that for the period October 2002 to December 2002, the demand has been worked out based upon the confessional statement of Shri Suresh Agarwal. He would draw our attention to the statement of said Shri Suresh Agarwal and submit that he has admitted that as to the details indicated against the dispatch column. It is his submission that the date-wise actual production of dyeing and printing in the factory and the difference in the clearance figures taken from the RT 12 was confirmed by Shri Suresh Agarwal by explaining the modus operandi of illicit clearances through kacha challan which was destroyed after the delivery of the goods. It is his submission that Shri Suresh Agarwal readily agree to pay the duty of Rs.72,27,484/- involved on such clandestine removal of the goods. He would also submit that Shri G.M. Kodawala Printing Master of the main appellant, in his statement also accepted the fact that the job cards which indicated actual printing and dyeing done by the appellant were destroyed after processing of the fabrics was complete and removed from the factory. Shri Kodawala explained the modus operandi adopted by citing various instances for the entries made in the job cards. Ld.Departmental Representative would also draw our attention to the fact that M/s Sangam Prints and M/s Neha Prints have clearly admitted that they had received the goods from the appellant without any duty paying document and the bulk of the quantity of processed MMF was cleared to M/s Sangam Prints, M/s Neha Prints and M/s Karishma Prints. It is his submission that there being an inculpatory statement of the purchaser of the goods, the appellant had no case to argue that there was no clandestine removal. He would submit that once confessional statement was given on 10.1.2003, if it is the claim of the main appellant that the said statements were retracted, then the retraction as claimed by the appellant is incorrect as the affidavit which is filed by the appellant was not produced to the investigating authority or the departmental authority. It is also his submission that the allegations in the show cause notice is based upon the confessional statement of the Director supported by the statement of the buyers and the documents recovered from the briefcase of the director, are enough to hold that the appellant had indulged himself in illicit production and clearance of the goods. He would rely upon the decision of the Hon'ble High Court of Allahabad in the case of Somani Iron & Steel Ltd 2011 (270) ELT 189 which has been upheld by Apex Court. It is also his submission that the evidences which are on record are more than enough to confirm the demand raised on the appellant. He would reiterate the findings of the adjudicating authority.
5. We have considered the submissions made at length by both sides and perused the records.
6. The issue involved in this case is whether the adjudicating authority is correct in confirming the demand raised against the main appellant and imposing penalties on the main appellant as well as other individuals on the charge of clandestine removal of the goods i.e. printed and dyed MMF fabrics.
7. At the outset, we would like to reject the contentions raised by ld.Counsel as to the authenticity of the Panchnama having been signed by the director indicating that on various pages the date of 9.1.2003 and last page of the Panchnama indicating the date of 10.1.2003 as enough to discredit the said Panchnama. In our considered view and on perusal of the records, we find that the DGCEI officers started recording the Panchnama in the afternoon of 9.1.2003 and it went on overnight till the afternoon of 10.1.2003, a fact undisputed. If that be so, the challenge of ld.Counsel as to the Panchnama being incorrect and the signatures obtained from the directors on the said Panchnama on 10.1.2003 by putting prior date is to be considered as negating the Panchnama, is totally baseless argument.
8. As regards the demand raised for the period July to September 2002, we perused the records. On perusal of the records, we find that the documents on which the Revenue relied upon to hold that these figures indicate the dispatch of unaccounted man made fabrics; said document did not indicate any affixation or suffixation on the figures which were mentioned. Ld.Counsel was correct in bringing to our notice that the said figures did not have any indicator as to whether they were fabrics or otherwise. We find that the director on being confronted with such figures in the notebook, in his statement clearly stated that the figures represent amount of dyeing and printing charges due to the main appellant. It is noted that the Revenue authorities did not further put any question to the director on the figures and accepted the submissions of the director that he will produce party-wise ledger. On perusal of party-wise ledger which was produced before the authorities and the findings recorded, we find that the adjudicating authority has discarded the evidences only on the ground that the figures mentioned in the note book for the period July to September 2002 do not tally with the figures shown as outstanding in the ledger account and the ledger account indicate higher figures. In our considered view, this reasoning of the adjudicating authority is totally flawed in as much as when the figures in the ledger account maintained by the appellant indicate higher amount of outstanding dues, it could be claimed that the figures indicated in the note book for the period July to September 2002 are also a part of the outstanding dues and the reconciliation has to be done. We find that the adjudicating authority or the investigating authority have not conducted further investigation to come to a conclusion that the figures indicated in the note book at Page No.9 for the period July to September 2002 are not an amount which is shown as receivable for clandestinely cleared goods. In our considered view, there being no other evidence to indicate that these figures were amount due for the clandestine removal of the goods, reliance placed only on the circumstantial evidences may not carry the case of the Revenue any further. To that extent, we find that the appellant has made out a case for holding that the duty liability Rs.80,89,255/- for the period July to September 2002 is unsustainable and is liable to set aside.
9. As regards the demand of duty for the period October 2002 to December 2002, we find that the Revenue authorities have done some reconciliation as to the clearances effected and recorded in statutory records and the figures mentioned in the documents which were unearthed during the search. We find that the Revenue authorities have recorded statement of officials of M/s Sangam Prints, M/s Neha Prints and M/s Karishma Prints for that period. Though the said documents/diaries indicated the names of other purchasers like M/s Classic Fabrics, M/s Karishma Fabrics, and M/s Shivam Prints, we find that the Revenue has not placed any reliance on statement, if any, recorded of the officials of these 3 purchasers. On perusal of the records, we find that the officials of M/s Sangam Prints, M/s Neha Prints have admitted and stated categorically that the main appellant had removed/sold the man made fabrics to them without preparing any duty paying documents. These confessional statements of the buyers are to be considered as evidence which is going against the appellant. As against such uncontroverted evidence, the main appellant was not able to produce any evidence in support of his claim that there was no clandestine removal made to these parties. In the absence of any such evidence before us, we find that the demand of duty liability on 9,33,085 LMs and 1,31,309.75 LMs cleared by the appellant to M/s Sangam Prints and M/s Neha Prints respectively, are to be upheld as the duty liability on the main appellant as an clandestinely removed the goods. As regards the demand of the duty liability on the clearances made to M/s Karishma Prints, we find that the official of M/s Karishma Prints has specifically stated in the statement recorded that they do not receive any goods from main appellant without duty paying documents. On the face of such clear statement from the buyers, it is not possible for us to hold that the appellant had cleared goods clandestinely to M/s Karishma Prints. The same observation will hold good for the clearances which has been alleged as clandestinely removed to M/s Classic Fabrics, M/s Karishma Fabrics, and M/s Shivam Prints as there are no statements of the officials of these 3 companies to implicate the main appellant.
10. In sum, for the period October 2002 to December 2002, we hold that the demand of the duty liability can be confirmed on the main appellant only for the quantity of man made fabrics cleared to M/s Sangam Prints, M/s Neha Prints as recorded at Paragraph No.13 of the Order-in-Original. To that extent, the appeal filed by the appellant is rejected. Lower authorities are directed to calculate the amount of duty liability on the man made fabrics of 9,33,085 LMs and 1,31,309.75 LMs cleared to these two purchasers. Appellant is also required to pay interest at appropriate rate on all these amounts of duty liabilities.
11. As regards the penalties we find the main appellant is to be penalized with equivalent amount of duty liability as has been worked out by the lower authorities on the clearances made to M/s Sangam Prints, M/s Neha Prints as indicated hereinabove with an option to pay 25% of the duty liability as per Section 11AC of Central Excise Act, 1944, as has been held by Hon'ble High Court of Gujarat in the case of Akash Fashions Prints Pvt.Ltd. 2009 (239) E.L.T. 439 (Guj.). These our findings are based upon the fact that the adjudicating authority in the impugned order, has not extended this benefit to the main appellant.
12. As regards the penalties imposed on other 3 appellants, we find that the bulk of the demand has been set aside by us on merit, accordingly, the penalties imposed on all other appellants needs to be re-worked out.
13. As regards the personal penalties imposed on the individuals, we find that Shri Suresh Kumar Agarwal, Director of the main appellant is penalized under Rule 26 of Central Excise Rules, 1944, since we have upheld the demand of duty on the main appellant for clandestine removal of the goods to the extent as indicated hereinabove, we find that Shri Suresh Kumar Agarwal who is one of the director of the company needs to be penalized under Rule 26 having played a role in such clandestine removal of the goods. Considering that the amount of duty liability having been substantially reduced, we hold that the ends of justice will be met if Shri Suresh Kumar Agarwal is visited with a penalty of Rs.2 lakhs (Rupees Two Lakhs only) under Rule 26 of Central Excise Rules, 1944.
14. As regards the personal penalties imposed on Shri Bharat Kumar Agarwal, director of Shri Sangam Prints, partner of M/s Sangam Prints, we find that they were the recipients/purchasers of the clandestinely removed goods and were aware of the fact that duty liability has not been discharged on the goods. Since they were aware that the goods are non duty paid, penalty under Rule 26 is imposable on them also, which in our considered view, should be in proportion to the quantity of the goods received by them. The ends of justice will be met by imposing a penalty of Rs.1 lakh (Rupees One Lakh only) on Shri Brij Mohan Agarwal.
15. As regards the penalty imposed on M/s Neha Prints, we find that the said M/s Neha Prints was also aware that they were receiving the goods without duty paying documents from the appellant and accordingly, a penalty on them under Rule 26 is also upheld. Ends of justice will met if the penalty imposed on them is reduced to Rs.25,000/- (Rupees Twenty Five Thousands only) under Rule 26 of Central Excise Rules, 1944.
16. Since we have disposed of the appeals on facts and circumstances and merits of the case, we do not wish to record any further finding on various submissions made by both sides.
17. All the appeals are disposed of as indicated hereinabove.
(Pronounced in Court on 25.08.2014)
(H.K. Thakur) (M.V. Ravindran)
Member (Technical) Member (Judicial)
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