Custom, Excise & Service Tax Tribunal
Cce, Delhi-I vs M/S Praveen Kumar & Co on 30 March, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
Court No. III
Excise Appeal No. 2198/2006-EX(DB)
[Arising out of Order-in-Appeal No. 13-CE/DLH/2006 dated 31.03.2006 passed by CCE, Delhi-I]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Memeber
Honble Mr. Manmohan Singh, Technical Member
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would 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 Department Authorities?
Yes
CCE, Delhi-I Appellant
Vs.
M/s Praveen Kumar & Co. Respondent
Appearance:
Present for the Appellant: Shri V.P. Batra, DR Present for the Respondent: Shri J.P. Koushik, Advocate Coram: Honble Ms. Archana Wadhwa, Judicial Memeber Honble Mr. Manmohan Singh, Technical Member Date of Hearing: 10.10.2013 Date of Decision: 21.07.2014 Interim ORDER NO.701/2014 PER: Ms. Archana Wadhwa:
Being aggrieved with the order passed by Commissioner (Appeals), revenue has filed the present appeal. We have heard Shri V.P. Batra, learned DR appearing for the revenue, and Shri J.P. Kaushik learned advocate appearing for the respondent.
2. As per on record M/s Parveen Kumar & Co. were engaged in the manufacture of PARVEEN CHHAP unmanufactured branded Chewing Tabacco falling under Chapter Heading No. 2401.90 and were registered with Central Excise department. The officers of Anti-Evasion branch, Delhi-I Commissionerate visited the factory and residential premises of the appellant on 4.10.2001. During the course of search of the residential premises 14 loose sheets written on both sides papers pertaining to the factory accounts were recovered and resumed by the officers for further investigations. The said 14 loose sheets were shown to Shri Parveen Kumar, Proprietor of the Appellants firm and statement dated 4.10.2001 was recorded under Section 14 of the Act ibid. Wherein he admitted the recovery of the loose sheets from his residential premises and stated that the same contained details of the clearances effected by him in a clandestine manner without discharge of Central Excise duty and without issue of proper document. He also handed over none cheques of Rs.1,00,000/- each totaling Rs.9,00,000/- towards Central Excise Duty evaded. Statement of Shri Rajender Kumar, Authorized Signatory was also recorded on 8.10.2001 under Section 14 of the Act ibid. Wherein he admitted the contents of the statement dated 4.10.2001 of Shri Parveen Kumar, Proprietor of the Appellants firm. The appellant informed the department that he had deposited Rs.4 Lacs vide TR-6 Challans dated 13.10.2001 and 8.11.2001. Statement of Shri Parveen Kumar, Proprietor was again recorded on 1.8.2003 under Section 14 of the Act ibid. Wherein the furnished month wise details of production and details covered under the 14 loose sheets recovered from his residence on 4.10.2001.
3. A show cause notice dated 5.11.2003 was issued to the appellant wherein it was alleged that the loose sheets recovered contain the details of the receipt and use/utilization of small and big pouches of Parveen Chhap Tobacco which after being duly filed with unmanufactured Tobacco were cleared without accounting for the same in the daily stock account register and without payment of Central Excise Duty leviable thereon which has already been admitted both by Shri Parveen Kumar, Proprietor and Shri Rajender Kumar, authorized Signatory in statements dated 4.10.2001 and 8.10.2001 respectively. It was stated in the show cause notice that Shri Parveen Kumar, Proprietor vide his voluntary statement dated 1.8.2003 recorded under Section 14 of the Act ibid. stated that those loose papers contained the details of purchase and utilization of pouches (of different sizes) and lime tubes and the said statement appeared to be an after thought and has been tendered to mislead the investigation particularly when Shri Parveen Kumar in his earlier statement dated 4.01.2001 has categorically admitted having cleared the goods clandestinely, the details of which were given in 14 loose sheets. On the basis of above it was alleged that the appellant had removed excisable goods worth Rs.58,74,033/- clandestinely without the issue of proper invoices and duty amounting to Rs.30,74,033/- was demanded under Section 11A(1) of the Central Excise Act, 1944 along with interest on the said duty and penal action under Section 11 AC of the Act ibid, and Rule 173 Q of the erstwhile Central Excise Rules, 1944 and Rule 25 of the erstwhile Central Excise (No.2) Rules, 2001 was contemplated against the appellant vide the said show cause notice. The said show cause notice was disposed of by the adjudicating authority vide the impugned order.
4. Aggrieved with the said order of the adjudicating authority, the appellant filed the appeal before Commissioner (Appeals) on the following grounds:-
i) That, the loose sheets contained the details of various sizes of pouches, which they had purchased and used in the packing of their finished goods. The sheets also contained the details of lime tubes purchased and issued for putting in the pouches. The pouches referred in the loose sheets relate to small/big pouches. Small pouch of 1/- or 2/- means one pouch of having MRP 1/- or 2/- whereas a big pouch of 1/- or 2/- means the outer bag wherein 40 pouches of Rs.1/- or 20 pouches of Rs.2/- are packed. The various words like Small pouches Big pouches and Lime tubes are clearly mentioned on the loose slips. The loose slip shows the opening balance, the quantity received/ used in particular month and the figure carried forward. This quantity of receipt of pouches or lime tubes is duly available in accounts books. The quantity of pouches used relates to the quantity manufactured, which is duly entered in RG-1 account. However the Central Excise officers made Shri Parveen Kumar to write that the loose sheet contain the details of clearances effected by him in clandestine manner. He denied as the same was against evidence on records.
ii) That, the whole case of the department is based on those 14 loose sheets which the department has assumed to contain the details of goods clandestinely removed by him. He denied the allegations categorically. He submitted that the details of empty pouches purchased and used during the relevant period and lime tubes purchased and issued during the relevant period for the manufacture of finished goods.
iii) That, the department had worked out the demand from page No. 5 onwards for the period from October, 1998 to September, 2001. From Page No. 1 to 4, though contained the identical details for the earlier period, no demand has been raised. Shri Parveen Kumar in his statement dated 11.08.2003 rendered under Section 14 of the Central Excise Act, 1944 on being specifically asked about the 14 loose sheets stated that those sheets contain the details of purchase/utilization of pouches of different sizes and lime tubes. The Central Excise Officers prepared a computerized list running into 19 pages. In those 19 pages, details of loose papers from Page No. 5 to 14 were tabulated by the officers on which appellant had put his signature on each page in token of its correctness. Another year-wise list was also prepared. On comparison of the figures in respect of utilization of pouches/lime tubes vis-`-vis the figures of finished products recorded in RG-1 register, it was stated that three was a very minor difference which was due to loss/wastage occurring at the time of production. He submitted that the statement running into 4 pages and referred to number of charts prepared by the department, which were confronted to the appellant and the entries were explained but this detailed statement which reflected the factual state of affairs was not brought out in the show cause notice.
iv) That, the again prepared the chart in respect of each and every entry that appeared in the loose papers. He categorically submitted that those contained the details of purchase of pouches and quantity issued for production. He mentioned that in respect of each entry showing the purchases of pouches or lime tube on a particular date, the material was duly entered in the records as having been purchased on proper invoices. All the purchase bills were duly accounted for in their statutory records. Copies of all the corresponding bills relating to purchase of pouches and lime tubes were enclosed with the reply to the show cause notice and again enclosed with the appeal memorandum. He submitted that finished goods has been packed in said pouches and had been duly accounted for in their statutory records like RG-1 and had been cleared on payment of duty except negligible wastage during process of manufacture. He enclosed month wise comparative figures for ready reference.
v) That, the statement of Shri Parveen Kumar wherein he is said to has stated that such loose sheets show the figures of removal of finished goods is not correct statement which is contrary to the documentary evidence on record which shows that statement was not recorded voluntarily. He submitted that the sheets contained the details of pouches used during a particular which correspond with each and every entry available in the statutory records which has been ignored and the statement which was contrary to facts on records has been relied upon. He submitted that the uncorroborated statement under no circumstances can be treated as voluntary due to the fact that very contents of the statement are contrary to the facts on record and duly verified by the department.
vi) That, it is well settled that where two pieces of evidence are there, one oral and the other documentary, the documentary evidence has to be preferred. He submitted that in their case the oral evidence is uncorroborated by any material evidence whereas the documentary evidence submitted by them is clearly corroborative with the statutory records. He enclosed copies of the loose papers, corresponding purchase invoices, Copies of the RT-12 of the relevant period and comparative charts. He submitted that a bare perusal of those loose sheets it is clear that they are in conformity with the recorded entries in the statutory records and each and every entry in loose slips duly tallies with the purchase records and the quantity used tallies with the duly recorded production figures in the RG-1. He submitted that the impugned order has failed to appreciate the facts and the order has been passed in a mechanical manner.
5. Appellant authority vide his impugned order set aside the impugned order by observing as under:-
I have gone through the facts and circumstances of the case and find that the facts of the case are very clear. The allegation of clandestine removal of excisable goods alleged by the department is mainly based on recovery of 14 loose sheets recovered from the residential premises of the appellant wherein certain details of packing material i.e. pouches used to pack the unmanufactured branded chewing tobacco and lime tubes to be put along with tobacco, such as Balance as on 1st day of the each month. Quantity used in the said month, Quantity received during the said month with date of receipt have been noted down in hand writing, recovery of which has been admitted by the appellant vide his statement dated 4.10.2001. It has also been alleged by the department that he also admitted that the said sheets contained the details of clearance effected by him in a clandestine manner without discharge of Central Excise duty and without issue of proper document. The show cause notice does not indicate whether any further investigation was carried out to corroborate the admission of clandestine removal by finding out the supplier of the raw material & packing material, the buyers of the finished goods and the mode of transport through which the goods were clandestinely removed to strengthen and establish the charge of clandestine removal. The show cause notice also does not indicates whether Shri Parveen Kumar was questioned by the Central Excise Officers and whether he disclosed any information regarding suppliers of the raw material and buyers of the finished goods alleged to has been removed during the period from May 1997 to September, 2001 details of which were hand written in those 14 loose sheets. During the course of investigation, another statement of Shri Parveen Kumar was recorded on 1.08.2003 under Section 14 of the Act ibid. Wherein he associated with the Central Excise Officers in preparing the detailed month wise statement out of the 14 loose sheets and explained the entries in the loose sheets and stated that those loose sheets contained the details of purchase and utilization of pouches of different sizes and lime tubes and tally with its usage in RG-1 and there was very minor difference which is due to loss/wastage occurred during the manufacturing process. The appellant in the reply to the show cause notice relied on the statement dated 1.08.2003 and also submitted detailed comparative charts, copies of the RT-12 Returns and month wise extracts of the RG-1 register along with purchase bills of each and every entry receipt of pouches/lime tubes reflected in the 14 loose sheets and claimed that those accounts hand written in the loose sheets are mere duplicate of the statutory records and all the purchase of small, big pouches and lime tubes have been made against proper invoices and exactly the same quantity of finished goods (except negligible difference in some cases on account of loss/wastage during manufacture) corresponding to the said quantity of packing material had been reflected in the RG-1 and corresponding RT-12 Return. The appellant also raised a question mark on the voluntary statement dated 4.10.2001 of Shri Parveen Kumar while defending the case before the adjudicating authority, but the adjudicating authority brushed aside the contentions of appellant as an after thought and confirmed the demand of duty and imposed penalty by relying on the statement dated 4.10.2001 and on the basis that goods worth Rs.19,528/- were not entered in the RG-1 register on the day of visit of the officers to the appellants factory and observed that it clearly indicates that there was definitely the preponderance of probability that the appellant was maintained parallel records in the form of loose sheets for those goods which were used in the manufacture of finished goods as such to be cleared clandestinely without discharging Central Excise duty. This finding of the adjudicating authority is based on probabilities only and contrary to the facts based on verifiable statutory records such as RG-1 and RT-12 Returns.
6. The appellant authority further observed that the month wise details of utilization of pouches mentioned in the loose papers relied upon in the show cause notice and comparative month wise chart submitted by the appellant stand compared by him. He accordingly observed that while comparing the two there is a minor difference of 500 pouches per month, which is on ground of loss/wastage etc. during the course of manufacture. As such he observed that from the comparative chart, utilization of the pouches shown in the loose papers tally with the production shown in the RG-1 as well as RT-12 Return and there is no scope to render the figures written in the loose sheets as figures related to clandestine removal. Each and every entry written in the loose sheets for receipt of pouches is duly correlated with purchase invoices issued by raw material supplier. Accordingly, he observed as under:-
7. In the instant case the investigations have miserably failed to get any corroborative evidence to strengthen the Revenues case. I find that finding of clandestine removal based on a bald and uncorroborated statement which is contrary to the facts on record is neither justified nor sustainable. There is no indication in the show cause notice that any attempt was made to identify the buyers of the excisable goods allegedly been removed clandestinely by the appellant continuously for a huge period of four years. On the contrary the appellant has explained the entries in 14 loose sheets vide his statement recorded on 1.08.2003 under Section 14 of the Act ibid and has also been able to establish that those entries pertain to the receipt and utilization of inputs duly entered in the statutory records and production on that account entered in the RG-1 and declared in the RT-12 Returns submitted to department periodically but the same has been ignored by the adjudicating authority considering them as an after thought. The uncorroborated and bald statement of the appellant in the instant case is an incomplete and inconclusive piece of evidence and cannot be made sole basis for holding the appellant guilty of the manufacture and removal of the finished goods without payment of duty during the relevant period in the absence of any tangible evidence regarding the clandestine removal of finished goods. I further find that it is well settled that the statement which travel beyond the documentary evidence, same has to be discarded and in the event of conflict, the documentary evidence should prevail. The statement contrary to the documentary evidence cannot be used to arrive at conclusive findings. I rely on the following judgments where Honble Tribunal has taken a similar view:-
a) Raj Petroleum Products Vs. CCE-2005(192) ELT 806 (T)
b) Modern Denim Ltd. Vs. CCE-2005 (191) ELT 1174 (T)
c) Hindustan Aegis LPG Bottling Co. Vs. CCE-2005 (182) ELT-180 (T)
8. Further the genuineness and authenticity of the documents were neither doubted by the adjudicating authority nor by the jurisdictional Central Excise Officers while offering comments on the appeal memorandum. In such a situation the comparative charts showing the figures of receipt and utilization of packing material i.e. pouches and lime tubes supplied along with branded chewing tobacco vis-`-vis production figures reflected in RG-1 Register and RT-12 Returns clearly establish that the loose sheets were not any way connected with any clandestine removal of excisable goods as alleged in the show cause notice and concluded in the impugned order. In view of the above circumstances, in the nut shell I conclude that the 14 loose sheets recovered and resumed by the department from the residential premises of the appellant were nothing but rough account of receipt and utilization of the lime tubes and various sizes of pouches received against proper purchase invoices which were used in packing the branded chewing tobacco manufactured by the appellant. Those figures do tally with the production figures of the said finished goods duly entered in the statutory records such as RG-1 register and declared in RT-12 Returns. The charge of clandestine against the appellant therefore is not established in the light of above findings and consequently the demand of duty and imposition of penalty do not sustain.
7. The said order of Commissioner (Appeals) is impugned before us.
8. We have considered the submission made by both the sides and have gone through the impugned order of Commissioner (Appeals). The entire case of the Revenue is based upon recovery of 14 loose sheets and the statement of the Proprietor as also of the authorized representative given at the time of search. We have examined the said sample loose sheets placed on record. The same contain certain date and figures under the heading small pouches, big pouches and lime tubes. The Commissioner (Appeals) has examined the said loose sheets and has come to the conclusion that the same relate to the quantity of the packing materials, which is one of the raw materials. The quantities mentioned in the said loose sheets stand verified by him and compared with the recorded entries made in the statutory records. A detailed chart stands prepared which only show the difference of 500 pouches per month, which stands attributed to loss/wastage during the course of manufacture. The revenue in their grounds of appeal have not rebutted the above finding of fact by the appellant authority. There is no ground challenging the findings that the entries made in the said loose sheets, duly tallied with the statutory records. The revenues only grievance is that Shri Parveen Kumar as also Shri Rajender Kumar, in their initiating statement, given at the time of search have admitted clandestine activities. However, as rightly observed by the Commissioner (Appeals), when there are documentary evidences, which fully corroborated the assessee stand, no adverse inference can be arrived at on the basis of the oral evidences in the shape of statement. He has rightly concluded that the statement which are against the documentary evidences have to be discarded. Inasmuch as the revenue is not disputing the finding of fact by the Commissioner (Appeals) that the entries as reflected in the said loose sheets are tallying with the entries made in this statutory record, we find no reason to deviate from the said finding of Commissioner (Appeals).
9. Otherwise also we find that there is no corroborative evidence advanced by the revenue to establish the allegation of clandestine removal. There is no investigation relatable to the procurement of huge raw material, the manufacture of huge quantity of the final goods in question and transportation of the same or to the identity of the buyers. In the absence of the corroborative evidences, the revenues endeavor to establish clandestine removal on the basis of entries made in the loose sheets, which otherwise also tally with the entries in statutory records, cannot be appreciated. As such we are of the view that there is no infirmity in the finding of Commissioner (Appeals), who has rightly set aside the order of original adjudicating authority confirming the demand. Accordingly, the revenues appeal is rejected.
(Pronounce in the open Court on ) (ARCHANA WADHWA) MEMBER (JUDICIAL) (Manmohand Singh) Member (Technical) Praveen Kumar & Co.
Appeal No. E/2198/2006-EX(DB) PER: MANMOHAN SINGH
10. I have gone through the draft order prepared by learned Member (J).
11. Department has come up in appeal before the Tribunal against OIA No.13-CE/DLH/2006 dt.31.3.2006 passed by the Commissioner (Appeals), Delhi-I Commissionerate. Commissioner (Appeals) dropped the proceedings against the respondent and set aside the order passed by the Additional Commissioner. Adjudicating authority has confirmed the demand with interest alongwith imposition of equivalent penalty. The case was booked by the preventive officers when they visited the premises of M/s.Praveen Kumar & Co. on 4.10.2001. During the course of search of residential premises, 14 loose sheets written on both sides papers pertaining to factory accounts were recovered and resumed for further investigations.
12. Shri Praveen kumar, Proprietor of the appellants firm in his statement dated 4.10.01 admitted recovery of 14 loose sheets from his residential premises and admitted that the same contained details of clearances effected by him in clandestine manner without discharge of central excise duty and without issue of proper documents. 9 Cheques of Rs.1 lakh each totalling Rs.9 lakh towards central excise duty evaded, were handed over. Statement of Shri Rajender Kumar, authorised signatory was also recorded on 8.10.01 wherein he admitted contents of the statement dated 4.10.01 of the proprietor Shri praveeen Kumar. He also informed that they have further deposited Rs.4 lakh by TR-6 challan dated 13.10.01 and 8.11.01. During further statement dated 1.8.2003, appellant raised a question mark on the voluntary statement before adjudicating authority. Commissioner (Appeals) held that findings of the adjudicating authority was based on probability and dropped proceedings. Leaned Member (J) after going through the facts of the case as well as findings of the Commissioner (Appeals) came to the same conclusion that the statements of Shri Praveeen Kumar and Shri Rajender Kumar, authorised signatory could not be made basis of confirmation of duty evaded because these statements were not supplemented with any documentary evidence. I do not agree with the findings recorded by the learned Member and propose to write separate order.
13. The facts of the case as given in the draft order are adopted for examination.
14. While going through records, it clearly comes out that officers in the anti-evasion branch, Delhi-I visited factory as well as residential premises of the appellant on 4.10.01. 14 loose sheets written on both sides papers pertaining to factory accounts were recovered and resumed by the officers. Shri Praveen kumar, Proprietor of the appellants firm in his statement dated 4.10.01 categorical admitted recovery of 14 loose sheets from his residential premises and admitted that the same contained details of clearances effected by him in clandestine manner without discharge of central excise duty and without support of proper documents. 9 Cheque of Rs.1 lakh each totalling Rs.9 lakh towards central excise duty evaded, was handed over. Statement of Shri Rajender Kumar, authorised signatory was also recorded on 8.10.01 wherein he admitted contents of the statement dated 4.10.01 of the proprietor Shri praveeen Kumar. It was also intimated that they have further deposited Rs.4 lakh by TR-6 challan dated 13.10.01 and 8.11.01. SCN dated 5.11.2003 was issued wherein it was alleged that the loose sheets recovered contained the details of the receipt and use/utilization of small and big pouches of Praveen Chhap Tobacco which after duly filled with unmanufactured tobacco were cleared without accounting for the same in the daily stock account register and without payment of duty leviable thereon. These facts were admitted both by Shri Praveen Kumar and Shri Rajender Kumar in their statement dated 4.10.01 and 8.10.01. Interestingly when a subsequent statement of Shri Praveen Kumar was recorded on 1.8.2003, he denied his earlier confession after a gap of two years contending that loose paper contained details of purchase and utilization of pouches of different sizes and lime tubes. It is on record that he had never disagreed with confessional statement made during the time of visit of his factory and residential premises and it was only an afterthought and that too after a gap of two years. He came with novel idea stating that details given in the loose papers relating to Praveen Chhap Tobacco pouches and Lime Tubes. Adjudicating authority did not find any convincing evidence and also did not rely upon statement which was retracted after two years and consequently confirmed duty amounting to Rs.30,74,033/- under section 11A(1) alongwith interest on said duty and equivalent amount of penalty under section 11AC ibid and Rule 173Q of erstwhile Central Excise Rules,1944 and Rule 25 of erstwhile Central Excise (No.2) Rules, 2001.
15. From the SCN issued to the respondent, following evidences came before the adjudicating authority in addition to the points which have been stated in the preceding paragraphs.
(a) The officers visited the factory premises of M/s. Praveen Kumar & Co. situated at A-163, Majlis Park, Azadpur, Delhi engaged in the manufacture of Praveen Chhap unmanufactured branded chewing tobacco. The officers conducted physical stocktaking of the finished goods as well as raw materials, lying in the factory premises in the presence of Shri Praveen Kumar, proprietor. As a result of physical stocktaking, 13 bags of Praveen Chhap unmanufactured tobacco weighing 7 kgs containing 500 pouches each of 14 gms. Tobacco valued at Rs.5,528/- and 20 bags of Praveen Chhap unmanufactured tobacco containing 1500 pouches each 8 gms. Tobacco valued at Rs.14,000/- were found in excess of the recorded balance in the daily stock register after taking into account days production. The stock of 33 bags in total was got entered by the visiting officers in the daily stock account register. This indicated that M/s.Praveen Kumar & Co.was indulinging in clandestine production and non accountal of such production in their records.
(b) During search of residential premises A-184, Mallis Park, Azadpur, Delhi, officers recovered 14 loose sheets written on both sides papers pertaining to the factory accounts and resumed the same for further investigation. During search of residential premises of Shri Praveen Kumar, his wife Smt.Rakesh Mittal was also present. The said 14 loose sheets were then shown to Shri Praveen Kumar. In his voluntary statement dated 4.10.01 recorded on the spot, he admitted the recovery of the said loose sheets from his residential premises and stated that the same contained details of the clearances effected by him in a clandestine manner without discharge of duty and without issue of proper documents. On enquiry, he stated that the main raw material is cut tobacco, after packing the same in the laminated pouches having their brand name i.e. Praveen Chhap, were cleared by him earlier in a clandestine manner without payment of duty whose details were reflected in the above said loose sheets.
Shri Praveen Kumar in his voluntary statement further stated that:
I hand over nine cheques of Rs.1,00,000/- each totalling to Rs.9,00,000/- towards the central excise duty evaded by me, the cheques were drawn on SBI, Majlis Park, New Delhi starting with S.No.369170 to 369178 and these cheques were handed over to the Central Excise officers by me voluntarily. I also undertook to deposit Rs.4,00,000/- towards duty of Central Excise by 05.10.2001.
(c) Summons dated 4.10.2001 were issued to Shri Praveen Kumar, Proprietor to appear on 5.10.2001 alongwith purchase file and balance sheet for the last five years. Shri Rajender Kumar Authorised signatory of the firm appeared on 5.10.2001 and vide his letter dated 5.10.2001 stated that Shri Praveen Kumar was unwell. However, Shri Rajender Kumar Authorised signatory of the firm in his voluntary statement recorded under section 14 admitted the contents of the statement dated 4.10.2001 of Shri Praveen Kumar recorded on the spot under section 14; that he was also present throughout the proceedings on 4.10.2001, he also confirmed that 9 chequess each of Rs.One lac were handed over by them for covering removal of Praveen Chhap Tobacco without payment of duty. He confirmed the recovery of 14 hand written pages showing details of production and clearance of Praveen Chhap Tobacco without payment of duty.
(d) It is further very relevant to note that the respondent deposited further Rs.4 lakh which was in addition to the amount already deposited amoauant of Rs.9,00,000/- This amount was promised to be deposited by Shri Praveen Kumar in his statement dated 4.10.2001.
(e) Department has been asking for certain documents relating to income-tax returns of Shri Praveen Kumar, M/s.Rajender General Store and M/s.Mittal Trading Co. for the last five years or since inception but the respondent failed to supply the same. Later on, they only supplied the balance sheet on 14.1.2012.
(f) It is also evident from record, that the details of receipt and use/utilization of small and big pouches of Praveen Chhap Tobacco after being filled with unmanufactured tobacco cleared without accounting the same in the daily stock account register and without payment of central excise duty were recorded in the private records.
16. Adjudicating authority in his Order-in-Original after analysing all the statements recorded during investigation and examination of various documents on records clearly came out that the statements tendered by Shri Praveen Kumar and Shri Rajender Kumar on 4.10.2001 were proper and statement of Sh.Praveen Kumar in para 9 of his statement dated 1.8.2003 was only retraction of his earlier statement of 4.10.2001 which was clearly an afterthought only with the motive to mislead the department and subsequently defraud the Revenue. He concluded that at the time of deposit of duty, party did not show any dissent or paid duty under protest. He further came to the conclusion that had the usage of small and big pouches and lime tubes mentioned in 14 loose sheets tallied with RG-1, the party would not have deposited the duty voluntarily or without showing any note of under protest. He also made reference to the non accountal of goods during search of premises. Above facts clearly indicated that there was preponderance of probability towards maintenance of private records in the form of loose sheets for those goods which were used in the manufacture of finished goods or finished goods as such, to be cleared clandestinely without discharging duty.
17. The respondents non-cooperative attitude in not providing necessary documents relating to income-tax returns to match the date with results obtained from investigation has played a major role in manifesting that such wilful avoidance was to stall furtehr progress of investigations.
18. Further retraction of statement after two years cannot have any validity or any reliability. Retraction, if any, has be very close to the recording of original statements. Moreover the statement of Shri Rajender Kumar, authorized signatory dated 8.10.2001 was till valid as that statement has not been retracted so far. Adjudicating authority also referred to the judgement of Supreme Court in the case of Surjeet Singh Chhabra vs. UOI-1997 (89) ELT 646 (SC) wherein apex court observed that a confession made before Customs Officer was held binding even if retracted later.
19. Main point for determination is that whether the statement of proprietor and authorised signatory which were given during visit of officers in the business premises and residential premises requires further elaboration though clear confessional statements of proprietor and authorized signatory were made. Further these statements were duly supported with recovery of documents clearly indicating clandestine manufacture and removal without payment of duty. This is fact on record that retraction has been made after two years when deposit of duty on evaded goods have been paid voluntarily without any duress. No protest was lodged. Deposit of further Rs.4 lakh was made after gap of six months. I am convinced that the conduct of proprietor and his authorised signatory clearly points out that they were not maintaining any record in proper way leading to unaccounted production of Praveen Chhap Tobacco found in the factory. It was also on record that loose sheets quoting the details of pouches which were filled with tobacco later cleared and admitted by both proprietor and authorised signatory clearly indicated that there was non accountal in the statutory records and later Praveen Chhap Tobacco have been cleared without payment of duty. It is very relevant to note that that once these documents were confronted to them, they readily agreed with production and clearance of Praveen Chhap Tobacco and their non accountal and clearance without payment of duty. They immediately gave cheques of Rs.9 lakh and after a gap of six months, they also deposited further Rs.4 lakhs. Shri Rajender Kumar, authorised signatory appeared on 8.10.2001 and in his voluntary statement recorded under section 14 of Central Excise Act, 1944, which he never retracted. He admitted the contents of the statement. He further confirmed the recovery of 14 hand written pages showing details of production and clearance of Praveen Chhap Tobacco without payment of duty.
20. I have also examined the order passed by the Commissioner (Appeals) and observe that his finding are solely dependent upon retracted statement of Shri Praveen Kumar which was given after gap of two years from the date of detection of irregularity/evasion and payment of duty through cheques as well as deposit of Rs.4 lakh through TR-6 challan. His contention that no duty could be fastened on the proprietor based on his statement does not have any force as duty has not been calculated only on the basis of his statement but actually it has been on recovery of documents indicating clandestine manufacture and clearance without payment of duty. It is further observed that it was not only bald statements of Shri Praveen Kumar and Shri Rajendra Kumar on the basis of which duty is demanded. It was also based on the documents recovered from their premises and only on confronting all those documents to Shri Praveen Kumar, he admitted these documents being related to clandestine manufacture and removal of excisable good without payment of duty. Differential duty amounting to Rs.9 lakh and Rs.4 lakhs were voluntary paid. Apex Court in the case of Surjeet Singh Chhabra vs. UOI observed that a confession made before Customs Officer was held binding even if retracted later. In the present case, there is no cogent evidence to disbelieve the confessional statement since retracted statement is having no probative value when other circumstances and cogent evidences demolish the retraction. Further statements were relating to facts in their exclusive knowledge.
21. In similar circumstances, statements were retracted in a case 2011 (270) ELT 643 (S.C.) Commissioner of C. Ex Mumbai verses Kalvent goods India Pvt. Ltd where in Supreme Court held that where statements were given by own volition and there is no allegation of threat, force, coercion, duress or pressure being utilised by the officers, these statements will be considered made of their own volition. These findings are further supplemented with the facts that amount of Rs.9,00,000/- (Rupees nine lakhs) and later on Rs.4,00,000/- (Rupees Four lakhs) were deposited on their own volition without any duress and pressure.
22. Keeping in view the facts and circumstances relating to all the statements as well as deposit of duty through cheques as well as through cash and clear admittance of clandestine manufacture and clearance by the proprietor and authorised signatory that Pouches filled with Tobacco were cleared details of which were mentioned in seized papers, it is evident that Praveen Kumar & Company has indulged in the clandestine manufacture and removal. Duty has rightly been demanded by the adjudicating authority vide his Order-In-Original. Commissioner (Appeals) has not been able to clearly bring out any satisfactory evidence to demolish the voluntary statement confessing the evasion.
23. Voluntary confessional statement which is retracted after two years without any basis, has no legs to stand. No new facts have come on record to justify retraction short levy was paid consequent upon confession not once but twice. Further confessional statement rendered by Shri Praveen Kumar was also satisfied by Shri Rajender Kumar authorised signatory. Contentions that resumed records were only referring to pouches and lime tubes and not to filled pouches of tobacco is clearly afterthought as pointing out to the fact that seized record are having reference to the pouches etc. has no force as those facts were on record and were not challenged and actually admitted. Also duties on evaded tobacco were paid in two instalment (2nd instalment being after a gap of four months). Once evasion is accepted and documents are confronted manifesting fraudulent intentions to defraud, there is no force in learned Member (Judicial)s contention that there were no investigations relating to procurement of raw materials and manufacture of huge quantity of final goods and transportation of goods. I feel once an evasion is clearly admitted and these activities are undertaken in the darkness of night, no evader shall leave proof of these activities. Once fraudulent intent to evade is manifested and later confessed, proving such evasion by other activities which are not recorded, will be giving a bonus to the evader. As per Supreme Courts judgement in D.Bhoormull-1983 (13) ELT 1546 (SC) case, Department is not required to prove its case with mathematical precision, but what is required is the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of facts in the issue.
24. In the present case, it is very clear admittance of clandestine removal and which is later also confirmed by authorised signatory without any pressure and duress and later voluntary payment of duty is paid, this clearly proves the exact nature of offence. If they would have any grievance force and forceful confession, they would have taken up the matter with higher authorities, but nothing was done. Actually balance amount of payment was also deposited after a gap of four months. Further, they private records of production and clearance were owned by them. Thus after two years, there could be no issue of retraction. Statement of Shri Praveen Kumar recorded on 9.8.2003 is merely an afterthought as he has already admitted in his statement dt.4.10.2001. The said statement of 4.10.2001 was voluntary in nature and it was never retracted on the plea that same was obtained by coercion or extortion. Actually facts were in their personal knowledge and there was no duress to conclude that confessional statements were not fair. Further there are indication of manipulation of records as after proper confirmation of evasion and alter payment of duty in two instalments, attempt has been made to manipulate the records with clear intention to defraud government revenue.
25. In view above, I respectfully disagree with findings of learned Member(J). I set-aside the findings recorded by Commissioner (Appeals) and upheld the findings recorded by adjudicating authority.
(MANMOHAN SINGH) MEMBER (TECHNICAL) DIFFERENCE OF OPINION Whether as per findings of Member (Judicial) that mere based on confessional statement, no duty could be demanded as other evidences relating to manufacture, procurement of raw materials and transportation have not been produced by Revenue and such retraction of statement will have effect.
Or Whether as per findings of Member (Technical) that based on confessional statement containing facts in their exclusive knowledge and recovery of other evidence and subsequent deposit of short levy, demand was liable to be confirmed alongwith the interest and penalty and retraction of statement after two years could have no effect on earlier confession.
(MANMOHAN SINGH) (ARCHANA WADHWA)
MEMBER(TECHNIAL) MEMBER (JUDICIAL)
mk
26. In this case, the following is the difference of opinion between Member (Judicial) and Member (Technical) as recorded vide the interim order No. 701/2014 dated 21.7.2014.
Whether as per findings of Member (Judicial) that mere based on confessional statement, no duty could be demanded as other evidences relating to manufacture, procurement of raw materials and transportation have not been produced by Revenue and such retraction of statement will have effect.
Or Whether as per findings of Member (Technical) that based on confessional statement containing facts in their exclusive knowledge and recovery of other evidence and subsequent deposit of short levy, demand was liable to be confirmed along with the interest and penalty and retraction of statement after two years could have no effect on earlier confession.
27. The facts as recorded in para 2 of the interim order are re-produced below:
As per facts on record M/s Praveen Kumar & Co. were engaged in the manufacture of PARVEEN CHHAP unmanufactured branded Chewing Tobacco falling under Chapter Heading No. 2401.90 and were registered with Central Excise department. The officers of Anti-Evasion branch, Delhi-I Commissionerate visited the factory and residential premises of the appellant on 4.10.2001. During the course of search of the residential premises 14 loose sheets written on both sides papers pertaining to the factory accounts were recovered and resumed by the officers for further investigations. The said 14 loose sheets were shown to Shri Parveen Kumar, Proprietor of the Appellants firm and statement dated 4.10.2001 was recorded under Section 14 of the Act ibid. wherein he admitted the recovery of the loose sheets from his residential premises and stated that the same contained details of the clearances effected by him in a clandestine manner without discharge of Central Excise duty and without issue of proper document. He also handed over nine cheques of Rs.1,00,000/- each totalling Rs.9,00,000/- towards Central Excise duty evaded. Statement of Shri Rajender Kumar, Authorised Signatory was also recorded on 8.10.2001 under Section 14 of the Act ibid. wherein he admitted the contents of the statement dated 4.10.2001 of Shri Praveen Kumar, Proprietor of the Appellants firm. The appellant informed the department that he had deposited Rs. 4 lakhs vide TR-6 Challans dated 13.10.2001 and 8.11.2001. Statement of Shri Praveen Kumar, Proprietor was again recorded on 1.8.2003 under Section 14 of the Act ibid. wherein he furnished month wise details of production and details covered under the 14 loose sheets recovered from his residence on 4.10.2001
28. During the hearing before me it was conceded by the ld. Advocate for the respondents that the proprietor Shri Praveen Kumar, in his statement recorded on 4.10.2001 admitted that the said 14 loose sheets were recovered from his residential premises, and that the same contained details of the clearances effected by him in a clandestine manner without discharge of Central Excise duty. In his statement Shri Rajender Kumar, authorised signatory, also admitted the contents of the statement of Shri Praveen Kumar. However, it was stated that in a subsequent statement dated 1.8.2003, Shri Praveen Kumar explained that the entries in the loose sheets were a sort of RG-I register entries. The ld. Advocate further stated that the Commissioner (Appeals) has also taken note of the quantities mentioned in loose sheets and the quantities as per RG-I register which were very similar as the difference between the two for various months was hardly about 500 (for each month) which shows that the loose sheets contained clearances made legally. The ld. Advocate cited several judgements including the cases of Raj Petroleum Products Vs. CCE, Mumbai-I 2005 (192) ELT 806 (Tri.-Mumbai), Sri Venkatesh Enterprises Vs. CC, Chennai 2005 (192) ELT 818 (Tri.-Chennai) and Al-Futtaim Engineering Vs. CC, Chennai 2007 (219) ELT 490 (Tri.-Bang.) essentially to press the proposition that as a basic rule of evidence, where there is a conflict between the documentary evidence and oral evidence, the former will prevail. The ld. Advocate also stated that in this case the Income Tax Appellate Tribunal has accepted these submissions and that the statement dated 4.10.2001 was actually dictated by Central Excise officers who made Shri Praveen Kumar sign the same.
29. The ld. AR contended that the case is not merely based on statement and the loose sheets are indeed corroborating evidence; the RG-I register was never produced at the time of the visit of Central Excise officers on 4.10.2001, the proprietor himself admitted that the loose sheets contained the details of clandestine clearances and that a retraction of sorts almost two years after the first statement could not be given credence. They cited several judgements to that effect which will be referred to in the discussion below.
30. I have considered the submissions and contentions of both sides. It is a fact that the statement dated 4.10.2001 had never been retracted until 1.8.2003 when the proprietor tried to claim that the entries in the loose sheets broadly tallied with their RG-I register. But for almost close to two years from 4.10.2001 there had been no representation alleging that the statement dated 4.10.2001 was obtained under duress. Indeed the statement dated 4.10.2001 was also confirmed by Shri Rajender Kumar, authorised signatory in his statement dated 8.10.2001 for which again there have been no allegations/representation that the same was obtained under duress. As regards the main contention of the Advocate that in the statement dated 1.8.2003 they explained all the entries of the loose sheets vis-a-vis RG-I register which showed only minor month wise difference of 500 whereby claiming that the loose sheets actually contained details of legitimate clearances only. I find that the proprietor was repeatedly summoned on 7.1.2003, 26.3.2003 and 1.8.2003 but he appeared only on 1.8.2003 when he so claimed. In this regard, I have seen the chart in para 5 of the order-in-appeal which is re-produced below :
MONTH/ YEAR Quantity of small Rs.1/- Pouches Quantity of small Rs.2/- Pouches Quantity as per loose papers Quantity as per RG-I Difference Quantity as per loose papers Quantity as per RG-I Difference Oct, 1998 255500 255000 500 25100 25000 100 Nov.,1998 254500 254000 500 26500 26000 500 Dec.,1998 255500 255000 500 26650 26500 150 Jan.,1999 259000 258500 500 26600 26500 100 Feb.1999 254500 254000 500 29100 2900 100 Mar.,1999 265000 264500 500 32700 32500 200 Even a cursory glance at the above chart reveals that for every month mentioned therein, the difference between the quantities shown in the loose sheets and the RG-I register is precisely 500 pouches with respect of the pouches of Rs. 1 each and in full hundreds like 100, 200, 500 (save for one which is 150) for pouches of Rs.2 each. Such neat differences are too neat to be really realistic in the given circumstances and raise a doubt about the genuineness of the RG-I register produced on 1.8.2003 when the said RG-I register was never produced by the appellants on the day of the visit/search and thereafter up to almost two years (i.e. up to 1.8.2003). The RG-I register was not recovered during search also. There was also no mention of the RG-I register in the statements of the proprietor or the authorised signatory; not even to the effect that it existed even if not found then, although RG-I register is required to be present in the factory 24x7 and is required to be made available to Central Excise officers on demand for verification. All of these facts, factors and circumstances are compelling to infer at least on the principle of preponderance of probability that the so called RG-I register produced on 1.8.2003 was nothing but a result of manipulation and fabrication. Further even at the time of recording statement dated 1.8.2003 Shri Praveen Kumar did not expressly retract his earlier inculpatory statement nor allege any duress or threat. Indeed the statement dated 4.10.2001 of Shri Praveen Kumar was written by his son and signed by him (i.e. Shri Praveen Kumar) and none of them in its immediate aftermath made any representation that the same was not voluntary. Indeed even the payment of duty has never been alleged by the proprietor or the authorised signatory to have been made involuntarily under duress or threat or inducement
31. Coming to the contention of the Respondents that documentary evidence should prevail over oral evidence and the judgement referred to by them in that regard, I would like to state that the proposition is totally acceptable and therefore there is no need to analyse the judgements referred to by them in that regard. The statements of Shri Praveen Kumar, Proprietor dated 4.10.2001 and Shri Rajender Kumar, authorised signatory on 8.10.2001 are clearly inculpatory. Further the said statements are duly supported by 14 loose sheets containing the details which were admitted to be the details of clandestine clearances, by both the proprietor himself as well as the authorised signatory. Thus here is a case of oral evidence (confession) of proprietor as well as the authorised signatory recorded on two different dates and supported by the documentary evidence in the form of 14 loose sheets recovered from the residence of the proprietor. The details contained in these loose sheets were clearly admitted by the proprietor and the authorised signatory to be the details of clandestine clearances. Thus, it is not a case of mere oral evidence unsupported by documents. A much later claim of the proprietor that those 14 loose sheets essentially contained the details of the RG-I register has been shown to be lacking any credibility; more so because there was no RG-I register produced at the time of search nor was it recovered during search and also because if these loose sheets actually contained details of legal clearances, they should have been found in the factory where such details are legally required to be kept 24x7 and produced to Central Excise officers on demand.
32. As far as the reference to the Income Tax assessment is concerned, it is to state that the Income Tax department had not investigated the case at their end and the CESTAT decision in this case is only to be based on the evidence found during investigation by Central Excise department.
33. It is pertinent to mention at this stage that a case is to be decided on the basis of the evidence collected and not on the basis of evidence which could have been collected but was not collected. It also needs to be reiterated that such cases are to be established based on the principles of preponderance of probability and not on the principle of beyond reasonable doubt.
34. The ld. Advocate cited the judgement in the case of Durga Trading Company Vs. CCE, Lucknow - 2002 (148) 967 (Tri.-Del.) wherein it has been held that the charge of clandestine removal cannot be based on presumptions and assumptions and there should be tenable evidence of removal of goods alleged to have been manufactured and cleared without payment of duty. Similar view was taken by other judgements referred to the ld. Advocate to that effect. But these judgements do not come to the Respondents rescue in the present case inasmuch as the statement of the proprietor himself as well as that of the authorised signatory clearly contain confession of clandestine removal of goods and the documentary evidence of such removal was found in the form of 14 loose sheets about which both these responsible persons, admitted that they contained details of clandestine clearances and none of these persons ever alleged any duress or inducement or threat.
35. In the case of CC, Mumbai Vs Shamshuddin M.A. Kadar - 2010 (259) ELT 44 (Bom.), Bombay High Court observed that the retraction made after delay of one and a half months was an afterthought and the statement is a material piece of evidence. In the case of K.G. Augustine Vs. CC - 1997 (89) ELT 625 (Tri.), it was held that the statement made by person to be considered voluntary and true even if retracted when circumstances not showing any use of threat or coercion and also when corroborated by statements of other persons. In the case of K.I. Pavunny Vs. Assistant Collector (HQRS), Central Excise Collectorate, Cochin - 1997 (18) RLT 641 (SC), the Supreme Court held that confessional statement under Section 108 of the Act, 1962 is admissible as person giving statement is not an accused and voluntary statement is not to be a characterised to have been obtained by threat, inducement or promise and further, that the burden is on the person to prove that his statement was obtained by threat inducement or promise. The Honble Supreme Court further observed that there is no prohibition under the Evidence Act to rely upon the retracted confession to prove the prosecution case or make the same basis for conviction of the accused. In the case of Collector of Customs Vs. Mahindra Chandra Dey, Calcutta High Court held that principles relating to inadmissibility of confessions under Cr P.C. 1973 are not applicable to confessions made under Section 108 of the Customs Act. Incidental reference can also be made to the case of CCE, Chandigarh Vs. Nabha Steels Ltd. 2004 (169) ELT 345 (Tri.-Del.) where CESTAT held as under :
2. I have heard both the sides. The bare perusal of record shows that the factory premises of the the the Central Excise officers on?respondents was visited by 25-7-2000. On verification of the stock of the raw material and finished goods, shortage of 8.835 MTs of non-alloy steel ingots was detected. Similarly, some shortage of runners and risers was also detected at the spot. These shortages were admitted by Shri Ajay Goyal, Director of the respondents and the entire duty involved on both the shortages was debited by the respondents. The plea of the respondents that no actual weighment was done for arriving at the correct shortage of the goods detailed above and that the quantity has been arrived at, on estimation basis has been wrongly accepted by the Commissioner (Appeals) for setting aside the duty demand. This plea could not be allowed to be taken by them in the face of the confessional statement of Ajay Goyal, Director of the respondents before the Excise staff at the time of checking. The respondents are bound by the admission made by their Director and could not later on complain that the shortage was not properly arrived at. Even at the time of signing of the panchnama prepared at the spot, the Director of the respondents or any other representative never took exception to the mode of verification adopted by the officers for arriving at the quantity of the goods found short. Therefore, the impugned order of the Commissioner (Appeals) setting aside the duty payable by the respondents on the goods found short, cannot be sustained and is set aside.
36. In the light of the foregoing, in the context of the present case, the reference is answered in favour of the opinion of Honble Member (Technical).
(R.K. Singh) Member (Technical) RM FINAL ORDER No. 51153/2015 In view of the majority decision, the appeal filed by the Revenue is allowed.
(Pronounced in open court on 30/03/2015)
(B.S.V. MURTHY) (ARCHANA WADHWA)
TECHNICAL MEMBER JUDICIAL MEMBER
Pnr.
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