Custom, Excise & Service Tax Tribunal
Balajee Structurals (India) Ltd vs Raipur on 28 June, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-SM
COURT -III
Excise Appeal No. E/50855 & 50862/2018-Ex [SM]
[Arising out of Common Order-in-Original No.
RPR/EXCUS/000/COM/005/2018 dated 08.01.2018 passed by the
Commissioner, Customs, Central Excise & Service Tax, Raipur .]
M/s. Balaji Structural India Pvt. Ltd.
& Suresh Agarwal, Director ...Appellant(s)
Vs.
C.C.E., & S.T., Raipur ... Respondent
Present for the Appellant : Mr. M. Saharan, (Adv.) Present for the Respondent : Mr. Harish Saini, A.R. Coram: HON'BLE MR. AJAY SHARMA, MEMBER (JUDICIAL) Date of Hearing.19.06.2018 Date of Decision._28.06.2018_ FINAL ORDER NO. __52331-52332/2018_ PER: AJAY SHARMA These are case of clandestine removal of M.S. Ingots. Since the duties and imposition of penalties are based upon the same evidences leading to the conclusion of clandestine removal therefore both the appeals are being disposed of by this common order.
2. The question involved in these appeals is whether the Principal Commissioner vide its impugned order dated 08.01.2018 is justified in confirming the demand of Central Excise duty of Rs. 10,68,667/- along with interest and penalty in respect of
2|Page ST/51009/2018 -[SM] clandestine removal of 360.240 mt of M.S. Ingots recovered from the appellant M/s. Balaji Stuctural (India) Ltd., Raipur of which the appellant-Suresh Agarwal is Director.
3. I have Heard both the parties and perused the records. A show cause notice dated 06.08.2010 was issued to the appellant in appeal no. 50855/2018-Ex (SM) as to why:-
(i) Central Excise duty amounting to Rs.
16,04,75,554/- (BED Rs. 15,63,58,411/- (+) Ed. Cess Rs. 31,27,168/- & SHE Cess Rs. 9,89,975/-) (as detailed above and in Annexure-A ) on the suppressed production and clandestinely removed 58681.0 MTs of M.S. Ingots valued at Rs. 1,13,55,92,087/- during the period 2005-06 (July 2006) to 2010-11 upto June'10, without issue of Central Excise invoice and without following Central Excise procedure, should not be recovered from them invoking the provisions of extended period of 5 years under the provision of Section 11 A of Central Excise Act, 1944.
(ii) Interest should not be recovered from them under the Section 11 AB of the Central Excise Act, 1944 readwith Rule 14 of the Cenvat Credit Rules, 2004.
(iii) Mandatory penalty equal to amount of duty should not be imposed upon Noticee under the provisions of Section 11 AC of the Central Excise
3|Page ST/51009/2018 -[SM] Act, 1944 for indulging in suppression of production and clandestine removal of goods without payment of duty.
(iv) Penalty should not be imposed upon thme under the provisions of Rule 25 of Central Excise Rules, 2002 for contravention of Rule 4, 6, 8 10 and 11 of the Central Exisce Rules.
4. Whereas in the same show cause notice, the appellant in appeal no. 50862/2018-Ex(SM) was also called upon to show as to why penalty under Rule 26 of the Central Excise Rules, 2002 should not be imposed on him for his act of omission and commission leading to the evasion of duty.
5. 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. At the time of adjudication before the ld. Principal Commissioner, Sh. S.K Pansari proprietor of Monu Steel did not appear for cross-examination despite various opportunities given and the same has recorded in the impugned order in paragraph 21.3 also. The show cause notice mentioned that "the appellant" with intent to evade payment of duty suppressed reproduction of M.S. Ingots so manufactured out of such sponge iron and clandestinely removal 58681 MTs (including the quantity of 360.240 mt of M.S Ingots manufactured and cleared clandestine by the appellant in
4|Page ST/51009/2018 -[SM] 2006-07) without issue of invoices and without payment of duty as recorded in the dairies of M/s. Monu Steel prop. Sh. S.K. Pansari. Therefore it is cleared that the Central Excise Duty amounting to Rs. 16,04,75,554/-is inclusive of the duty of Rs. 10,68,667 in respect of clandestine removal of 360.240 mt of M.S. Ingots.
6. In the said show cause notice the total demand of Central Excise duty raised was amounting to Rs. 16,04,75,554/-on the suppressed production and clandestine removal of 58681.0 MTs of M.S Ingots valued at Rs. 1,13,55,92,087/-during the period 2005- 06 (July 2005) to 2010-11 (June 2010). But the ld. Principal Commissioner vide impugned order dated 08.01.2018 although dropped the demand of Central Excise duty of Rs. 16,04,75,554/- being not sustainable for alleged suppressed production of 58681 MTs of M.S Ingots by the appellant, but still confirmed the demand of Central Excise duty of Rs. 10, 68, 667/- in respect of clandestine removal 360.240 MTs of M.S Ingots
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
5|Page ST/51009/2018 -[SM] 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 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 submitted that the Revenue is 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 their 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 to duty of Rs. 10,68, 667/- is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of the goods and also in view of the fact that the said amount is already included in the duty demand of
6|Page ST/51009/2018 -[SM] Rs. 16,04,75,554/-which has been dropped in the impugned order by the ld. Principal Commissioner. There is absolutely no evidence on record to show that the appellant - Ms/ Balaji Structural India Pvt. Ltd. has cleared 360.240 MT of M.S. Ingots. 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 dairy 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 could 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. Bs. CCE, Raipur, 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), 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
7|Page ST/51009/2018 -[SM] 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 - 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
8|Page ST/51009/2018 -[SM] 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, 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 a batch of matters being Appeal Nos. E/51117-51118/2018-SM and E/50940, 51236, 51241/2018 Arora (CG) Energy & Steel P. Ltd., Vs. CCE & ST Raipur vide common order dated 15.06.2018 set aside the demand since the entire case of the Revenue is based upon the entries made in the records of M/s. Monu Steel without there being any corroborative evidence.
13. In view of the above discussion and finding, the appeals are allowed and the impugned order is set aside. As a result the
9|Page ST/51009/2018 -[SM] penalty imposed on the Sh. Suresh Agarwal, Director is also set aside.
(Pronounced in the open court on __28.06.2018__) (V. PADMANABHAN) (Ajay Sharma) MEMBER(TECHNICAL) MEMBER (JUDICIAL) Sakshi