Custom, Excise & Service Tax Tribunal
Pragati Ingots &Amp; Power Private Ltd vs Raipur on 7 November, 2019
1
Excise Appeal Nos. 53734-53735 of 2018-SM
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH, COURT NO. II
Excise Appeal No. 53734 of 2018-SM
(Arising out of order in appeal No. BHO-EXCUS-002-APP-271-18-19 dated 27.07.2018
passed by the Commissioner (Appeals) Central Excise, Raipur.)
M/s Pragati Ingots & Power Pvt. Limited Appellant
Plot No. 196/5, Village-Bendri,
Tehsil- Dharsiva,
Raipur (C.G.) 493221
VERSUS
Commissioner, Customs Central Excise Respondent
Service Tax, Central Excise Building, Dhamtari Road, Tikrapara, Raipur-492001 with Excise Appeal No. 53735 of 2018-SM (Arising out of order in appeal No. BHO-EXCUS-002-APP-271-18-19 dated 27.07.2018 passed by the Commissioner (Appeals) Central Excise, Raipur.) Pradeep Agrawal Appellant Director of M/s Pragati Ingots & Power(P) Ltd., Plot No. 196/5, Village-Bendri, Tehsil- Dharsiva, Raipur (C.G.) 493221 VERSUS Commissioner, Customs Central Excise Respondent Service Tax, Central Excise Building, Dhamtari Road, Tikrapara, Raipur-492001 CORAM:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) APPEARANCE:
Shri Abhash Mishra, Advocate for the appellants. Shri K. Poddar, Authorised Representative for the respondent FINAL ORDERS NOS. 51466-51467/2019 DATE OF HEARING: 30.07.2019 DATE OF DECISION: 07.11.2019 ANIL CHOUDAHRY:
The appellant, M/s Pragati Ingots and Power pvt. Ltd. is engaged in the manufacture of MS Ingots. The appellant is registered with the Central 2 Excise Appeal Nos. 53734-53735 of 2018-SM Excise Department. The other appellant, Pradeep Aggrawal is the Director of M/s Pragati Ingots and Power Pvt. Ltd.
2. Another company namely, M/s Pankaj Ispat Limited, (PIL for short) also located at Raipur is engaged in the manufacture of MS Ingots and structural steels. There was a search by the officers of preventive branch on 12th April 2012 at the factory and other premises of M/s Pankaj Ispat Limited (PIL) and certain documents were recovered and seized. It appeared to revenue that PIL is engaged in suppression of production and clandestine removal of MS Ingots and structural steel. During investigation, statement of Sh. Pankaj Agrawal, Director of M/s Pankaj Ispat Limited (PIL) was recorded on 19.09.2012 and 02.10.2012, wherein, he inter alia, admitted the receipt of MS Igots without invoices from this appellant, clandestinely removed. Based on the statement of the Director and on scrutiny of the records and the documents revealed that PIL had procured 6936.105 MT and 25171.23 MT unaccounted MS ingots during the years 2010-11 and 2011-12 respectively. Such Ingots were utilized for manufacture of finished goods, which were removed clandestinely leading to evasion of duty. On segregation of the unaccounted purchases of MS ingots by PIL, it appeared that this appellant have also supplied MS Ingots clandestinely to PIL 202.03 MT during the year 2010-2011, valued at Rs. 55,65,927/- involving duty of Rs. 5,73,290/-.
3. The statement of Sh. Bishram Sahu, Accountant of appellant was recorded on 21.11.2013, wherein he denied of any clandestine removal of MS Ingots by the appellant. It was further stated that they have sold MS ingots to PIL under cover of invoices only.
4. Show cause notice dated 08.03.2016 was issued on the appellant invoking the extended period of limitation to demand duty of Rs. 5,73,290/- for alleged clandestine removal of finished goods along with interest and 3 Excise Appeal Nos. 53734-53735 of 2018-SM further penalty was proposed under Section 11AC/11AC-1(a). Further, penalty was also proposed on Director of M/s Pragati Ingot & Power Pvt Ltd. The show cause notice was adjudicated on contest, the OIO dated 16.02.2018 was passed by the Assistant Commissioner dropping the show cause notice.
5. Being aggrieved, the revenue preferred appeal before the Commissioner (Appeal). In the impugned order in appeal, passed by the Commissioner (Appeal), who was pleased to allow the appeal of revenue, recording the finding that as the buyer-M/s Pankaj Ispat Limited have confirmed the quantum as per their records, no further evidence is required. Further business relationship is admitted by the appellant with Pankaj Ispat Limited. Accordingly, the Commissioner (Appeals) confirmed the imposition of duty with equal amount of penalty on both the appellants.
6. Being aggrieved, the appellants are before this Tribunal.
7. Heard the parties.
8. It is submitted on behalf of the appellant that the Department has raised a wrong recovery relying upon a third party evidence i.e. documents recovered from M/s. PIL. No investigations in the form of search or recoveries from the appellant premises were made. There is no other corroborative evidence on record to prove the allegations, as have been confirmed by the appellate authority below. The order is, accordingly, prayed to be set aside. Appeal is, therefore, prayed to be allowed. They have relied upon the following case laws for their support:-
1. Continental Cement Company Vs. Union of India - 2014 (309) ELT 411 (All.)
2. Raipur Forging Pvt. Ltd. Vs. CCE, Raipur-I - 2016 (335) ELT 297 (Tri.-Del.), 4 Excise Appeal Nos. 53734-53735 of 2018-SM
3. CCE & ST, Raipur Vs. P.D. Industries Pvt. Ltd. - 2016 (340) ELT 249 (Tri.-Del.)
4. CCE & ST, Ludhiana Vs. Anand Founders & Engineers -
2016 (331) ELT 340 (P&H).
5. Commissioner of C.Ex., Indore vs. Prag Penta Chem Pvt.
Ltd. - 2018 (360) E.L.T. 1025 (Tri.-Del.).
6. Rudra Ventures Pvt. Ltd. vs. Commissioner of C.Ex., Ludhiana - 2016 (344) E.L.T. 472 (Tri. - Chan.)
9. Per-contra, ld. D.R. for the Department has submitted that the Officers of Headquarters, Preventive Branch had conducted massive investigation and searched the premises of M/s.PIL and recovered voluminous incriminating documents sufficiently proving that the appellants have supplied unaccounted raw-material to M/s. PIL. The order under challenge has discussed the clear involvement of the appellant facilitating the clandestine removal of the finished goods to M/s. PIL. There is no infirmity in the order under challenge. The same is, accordingly, prayed to be set aside.
10. After hearing both the sides, since the sole challenge to the order is its reliance upon third party evidence, it is necessary to check the evidentiary value of the third party evidence. The relevant case law in the case of Bajrangbali Ingots & Steel Pvt. Ltd. & Suresh Agarwal vs. CCE, Raipur in Appeal No. E/52062 & 52066/2018 heard on 16.11.2018, which is held as follows:-
9. 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 5 Excise Appeal Nos. 53734-53735 of 2018-SM 340 (P&H). It stand held in all these judgements 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. There is no other evidence or document in the form of stock verification of the raw-material of the appellant and the material supplied to M/s. PIL nor is there any evidence about usage of any transportation by the appellants for transporting the alleged quantity of raw-material to M/s.PIL. In absence thereof, the documents recovered from M/s.PIL cannot be held conclusive against the appellant.
12. In the result, the order confirming the recovery has no legal basis to sustain. Accordingly, order-in-appeal is hereby set aside. Appeal stands allowed. The order-in-original stands restored.
(pronounced on 07-11-2019).
(Anil Choudhary) Member (Judicial) JB