Custom, Excise & Service Tax Tribunal
Jain Metal Rolling Mills Unit I vs Commissioner Of Gst&Amp;Cce(Chennai ... on 30 September, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
REGIONAL BENCH - COURT NO. - III
Excise Appeal Nos. 42747 & 42748 of 2018
(Arising out of Order-in-Appeal No.511 & 512/2018 (CTA - I) dated 26.9.2018
passed by the Commissioner of GST & Central Excise (Appeals - I), Chennai)
M/s. Jain Metal Rolling Mills Unit I Appellant
No. 365/200, Madhavaram High Road
Chennai - 600 060.
Vs.
Commissioner of GST & Central Excise Respondent
Chennai North Commissionerate No. 26/1, Mahatma Gandhi Road Chennai - 600 034.
APPEARANCE:
Shri S. Venkatachalam, Advocate for the Appellant Ms. K. Komathi, JC (AR) for the Respondent CORAM Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) Final Order Nos. 41156-41157 / 2019 Date of Hearing: 30.09.2019 Date of Decision: 30.09.2019 Brief facts are that the appellants are registered with the Central Excise Department for manufacturing articles of copper, brass sheets and circles They also have a sales depot at No. 3, Ponnappa Lane, Park Town, Chennai, which is also registered with the Central Excise Department. A search was conducted at the manufacturing unit as well as depot of the appellant. From the depot certain items in the nature of brass circles and sheets, copper plates and scrap of 2 brass and copper and cash amounting to Rs.50,000/- were recovered by the department for which a seizure mahazar was prepared. On reasonable belief that these goods are excisable goods for which the appellant could not furnish any documents at the time of search and seizure, Show Cause Notice No. 26/2015 dated 2.6.2015 was issued proposing to confiscate the good. The manufacturing unit of the appellant was also visited by the officers and 13 handwritten invoices were recovered. On the statements recorded, the department was of the view that these invoices where in respect of goods cleared clandestinely and Show Cause Notice No. 1/2017 dated 7.3.2017 was issued proposing to demand duty on the goods so removed clandestinely. After due process of law, both the Show Cause Notices were adjudicated and the original authority confirmed the confiscation and the confirmation of duties. In appeal, Commissioner (Appeals) upheld the same. Hence these appeals.
2. On behalf of the appellant, ld. counsel Shri S. Venkatachalam appeared and argued the matter. He submitted that the appellant has given detailed reply to the Show Cause Notice. After search and recovery of the items in the depot, the appellant immediately furnished documents to show that the goods stocked in the depot were only bought-out items. The invoices furnished by the appellant along with the bank statements would establish that the goods are properly accounted. The only violation, if any, was that the appellant did not maintain the accounts in their depot as required under Rule 10 of the Central Excise Rules and all the accounts were maintained in the office of the appellant situated at Kilpauk, Chennai. The department rejected the document furnished by the appellant 3 alleging that it was an afterthought. The appellant has furnished the bank details showing the purchase of the goods and therefore the rejection of the documents alleging that these are only afterthought is without any basis. Therefore, confiscation of the goods and demand of duty in respect of these goods cannot sustain. 2.1 In respect of the allegation regarding recovery of handwritten invoices from the manufacturing unit, the ld. counsel for the appellant explained that these invoices were merely raised only for quotation purposes for the new customers and that the goods have not been cleared on these invoices. The department relied upon the statement given by Shri Shiv Prasad Singh, Factory in-charge of the appellant-company, who has inadvertently stated that the goods on these invoices were cleared without payment of duty. Though the appellant requested for cross-examination of the said witness, the same was not considered by the department. As per Section 9D of the Central Excise Act, 1944, the said statement made by the witness cannot be relied by the department without cross-examination of the witness. He relied upon the decision in the case of G. Tech Industries Vs. Union of India reported in 2016 (339) ELT 209 (P&H). He therefore submitted that the demand of duty, interest or the penalties imposed cannot sustain.
3. The ld. AR Ms. K. Komathi appeared and argued on behalf of the department. She referred to Rule 10 of Central Excise Rules and argued that it is incumbent upon the appellant to maintain proper accounts of the stock kept in depot. The appellants have failed to explain the details of the stock kept in the depot. It is only after the search by the officers that the appellants have produced certain 4 invoices. Production of the invoices is only an afterthought by the appellant and therefore the authorities below have rightly rejected the same.
3.1 With regard to 13 handwritten invoices, the ld. AR submitted that the factory manager Shri Shiv Prasad Singh has categorically admitted that the goods in respect of these invoices were removed without payment of duty. Therefore, the demand confirmed is legal and proper.
4. Heard both sides.
5. The first issue is with regard to the demand in respect of the goods seen at the registered depot of the appellant. The appellant has submitted that these are bought-out items and they have furnished invoices before the officer and the same is reflected in the Show Cause Notice itself. The invoices show the purchase of such items and the bank statements produced by the appellant would evidence the payment made on these items. The department has no case that the invoices do not correlate with the goods seen and seized at the premises. Therefore, the allegation that the invoices are only an afterthought cannot sustain. Further, the department has not investigated with the sellers who have supplied these bought-out items to the appellant. From the totality of these facts, I am of the view that the appellant has succeeded in establishing that the goods kept in the depot was accounted. But, however, they have failed to maintain the accounts at the depot itself as required under Rule of the Central Excise Rules. They have maintained the accounts only in their office. This is a violation of the provisions of Central Excise Rules, for which I am of the view that the penalty of Rs.5,000/- has 5 to be imposed under Rule 27 of the Central Excise Rules, 2002. Ordered accordingly.
5.1 The second issue is with regard to the demand of duty in respect of the handwritten invoices recovered from the manufacturing unit. The appellant has contended that these invoices are prepared as quotations for information to the new customers. The department has confirmed the duty by relying upon the statement of Shri Shiv Prasad Singh. The said person is the factory manager of the appellant. Even though the appellant has requested for cross-examination of the said witness, the same has not been considered or granted by the original authority. As per section 9D of the Central Excise Act, 1944, the department has to allow the cross-examination of the witnesses when they are relying upon the statement of such witnesses to confirm the duty. In the present case, apart from the statement of Shri Shiv Prasad Singh, there is no other evidence to hold that the appellant has clandestinely manufactured or removed the goods. The department has not conducted any investigation with regard to the alleged purchasers of the goods. So also there is no evidence with regard to quantity of inputs that have been used for manufacture of alleged clandestine goods.
5.2 From the above discussions, I am of the view that the department has failed to establish the clandestine removal and clearance of the goods in respect of 13 handwritten invoices. The demand of duty with regard to such allegation cannot sustain and requires to be set aside, which I hereby do.
6. In view of the above, I am of the view that the confirmation of duty demand, interest or penalty cannot sustain. I set aside the 6 same. However, I impose a penalty of Rs.5,000/- (Rupees five thousand only) under Rule 27 of the Central Excise Rules, 2002 for not maintaining the accounts at the depot as required under Rule 10 of the Central Excise Rules, 2002. The appeals are partly allowed in the above terms.
(Dictated and pronounced in open court) (SULEKHA BEEVI C.S.) Member (Judicial) Rex