Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs ) Manohara Saraswati Glass Works on 21 February, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.E/677/04, E/678/04,
E/679/2004 & E/680/2004
[Arising out of Order-in-Appeal No.8-11/2004 TRY (ADK) dt. 22.1.2004 passed by the Commissioner of Customs,
& Central Excise (Appeals), Tiruchirapalli]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Member wishes to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Central Excise,
Tiruchirapalli
Appellant/s
Versus
1) Manohara Saraswati Glass Works
2) Jayadevi Industries
3) Mahashree Aruna Chemicals
4) Sowbagyalakshmi Silicates
Respondent/s
Appearance :
Ms.Indira Sisupal, JDR Shri S.Venkatachalam, Advocate For the Appellant/s For the Respondent/s CORAM:
Honble Ms.Jyoti Balasundaram, Vice-President Date of Hearing : 31.11.2010 Date of Pronouncement : 21.2.2011 Final Order No.____________ The brief facts of the case are that, on the basis of intelligence gathered, the officers of Directorate General of Anti-Evasion searched the factory and office premises of M/s.Jayadevi Industries, M/s.Manohara Saraswathi Glass Works, M/s.Mahashree Aruna Chemicals and M/s.Sowbagyalakshmi Silicates. Verification of seized records revealed that the quantity of Sodium Silicate manufactured was disproportionate to the quantity of Soda Ash consumed and, therefore, show-cause notices were issued to each of the four above mentioned units, proposing recovery of differential duty and proposing penal action. The demands were confirmed and penalties imposed by the Commissioner vide Orders-in-Original No.4 to 7/95 dt. 21.2.95 as per details herein below :- S.No. Name of the factory Duty demanded Rs.
Penalty imposed Rs.
1.
M/s.Jayadevi Industries 3,87,112.44 75,000/-
2. M/s.Manohara Saraswathi Glass Works 6,27,677.09 75,000/-
3. M/s.Mahashree Aruna Chemicals 4,36,678.56 50,000/-
4. M/s.Sowbagyalakshmi Silicates 7,56,633.09 75,000/-
Penalty of Rs.50,000/- was also imposed on Shri A.Ganesan, Partner of M/s.Jayadevi Industries. The factories preferred appeals before the Tribunal which vide its Final Order No.315 to 318/2000 dt. 2.3.2000 remanded the cases for de novo consideration. Pursuant to the order of the Tribunal, the Additional Commissioner took the cases afresh and since the assessees did not appear for personal hearing, the matter was decided ex-parte by confirming the demands and imposing penalties. Vide the impugned order, lower appellate authority set aside the adjudication order; hence these appeals by the Revenue.
2. We have heard both sides. The reasoning of the Tribunal in the remand order is reproduced herein below :-
a. The ratio for arriving at the estimated production of sodium silicate in the case of M/s.Sowbagyalakshmi Silicates & M/s.Manohara Saraswathi Glass Works appears to have been erroneously jacked up by first calculating the total quantity of sodium silicate in solid form which will be produced from the raw materials and thereby again adding extra quantity of sodium silicate in liquid form cleared. There is substantial force in the submissions of learned consultant in this respect and therefore this matter needs to be properly re-examined in the light of his submission. It is not possible for the Tribunal to do this arithmetical work in relation to the primary documents involved.
b. There is no consideration in the order of the 20 invoices, which have been shown to have been recorded in their Form IV raw materials accounts as submitted by the learned consultant above. This issue also needs to be reconsidered.
c. The Commissioner has relied upon the weighment done at the weighbridge near Chennai, yet there is no evidence relating to the same which has been supplied to the Appellants as can be seen from the annexure to Show Cause Notices. Therefore we are of the considered opinion that this decision to rely on the weighment has been taken without disclosing proper evidence relating thereto to the appellants which is against the principles of natural justice.
d. The ground taken by the learned consultant that some of the invoices were in different names than those referred to in para 28 of the Show Cause Notice also needs reconsideration.
e. While it is not disputed that the appellants had been allowed cross examination of some witnesses relied upon by the department during the original proceedings, the submissions of the learned consultant to the effect that the result thereof was in the appellants favour, as the witness have resiled from their earlier deposition and this needs to be reconsidered as the only evidence mainly used by the department is that the invoices were issued by such persons.
f. Due opportunity to be given to the appellants to be heard in detail and after due consideration of not only above points but also any other arguments that appellants may choose to place during the proceedings.
3. The case of the department is that 1202.775 MTs of soda ash purchased by the four factories was not accounted and 5262.724 MTs of sodium silicate was manufactured out of soda ash and cleared. All the factories produced 9 invoices for a total quantity of 353.100 MTs of soda ash and claimed that only this quantity was not accounted. However, the Commissioner (Appeals) has set aside the entire demand relating to sodium silicate manufactured out of the entire quantity of 1202.775 MTs of soda ash. The Tribunal had held in the remand order that the ratio for arriving at the estimated production of sodium silicate in the case of M/s.Sowbagyalakshmi Silicates & M/s.Manohara Saraswathi Glass Works appears to have been erroneously jacked up by first calculating sodium silicate in solid form which would be produced from the raw materials and adding extra quantity of sodium silicate cleared in liquid form. If the full quantity of 2167.000 kgs. of solid sodium silicate manufactured was converted into liquid, it should have resulted in production of 3900.778 kgs. of liquid silicate whereas the RG.1 shows only 2692.315 kgs of liquid silicate and, therefore, the investigating officers came to the conclusion that the quantity of solid and liquid accounted are separate and not converted from solid to liquid. However, I note that it would be correct to work out the ratio assuming that all sodium silicate is first accounted in solid form. The ratio of soda ash to liquid sodium silicate is 29% for M/s. M/s.Sowbagyalakshmi Silicates and 21.24% for M/s.Manohara Saraswathi Glass Works. This cannot result in total setting aside of the demand. As regards the 20 invoices referred to at para 5(b) of the remand order, the quantity of 209.475 MTs, represented by the above mentioned 20 invoices has been excluded while computing 1202.775 MTs of soda ash alleged to have been clandestinely purchased. As regards the correctness of the calculation of SED, I agree with the Revenue that since the period of clearance of goods in question without payment of duty is within the exclusive knowledge of the assessees who had not come forward to furnish details of the period of actual clearance, the adjudicating authority had correctly calculated the SED payable. As regards the finding of the Commissioner (Appeals) that investigation came to an abrupt halt only with the finding that the lorry bearing Regn.No.TN-01-C-6769 and TN-01-D-1377 belongs to M/s.Vani Soap Works, Puduthurkollai and lorries with Regn.Nos.TN-01-C-6769 and TN-01-D-1377 belong to M/s.Manohara Saraswathi Glass Works and M/s.Mahashree Aruna Chemicals respectively and that the investigating authority had not obtained the statements from the owners of the vehicles and their drivers so as to prove illicit receipt of silicate by M/s.Silver Chemicals, I note that the vehicle numbers and their owners have been wrongly noted in the impugned order for the reason that lorry number TN-01-C-7189 belongs to M/s.Vani Soap Works, in which A.Ganesan is a partner, TN-01-C-6769 belongs to M/s.Manohara Saraswathi Glass Works and TN-01-D-1377 belongs to M/s.Mahashree Aruna Chemicals. The man behind the functioning of these four units i.e. the person who was actually managing all the affairs of the four units is A.Ganesan who has admitted clandestine removal of the goods in question without payment of duty in the lorries whose numbers are mentioned herein above and the submission that Shri Ganesan was threatened into an admission of clandestine clearance cannot be accepted as it is an after-thought, raised only before the lower appellate authority. The confessional statements of other witnesses have also not been retracted. The assessees contention is that sodium silicate liquid can be transported only by means of tankers and that none of the above mentioned vehicles alleged to have transported sodium silicate is a tanker. However, the assessees have not produced any material to establish that the above vehicles are only lorries. Further, even if they are lorries, tanks can be fitted in such lorries for transportation of liquid sodium silicate.
4. Shri A.Ganesan has admitted purchase of soda ash and silica sand which are the two main raw materials for the production of solid silicate, without bills, without accounting for the same in Central Excise records, in admission to suppression of manufacture of sodium silicate (liquid) and removal without payment of duty. The soda ash has been purchased from individual dealers such as M/s.Balaji Chemicals, M/s.Sri Srinivasa Enterprises, M/s.Venkateshwara Chemicals and M/s.Lakshmi Enterprises but not accounted for in the statutory records. The affairs of all the four dealers of soda ash were conducted from the same premises and controlled by Shri A.Subburathinam, Proprietor of M/s.Balaji Chemicals who has stated that he used to supply soda ash to Shri A.Ganesan raising bills in the names of M/s.Andavar Industries, M/s.Nithya Chemicals and M/s.Balasubramaniaswamy Traders; that most of the quantities covered by retail bills raised by him in the names of the four companies under his control was actually supplied to Shri A.Ganesan of M/s.Jayadevi Industries. S/Sh L.Subbaiah, Manager of M/s.Sri Srinivasa Enterprises, S.Karuppaiah, Manager of M/s.Balasubramaniaswamy Traders. Balamurugan and S.Amirtharaj, Accountants of Jayadevi Industries corroborated the statements of Shri A.Ganesan and A.Subburathinam between whom the entire transactions of purchase of soda ash without bills had taken place. Similarly, M/s.T.Ganesan of M/s.Siddhi Vinayaga Agencies had stated during investigation, that he had supplied silicate to Shri A.Ganesan of Jayadevi Industries without bills due to stiff competition in the market, financial conditions etc. None of these statements recorded earlier were retracted and it is only during cross-examination that the above witnesses changed their stand and, therefore, their original statements have rightly been relied upon by the adjudicating authority.
5. The case law relied upon by the Commissioner (Appeals) viz. the decision of the Tribunal in CCE Madurai Vs Madras Suspensions Ltd. Final Order No.558, 559/03 dt. 2.7.03 is distinguishable in that case it was held that the Revenue had not produced any other evidence such as shortage of raw materials, purchase of inputs/excess power consumption/payment made to suppliers of raw materials/excess of profit, to establish clandestine manufacture and removal, while in the present case, the evidence on record establishes that raw materials were not accounted for, that soda ash, silica had been purchased without bills etc. and, therefore, I hold that the material on record is sufficient to prove clandestine purchase of raw materials and manufacture and removal of final product without payment of duty.
6. In the light of the above discussion, I set aside the impugned orders and allow the appeals.
(Pronounced in open court on 21.2.2011) (JYOTI BALASUNDARAM) VICE-PRESIDENT gs 10