Mamta Steel India Pvt Ltd vs -Allahabad on 21 November, 2023

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Custom, Excise & Service Tax Tribunal

Mamta Steel India Pvt Ltd vs -Allahabad on 21 November, 2023

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
                  ALLAHABAD

                   REGIONAL BENCH - COURT NO.I

                 Excise Appeal No.70108 of 2016

(Arising out of Order-in-Appeal Nos.394-395-CE/APPL.LKO/LKO/2015 dated
14/10/2015 passed by Commissioner (Appeals) Customs, Central Excise &
Service Tax, Lucknow)

M/s Mamta Steel India Pvt. Ltd.,                  .....Appellant
(Peeparpur, (Sanha), Amethi)
                                    VERSUS

Commissioner of Central Excise, Lucknow ....Respondent
(7A Ashok Marg, Lucknow)
                                    WITH
                 Excise Appeal No.70109 of 2016

(Arising out of Order-in-Appeal Nos.394-395-CE/APPL.LKO/LKO/2015 dated
14/10/2015 passed by Commissioner (Appeals) Customs, Central Excise &
Service Tax, Lucknow)

Shri Lal Padmakar Singh, Director,                .....Appellant
(M/s Mamta Steel India Pvt. Ltd.,
Peeparpur, (Sanha), Amethi)
                                    VERSUS

Commissioner of Central Excise, Lucknow ....Respondent
(7A Ashok Marg, Lucknow)


APPEARANCE:
Shri S.P. Ojha, Consultant for the Appellant
Shri Sandeep Pandey, Authorised Representative for the Respondent


CORAM:        HON'BLE MR. SANJIV SRIVAST AVA, MEMBER (TECHNICAL)



             FINAL ORDER NOs.70207-70208/2023


                DATE OF HEARING  :              06 November, 2023
           DATE OF PRONOUNCEMENT :              21 November, 2023


SANJIV SRIVASTAVA:


       These two appeals are directed against common Order-in-
Appeal Nos.394-395-CE/APPL.LKO/LKO/2015 dated 14/10/2015
passed by Commissioner (Appeals) Customs, Central Excise &
                                              Excise Appeal Nos.70108-70109 of 2016
                                 2


Service Tax, Lucknow. By the impugned order Commissioner
(Appeal) has held as follows:-

                                 ORDER

Both appeals i.e. Appeal No.- 39-ST(CX)/2015 dated 31.03.2015, filed by M/s Mamta Steel India Pvt. Ltd., Peeparpur (Sanha), Amethi, District- Chhatrapati Sahuji Maharaj Nagar- 227405, and Appeal No.- 40-ST(CX)/2015 dated 31.03.2015, filed by Shri Lal Padmakar Singh, Director of M/s Mamta Steel India Pvt. Ltd., Peeparpur (Sanha), Amethi, District- Chhatrapati Sahuji Maharaj Nagar (U.P.), are dismissed and corresponding O-I-O No.- 51/ADC/LKO/CX/2014-15 dated 12.01.2015, is upheld.

1.2 Original Authority vide his Order-in-Original No.51/ADC/LKO/CX/2014-15 dated 12/01/2015 held as follows:-

ORDER On the basis of foregoing discussion and findings, I pass the following order:-

1. I confirm the total demand of Rs. 2,00,449/--00 (Rs Two lacs four hundred and forty nine only) not paid on shortage found in stock of MS Ingots in the premises of M/s Mamta Steel under Section 11A(4) of the Central Excise Act, 1944 along with interest at the applicable rate under Section 11AA ibid.

2. I confirm the demand of Central Excise Duty (including Education Cess, Secondary & Higher Education Cess) to the tune of Rs.36,46,346/-[Rs Thirty six lakh forty six thousand three hundred and forty six only] not paid on the finished goods removed clandestinely under the cover of the duplicate/forged invoices (issued from books at Sr.No.6 & 8 of the 'Resumption Memo') in addition to other books (Sr.No.7 & 9 of the 'Resumption Memo') from the factory premises of M/s Mamata, Section 11A(4) of the Central Excise Act, 1944; along with interest at the applicable rate Section 11AA ibid.

Excise Appeal Nos.70108-70109 of 2016 3

3. I impose a penalty of Rs.38,46,395/- [Rupees Thirty Eight lakh forty six thousand three hundred and ninety Five only] upon M/s. Mamta Steel India Pvt. Ltd., Amethi, Distt. C.S.M. Nagar (U.P.) Pin Code-227408. under Rule 25 of the Central Excise Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944.

4. I also impose a penalty of Rs.38,46,395/- [Rupees Thirty Eight lakh forty six thousand three hundred and ninety Five only] upon Shri Lal Padmakar Singh, director M/s Mamta Steel India Pvt. Ltd., under Rule 26 of the Central Excise Rules, 2002."

2.1 Appellant-I M/s Mamta Steel India Pvt. Ltd. is a manufacturing unit and Appellant-II Shri Lal Padmakar Singh is director of the said unit. Appellants were engaged in manufacture of MS Ingots, falling under Tariff Item No.72061090 of schedule to Central Excise Tariff Act, 1985. Appellants' unit was visited by Central Excise Officers on 30.11.2011 and verification of the stock was done under a proper panchnama. It was found that there was shortage of finished goods to the extent of 72.78 MT on which Central Excise duty of Rs.2,00,449/- was payable. Various records such as RG-1 register, Form-IV register and various invoice books were also resumed under the Panchnama dated 30.11.2011.

2.2 During the course of scrutiny of records it was observed that appellants have been clearing the goods against the same invoice, number of times to various customers and thus was evading central excise duty. After completion of the investigations and inquires a show cause notice dated 22.03.2013 was issued to the appellants asking them to show cause as to why:-

Appellant-I "(a) Central Excise duty (including Education Cess, Secondary & Higher Education Cess) to the tune of Rs.2,00,449/- not paid on the shortage found in the stock of M.S. Ingots in the factory premises of M/s Mamata, Excise Appeal Nos.70108-70109 of 2016 4 should not be demanded and recovered under the provisions of Section 11A(4) of the Central Excise Act, 1944;

(b) The Central Excise duty (including Education Cess, Secondary & Higher Education Cess) to the tune of Rs.36,46,346/- not paid on the finished goods removed clandestinely under the cover of the duplicate/forged invoices (issued from books at Sr.No.6 & 8 of the 'Resumption Memo') in addition to other books (Sr.No.7 & 9 of the 'Resumption Memo') from the factory premises of M/s Mamata, should not be demanded and recovered under the provisions of Section 11A(4) of the Central Excise Act, 1944;

(c) Interest at applicable rates, on the duty not paid, should not be demanded and recovered under Section 11AA of the Central Excise Act, 1944; and

(d) Penalty should not be imposed upon them for contravention of Rules 4,6,8,10, 11 of Central Excise Rules, 2002, under Rule 25 of the Rules, ibid read with Section 11AC of the Central Excise Act, 1944 for their act of suppression the facts, fraud, collusion and contravention of provisions of various Rules, ibid with intent to evade payment of duty as discussed in foregoing paras."

Appellant-II was asked to show cause as to why penalty should not be imposed upon him under Rule 26 of the said Rules for his acts of knowingly, deliberately and actively engaging in concealing/ selling & purchasing/ dealing with transactions in aforementioned clandestine removal of excisable finished goods by the Appellant No.I and of preparing duplicate/forged Invoices.

2.3 This show cause notice was adjudicated as per the Order- in-Original referred in para 1.2 above. Aggrieved appellants filed appeal before Commissioner (Appeals) which was dismissed as per the impugned order as stated in para-1 above. Aggrieved appellant challenged this order before this Tribunal and the Excise Appeal Nos.70108-70109 of 2016 5 Tribunal vide its Final Order Nos.71270-71271/2017 dated 17.10.2017 dismissed the appeals by observing as follows:-

"5. Having considered the rival contentions and on perusal of records it is notice from the show cause notice dated 22.03.2013 that invoices with same numbers such are Invoice No.26 was issued on various dated such as 01.11.2011, 02.11.2011, 03.11.2011, 04.11.2011, 05.11.2011 and 06.11.2011 indicating various quantities of ingots cleared and similar situation was in Invoice No. 27 or Invoice No. 28 etc. Further, in the invoice book mentioned at Serial No. 8 of Annexure A, Invoice No. 3 was issued several times. No convincing defence was put forth against issue of number of invoices with the same number on various occasion to different purchases containing different information about the quantity of ingots cleared. Therefore, I do not find any infirmity in the order passed by the learned Commissioner (Appeals). I, therefore, declined to interfere with the impugned Order- in-Appeal. Both the present appeals are dismissed."

2.4 Against the order of dismissal appellants filed appeal before Hon'ble Allahabad High Court, wherein vide order dated 01.08.2019 in Central Excise Appeal No.17 of 2018 Hon'ble High Court has allowed the appeal of the appellants by remanding the matter back to the Tribunal observing as follows:-

"17. Providing of reasons in orders is of essence in judicial proceedings. Every litigant who approaches the Court with a prayer is entitled to know the reasons for acceptance or rejection of such request. Either of the parties to the lis has a right of appeal and, therefore, it is essential for them to know the considered opinion of the Court or the Tribunal to make the remedy of appeal meaningful. It is the reasoning which ultimately culminates into final decision which may be subject to examination of the Appellate or other higher Courts. It is not only desirable but, in view of the consistent position of law, mandatory for the Court to Excise Appeal Nos.70108-70109 of 2016 6 pass orders while recording reasons in support thereof, however, brief they may be. Brevity in reasoning cannot be understood in legal parlance as absence of reasons. While no reasoning in support of judicial orders is impermissible, the brief reasoning would suffice to meet the ends of justice at least at the interlocutory stages and would render the remedy of appeal purposeful and meaningful. It is a settled canon of legal jurisprudence that the Courts are vested with discretionary powers but such powers are to be exercised judiciously, equitably and in consonance with the settled principles of law. Whether or not, such judicial discretion has been exercised in accordance with the accepted norms, can only be reflected by the reasons recorded in the order impugned before the higher Court. Often it is said that absence of reasoning may ipso facto indicate whimsical exercise of judicial discretion. Patricia Wald, Chief Justice of the D.C. Circuit Court of Appeals in the Article, "The problem with the Courts: Black-robed Bureaucracy Or Collegiality Under Challenge" 42 Md.L. Rev. 766, 782 (1983), observed as under:-

'My own guiding principle is that virtually every appellate decision requires some statement of reasons. The discipline of writing even a few sentences or paragraphs explaining the basis for the judgment insures a level of thought and scrutiny by the Court that a bare signal of affirmance, dismissal, or reversal does not.'

18. The Court cannot lose sight of the fact that a losing litigant has a cause to plead and a right to challenge the order if it is adverse to him. Opinion of the Court alone can explain the cause which led to passing of the final order.

Whether an argument was rejected validly or otherwise, reasoning of the order alone can show. To evaluate the submissions is obligation of the Court and to know the Excise Appeal Nos.70108-70109 of 2016 7 reasons for rejection of its contention is a legitimate expectation on the part of the litigant.

19. It will be useful to refer to the words of Justice Roslyn Atkinson, Supreme Court of Queensland, at AIJA Conference at Brisbane on 13-9-2002 in relation to Judgment Writing. Describing that some judgments could be complex, in distinction to routine judgments, where one requires deeper thoughts, and the other could be disposed of easily but in either cases, reasons they must have. While speaking about purpose of a judgment, she said, 'The first matter to consider is the purpose of the judgment. To my mind there are four purposes for any judgment that is written:-

(1) to clarify your own thoughts;

(2) to explain your decision to the parties;

(3) to communicate the reasons for the decision to the public; and (4) to provide reasons for an Appellate Court to consider.'

20. Clarity of thought leads to proper reasoning and proper reasoning is the foundation of a just and fair decision. In Alexander Machinery (Dudley) Ltd. v. Crabtree 1974 ICR 120 (NIRC), the Court went to the extent of observing that 'Failure to give reasons amounts to denial of justice'. Reasons are really linchpin to administration of justice. They are the link between the mind of the decision-taker and the controversy in question. To justify our conclusion, reasons are essential. Absence of reasoning would render the judicial order liable to interference by the higher court. Reasons are the soul of the decision and its absence would render the order open to judicial chastism. The consistent judicial opinion is that every order determining rights of the parties in a Court of law ought not to be recorded without supportive reasons. Issuing reasoned order is not only beneficial to the higher Excise Appeal Nos.70108-70109 of 2016 8 courts but is even of great utility for providing public understanding of law and imposing self- discipline in the Judge as their discretion is controlled by well- established norms. Absence of reasoning is impermissible in judicial pronouncement.

22. The contention raised before us that absence of reasoning in the impugned order would render the order liable to be set aside, particularly, in face of the fact that the Tribunal found merit and allowed the appeal.

23. Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases (Wharton's Law Lexicon). Such is the significance of reasoning in any rule of law. Giving reasons furthers the cause of justice as well as avoids uncertainty. As a matter of fact it helps in the observance of law of precedent. Absence of reasons on the contrary essentially introduces an element of uncertainty, dissatisfaction and give entirely different dimensions to the questions of law raised before the higher/appellate courts. In our view, the court should provide its own grounds and reasons for rejecting claim/prayer of a party whether at the very threshold i.e. at admission stage or after regular hearing, howsoever concise they may be.

24. It is the duty cast upon the Appellate Authority that even if it is in agreement with the view taken by the first Appellate Authority, it should give its own reasons/findings which may indicate that there has been application of mind and also the consideration of grounds raised in the appeal by the revisionist. In absence of reasons it is difficult to come to a conclusion that there has been any application of mind by the Tribunal and such an order in the opinion of the Court cannot be sustained and deserves to be set aside.

25. Accordingly, the appeals are allowed. Judgment and order dated 17.10.2017 passed by the Central Excise and Excise Appeal Nos.70108-70109 of 2016 9 Service Tax Appellate Tribunal, Allahabad is hereby set- aside.

26. The matter is remanded to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) for redetermination, in terms of the discussion made above, after affording opportunity to the parties expeditiously, say within a period of three months from the date of production of a certified copy of this order in accordance with law."

2.5 Hence, these appeals.

3.1 I have heard Shri S.P. Ojha learned Consultant appearing for the appellant and Shri Sandeep Pandey learned Authorised Representative appearing for the revenue.

3.2 Arguing for the appellants learned Counsel submits that-

 In the present case the demand made in respect of shortages of stock is without any merits as the stock was determined on the basis of eye estimation and not by actual weighment. It has been held by the Tribunal in series of decisions that such demands made on the basis of eve estimation cannot be sustained. Reliance can be placed to the decision of Allahabad Bench in the case of Shree Gurunanak Steel & Allied Industries Vs Commissioner of Central Excise, Lucknow Final Order No.71243/2019 dated 28.06.2019.

 It is admitted in para 6 of the show cause notice No.31 dated 30.11.2011 issued from the alleged forged invoice book was issued to M/s United Steel Industries for removal of 32.860 MT M.S. Ingots but in follow-up action conducted on 01.12.2011 at M/s United Steel Industries, no discrepancy was found.

 Director of the appellant (appellant-II) never admitted removal of M.S. Ingots without payment of duty.  Show cause notice admits that all the invoices from May 2011 to November 2011 were issued either to M/s United Steel Industries or M/s Kumar Industries, Officers visited Excise Appeal Nos.70108-70109 of 2016 10 at both the units and verified all the invoices issued by the appellants during the period from May, 2011 to November 2011. They did not find any discrepancy in the records. Both the said units have denied to receive any goods other than goods received through proper invoices produced by them.

 It is settled position in law that whosoever makes an existence of certain facts must make in by producing cogent evidences unless there is exception in the law. Reliance can be placed by the following decisions- o M/s Vikram Cement Vs CCE, Kanpur 2012 (286) ELT 615 (Tri.-Delhi), o CCE Vs Brims Product 2011 (271) ELT 184 (Pat.) o CCE Vs Renny Steel Casting (P) Ltd. 2013 (288) ELT 45 (P & H).

 Since the demand of duty is not sustainable the demand of interest or imposition of penalty dovetailed with such demand of duty are also not sustainable. For the same reason no penalty can be imposed on the appellant-II. Further, he places reliance by the decision of Hon'ble Supreme Court in the case of CCE Vs HMM 1995 (76) ELT 497 (SC).

3.3 Arguing for the Revenue Learned Authorized Representative submits that-

 It is wrong to say that the stock taking was made on eye estimation basis. Panchnama specifically records that the goods actually weighted, this fact of physical verification of stock has been admitted by the director-appellant-ii in his statement recorded on the spot. The invoices against which these demands have been made are the invoices which are found to be issued from the invoice books maintained by the appellant-I. Once there invoices are bearing the same serial number and have been used for clearance of the goods number of times in case where such documentary evidence is available. No further verification Excise Appeal Nos.70108-70109 of 2016 11 is needed, this is the only case that the appellant should be asked to pay the duty as demanded in the show cause notice.

 The charge of clandestine clearance against the appellant by using invoice of same number for clandestine clearance to the goods is well founded and the appellant-I is liable for appropriate penal action in terms of Section 11AC and appellant-II is liable for penalty under Rule 26 of Central Excise Rules, 2002.

 Appeal may be dismissed.

4.1 I have considered the impugned order along with the submissions made in the appeal and during the course of arguments.

4.2 Appellants have contested the demand made in respect of shortages noticed by relying the decision of this Tribunal in the case of Shree Gurunanak Steel & Allied Industries (supra), wherein following has been held:-

"3. The issue to be decided is as to whether the shortages by itself cannot be said to have been on account of clandestine removal or said fact has to be proved by production of the other tangible and positive evidences. The said issue was considered by the Hon'ble Allahabad High Court in the case of Minakhee Castings reported as 2011 (274) ELT 180 (Allahabad) and it was held that the shortages, by itself, cannot lead to the finding of clandestine activity. I also note that an identical issue was considered by the Tribunal in the case of JHV Steels Ltd. Vs Commissioner of Customs, Central Excise & Service Tax vide Final Order No. 70368 of 2018 dated 07.02.2018 wherein it was observed as under:-

"4. It is very clear from the narration in the said show cause notice as scripted hereinabove that actual weighment of finished goods was not carried out by the officers and shortage was estimated on Excise Appeal Nos.70108-70109 of 2016 12 the basis of approximation. On the basis of such approximation charges of shortage of finished goods cannot be leveled. The burden was on Revenue to prove that there was shortage in the finished goods. Further there was also burden on Revenue to prove that the alleged goods were manufactured and cleared without payment of duty by conducting appropriate investigation. No such investigation was carried out. Therefore, I set aside the impugned Order-in-Appeal and allow the appeal. The appellant shall be entitled for consequential relief, as per law."

4. Inasmuch as, in the present case the entire case of revenue is based upon the shortages without there being any other evidences, I set aside the impugned order and allow the appeal with consequential relief to the appellant."

In the present case, this decision may not be applicable. For this purpose I am referring to the panchnama recorded on 30.11.2011 for stock taking:-

"अ धका रय ने फै म उपल ध, तैयार माल व क चे माल क जांच और उनके भौ तक स यापन का काय ार भ कया। ी संह ने बताया क उनक फै म M.S. Ingot (CSH 72061090 ) का नमाण कया जाता है िजसम मु यत: M.S. Scrap, sponge iron, Ferro alloys का योग कया जाता है । फै मे एक भ ठ है िजसक मता 6 टन क है । रकाड का नर ण करने के दौरान अ धका रय ने पाया क RG-1 (Daily stock Account) दनांक 30/11/2011 क closing balance तक भरा हुआ है और िजसम आज दनांक 30/10/2011 का उ पादन कुल 12 टन M.S. Ingot भी शा मल है । अ धका रय ने फै म उपल ध M. S. Ingot क मा ा का भौ तक प से आकलन करने पर पाया क टाक मे कुल 251 M.S.Ingots िजनका कुल वजन तौलने पर 25.602 MT पाया गया, मौजूद मले। जब क Daily stock Register म कुल मा ा 97.680 MT (C.B 30/11/11) दज है । इस कार m.s Ingots के टाक म कुल 72.078 MT क कमी पाई गई। टाक म इस कमी के बारे म पूछे जाने पर ी लाल प माकर संह कोई संतोषजनक उ र नह दे सके। य य प उ होने इस कमी को Excise Appeal Nos.70108-70109 of 2016 13 वीकार करते हुए यह कहा क वह आज दन भर फै न आ सके थे और उनके पीछे ी बी एस शु ला, अ धकृत ह ता र मौजूद थे। शायद उ होने ह कोई माल नकाला हो पर काटना भूल गये हो। इस बारे म कोई प ट उ र वह ी बी एस शु ला से पछ ू कर ह दे पायेग।

M.S.Ingots के टाक के पाई गई कमी का कुल मू य Rs.27000/MT (Invoice No.30 dated27/11/11 आ खर जार इ वाइस) के आधार पर ₹19,46,106 होता है इस पर दे य उ पाद शु क (Cenvat ₹194611 + Ed.Cess ₹3892+ H.S.E.Cess ₹1946) कुल 309449 है िजसे ी संह ने अ तशी अदा करने का आ वासन दया। अ य व तओ ु ं के टाक म sponge iron तथा Femn हवा fesi का टाक सह पाया गया।"

4.3 Director of the appellant-I i.e. appellant-II, in his statement recorded on the spot admitted the shortages and expressed de-satisfaction over the physical verification of stock. The relevant part of his statement is reproduced bellow:-

"म लाल प माकर संह मे. ममता ट ल इि डया पा. ल., सनहा पीपरपरु अमेठ िजला- सी. एस. एम. नगर म डायरे टर हूँ अ य डायरे टर मेर प नी एवं मेर मां ह अत: म वयं ह फै का सम त काय एवं िज मेदार दे खता ै से संचा लत, क य उ पादशु क वभाग म हूँ। मेर क. वष 2011 के माच/अ ल M.S. Ingots का उ पादन करने के लए पंजीकृत हुई, मेर फै म एक इ डे शन फै लगी है िजसक उ पादन मता 6 टन त ह ट है , फै म M.S. Ingots के उ पादन के लए क चे माल के प म अ धकतर एम.एस. ै प का इ तेमाल होता है , जो क हम कबा डय से भी, सीधे उ पादनकता से खर दते ह, हमार फै म ए साईज संबं धी रकाड, हमारे एकाउं टट बी.एम. शु ला दे खते ह जो आज अ धका रय के फै म आने से पहले ह अपने घर चले गये थे अत: ए साईज रकाड के वषय म म अभी कुछ बता नह ं सकता, अ धका रय के पछ ू ने पर मुझे यह कहना है क मेर फ म मु यत: पंज आयरन तथा कै पटल गु स जैस-े फर नश, मो ड, ांसफामर आ द पर सनवैट े डट लया है , अ धका रय ने मेरे फै म उपल ध M.S. Ingots, पंज आयरन एवं फैर मैगनीज के टाक का भौ तक स यापन कया, और इंगट के आर जी-1 म दज टाक से कुल 72.078 एमट माल क कमी के आधार पर Excise Appeal Nos.70108-70109 of 2016 14 .1946106 होता है तथा इस पर दे य उ पाद शु क कुल पये 2,00,440/- आता है , इस कमी के बारे म म अभी कोई भी उ तर नह ं दे सकता य क म आज दन भर फै नह ं आ सका था और शायद मेर अनप ु ि थ त म बी.एम. शु ला, अ धकृत ह ता र ने कोई माल नकाला हो क तु शायद इ वाईस काटना भल ू गये ह , इस बारे म कोई प ट उ तर म बी.एम. शु ला से पूछकर दे पाऊँगा। म M.S. Ingots टाक म पाई गयी कमी से पूणत: सहमत हूँ। इसके अ त र त अ धका रय ने फै म उपल ध कुछ रकाड एवं कागजात म ये पंचनामा बनाकर अपने क जे म लया, म अ धका रय वारा फै म क गई जांच एवं भौ तक स यापन क कायवाह से पूणत: संतु ट हूँ और इसी लए मने पंचनामे पर ह ता र कए ह। पंचनामे के संल नक म दज रकाड अथवा कागजात जो मेर फै से ा त हुए ह के अ त र त अ य कोई सामान अथवा कागजात अपने क जे म नह ं लया। मेरा यह बयान बना कसी डर अथवा दबाव म दया गया है और यह मेरे जानकार के अनस ु ार पूणत:

स य है ।"

4.4 Having admitted about the shortages of the stock and expressing satisfaction in the manner of physical verification of stock appellant cannot turn back and make a claim, contrary to the same. Entire stock taking by way of physical weighment has been done as recorded in the panchnama which is a substantial piece of evidence and cannot be denied in this manner. Accordingly, I do not find any merits in the statements of the appellant in this regard.

4.5 Another demand of Rs.36,46,346/- has been confirmed against the appellant in respect of the goods cleared clandestinely. Appellant has contested this demand stating that in respect of the invoices as per the invoice books maintained by them were sought to be verified from the customers. It was found that nothing incriminating was found hence there is no force in the demand. The relevant paras of the show cause notice is reproduced bellow:-

Excise Appeal Nos.70108-70109 of 2016 15

5. Whereas on preliminary scrutiny of the invoice books of the party appearing at Sl.No.6, 7, 8 & 9 of the 'Resumption Memo' dated 30.11.2011, it appeared that invoice books at Sl.No.6 & 8 are forged ones and have been used in addition to other Invoice Book, at Sl.No. 9 of the 'Resumption Memo', which contained particulars of removed goods in accordance with their production, removal and duty payment related records (viz. RG - 1 PLA, RG23APt-II, ER-1 etc). Invoice book mentioned at S.No. 7 has been found to contain two filled invoices (triplicate copy) only having the identical details mentioned in the corresponding invoices issued from the original invoice book (at S.No.9). The aforesaid forged invoice books (at S.No.6 & 8) being used simultaneously to the original one appeared to be used for clandestine removal of unaccounted production of M.S. Ingots. The details of these forged invoices are summarized in a Chart-'A' & Chart-'B' as appended below.

CHART-'A' Invoice Book mentioned of the resumption Steel Pvt. Ltd on 30.11.11 (RUD-3) S Invo Date No ice No Ingots 1 25 30.10. 11 Industri es 2 26 01.11. 11 Steel Industri es 3 26 02.11. 11 Industri es 4 27 02.11. 11 Steel Industri es 5 26 03.11. 11 Steel Industri es 16 United 30.410 821070 82107 1642 821 84570 24.620 664740 66474 1329 665 68468 33.790 815657 81566 1631 816 84013 United 34.460 930420 93042 1861 930 95833 United 32.470 876690 87669 1753 877 90299 United 33.380 901260 90126 1803 901 92830 33.200 896400 89640 1793 896 92329 United 33.100 893700 89370 1787 894 92051 33.270 898290 89829 1797 898 92524 33.490 904230 90423 1808 904 93135 33.090 893430 89343 1787 893 92023 33.750 911250 91125 1823 911 93859 35.090 947430 94743 1895 947 97585 34.410 929070 92907 1858 929 95694 8.730 235710 23571 471 236 24278 32.810 885870 88587 1772 886 91245 United 29.140 786780 78678 1574 787 81039 32.100 866700 86670 1733 867 89270 Excise Appeal Nos.70108-70109 of 2016 id="span_19"> 17 United 34.080 920160 92016 1840 920 94776 33.070 892890 89289 1786 893 91968 United 32.770 884790 88479 1770 885 91134 United 32.450 876150 87615 1752 876 90243 32.490 877230 87723 1754 877 90354 32.230 870210 87021 1740 870 89631 United 33.450 903150 90315 1806 903 93024 United 32.860 887220 88722 1774 887 91383 Total 978.22 260153 26015 5202 2601 26795 0 20 33 9 4 76 at SL No 8 of Annexure 'A' memo resumed from M/s Mamta Buyer's Quanti Value CENVA Edu SHE Total Name ty of T Duty Cess Cess Duty Ingots United 9.000 198000 19800 396 198 20394 United 8.000 190908 19091 382 191 19664 United 8.950 213703 21370 427 214 22011 United 8.990 216821 21682 434 217 22333 Excise Appeal Nos.70108-70109 of 2016 id="span_20"> 18 United 8.950 215845 21585 432 216 22233 United 32.780 791007 79101 1582 791 81474 United 8.990 216821 21682 434 217 22333 United 32.780 791014 79101 1582 791 81474 United 36.510 881351 88135 1763 881 90779 United 8.990 216730 21673 433 217 22323 United 32.780 791014 79101 1582 791 81474 United 8.920 215114 21511 430 215 22156 United 40.860 986320 98632 1973 986 10159 id="span_21"> .11 Steel 1 United 32.780 791014 79101 1582 791 81474 United 32.780 791014 79101 1582 791 81474 United 36.510 881351 88135 1763 881 90779 United 36.510 881351 88135 1763 881 90779 United 8.880 214132 21413 428 214 22055 Total 393.96 948351 94834 1893 9487 97677 id="span_22"> 0 7 7 1 Quantity Value CENVAT Edu SHE Total Duty Cess Cess Duty Excise Appeal Nos.70108-70109 of 2016 id="span_23"> 19 978.220 26015320 2601533 52029 26014 2679576 393.96 9483510 948347 18937 9487 976771 1372.18 35498830 3549880 70966 35501 3656347 at SL No 7 of Annexure 'A' memo resumed from M/s Mamta Date Buyer's Quanti Value CENVA Edu SHE Total Name ty of T Duty Cess Cess Duty Ingots 09.05 United 26.570 640961 64096 1281 641 66019 13.05 United 32.180 776510 77651 1553 777 79981 58.75 141747 14174 2834 1418 14600 id="span_24"> 1 7 0 at SL No 9 of Annexure 'A' memo resumed from M/s Mamta Buyer's Quanti Value CENVA Edu SHE Total Name ty of T Duty Cess Cess Duty Ingots 09.05. United 26.57 640961 64096 1282 641 66019 13.05. United 32.18 776503 77650 1553 777 79980 17.06. United 32.28 779206 77921 1558 779 80258 28.06. United 31.98 771965 77197 1544 772 79513 16.07. United 30 724170 72417 1448 724 74589 36.58 883005 88301 1766 883 90950 Excise Appeal Nos.70108-70109 of 2016 id="span_25"> 20 United 34.33 828692 82869 1657 829 85355 28.32 683616 68362 1367 684 70413 United 36.89 826152 82615 1652 826 85093 United 31.44 758930 75893 1518 759 78170 32.69 789104 78910 1578 789 81277 United 15.19 366671 36667 733 367 37767 32.74 790311 79031 1581 790 81402 34 820726 82073 1641 821 84535 United 34.75 838830 83883 1678 839 86400 32.15 776069 77607 1552 776 79935 United 33.93 819036 81904 1638 819 84361 35.3 852187 85219 1704 852 87775 United 34.8 840037 84004 1680 840 86524 33.91 818553 81855 1637 819 84311 35.85 865383 86538 1731 865 89134 33.05 797794 79779 1596 798 82173 37.53 101331 10133 2027 1013 10437 id="span_26"> 11 Industri 0 1 1 Excise Appeal Nos.70108-70109 of 2016 id="span_27"> 21 34.8 840037 84004 1680 840 86524 30 810000 81000 1620 810 83430 30.74 829980 82998 1660 830 85488 United 32.95 884250 88425 1769 884 91078 27.56 744120 74412 1488 744 76644 30.2 815400 81540 1631 815 83986 United 32.63 881010 88101 1762 881 90744 Total 965.34 238660 23865 4773 2387 24581 08 86 1 0 87

6. Whereas on further examination of the forged invoice book at Sl.No.6 of the 'Resumption Memo', it was found that the last issued Invoice bearing No.31 dated 30.11.2011 was issued to M/s United Steel Industries, 13/1, Industrial Area, Nadarganj, Amausi, Lucknow, for removal of 32.860 MT M.S. Ingots. Since, it was a forged invoice, a follow-up action was conducted in the factory of M/s United Steel Industries, Amausi on 01.12.2011. In follow-up action conducted as above, prima-facie no discrepancy in the stock of M.S. Ingots / raw material was noticed by the officers on that day. Statement of Shri R.K. Srivastava, Authorized Signatory was also recorded on 01.12.11 wherein he stated : -

 that M/s United Steel Industries started to purchase M.S. Ingots from M/s Mamta from the month of May, 2011 which was utilized as raw material for production of its finished goods viz. M.S. Angle, M.S. Bar, M.S. Channel, M.S. Flat etc.;

Excise Appeal Nos.70108-70109 of 2016 22  that during the period from 14.05.11 to 30.11.11, the unit had purchased M.S. Ingots 14 times from M/s Mamta and the copies of invoices issued by M / s Mamta and ledger account were also provided; last invoice no.30 was issued by M/s Mamta on 27.11.11.

7. And whereas the resumed records being maintained by the party were examined thoroughly and they were found to contain details/information as under:

• RG-1 Register (RUD-7): contains production, clearance and stock position of finished goods on daily basis. It shows balance of stock of M.S.Ingots as on 30.11.11 as 97.680 MT after adding 12.0 MT of day's production.

• Form-IV Register (RUD-8): contains receipt, issue and stock position of raw materials viz. Scrap, Ferro Silicon and Silico Manganese on daily basis. • Incoming Goods Register (Sponge & Scrap) (RUD-9): contains invoice-wise details of sponge iron and scrap received in the factory of M/s Mamta during 2011-12 (upto 23.09.11).

• Gate Register (RUD-10): contains date-wise entries regarding incoming and outgoing of the workers from the factory during the period 3.9.11 to 30.10.11. There is clear mention of the designation of Shri Brajesh as Munshi, Virendra as Supervisor, Shri Ram Karan Maurya as Melter.

• Furnace Record/Attendance (RUD-11): contains attendance of staff and labourers including Brajesh, Virendra Supervisors and Ram Karan, Melter during the period 1.11.11 to 29.11.11. It also gives information whether the plant (production) was working or not on a particular date. The time of last heat was mentioned at the end of date- wise page. On the page for the date 20.11.11 and 21.11.11, it is mentioned that due to shortage of scrap, only four Excise Appeal Nos.70108-70109 of 2016 23 (4) heats could be produced.(Maal na hone ki wajah se chaar heat nikal paee) whereas on that dates in the RG-1, the party has shown 'Nil' production. This clearly proves that production of four heats or 6MTx4heats = 24 MTs each has been suppressed on 20.11.11 and 21.11.11.

• Invoice Book (S.No. 6): contains triplicate folio of duplicate/forged invoices issued for clandestine removal of M.S. ingots. First page of invoice bears invoice no. 25 dated 30.10.11 and 33 ^ (nd) page i.e. the last issued folio of invoice bears no. 31 dated 30.11.11. Each no. of invoice has been used many times as evident from invoice folios. • Invoice Book (S.No. 7): contains two folios of issued invoices bearing S.No. 1 & 2 which are identical to the original ones issued from book no. 9. • Invoice Book (S.No. 8): contains triplicate folio of duplicate/forged invoices issued for clandestine removal of M.S. ingots. First page of invoice bears invoice no. 01 dated 03.05.11 and 18 ^ 0 page i.e. the last issued folio of invoice bears no. 03 dated 01.06.11. Each no. of invoice has been used many times as evident from invoice folios • Invoice Book (S.No. 9): contains triplicate folio of original invoices issued for removal of M.S. ingots. First page of invoice bears invoice no. 01 dated 09.05.11 and 30th page i.e. the last issued folio of invoice bears no. 30 dated 27.11.11. Each no. of invoice has been used once only as evident from invoice folios.

• Invoice Book of M/s Bharat Sponge and Iron Scrap Supplier (RUD- 12): contains used invoice folios bearing no. 51 dated 9.10.11 to no. 91 dated 28.11.11 for sale of Scrap Iron to M/s Mamta only. • Scrap Sorting Book (RUD-13): contains carbon copy of scrap sorting details which describe the quality of Excise Appeal Nos.70108-70109 of 2016 24 scrap, quantity, rate per kg, total amount to be paid for the consignment and dated signature of Scrap sorting person i.e Shri Sanjeev during the period from 16.11.11 to 24.11.11. A comparative chart prepared on this basis vis-à-vis quantity of scrap sold as per invoices of M/s Bharat Sponge issued during the corresponding period (Annexure-I) evidences that the quantity of scrap which was received by M/s Mamta as per sale invoices of M/s Bharat Sponge or Form IV of M/s Mamta is 30.69 MT as compared to quantity sorted at the end of M/s Mamta (or M/s Bharat, as per version of party, who sold this quantity, in turn, to M/s Mamta) as 230.10 MT. Thus, this huge difference in receipt of main raw material i.e. scrap is a clear evidence of non accountal of raw material with malafide intention to use them in manufacture of suppressed production of M.S.ingots in the factory of M/s Mamta which was removed clandestinely without issue of legitimate invoices and without payment of CENVAT duty payable thereon.

• Gate Pass Books (S.No.12) (RUD-14): contains carbon copy of folios issued 10 in numbers, during the period 28.6.2011 to 04.07.2011. It shows three consignments of incoming scrap on 28.06.2011and one consignment each on 29.06.11 and 03.07.11. But the Form-IV of the party maintained for scrap does not show any such receipt on that dates. This clearly shows that the party has not accounted for the actual receipt of scrap in their books. The book bears the signature of Shri Sanjeev and Shri Ashish Kumar, apparently.

• Dharam Kanta Parchi Book (RUD-15): contains folios issued during the period 19.11.11 to 30.11.11 for weighment of M.S.ingots dispatched from the factory under cover of either genuine invoices or forged Excise Appeal Nos.70108-70109 of 2016 25 invoices. It bears the signature of the same Shri Sanjeev on a few folios as the preparer. The contents of the chart prepared on the basis of this Dhram Kanta Parchi Book and the dispatches made under cover of Invoice books (S.No. 6 & 9) establishes the modus operandi of the party adopted for removal of M.S. Ingots clandestinely.


                                         CHART

S.      Date          Net Quantity of M.S.   Truck No.      Corresponding Invoice no.      Invoice  issued
No.                   Ingot (in Kgs)                                                       from Book No.

 1       19.11.11            29140            UP44T2723                  29                  06 (forged)

                                              UP44T1662
 2       21.11.11            34080                                       29                  06 (forged)

                                              UP44T2723
 3             -             30200                                29 dt.23.11.11             09 (forged)

                                              UP44T2723
 4       24.11.11            33070                                       30                  06 (forged)

                                              UP44T2723
 5       25.11.11            32770                                       30                  06 (forged)

                                              UP44T2723
 6       26.11.11            32450                                       30                  06 (forged)

                                              UP44T2723
 7       27.11.11            32630                                       30                  09 (Original)

                                              UP44T1662                                      06 (forged)
 8       27.11.11            32490                                       31

                                              UP44T1662                                      06 (forged)
 9       28.11.11            32230                                       31

                                              UP44T2723                                      06 (forged)
 10      29.11.11            33450                                       31

                                              UP44T2723                                      06 (forged)
 11      30.11.11            32860                                       31

On going through the party's resumed records and the charts mentioned above, it appears-

• that all forged invoices were issued to M/s United Industries, Industrial Area, Amausi, Lucknow and M/s Kumar Industries, Industrial Area Nadarganj, Lucknow for sale of unaccounted goods; and • that the party have also purchased unaccounted-for raw material to manufacture these clandestinely removed goods."

4.6 Adjudicating Authority in his Order-in-Original has examined the above evidences and concluded that the charge of clandestine clearance against the appellant is well founded. Accordingly, I do not find any merits in the submissions made by the appellant. The demand made against the appellant is based Excise Appeal Nos.70108-70109 of 2016 26 on the documents, invoice books resumed during the search operation under Section 36A of the Central Excise Act provides that-

36A. Presumption as to documents in certain cases.--Where any document is produced by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law and such document is tendered by the prosecution in evidence against him and any other person who is tried jointly with him, the Court shall,--

(a) unless the contrary is proved by such person, presume--

(i) the truth of the contents of such document;

(ii) that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the Court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person's handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested;

(b) admit the document in evidence, notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence."

4.7 Nothing has been produced to contradict the information contained in the records resumed during the search operation from the premises of the appellant; the presumption for redemption of documents is in legal presumption under Rule 36A of the Act. Hon'ble Kerala High Court has in case of Kollatra Abbas Haji [1984 (15) E.L.T. 129 (Ker.)] interpreting similar provision under Customs Act, 1962 observed as follows:

6. Section 138B of the Customs Act, 1962 reads :

"138B. Relevancy of statements under certain circumstances. (1) A statement made and signed by a person before any Gazetted officer of Customs during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of Excise Appeal Nos.70108-70109 of 2016 27 proving, in any prosecution for an offence under this Act, the truth of the facts which it contains;

(a) When the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable;

(b) when he person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice.

(2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court."

The respondents' Counsel, Shri P. Santhalingam submits that the fact that a statement made and signed by a person is relevant for the purpose of clause (b) makes it equally relevant for the purpose of confronting a person when examined under Section

107. The petitioner was confronted, counsel points out, with the statements of the co-accused and those statements are relevant material in the light of Section 138B. Counsel further points out that clause (b) says that statement has to be admitted in evidence when the maker of the statement is examined as a witness. Counsel then refers to Section 139 which reads :

"139. Presumption as to documents in certain cases.--Where any document -

(i) is produced by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law, or Excise Appeal Nos.70108-70109 of 2016 28

(ii) has been received from any place outside India in the course of investigation of any offence alleged to have been committed by any person under this Act, and such document is tendered by the prosecution in evidence against him or against him and any other person who is tried jointly with him, the court shall -

(a) presume, unless the contrary is proved, that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person's handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested;

(b) admit the document in evidence, notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence;

(c) in a case falling under clause (i) also presume, unless the contrary is proved, the truth of the contents of such document."

This shows, that the Court shall presume, unless the contrary is proved, that the signature and every other part of the document referred to in the Section is genuine. There is much force in Counsel's submission. Section 138B makes it clear that in proceedings before an administrator, as in the case of a proceeding in a court of law, a statement made and signed by a person is material and it has to be admitted in evidence in the interest of justice. Section 139 places the burden upon the maker of the statement to deny the genuineness of his signature or any statement contained in the document. It is not disputed by the petitioner's counsel that the expression `document' would include the statements signed by the co-accused. Section 139 leaves no doubt that a court shall presume, unless the contrary is proved, that the signature of the maker is genuine and every other part of the document is equally genuine. This is the principle on which the court must act. Section 139 does not Excise Appeal Nos.70108-70109 of 2016 29 exclude the applicability of this principle in proceedings before an administrator. If it is open to a court to draw the statutory presumption, it is equally open to an administrator in proceedings of this kind to draw a like presumption and conclude, in the absence of evidence to the contrary, that every word contained in the statement and the signature appearing on the face of it are those of the maker. This being the position in law, the respondents were entitled to rely upon every word in the statements signed by the witnesses, notwithstanding their attempt to retract therefrom, especially when there is no evidence of threat. As stated earlier, counsel for the petitioner made no attempt to elicit any such information from the officers or from the co-accused themselves. In R.S. Kalyanaraman v. Collector of Customs, Madras (1978 Tax L.R. 1735) the Madras High Court repelled the contention that the confession of a co- accused was not evidence on the basis of which a person could be found guilty in departmental proceedings. The Court stated :

"........ The fact that the criminal Court had acquitted the petitioner would be of no consequence since the acquittal was on the footing that the confession of a co-accused could not be used against the petitioner. In departmental proceedings, there is no bar to use such statements......"

In my view it is sufficient to conclude that the charge of clandestine clearances based on these documents resumed during the search of the appellant is well within the preponderance of probability in such cases as has been proponed by Hon'ble Supreme Court in the case of D. Bhoormull [1983 (13) ELT 1546 (SC)]. Relevant paras of the said order are reproduced bellow:-

"32. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the Excise Appeal Nos.70108-70109 of 2016 30 burden to establish those facts is cast on the person concerned :

and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in `Law if Evidence' (12th Edn. Article 320, page 291), the "presumption of innocence is, no doubt, presumptio juris : but every day's practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property,"

though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may suffice.

33. Another point to be noted is that the incidence, extent and nature of the burden of proof for proceedings for confiscation under the first part of the entry in the 3rd column of clause (8) of Section 167 may not be the same as in proceedings when the imposition of the other kind of penalty under the second part of the entry is contemplated. We have already alluded to this aspect of the matter. It will be sufficient to reiterate that the penalty of confiscation is a penalty in rem which is enforced against the goods and the second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In the case of the former, therefore, it is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough if the Department furnishes prima facie proof of the goods being smuggled stocks. In the case of the Excise Appeal Nos.70108-70109 of 2016 31 latter penalty, the Department has to prove further that the person proceeded against was concerned in the smuggling.

34. The propriety and legality of the Collector's impugned order had to be judged in the light of the above principles.

35. It is not correct to say that this is a case of no evidence. While it is true that no direct evidence of the illicit importation of the goods was adduced by the Department, it had made available to the Collector several circumstances of a determinative character which coupled with the inference arising from the dubious conduct of Baboothmull and Bhoormull, could reasonably lead to conclusion drawn by the Collector, that they were smuggled goods. These circumstances have been set out by us earlier in this judgment. We may recapitulate only the most salient among them.

43. If we may so with great respect, it is proper to read into the above observations more than what the context and the peculiar facts of that case demanded. While it is true that in criminal trials to which the Evidence Act, in terms, applies, this section is not intended to relieve the prosecution of the initial burden which lies on it to prove the positive facts of its own case, it can be said by way of generalisation that the effect of the material facts being exclusively or especially within the knowledge of the accused, is that it may, proportionately with the gravity or the relative triviality of the issues at stake, in some special type of case, lighten the burden of proof resting on the prosecution. For instance, once it is shown that the accused was travelling without a ticket; a prima facie case against him is proved. If he once had such a ticket and lost it, it will be for him to prove this fact within his special knowledge. Similarly, if a person is proved to be in recent possession of stolen goods, the prosecution will be deemed to have established the charge that he was either the thief or had received those stolen goods knowing them to be stolen. If his possession was innocent and lacked the requisite incriminating knowledge, then it will be for him to explain or establish those facts within his peculiar Excise Appeal Nos.70108-70109 of 2016 32 knowledge, failing which the prosecution will be entitled to take advantage of the presumption of fact arising against him, in discharging its burden of proof.

44. These fundamental principles, shorn of technicalities, as we have discussed earlier, apply only in a broad and pragmatic way to proceedings under Section 167(8) of the Act. The broad effect of the application of the basic principle underlying Section 106,. Evidence Act to cases under Section 167(8) of the Act, is that the Department would be deemed to have discharged its burden if it adduces only so much evidence, circumstantial or direct, as is sufficient, to raise a presumption in its favour with regard to the existence of the fact sought to be proved. Amba Lal's case, (1961) 1 SCR 933 = 1983 E.L.T. 1321, was a case of no evidence. The only circumstantial evidence viz. the conduct of Amba Lal in making conflicting statements, could not be taken into account because he was never given an opportunity to explain the alleged discrepancies. The status of Amba Lal viz. that he was an immigrant from Pakistan and had come to India in 1947-before the customs barrier was raised-bringing along with him the goods in question, had greatly strengthened the initial presumption of innocence in his favour. Amba Lal's case thus stands on its own facts."

By applying the principle laid down by the Hon'ble Apex Court as above in case of Delhi Bench has held as follows:

"6. We have considered the submissions of both the sides. Regarding difference in the figures of clearances made from the factory as per gate passes and figures of clearance as per Railway Receipts, we observe that the Adjudicating Authority has given his findings that the dispatch of goods had not been disputed by the appellants. The appellants had not disputed the same before us also. Their defence is that the unsold tapes/cassettes which were returned to Bhopal were re- dispatched by rail together with those cleared on the day under GP-Is from the factory. The Adjudicating Authority had given his findings to the effect that they were specifically asked to Excise Appeal Nos.70108-70109 of 2016 33 produced documents and details in support of the said contention and that "even after ample and repeated opportunity given to them they failed to produce any evidence in support of their claim of returned goods." Even now the appellants have not brought on record any documentary evidence to show that the duty paid goods received at Bhopal from different diagnostic center were despatched by rail. As the appellants had not disputed the dispatch of goods and had not brought any evidence on record in support of their contention, non-cross- examination of the persons concerned does not affect the case of the Revenue. The appellants have now placed heavy reliance on the deposition of A.K. Godbole before the Adjudicating Authority. But we observe that the same Godbole in his statement dated 17-2-1994 clearly deposed that the tapes mentioned in Railway Receipts were removed from factory without Gatepass/duty paying document. There is nothing on record to show that he ever retracted his statement. We also observe that this statement was recorded in February, 1994 that is much after the search of the factory of the appellants on 19-9-1993. There is no substance in his answer that since the officer did not ask him about the absence of gate pass, he did not inform them about clearance of goods from Bhopal. When the question was put to him about the goods mentioned in Railway Receipts, he clearly answered that "blfy, esjk ;g ekuuk gS fd mijksDr R.R. esa fudkyh xbZ video Tapes fcuk fdlh Gate-pass/duty paying documents ds vUnj Factory ls clear dh xbZ A" If the goods were cleared from Bhopal and about which he was aware he should have mentioned the same instead of deposing that the video tapes were cleared without gate pass/duty paying documents. In view of this his version made after more than 4 years of making initial statement is not tenable. We, therefore, find no infirmity in the findings recorded by the Adjudicating Authority.

7. Regarding E-185 cassettes, it was mentioned in Internal Office Memo that 3800 E185 cassettes were to be carried out by the E.D. Loding was to be continued in the night shift also. The Revenue has come to the conclusion, we think rightly, that the Excise Appeal Nos.70108-70109 of 2016 34 appellants had manufactured the said cassettes. Their conclusion was strengthened from the telegram sent to one Narsimha Rao of Vijaywada intimating him that his ordered goods 3800 of E185 were ready for despatch. The appellants have not explained anything about the said Inter Office Memo and the telegram sent by them to said Narsimha Rao. They have on the other hand emphasized that R.N. Sharma, Dy. Manager (Production), was not produced for cross-examination and Shri Agrahari, Account Clerk had mentioned that he had no knowledge that E-185 cassettes were ever manufactured. In a case when a unit is involved in clandestine manufacture and removal of goods, it is possible that all the hands working in unit may not be taken into confidence. Shri Sharma, on the other hand, was Deputy Manager Production of the appellants and obviously would know about the goods manufactured in the factory. There is nothing on record also to suggest that Shri Sharma retracted his statement anytime. Taking into consideration all the facts coupled with Inter Office Memo and said Telegram we agree with the findings reached in the impugned Order by the Adjudicating Authority that the appellants were manufacturing and clearing goods without recording in the statutory records and without payment of duty. This finding is strengthened from the fact that some documents were torn and found during the search of the factory premises. These torn papers were issue notes of video tapes which were issued for packing. There is no substance in the appellants' contention that the scribe of the torn papers was never located nor interrogated. The finding of the said torn papers from the factory had not been denied nor it had been claimed that they did not pertain to them. In respect of double sets of invoices the appellants have only contended that no evidence had been brought on record by Revenue to show that the goods had actually been removed and dispatched. In a case of clandestine removal, the Revenue cannot be burdened to prove in respect of each and every document that goods were actually removed and dispatched. It is for the appellants to explain the existence of double sets of invoice which, in our Excise Appeal Nos.70108-70109 of 2016 35 opinion, they have not done. Further their explanation that bills raised for discounting purpose were for commercial reasons besides being averred first time, has not been substantiated with any document/affidavit. We also do not find any substance in their submissions that from the account of the raw material brought into the factory it was not possible to manufacture any quantity of tapes and cassettes in excess of the quantity mentioned in RG-1 register. In a case of clandestine manufacture and removal of goods, the Revenue cannot prove the case with mathematical precision. It was observed by the Supreme Court in Collector of Customs v. D. Bhoormul - 1983 (13) E.L.T. 1546 (S.C.) that "in order to appreciate the scope and nature of the onus cast by it, due regard must be paid to other kindred principles, no less fundamental of universal application. One of them being that the prosecution or 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 the facts in issue." In our opinion, the Revenue has established their case about the manufacture and clearance of goods by the appellants without entering them into statutory records and without payment of duty. Accordingly, we uphold the demand of duty as confirmed in the impugned Order. ....."

4.8 Hon'ble High Court while remanding the matter has not stated that the arguments advanced by the appellant has been accepted while the matter has been remanded only for passing an speaking order by keeping all the issues open.

4.9 As all the charges made against the appellant have been upheld including the charge of clandestine clearances the penalty imposed under Section 11AC is also justified.

4.10 As for as Appellant-II is concerned, I find that he is a person who was responsible for all the activities and was also the beneficiary of the act of clandestine clearance. Further, I note Excise Appeal Nos.70108-70109 of 2016 36 that he has been constantly issued summons to join the investigation and tell the truth. The relevant paragraphs are reproduced bellow:-

"10. The sequence of two summons dated 02.12.2011/08.12.11 as stated, 3rd summons dated 19.12.2011 was issued to Shri Lal Padmakar Singh & Shri B.M. Shukla to appear before the designated authorities on 27.12.2011 which were got served to them on 26.12.11 through the staff of Central Excise Division, Raebareli, but they didn't appear that time too. Despite above, a letter dated 27.12.11 was received from Shri Lal Padmakar Singh wherein he informed that his accountant had resigned from the office of his factory w.e.f. 02.12.11 and his whereabout was not known to him, therefore, he returned the summons to the department for not being served upon him. Further, in reference to summons issued on 19.12.11 to Shri Lal Padmakar, Shri Singh informed that he was out of station for treatment at that time and hence, he was unable to attend the office for tendering his statement. He requested for some other date in the 3rd week of January, 2012 so that he might appear before the designated authorities to tender his statement with full cooperation. Therefore, summons meant for Shri Lal Padmakar Singh as well as Shri B.M. Shukla were again issued to appear before the Superintendent (Prev.) on 19th or 23nd January 2012. In addition to above, copy of summons were also sent to the Assistant Commissioner, Central Excise Division, Raebareli on 11.01.2012 for service upon them. The Assistant Commissioner, Raebareli was also requested that summons meant for Shri B.M. Shukla might be served upon him after obtaining his permanent address from M/s Mamta. However, summons meant for Shri Lal Padmakar Singh, director was delivered on 17.01.12 in the factory office by the staff of Central Excise Division, Raebareli for providing it to Shri Singh as he was not available in the factory at that time. However, summons to Shri B.M. Shukla could not be served upon him and it was stated by the factory staff that he had left the job, thus, the summons was returned back to the officials. Further, Shri Lal Padmakar Singh submitted two letters Excise Appeal Nos.70108-70109 of 2016 37 both dated 25.01.2012 to the Department. In these letters he requested for supply of the photocopies of certain documents i.e. RG-1 (daily stock account), Form-IV (register containing stock of raw material) registers & other records so that he may be able to understand the same properly and prepare himself to tender his statement before the designated authorities. In furtherance, 4th summons was again issued to Shri Lal Padmakar Singh on 06.02.12 requiring him to appear before the designated authority on 13.02.12 alongwith the documents mentioned in the schedule to the summons. Summons dated 06.02.12 was sent to the Assistant Commissioner, Central Excise Division, Raebareli for service upon Shri Singh. Copies of Form-IV & RG-1 register were also sent through 'speed post' to him vide the office letter C.No.1249 dated 06.02.12. A separate letter dated 06.02.12 was also sent to the Assistant Commissioner, Central Excise Division, Raebareli to obtain the whereabouts / permanent address of Shri B.M. Shukla from the said factory. Meanwhile, copies of Form-IV & RG-1 were again supplied to the party through 'speed post' vide this office letter even C.No.2303 dated 13.03.12 which was received back undelivered from the postal authorities with the remark as "Inkari Vapas sd/16.03.12" (Denied, returned). However, the photocopies of the same were served to one Shri Vijay Kumar Singh of M/s Mamta Steel on 18.03.12 in the factory through the officers of the Central Excise Division, Raebareli. Although the desired documents were already supplied to the party, Shri Singh again submitted a counter letter dated 22.03.12 (received on 23.03.12) for supply of photocopies of documents to him to have full knowledge of the same so that he would be able to disclose information desired by the Department. All the documents as desired by the party had been provided to them on 09.04.12.

11. It appears from the foregoing that Shri Lal Padmakar Singh, director of the company was deliberately delaying the process of investigation and so had chosen not to appear before the designated authority to tender his statement. Again 5th summons dated 20.04.12 was sent through 'speed post' to Shri Excise Appeal Nos.70108-70109 of 2016 38 Lal Padmakar Singh on 01.05.12 to appear before the designated authority. Attested copy of the summons was also served on the party on 26.04.12 by the staff of Central Excise Division, Raebareli in the factory. This time in pursuance of the summons dated 20.04.12, Shri Lal Padmakar Singh appeared on 01.05.12 before the designated authority i.e. Superintendent (Prev.), Central Excise & Service Tax, Lucknow and tendered his statement dated 01.05.12 wherein he stated interalia:--

1. that his factory is a registered unit and it started production of M.S. Ingots w.e.f. 11.05.2011; that he took loan from Bank of Baroda;

2. that there are 6 office staff & 20 labourers who work in the factory only when the factory runs;

3. that work relating to production/sale of the factory and purchase of raw material is looked after by S/Shri Vijay and Sunil Singh; work relating to excise matters is looked after by Shri Sonu Gupta; and work relating to trade tax is looked after by Shri Pankaj, Advocate. All these workers were temporary employees;

4. that in reference to his last statement dated 30.11.11 that Shri B.M. Shukla, Authorized Signatory of the factory who looked after the work of issue of excise invoice at that time and used to sign them after preparing the invoice, and in reference to a question where Shri B.M. Shukla was; and as per his records what is his residential address, he answered that Shri B.M. Shukla was also his temporary worker who was residing at Chowk, Sultanpur and he telephonically informed that he could not come in the factory for his personal reasons, and after that it was not known to him where he had gone;

5. that in the year 2011-12, raw material viz. sponge iron & scrap, was mainly obtained from (1) M/s Bharat Sponge & Iron Scrap, Sultapur; (2) M/s R.L.J. Concast Pvt. Ltd., Varanasi; and (3) M/s S.A. Iron Alloys, Excise Appeal Nos.70108-70109 of 2016 39 Varanasi. A chart containing all the details of such purchases was also provided by him;

6. that he purchases raw material directly from the factories and no commission agent was involved in the deals;

7. that freight regarding sponge iron was paid according to the bilty, freight regarding scrap is paid by the supplier himself; and ledger regarding freight of sponge iron will be produced;

8. that the papers/documents as desired in the schedule to the summons dated 02.12.11/08.12.11 viz. sale record (upto 30.11.11), purchase record (upto 30.11.11), parties' ledger (upto 30.11.11) and copy of ST-2 are provided; and for freight & transporter bill, a letter was sent to the transporters and as soon as it is received the same will be provided; that he will provide the name, address & mobile nos. of the transporters within 15 days' of time / on the next date;

9. that FOR basis sale of M.S. Ingots was effected and managed by the seller ie M/s Mamta, on the basis of bilty, and freight was paid by the factory i.e. the seller,

10. that sale amount is received in the bank account through any mode of transaction including RTGS;

11. On being shown ER-1 returns for the months of April,2011 to October,2011 submitted by the party before the Superintendent, Central Excise Range, Jagdishpur, he confirmed that the same were prepared by Shri B.M. Shukla and also signed by him. Though, ER1 for the month of April,2011 was signed by Shri Singh himself,

12. that since the factory was started in the month of May,2011 and it being new, Shri B.M. Shukla was appointed as a temporary worker to look after the maintenance of office papers;

13. As soon as he gets the permanent address of Shri B.M. Shukla, he will inform to the department;

Excise Appeal Nos.70108-70109 of 2016 40

14. Subsequent to above, Invoice No.26 dated 06.11.2011 contained in Book No.1 mentioned at SI.No.6 of the 'Resumption Memo' to the panchnama dated 30.11.2011, on which signature of Shri Singh was available, was shown to him; and in reply to question no.16 of the statement, he replied that prima-facie the shown bill appears to be related to M/s Mamta Steel India Pvt. Ltd.; he further added that he was not having technical knowledge and he was not aware of the contents of the invoice as above shown to him. However, he narrated that the bill was very old in which date 06.11.11 was printed;

15. On being raised few questions regarding issue of Form- 21 related to trade tax, he again avoided to answer these questions for the reason that he was not having technical knowledge; and on being asked about the register which he or his staff should have prepared; he stated that he could answer to these questions only after consultation of his advocate;

16. that further to above, triplicate copy of Invoice No.27 dated 15.11.11 (Book No.1) mentioned at Sl.No.9 of the 'Resumption Memo' to the Panchnama dated 30.11.2011, on which signature of Shri Lal Padmakar Singh was available, was shown to him; and on being asked who had prepared or written on that invoice, Shri Singh stated that signatures available in the invoice appears to have been signed by him; he didn't reveal the name of the person who had written or filled up that invoice;

17. After this, Invoice No.30 dated 27.11.2011 (Book No.1) mentioned at SI.No.9 of the resumption memo to the panchnama dated 30.11.2011 was shown to Shri Singh alongwith the signatures of Shri B.M. Shukla whose attested signatures were submitted to the Central Excise Range-Jagdishpur, and on being asked to verify Excise Appeal Nos.70108-70109 of 2016 41 the signature of Shri B.M. Shukla, he avoided and escaped himself to answer that question;

Apart from above, Shri Lal Padmakar Singh avoided to answer many a questions raised by the designated authority and his behaviour remained non- cooperative while tendering his statement. Statement speaks very well in this regard. Further, he requested for some other date for further inquiry. However, from his replies it is very much established that he admitted to have signed on the forged invoice no.26 dated 06.11.11 contained in the bound book at Sl.No.6 of the Resumption Memo dated 30.11.11. He has also identified his signatures on the genuine invoice no.27 dated 15.11.11 contained in the bound book at SI.No.9 of the Resumption Memo. However, on both the occasions he denied to have knowledge of the contents thereof. It may be noted that all invoices were mostly signed by Shri B.M. Shukla, the Authorized Signatory and sometimes by Shri Lal Padmakar Singh, the director, himself, as issuing authority. It is, thus, amply clear that all the invoices issued either from the forged invoice books at S.No.6 & 8 of the Resumption Memo or from the genuine invoice book at S.No.9 of the Resumption Memo have been issued from the factory either from Shri B.M. Shukla, the then Authorized Signatory of the party, or Shri Padmakar Singh, himself and this fact was very much in personal knowledge of Shri Lal Padmakar Singh, director of the company.

The 6th summons was sent to Shri Singh on 08.05.12 by the Assistant Commissioner, Central Excise & Service Tax, Lucknow through 'speed post' / 'email' for appearing on 16.05.12 alongwith the documents mentioned in the schedule to the summons as above. In his reply to above, Shri Singh submitted a letter dated 16.05.12 (received on 17.05.12) stating that the documents required by this office were being prepared and located, and for the reasons, he was unable to appear on 16.05.12. He requested for one Excise Appeal Nos.70108-70109 of 2016 42 month's time. It was also requested not to deliver any letter / or communication through the Assistant Commissioner, Central Excise Division, Raebareli. The Assistant Commissioner (Prev.), Central Excise & Service Tax, Lucknow, replied the above said letter dated 16.05.12, vide this office even C.No.4808 dated 18.05.12, that the documents mentioned from SI.No.1 to 4 were readily available with him and usually maintained by a company and the documents from Sl.No.5 to 7 were those in respect of which he himself during the course of statement on 01.05.12 undertook to provide within fifteen days. It was also observed that all the documents were readily available records which did not require any preparation. It was not understood as to what records were 'under preparation'. Nevertheless, he was granted time upto 31.05.12 for production / preparation of the said records. Further, it was also made clear that the letters/ communications sent from the Preventive Branch were not received / delivered at his factory for one or the other reason. Copies of two communications which were received in this office undelivered with the remarks of the postal authorities on envelops were also sent to him as being instances. In situations narrated above, it was also made clear that the department had no option but to send the communication through the divisional office to ensure proper and timely delivery to him. It was also informed that as per his request during the statement on 01.05.12, the information of summons was also sent to him on the 'e-mail ID' as given during the said statement but he had not bothered to respond even by email. Moreover, the above said letter dated 17.05.12 was sent to him through 'speed post' as well as through his 'email I D^ , alongwith the 7th summons dated 18.05.12 through 'speed post' / 'email' requesting him to appear before the Assistant Commissioner (Prev.), Central Excise & Service Tax, Lucknow for tendering his statement under section-14 on 31.05.12. Attested copy of Excise Appeal Nos.70108-70109 of 2016 43 the summons was also sent to the Assistant Commissioner, Central Excise & Service Tax, Raebareli on 18.05.12 for service upon the party.

In compliance to above, Shri Singh appeared before the Assistant Commissioner (Prev.), Central Excise & Service Tax, Lucknow, on 31.05.12 but stated that he was not well that day, and therefore, unable to record his written statement. Though, he submitted the papers as follows - (i) Memorandum of Article of Association of M/s Mamta Steel India Pvt. Ltd., Amethi; (ii) Input freight transportation ledger for the period 03.04.11 to 31.03.11; (iii) Output freight transportation ledger for the period 09.05.11 to 31.03.12; (iv) Sale ledger of M.S. Ingot 09.05.11 to 31.03.12; (v) Letter dated 25.04.12 issued to M/s Gayatri Transport Co., Pratapgarh; (vi) Copies of bilties received from M/s Gayatri Transport Co., Pratapgarh; and (vii) Copy of register relating to Form-21. Further, he proposed a date i.e. 05.06.12 to tender his statement, but he didn't appear in the office.

12. Due to compelling circumstances as already elaborated above as well as non-cooperation of Shri Lal Padmakar Singh, 8th summons dated 27.06.12 was again issued to appear on 06.07.12 alongwith the documents mentioned in the schedule to the summons. In addition to above, summons dated 27.06.12 were also issued to (i) M/s Gayatri Transport Co., Pratapgarh; (ii) Shri Brajesh, Munshi

- M/s Mamta; (iii) Shri Sanjeev Mishra of M/s Mamta; (iv) Shri Virendra, Supervisor of M/s Mamta; and (v) Shri Ram Karan Maurya, Melter - M/s Mamta No one appeared on 06.07.12. Instead a letter Ref.no.Mamta Steel / 2012 - 13/13 dated 06.07.12 was received from Shri Singh stating that he would not be able to attend the office on 06.07.12 due to some personal and family problems. However, he informed that he would be attending the office on 11.07.12, Excise Appeal Nos.70108-70109 of 2016 44 and accordingly, he appeared on 11.07.12 and recorded his statement stating interalia: -

 that in reference to the answer to question no.22 of statement dated 01.05.11, Shri Singh reiterated his answer and stated that Form-21 was sent alongwith the vehicle (goods career), a copy of which remained with the party receiving the goods; another copy of Form-21 was submitted in sale tax department; and number of Form-21 is written on the invoice when it was sent to the party;

 that in reference to the answer to the question no.26 of statement dated 01.05.11, Shri Singh reiterated his answer that invoice was prepared by S/Shri Sanjeev Mishra & Sonu Gupta. Shri Sanjeev Mishra had left the job from the factory w.e.f. 30.11.11 whereas Shri Sonu Gupta is still working in the factory;

 that in reference to the question no.27 of statement dated 01.05.11 whether it has been enquired about the handwriting & signature of Shri B.M. Shukla available on the Invoice No.27 dated 27.11.11 (Book No.1 at Sl.No.9 of the 'Resumption Memo'); Shri Singh replied that he was not in a position to reply to this because he had not seen his (Shri B.M. Shukla) signature as yet; however on being shown a copy of letter dated 11.07.12 in the pad of M/s Mamta wherein signature of Shri B.M. Shukla was attested by Shri Singh, he answered in affirmative in a manner had it been correct then signature of Shri B.M. Shukla might also have been correct;

 On scrutiny of records resumed on 30.11.11 from his factory premises it has been observed that raw material as sponge iron was purchased from M/s Bharat Sponge & Iron Scrap Suppliers, C.S.M. Nagar which appears to be a dealer, on being asked as to how an order was placed to M/s Bharat Sponge & Excise Appeal Nos.70108-70109 of 2016 45 Iron Scrap Suppliers and by whom; who was contacted regarding purchase of sponge iron and in what manner the delivery of raw material was done; Shri Singh stated that he was the owner of that firm i.e. M/s Bharat Sponge & Iron Scrap Suppliers, himself; further he clarified that after collecting scrap whatever he was having in loose quantities, he used to supply the same to M/s Mamta under the cover of a bill raised by him; and accordingly sale tax was deposited;

 On being asked where that firm (M/s Bharat Sponge & Iron Scrap Suppliers) was situated / located and what was the Registration No. of that firm; whether the goods (sponge iron) was supplied to some others; it was clarified by Singh that firm is situated in 'Sanha' itself on his own land & he could not remember the Registration No. of that firm; further he assured that he would provide the registration no. telephonically; and he revealed that he had not sold the goods to any other party from M/s Bharat Sponge;

 On scrutiny of records it has been observed that raw material as scrap was transported through the trucks of M/s Tiwari Road Lines, Ramganj, C.S.M. Nagar; Shri Singh was asked where that transport company is situated and where its office is located; In his reply to above Shri Singh stated that M/s Tewari Road Lines is situated in Ram Nagar, C.S.M. Nagar and his staff used to contact them for transport; to whom his staff members have contacted he would be able to submit any information in this regard only after obtaining the same from them;

 On being asked as to how the freight was paid in respect to the goods transported through M/s Tiwari Road Lines from M/s Bharat Sponge & Iron Scrap Suppliers; it was stated that freight was paid by M/s Excise Appeal Nos.70108-70109 of 2016 46 Mamta Steel and service tax due on it was paid by the company itself;

 On being asked as to how quality & value of scrap was checked; and name of the person who was deputed for that work; it was stated that the work looked after by Shri Sunil Singh; and prior to 30.11.11 that work was looked after by Shri Sanjeev Mishra;

 On perusal of records resumed on 30.11.11 from the factory, it has been observed that removal of M.S. Ingot was done through the bilty of M/s Gayatri Transport Company and the freight of that material was borne by M/s Mamta; on being asked as to whom they contacted in M/s Gayatri Transport Company for transportation of M.S. Ingot as above and whether the trucks used by them were owned by the transporter; name & address of that person was also demanded from Shri Singh; In this regard Shri Singh stated that this work was done by his staff and all the details would be supplied to the Superintendent (Prev.), Central Excise, Lucknow telephonically;

 On being asked about number of supervisors in the factory, Shri Singh stated that no such type of post as supervisor is there in the factory and all the work was being looked after by all the persons;  On being asked about number of meltors, Shri Singh stated that Shri Ram Karan Verma was the only meltor in his factory but his address was not known to him as he was the man of contractor named Shri Ravi; he worked for 8 hrs. for melting purposes; he was to report to the contractor as well as to him;  That purchase of raw materials and sale of finished goods was being looked after by him and other purchases are being looked after by Sonu Gupta and Vijay Singh;

Excise Appeal Nos.70108-70109 of 2016 47  That the system of issuing of "gate pass" was started since beginning but 'due to its improper working, the same was discontinued by last 10 months;  That the register resumed under entry no.5 of resumption memo dated 30.11.11 indicating therein Shri Virendra & Shri Brajesh were supervisor in his factory; he informed that that register belongs to contractor Ravi and both the supervisors were his men to control work and workmen and they had no business with the factory;

 That Shri Ravi was the labour contractor, the labourers who worked at the furnace belonged to him, he was being paid a fixed sum against the production of Ingots per tonne;

 That he had no written contract with Shri Ravi, the contract was verbal, he was being paid Rs.220/- per ton; and he was the resident of Delhi and 'his full address is not known to him; his mobile no. is 07376519528;

 That on being asked about the records - "scrap sorting book" (resumption memo no.11) being maintained by Shri Sanjeev, he said that this book belonged to M/s Bharat Sponge & Scrap Suppliers and he is the proprietor of this firm, that's why the invoice of the same was also available in the factory premises; that he had seen & signed no.934 dated 23.11.11 of the book, this book was maintained by Shri Sanjeev or any of the staff, this book contains the valuation & details of sorting of scrap purchased by M/s Bharat Spong & Scrap;

 That on being asked about Shri Sanjeev about an employee of M/s Mamta Steel, how he performed duties for M/s Bharat Sponge and scrap suppliers, Shri Singh stated that being a temporary employee, in the leisure time all the employees perform sorting work also. Since at that period Shri Sanjeev stayed Excise Appeal Nos.70108-70109 of 2016 48 in the factory itself and he was an educated person so he was used for the purpose of sorting of scrap;  That on being asked about the records - "Dharam Kanta Parchi/Book" (resumption memo no.13) is being maintained by Shri Sanjeev, he stated that no such type of record was in his cognizance;  That on being asked about the records - "Gate Pass Book" (resumption memo no.12) being maintained by Shri Sanjeev / Ashish, he said that this system was started but closed, he was not aware of the fact that who used to issue the gate pass & why; and after having perused the same he signed on it;  That summons to S/Shri Sanjeev, Virendra, Brajesh & Ram Karan Maurya were issued under section-14 for appearing in the office on 06.07.12, but no one appeared on the day neither anybody replied in this regard; further he was asked to provide their full addresses & to ensure their presence on 20.07.12 and to receive the summons issued by the Superintendent (Prev.), Central Excise, Lucknow; further it was informed to him that the summons would be sent through postal services. He also assured that he would try his best for their appearance on time for tendering their statement; that out of these four, only Ram Karan was working with him, hence, he will give the addresses of the other persons, that's why he had not received the summons.

13. The summons issued to S/Shri Sanjeev, Virendra, Brajesh & Ram Karan Maurya for appearing in the office on 06.07.12, were got received by one Shri Ashish, Accountant of the factory on 04.07.12 through the divisional staff of Central Excise Division, Raebareli. Summons issued to M/s Gayatri Transport Co. (Commission Agent), Allahabad Faizabad Road, Pratapgarh was also received by Shri Ashish in the factory. Nobody appeared on date 06.07.12. Again Excise Appeal Nos.70108-70109 of 2016 49 summons were issued on 20.07.12 to M/s Gayatri Transport Co., Pratapgarh as well as to Shri Ram Karan Maurya, Melter to appear before the designated authority as on 31.07.12 but nobody appeared on 31.07.12 this time too. Subsequent to above, Shri Lal Padmakar Singh was reminded about his statement dated 11.07.12 that he would provide the addresses of Shri Sanjeev, Shri Virendra and Shri Brajesh, Munshi who had left his factory after 30.11.12. He was again requested vide this office letter even C.No.7939 dated 24.07.12 to provide their addresses for sending summons to them. He was also informed that summons had again been issued to Shri Ram Karan Maurya, Melter - M/s Mamta to appear before the Superintendent (Prev.), Central Excise & Service Tax, Lucknow on 30.07.12 and it was requested to direct him to ensure his presence on 31.07.12 but no one appeared on the said date & time, despite the fact all the summons dated 20.07.12 meant for

- (1) Shri Lal Padmakar Singh, Director; (2) Shri Brajesh, Munshi; (3) Shri Sanjeev Mishra; (4) Shri Virendra, Supervisor; (5) Shri Ram Karan Maurya, Melter - M/s Mamta; and (6) M/s Gayatri Transport Co., the persons/firm associated to business of M/s Mamta Steels were already served in the factory and received on 04.07.12 by one Shri Ashish, Accountant of the factory on behalf of them.

From the above, it could be easily observed that Shri Ashish had adequate knowledge of their present addresses and that is why he had received the summons on their behalf for delivery to them. Though the summons meant for M/s Gayatri Transport Co. was got received back undelivered from the postal authorities with the remark that - "apoorna pata-sd/07.08.12". Moreover, Shri Singh was again requested to facilitate the presence of all these persons/firm in the office of the Enquiring Officer on any working day between 16.08.12 to 23.08.12 for tendering their statement/s or otherwise their present addresses be Excise Appeal Nos.70108-70109 of 2016 50 communicated to this office. But no response was given to above request by the party.

14. During the course of thorough investigation, following persons from the staff and other persons/firms who appeared to have colluded on the duty evasion by M/s Mamta Steel were summoned several times to record their statement under the provisions of Section 14, of Central Excise Act, 1944: --

1. Shri Lal Padmakar Singh, Director;

2. Shri Brajesh, Munshi;

3. Shri Sanjeev Mishra,

4. Shri Virendra, Supervisor,

5. Shri Ram Karan Maurya, Melter of M/s Steel; and

6. M/s Gayatri Transport Company (Commission Agent, associated to the business of the above party) But no body except Shri Lal Padmakar Singh turned up to record his statement as on 01.05.12 & 11.07.12 u/s 14 of the Central Excise Act, 1944. In his statement dated 11.07.12, he assured that he would provide the addresses of Shri Sanjeev Mishra, Shri Virendra, Shri Brajesh and that he would also ensure the presence of Shri Ram Karan Maurya, Melter - M/s Mamta Steel, before the Superintendent (CP). But no body appeared before the Superintendent (CP), Central Excise, Lucknow, to tender their statements. As the investigation was lingering on unnecessarily due to non co-operation of the party, Shri Amit Prakash, Superintendent, Central Excise Division, Raebareli, was requested, vide office letter dated 25.09.12, to record the statement of the above persons firms pertaining to the case with the help of local staff for completing the investigation and send a report to HQ office. In compliance, Shri Amit Prakash, Superintendent, Central Excise Division, Raebareli, visited the factory premises of the said factory on Excise Appeal Nos.70108-70109 of 2016 51 01.10.12 alongwith the divisional staff for recording the statements of the concerned persons. At the time of visit Shri Lal Padmakar Singh, Director was present in the factory. He informed that the persons namely Brajesh, Sanjeev Mishra and Virendra are not available in the factory. No representative of M/s Gayatri Transport Co. was also stated to be available there. Statements of (i) Shri Lal Padmakar Singh, director; (ii) Shri Ashish Kumar, Accountant; & (iii) Shri Ram Karan Maurya, Melter were recorded on the spot as on 01.10.12 before the Superintendent, Central Excise Division, Raebareli, wherein they have stated inter alia as under :--

Statement of Shri Lal Padmakar Singh  that summons issued to S/Shri Sanjiv Mishra, Virendra and Brajesh were handed over by Shri Ashish to me, but the said persons belonged to the contractor who was informed in this regard. He further informed since those persons belonged to the contractor and they left the job in the month of May,2012 whereas Shri Ram Karan Maurya was still working;

 that Shri Ashish was not aware of the fact that the above said three persons had left their jobs from the contractor because the persons who worked in the factory under the supervision of contractor got changed from time to time as per the requirement/need; when he enquired about these persons, other labourers told him that those persons had left their jobs;

 that Shri Ram Karan Maurya, melter - M/s Mamta didn't appear before the designated authority as on 31.07.12 because he was on leave that day; he was informed regarding the summons when he returned to the factory but till then the day 31.07.12 passed away;

 that summons issued to M/s Gayatri Transport Co., was received by the representative (Shri Ashish) of the factory and on being enquired as to why nobody appeared on behalf of them, Shri Singh stated that the persons concerned was Excise Appeal Nos.70108-70109 of 2016 52 informed telephonically; and after that his number was running off,  that Shri K. Ravi was the contractor of labourers who worked in the factory and their labour charges were paid in cash after the work was over; therefore there remained no requirement of more knowledge about them; however, he informed about his phone no. as 07376519528.

Statement of Shri Ashish, Accountant - M/s Mamta  that he has been working in the factory since 16/17th October of last year;

 he had no fix time to come in the factory, however, he used to come at least once in a day as per requirement & need of the work and maintain records pertaining to Central Excise; further he informed that he work as per the Shri Singh directions and report to him;

 that he comes by 10 AM or earlier and completes RG-1 about clearances, the director informs him and he prepares the invoices at any time as per the directions of the director but it is signed by the director himself; though he is authorized for Central Excise Work but invoice is signed by the director only; whereas RG-1 register, returns, form-IV etc. are signed by him;

 that some staff informs him about last day's production as well as the quantity of raw material used and accordingly, he prepares production report;

 that the production report is not in the form of serially numbered bound book. After filling it by hand it is placed in file. He has supplied original copy of production slip for 28.09.12 & 29.09.12 as sample;

 that he is not having knowledge of those persons / labours who worked in the induction furnace; he didn't know whereabouts of Shri Virendra, Munshi or Shri Brajesh;  that Shri Sanjeev Mishra & Shri B.M. Shukla were working in the factory earlier but since December, 11they have left the job;

Excise Appeal Nos.70108-70109 of 2016 53  that Shri B.M. Shukla was also working in the factory earlier but now he has left the job;

 that on being shown the copies of some gate passes it was enquired whether signatures available on them pertains to him; he stated that the signatures appears to be of some Ashish Kumar or Aayush Kumar but does not belong to him;  that on being shown the production report dated 29.11.11 & 30.11.11 found in the factory premises as on 30.11.11; and on being enquired whether those were the reports that were prepared as well as signed by him; he answered that he had gone outside for two days after a phone call was received by him; when he came back to his factory and found it missing, he prepared another report.

Statement of Shri Ram Karan Maurya, Melter - M/s Mamta  that he works in the furnace of the factory which runs in one shift and starts from 8 or 9 A.M.; he joined the factory in September, 11 with one Prabhu, a worker, who had left the job; presently he is working under the contractor Shri Ravi who pay him Rs.8,000/- per month as salary;  that goods in two heats are produced in one shift and each heat takes four hours to complete; in one heat 6 tons finished material is produced and it is the maximum capacity of the furnace;

 that he didn't maintain any record with respect to production of the finished goods. Production might be counted and reported further by the chemist;  that he was not aware of any person or remember any name who earlier worked as supervisor in the factory; Earlier many Supervisors joined and left the job in the factory whose names he did not remember; at present one Shri Gupta ji has been working as supervisor for the last one week;

 on being asked whether any Virendra or Brajesh remained there as supervisor, he stated that he was not aware of these names;

Excise Appeal Nos.70108-70109 of 2016 54

18. Party No. 2 have knowingly colluded with the party No.1 and abetted in the contravention of provisions of Central Excise Rules, 2002, read with the Central Excise Act, 1944 in the intended act of the party No.1 regarding clandestine manufacture and removal of their excisable finished products (M .S. Ingots) without payment of Central Excise duty, as stated above, by the acts of concealing/selling and purchasing / dealing with transaction and fraudulently preparing duplicate/forged Invoices, therefore, for this act on the part of the aforementioned party (party No. 2) have rendered themselves liable for penalty under Rule 26 of the Central Excise Rules, 2002. In fact from the foregoing paras it is evident that the party no 2 ie Shri Lal Padmakar Singh, the director of the Company, was not only running and managing the whole show in the factory but also instrumental in the evasion of Central Excise duty. It was at his behest that the evasion was being done and all the employees were taking orders from him only. There was no other director or any other person at key post who was seen to have been managing the affairs of the factory. It was apparently only he who was the beneficiary of the evasion. It was he who tried every means to delay and scuttle the investigation."

4.11 The Appellant-II was actually involved in the act of evading the duty by making clandestine clearances of the goods for Appellant-I. The penalty imposed upon him under Rule 26 is justified and upheld.

5.1 Both the appeals are dismissed.

(Pronounced in open court on- 21/11/2023) Sd/-

(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp

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Mamta Steel India Pvt Ltd vs -Allahabad on 21 November, 2023