Custom, Excise & Service Tax Tribunal
Unknown vs Commissioner Of Central Excise, ... on 20 September, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/252 to 254, 1231/07 [Arising out of Order-in-Original No. 17/CEX/2006 dt. 30.11.2006 passed by the Commissioner of Central Excise, Pune.] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. C.J. Mathew, Member(Technical) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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M/s. Hira Enterprises,
Shri. Aslam Hashambhai Tamboli
Shri. Mohmed Arshad
:
Assessees
VS
Commissioner of Central Excise, Pune-II, Commissionerate
:
Respondent
Appearance
Shri. Jaikumar, Advocate with Shri. Kartik Jindal, Advocate and Shri. Ganesh R.S. Iyer, Advocate for the Assessees
Shri. Ashutosh Nath, Asstt. Commissioner(A.R.) for the Revenue
CORAM:
Honble Mr Ramesh Nair, Member(Judicial)
Honble Mr. C.J. Mathew, Member(Technical)
Date of hearing: 20/9/2016
Date of decision: 5/1/2017
ORDER NO.
Per : Ramesh Nair
These appeals are directed against Order-in-Original No. 17/CEX/2006 dt. 30.11.2006 passed by the Commissioner of Central Excise, Pune. The Appeal No. 252 to 254/07 has been filed by M/s Hira Enterprises, Shri Aslam Hashambhai Tamboli, Shri Mohammed Arshad against the demand of 31,50,575/- and penalties imposed whereas the Appeal No. E/1231/07 has been filed by the revenue against dropping of demand of Rs. 77,90,388/-.
2.?The fact of the present case is that M/s Hira Enterprises is engaged in the manufacture of Hira and BaOba brands of Gutka, Hira brand of Pan masala & Mawa. The revenue officers conducted searches at factory premises of M/s Hira Enterprises. Searches were also conducted at premises of dealer M/s Super Trader at Mumbai and Bhiwandi which led to recovery of sheets alleged to be containing details of quantity purchased from M/s Hira Enterprise. The officers also detained goods from the Bhiwandi premises of M/s Super Trading. Statement of Shri Mohd. Arshad proprietor of M/s Super Trading was recorded on 26.07.2002 wherein he stated that they are receiving goods under cover of central excise invoice. Sometimes they have received Hira gutka without payment of duty. That the details stated in records seized from his premises pertains to clearance of Hira brand Gutka to different parties and amounts received from them. That the payment to M/s Hira Enterprise was made through demand draft only. Statement of Shri Sajan Hasan Shah, Sales Incharge of M/s Hira Enterprise was also recorded wherein he stated that he looks after sale of goods and has also employed services of Shri Arshad F Khan, proprietor of M/s Super Trading to sell the products having office at Bhiwandi. Shri Arshad F khan in his statement dt. 27.08.2002 stated that Hira gutka is received in gunny bags containing six bags each of gutka. Similarly Sada Pan Masala was in gunny bag containing 5 bags of pan masala, one gunny bag of mawa used to contain 5 bags of mawa, one gunny bag of BaOba used to contain six bags of BaOba whereas the invoice received by them from M/s Hira Enterprise was only for 1/6th of thaila Bags of Gutka, 1/5th of Thaila bags for sada, 1/5th of thaila bags of mawa and 1/6th of thaila bags of BaOba ; that the difference between the value of goods received and invoice value was paid back by him to M/s Hira Enterprise in cash.
2.1 Shri Aslam Hashambhai, partner of M/s Hira Enterprise in his statement dt. 03.09.2002 accepted the statement of Shri Arshad. He further stated that on certain occasions on request of some customers they used to pack cloth bags in gunny bags for the purpose of its safe transportation. On being asked as to whether the same modus operandi has been applied for clearance of their products to other dealers also he replied that he has to check before responding. Based on the investigation M/s Hira Enterprise were issued show cause notice dt. 28.11.2005 demanding duty of Rs. 1,09,40,463/- and proposing penalty of equivalent amount. It was also proposed to impose penalty on Shri Aslambhai, Partner of M/s Hira Enterprise and Shri Mohd. Arshad proprietor of M/s Super Trading.
2.2 The adjudicating authority dropped the duty demand of Rs. 77,90,388/- on the ground that charge of sale of the goods in excess of invoiced quantity is not proved and hence does not sustain. However a demand of Rs. 7,70,475/- was confirmed on the ground that the transactions are not covered by and invoices and are clandestine removals. Further a demand of Rs. 23,79,600/- was confirmed on the ground that the transactions are also not covered by the invoices and hence the same are clandestine removal by M/s Hira Enterprise. Further penalty was also imposed upon main assessee. A penalty of Rs. 25000/- was also imposed upon Shri Aslam Hashnbhai Tamboli, Partner of M/s Hira Entrerprise and of Rs. 10,00,000/- upon Shri Mohd. Arshad, Proprietor of M/s Super Trading. Aggrieved by the impugned order M/s Hira Enterprise, Shri Aslam Hashnbhai and Shri Mohd. Arshad has filed Appeal Nos. E/252 to E/54 of 2007 against the demand and penalties and Revenue filed Appeal No. E/1231/07 -MUM against setting aside of demand of Rs. 77,90,388/- and also seeking penalties.
3. Shri. Jaikumar, Ld. Counsel with Shri. Kartik Jindal, Advocate and Shri. Ganesh R.S. Iyer, Advocate appeared on behalf of the assessees. Ld. Counsel for the assessee submits that the demand of duty of Rs. 31,50,075/- confirmed against them is not sustainable as the same are against Commissioners own findings on the basis of which the other demand was dropped. That the adjudicating authority while dropping bulk of demand has already discarded set of documents viz. chits of dealer on the ground that the same do not represent credible and reliable evidence. That once it is held so the same documents cannot be relied upon for confirmation of other demand. That M/s Super Trading in addition to selling of goods of M/s Hira are also selling goods of other manufacturers i.e cigarettes, gutka, matches etc. They are not sole selling agent of M/s Hira and is not related with M/s Hira only. The said firm is like other dealers based at Nashik, Dhule, Ahmednagar, Aurangabad selling goods of assessee firm. That the adjudicating authority also admitted the above facts and it was also admitted that the chits do not indicate any brand name least Hira/ BaOba brand in respect of gutka received, sold and held in stock. The transactions of receipt of goods are not reconcilable with the invoices of assessee for surplus receipt against invoices and no corroboration with any document. The collection shown in the chits is not attributable to sale proceeds of said dealer for sale of assessees products and can be said to include sale proceeds of various other goods sold by the dealer to its buyers. That the statements do not explain or prove any clandestine removal and are thus empty or vague, assessees production capacity is in fair commensurate with the raw material receipts, consumed and finished goods manufactured and sold and that the accounts maintained by the assessees are comprehensive of the said position. That in absence of any corroboration or co-relation of chits seized from dealer with the any documents of assessee the chits has no evidentiary value alleging clandestine removal . That there is no justification of demand confirmed by adjudicating authority on the ground that the said chits shows stock of gutka held by the dealer but on corresponding dates or the nearby dates there is no invoice issued by the assessee. That since there was no transaction of any goods and hence question of issuing invoice is just otiose and since having charge of surplus removal of goods against the invoiced transactions no room exists for adjudicating authority to confirm demand. He further submits that in case of goods seized during investigation the confiscation of seized goods from premises of M/s Super Trading was proposed and same was confirmed by the adjudicating authority. That the Commissioner (Appeals) set aside the order-in-original vide order in appeal dt. 18.08.2004. That on filing appeal by the revenue against the said O-I-A the Tribunal remanded the matter back to the Commissioner (Appeals) who vide Order-in-Appeal dt. 27.11.2007 set aside the confiscation of goods and penalties on the ground that allegation of clandestine removal is far fetched as it is not required by law that the dealer should keep the invoices with them all the time. That whereas Shri Arshad in his statement dt. 27.08.2002 has stated about packing of goods in gunny bags for clearances and Shri Aslam Shah had also stated so but it can be seen that he stated that on certain occasion on request of customers, they used to pack the cloth bags in gunny bags for safe transportation. That nowhere there is admittal that in respect of all consignments by M/s Hira they had resorted to packing of 5 6 bags in gunny bags. Department has not been able to corroborate this aspect by way of evidence as they have relied only upon the chits found with M/s Super Trading. In the absence of any other evidence to the extent of money being paid or transport documents to substantiate the actual quantum of goods alleged to be have been cleared, the clandestine removal cannot be alleged. That there is no evidence that M/s Hira Enterprise has done any unaccounted excess production. Goods lying with dealers/ traders and selling agents not to be confiscated merely on the ground that it failed to co-relate with the duty element with the goods. That against the said order of Commissioner (Appeals) revenue filed appeal before CESTAT who vide Final Order 11.07.2008 rejected the appeal file by the revenue. That in the light of above judgment of CESTAT on the same set of facts, evidence and investigation the departments case does not stands. He also submits that the reliance placed upon the judgment of CCU, Madras Vs. D.Bhoormull [1983 (13) ELT 1546 (SC)] is not applicable as the same is in context of Customs Act and not central excise act. That the onus is on the department which have not been proved. He relies upon following judgments:
(a) Mohan Steels Ltd. V/s Commissioner of Central Excise, Kanpur [2004 (177) E.L.T. 668 (Tri. - Del.)]
(b) Commissioner of Central Excise, Mumbai-Iii V/s Mira Silk Mills [1999 (112) E.L.T. 934 (Tribunal)]
(c) Commissioner of Central Excise, Meerut V/s Raman Ispat (P) Ltd. [2000 (121) E.L.T. 46 (Tribunal)]
(d) Shalimar Rubber Industries V/s Collector of C. Ex., Cochin [2002 (146) E.L.T. 248 (S.C.)]
(e) Sanket Food Products Pvt. Ltd. V/s Commissioner of C. Ex., Aurangabad [2005 (188) E.L.T. 107 (Tri. - Del.)]
(f) Jagatpal Prem Chand Ltd. V/s Commissioner of Central Excise, Delhi-I [2004 (178) E.L.T. 792 (Tri. - Del.)]
(g) Surya Roshni Ltd V/s Commissioner of Central Excise, Indore [2005 (182) E.L.T. 420 (Tri. - Del.)]
(h) Gulabchand Silk Mills Pvt. Ltd. V/s Commissioner of C. Ex., Hyderabad-II [2005 (184) E.L.T. 263 (Tri. - Bang.)
(i) Commissioner of Central Excise, Surat-I V/s Umiya Chem Industries[ 2005 (185) E.L.T. 410 (Tri. - Mumbai)]
(j) Bhushan Steel & Strips Ltd. V/s Commissioner of C. Ex., Ghaziabad [ 2015 (329) E.L.T. 625 (Tri. - Del.)]
(k) Commissioner of Central Excise, Meerut V/s Rishabh Velveleen P) Ltd.[2006 (201) E.L.T. 437 (Tri. - Del.)]
(l) Collector Of Customs, Madras And Others V/s D. Bhoormull 1983 (13) E.L.T. 1546 (S.C.)]
(m) M. Nagabhushana V/s State of Karnataka [2011 (271) E.L.T. 481 (S.C.)]
(n) Union of India V/s East & West Shipping Agency [2010 (253) E.L.T. 12 (Bom.)]
(o) Sulochana Amma V/s Narayanan Nair [1995 (77) E.L.T. 785 S.C.)]?
(p) Commissioner of Central Excise, Delhi-I V/s Ishnu & Co. Pvt. Ltd.[2016 (332) E.L.T. 793 (Del.)]
(q) Chandan Tobacco Company V/s Commissioner of C. ex., Vapi [2014 (311) E.L.T. 593 (Tri. - Ahmd.)]
(r) Nava Petrochemicals Ltd. V/s Commissioner of C. Ex., Ahmedabad[2010 (254) E.L.T. 165 (Tri. - Ahmd.)]
(s) commissioner of c. Ex., chandigarh-I V/s Laxmi Engineering Works [2010 (254) E.L.T. 205 (P & H)]
(t) Kamboj Ispat P. Ltd. V. Commissioner [2016 (333) E.L.T. A116 (Tri. - Mumbai)] (u) MD. Noman Alam V/s Union of India[ 2016 (331) E.L.T. 163 (Pat.)]
4.? Shri. Ashutosh Nath, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned orders in as much as demand of Rs. 31,50,075/-. However as regard the Revenues appeal seeking demand of Rs. 1,09,40,463/- he submits that from the statements recorded and papers seized from M/s Super Traders it is apparent that the goods were cleared by M/s Hira Enterprise without payment of duty. He further submits that during physical verification of the stocks on 26.07.2002 at premises of M/s Super Trading, they were not able to provide duty paying documents. That in their statements Shri Aslam proprietor of M/s Hira Enterprise accepted the removal of goods in excess of invoices quantity indicated in gunny bags. That Shri Arshad of M/s Super Traders also accepted that they have received invoice for less quantity and also explained the records seized from premises of M/s Super Traders. That the seized records of M/s Super traders shows clearance of goods, amount received and balance amount which evidences clearances of goods by removal of goods. That M/s Super traders were not able to produce the duty paying documents of goods which were shown in the records. In his support he placed reliance on following judgments :
(a) Commissioner V/s. Shiva Steel Re-rolling Mills [2016 (337) E.L.T. A94 (Bom.)]
(b) Padmashri V.V. Patil S.S.K. Ltd. V/s Commissioner of Central Excise & Customs [2016 (335) E.L.T. 196 (S.C.)]
(c) Haryana Acrylic Manufacturing Company Private Limited V. Commissioner [ 2016 (332) E.L.T. A249 (S.C.)]
(d) Commissioner of C. Ex. & Cus. V/s Shri Ram Aluminium Pvt. Ltd. [2009 (242) E.L.T. 202 (Bom.)]
(e) Nu-Trend Business Machines (P) Ltd. V/s Commr. of C. Ex., Chennai [2002 (141) E.L.T. 119 (Tri. - Chennai)]
(f) Hero Plywoods & Boards V/s Commissioner Of C. Ex., Calicut [2009 (248) E.L.T. 205 (Tri. - Bang.)]
(g) Commissioner of Central Excise, Mumbai V/s M/s Kalvert Foods India Pvt. Ltd. [2011-TIOL-76-SC-CX]
(h) Hy-Grade Pellets Ltd. V/s Commissioner of Customs, Visakhapatnam [2004 (171) E.L.T. 177 (Tri. - Del.)]
5.?We have carefully considered the submissions made by both the sides and perused the records.
6.?We find that the demand of Rs. 31,50,075/- has been confirmed mainly on the ground that the details of goods found entered in records of M/s Super Traders are not covered by the invoices of M/s Hira Enterprise and thus details are of goods cleared clandestinely by M/s Hira Enterprises. We also find that in case of demand of Rs. 77,90,388/- dropped by the adjudicating authority the said demand was also based upon the Papers seized from premises of M/s Super Trading and statement of its proprietor Shri Arshad who explained the entries of such papers and also stated that the quantity of Gutka, Sada pan masala and other items were more than the invoice quantity. Shri Aslam, partner of M/s Hira Enterprise also accepted the statement of Shri Arshad. We find that except the above statement and papers seized from the premises of M/s Super Trading no other evidence has been brought on record that the assessee firm has supplied the goods more than the invoiced quantity. We find that no evidence or papers has been seized from the assessee firm which can show that they have cleared goods more than the invoiced quantity. Though during investigation the name of other dealers selling the goods of the assessee firm also cropped up but it is not known as to whether they were also receiving goods more than the invoiced quantity. We also find that Shri Aslam Shah in his statement has stated that the goods were packed in gunny bags i.e 5 or 6 bags of Hira or BaOba Gutka or Pan masala in one gunny bags only if the buyers wanted them to do so. However it is not forthcoming from the investigation as to whether such packing was undertaken in all clearances or was limited to only some clearances. No document, record has been unearthed which can show that the assessee firm was undertaking the goods in packing 5 or 6 bags of goods in each gunny bag and was clearing the same to M/s Super Trading. The investigation has remained inconclusive as the clearances record, transportation and receipt of amount by assessee firm towards such excess clearances has not been adduced to bring home the charges of clandestine removal. We find that M/s Super trading being engaged in trading of goods of other manufacturer also and there records cannot be a basis to allege that the goods manufactured by M/s Hira Enterprises were cleared clandestinely. Though the statement of Shri Aslam, Partner of M/s Hira Enterprise has been recorded but the same is not supported by any Independent evidence as nothing incriminating was seized from the premises of M/s Hira Enterprises and hence his statement has to be construed as being in isolation and non corroborative. The adjudicating authority while setting aside the demand of Rs. 77,90,388/- has relied upon the bunch of decision of Honble Court and CESTAT. We find that the gist of all such judgments is that unless the charges of clandestine removal is corroborated by any independent and tangible evidence the demand cannot be confirmed. In case of Prince Gutka Ltd. Vs. CCE, Meerut 2005 (185) ELT 196 (TRI) DEL, the CESTAT while dwelling upon the evidence in the form of chits recovered from the assessee company held that loose chits found from the assessee premises cannot be a basis for demand unless the same is supported by receipt of raw material and its clearances. Similarly in case of Jagatpal Premchand Ltd. Vs. CCE Delhi 2004 (178) E.L.T. 792 (Tri. - Del.) it was held that in absence of any excess stock of Supari/Katha/Tobacco, etc. i.e., main raw materials for manufacture of Panmasala and Gutka found in factory during visit of officers, or anything found during investigation with suppliers of supari coupled with fact that no excess stocks of final products found during officers visit to factory, charge of clandestine removal not sustainable since such charge, as held by Tribunal in Emmtex Synthetics Ltd. [2003 (151) E.L.T. 170 (Tribunal)], has to be established by adducing tangible, convincing and cogent evidence. We find that the investigation has been silent on all the aspects of procurement of raw material, labour, power, manufacture of finished goods, its clearance from factory of assessee firm and receipt of any amount towards alleged clandestine clearance. Further no excess stock has been found from the assessees factory and no incriminating records were seized. Summing up all the above facts we are of the view that the statement of Shri Mohd. Arshad of M/s Super Trading and its acceptance by Shri Aslam Shah, Partner of M/s Hira Enterprise and findings of paper containing some transactions are not conclusive evidence of clandestine removal by M/s Hira Enterprise. We are of the view that the evidences i.e papers/ records found from the third party i.e M/s Super Trading cannot be a basis for holding clandestine removal by M/s Hira Enterprise in absence of any corroboration from assessees side and thus demand cannot be made against M/s Hira Enterprise. We also find that in case of goods found at the premises of M/s Super Traders alleged to have been cleared from the factory of M/s Hira Enterprises without payment of duty and wherein confiscation of goods and imposition of penalties upon the assessees were ordered by the adjudicating authority, the Commissioner (Appeals) dropped the charges vide OIA dt. 27.11.2006 holding that there is no evidence that M/s Hira Enterprise has cleared unaccounted excess production. The said order of the Commissioner (Appeals) was upheld by the CESTAT vide Order No. A/567-570/08/SMB/C-II dt. 11.07.2008. We thus find that the CESTAT has already held that charges of clandestine removal against M/s Hira Enterprise are not sustainable.
6.1. In view of the above discussion, we are of the considered view that the allegations against M/s Hira Enterprise of removal of goods clandestinely are not sustainable and no demand can be made against them. We therefore allow the appeals filed by M./s Hira Enterprises, its Partner Shri Aslam Hashambhai Tamboli and proprietor of M/s Super Trading Shri Mohd. Arshad with consequential reliefs.
7.?As regard Revenues appeal No. E/1231/07 we hold that in view of our above observations, the charges of clandestine removal against M/s Hira Enterprise are not sustainable and therefore the Revenues appeal does not survive. Hence the same is dismissed.
8.?All the appeals are dispose off in the above terms.
(Order pronounced in court on _____________) C.J. Mathew Member (Technical) Ramesh Nair Member (Judicial) sk 2 E/252 to 254, 1231/07