Custom, Excise & Service Tax Tribunal
Satya Power & Ispat Ltd vs Commissioner (Appeals), Central Gst, ... on 27 August, 2024
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO.III
E-Hearing
Excise Appeal No.53076 of 2018
[(Arising out of Order-in-Appeal No.BHO-EXCUS-002-APP-177-18-19 dated
17.05.2018 passed by the Commissioner (Appeals), Central Goods and Service Tax,
Central Excise and Customs, Raipur (C.G.)]
M/s.Satya Power & Ispat Ltd., Appellant
Village-Gatauri, Ratanpur Road,
Bilaspur (C.G.).
VERSUS
Commissioner of Central GST, Central Respondent
Excise and Customs, Central Excise Building, Dhamtari Road, Tikrapara, Raipur (C.G.)-492 001.
APPEARANCE:
None for the appellant Shri Rakesh Agarwal, Authorised Representative for the respondent CORAM:
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL) HON'BLE MR. P.V.SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO.58110/2024 DATE OF HEARING: 01.08.2024 DATE OF DECISION: 27.08.2024 BINU TAMTA:
1. M/s. Satya Power & Ispat Limited 1 has challenged the order-in-
appeal no.BHO-EXCUS-002-APP-177-18-19 dated 17-05-2018 confirming the demand of central excise duty along with interest and penalty.
1 The Appellant 2
2. The appellant is a manufacturer of sponge iron. On the basis of an intelligence report that the appellant is not properly discharging the duty liability, the team of central excise officers visited the factory premises and conducted preventive checks on 16.01.2015 and 17.01.2015. During their visit, physical stock verification of finished goods and raw materials were undertaken, which revealed shortages in the stocks of Iron Ore, Coal, Sponge Iron and Dolochar. Show cause notice dated 16.09.2016 was issued to the appellant proposing recovery of central excise duty amounting to Rs.21,79,258/- along with interest and penalty of equal amount. On adjudication, the demand was confirmed, basically relying on the admissions made by the authorized signatory of the appellant company regarding shortage of finished goods and the raw materials. The appeal filed by the appellant was rejected by the impugned order and hence, the present appeal has been filed before this Tribunal.
3. None appeared for the appellant despite several adjournments sought by the appellant. The appeal pertains to the year 2018 and on the last occasion on 04.07.2024, it was made clear that no further adjournment shall be granted. Hence, we have heard Shri Rakesh Agarwal, Authorised Representative for the respondent and perused the records of the case.
4. The challenge by the appellant is that the preventive checks at the factory premises were conducted without any search warrant, authorizing the departmental officers to conduct the search. According to the learned counsel for the appellant, the proceedings are un- sustainable as neither the show cause notice nor the relied upon 3 documents were served upon him nor did he receive any notice for the personal hearing. The allegations of clandestine removal were denied as there was no mention of any specific period when the goods were clandestinely removed. In the absence of any period mentioned, it cannot be presumed that the alleged sales must have taken place beyond the normal period of limitation of one year and, therefore, the demand made by invoking the extended period of limitation is not permissible. The learned counsel for the appellant challenged the levy of penalty by submitting that there was no clandestine removal of goods by the appellant and the Revenue has failed to bring on record any clinching evidence in that regard as mere shortage of goods may arise in various situations, but does not necessarily reflect to any intention to evade duty. Since the Revenue has no conclusive evidence to prove collusion, fraud, or suppression of facts on the part of the appellant and, therefore, neither the extended period can be invoked nor penalty can be levied.
5. Learned Authorised Representative reiterated the findings of the Authorities below and also on the statement made by Shri Shikhar Agarwal, the Authorised Signatory of the appellant, where he admitted that he was satisfied with the manner of stock taking in the panchnama proceedings, carried out in their factory premises and accepted the differences found in the various stocks of finished goods and raw materials. Learned Authorised Representative clarified the issuance of search warrant, issuance of the show cause notice and the notice of hearing letters sent to the appellant through speed post on various dates.
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6. The short issue for consideration is whether the Revenue has proved the case of clandestine removal against the appellant.
7. While considering the issue of clandestine removal, the statement dated 17.01.2015 of Shri Shikhar Agarwal recorded under Section 14 of the Central Excise Act, 1944 2 is relevant to be taken note of, where he accepted that he was part of panchnama proceedings and was present throughout. The relevant part of the statement reads as under:-
"(v) He had gone through the Panchnama dated 17.01.2015 drawn at their premises and admitted the shortage of finished goods and raw materials and removal of good without payment of duty and without accounting for in the records; he agreed to its contents and as a token of his agreement he had signed the Panchnama. He agreed with the verification of records with physical stock by the officers and accepted the responsibility for the lapse and agreed to discharge the duty liability involved in the stock found short during the physical verification willingly." From the above contents of his statement, it is evident that Shri Shikhar Agarwal had admitted the shortage of the finished goods and the raw materials and also the removal of the goods without payment of duty and without accounting thereof in the records. Further, he agreed with the verification of records with physical stock by the officers and accepted the lapse of the stock found short. Coupled with the admissions made by Shri Shikar Agarwal, the modus operandi of the appellant of not maintaining any kind of Daily Stock at the factory 2 The Act 5 premises, not making entry of final products in the daily production register, not issuing any invoices in respect of excisable goods cleared and neither declared the production and clearance of excisable goods so manufactured and cleared in the ER-1 Returns only reflects that shortage of the finished goods and the raw materials during the physical verification at the time of preventive check is evident of the fact of clandestine removal with intent to evade payment of duty.
8. On the principle what is admitted need not be proved, as held by the Apex Court in the case of CCE, Madras Vs. Systems and Components Pvt. Ltd. 3, the charge of clandestine removal stood conclusively proved by the admissions of the authorized signatory of the company. Similarly, the observations of the Tribunal in the case of K.P. Basheer Vs. Collector of Central Excise, Cochin 4 , the admitted facts need not be proved or established by the Department. We are, therefore, of the view that the issue of clandestine removal stands proved by the Revenue by their own admission and hence, what is established does not require to be proved.
9. The conclusion drawn by the Commissioner (Appeals), that had the appellant not removed such goods clandestinely, they would have surely produced the necessary evidences to the contrary is plausible in the circumstances and needs to be affirmed. The appellant has not been able to give any reasonable explanation for the same. Moreover, as observed by the Tribunal in the case of Haryana Steel and Alloys Ltd. Vs. CCE & ST, New Delhi 5 that :-
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2004 (165) ELT 136(SC) 4 1999 (109) ELT 247 (T) 5 2017(355) ELT 451 (T-D) 6 "While the onus is on the Revenue to establish clandestine removal, they are not required to prove the case with mathematical precision as such a case involves deliberate and well thought out modus operandi to evade duty. The Tribunal in the case of Ramachandra Rexins Pvt. Limited v. CCE, Bangalore - 2013 (295) E.L.T. 116 (Tri.-Bang.), considered the issue in detail. The Hon‟ble Supreme Court as reported in 2014 (302) E.L.T. A61 (S.C.), while upholding the decision of the Tribunal held as under :-
"Tribunal further held that in a case of clandestine activity involving suppression of production and clandestine removal, it is not expected that such evasion has to be established by Department with mathematical precision. A person indulging in clandestine activity takes sufficient precaution to hide/destroy the evidence. The evidence available shall be those left in spite of the best care taken by the persons involved in such clandestine activity. In quasi-judicial proceedings, in such a situation, the entire facts and circumstances of the case have to be looked into and a decision has to be arrived at on the yardstick of „preponderance of probability‟ and not on the yardstick of „beyond reasonable doubt.‟ In case of clandestine removal, benefit of Cenvat/Modvat claim cannot be considered in absence of duty paying documents."
10. Lastly, the principles settled by the Apex Court in CC Vs. D. Bhoormal 6 clarifies the code of conduct to be followed, as under:-
"The law does not require the prosecution to prove the impossible. All that is required is the establishment of such a degree of probability that a prudent man may, on the basis, believe in the existence of the fact in issue. The Hon‟ble Court further observed that „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 its special or peculiar knowledge of the person concern."
11. The objection raised by the appellant that search was without search warrant is not sustainable as per the records made available and considered in the impugned order. The Revenue has placed on record the authorization dated 15.01.2015 by the Additional Commissioner (Preventive) to the Superintendent (Preventive) 6 1983 (13) ELT 1546 (SC) 7 authorizing him to search the premises, etc. of the appellant. From the impugned order, we find that the Commissioner (Appeals) had categorically noted that the panchnama makes it clear that the search warrant was shown to Shri Ram Avtar Agarwal, Director of the appellant and he had signed the search warrant. On the issue that the show cause notice, the relied upon documents and the personal hearing notices were not received by the appellant, we find that the appellant is mis-leading as the acknowledgement receipts of the show cause notices duly signed by the authorized signatory of the appellant are on record. In fact this Tribunal had called for the verification of service of show cause notice and the learned Authorised Representative produced the acknowledgement receipt that show cause notice was received by the appellant on October 06, 2016, as recorded in the Order dated 12.10.2021. Similarly, the notices for personal hearing issued on various dates sent by speed post were not returned or un-delivered. The contention of the appellant stands duly dis-proved by the documentary evidence placed on record by the Revenue.
12. Learned counsel in their submissions received by the Registry on 16.01.2024 has taken an additional ground that the order-in-original dated 27.09.2017 was passed in relation to the show cause notice dated 11.08.2016, which related to the recovery of cenvat credit of Rs.6,74,865/- and was not in relation to the show cause notice dated 16.09.2016, which related to the recovery of central excise duty amounting to Rs.21,79,258/- and hence, argued that Revenue cannot argue a case, which is not made out in the show cause notice. The contention raised is beyond the records of the case as both from the 8 order-in-original as well as the order-in-appeal, it is evident that the subject matter of dispute was the show cause notice dated 16.09.2016 relating to the recovery of central excise duty in question and the same have been decided on merits. The contention raised by the appellant is misleading and hence not maintainable.
13. In view of the facts discussed above, invocation of extended period of 5 years under Section 11 A (4) of the Act is correct and this being a case of deliberate suppression of facts regarding production and removal of goods, the penalty has been rightly invoked under Section 11AC(1)(c) of the Act.
14. Accordingly, the demand of duty along with interest and penalty is confirmed. We do not find any infirmity in the impugned order and hence, the same is affirmed.
15. The appeal is, accordingly dismissed.
[Order pronounced on 27th August, 2024] (Binu Tamta) Member (Judicial) (P. V. Subba Rao) Member (Technical) Ckp.