Custom, Excise & Service Tax Tribunal
Unknown vs C.C..E.., Bilaspur on 16 September, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-I Date of hearing: 6.9.2016 Date of pronouncement : 16.09.2016 Central Excise Appeal No.52268 of 2016 -SM Arising out of the order-in-appeal No.BHO-EXCUS-002-APP-045-16-17 dated 24.5.2016 passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, Raipur. For approval and signature: Honble Mrs. Archana Wadhwa, Judicial Member 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Appellants c Salasar Steel and Power Limited .. Appellants Vs. C.C..E.., Bilaspur .. Respondent
Appearance:
Present Ms. Suarbhi , Advocate for the appellants Present Shri Dharam Singh, A.R. for the Respondent/Revenue Coram: Honble Mrs. Archana Wadhwa, Judicial Member Final Order No. 53627/2016 Per Archana Wadhwa:
As per facts on record, the appellant is engaged in the manufacture of sponge iron falling under Chapter 72 of the Tariff. Their factory was visited by the Central Excise offices on 3.9.2013 who undertook verification of the stock. As a result, certain stock of the coal, ash char, fly ash bricks, fly ash blocks was found short.The said shortages were detected by the officers and are the subject matter of the present appeal.
2. The stock measurement conducted at their factory premises also resulted in excess stock of 286.235 MT of sponge iron under belief that the said stock was meant for clandestinely removed and as such , have not been entered in the record, the same were seized by the officers.
3. Simultaneously, residential premises of Shri Praksh Chandra Mundra, General Manager were also put to search. During search of residential premises, cash amount of Rs.4.95 lakhs along with one laptop, two pen drives , a cash book and note book were also recovered. Proceedings were recorded in panchnama dated 2.9.2013 and the recovered cash was seized on the belief that the same was sale proceeds of clandestinely removed goods and as such liable to confiscation under Section 129 of the Customs Act, 1962 as made applicable to Central Excise matters.
4. Based upon the above, proceedings were initiated by issuing show cause notice dated 21.2.2014 proposing to confiscate the excess found stock of 286.235 MT of sponge iron valued at Rs.47,80,128/- and also for confiscation of the cash found from the residential premises of Prakash Chandra Mundra,General Manager. Notice also proposed imposition of penalty.
5. During adjudication, the appellant took categorical stand that the stock was not actually measured and it is impossible to weigh the stock during short period of visit by the officers, that the measurement report does not bear signature of panchas and the departmental officers and as such, the conclusion of the excess weighed is not correct. The goods are stored in heaps which are in conical shape and not of cubic shape and as such, the stock of the said goods in heaps has always been determined by adopting the method of calibration weight/conical weight and not the volumetric weight as mentioned in the panchanama. Similarly, the correct method of accounting weight of bllet and other sold sections is the sectional weight system and not volumetric weight system or average weight system as mentioned in the panchanama. The seizure of the goods was also contested on the point of reasonable belief. The appellant also contested that they had cleared 1580.900 MT of goods on the mid-night of 2.9.2013 which factor has not been taken into account. The days production was also not considered and as such, the excess has been incorrectly arrived at. They further submitted that there is no statement of any authorized person to the effect that such excess quantity of the final product was not entered in the record with any mala fide on the part of the assessee so as to clear the same without payment of duty.
As regards the seizure of cash, the appellant contested that the same was owned by Shri Atul Prakash Mundra, son of Shri Prakash Chandra Mundra, a share broker. The show cause notice has neither been served to Shri Prakash Mundra nor Shri Atul Prakash Mundra proposing confiscation of Indian currency seized from their residence, from where the same was recovered. As such, to confiscate the said stock on the ground that the same was sale proceeds of the smuggled goods by the manufacturing unit is not proper.
6. The adjudicating authority did not find favour with the above submission of the appellant and confiscated 286.235 MT of sponge iron totally valued at Rs.47,80,128/- with an option to the appellant to redeem the same on payment of redemption fine of Rs.12 lakhs. The cash amount of Rs.4.95 lakhs was also confiscated absolutely under the provision of Section 121 of the Customs Act, 1962 read with Notification No.68/63 dated 4.5.63. In addition , the penalty of Rs.5 lakhs was imposed upon the appellant under Rule 25 of the Central Excise Rules. The said order in-original of the adjudicating authority stands upheld by the Commissioner (Appeals). Hence the present appeal.
7. After hearing both sides duly represented by Ms.Suabhi Sinha, ld. Counsel appearing for the appellant and Shri Dharma Singh, ld. A.R. appearing for the respondent/Revenue. I find that the challenge in the present appeal is to confiscation of the excess found goods as also the Indian currency recovered from the residential premises of the General Manager as also to imposition of penalty.
As regards the confiscation of excess found goods, I find that the appellants have at the first instance challenged the correctness of the said excess found goods and the method adopted by the visiting officers for arriving at the conclusion of excess goods, the ld. Advocate has drawn my attention to the relied upon documents where no sign of panchas appears.
8. I find that the law as regards confiscation of excess stock of goods almost stands settled. The same cannot be confiscated on the mere conclusion of non-entry of goods in the statutory documents, unless there is evidence that such stock was not entered in RG-1 register either deliberately or on the mala fide intention to remove the same clandestinely. Admittedly, in the present case, it is not the Revenues case that the goods were in process of being removed. Apart from the fact that such stock taking process stands challenged, by adopting the fact that there is no evidence on record to show that such excess found stock was meant for clandestinely removal, in which case, action against the assessee was not appropriate.
For arriving at the above conclusion , the appellant relied upon the earlier decision of the Tribunal in the case of C.C.E. Raipur vs. Devi Iron & Power Pvt. Ltd. - 2015 (321) ELT 270 (Tri- Del.) as also in the case of Morakhia Metals & Alloys Pvt. Ltd. vs. C.C.E.& S.T., Allahabad III 2015 (330) ELT 325 (Tri-Ahmd.); C.C.E., Jaipur vs. Karnawat International Pvt. Ltd. 2015 (316) ELT 172 (Tri-Del.) ; Kashi Laminators (P) Ltd. vs. C.C.E., Lucknow 2014 (314) ELT 327 (Tri-Del.) and C.C.E., Calicut vs. Steel Complex Ltd. 2006 (197) ELT 512 (Tri-Bang.)
9. The ratio of the above decisions is that the fact that excess finished goods found in the factory by itself cannot be held to be a ground to attribute any intention to the assessee so as to lead to conclusion of mala fide. Further, in all the said decisions, the fact of stock taking was not done in proper manner was also one of the reason for the Tribunal to arrive at this finding. In the case of Industrial Thermopack vs. C.C.E., Delhi IV 2015 (329) ELT 500 it was held that non-accountal of goods by itself cannot lead to the confiscation of the goods, in the absence of any corroborative evidence produced to establish intent of the appellant to remove goods clandestinely. To the similar effect is another decision of the Tribunal in the cases of C.C.E., Siliguri vs. Asha Ispat (P) Ltd. 2006 (205) ELT 324 (Tri-Kolkata) and Unique Intercontinental Ltd. vs. C.C.E., Chandigarh I. As regards the confiscation of the seized Indian currency , I find that the same was seized from the residential premises of the son of General Manager. In spite of the fact that no notice was issued to the person from whose possession the currency was seized, to confiscate the currency on the assumption that the same represents the sale proceeds of the goods cleared and sold by the manufacturing unit without there being any evidence to that effect and without there being any duty demand in respect of such clandestinely removed goods is neither proper nor justifiable. It is well settled law that onus to prove that currency in question represents sale proceeds of clandestinely removed goods lies heavily on the Revenue and is required to be discharged with sufficient evidence . In the instant case, I find that there is nothing on record to show that cash seized from the residential premises of the General Manager of the company represent sales proceeds of the clandestinely removed goods from the appellant factory.
10. In support of the above conclusion, reference is made to the Tribunal decision in the cases of Standard Grease & Specialities Pvt. Ltd. vs. C.C.E. & S.T., Vapi 2014 (303) ELT 434 (Tri-Ahmd.) and Pandit D.P. Sharma vs. C.C.E., Calcutta II 2001 (137) ELT 692 (Tri-Kolkata). It may be mentioned that Tribunal decision in Pandit D.P.Sharma stands affirmed by the Honble Supreme Court when the appeal filed by Revenue was dismissed reported in C.C.E., vs. Pandit D. Sharma 2003 (157) ELT A 201 (SC).
11. In view of the foregoing, I find no reason to uphold the impugned order. Accordingly, the confiscation of goods as also cash seized or imposition of penalty upon the appellant by the authorities below, are set aside. The appeal is allowed with consequential relief.
(Pronounced in the open Court on 16/09/2016) (Archana Wadhwa) Judicial Member 6