Custom, Excise & Service Tax Tribunal
) M/S.Shivam Steel Corporation vs Commissioner Of Central Excise & ... on 15 February, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
1-5) Appeal Nos.EA-477, 223, 224, 478, 479/09
(Arising out of Order-in-Original No.
1) CCE/BBSR-II/No.27/COMMISSIONER/2009 dated 29.05.2009
2,3) CCE/BBSR-II/No.01/COMMISSIONER/2009 dated 30.01.2009
4,5) CCE/BBSR-II/No.27/COMMISSIONER/2009 dated 29.05.2009
passed by the Commissioner of Central Excise & Customs, Bhubaneswar-II.)
FOR APPROVAL AND SIGNATURE
HONBLE DR. D.M. MISRA, MEMBER(JUDICIAL)
HONBLE SHRI H.K.THAKUR, MEMBER(TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
1) M/s.Shivam Steel Corporation
2) M/s.Bajrang Steel and Alloys(P) Ltd.
3) Shri Ajay Bansal, Director
4) Shri Ajay Bansal, Partner
5) Shri Rajinder Agarwal, Partner
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise & Customs, BBSR-II
Respondent (s)
Appearance:
Shri K.K.Anand, Advocate for the Appellant(s) Shri K.Chowdhury, Supdt.(AR) for the Revenue CORAM:
Honble Dr. D.M. Misra, Member(Judicial) Honble Shri H.K.Thakur, Member(Technical) Date of Hearing :- 15.02.2016 Date of Pronouncement :- 29.04.2016 ORDER NO.FO/A/75295-75299/2016 Per Shri H.K.Thakur.
Hearing in the following appeals was held on 15.02.2016:-
Sl.
No. Name of Appellant Appeal No. Order-in-Original No. & date Duty/penalty imposed
1.
M/s.Shivam Steel Corporation (Appellant No.1) E-477/2009 CCE/BBSR-II/No.27/COMMISSIONER/2009 dated 29.05.2009 Rs.2,04,30,072/- plus interest plus equivalent penalty
2. M/s.Bajrang Steel & Alloys Pvt.Ltd.
(Appellant No.2) E-223/2009 CCE/BBSR-II/No.01/COMMISSIONER/2009 dated 30.01.2009 Rs.59,62,705/- + interest + Equivalent penalty
3. Shri Ajay Bansal, Director of Appellant No.2.
E-224/2009
-do-
Rs.25.00 lakh penalty
4. Shri Ajay Bansal, Partner of Appellant No.1 E-478/2009 CCE/BBSR-II/No.27/COMMISSIONER/2009 dated 29.05.2009 Rs.50.00 Lakh penalty
5. Shri Rajendra Agarwal, Partner of Appellant No.1 E-477/2009
-do-
Rs.25.00 Lakh penalty
2. Brief facts of the case are appellant M/s.Bajrang Steel & Alloys (P) Ltd. (Appellant No.2) is the manufacturer of M.S.Ingots falling under Central Excise Tariff Heading (CETH) 7206.90 of the Central Excise Tariff Act, 1985 (CETA, 1985). Appellant M/s. Shivam Steel Corporation (Appellant No.1) is the manufacturer of M.S. Bars, M.S. Flats, Pipes, Angles, Channels, Profiles etc. falling under Chapter 72 & 73 of the CETA, 85. Shri Ajay Bansal is the Director of Appellant No.2 and is also a partner of Appellant No.1. Appellant Shri Rajendra Agarwal is also a partner of Appellant No.1. On 11.08.2006 simultaneous searches were carried out by the officers of Directorate General of Central Excise Intelligence (DGCEI) in the premises of Appellant No.1, 2 and some residential premises. Another premises of one Shri Sanatan Maity was also searched on 11.08.2006 who was the Accountant of Appellant No.1. Officers of DGCEI recovered a private diary and certain documents from the residential premises of Shri Sanatan Maity. Shri Maity in his statements dated 11.08.2006, 04.09.2006 and 05.09.2006, inter alia, stated that papers recovered from his residential premises (Document No.11/DGCEI/SSC/SM ./06) reveal purchase of ingots, production of Rods, Sales of Rods, production and sale of scrap, purchase & consumption of coal and furnace oil by appellant No.1 for the months of February, March and April, 2004. He also confirmed that these documents also reveal sale receipts of Rods from various parties and that these documents are rough working sheets. Statements of Shri Ajay Bansal (Director of appellant No.2 & partner of appellant No.1) were recorded on 11.08.2006, 06.09.2006 & 26.09.2007 as partner of M/s. Shivam Steel Corporation (Appellant No.1). He was shown the documents recovered from the residence of Shri Sanatan Maity when he confirmed in his statement dated 11.08.2006 (Q No.39) that as per these documents and the statements of Shri Sanatan Maity, ingots were shown to be purchased from one Sunderlal but actually the goods were purchasded from Appellant No.2. Sh.Ajay Bansal also stated that he was not aware as to why in the said documents name Sunderlal was mentioned. He also agreed to pay Central Excise duty on the parallel invoices quantity cleared by appellant No.2 as clearances made under mistake and that payment of sale from the customers are received mainly through cheques/DD and rarely through cash. By another statement dated 26.09.2007 appellant Shri Ajay Bansal agreed that they are selling re-rolled products to one M/s.Bajrangbali Steel (P) Ltd. and that in some cases finished goods were cleared without payment of central excise duty. Under this statement dated 26.09.2007 he expressed his inability to comment on the documents recovered from the residential premises of Shri Sanatan Maity. Shri Amit Kumar Agarwal and Shri Prem Chand Agarwal, Directors of M/s.Bajrangbali Steel (P) Ltd. confirmed that sometimes they received the materials from appellant No.1 with invoices and sometimes without invoices. In the subsequent statements dated 04.09.2006 & 05.09.2006 of Shri Sanatan Maity it was expressed that he does not know Sunderlal which is mentioned in the documents recovered from his residential premises. At the same time Sh.Maity also stated that he does not know how the seized papers/documents came to his residence and also that these documents contain some rough projections of Appellant No.1 for bank loan purposes. After completing the investigations separate show cause notices were issued to the appellants and decided under separate Order-in-Original as tabulated in para 1 above.
2.1 After making the Bench go through the findings of the Adjudicating authority learned Advocate made the following submissions/arguments during the course of the proceedings as well as through written submissions filed on behalf of the appellants:-
(i) That it is wholly incorrect to hold that Shri Sunderlal, mentioned in the documents recovered from the residential premises of Sanatan Maity, was the pseudo name of appellant No.2. That documents recovered no where says that the same were the sale proceeds of re-rolled products manufactured by appellant No.1 and that the same were manufactured out of ingots procured from appellant No.2. That nowhere in the statements of Shri Sanatan Maity is stated that these records were prepared at the instance of Shri Ajay Bansal. That statement dated 11.08.2006 of Shri Ajay Bansal nowhere says that Sunderlal was the pseudo name of appellant no.2. That Shri Sanatan Maity also did not state that Sunderlal was pseudo name of appellant No.2.
(ii) That during the visit of DGCEI to the premises of appellant No.2 no variations in the raw material stock or finished goods could be detected. That if appellants were indulging in large scale clandestine manufacture and clearances of ingots of re-rolled materials then there were bound to be variations in raw materials and finished goods of Appellant No.2.
(iii) That even if it is presumed that Ingots were clandestinely removed by appellant No.2 to appellant No.1 then only quantities equivalent to Ingots supplied by appellant No.2 could be manufactured by appellant No.1. That there is no evidence as to how much quantity of Ingots were supplied by appellant No.2 to Appellant No.1 and what was the mode of transportation of both ingot and re-rolled products respectively manufactured by Appellant No.2 & 1.
(iv) That it is a well settled law that allegations of clandestine removal is a serious charge which must be proved by Revenue with corroborative, independent, cogent and concrete evidences. He relied upon the following case laws on this issue in support of his argument:-
(a) Melton India (P) Ltd.v.CCE, Noida [2005 (181) ELT 129(Tri.-Del.)]
(b) Pan Parag India Ltd. v. CCE, Kanpur [2013 (291) ELT 81(Tri.Del.)]
c) Palvinder Kaur v. The State of Punjab [Manu/SC/0038/1952]
d) CCE v. Rajdoot Cables (P) Ltd. [2010 (254) ELT 606(P & H)]
e) Pan Parag India Ltd. v. CCE, Kanpur [2013 (291) ELT 81 (Tri.Del.)]
f) Hindustan Machines v. CCE, Delhi [2013 (294) ELT 43(Tri.Del.)] [Upheld by Delhi High Court [2015 (322) ELT 616 (Del.)]
(v) That merely some figures tallying from the Sunderlal ledger & payments received by appellant No.2, ipso facto, did not establish that Appellant No.1 has indulged in clandestine manufacture and clearance of Ingots unless the same are corroborated by the procurement of raw materials and use of extra power by appellants No.1 & 2. That certain computer printouts recovered from the residence of Sanatan Maity cannot be considered as acceptable document if not retrieved as per Section 36 B(2) & 36 B(4) of the Central Excise Act, 1944. That the procedures under Section 36B of the Central Excise Act, 1944 were not followed and also the documents were not recovered from the premises belonging to the appellants.
(vi) That certain entries made in the Sunderlal ledger tallying with the cheque receipts of appellant No.2 will only raise a strong suspicion regarding the clandestine activities of the appellants, but it cannot be said that all these entries were ingots received from appellant No.2. That it is a well settled legal proposition that a strong suspicion/grave doubt can not take the place of a legal proof. Learned Advocate relied upon the following case laws in support of his arguments:-
(a) Anjlus Dungdung vs. State of Jharkhand [2005 (9) SCC 765]
(b) Sakeen Alloys Pvt.Ltd. v. CCE, Ahmedabad [2013 (296) ELT 392(Tri-Ahmd.) [upheld by High Court (2014 (308) ELT 655 (Guj.)]
(c) UOI v. MSS Foods Products Ltd. [2011 (264) ELT 165(MP)]
(d) Mahesh Silk Mills vs. CCE, Mumbai [2014 (304) ELT 703(Tri.Ahmd.) [ upheld by Gujarat High Court 2015(319)ELT A- 52(Guj.)]
(vii) That entire statement of a relied upon document has to be considered as such and not a part of such statement.
(viii) That the case of CC, Madras & Others vs. D.Bhoormull [1983 (13) ELT 1546(SC)] relied upon by Revenue is an old case law and has been distinguished by Apex Court itself in the case of O.Konavalov vs. Commander, Coast Guard Region [2006 (197) ELT 3(SC)] and Ispat Industries Ltd. vs. Commissioner of Customs, Mumbai [2006 (202) ELT 561(SC)].
(ix) That duty amount of Rs.98,291/- on 40.860 MT of MS Ingots as per Invoice No.505 dated 11.08.2006 of Appellant No.2 is not disputed as the said document was recovered from the premises of appellant No.1.
2.2 Learned Advocate further argued that out of total demand of Rs.2,04,30,072/- issued to appellant No.1,Rs.28,17,957/-, pertaining to documents recovered from the premises of M/s.Bajrangbali Steel Industries Pvt.Ltd. drawn under Panchnama dated 11.08.2006, is not disputed. Similarly demand of Rs.35,878/-, with respect to six parallel invoices recovered from the factory premises of appellant No.1, is not disputed. That reduced penalty of 25% is only required to be paid with respect to admitted duty liability of Rs.28,17,957/- and Rs.35,878/- which was paid even before the issue of show cause notice. Further, it was also the case of the learned Advocate that once a penalty is imposed upon the partnership concern then no separate penalty can be imposed upon the partner as per Bombay High Courts Order in the case of CC(E.P.) vs. Jupiter Exports [2007 (213) ELT 641 (Bom.)]. That duty demands calculated as per documents at pages-215 to 229 of Appeal No.E/477/09 is not sustainable at all. That no other entry of these documents was verified during investigation to establish that all entries in these documents are genuine, except enquiries with M/s.Bajrangbali Steel & Alloys (P) Ltd.. That some of the entries like electricity consumption is actual as a person may take some actual figures also from his records to make inflated projections look genuine for bank loan purposes. That the demands issued against his clients is solely based on assumption, presumption and conjectures which is not acceptable as per the settled legal principles. That the subsequent statement of Shri Sanatan Maity also conveyed that figures shown in the documents recovered from his residence are only projected amounts for the purpose of taking bank loans.
3. Shri K.Chowdhury, Supdt.(AR) appearing on behalf of the Revenue made the following arguments in these appeals:-
(i) That all the Cheque entries made in the name of Sunderlal in documents at page 215 & 229 of Appeal No.E/477/09 were received into a bank account of appellant No.2. That Shri Ajay Bansal (Partner of appelaltn No.1 and also the Director of Appellant No.1) in his statement dated 11.08.2006 admitted that though as per the documents the ingots have been purchased by one Sunderlal but actually the said goods have been purchased by M/s.Bajrang Steel & Alloys (P) Ltd. (Appellant No.2). Learned AR made the Bench go through the important extracts of this statement as reflected in Para 2.4 of show cause notice dated 26.11.2007.
(ii) That as per the documents recovered from the residential premises of Shri Sanatan Maity the electricity consumption shown in each month tallies exactly with the electricity consumed by Appellant No.1. That investigation conducted revealed that for entries made against M/s.Bajrangbali Industries (P) Ltd. were actually confirmed to have been received by these recipients of goods from Appellant No.1.
iii) That as per the documents recovered from the premises of Shri Sanatan Maity the closing balance of ingots for one month exactly matches with the opening stock balance of the next month which shows the correctness of the purchases made by Appellant No.1 and used in the manufacture of clandestinely removed re-rolled products.
iv) That as per statement dt.11.08.2006 of Shri Sanatan Maity, the documents recovered from the residence of Shri Maity at Kalunga, revealed purchase of Ingots, production of rods (Saria), Sale of rods, etc. of M/s. Shivam Steel Corporation (Appellant No.1). Ld. A.R. made the bench go through para-25 of the Show Cause Notice dt.26.11.07 that the Director of M/s. Bajrangbali Steel Industries (P) Ltd. also confirmed that goods from Appellant No.1 were received sometimes without invoice for which payments were made in cash. That some documents were also recovered from this Customer for which duty liability is admitted by Appellant No.1. That looking to these documentary evidences Adjudicating Authority in para-6.4 of the Order-in-Original dt.29.05.2009 has correctly held that all amounts shown against Sunderlal indicate clandestine manufacture and clearance of goods manufactured by Appellant No.1 and 2. Ld. A.R., therefore strongly defended the Orders-in-Original passed by the Adjudicating Authority and pleaded for rejection of the Appeals filed by the Appellants.
4. Heard both sides and perused the case records. Cases of clandestine manufacture and clearances were made against Appellant Nos. 1 and 2. The Show Cause Notices were predominantly based on certain documents recovered from the residential premises of one Shri Sanatan Maity who was working as Accountant of M/s. Shivam Steel Corporation (Appellant No.1).
5. Appellant No.2 has not disputed the duty liability of Rs.98,291/- with respect to removal of 40.860 MT of M.S.Ingots pertaining to document 02/DGCEI/RRU/SSC/FAC/2006 recovered from the factory premises of Appellant No.1 and confirmed under Order-in-Original No.CCE/BBSR-II/No.01/Commissioner/2009 dt.30.01.2009. Similarly duty demands of Rs.28,17,957/- and Rs.35,878/- have not been disputed by Appellant No.1 with respect to Order-in-Original No.CCE/BBSR-II/No.27/Commissioner/2009 dt. 29.05.2009.
6. From the case records it is observed that remaining part of demands confirmed in both the Orders-in-Original are only based upon certain documents recovered from the residence of Shri Sanatan Maity, Accountant of Appellant No.1. The case of Revenue against Appellant No.2 is that the name Sunderlal, mentioned in the diary and computer printouts recovered from the residence of Shri Sanatan Maity, is a pseudo name of Appellant No.2 as admitted by Shri Ajay Bansal in his statement dt.11.08.2006 and 06.09.2007. However, on perusal of statement dt. 11.08.06 of Shri Ajay Bansal it is observed that he has never stated that Sunderlal is the pseudo name of Appellant No.2. It is also observed from answer to Question No.39 of this statement that questions were asked with respect to document No.2/DGCEI/RRU/SSC/FAC/2006 and not on the issue that the entire amounts against Sunderlal, shown in the records recovered from the residence of Shri Sanatan Maity, are received from Appellant No.2. Statement dt. 11.08.2006 is recorded in Hindi and the same pertains to one document but while doing its English translation the word has been translated as documents as per para 2.4 of the Show Cause Notice dt.30.01.2009. Statement dt. 11.08.2006 of Shri Sanatan Maity, Accountant of Appellant No.1 does not say that the name Sunderlal mentioned in the documents recovered from his residence indicate payments made to Appellant No.2 on the purchase of M.S.Ingots and that the same are used for the manufacture of re-rolled products. In this statement Shri Maity only states that the documents recovered from his residence only show purchase of ingots but does not say that ingots are received from Appellant No.2. At the same time answer to Question No.6 of Sh. Maitys statement dt. 11.08.2006 also conveys that these documents are rough working sheets. By subsequent statement dt. 05.09.2006 Shri Sanatan Maity states that the data on the seized documents was only rough projected calculations done for bank loan purposes. It is not coming out from the Show Cause Notice and the Order-in-Original dt. 30.01.2009 as to from where the raw materials were procured by Appellant No.2 for the manufactured of M.S.Ingots for which duty is demanded. It is also not coming out as to how much quantity of M.S.Ingots were manufactured by Appellant No.2. No shortages/excess in the raw materials/finished goods of Appellant No.2 were noticed by the department.
7. Central Excise duty demand on Appellant No.1, other than amounts mentioned in para-5 above, is solely based on a two page computerized statement recovered from the residence of Shri Sanatan Maity. It is not coming out of these documents as to from which computer these printouts were taken and whether the condition specified u/s 36B(2) and (4) of the Central Excise Act, 1944 were followed. In the case of Anvar Pv vs. V.K.Basheer [Manu/SC/0834/2014] Apex Court, while interpreting Sec. 65B of the Evidence Act, made following ruling in paras 13 to 17.
13. Any documentary evidence by way of an electronic record under the Evidence Act, in view of Sections 59 and 65A, can be proved only in accordance with the procedure admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the Section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned Under Sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e. electronic record which is called as computer output, depends on the satisfaction of the four conditions Under Section 65B(2). Following are the specified conditions Under Section 65B(2) of the Evidence Act:
(i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer;
(ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity;
(iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and
(iv)The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity.
14. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied:
(a) There must be a certificate which identifies the electronic record containing the statement;
(b) The certificate must describe the manner in which the electronic record was produced;
(c ) The certificate must furnish the particulars of the device involved in the production of that record;
(d) The certificate must deal with the applicable conditions mentioned Under Section 65B(2) of the Evidence Act; and
(e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device.
15. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice.
16. Only if the electronic record is duly produced in terms of Section 65B of the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to Section 45A-opinion of examiner of electronic evidence.
17. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements Under Section 65B of the Evidence Act are not complied with, as the law now stands in India. 7.1. The language of Section 65B of the Evidence Act, 1962 and Section 36B of the Central Excise Act, 1944 is similar. The ratio laid down by the Apex Court will thus be squarely applicable to the provision of Section 36B of the Central Excise Act, 1944 and any reliance placed on the computerized printouts, without following statutory procedures and conditions of Section 36B, are not acceptable as evidence. It is observed that none of the statements recorded by the investigation convey that the entries made in the documents recovered from the residence of Shri Sanatan Maity are actually manufactured and cleared clandestinely by either Appellant No.1 and Appellant No.2. The conclusions arrived at by the Adjudicating Authority are based on his own analysis.
7.2. In para 6.4. of the Order-in-Original dt. 29.05.2009, in the case of Appellant No.2, it is observed by the Adjudicating Authority that since an amount of Rs.1,88,00,000/- was received by Appellant No.2 from Sunderlal, therefore, the remaining amount of Rs.3,04,21,230/- appears to be attributable to the sale proceeds of M.S.Ingots clandestinely received by Appellant No.1. The findings of the Adjudicating Authority are thus clearly based on presumptions, assumptions and surmises when the computerized documents relied upon by the Revenue are not admissible evidences as recorded in para-7.1 above. Further, in the case of Oudh Sugar Mills Ltd. vs. Union of India [1978(2) E.L.T. (J 172)(S.C.)] it is held by Apex Court in paras 7,11,13 to 15 that any demand calculations based on unwarranted assumptions can not be accepted.
8. Further a case of clandestine removal cannot be upheld on the basis of certain statements alone as held in the case of Commissioner of Central Excise vs. Saakeen Alloys Pvt. Ltd. [2014(308) E.L.T. 655 (Guj.)] wherein Gujarat High Court rejected the appeal of the Revenue by making following observations in para-10.
10. All the appeals are based predominantly and essentially on factual matrix. The Tribunal elaborately and very correctly dealt with the details furnished by both the sides and rightly not sustained the demand of Rs.1.85 Crores, which had no evidences to bank upon. Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements. To the extent there existed substantiating material, Tribunal has sustained the levy. No perversity could be pointed out in the approach and treatment to the facts. 8.1. In the present proceedings before us there is no confessional statements, except admissions of certain duty liability made by the Appellants as mentioned in para-5 above. In the case of Palvinder Kaur vs. The State of Punjab (supra) Supreme Court held that a statement has to be read as a whole. Similar view was expressed by P&H High Court in the case of Commissioner of Central Excise, Delhi-IV vs. Rajdoot Cables (P) Ltd. (supra) where following observations were made by Honble High Court in para-3 while dismissing Revenues Appeal.
3. We have gone through the records and perused the orders passed by the adjudicating authority, Commissioner (Appeals) as well as the Tribunal. We are of the considered opinion that the orders passed by the Tribunal setting aside the order of Commissioner (Appeals) is fully justified. The Tribunal has rightly held that Revenue has solely placed reliance on the statement of Shri R.K.Gupta, Proprietor of M/s. R.K.Enterprises and, therefore, the entire statement of Shri R.K.Gupta should be taken into consideration and not only part of it. There is no dispute about the proposition that the Courts can disengage the truth from the falsehood of the statement of a person. The person may speak partly true and partly false. The grain can be separated from the chaff but in the instant case, except for the statement of Shri R.K.Gupta, there is no corroboration by the Revenue during the investigation. The part of the statement of Shri R.K.Gupta is in favour of the Revenue and part of it not. If the statement of Shri R.K.Gupta is to be believed then it has to be believed in entirety. The scrutiny of the statement of Shri R.K.Gupta reveals that he has stated that about 50% of the transactions were bogus and the transactions where Tempo Nos., were same as in the purchase invoices of the same date, the transactions were genuine and actual delivery of goods took place and further, the transactions were genuine where material supplied was less than 6 tons. 8.3. In the present proceedings there is no confessional statement recorded during investigation that Appellants have indulged in any clandestine manufacture and clearance of goods based on documents recovered from the residential premises of Shri Sanatan Maity. There is also no evidence on record as to from where the raw materials for manufacturing of M.S. Ingots and Re-rollable products manufactured by appellants were procured. Alternately there is also weight in the argument of the Appellants that M.S.Ingots alleged to be clandestinely cleared by Aappellant No.2 are not sufficient to manufacture quantities alleged to have been manufactured and cleared by Appellant No.1.
8.4. The above factual matrix of the current proceedings only convey a strong suspicion against the appellants that they are undertaking clandestine manufacture and clearance of dutiable goods. As already observed by the Courts any suspicion, however grave, can not take the place of an evidence. In the present proceeding certain documents recovered from the residence of Shri Sanatan Maity etc. are the only indicators to raise suspicion that certain goods might have been manufactured and cleared by the Appellants. In the case of Pan Parag India Ltd. vs. Commissioner of Central Excise, Kanpur (supra), relied upon by the Appellants, also there were 719 loading slips indicating clandestine clearance by that Appellant. It was held , by CESTAT, interalia, that demands are not sustainable on the basis of loose papers/loading slips unless corroborated appropriately by other independent evidence. In para-39 of this case law it is also observed that a statement has to be accepted or rejected in its entirety and part of the same cannot held to be incorrect and another part as acceptable. In this case law, on the issue of raising of demands on the basis of documents recovered from the third partys premises, following observations were made by CESTAT, Delhi by relying upon several case laws including decided by Honble Apex Court and High Courts:-
51. It has been constantly held by various decisions that the charges of clandestine removal cannot be upheld on the basis of documents recovered from the third partys premises. Reference in this regard can be made to Tribunals decision in the case of Rutvi Steel & Alloys reported in 2009 (243) E.L.T. 154 (Tri.) as also to the Tribunals decision in the case of Bhandari Industrial Metals Ltd. reported in 2009 (245) E.L.T. 613 (Tri.). Similarly there is catena of judgments laying down that the inculpatory statements alone cannot be made the basis for arriving at a finding of clandestine removal. In a nutshell, it has been the constant stand of quasi-judicial and judicial appellate forums that for establishing the fact of clandestine removal, there need to be sufficient evidence on record leading to conclusive proof of production of goods, their removal from the factory by any mode of transportation and clandestine clearance to the buyers. Mere doubts, howsoever strong cannot take the place of evidence required to be produced by the Revenue. The onus to establish such clandestine activities, resulting in confirmation of demand is placed heavily on the Revenue and is required to be discharged by production of sufficient evidences. Again, it is to be proved by the Revenue that the raw materials required for production of huge quantity of final product were obtained by the assessee in a manner which is not in its regular course of its business. It stands held by the Tribunal in the case of Mohan Steels Ltd. reported in 2004 (177) E.L.T. 668 (Tri.), that duty demand cannot be confirmed unless it is shown that the manufacturer had procured all the raw materials required to manufacture the goods. There is a long list of decisions and reference to refer to all of them may not be necessary as it is a settled law.
Similarly, the Tribunal in various cases, as detailed below, has held that charges of clandestine removal cannot be leveled or confirmed on the basis of private records, the authenticity of which was doubted by the manufacturer without any corroborative evidence and the private records/registers of third party cannot be the sole basis for arriving at the clandestine removal in the absence of corroborative evidences.
(i) Dalmia Vinyls P. Ltd. 2005 (192) E.L.T. 606 (Tri.-Bang.)
(ii) Chemco Steels P. Ltd. 2005 (191) E.L.T. 856 (Tri.-Bang.)
(iii) C.M.Re-Rollers & Fabricators 2004 (168) E.L.T. 506 (Tri.-Del.)
(iv) TGL Poshak Corpn. 2002 (140) E.L.T. 187 (Tri.-Che.)
(v) Minakshi Steels 2005 (190) E.L.T. 395 (Tri.-Kol.)
(vi) Sri Jayajothi & Co. Ltd. 2002 (141) E.L.T. 676 (Tri.-Che.)
(vii) Sharma Chemicals-2001 (130) E.L.T. 271 (Tri.-Kol)
(viii) Opel Alloys P. Ltd. 2005 (182) E.L.T. 64 (Tri.-Del.) Similarly in the case of Paras Laminates P. Ltd. reported in 2005 (180) E.L.T. 73(Tri.); as confirmed by Honble Supreme Court reported in 2006 (199) E.L.T. A.182 (S.C.); Ruby Chlorates P. Ltd. reported in 2006 (204) E.L.T. 607 (Tri.-Che.); D.P.Industries reported 2007 (218) E.L.T. 242 (Tri.-Del); Durga Trading Co. reported in 2002 (148) E.L.T. 967 (Tri.-Del.);
Durga Trading Co. reported in 2003(157) E.L.T. A315 (S.C.) and Laxmi Engineering Works reported in 2010 (254) E.L.T. 205 (P&H), it was held that charge of clandestine removal must be corroborated by independent and un-impeachable evidences such as purchase of consignees mentioned in invoices/payment to the manufacturers; that the charge of clandestine removal is a serious charge which must be proved by the department by a adducing sufficient and tangible evidences and demand of duty cannot be confirmed on the basis of assumptions and presumptions and surmises & conjectures.
52. At this stage, we may refer to the decision of Honble Supreme Court in the case of CBI v. V.C. Shukla reported in 1988 (3) SCC 410. Though the said decision does not relate to clandestine removal and confirmation of demand of duty of excise but reference can be made to the observations and findings of the Apex Court relating to the evidences. While dealing with probative value of the entries made in the books of accounts, the Honble Supreme Court observed that such statements shall not alone be sufficient evidence to charge any person with liability. Entries even if relevant are only corroborative evidences and required independent evidence as to thustworthyness of those entries necessary to fasten liability. The entries made in the diaries though admissible u/s 34 of the Evidence Act, 1872, truthfulness thereof is not proved by any independent evidence.
Replying on the above observations made by Apex Court to the facts of the present case, we find that the entire cases of the Revenue is made on the basis of 719 invoices of doubtful nature, the trustworthiness of which do not stand established by the Revenue by any admissible independent evidences.
Similarly in the case of Ratna Fireworks reported in 2005 (192) ELT 382(Tri.), it was observed that though mathematical procedure is not required to establish the clandestine removal but that does not mean a fact could be proved without sufficient evidence. The Honble Supreme Court in the case of Anjlus Dung Dung v. State of Jharkhand reported in 2005 (9) SCC 765 observed that suspicious however strong cannot take place of proof.
9. In view of the above observations and the settled proposition of law appeals filed by the Appellants are required to be allowed, except to the extent indicated in para-10 below.
10. Appeals filed by Appellant No.1 and 2 are rejected with respect to demands of Rs.28,53,835/- and Rs.98,291/- indicated in para-5 above, which shall be payable with interest and equivalent penalty. As no option to pay 25% of reduced penalty under sec. 11 AC has been extended in the Orders-in-Original, therefore, the same is extended to the Appellants if these amounts, alongwith interest and reduced penalty, stand paid within one month of the receipt of this order. In the interest of justice penalty upon Shri Ajay Bansal, Director of Appellant No.2 is reduced to Rs.30,000/- in Appeal No.E/224/2009. Penalties imposed upon partner Shri Ajay Bansal and Shri Rajendra Agarwal are not imposable in view of Bombay High Courts Order in the case of CC(E.P.) vs. Jupiter Exports (Supra) and are accordingly set aside.
11. Appeals filed by the appellants are disposed of in terms of Paras 9 and 10 above.
(Pronounced in the open court on 29.04.2016.)
SD/ SD/
(D.M.MISRA) (H.K.THAKUR) MEMBER(JUDICIAL) MEMBER(TECHNICAL)
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Appeal Nos.EA-477, 223, 224, 478, 479/09