Custom, Excise & Service Tax Tribunal
C.C.E. & S.T.-Raipur vs P.D. Industries Pvt. Ltd on 29 September, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
SINGLE MEMBER
Date of Hearing: 17/09/2015
Date of Pronouncement: 29/09/2015
Appeal No. E/54764/2014-EX(SM)
[Arising out of Order-in-Appeal No. 119-120/RPR-I/2014 dated 04.06.2014 passed by the Commissioner (Appeals-I) Customs & Central Excise, Raipur]
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would 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 of the order?
4.
Whether order is to be circulated to the Department Authorities?
C.C.E. & S.T.-Raipur Appellant
Vs.
P.D. Industries Pvt. Ltd. Respondent
Appearance:
Present for the Appellant: Shri M.R. Sharma, AR Present for the Respondent: Shri M.P.Singh, Advocate Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial) Final Order No. 52993/2015 Per: Sulekha Beevi C.S.
1. Revenue is in appeal challenging the impugned order which set aside the Order-in-Original which confirmed the demand and recovery of excise duty of Rs.12,31,585/- alleging clandestine removal of 796.380 MT Sponge Iron against the respondent.
2. Facts in brief are as follows:
2.1 Respondent is engaged in manufacture of Spong Iron. M/s Shri Bajrang Transport Service and M/s Purwanchal Road Carriers are engaged in transportation of Sponge Iron, M.S. Ingot, M.S. Billet by Road from factory premises of various manufacturers including the respondent. M/s Kailash Traders is a Commission agent/broker who deals in various items of Iron & Steel Products. Acting upon information that some Iron & Steel manufacturer are engaged in clandestine removal of goods, the office premises & residence of M/s Kailash Traders was searched. Later search and verification was conducted in the premises of the above two transporters also and records pertaining to transport of Sponge Iron, M.S. Ingot/M.S. Billets were seized. To verify the dispatch of Sponge Iron as per records of the Commission agent and two transporters, records were called for from manufacturer suppliers under summons. In response to summons Respondent along with many other co-noticees had submitted records/sales invoices issued by them. Upon verification of record of M/s Kailash/broker the officers of the department observed that invoices have been issued by Respondent in substantial number of cases, but with regard to 604.390 MT of Sponge Iron, there were no sales invoices issued by Respondent. Similarly on verification of dispatches of M/s Shree Bajrang Transport it was found that no invoice was issued against 124.80 MT of Sponge Iron. Again, dispatches of records pertaining to M/s Purvanchal Carriers compared with sales details provided by Respondent though invoices have been issued for substantial number of cases, but against 67.910 MT of Sponge Iron, the sale s invoices were not seen issued. Accordingly show cause notice was issued to Respondent alleging clandestine removal of 796.280 MT of Sponge Iron during the period 2005-2006 to 2006-2007 and proposing to recover duty interest and penalty. The said proceedings finalized in the order which confirmed and ordered recovery of Central Excise duty of Rs.12,31,585/- alongwith interest and also imposed equal amount of penalty, besides separate penalty of Rs.3,08,000 on Shri Surendra Agarwal being the Director of the Respondent unit. The respondents filed appeal before the Commissioner Appeals who set aside the order. Aggrieved the revenue is now before the tribunal.
3. The learned AR, Shri M.R. Sharma reiterated the ground of appeal and vehemently argued that as the records of transporters and the commission agent revealed that their services were utilized by Respondent for clearance of goods, then the entries found in their records of which did not tally with sale invoices issued by Respondent would establish that the goods were removed clandestinely. That details of M/s Kailash Traders showed that as against 604.390 MT of Sponge Iron Sales invoices were not issued by Respondent. Similarly the records of M/s Bajrang transports and M/s Purvanchal Carriers Showed transportation of 124.80 MT & 67.910 MT of Sponge Iron from the factory of Respondent which did not reflect in any sales invoices issues by Respondent. That the Commissioner(Appeals) has over looked such vital evidence. Further that Shri Kailash Agarwal, the Commission agent deposed that he used to write B with the invoice number against the entries in the case of sale invoices which was issued by manufacturers and when no invoice was issued he used to write R against the entry. That these evidences established the case of removal of goods in clandestine manner.
4. Per Contra, the learned Counsel Shri M.P. Singh supported the impugned order and argued that the only basis for initiation of proceedings and confirmation of demand by the adjudicating authority was the records of a third party i.e.; the commission agent and transporters. These were not at all corroborated and there was no positive evidence to establish clandestine removal of goods. He adverted to the discussion made in the impugned order which is as under:
Further on a careful consideration of the facts and records, I noticed that mere entries found recorded in the records of said Transporters and Commission Agent can not be held to be sufficient piece of evidence to confirm the demand of duty and allegation of clandestine removal. It is well settled law that there has to be some concrete evidence in the form of receipt of raw materials, shortage of raw materials, clandestine manufacture including use of electricity, excess or shortage of inputs found in the stock, flow back of funds, purchase of final products by parties alleging receipt and removal of goods and any such evidence which would show clandestine manufacture of goods. It is also an admitted facts that the documents recovered from the premises of M/s Kailash Traders, M/s Shri Bajrang Transport, Raipur and M/s Purvanchal Road Carriers Raipur, are third party documents and same cannot be relied upon without any corroborating evidences. The statement of Prop. Of M/s Kailash Traders recorded on various dates does not say any thing about involvement of appellant No. 1 in clearing the said alleged quantity of Sponge Iron without payment of Central Excise duty and also there was no admittance by the said Transporters to the effect that they have dealt/transported the alleged goods from the appellant No. 1 which were non duty paid. Thus mere entries of records of Transporters and Commission Agent cannot be the basis of alleging the charge of clandestine removal. There is no evidence pertaining to the excess use of electricity for the purpose of manufacture of the item in question. The electricity required to be used would have shown excess consumption for manufacture of the final product. No such evidence has been brought forth. There is no evidence of clandestine purchase and sale of raw material and final product. There is no evidence pertaining to flow back of funds. Therefore, the entire case is based on entries found recorded in the record of transporters and Commission Agent does not have reliability and credibility.
5. The Bench raised a query as to what is the marking of B and R in the records of the Commission Agent, the learned Counsel explained that, in cases where the bills are issued and there was no dispute between the manufacturer and buyer, the agent would note it as B. Some times goods are rejected or some dispute arises, and bills/invoices in such cases are not issued. He used to note these as R. The records reveal that the whole case of clandestine removal is based merely on the entries found in the books of Commission agent and transporters. They were acting as agent and transporter not only for the Respondent but also for other manufacturers. The department has not conducted any physical verification of stock of finished goods or raw material. The allegation is not supported by data of purchase of excess raw materials or consumption of electricity during the relevant period. The details of payment and flow of cash from the buyer to Respondent is not established by any evidence. So also there is no proof like parallel invoice, or other documents maintained by manufacturer corroborating the date collected from such commission agent and transporters. No investigation is conducted whether Respondent actually manufactured such large quantities during the relevant time. If Revenue wants to rely upon the entries of document seized from the premises of third party, it is for them to prove the genuineness of those entries with the Respondent. The proceedings and allegation of clandestine removal cannot be based on surmises and conjectures or mere suspicions. The appellant has not been able to demonstrate anything to disturb the findings made in the impugned order.
6. In the light of the above discussions, the appeal filed by Revenue is dismissed.
(Pronounced on 29/09/2015) (Sulekha Beevi C.S.) Member (Judicial) K. Gupta 7