Custom, Excise & Service Tax Tribunal
M/S. Annex Glass Industries Pvt. Ltd vs Cce, Hyderabad on 31 October, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No.E/23767, 23784/2014 (Arising out of Order-in-Appeal No.51/2014-15(H-IV)CE dt. 24/10/2014 passed by CCE(Appeals), Hyderabad) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member(Judicial) 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 authoritative report or not? 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Annex Glass Industries Pvt. Ltd. Shri Krishna Kiran Parvathaneni ..Appellant(s) Vs. CCE, Hyderabad ..Respondent(s)
Appearance Shri Y. Sreenivasa Reddy, Advocate for the appellants.
Shri S. Chander Bose, Jt. Commissioner(AR) for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing:07/10/2016 Date of decision: FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The appellants are manufacturers of architectural glass viz. Toughened Laminated Glass and Insulated Glass Unit and are registered with the Central Excise Department. On the basis of intelligence gathered that appellants are clearing finished goods without payment of duty, the officers visited the factory premises and recovered documents and also recorded statements. Basing upon such evidences, a show-cause notice was issued to the appellants alleging that they have cleared goods clandestinely with an intention to evade Central Excise duty. After adjudication, the original authority confirmed the duty along with interest and imposed equal amount of penalty besides imposing separate penalty of Rs.1 lac on Shri Krishna Kiran Parvathaneni, Managing Director of appellant company. The appellants filed appeals before the Commissioner(Appeals) and vide the order impugned herein, the Commissioner(Appeals) upheld the order passed by adjudicating authority. Hence these appeals.
2. On behalf of the appellant, the contentions submitted can be summarized as under:-
i. The entire demand is solely based on computer printouts and no other documentary evidence was found to substantiate the allegation of clandestine clearance of goods. That the computer printouts recovered from the premises of the factory are not admissible in evidence for not following the conditions prescribed in Section 36B of Central Excise Act.
ii. That no discrepancy was found in the stock of raw materials or stock of finished goods during the search and this fact was recorded in the panchnama itself.
iii. That the raw materials i.e. plain glass can be manufactured only by Multi-national companies like Saint Gobian, Modi Glass etc. and that the appellant cannot get such raw materials from local market. That there is no iota of evidence for procurement of excess raw materials, consumption of excess electricity or manufacture of excess quantity of goods. That therefore the allegation that appellant cleared goods clandestinely is totally false.
iv. The Department has not examined the transporters of goods alleged to be cleared clandestinely or obtained any proof for receipt of any amount from any person in cash by the appellant.
v. The Department has placed much thrust upon the statement given by Shri Ram Mohan, Manager(Finance) and also the figures mentioned in some e-mail messages which were found in lose sheets in inter office correspondence of the factory. The appellant was not given an opportunity to cross-examine Shri Ram Mohan, Manager(Finance). Further that no explanation was obtained from Shri Krishna Kiran Parvathaneni, Managing Director who is alleged to have received e-mails.
vi. Another document relied by the Department are two statements of sales for 2010-2011 and 2011-12 alleged to be the details of clandestine clearance made by the appellant. That the Department has not conducted any verification with the buyers listed in these statements.
3. The learned counsel relied upon the decision laid in Ambica Organics Vs. CCE, Surat [2016(334) ELT 97 (Tri. Ahmd.)] to canvass the proposition that computer printouts are not admissible in evidence if the conditions specified in Section 36B are not satisfied. The learned counsel has also relied on various decisions, as below, to put forward the argument that the Department has to establish clandestine clearance with cogent evidence since the said allegation is a serious one.
a. Agarvanshi Aluminium Ltd. Vs. CCE, Mumbai [2014(299) ELT 83 (Tri. Mum.)] b. Telebrands India Pvt. Ltd. Vs. CC, Mumbai [2016(336) ELT 97 (Tri. Mum.)] c. Union of India Vs. Rajendra Bajaj [2010(253) ELT 165 (Bom.)] d. Hissar Pipes Pvt. Ltd. Vs. CCE [2015(317) ELT 136 (Tri. Del.)] e. Bosch Chasis Systems Pvt. Ltd. Vs. CCE [2008(232) ELT 622 (Tri. LB)]
4. Against this, the learned AR, Shri S. Chandra Bose explained the allegations raised against the appellant and adverted to the evidences relied upon by the Department. He submitted that in the email messages recovered from the file, it was seen that the appellant has mentioned two types of invoices. The column CI in the e-mail is with regard to clearances without payment of duty and what is mentioned as tax in the e-mail is the sales which was accounted in the books of the appellant. He submitted that the computer printouts recovered were not documents retrieved from the computer but they were lose sheets kept in the file in the appellants factory. That the conditions in Section 36B of Central Excise Act would become applicable only in cases when data stored in the computer is retrieved by the officers in the form of computer printouts. He stressed upon the statement given by the Finance Manager Shri Ram Mohan and submitted that the Finance Manager had admitted the contents in the email printouts. He submitted that the said Finance Manager has accepted the contents of the emails and therefore the same would establish that the appellant has cleared goods without payment of duty. Further that the sales list obtained from the file kept in the factory premises would also show that the appellant has cleared goods without accounting.
5. I have heard both sides.
6. The main evidences on relied by the Department are three, (i) two email messages, (ii) two sheets of sales statement and (iii) the statement of Shri Ram Mohan, Finance Manager. At the outset, it has to be stated that the officers have found the physical stock of raw materials and finished goods as per the stock statements maintained by the appellant. There was no discrepancy with regard to the stock of raw materials or finished goods as accounted in the statutory records. In the e-mails, which are said to be recovered from the file kept in the factory premises, there are four column as Sales Commercial Tax Grand Total. Certain figures are shown under each column. It is the case of Department, that the figure shown under Commercial is the sales made by the appellant without payment of duty by issuing commercial invoice and the figure shown under Tax is the sales made by the appellant on payment of duty and which is accounted in their books of accounts. Refuting this, the learned counsel for appellant has submitted that though the Department contends that the figure mentioned against tax in these emails is accounted in the appellants books, it is not so. That such figure does not tally with the sales accounted in statutory records which would itself establish that the allegation is false. The e-mails are seen sent to several employees including the Finance Manager Shri Ram Mohan and the Managing Director Shri Krishna Kiran Parvathaneni. The Finance Manager in his statement has accepted these figures in the email to be Commercial/Tax as alleged by the Department. The Managing Director Shri Krishna Kiran Parvathaneni has not commented anything about these e-mails. It is material to note in the statement given by Shri Krishna Kiran Parvathaneni that he requested further time to comment upon the e-mails and the Department has failed to further examine Shri Krishna Kiran Parvathaneni and obtain explanation with regard to e-mails which is material. It also needs to be mentioned that the appellants had requested to cross-examine Shri Ram Mohan whose statement is much relied by the Department. The adjudicating authority has failed to grant permission to cross-examine Shri Ram Mohan which is noted in para 20 of the Order-in-Original. The adjudicating authority has observed that the request for cross-examination is only a dilatory tactics on the part of the appellants to prolong the adjudication process and that it was just a statement of facts made by Shri Ram Mohan and not related to his opinion on any matter or on a subject. That the denying of cross-examination of Shri Ram Mohan is not prejudice to the interest of the fair play and principles of justice. When the Department relied upon the statement of Shri Ram Mohan and his acceptance with regard to emails, the appellants ought to have been given a chance to cross-examine him.
7. Another evidence relied by the Department is the two pages of sales statement received from the premises of the factory. It is the case of the Department that as per the sales statement, the appellants cleared the goods without payment of duty. There are other e-mail correspondences which are relied by the Department which contain instructions to the employees to dispatch the goods to the buyers without payment of duty. But there is no correlating evidence to substantiate that such buyers were supplied goods without payment of duty. Again the transporters who have been alleged to be supplied the goods or the buyers whose names are mentioned in the statements/e-mails have not been questioned. No enquiry has been done by the Department in this regard. On the totality of evidence placed before me, the investigation is too shabby and evidences are not sufficient to establish that appellant is guilty of clandestine removal of goods. The figures in e-mail messages relied by department showing column such as Commercial/Tax figures do not tally with the figures in the books of accounts maintained by appellant which cuts the root of the Departments case. The buyers shown in the sales statement were not questioned or their stocks verified. This together with the fact that all statutory records were proper, would go to establish that Department has failed to prove the case put forward in the show-cause notice.
8. In the result, the impugned order is set aside and the appeals are allowed.
(Pronounced in open court ..) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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