Custom, Excise & Service Tax Tribunal
M/S. S.H.Haryana Wires Ltd vs Cce, Faridabad on 20 July, 2016
?CUSTOMS, EXCISE & SERVICE TAXAPPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH-160017 DIVISION BENCH COURT NO.1 Appeal No. E/3019-3021/2011-Ex(DB) Appeal No.E/26-28/2012 [Arising out of the OIO No.19/DM/ADJN/2011-12 dt.26.9.11 passed by the CCE, Delhi-IV, Faridabad) Date of Hearing/Decision: 20.07.2016 For Approval &signature: HonbleMr.Ashok Jindal, Member (Judicial) Honble Mr. V.Padmanabhan, Member(Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordships wish to see the fair copy of the order? seen 4. Whether order is to be circulated to the Department Authorities? Yes M/s. S.H.Haryana Wires Ltd. Appellant Shri Sunil Mangla, Director Shri Anil Kaushik, Sr. Marketing Manager M/s.Narang Metals, B.s.Trading Co. Shri Manjit Singh Vs. CCE, Faridabad Respondent
Appearance ShriK.K.Anand, Advocate- for the appellant ShriG.M.Sharma, A.R.- for the respondent CORAM: HonbleMr.Ashok Jindal, Member (Judicial) HonbleMr.V.Padmanabhan, Member (Technical) FINAL ORDER NO: 61151-61154,61214-61216/2016 Per Ashok Jindal:
The appellants are in appeals against impugned order wherein the Commissioner (Appeals) has passed the following orders:
(i) I confirm and order recovery of Central excise Duty amounting to Rs. 93.13.644.47 (i.e. Basic duty of Rs. 9107015.03 + Ed. Cess Rs. 182140.0 + H.Ed. Cess Rs. 24489.13) leviable on clandestine clearances of finished goods without payment of Central Excise duty with mala-fide intention to evade payment of Central Excise Duty and suppressed the facts without accounting in the statutory records/ books of account for the period from October 2004 to 04.06.2009, as detailed in Annexure E to the show cause notice, from M/s S.H. Haryana Wires Ltd., 49/4, Mathura Road, Village Prithla, Tehsil Palwal, Distt. Faridabad (Haryana) under Section 11A of the Central Excise Act, 1944 under the extended period of limitation under proviso to above section 11A of the Act ibid.
(ii) I confirm the order recovery of Cenat Credit wrongly availed and utilized by M/s S.H. Haryana Wires Ltd. amounting to rs. 16,27,231/- from them under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 under the extended period of limitation under proviso to above section 11A of the Act ibid.
(iii) I order recovery of interest at appropriate rate under section 11AB of the Central Excise Act, 1944 from M/s S.H. Haryana Wires Ltd. 49/4, Mathura Road, Village Prithla, Tehsil Palwal, Distt. Faridabad (Haryana) on the demand amount of Central Excise Duty so determined at sub para (i) above.
(iv) I order recovery of interest at appropriate rate under Rule 14 of the Cenvat Credit Rules, 2004 read with the provisions of Section 11AB of Central Excise Act 1944 from M/s S.H. Haryana Wires Ltd, 49/4, Mathura Road, Village Prithila, Tehsil Palwal, Distt. Faridabad (Haryana) on the demand amount of Cenvat Credit so determined at sub para (ii) above.
(v) I impose penalty of Rs. 93,13,644/- i.e. equivalent to the amount of duty determined at sub-para (i) above, on M/s S.H. Haryana wires Ltd, 49/4, Mathura Road, Village Prithla, Tehsil Palwal, Distt. Faridabad (Haryana) under Section 11AC of the Central Excise Act, 1944. Further, I also impose penalty of Rs. 16,27,231/- i.e. equivalent to the amount of Cenvat Credit determined at sub-para (ii) above, on M/s S.H. Haryana Wires ltd, 49/4, Mathura Road, Village Prithla, Tehsil Palwal, Distt. Faridabad (Haryana) under Rule 11AC of the Central Excise Act, 1944 in terms of Rule 15(2) of the Cenvat Credit Rules, 2004. However, in terms of proviso to Section 11AC if the entire amount of both the above demands of Central Excise Duty and Cenvat Credit duty and the interest as due thereon, is paid by the party within 30 days from the date of receipt of this order, then the amount of penalty will be equal to 25% of the total amount of demands of duty and cenvat credit (i.e.) Rs. 1,09,40,875/- in total) so determined provided the reduced amount of penalty is also paid within 30 days from the date of receipt of this order. Further, no separate penalty under Rule 25 of the Central Excise Rules, 2002, as proposed in the show cuase notice, is required to be imposed for the same offence once the penalty has been imposed under section 11AC of the Act.
(vi) I impose penalty of Rs. 20,00,000/- (Rupees Twenty lacs only) on Shri Sunil Mangla, Director M/s S.H. Haryana Wires Ltd. under Rule 26(1) of the Central Excise Rules, 2002.
(vii) I impose penalty of Rs. 10,00,000/- (Rupees Ten Lakhs only) on Sh. Anil Kaushik, Senior Marketing Manager, M/s S.H. Haryana Wires ltd. under rule 26(1) of the Central Excise Rules, 2002.
(viii) I impose penalty of Rs. 8,00,000/- (Rupees Eight Laksh only) on M/s Narang Metals, 518/7, Subhash Nagar, Gurgaon under Rule 25(1)(d) of the Central Excise Rules, 2002.
(ix) I impose penalty of Rs. 10,00,000/- (Rupees Ten lakhs only) on M/s B.S. Trading Co., 883/13, Vijay Park, Gurgaon under Rule 25(1)(d) of the Central Excise Rules, 2002.
(x) I impose penalty of Rs. 2,00,000/- (Rupees Two Lakhs Only) on ShriManjeet Singh, Proprietor of M/s B.S. Trading Co. 883/13, Vijay Park, Gurgaon under Rule 26 of the Central Excise Rules, 2002.
2. The facts of the case are that the main appellant, namely, M/s.S.H.Haryana Wires Ltd. is engaged in the manufacture of winding wires. On intelligence, a search was conducted in the premises on 12.1.2007. During the course of search certain documents resumed and various statements were recorded although the investigation was going on the information was sought from the appellant with regard to their records and the same supplied in 2009. On the basis of conclusion of investigation, a show cause notice was issued to all the appellants. The duty was demanded from the main appellant of Rs.93,13,644/- on account of clandestine removal of the goods during the period October,2004 to April, 2009 and the credit was sought to be denied to the tune of Rs.16,27,231/- with reference to invoices issued by M/s.B.S. Trading Co. and M/s.Narang Metals and to impose penalties on all the appellants. The show cause notices were adjudicating and proposal made in the show cause notices were confirmed by way of demanding duty on account of clandestine removal to the to tune of Rs.93,13,644/- and to deny the credit of Rs.16,27,231/- on account of invoices issued by M/s.B.S. Trading Co. and M/s.Narang Metals and equivalent penalty was also imposed on the man appellant and the interest was also demanded. The penalties on the co-appellants were also imposed. Aggrieved with the said order, all the appeals are before us.
3. Shri K.K.Anand, Advocate, learned Counsel for the appellant No.1 and 2 and ShriR.P.Jindal for the appellant No.4 to 6 appeared before us.
4. Shri K.K.Anand, learned Counsel submits that the duty of Rs.93,13,644/- has been confirmed on the ground that the main appellant cleared a quantity of 188878.57 kgs of winding wires during the impugned period. The duty has been confirmed on the ground that in the software, spool has passed the quality control test after which status PS allotted to particular spool thereafter goods are weight and ready to dispatch for final labelling is affixed on the same Y status is given to the said goods. As per the department, the appellant has cleared 19090.01 Kgs of finished goods to which temporary invoices were allotted. It is the case of the Revenue that in respect of the spools mentioned in respect of spoon mentioned the temporary invoice allotted quality control test and final labels were printed on those spools. For remaining, it is submitted that the demand is based on RUD 22 on the allegation that the appellant has cleared 3749 spools without payment of duty as they have passed quality control test and final labelling were printed against those clearances. It is his contention that the duty has been confirmed on the ground that where remarks PS of QC and remarks Y in final label print column were found on the spools of the finished goods were not found entered in RG-1 register. Therefore, it was presumed that the goods have been cleared clandestinely. It is his submission that majority of duty demand is based on RUD 22 which revealed that the department has presumed that against all spools the status PS and Y was found mentioned. Status PS means that the goods were cleared by the quality control department whereas status Y means final labelling of the manufactured product. It is his submission that the appellant was using a software developed by one M/s.Chipsoft, Delhi and it is contended that the various CDs and pen drives which were seized on 12.1.2007 and subsequently provided by the appellant in June, 2009, contained an additional column location in software.
5. It is his contention that out of total quantity of 2,10,566 which was shown in RUD 22, a quantity of 1,52,997.880 was lying in Q Location. It is his submission that the spools with proper sticker are thereafter tested in the quality department. The spools which was the quality test are shown on the software to the finished goods, although physically they are still lying in the production hall. The software clearly shows that actual position of the spools clarifying whether the spools are lying in the production hall or in the godown. The allegation of the department is that while preparing RUD 22, DGCEI deliberately omitted column location in software according to which the quantity of 1,52,000/- was lying in the production hall. There is no finding given by the adjudicating authority to that effect in the impugned order. Therefore, the demand on the quantity of 1,52,000 is not sustainable. Further, the appellant during the proceedings have requested for supply of soft copy of the printout of the hard disc but the department has provided only truncated and distorted version of data as RUD 2 but in original form was not supplied to the appellant. He further submits that the appellant has provided to the department stock position of various spools lying upto 4.6.2009 which was relied on as RUD 14 which revealed as on 4.6.2009 had a stock of 71055.55 kgs whereas the department while calculating the duty demand had taken into account only a stock of 33846.57 kg. The Revenue did not provide the basis for the same despite addressing communications to them. It is the case of the revenue that if the spools lying in the status Q, the actual stock as on 4.6.2009 was 19090.01 kgs which manufactured against temporary invoices was taken not account, there will be no duty demand against the appellant. But the adjudicating authority has not given the finding on this. He further submits that one spool was showing weight of 50000 kg which is practically impossible. On this, there is no finding was given by the adjudicating authority. Therefore, he submits that if the quantity of 1,52,997 which was lying in Q location and includes quantity of 50000 kg on a single spool and quantity of 19090.01 against which temporary invoices were issued was lying in de-location. . Further a quantity of 37208.98 is difference between the actual stock available on 4.6.2009 and allowance of which has not been given by the DGCEI. If the above quantity taken into consideration, then there is no case of the department, in that circumstance, it is prayed that the impugned order quo demanding duty is to be set aside.
6. He further submits that it has not been considered that the whole case is based on private/internal records which cannot be made the sole basis for demanding duty unless independent and corroborate evidence about clandestine removal is brought on record. Although the investigating authority has recorded several statements from the official of the main appellant as well as its directors, nobody ever stated that they had indulged in clandestine removal of finished goods. In fact, they were not questioned about the column location in software on the contrary the said column was purposefully removed while calculating the duty demand while preparing RUD 22. It is his submission that the closing stock was also not taken into properly as well as quantity of 50,000 kgs were added which could not be manufactured on a spool of one kg. Further, the quantity of 19,090.01 kg for which temporary invoices were prepared also merit exclusion. He further submits that location D means the goods against which packing slip has been prepared. He submits that it is well settled law that following parameters are essentially required to be proved for arriving at a conclusion of alleged clandestine removal:
(i) That excess raw material was received
(ii) incidence of actual removal of finished goods
(iii) identification of the alleged buyers of finished goods
(iv) Factum of transportation of raw material as well as finished goods clandestinely
(v) Receipt of sale proceeds through cheque or cash.
(vi) Use of excess electricity
(vii) Statements of buyers with some details of illicit manufacture and clearance of finished goods.
(viii) Link between the private/internal records with the actual manufacture of the finished goods. It is submitted that none of the above parameters are fulfilled in the present case in view of the following decisions:
(a) Gupta Synthetics Ltd. vs. CCE, Ahmedabad-II-2014 (312) ELT 225 (Tri.Ahd.)
(b) Arya Fibres Pvt.Ltd. vs.CCE-2014 (311) ELT 529 (Tri.Ahmd)
(c) Suzuki Synthetics Pvt.Ltd. vs. CCE-2015 (318) ELT 487 (Tri.Ahmd)
(d) Century Metal Recycling Pvt.Ltd. vs. CCE, Delhi-2016 (333) ELT 483 (Tri.Del.)
7. With regard to the denial of cenvat credit of Rs.16,27,231/-, it is the submission of the learned Counsel that the inculpatory statements from Sh.Manjeet Singh, Proprietor of M/s.B.S.Trading Co. and authorised signatory of M/s.Narang Metals, Shri Harvir Singh, employee of the appellant and Shri Chander Bose, security supervisor of the main appellant were recorded. Shri Manjeet Singh in his statement dated 26.2.2008 had stated that only bills were supplied to the main appellant without goods. He further stated that the payments were received through cheques which was subsequently returned back in cash to Shri Sunil Mangla, Director of the man appellant. Through shri Ved Prakash who was his trusted worker. Shri Chander Bose, security supervisor in his statement stated a number of time he had made entries in the inward registers without making entry in the receipt book. Shri Manjeet Singh in his statement dated 12.7.2007 admitted that the facts stated by Shri Chander Bose. However, in his statement Shri Sunil Mangla categorically denied the charges that Shri Manjeet Singh and he was confronted with the statements of Shri Chander Bose and Shri Manjeet Singh. The main appellant sought cross examination of the witnesses on whose statements reliance was placed in the show cause notice but the same was not provided hence the said statements are not having the evidentiary value.
8. Further no statement of any transporter has been recorded to reveal the truth. It is contention of the appellant that the statements of Sh. Manjeet Singh, Proprietor and authorised signatory of M/s.Narang Metal were taken under duress. Moreover, Shri Chander Bose and Shri Harvir Singh have retracted their statements. In the absence of any corroborative evidence, the inculpatory statement cannot be relied upon, there is no justification for denial of credit. In the circumstances, it is prayed that the impugned order be set aside.
9. On the other hand , learned AR supported the impugned order and submits that the adjudicating authority has rightly denied the credit on the basis of inculpatory statements of the suppliers of the goods, who have admitted that they have supplied only invoices and not the goods. The said statements have been corroborated by Shri Chander Bose and Shri Harvir Singh, therefore, these statements are reliable. Further, it is his submission that from the records of the appellant it is clear that after giving the spool the status as PS y the goods are ready for despatch but the same were not entered into RG-1 register and not found in stock, therefore, it is correctly held after detail discussion in the impugned order that the goods have been cleared clandestinely and on the contrary the appellant have failed to produce the evidence with the regard to the manufacturing and sale of the goods. It is prayed that the impugned order be upheld.
10. Heard both sides and considered the submissions.
11. On careful consideration of the submissions of both sides, we find that the man appellant has disputed the documents, namely, RUD 22. It is his submission that the said documents has been truncated and distorted. Therefore, it is essential to know the truth of the document RUD 22. The appellant has asked the copy of the hard disc taken by the investigating authority on 12.1.2007 and the copy of pen drive given to the investigating authority on 3.9.2009. Without supplying the copies said documents, truthfulness of the document RUD 22 is doubtful as claimed by the appellant, the document RUD 22 is as under:
12. On perusal of the above, there is significant difference in the said documents and to know the truth, copy of the hard disc taken by the adjudicating authority on 12.1.2007 and pen drive given to the investigating agency on 3.9.2009 are necessary and the authenticated copy of documents which is required to be supplied to the appellant and the adjudicating authority to know the truth.
13. We further find that as on 4.6.2009 a quantity of 71055.55 kgs shown by the appellant as closing stosck while calculating the demand, the stock taken as 33846.57 and no explanation to that effect has been given in the impugned order. There is discrepancy in calculating the closing stock. That query is required to be ascertianed by the adjudicating authority. Further, we have seen that on a spool of one kg 50000 kgs of winding wiers cannot be wounded which is practically impossible and the same has been shown by the appellant in their records maintained by them which is not correct by any stretch of imagination. That issue is to be addressed by both sides. We further find that the issue of quantity of 19.090.01 kgs on account of temporary invoices were shown as location D have not been addressed by the adjudicating authority.
14. We find that no evidence has been brought on record to allege clandestinely removal. It is well settled law that following parameters are essentially required to be proved for arriving at a conclusion of alleged clandestine removal:
(i) That excess raw material was received
(ii) incidence of actual removal of finished goods
(iii) identification of the alleged buyers of finished goods
(iv) Factum of transportation of raw material as well as finished goods clandestinely
(v) Receipt of sale proceeds through cheque or cash.
(vi) Use of excess electricity
(vii) Statements of buyers with some details of illicit manufacture and clearance of finished goods.
(viii) Link between the private/internal records with the actual manufacture of the finished goods.
15. We find that none of the above parameters are fulfilled and therefore the impugned order qua demanding duty of Rs.93,13,644/- is not correct.
16. We find that the credit of Rs.16,27,231/- has been denied on the ground that only invoices have been received in the factory and not the goods have been received. It is the contention of the appellant that the statements of the suppliers had been recorded under duress. In fact, they have supplied the goods. To find out truth whether the goods have been accompanied with the invoices or not the statement of the transporter is required but no statement of the transporter has been recorded by the revenue. The allegation of the appellant that the statement of Shri Manjeet Singh obtained under duress is required to be addressed by the adjudicating authority. Therefore, the impugned order lacks merits.
16. In these circumstances, we set aside the impugned order and remand the matter back to the adjudicating authority on the following direction:
(a) to supply the copy of the hard disc obtained by DGCEI on 12.1.2007 and copy of pen drive supplied by the appellant on 3.9.2009 to ascertain the truthfulness of RUD 22
(b) to address issue of winding wire ofn a spool of 1 kg of quantity of 50000 kgs
(c) to address the issue of 19,090.01 kg against temporary invoices issued and found in location D
(d) to address issue in difference in stock taken on 4.6.2009 as quantity of 33846.57 kg as against 71055.55 kgs if in the RUD 22 found is to be correct as per the appellant verson, in that circumstance, quantity shown in the location Q cannot be termed as removed clandestinely.
(e) The adjudicating authority is also directed to address the issue denial of credit by giving the credence on the entire evidence apart from the statement of Shri Manjeet Singh to ascertain the truth after granting the cross examination of witnesses.
17. With these observations, the appeals are disposed by way of remand.
(Pronounced in the open court)
(V.Padmanabhan) (Ashok Jindal)
Member (Technical) Member (Judicial)
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