Custom, Excise & Service Tax Tribunal
C.C.E.& C., Indore vs M/S S.K. Industries on 9 December, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI 110 066.
Date of Hearing : 11.08.2016
Date of Pronouncement :09/12/2016
(1 5) Appeal No.E/2614 18/2005-EX[DB]
[Arising out of Order-in-Original No.49/COMMR/ CEX/IND/2004 dated 30.06.2004 passed by the Commissioner, Central Excise & Customs, Indore.]
C.C.E.& C., Indore Appellant/Revenue
Vs.
1. M/s.S.K. Industries
2. Shri Sunil Kumar Jain, Partner
3. Shri Suresh Kumar Jain, Manager
4. Shri Jagdish Singh Rana, Prop. Responden t
M/s Parasnath Traders
5. Shri Hari Krishna Aggarwal, Manager
M/s Motor Transport of India (P) Ltd.
(6) Appeal No.E/881/2007
[Arising out of the Order-in-Appeal No.IND-I/03/2007 DATED 10.1.2007 passed by the Commissioner (Appeals I),Customs & Central Excise, Indore.]
C.C.E &C., Indore .. Appellant/Revenue
Vs.
M/s S.K. Industries .. Respondent
(7) Appeal No.E/1109/2008-EX[DB] C.C.E. & C., Indore .. Appellant/Revenue Vs M/s S.K. Industries .. Respondent [Arising out of the Order-in-Appeal No.IND-I/82/2008 (Denovo) dated 9.4.2008 passed by the Commissioner (Appeals I),Customs & Central Excise, Indore].
Appearance:
Mr. R.K. Manjhi, DR - For Appellant/Revenue Mr. C. Hari Shanker, Senior - For Respondents Advocate with Shri Prem Ranjan, Advocate CORAM: Honble Mr. Justice (Dr.) Satish Chandra, President Honble Mr. Ashok K Arya, Member (Technical) Final Order Nos.55782 55788/2016 dated 09.12.2016 Per: Mr. Ashok K Arya :
1. Both sides have been heard.
2. All the seven Appeals have been filed by the Department. First five appeals [Nos.E/2614 to 2618/2005] are against the adjudication order No.49/Commr/CH/IND/2004, dated 30.06.2004, passed by the Commissioner of Central Excise, Indore whereunder demand of Rs.6,99,31,414/- is dropped.
2.1 Revenues sixth appeal No.E/881/2007 is against the Order-in-Appeal dated 10.1.2007, whereunder interest on the refund amount of Rs.6 lakhs sanctioned to the respondent, M/s S.K Industries has been challenged.
2.2 Revenues seventh appeal No.E/1109/2008 is against the Commissioners Order-in-Appeal dated 9.4.2008, where refund of Rs.6 lakhs sanctioned to the respondent No.1, M/s S.K. Industries has been challenged.
3. The impugned Order-in-Original No.49/Commr/ CEX/ND/2004 dated 30.6.04 (against which first five apepals No.E/2614 to 2618/2005 have been filed) decided the Show Cause Notice dated 26.02.1998, issued by CCE, Indore-I, where the following five respondents are the noticees:-
(i) M/s. S.K. Industries, Gwalior
(ii) Shri Sunil Kumar Jain, Partner, M/s. S.K. Industries;
(iii) Shri Suresh Kumar Jain, Manager, M/s. S.K. Industries;
(iv) Shri Jagdish Singh Rana, Proprietor, M/s. Parasnath Traders, Gwalior;
(v) Shri Hari Krishna Agrawal, Manager, M/s. Motor Transport of India P. Ltd., Gwalior.
3.1 Meanwhile, when the demand of Rs.6,99,31,414/- had been dropped by the impugned adjudication order dated 30.06.2004, the respondent, namely, M/s. S.K. Industries filed the refund claim for Rs 6 lakhs as the said Rs.6 lakhs had been paid vide PLA entry No.70/1997, dated 16.09.1997 by the Noticee/assessee, M/s. SK Industries against the duty leviable about which the Department says that this payment confirms the acceptance by the noticee respondent No.1 (M/s. SK Industries) that the Gutka of Mahak Brand was cleared on the bills of M/s. Parasnath Traders without payment of Central Excise duty.
3.1.1. This refund claim of Rs.6 lakhs was rejected by the Dy. Commissioner vide Order-in-Original No.19/C/REF/DC/05. dated 26.07.2006. The respondent namely, M/s. SK Industries filed an appeal against the said order of the rejection of refund before the Commissioner (Appeals), Indore, who vide his Order-in-Appeal No.IND-1/326/2006 dated 11.10.2006 set aside the Dy. Commissioners rejection order and directed the Dy. Commissioner to refund the amount along with interest.
3.1.2 Being aggrieved by the above Order-in-Appeal, dated 11.10.2006, the appellant, namely, CCE, Indore filed an appeal along with stay application before the Tribunal on 04.12.2006, which was registered as Appeal No.E/4024/2006. This appeal was decided by way of remand to the Commissioner (Appeals) by the Tribunal vide its Final Order No.124/2008-SM(BR) dated 10.12.2007.
3.1.3 Commissioner (Appeals) readjudicated and again allowed the refund of Rs 6 lakhs vide Order-in-Appeal No.IND-I/82/2008 (De novo) dated 9.4.2008.
3.1.4 Thereafter the appellant filed appeal against the above Order-in-Appeal dated 9.4.2008 which is registered as Appeal No.E/1109/2008 [Appeal No.7] and is linked for decision with the Revenues appeals No.E/2614 to 2618/2005, which are presently under consideration and decision by the Tribunal.
3.2 The Commissioner (Appeals) order dated 11.10.2006 has been implemented by the Dy. Commissioner and refund claim was allowed but no interest thereon was paid to respondent No.1, M/s. SK Industries. The respondent No.1 again approached Commissioner (Appeals), Indore against non-payment of interest and Commissioner (Appeals) vide his order No.IND/1/03/2007; dated 10.01.2007 directed Dy. Commissioner to sanction interest due to the respondent No.1, M/s. SK Industries. This Order-in-Appeal dated 10.01.2007 was also appealed before this Tribunal by CCE, Indore, which is registered by CESTAT as E/881/2007 [Appeal No.6]; this appeal along with the appeals No.E/2614 to 2618/2005 will also be disposed off during present proceedings by the Tribunal. Meanwhile, Dy. Commissioner sanctioned interest of Rs.79,989/- in pursuance of the Order-in-Appeal dated 10.01.2007.
3.3 The appellant, namely, CCE, Indore (Revenue) prayed that above appeals filed by them and registered as E/2614 to 2618/2005 and E/881/2007 be tagged together for decision.
3.4 The Revenues appeal No.E/1109/2008 after the hearing held on 22.6.2010 was ordered by the Tribunal to be linked with the main appeal Nos.E/2614 to 2618/2005. Thus it is a third round of litigation before the Tribunal.
4. Briefly the facts are that the main matter, formally started with the issue of the Show Cause Notice (SCN) dated 26.02.1998 to the five noticee respondents after the interception of two mini trucks on 08.07.1997 by the officers of Central Excise, Gwalior Division. The said trucks were carrying gutka/pan masala of Mahak brand. The officers of Central Excise recorded the statements of various persons under Section 14 of the Central Excise Act, 1944 and found that said two mini trucks carried 233 bags of gutka / pan masala valued at Rs.27,88,200/-, which had been cleared without issue of invoices and without payment of duty. These goods along with the trucks were seized by the Revenue under Panchnama dated 08/09.07.1997. Later, the duty liability for these 233 bags of gutka / pan masala amounting to Rs.5,57,640/- was paid by the respondent vide PLA entry No.60/1997, dated 16.09.1997.
4.1 The officers of Central Excise made further follow up searches and issued the Show Cause Notice dated 26.02.1998, which was initially adjudicated by CCE, Indore vide Order-in-Original No.21/Commr/IND/CEX/99, dated 26.03.1999, whereunder the duty of central excise was confirmed for recovery and penalty was imposed on five noticees, who are respondent in present proceedings.
4.2 Aggrieved by the above order dated 26.03.1999, the assessee preferred an appeal before this Tribunal. The Tribunal vide its Final Order No.A/1104-8/99-NB(DB), dated 03.12.1999, remanded the case back to the Commissioner, Indore for passing fresh order by extending reasonable opportunity of defence to the noticees. The case was again adjudicated by the Commissioner vide Order-in-Original No.52/ Commr/CEX/IND/2001, dated 28.09.2001, whereunder the entire demand of duty was again confirmed and penalties were imposed on the assessee and other noticees.
4.3 The assessee and other noticees again preferred an appeal before the Tribunal, and vide Final Order No.A/724-728/03-NB-C, dated 03.12.2003, the Tribunal again remanded the case for adjudication afresh after affording an opportunity of cross-examination of the witnesses. The impugned adjudication order was passed thereafter. Vide the impugned order dated 30.06.2004, the demand of duty of Rs.6,99,31,440/- was dropped. Thereafter, the Department, namely, CCE, Indore is in appeal against the order dated 30.6.2004 before this Tribunal.
5. Revenue has been represented by Shri R.K. Manjhi, ld. Authorised Representative (AR),. His main submissions based on the appeal memorandum inter alia as under:
i ( a) The Commissioner has not appreciated that from Central Excise point of view Pan Masala/Gutka are highly evasion prone commodities. The very nature of this trade breeds evasion because the pouches are sold through countless numbers of small street side kiosks, where no records are kept.
( b) Further, the process of manufacture of pan-masala/gutka is very simple with no requirement of any elaborate machinery or capital investment.
( c) Moreover, the incentive and lure for evasion is very high in view of the high central excise duty rates. Cumulatively, these factors have resulted in a very high degree of evasion in these commodities.
(d) While on one hand, evasion is very high, on the other, it is very difficult to establish evasion on the basis of records simply because either no records are maintained or whatever kuccha records kept are destroyed within a short time.
(e) The financial transactions are invariably made in cash with no legitimate records whatsoever. Most of the inputs also come from the unorganised sector.
(f) The investigations into cases of evasion are, therefore, limited and circumscribed by the extent of recovery of incriminating documents and collation of circumstantial evidence. This background and realities of pan masala/gutka trade have to be borne in mind while collectively appreciating the evidences unearthed and adduced in any investigation into evasion of duty.
ii (a) The courts repeatedly have recognised and accepted the difficulty of establishing a case of clandestine clearance with mathematical precision in view of the very surreptitious nature of this activity, with secrecy and stealth being its covering guards and the damage it causes to the economy of a country.
(b) Though often quoted, but extremely pertinent, were the observations of the Hon'ble Supreme Court in the case of Commissioner of Customs Madras Vs. D Bhoormull 1983(13) ELT 1546 (SC), wherein it was held that the department is not required to prove its case with mathematical precision but what is required is the establishment of such a degree of probability that a prudent man may on its basis belief in the existence of the facts in issue. 5.1 The learned A.R. further inter alia submits as follows:
(a ) it is an admitted fact that only the party manufactures mahak brand gutkha/pan masala.
( b) It is also an admitted fact that 233 bags of Mahak Rangeela and Mahak Special brands of gutkha that was seized in transit from Gwalior to New Delhi on 08.07.1997 were cleared by the party from their factory without payment of duty and without issuance of any invoice. In fact, the party also voluntarily deposited the entire duty liability of Rs.5.57 lakhs on the seized goods and subsequently settled the case under the KVSS Scheme.
( c) This clandestinely cleared gutkha that was seized was being transported by Motor Transport Company on two trucks and the accompanying invoices were issued by a trading firm namely M/s. Parasnath Traders, Gwalior.
(d ) That on the challans and other documents accompanying the seized consignment of Mahak brand Gutkha the description given was only gutkha with no mention of the brand name.
(e ) It is also an admitted and undisputed fact that as far as their trade in gutkha was concerned, M/s. Parasnath Traders was dealing only in Mahak brand of gutkha. This is not only categorically stated by Shri Jagdish Singh Rana, Proprietor, M/s. Parasnath Traders in his statement dated 23.09.1997, but also affirmed by him during his cross-examination done on 26.05.2004 by the party before the Adjudicating Authority.
(f) In the follow up search conducted at the premises of M/s. Parasnath Traders only Mahak brand of gutkha was seized, which had also admittedly been cleared by the party without payment of duty.
( g) That prior to 14.10.1995, M/s. Parasnath Traders (PNT)was known as M/s. Raja Sales Agency and that in the transition period the stationery of M/s. Raja Sales Agency(RSA) was also being utilised by M/s. Parasnath Traders.
( h) In the course of search operation conducted at various premises of the transport company, several GR and challans were recovered vide which gutkha had been transported by M/s. Parasnath Traders/Raja Sales Agency from Gwalior to New Delhi consigned to self. In some of these challans the description of goods was given as Mahak brand gutkha and in others as only gutkha (i.e. similar to the description given in documents accompanying the seized consignments.
( i) None other than Shri SK Jain, partner of M/s. SK Industries, honoured the search warrant that was issued for the search of premises of M/s. Parasnath Traders.
(j) It was categorically admitted by Shri Bhagirath Kushwah, godown in-charge of the transporter in his statement dated 08.0.1997 that the seized document had come from the factory of the respondent, M/s. SK Industries and that the documents or bills of M/s. Parasnath Traders did not accompany the consignment. This was also affirmed by Shri Ravindra Sharma, Branch Manager of Motor Transport Company (MTC) in his statement dated 08.07.1997 wherein he, inter alia, stated that the goods transported under bills of M/s. Parasnath Traders came to their godwon directly from the factory of the respondent, M/s. SK Industries and that whatever goods that come under the bills of M/s. Prasnath Traders is pan masala of various brand manufactured by M/s. SK Industries, the respondent.
( k) A dispatch register was also recovered from the premises of the transporter in which against all the dispatches of M/s. Parasnath Traders a code CZ was written. On being asked, Shri Ravindra Sharma, Manager of the transport company stated that CZ was a code used by them for pan masala.
( l) Apart from these, money receipts, that were issued by the transporter at destination to the recipient of goods as receipts for payment of freight by the recipient, were recovered from the transporter premises which clearly showed that gutkha which was consigned to self on the challans by M/s. Parasnath Traders / Raja Sales Agency, was actually being received in Delhi by the respondent, M/s. SK Industries. It was clearly stated in these money receipts that the goods had been received by M/s. SK Industries, New Delhi. Such evidence was gathered in respect of gutka transported on 62 challans which indicated that M/s. Parasnath Traders/ Raja Sales Agency was only being used as a front by the respondent to transport clandestinely cleared gutkha from Gwalior to New Delhi.
( m) Apart from the above documents, several crossing account statements were recovered from the premises of the Motor Transport Company which were prepared by them at destination at the time of delivery of goods. While the description of goods that were consigned by M/s. Parasnath Traders to self at New Delhi was given as gutkha on the challans, in the corresponding crossing account statements the description was clearly mentioned as Mahak Pan Masala. In fact Shri SK Jain, partner of M/s. SK Industries has admitted in his statement dated 16.09.1997 that 214 bags that was transported under these two challans were cleared by them from their factory without payment of duty.
( n) In all, around 416 transport challans were recovered on which M/s. Parasnath Traders / Raja Sales Agency had transported gutkha from Gwalior to Delhi and on the basis of which the entire duty demand in Annexures A, B and C of SCN was worked out. The break up and nature of description of goods on these challans is as follows:-
( i) On 20 challans (evidencing evasion of Rs.36.57 lakhs), the consignors name was shown as Parasnath Traders (PNT) and description of goods was specifically given as Mahak / Sahara Brand Gutkha (Sahara being another brand being manufactured by the respondent only). Shri SK Jain, in his statement dated 16.09.1997 has admitted that the pan masala / gutkha transported on these 20 challans was cleared from their factory without payment of duty and the party had also deposited Rs.6 lakhs vide PLA entry No.70 dated 16.09.1997 as part payment for these clearances and he promised to deposit the remaining amount on a later date as there was no balance in their PLA on that date.
( ii) On 334 challans (evidencing duty evasion of Rs.6.26 crores) consignors name was also given as Parasnath Trader / Raja Sales Agency (RSA) and description of goods was given only as gutkha without specific mention of the brand name which was consigned to self at New Delhi. In respect of these challans listed in Annexure B although the description of goods transported was mentioned as gutkha, a very reasonable conclusion had been drawn in the Show Cause Notice (SCN)that it was Mahak brand gutkha that was transported under these challans. This conclusion has been drawn on the basis of following clear-cut evidence available on record, which has already been discussed above.
(ii-a) It is an admitted fact that the only brand of gutkha that Parasnath Traders or Raja Sales Agency was dealing in was Mahak Brand Gutkha.
(ii-b) The description of goods mentioned on these challans pertaining to M/s. Parasnath Traders and Raja Sales Agency was gutkha.
(ii-c) The transportation of goods on challans by M/s. Parasnath Traders relied upon in the Show Cause Notice has not been denied at any stage by M/s. Parasnath Traders.
(ii-d) It is also an admitted fact that the challans and the details therein, including description of goods, were being prepared by the transporter on the basis of description of goods and other details appearing in the invoices of M/s. Parasnath Traders / Raja Sales Agency. In other words, the description of goods on the challans was taken from the description given on the invoices of M/s. Parasnath Traders. It was categorically stated by the godown in charge and Manager of the transport that on the invoices of M/s. Parasnath Traders they had transported pan-masala of various brand manufactured by the respondent, M/s. SK Industries and that whatsoever goods were booked by M/s. Parasnath Traders, it came directly from the factory of the respondent, M/s. SK Industries to their godown.
(ii-e) The description of goods that was given on the challans of the transporter and invoices of M/s. Parasnath Traders that were accompanying the two consignments of 233 bags of Mahak brand gutkha seized on 08.07.1997, was only gutkha with no mention of the brand name. The party has categorically admitted having cleared these consignments from its factory without payment of duty. The seizure of Mahak brand gutkha, when documents accompanying the goods, described them only as gutkha provides clinching evidence of the conclusion arrived at in the Show Cause Notice that what was being transported was Mahak brand gutkha when the description of goods in the challan was given only as gutkha.
(ii-f) Apart from the above example of the documents accompanying the seized goods other clear cut documentary evidence that supports the conclusion in the Show Cause Notice is in the nature of crossing account statements and money receipt recovered from the Delhi branch office of the transporter that correspond to the challans on which the description of goods was given as gutkha. While on the crossing account statements the brand Mahak was mentioned, the money receipt that could be recovered evidenced that the payment of freight for such consignments at destination was being done by the respondent, M/s. SK Industries.
(ii-g) The godown in-charge, i.e., Shri Bhagirath Kushwah as well as the manager, Shri Ravinder Sharma of the Gwalior branch of the transporter have categorically stated in their statement recorded on 08.07.1997 that goods were transported on the invoices of M/s. Parasnath Traders was gutkha of brand manufactured by the respondent, M/s. SK Industries and that these goods used to come from the factory of the respondent, M/s. SK Industries directly. The godown incharge Shri Bhagirath Kushwah and Shri Ravinder Sharma, Manager have not been cross-examined by the party and hence the facts stated in these two statements remain undisputed and irrefuted.
(ii-h) Shri Ravinder Sharma, Branch Manager of the transporter in his statement dated 08.07.1997 had also stated that although the goods transported by them were gutkha of various brands manufactured by the respondent, M/s. SK Industries, they did not mention the specific brand name on the challans as they did not open the bags. While it may be accepted that the godown in-charge or the manager were not opening the bags, it cannot be accepted that even by not opening the bags they would not know whether the bags contained finished gutkha packed in pouches or supari dust which is not packed in pouches but would only be stuffed loose in gunny bags.
(ii-i) The respondent has not been able to substantiate its claim that in place of gutkha some other goods were transported on the challans where description of goods was given as gutkha. As already stated there was ample evidence in the shape of statements, description of goods in transportations challans, invoices of PNT to show that what was transported was gutkha. The respondent on the other hand has made only a general averment that M/s. Parasnath Traders is also trading in supari dust. No explanation has been given as to why description of goods was given as gutkha on the challan / invoice if supari dust was actually being sent. In fact often the converse practice is adopted where gutkha is mis-declared as supari dust on transporters documents to conceal clandestine clearances of gutkha. There can be no reason to mis-declare supari dust as gutkha. Since all the consignments were consigned to self, a copy of the bilty would have been given to the consignor and they seem to have never objected earlier for a wrong description being given on the bilties. On being asked Shri Jagdish Rana, Proprietor could give no reason, whatsoever, as to why the description was given on their invoices as gutkha if actually supari dust was being sent. Since a copy of the bilty or challan is also given to the consignor particularly when goods are consigned to self at destination, M/s. Parasnath Traders never objected to this mis-declaration of description of goods on the challans.
(ii-k) Even on the dispatch register of Motor Transport Company against such dispatches the words CZ were written which, as disclosed by the managers of Motor Transport Company was a code word used for Gutkha. The averment of the respondent party that the words CZ denoted the consignor i.e., M/s. Parasnath Traders is clearly an after-thought as the manager of the transporter Shri Ravinder Sharma in his first statement recorded on the date of seizure, i.e., 08.09.1997 had categorically stated that the code CZ denoted gutkha dispatches. This was also affirmed by Shri Hari Krishna Aggarwal, another manager of the transporter in his statement recorded on 30.09.1997. Moreover, M/s. Parasnath Traders were not registered in Sales Tax Department for trade in supari dust and from the registration certificates regarding State and Central Sales Tax, relied upon as Annexure K to the Show Cause Notice, it is clear that M/s. Parasnath Traders were registered only for trade in pan masala chutney and mineral water only.
(iii) On 62 challans listed in Annexure-C to Show Cause Notice (evidencing duty evasion of Rs.36.52 lakhs) consignors name was M/s. Raja Sales Agency and goods were consigned to self at New Delhi and description was given as gutkha, but delivery was taken by the respondent, M/s. SK Industries at New Delhi.
(iii-a) Regarding these 62 challans there is clear cut evidence that these were of Mahak Brand as delivery of goods was taken by the respondent , M/s. SK Industries themselves. This fact of delivery being taken by the respondent party is evident not only from the corresponding money receipts that were recovered but was also confirmed by Mr. Hari Krishna Agarwal, Manager of Motor Transport Company in his statement dated 09.07.1997.
5.2 The ld. Authorised Representative (AR)in addition inter alia submits that:-
(i) The demand is not based on presumptions and assumptions but is based on documents with corroborative evidence.
( ii) There can be no motive for mis-declaration of supari dust as gutka. In this regard, the following factors will also show that assessees defence cannot be accepted-
(a) Description of the goods on the invoices, challans, bilties was consistently over a long period of time given as gutkha.
(b) The consignor, i.e., M/s. Parasnath Traders (PNT) / Raja Sales Agency (RSA), who are also given one copy of the bilties for securing release of goods at destination, did not ever seem to have objected to giving wrong description of goods transported on these challans.
( c) No cogent or tangible evidence has been produced by the respondent or by M/s. Parasnath Traders to substantiate their claim that it was supari dust that was actually transported while the description of goods was given as gutka.
(d) M/s. Parasnath Traders and M/s. Raja Sales Agencies were not even registered in the Sales Tax Department for trade of supari dust.
(e ) On the documents accompanying the seized Mahak brand gutkha consignments also the description of goods was given as gutkha.
( f) Even in documents that were prepared by the transporter at destination at the time of delivery of goods to the consignee, like money receipt, crossing account statement, that could be recovered, the description of goods was given as gutka.
( g) Statement of the godown in-charge and manager of the transporters confirmed that what was transported on the bills of M/s. Parasnath Traders was gutka of various brands manufactured by the respondent and that the gutkha was coming straight from the factory of the respondent, M/s. SK Industries.
( h) Even if the bags were not opened, the persons handling these bags at transporters end would by the very difference in the nature of two products, i.e., packed gutka on one hand and supari dust on the other, know the nature of contents. Supari dust, which is cheap bulk raw material, would not be packed in the same manner as finished gutka in pouches.
( i) There can be absolutely no reason / motive for clearance and transportation supari dust in the guise of gutka. The converse may be true, clandestinely cleared gutka may be transported by mis-declaring the same as supari dust or anardana etc. with a view to evading duty as supari dust / anardana do not attract any Central Excise duty.
5.3 Ld. Departmental Representative also submits that Revenue has not been arbitrary or unreasonable while computing the value as for three different periods three different values have been taken which range from Rs.4,500/- per bag to Rs.9,600/- per bag depending on the average value per bag cleared during that period.
5.4 The ld. A.R. emphasises that clandestine manufacture and removal of goods namely, Mahak brand Pan Masala without payment of duty, has been proved by the facts and circumstantial evidence on record; therefore, the impugned order is to be quashed and the show cause notice has to be sustained.
6. The respondents have been represented by ld. Sr. Advocate, Shri C. Hari Shanker and ld. Advocate Shri Prem Ranjan. They reiterate the findings given in the impugned order and further inter alia submit as follows:-
( i) The challan entries were made not personally by Shri J.S. Rana, Proprietor of M/s. Prasnath Traders, but by his Munshi Shri Girish, who is illiterate and did not verify which was the subject material.
( ii) Shri Hari Krishna Agrawal, Manager of the transport company has stated that paan masala and supari dust were being disbursed and transported. It was clarified by Mr. Hari Krishna Agrawal during cross-examination that they used to allot separate code words/private marks for identification of their regular customers and for PNT (M/s. Parasnath Traders) they allotted CZ. It was also stated by Shri Agrawal that PNT also used to send supari.
6.1 Ld. Senior Advocate Shri C. Hari Shanker based on the written submissions inter alia states that charges in the show cause notice have not been proved and therefore, the duty demanded of Rs.6,99,31,440/- proposed in the show cause notice is not recoverable and the impugned order dated 30.6.2004 passed by the ld. Commissioner be upheld.
7. The facts on record, the submissions of both sides i.e. the appellant (Revenue ) as well as the respondents (assessee and others) and the case laws cited have been carefully considered.
8. The matter mainly pertains to unaccounted/clandestine manufacturing, and clearance of goods namely, gutkha/pan masala of Mahak Brand by the respondent firm M/s S.K. Industries, Gwalior.
9. Presently, the appellant and the respondents are before this Tribunal in the 3rd round of litigation. On earlier two occasions, the duty demand issued under show cause notice dated 26.2.1998 was confirmed and penalties were imposed by the Commissioner. When respondents last time came in appeal before this Tribunal, the matter was remanded back to the original adjudicating authority, who while deciding 3rd time did not confirm the demand proposed by the show cause notice and no penalties were imposed as proposed in the show cause notice. Consequently, the Department (Revenue) is in appeal before the Tribunal. A summary of earlier happenings is given again below:
9.1 The notice dated 26.2.98 adjudicated first time by the Commissioner of Central Excise , Indore who vide Order-in-Original dated 26.3.99 confirmed the demand for recovery and imposed penalties on the noticee-respondents No.1 to 5.
Aggrieved by this order dated 26.3.99, the Noticee No.1 preferred appeal before CESTAT. The CESTAT vide its final Order No.A/1104-8/99-NB(DB) dated 3.12.99 remanded the case for fresh adjudication.
9.2 Commissioner of Central Excise, indore vide Order-in-Original No.52/Commr./CEX/IND/2001 dated 28.9.2001 again confirmed the demand for recovery and imposed penalties on the noicee-respondents No.1 to 5.. The respondents being aggrieved by the said order dated 28.9.2001 preferred appeal before CESTAT. The CESTAT vide its Final Order No.A/1104-08/99-NB(DB) dated 3.12.99 remanded the matter to the adjudicating authority for deciding afresh. The then Commissioner , Central Excise, Indore decided the show cause notice by dropping the demand and not imposing any penalties on any of the noticee-respondents. Revenue is now in appeal before this Tribunal against the said adjudication order dated 30.6.2004.
10. It is to be noted that that the show cause notice was issued on 26.2.98 and the impugned order No.49/COMMR/CEX/IND/2004 dated 30.6.2004 mentions that the said show cause notice dated proposed the following:
(i) Recovery of duty of excise amounting to Rs.6,99,31,440/- from Noticee No.1 and for adjustment of amount already paid vide PLA E. No.70 dated 16.7.70.
(ii) Imposition of penalty on the Noticee No.1 under Rule 173Q of Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944.
( iii) Confiscation of land, building, plant and machinery, material, conveyance or any other things used in connection with manufacture of storage or removal of such goods, in terms of Rule 173Q(2) of the Central Excise Rules, 1944.
( i) Imposition of penalty under Rule 209A of the Central Excise Rules, 1944 on the Noticee No.2, 3, 4, & 5.
11. These proceedings have the origin in interception of two mini trucks carrying gutkha pan masala of Mahak Brand by the officers of Central Excise on 8.7.97; total number of 233 bags valued at Rs.17,59,650/- were found loaded in the said two trucks. Shri Sunil Kumar (SK) Jain, one of the partners in assessees company, S.K. Industries in his statement dated 16.9.97 admitted clearance of the said 233 bags of pan masala/gutkha seized on 8.7.97 without payment of duty and stated that the duty liability amounting to Rs..5,57,640/- on the said seized 233 bags of Mahak pan masala/gutkha which were seized by the officers in transit, was paid vide PLA Entry No.60 dated 23.7.1997. Shri Sunil Kumar Jain, partner, who is also the noticee No.2 also admitted the responsibility of such clandestine removal from the factory of the appellant M/s S.K. Industries.
11.1 In case of 233 bags of Mahak brand gutkha which were seized from two mini trucks on 8.7.97 on which duty liability had been computed as Rs.5,57,640/-, Shri Anil Kumar Jain, Authorised signatory of M/s S.K. Industries (Noticee respondent No.1) admitted in his statement recorded under Section 14 of the Central Excise Act, 1944 that these goods were removed from their factory without issuing invoice and without payment of duty leviable thereon. Further, Shri Sunil Kumar Jain, who is Noticee-respondent No.2 and who is partner in the above noticee firm M/s S.K. Industries, also in his statement dated 16.9.97 recorded under Section 14 of Central Excise Act, 1944 admitted the responsibility for clandestine removal of the said 233 bags of Mahak brand pan masala/gutkha and deposed that duty liability on seized goods was paid vide PLA Entry No.60 dated 23.7.97 which is Rs.5,57,640/-.
11.2 The noticee-respondent i.e. M/s S.K. Industries argues that the relevant challans, entries were made not by Shri Jagdish Singh Rana, who is proprietor of M/s Parasnath Traders, Gwalior through whom suparidust was sent further via Transport company to Delhi. We find that the entries made by the Munshi of Shri Jagdish Singh Rana are correct as per the other evidences available. It is evident that the entries were not made personally by Shri Rana, who is the proprietor of Parasnath Traders but he states that the goods were booked by them for transportation to Delhi and the challans available for said goods with them belonged to Mahak brand gutkha only.
11.3 The respondents M/s S.K. Industries and others also argue that M/s Parasnath Traders were selling supari dust. However it is on record that they did not have any registration with States Department of Sales Tax for sale of supari dust. Other circumstantial evidences do not indicate that under the guise of Mahak brand gutkha, supari dust was being sold by Parasnath Traders or by the respondent M/s S.K. Industries.
11.4. Show cause notice on pages 5 6 mentions that Gautam Singh, booking clerk of Motor Transport of India (P) Ltd. (MTIPL), New Delhi clearly admits in his statement recorded under Section 14 of Central Excise Act that corresponding crossing account statements were prepared by him on the basis of challans received by him from Gwalior along with the consignments. He further admits that description of the goods as per challans was Gutkha only, whereas on the crossing account statement the description of the goods was given by him as Mahak brand pan masala as per instructions of the party, who took the delivery of the goods.
11.5 The respondents M/s S.K. Industries and others argue that there is no column provided in the crossing account statement to mention the description of goods. Therefore, the respondents plead that mention of the description of the goods in the crossing account statement given by the transporter is contrary to general practice and that has been only used to establish demand pertaining to Annexure C of the SCN.
11.6 We do not find any force in the argument of the respondent that since the description of the goods were written by the transporter, which is not general practice by the transporter, that is why such description cannot be taken as evidence. This is certainly very weak argument of the respondents, when the description given in the crossing account statement of the transporter speaks the truth, which is corroborated by as other evidences on record. Thus the description given in the crossing account statement cannot be discarded, rather it clearly proves the allegation of Revenue in this regard.
11.7 The respondents argue that the Department did not go into the vital facts as to whether the noticee was in a position to manufacture gutkha worth of Rs.10 crores per year with the pattern of purchase, sale and power consumption or not. It is in common knowledge that the manufacturing gutkha pan masala does not require any high tech machinery/technology. Even small room apartment or a middle size room, wherein a big number of gutkha manufacturing machines can be installed and the turnover can reach per year even over Rs.20- 30 crores depending upon the marketing capacity and accessibility to market. The respondents further argue that no indiscrepancy is found in their record by the Revenue during physical verification of the stock of raw material and finished products; therefore, they should not be suspected for unaccounted manufacture and clearance. It is a well known fact that when the respondents have unaccounted manufacturing and clandestine clearance, such activities in factory premises are done with elaborate planning. Whenever during surprise check, they are caught red handed doing unaccounted manufacturing and such activities, it cannot be accepted that said manufacturer is not regularly involved in such illegal activities. Here the Revenue got enough records in the form of challan and documents with the respondent, M/s S.K. Industries, main dealer namely, M/s Parasnath Traders.
Therefore, the charge of unaccounted manufacture and clandestine clearance cannot be denied by the respondents.
11.8 The respondents argue that the entire demand was made on the basis of third party documents. They further state that none of the documents have been recovered from their own premises. We have come to the considered view that the respondents M/s S.K. Industries are very clever in the illegal activity of duty evasion. It is their modus operandi to keep the factory premises completely clear and clean of adverse and incriminating documents. Now they have been caught red handed in the form of seizure made on 8.7.1997of unaccounted/clandestinely removed goods during the transit check by the officers of the Central Excise officers. The respondents, therefore, cannot say that the entire demand is based on the documents belonging to the third party; they admit that the goods seized were clandestinely manufactured and cleared by them and no duty on such goods was paid by them. All these facts have been admitted by Shri Sunil Kumar Jain, who is the responsible functionary (partner) in the respondent unit namely, S.K. Industries. When they did not issue any document for clandestine manufacture and clearance, the said documents will not be available even if the Department of Revenue makes number of search operations in their factory premises. All the nefarious activities which have come to light during these proceedings clearly indicate that the respondents have been indulging in unaccounted clearance and clandestine removal. The whole operation again clearly reveal the respondents clever and modus operandi of evasion of duty of Central Excise.
11.9 By way of summary and in addition we would like to state that total duty demand of Rs.6,99,31,440/- mentioned in the show cause notice involve clearances of 27,929 bags (Annexures A, B & C of the SCN) having total value of Rs.17,48,28,600/- for the period of February 1996 to June 1997.
11.9.1 Total number of transport challans (including money receipt & GRs) for above duty demand is 416. While demand is based on transport challans and money receipts/GRs only, these challans and money receipts/GRs were receovered mainly from office(s) of the concerned transporter namely, Motor Transport India (P) Ltd. (MTIPL), Gwalior/Delhi.
11.9.2 In case of goods at Annexure A 20 challans have been mentioned and duty involved is of Rs.36.57 lakhs. Here the main evidences to sustain the charge of unaccounted manufacturing and clandestine clearance without payment of duty are :
i) Consignors name on the documents relating to the goods is Parasnath Traders (PNT), who is the same, whose name was found in the documents concerning the goods, which were found cleared without payment of duty during transit check, and therefore, seized then;
ii) Description given for the goods in the documents is Mahak/Sahara brand which are manufactured by the respondent No.1, M/s S.K. Industries only;
iii) Mr. Sunil Kumar Jain, Partner, M/s S.K. Industries admitted to have manufactured these goods;
iv) M/s S.K. Industries paid initial duty deposit of Rs.6 lakhs in this regard.
11.9.3 in case of goods at Annexure B to SCN concerning 334 challans (recovered from office of M/s Motor Transport of India P. Ltd. Gwalior) involving duty of Rs.6.26 crores also there are sufficient evidences to sustain the charge of unaccounted manufacturing and clandestine clearance without payment of duty against the respondent, M/s S.K. Industries and others. These evidences are -
i) On the documents again the consignors name is PNT and Raja Sales Agency (RSA), which is the old name of PNT.
ii) description of goods given in the documents again is Gutkha only.
iii) Goods were consigned to self only and the delivery in Delhi was take by the respondent, M/s S.K. Industries only.
iv) Description of the goods given in the transport challans was based on the invoices issued by PNT/RSA only.
v) Both the godown in-charge, Shri Bhagirath Kushwah, and Manager of Gwalior Branch of Transporter, Shri Ravinder Sharma admitted in their statements dated 8.7.1997 recorded under Section 14 of the C.Ex. Act, 1944 that subject goods, Gutkha were received from the factory of the respondent, M/s S.K. Industries only and were transported on the invoices of M/a PNT.
vi) the payment of the freight for the transportation was made by the respondent, M/s S.K. Industries only.
vii) The respondent, M/s S.K. Industries could not substantiate its claim that the goods were not Gutkha but were suparidust.
viii) The code CZ mentioned in documents also refer to goods, Gutkha only.
11.9.4 In case of the goods at Annexure C to SCN, 62 money receipts/GRs have been mentioned and duty involved is Rs.36.52 lakhs. In order to prove evasion of duty of Central Excise for these goods these are enough evidences available on record and the respondents cannot say that Revenue has made its case of duty evasion without any basis.The evidences on record in this regard are :-
i) Consignor here again is RSA, who is the predecessor of PNT; RSA is old name of PNT.The facts have proved that PNT and RSA are the accomplices of the respondent, M/s S.K. Industries in evasion of duty of Central Excise.
ii) Goods were transported in the mode of self only and delivery was taken by the respondent M/s S.K. Industries only.
iii) Goods were described in the documents as Gutkha only.
iv) Goods were Mahak brand Gutkha only as confirmed by the statement dated 30.9.97 of Shri H.K. Agrawal, Manager of Transporter, M/s MTIPL.
11.10 Commissioner in the impugned order dated 30.6.2004 has failed to appreciate above evidences and fact of payment of duty and the fact of seizure, where no duty paying documents were available and other evidences on record not only in respect of these 233 bags of Mahak Pan Masala seized but also in case of all the goods at Annexures A, B & C of Show Cause Notice. There is sufficient evidence including the statements of Shri Anil Kumar Jain and Sunil Kumar Jain which on record prove the charges of clandestine manufacture and clearance of the impugned goods i.e. Mahak brand gutkha/pan masala.
11.11 It is important to state that unaccounted manufacture and clandestine removal are always secret activities and persons concerned always try their best not to leave behind any of their foot prints in the form of any evidences of their nefarious activities. We refer to the CESTAT observations in the case of Gulabchand Silk Mills Pvt. Ltd. Vs. Commissioner of Central Excise, Hyderabad [2005 (184) E.L.T. 263 (Tri.-Bang.)] wherein it inter alia observes as under :
9. . The entire statement of Shri Gopal Gupta is very revealing. On the point of manipulation of invoice, Shri Bhavani Kishore, Accountant of M/s. GSML, has elaborated in great detail, which, in our view could not have been the imagination of the Investigation Officers. Shri Bhavani Kishore has clearly stated that the duty is paid on only 10% of the actual quantity cleared. He has also stated that the practice of putting a decimal and showing lesser duty is as per the directions of the Managing Director Shri Gopal Gupta. Shri Subash Agarwal, Proprietor of M/s. SNT has also stated that they received processed fabrics from M/s. GSML with bills and without bills. In respect of goods purchased without bills the payments are made in cash.
10.?Shri Nirmal Kumar Gupta Proprietor of M/s. KT in his statement has stated that they do not receive any delivery challan or invoice along with the processed fabrics received from M/s. GSML. The consignment will be sent on a kutcha bill showing the quantity of processed fabrics and number of packages. Such type of kutcha bills are available from the files recovered from his residence under panchanama dated 15-5-1997. On few occasions they have received the processed fabrics along with Central Excise invoice. So the practice of sending non-duty paid goods from M/s. GSML is very evident not only from the statements of the various persons, but also the incriminating documents. In any type of clandestine activity, the persons try their best not to leave any evidence. We cannot expect persons indulging in clandestine clearance to faithfully put the details of all such clearances in some register and append their signature. This is never done. Hence, clandestine activity at best can be established only by circumstantial evidence. It should also be borne in mind that it will be humanly impossible to establish every link in the chain of clandestine activity. For example, in this case, the recovery of unaccounted goods, the admissions of the persons involved, the recovery of goods/incriminating documents in the dealers premises, the statement of the dealers etc., all indicate that M/s. GSML were in the habit of suppressing production and clearing the goods without payment of duty. It would be too much to expect that the Investigating Officers should establish by what transport on which dates and where the supposed non-duty paid goods were sent and who received them, when and how they were distributed and all the financial dealings etc. We are very sure that humanly it would be impossible to establish all the links of clandestine activity without any break. In this case, the statements or the admissions are supported by the recovery of non-duty paid goods as well as incriminating documents. A modus operandi of paying only one tenth of the duty actually payable has been graphically described by Shri Gopal Gupta and Shri Bhavani Kishore in their statements. Hence, in our view, the adjudicating authority has rightly confirmed the demand based on the quantity of 11 lakh Lmts. of MMF cleared without payment of duty on the basis of admission by Shri Gopal Gupta, corroborated by the incriminating documents, unaccounted goods and the statements of all others. When a fact is admitted it doesnt need further corroboration. We have no reason to believe that the statements have been taken under duress. We also hold that the retraction made after two months is an afterthought. The denial of cross-examination of the two persons Shri Bhavani Kishore and Shri Gouri Shankar Gupta does not vitiate the proceedings. [Emphasis supplied] 11.12 Based on above discussions and observations of the Tribunal quoted above, we are of the considered view that there is no force and justification in dropping the demand of Central Excise duty in case of the goods mentioned in Annexures A, B & C of the SCN by the Commissioner in the impugned order. The submissions and arguments given by the respondents in this regard are more in the nature of an after-thought and do not have sufficient substance for above conclusion in the present proceedings. For above conclusion in the present proceedings, we take further support from Honble Supreme Courts decision in the case of Collector of Customs Madras and others vs. D. Bhoormull 1983 (13) ELT 1546 (SC) and and the Honble High Court of Himachal Pradeshs decison in the case of Commissioner Central Excise Vs. International Cylinders Pvt. Ltd. [2010 (255) E.L.T. 68 (H.P.) al where Honble High Court observes that no law can be interpreted in a manner so as to give premium to illegal and criminal activities; it is a basic common sense that no person will maintain authentic records of the illegal activities or manufacture being done by it.
12. There are thus sufficient evidences against the respondents in respect of the charges mentioned in the show cause notice i.e.unaccounted manufacture and clandestine removal of the goods without payment of duty. We refer to the Honble Supreme Courts decision in the case of Collector of Customs, Madras and Others Vs. D. Bhoormull [1983 (13) E.L.T. 1546 (S.C.)].The Honble Supreme Court in the said case observed as under :
30. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the onus cast by it, we must pay due regard to other kindred principles, no less fundamental, or universal application. One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs absolute certainty is a myth, and as Prof. Brett felicitously puts it-"all exactness is a fake". El Dorado of absolute Proof being unattainable, the law, accepts for it, probability as a working substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent mans estimate as to the probabilities of the case.
31. . .. ..
32. Smuggling is clandestine conveying of goods to? avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on the person concerned : and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in `Law if Evidence (12th Edn. Article 320, page 291), the presumption of innocence is, no doubt, presumptio juris : but every days practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property, though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may sight. [Emphasis supplied] In the present proceedings also, the activities and the transactions perpetrated by the respondents are unaccounted manufacture and clandestine clearances to evade payment of Central Excise duty and these are definitely in the nature of white collar crimes like smuggling, evasion of taxes/duties of State etc., and observations of the Honble Supreme Court made in the above decision are aptly applicable to the present facts. Therefore, the appellants cannot argue that for all the transactions, there is need of making 100% proof available. The Department has been able to prove its case of unaccounted manufacture and clandestine clearances beyond reasonable doubt as discussed and analysed in earlier paras of this order.
13. It is to be noted again that it is not necessary for the Revenue to establish the unaccounted production and clandestine clearances without payment of Central Excise duty on the part of the Respondent, M/s S.K. Industries with mathematical precision. If there are enough evidences on record as well as the statements of the concerned persons to indicate and infer the existence of facts of unaccounted production and clandestine clearance without payment of duty on the yardstick of preponderance of probability of happening such fact, then charges can be called as a proved fact beyond reasonable doubt. Thus, there is no need to look for a fact happening with mathematical precision. In this regard, CESTAT, Mumabis majority decision in the case of Bhagwathi Steelcast Ltd. Vs. Commissioner of Central Excise [2013 (293) E.L.T. 417 (Tri.-Mum.) is referred below. The majority decision in the said case supports our conclusions made earlier. The majority decision of CESTAT, Mumbai has inter alia in the said case observed as under :
75.5 In the case? of A.N. Guha & Co. v. Collector [1996 (86) E.L.T. 333], this Tribunal held that it is not necessary for the department to establish a fact with mathematical precision. Once the presumption as to the existence of a fact is raised against the assessee that the input has not been transported in the vehicle mentioned in the invoices, it is reasonable to say that the inputs were not received in the factory. In the case of R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P., (order dated 8-10-2003 in Civil Appeal No. 10585 of 1996) the Honble Apex Court held as follows :
Whether a civil or a criminal case, the anvil for testing of proved, disproved and not proved, as defined in Section 3 of the Indian Evidence Act, 1872 is one and the same. A fact is said to be proved when, if considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of a particular case, to act upon the supposition that it exists. It is the evaluation of the result drawn by applicability of the rule, which makes the difference. The probative effects of evidence in civil and criminal cases are not however always the same and it has been laid down that a fact may be regarded as proved for purposes of a civil suit, though the evidence may not be considered sufficient for a conviction in a criminal case. BEST says : There is a strong and marked difference as to the effect of evidence in civil and criminal proceedings. In the former a mere preponderance of probability, due regard being had to the burden of proof, is a sufficient basis of decision : but in the latter, especially when the offence charged amounts to treason or felony, a much higher degree of assurance is required. (BEST, S. 95). While civil cases may be proved by a mere preponderance of evidence, in criminal cases the prosecution must prove the charge beyond reasonable doubt. (See Sarkar on Evidence, 15th Edition, pp. 58-59) In the words of Denning LJ (Bater V.B, 1950, 2 All ER 458, 459) It is true that by our law there is a higher standard of proof in criminal cases then in civil cases, but this is subject to the qualification that there is no absolute standard in either case. In criminal cases the charge must be proved beyond reasonable doubt, but there may be degrees of proof within that standard. So also in civil cases there may be degrees of probability. Agreeing with this statement of law, Hodson, LJ said Just as in civil cases the balance of probability may be more readily fitted in one case than in another, so in criminal cases proof beyond reasonable doubt may more readily be attained in some cases than in others. (Hornal V. Neuberger P. Ltd, 1956 3 All ER 970, 977).
75.6 . . ..
75.7 The concepts? of reasonable doubt and preponderance of probability have been lucidly explained by the Honble Apex Court in the case of State of Rajasthan v. Mohan Lal [2009 (237) E.L.T. 435 (S.C.)] as follows :-
36. Doubts would be called reasonable if they are free from a zest for abstract speculation. Law cannot afford any favourite other than truth. To constitute reasonable doubt, it must be free from overemotional response. Doubts must be actual and substantial doubts as to the guilt of the accused persons arising from the evidence, or from the lack of it, as opposed to mere vague apprehensions. A reasonable doubt is not an imaginary, trivial or a merely possible doubt, but a fair doubt based upon reason and common sense. It must grow out of the evidence in the case.
37.?The concepts of probability, and the degrees of it, cannot obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt. There is an unmistakable subjective element in the evaluation of the degrees of probability and the quantum of proof. Forensic probability must, in the last analysis, rest on robust common sense and, ultimately, on the trained intuitions of the Judge... (emphasis supplied)
14. The Honble High Court of Himachal Pradesh in the case of Commissioner Central Excise Vs. International Cylinders Pvt. Ltd. [2010 (255) E.L.T. 68 (H.P.) has observed that no law can be interpreted in a manner so as to give premium to illegal and criminal activities; it is a basic common sense that no person will maintain authentic records of the illegal activities or manufacture being done by it.
The present case concerns with evasion of payment of duty of excise and above observations of Honble High Court of H.P..are rightly applicable here.
15. CESTAT, Bangalore in the case of Ramachandra Rexins Pvt. Ltd. Vs. Commissioner of Central Excise, Bangalore-I [2012 (295) E.L.T. 116 (Tri.-Bang.) also holds that only yardstick is preponderance of probability and not mathematical precision and on this yardstick departments present case sustains. It follows from the case law cited above that the department need not prove the case with mathematical accuracy. So long as the department has established the case with such a degree of preponderance of the existence of a fact, it is sufficient.
16. It is observed that the case laws and the observations made by the higher judicial fora quoted above provide the basis, support and sustenance for the conclusions drawn here regarding the charges of unaccounted manufacture and clandestine clearances without payment of duty of Central Excise against the respondents.
17. Along with conclusions drawn above, it is to be observed again that the activities like unaccounted production and clandestine removal without payment of due taxes to the National Exchequer gravely hurts the economy of the Nation. In other words, these kinds of activities are in the nature of economic offences and are termed as white collar crimes gravely affecting the society as a whole including the common man on the street. These are the offences which affect the society as a whole and cannot, therefore, be taken lightly. Whenever the perpetrators of such offences get caught, such evils and evil doers are to be tackled and combated effectively by applying the relevant laws and by taking the law and law enforcement to their logical conclusion. However, it does not mean that offenders could be booked without evidences. In fact, when there is no evidence, there is no offence and no offender. The point is that when such evil activities are done in utter secrecy and in an organized manner, there would be only very few evidences available; therefore, whenever such a few evidences are available, the inferences have to be made out of those evidences on the yardstick of preponderance of probability and offenders are to be strictly dealt with accordingly. This is the essence of all the case laws of the higher judicial fora quoted above to support the conclusions made by us in the present case. Consequently, we are of the considered view that the respondents committed the contraventions of the law as made out above and in such respects the show cause notice is sustainable. Consequently, we hold as below:
( i) In respect of appeal No.E/2614/2004 duty of central excise amounting to Rs.6,99,32,449 along with interest is held as recoverable from the respondent No.1, M/s S.K. Industries in terms of Show cause notice dated 26.2.98.
(ii) Penalty of Rs.6,99,32,440/- which is equivalent to central excise duty evaded for the subject goods is imposed under Rule 173Q of CER, 1944 read with Section 11AC of the CEA, 1944.
( iii) In respect of confiscation under Rule 173Q(2) of Central Excise Rules, 1944 of the concerned land, building, plant machinery material, conveyance and any other things used in connection with the manufacture, production, storage, removal or disposal of the subject goods which were unaccountedly manufactured and clandestinely removed without payment of duty, however, Revenue has not adduced any evidence of availability of these items (land, building, plant & machinery etc.) on todays date, and the matter is over 19 years old; we, therefore, are not passing any order on the confiscation of the said items/goods, and then there cannot be any question of imposing any redemption fine in this regard.
(iv ) Considering the roles played by the concerned noticee-respondent(s) respective penalties are imposed on the on them as under:
(a) Sunil Kumar Jain is the partner in the respondent No.1 unit,, M/s S.K. Industries. He has admitted his role in unaccounted manufacture and clandestine removal of the subject goods and owns responsibility for the involvement in the act of evasion of central excise duty of Rs.6,99,31,440/- by the respondent No.1 M/s S.K. Industries. A penalty of Rs.5 lakhs (five lakhs) is, therefore, imposed in terms of the SCN on Shri Sunil Kumar Jain, partner of M/s S.K. Industries for his role and involvement in the evasion of central excise duty by the respondent No.1.
(b) Shri Suresh Kumar Jain, son of Shri Ghanshyam Das Jain, is the Manager with the respondent No.1, M/s S.K. Industries. He was looking after the entire works of manufacturing of gutkha and pan masala and also the matters relating to labour, sale/marketing of the goods from the factory of the respondent No.1. From the facts, it is clear that he being in-charge of day to day operation, had full knowledge of unaccounted manufacture and clandestine removal and played an important role in evasion of duty of central excise by the respondent No.1. A penalty of Rs.5 lakhs (five lakhs) therefore, is imposed on Shri Suresh Kumar Jain under Rule 209A of CER , 1944 for his role and involvement in evasion of Central Excise duty.
(c) Shri Jagdish Singh Rana is the proprietor of M/s Parasnath Traders (PNT) He is the noticee respondent No..4. He assisted the respondent No.1 in evasion of central excise duty. He played support part in the execution of modus operandi used by respondent No.1 in evasion of central excise duty. The impugned activities in respect of the subject goods were conducted by M/s Parasnath Traders, whose proprietor is Shri Jagdish Singh Rana; therefore, Shri Jagdish Singh Rana is liable to be penalized under Rule 209A of the Central Excise Rules, 1944. Consequently, a penalty of Rs.1 lakh (one lakh) is imposed on Shri Jagdish Singh Rana , Noticee No.4 in the SCN under Rule 209A of CER , 1944.
(d) Shri Hari Krishna Agrawal, who is the noticee-respondent No.5 is the Manager of Motor Transport of India Pvt. Ltd. (MTIPL), whose office and the resources in the form of transport vehicles were used for activity of evasion of central excise duty by the noticee No.1.Therefore, Shri Agrawal makes himself liable for penal action under Rule 209A of CER 1944. Consequently a penalty of Rs.50,000/-(fifty thousand only) is imposed on Shri Hari Krishna Agrawal under Rule 209A of CER, 1944.
Appeal No.E/881/2007
17. The Commissioner (Appeals) vide impugned order No.IND-I/3/2007 dated 10.1.2007 allowed the appeal of the respondent No.1 M/s S.K. Industries against the Order-in-Original No.54/CEX/REF/DC/06 dated 27.11.06 and corrigendum No.C.V (18)Ref/34/06 dated 7.12.06 whereunder M/s S.K. Industries was not given interest on the grant of refund of Rs.6 lakhs, whereas the interest had arisen out of the Order-in-Appeal No.IND I/326/06 dated 11.10.06 passed by the Commissioner (Appeals), Central Excise, Indore. Thus the Commissioner (Appeals) vide the impugned order dated 10.1.2007 granted interest to M/s S.K. Industries on the refund amount of Rs.6 lakhs. Revenue in this appeal prays that the Order-in-Appeal passed by the Commissioner (Appeals) may be quashed.
18. As refund amounting to Rs.6 lakhs had become due to the respondent, M/s S.K. Industries on account of Commissioner, Central Excise, Indores order No.49/Commr/ CEX/IND/2004 dated 30.6.2004 against which the Department filed the main appeal(s) (No.E/2614 to 2618/2005), which are being decided by this order, it would be right to remand this matter to the Commissioner (Appeals) for decision afresh based on the findings given by us here in the main appeal(s) after giving opportunity of personal hearing to the respondent No.1 M/s S.K. Industries. The Commissioner, Central Excise (Appeals), Indore will decide the same within four months of the receipt of this order. The Revenues appeal is thus allowed by way of remand.
Appeal No.E/1109/2008
19. Revenue is in appeal against the sanctioning of refund of Rs.6 lakhs by the Order-in-Appeal No. IND-I/82/2008 (de novo) dated 9.4.2008. The Commissioner vide this impugned order dated 9.4.08 allowed the appeal of M/s S.K. Industries which was against the Order-in Original No.19/CEX/REF/DC/05 dated 26.7.06 passed by the Deputy Commissioner rejecting the refund claim of Rs.6 lakhs filed by M/s S.K. Industries.
20. We find that refund claim of Rs.6 lakhs had arisen on account of Order-in-Original No.49/COMMR/CEX/IND/2004 dated 30.6.2004 which was passed by the Commissioner, Indore and against this order , the Revenues main appeal(s) (No.E/2614 to 2618/2005) are being decided by this order. As we are setting aside the Order-in-Original dated 30.6.2004, consequential proceedings which arose out of the said order dated 30.6.2004 have to be examined in terms of our order in main appeal (s) against the said order dated 30.6.04.
20.1 Therefore, this matter is fit to be remanded back to the Commissioner, who shall decide the subject matter afresh in terms of the Tribunals decision being made herein in the main appeal(s) against the adjudication order No. .49/COMMR/CEX/IND/2004 dated 30.6.2004. The Commissioner shall decide the matter de novo after giving fresh opportunity of personal hearing to the respondent No.1, M/s S.K. Industries.
21. All the appeals are disposed of in above terms.
[Pronounced in the Open Court on 09/12/2016).
(Justice Dr. Satish Chandra (Ashok K.Arya)
President Member (Technical)
scd/
Appeal No.E/2614-18/05, E/881/07, E/1109/08
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