Custom, Excise & Service Tax Tribunal
M/S Mukesh Appliances Pvt.Ltd vs Commissioner, Central Excise & Service ... on 18 November, 2015
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad Appeal No.E/730,731/2008-SM [Arising out of OIA No.36-37/DAMAN/2007, dt.26.11.2007, passed by Commissioner (Appeals), Central Excise & Customs, Daman] 1. M/s Mukesh Appliances Pvt.Ltd., 2. Shri Madanlal Jain Appellants Vs Commissioner, Central Excise & Service Tax, Daman Respondent
Represented by:
For Appellant: Shri Alok Barthwal, Shri R.K. Jain - Advocates For Respondent: Shri Jitendra Nair, Authorised Representative For approval and signature:
Honble Mr. P.K. Das, Member (Judicial)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) Date of Hearing:30.10.2015 Date of Pronoucement:18.11.2015 Order No.A/11684-11685/2015, dt.18.11.2015 Per: P.K. Das The relevant facts of the case, in brief, are that the Appellant M/s Mukesh Appliances Pvt.Ltd was engaged in the manufacture of Mixers, Grinders etc classifiable under sub-heading No.8509.00 of the Schedule to the Central Excise Tariff Act, 1985. They were availing SSI exemption benefit under Notifications No.16/97-CE, dt.01.04.97, 8/98-CE, dt.02.06.1998, 8/99-CE, dt.28.02.1999 and 8/2000-CE, dt.01.03.2000 upto the clearance value of Rs.50 lakhs. On 22.08.2000, the Central Excise officers of Surat-II, visited the Appellants factory premises. They have seized the files containing sale invoices for the year 1998-99 to 2000-01 and two notebooks for July 2000 and August 2000 respectively from the premises of the Appellant Company. It has also recorded the statements of the employees and the Director of the Appellant Company. As a follow-up action, the Central Excise officers visited the offices of the several transporters and recorded the statements of the employees of the transporters and also recovered the lorry receipts from the premises of the transporters.
2. A Show Cause Notice dt.09.11.2001 was issued, proposing demanding Central Excise duty amounting to Rs.13,81,649.00 alongwith interest and to impose penalty for the period 1998-99 to 2000-01. It has also proposed to impose penalty on the Director of the Appellant Company (Appellant no.2) amongst others. The Adjudicating authority confirmed the demand of duty alongwith interest and imposed penalty on the Appellant amongst others. The Appellants filed appeals before Commissioner (Appeals), C.E. & C, Daman. By the Order-in-Appeal No.KU/411 to 414/DAMAN/2005, dt.13/14.12.2005, the Commissioner (Appeals) set aside the Adjudication order and remanded the case to the Adjudicating authority with direction to supply the relied upon documents and to give them opportunity of cross examination of the witnesses. In denovo Adjudication, the Adjudicating authority again confirmed the demand of duty of Rs.13,81,649.00 alongwith interest and imposed penalty of equal amount of duty on the Appellant Company. Penalty of Rs.50,000.00 was imposed on Shri Madanlal Jain, Director of the Appellant Company, amongst others. By the impugned order, the Commissioner (Appeals) upheld the Adjudication order and rejected the appeals filed by Appellants.
3. The learned Advocate on behalf of the Appellant submits that the entire demand was raised on the basis of the documents recovered from the premises of the transporter and the statements of the employees of transporter. In this context, the learned Advocate drew the attention of the Bench to the Annexure B to I of the Show Cause Notice. He submits that the Appellant requested to provide a copy of relied upon documents and cross examination of the employees of transporters. It is submitted that the notebooks were seized from the premises of the Appellant and no demand was raised on the basis of the said notebooks. It is further submitted that despite of the Order (Appeal) dt.14.12.2005 of the Commissioner (Appeals), the Adjudicating authority in denovo Adjudication, had not supplied the relied upon documents and also not given the opportunity of cross examination. By the impugned order, the Commissioner (Appeals) had also not considered their submissions. He submits that during summon proceeding, the Director of the Appellant Company was merely shown the statements of the employees of the transporter. He submits that none of the employees of the Appellant Company had admitted the clandestine removal of the goods. He further submits that none of the employees of the transporter had not given the details of the clandestine removal of the goods, insofar as the person involved of the Appellant Company. The letters dt.30.04.2001, 02.07.2001, 08.07.2001 of the Appellant Company would show that the statements were not voluntary. Further, by letter dt.13.09.2001, the Appellant requested to refund the deposit made during the investigation. The learned Advocate submitted the written submissions alongwith compilation of case laws and the documents. The learned Advocate also disputed the quantification of demand of duty.
4. On the other hand, the learned Authorised Representative for the Revenue reiterates the findings of the Commissioner (Appeals). He submits that the documents recovered from the premises of the transport company were approved by the employees of the Appellant Company in their statements. Further, the employees and the Director of the Appellant Company had seen the statement and therefore, there is no requirement of cross examination of the employees of the transport company. He submits that the Adjudicating authority had given detailed findings of clandestine removal of the goods in each year beyond the SSI exemption limit of Rs.50 lakhs.
5. After hearing both the sides and on perusal of the records, I find that the Central Excise officers visited the Appellants factory on 22.08.2000 and resumed the files containing invoices, Note Books and also recorded the statements of the employees and Directors of the Appellant Company. The Central Excise officers also visited several transport companies and recovered the L.Rs. and Dispatch Registers and recorded the statements of the employees of the transport companies. The Appellants deposited the amount of Rs.75,000.00 at the instance of the Central Excise officers. Subsequently, the Appellants filed refund claim of Rs.75,000.00. By letter dt.25.09.2001, the Assistant Commissioner of Central Excise, Div. Daman, informed the Appellants as under:-
Sub: Refund claim of Rs.75,000.00 filed by M/s Mukesh Appliances Pvt.Ltd., Dabhel-Daman Reg.
Please refer to your application dt.13.09.2001 on the above cited subject.
In this connection, it is to inform you that the matter is between you and HPIU-IV, Surat-II, therefore, it is requested to do contact with the Office of the Deputy Commissioner (Prev.), Central Excise & Customs, Surat-II and obtaining clarification that the matter relating to the said case has been cleared and they have no objection if the deposit of Rs.75,000.00 refunded. No Objection Certificate may be obtained from Dy.Commissioner (Prev.), and furnish alongwith the Refund claim, so that further action can be initiated.
Therefore, the application dt.13.09.2001 alongwith its enclosures are returned herewith for doing needful at your end.
6. Thereafter, a show cause notice dt.09.11.2001 was issued. It is revealed from the Annexure B to I of the Show Cause Notice, that the demand was raised on the basis of the L.Rs. recovered from the premises of the various transport companies. The Central Excise officers recorded the statements of the employees of the transport companies. The statements are mostly similarly worded. By the statement dt.12.09.2000, Shri Shabbir S. Shaikh, Manager of M/s Surat Ahmedabad Transport Pvt. Ltd, GIDC, Vapi, stated that he was shown their dispatch register, which was seized from their office in case of Sico Industrial Ltd, Vapi. He stated that these registers are of their Company and from the said dispatch registers, the Central Excise officers prepared statements in respect of the goods dispatched by M/s Mukesh Appliances Pvt. Ltd, Daman. Shri Manoj Kumar Sharma, Assistant Manager of M/s Prakash Roadlines Ltd, Daman, in his statement dt.12.10.2000, stated that he was shown the statement prepared by the Central Excise officers on the basis of their booking register which was produced by them on 12.10.2000, showing the details of Mixers, Grinders cleared by M/s Mukesh Appliances Pvt.Ltd, Daman to different consignees through their transports. It has also stated that the details like date, L/R No., name of the consignee, and packages mentioned in their booking registers are true and correct.
7. Shri Bam Bhola Babu Ram Tiwari, Manager of M/s Sachdeva Roadways Pvt. Ltd, in his statement dt.28.11.2000, stated that he was shown the statement prepared by the Central Excise officers on the basis of their booking registers, which was produced by them on 27.05.2000 showing the details of mixers/grinders cleared by M/s Mukesh Appliances Pvt.Ltd, Daman of the booking in the name of M/s Sakaria Appliances. It is further stated that that the name of M/s Sakaria Appliances has been shown as a consignor, has been prepared for the goods cleared by M/s Mukesh Appliances and for the same goods cleared by M/s Mukesh Appliances Pvt.Ltd and the consignor has been shown as M/s Sakaria Appliances in their booking register.
8. On perusal of the statements, it appears that the Central Excise officers prepared the statements of the clearance of the goods on the basis of dispatch registers and the L.Rs. recovered from the office of Transport Companies and recorded the statements of the employees of the transport companies. The Appellants requested the Adjudicating authority to supply the copy of documents recovered from the premises of transporters as referred in the annexures to the Show Cause Notice and the cross examination of the employees of transporters, which was rejected. The Commissioner (Appeals), by earlier order dt.14.12.2005, remanded the matter to the Adjudicating authority for denovo Adjudication order. The relevant portion of the said order, dt.14.12.2005 is reproduced below:-
It is seen from the impugned Order-in-Original that the clandestine removal of excisable goods and evasion of duty has been established on the basis of transporters depositions and their records recovered by the investigating officers. On perusal of the appellants defence reply dt.11.02.2002 filed to the show cause notice, it reveals that a demand for supply of relied upon documents and cross-examination of transporters whose statements have been recorded was asked for. However, these requests have not been considered by the Adjudicating authority before adjudicating the case. Further, it is also noticed that the Adjudicating authority, viz. Joint Commissioner, has not heard the appellants in person before deciding the case. The change in Adjudicating authority has also not been intimated to them in writing. Therefore, there is a denial of natural justice to the appellants to properly represent their case.
2. In view of the above facts, I hereby set aside the impugned Order-in-Original and remand back the case for fresh adjudication to the original Adjudicating authority with directions to provide all relied upon documents to the appellants and to give them opportunity to cross-examine the persons whose statements have been relied upon in the case. The appellants are also hereby directed to co-operate with the Adjudicating authority in early adjudication of the case in fresh adjudication. This action is supported by the Hon'ble Gujarat High Courts decision in the case of Medico Labs Vs CCE, Ahmedabad 2004 (173) ELT 117.
9. I find that the Adjudicating authority, in denovo adjudication, had not given any findings on supply of the relied upon documents and cross examination of the witness. Revenue neither challenged the order of the Commissioner (Appeals) before the Tribunal nor complied with the direction of Commissioner (Appeals). The Adjudicating authority is duty bound to comply with the direction of Commissioner (Appeals). It is seen from the impugned order of the Commissioner (Appeals) that the Appellants stated before the Commissioner (Appeals) that whole demand is based on the registers of the transporter which was not provided to the Appellant, and also they could not have been granted opportunity of cross examination. The Commissioner (Appeals) observed that the officers prepared the details of clearance on the basis of records (L.R. book, booking register, dispatch register), produced by the transporter. Even though the Commissioner (Appeals) had not provided the copy of the documents and the cross examination of the employees of the transporter. The Commissioner (Appeals) proceeded on the basis of the statement of Shri Ramesh Chandra Paliwal, Storekeeper of the Appellant Company recorded on the different dates, wherein he admitted the fact that he was attending the work of maintaining notebook of finished goods to be dispatched from the factory and stock remaining balance. Shri Madanlal Jain, Director of the Appellant Company (Appellant No.2) had also agreed with the statement of Shri Ramesh Chandra Paliwal. It is significant to note that the demand was not raised on the basis of the notebook recovered from the factory premises of the Appellant Company. Thus, the findings of the Commissioner (Appeals) are not sustainable.
10. I find that the documents were recovered from the transporters premises and the statements of the transporters were recorded in 2000. The Commissioner (Appeals), by order dt.14.12.2005, directed the Adjudicating authority to provide the documents which was not complied with. On the other hand, by the impugned order, the Commissioner (Appeals) proceeded on the basis of the statements of the employees of the Appellant Company in respect of seizure of notebooks, which is not the basis of the demand. It is clearly evident from the annexures to the Show Cause Notice that the demand was raised on the basis of the documents recovered from the various transport companies, copies were not provided to the Appellant Company. In my considered view, denying the opportunity of cross examination of the witnesses whose statements were relied upon by the Adjudicating authority, and without supplying the copy of the documents recovered from the premises of the third party, the basis of the impugned order is a serious lapse, which makes the order nullity, inasmuch as it amounted to violation of principles of natural justice. It is noted that the Appellants are adversely affected by the statements of the employees of the Transport Companies and the documents recovered from the transport companies and they are not allowed to cross examination of the witnesses and to examine the documents on the basis which the demand was raised. The contention of the learned Authorised Representative is that it is not necessary for cross examination, as the statements were shown to the Director of the Appellant. The submission of the learned Authorised Representative cannot be accepted. In a recent decision, the Honble Supreme Court, in the case of Andaman Timber Industries Vs CCE Kolkata-II 2015-TIOL-255-SC-CX set aside the order and allowed the appeal of the Assessee. It has been observed that the Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the Appellants themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the Appellant wanted to cross-examine those dealers and what extraction the Appellant wanted from them. The relevant portion of the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) is reproduced below:-
7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No.2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions.
8. In view of the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice.
9. We, thus, set aside the impugned order as passed by the Tribunal and allow the appeal.
12. Another aspect of the case is that the learned Authorised Representative submitted that the Director of the Appellant Company was shown and accepted the statements of the employees of the transport companies. The learned Advocate countered the submission of learned Authorised Representative and drew the attention of the Bench to the correspondences to substantiate that the Appellant had not accepted the clandestine removal of the goods and filed refund claim of deposit made at the instance of the officers. This is supported by the letter dt.25.09.2001 of the Assistant Commissioner of Central Excise, as referred above. It is seen that the Central Excise officers visited the Appellants factory on 22.08.2000, no storage/excess quantity of finished goods was found. They have also seized several records, no evidence to indicate clandestine removal of goods. The Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Vs Saakeen Alloys Pvt.Ltd 2014 (308) ELT 655 (Guj.) observed that confessional statement solely in the absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements. The Tribunal in the case of Arya Fibres Pvt.Ltd Vs Commissioner of Central Excise, Ahmedabad-II 2014 (311) ELT 529 (Tri-Ahmd) held that in the case of clandestine manufacture and removal of goods, reliance on private records seized from buyers premises not to be the sole basis for demand especially when corroborative evidence like purchase of extra raw material, actual removal of clandestine goods, receipt of sale proceeds, etc. not produced.
13. In the present case, despite the order of the Commissioner (Appeals) in 2005, the Adjudicating authority had not supplied the relied upon document as recovered from the premises of the third party and also denied the opportunity of cross examination. By the impugned order, Commissioner (Appeals) proceeded on the basis of the statements of the employees of the Appellant, who was maintaining Note Book. But, the said Note Book is not the basis of demand of duty. So, there is no material on record, on the basis of which, it could justify the clandestine removal of goods. So, the demand of duty alongwith interest and imposition of penalty cannot be sustained.
14. In view of the above discussion, the impugned order is set aside. The appeals filed by the Appellants are allowed.
(Pronounced in Court on 18.11.2015) (P.K. Das) Member (Judicial) cbb 9