Customs, Excise and Gold Tribunal - Tamil Nadu
Tgl Poshak Corporation And ... vs Commissioner Of Central Excise, ... on 6 September, 2001
ORDER
Shri S.L. Peeran
1. The appeal of the assessee and the Revenue arise from a common order-in-original No. 64/94 dated 26.12.94. The Commissioner of Central Excise, Hyderabad has confirmed duty demand of RS. 68,35,193/- under Section 11A read with Rule 9(2) of C.E. Rules, 1944 and imposed a penalty of Rs. 50,000/- under Rule 173Q of C.E. Rules. The findings recorded in so far as these demands are concerned are reproduced herein below:-
I have carefully gone through the case proceedings. I final that the show cause notice proposes to demand duty from M/s. T.G.I. Poshak Corporation as detailed below.
i) An amount of Rs. 2,08,284/- being the duty alleged to have been not paid on 162.255 MT of vanaspati cleared form the factory without payment of Central Excise duty. This amount is arrive at based on certain details contained in the exercise note recovered from the factory at the time of search.
ii) An amount of rs. 68,35,193/- being the duty alleged to have been not paid on 3597.470 MTs cleared from the factory without payment of Central Excise duty. This amount is arrived at basing on the following documents:
i) Confidential file.
ii) Selective operational data returns submitted to Banks.
iii) Balance Sheets for 1990-91 and 1991-92.
iv) Consortium Meeting file.
With reference to the first demand mentioned above assessee has claimed that the duty has been demanded based on the figures given in the exercise note book and that the figure given there in are only the orders received for execution and not the (SIC) executed. This argument of the assessee cannot be accepted. The data given in the note book clearly indicates the details (SIC) such as the number of tins, price fixed and in such cases details of the truck by which the goods are sent. Inspite of having all these details x the assessee is trying to take shelter n the ground that the department has not produced the Central Excise gate pass details etc., When goods are cleared under Central Excise gate pass there will not be a need for demanding duty and duty is demanded precisely for the reason that goods are cleared without payment of duty and Central Excise gate passed. Therefore, the allegations made in the show cause notice with reference to the first charge merits to be confirmed.
With reference to the second demand the party has interalia stated in his submissions at various stage as follows:
i) That the (SIC) relied upon in the show cause notice for demanding the duty are prepared for submitting them to banks.
ii) The power consumption figures would reconcile with the RG-1 production figures if average power required for production of 1 Tin of Vanaspati is taken into consideration.
iii) They have not produced any power using the generator.
iv) No further evidence is produced regarding production and clearance.
v) Documents filed to bank cannot be relied upon for demanding Central Excise duty. They have relied upon certain case laws also.
2. Ld. Counsel Shri K.R. Natarajan submits that demands cannot be confirmed based on recovery of exercise note books and certain balance sheets maintained by the party and in the absence of an corroborative evidence. He submits that large number of judgments were cited on this very issue to show that demands cannot be confirmed on the basis of seized, exercise documents maintained by the workers. However, the Commissioner has not recorded any finding nor he has discussed the judgments, although all the statements and the judgments cited by them have been noted in his order. Ld. Counsel relies on the following judgments to support his plea that demands cannot be confirmed. The citations furnished in the tabulated form by the Counsel is reproduced below:-
1. 2001 (130) E.L.T. 228 (T) Clandestine removal and Commissioner of CE., Patna clearance is a serious charge Vs against manufacturer, which Universal Polyethylene Industries is required to be discharged by the Revenue by production of sufficient and tangible evidence.
para 3
2. 2001 (130) E.L.T. 344 (T) Chennai Demand-Clandestine M.T.K. GURUSAMY removal-Private note book Vs. maintained by part time Commissioner of CE, Madurai employee containing unauthenticated entries.
para 6
3. 2001 (130) E.L.T. 719 (T) Kolkata Clandestine removal-
BRIMS PRODUCTS Evidence-Standard of-No
VS positive evidence to
COMMR. OF CE, PATNA establish clandestine
removal adduced by
departmental-Quantity
alleged removal calculated
on basis of transport
company's records based on
presumptions and
assumptions not
sustainable (Para3)
1 GURPREE RUBBER INDUSTRIES CLANDESTINE
1996 (63) ECR 68 (T) PRODUCTION AND
REMOVAL NOT
PROVED BY ANY
EVIDENCE SUCH AS
INSTALLED CAPACITY
PURCHASE &
UTILISATION OF RAW
MATERIALS
LABOUR EMPLOYED,
POWER CONSUMED,
Etc. DEMAND SET
ASIDE.
2. AMBIGA METAL WORKS EVASION OF DUTY
ECR VOL 39 PARA 549 MUST BE BASED ON
SOLID AND
ACCEPTABLE
EVIDENCE
3. KISHAND & CO. OIL INDUSTRIES LTD., CLANDESTINE
1996 VOL 82 ELT REMOVAL OF V.P.
CANNOT BE BASED ON
I.T. ASSESSMENT
ORDER
4. PUNJAB OIL & SILICATE MILLS ALLOTMENT OF COAL,
993 (65) ELT 268 (T) AFFIDAVITS WERE
FILED BEFORE DEPT OF
INDUSTRIES-CANNOT
BE RELIED WITHOUT
ANY CORROBORATIVE
EVIDENCE-
CLANDESTINE
REMOVAL TO
ESTABLISHED
5. ASHWIN VANASPATI INDUSTRIES CLANDESTINE
1992 (50) ELT 175 (T) REMOVAL ALLEGED
ON THE BASIC OF
PRIVATE REQUIRES
MAINTAINED BY
SUPERVISORS.
6. D.S. SCREEN PVT. LTD. IN THE ABSENCE OF
1990 (50) ELT 475 ANY CORROBORATIVE
OF CIRCUMSTANTIAL
EVIDENCE
FRAUDULENT
REMOVAL NOT
INFERABLE.
7. V.K. THAMPY INVESTIGATION NOT
1994 (69) ELT 300 DONE TO ASCERTAIN
WHETHER THE
PARAMETERS LIKE
ELECTRICITY
CONSUMED-RAW
MATERIALS USED.
8. K. HARINATH GUPTA CLANDESTINE
94 (71) ELT 980 REMOVAL BURDEN ON
DEPT-SOURCES OF
RAW MATERIALS NOT
CONTACTED BUYERS
NOT CONTACTED-
RECEIPT OF SALE
PROCEEDS NOT
ESTABLISHED
9. ICY COLD CLANDESTINE
94 (69) ELT 337 REMOVAL A POSITIVE
ACT PROBABLE ON
MERE ASSUMPTIONS
AND PREASSUMPTIONS.
10. T.M. INDUSTRIES RECORDS MAINTAINED
93 (68) ELT 807 FOR ARRANGING BANK
FINANCE BY
THEMSELVES NOT
RELIABLE.
11. RHINO RUBBER (P) LTD. PARTY'S RECORDS NOT
1996 (85) ELT 260 RELIABLE WHEN
THERE IS NO DIRECT
LINK OF
TRANSACTIONS
ESTABLISHED OTHER
PARAMETERS LIKE
ELECTRICITY
CONSUMPTION TO BE
CONSIDERED.
12. MADHU FOOD PRODUCTS NO EVIDENCE OF
1995 (76) ELT 197. ACTUAL REMOVAL
FROM FACTORY
WITHOUT PAYMENT OF
DUTY.
13. RISHAB REFRACTORIES AFFIDAVITS FIELD TO
1996 (87) ELT 93 OTHER DEPARTMENTS
FOR GETTING
BENEFITS NOT
RELIABLE TO PROVE
CLANDESTINE
REMOVALS.
14. LML LTD. CLANDESTINE
1997 (94) ELT 519 REMOVAL CANNOT BE
PROVED BY OFFICE
MEMO-NOT A DIRECT
EVIDENCE NITS
EVIDENTIARY VALUE
EXTREMELY LIMITED.
15. KASHMIR VANASPATHI NOTE BOOK
1989(39) ELT 655 MAINTAINED BY
LABOURERS NOT A
DEPENDABLE RECORD
IN THE ABSENCE OF
OTHER EVIDENCE
SUCH AS
CONSUMPTION OF RAW
MATERIALS.
16. SWARNA POLYMERS (P) LTD. INFLATED FIGURES
2000 (92) ECR 325 SUBMITTED TO BANK
ARE NOT SUFFICIENT
GROUNDS TO ALLEGE
CLANDESTINE
PRODUCTION &
REMOVAL SHOULD BE
CORRELATED-RAW
MATERIALS & POWER
CONSUMED.
1. RLT 40 Page. 1077 ALLEGATION BASED
COMMISSIONER OF CE., ON OCTROI RECORDS
VS. SHOWING MOVEMENT
DASHMESH CASTING (P) LTD., Para 4 OF RESPONDENTS
TRUCK. NO OTHER
EVIDENCE BROUGHT
ON RECORD
ALLEGATION NOT
ESTABLISHED.
2. RLT 41 P. 348 EVIDENCE NOTE
CCE., MEERUT BOOK SHOWING
VS PRODUCTION OF
RAMAN ISPAT STEEL INGOTS
PARAS 7,8 & 9 RECEIPT AND
CONSUMPTION OF
RAW
MATERIALS/SCRAP NO
INVESTIGATION DONE
WITH PERSONS WHO
MADE THE ENTRIES.
NO INVESTIGATION
WITH TRADERS WHO
RETURNED THE SCRAP
- CLANDESTINE
REMOVAL NOT
ESTABLISHED.
3. RLT 36 page211 PRIVATE REGISTER
KIRTHIBAI MAGANBAI PATEL NOT SUFFICIENT TO
VS PROVE CLANDESTINE
CCE., NAGPUR, PARA 4 REMOVAL.
4. ELT 120 P. 505 (T) DIFFERENCE IN RG 1
K.J. DIESELS (P) LTD., CLOSING STOCK AND
VS MONTHLY
CCE, KANPUR STATEMENT ALONE IS
PARA 3 NOTE SUFFICIENT TO A
DUTY DEMAND ON
ALLEGED
CLANDESTINE
REMOVAL IN THE
ABSENCE OF ANY
CORROBORATING
EVIDENCE.
5. 1993 (34) RLT 662 (CEGAT) CIRCUMSTANTIAL
GRAUER & WEIL (India) ltd. EVIDENCE NOT
VS SUFFICIENT TO
CCE, MEERUT. ESTABLISH
CLANDESTINE
REMOVAL-MORE
POSITIVE EVIDENCE
IS NECESSARY TO
SUSTAIN CHARGE.
6. RLT 35 p. 162 (T) NO COGENT REASONS
ARTI STEELS LTD. GIVEN FOR FIGURES
VS. OF PRODUCT-
CCE., CHANDIGARH CORRELATION
BETWEEN VARIOUS
OTHER DOCUMENTS-
GAP IN POWER
CONSUMPTION-NO
SUFFICIENT
MATERIALS FOR
ESTABLISHING
CLANDESTINE
REMOVAL.
7. RLT 35 p.654(T) ALL OTHER
PEPSICO INDIA HOLDING PARAMETERS AS LAID
VS DOWN IN RULE 173E
CCE., MEERUT SHOULD ALSO HAVE
BEEN TAKEN INTO
CONSIDERATION.
1997 (87) ELT 387(T) Modvat-Duplicate coy of
GEEP INDUSTRIAL SYNDICATE LTD., invoice lost in transit-
VS. Extent of evidence
COLLECTOR OF C.EX., ALLAHABAD permission under Rule
57G(2A) of the Central
Excise Rules, 1944 to avail
Modvat Credit on the
strength of original invoice
sought not rejectable
declaration of the
transporter and the driver as
also an F.I.R. of such
Police Station produced.
2. 1998 (97) E.L.T. 327(T) Modvat-Duty paying
SHIVA STAMINGS PVT. LTD. documents when received
VS. subsequently-Credit taken
CCE., JAIPUR on the strength of bills on
the imported inputs and
requisite certificate from the
concerned Superintendent
of Central Excise produced
subsequently.
3. 1999 (114) E.L.T. 51(T) Modvat-Loss of duplicate
BHARAT ROLL INDUSTRIES (P) LTD., copy of invoice in the
vs. factory-Modvat not
CC., CALCUTTA-II deniable on the ground that
the duplicate copy of
invoice was lost in the
factory and not during
transit-Rule 57GG of CE.,
Rules 1944.
4. 1999 (32) RLT 209 (CEGAT) Modvat credit - Rule 57G
HARVELL'S ELECTRONICS (P) LTD., of C.Ex. - Invoice-
VS. Transporter's copy
CCE., MEERUT misplaced-no evidence of
its being lost in transit
produced - credit on the
basis of original copy not
admissible.
5. 1999 (114) ELT 253 (t) Modvat- Duty paying
KLCKNER SUPREME PENTAPLOST documents on credit not to
LTD., be denied merely for
VS. presenting re-constructed
CCE., INDORE copy of Bill of Entry when
receipt of inputs in
appellant's factory and
utilization therein
manufacture of final
products not disputed.
6. 1993 (68) Reference to High court
E.L.T. 446(T) Modvat-Duty paying
C.CE, and CUSTOMS documents can be received
VS subsequently Non.
3. Ld. Counsel submits that the appeal of revenue is required to be dismissed for the simple reason that revenue is seeking confirmation of the portion of the order by which the Commissioner has dropped the proceedings for lack of evidence. The relevant portion of the order dropping the proceedings are produced herein below:-
"I have carefully gone through the entire records of the case. The department's only strong point on which demand is made is that there are certain records/returns submitted to the banks, which indicate a higher production/clearances figures. On careful examination, I find that the department has not investigated the following aspects:
(i) To find out further above the production details.
(ii) To find out further whether raw materials have been purchased as reflected in the relied upon documents, or not
(iii) To find out the despatch particulars from the lorry booking offices/regular transporters.
(iv) To find out about the realisation of sale proceeds.
(v) To find out about the power generation from generator.
(vi) To find out finished product receipt details from regular dealers.
Gist of same of the case laws relied upon is reproduced below. CEGAT in the case of Punjab Oil and Silicates Mills Vs Collector of Central Excise has held that statements given to Department of Industries cannot be relied upon to demand differential duty without corroborative evidence. CEGAT i the case of V.K. Thappy Vs Collector of C.Ex. has held that duty cannot be demanded where other parameters such as excess power consumption, raw material consumption etc. are not proved.
In the absence of above investigations, further corroborative evidence, and the case laws referred to I find it difficult and would be unfair to demand duty from the assessee merely based on the figures given to the banks, without corroborative evidence. Though there appears to be a suspicion regarding the clandestine clearance of the goods, in the absence of detailed investigations and corroborative evidence the benefit of doubt has to be extended to the party."
4. Ld. Counsel submits that the above judgments would clearly apply to the above extracted finding as the department has not produced any evidence to support the case of clearances.
5. Heard Ld. SDR Shri G.S. Menon reiterates the departmental view. He contends that there are statements and several registers maintained by the party which clearly indicated that they had manufactured and cleared the goods. He refers to the evidence which was culled out by the investigating agencies which clearly showed the manufacture of 'vanaspati' during the period in question. He submits that the Commissioner has not given details on the evidence and therefore matter has to be readjudicated by taking into consideration the evidence which is already noted by him in his order. He also refers to the grounds of appeal which reproduced below:-
A) The demand for Rs. 68,35,193/- was towards the duty on the clearance of vanaspathi without payment of duty made during the period of 1990-91 & 1991-92 (upto 31-1-92). The demand was based on the excess clearances shown by a set of private records when compared with the clearances shown by RG-I register. The set of private records are:-
1) Confidential file which contain production & clearance particulars of vanaspati and other products during the period 1990-91 and 1991-92 as shown to the bank and as show in the Central Excise records.
2) Select operational Data Returns which are the monthly production and clearance details filed with bank. These figures tallied with those found in the confidential file.
3) Consortium Meeting file which is a correspondence file with bank for working capital and contained the production and clearance figures.
4) Balance sheet for the years 1990-91 and 1991-92 those figures tallied with those shown in confidential file and select data returns submitted.
B) It is evidence from there sets of private records and balance sheets for the year 1990-91 and 1991-92 that the figures in each of the private records had tallied with each of the other records. Same production and clearance figure being present in 4 sets of records gives the strength of corroborative evidence. These records clearly show that more clearances were effected than what was shown in the statutory record i.e. RG-I register. Hence the veracity of private records need not be doubted and the figures taken from the private records appeal to be having strength of corroborative evidence and hence the demand of Rs. 63,35,193/- made on the basis of figures shown by private records requires to be confirmed. As this demand is dropped, the order appears to be not proper to this extent.
6. We have carefully considered the submissions and perused the impugned order. In so far as the assessee's appeal is concerned, we notice from the extracted portion of the Commissioner's order that Revenue is solely relying on the exercise note books mainly balance sheets. The Tribunal in large number of cases which have already been noted above in the tabulated list of citations furnished by the Counsel has held that unless there is clinching evidence on the nature of purchase of raw materials, use of electricity, sale, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some workers. The facts in the case of ASWIN VANASPATI INDUSTRIES would be identical to the facts herein as in that case also the allegation was with regard to removal of Vanaspati based on the inputs maintained. The tribunal went in great detail and have clearly laid down tat unless department produces evidence, which should be clinching on the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly apply to the facts of this case. Hence, following the ratio of the cited judgments, the assessee's appeal is allowed.
7. In so far as the Revenue's grievance on the Commissioner's dropping the proceedings is concerned, we notice from the extracted portion of the Commissioner's order that Commissioner has duly considered, the note books relied upon by the department that they are not in the nature of purchase and removal of goods which was only certain balance sheets and certain private registers which does not prove the case of the department with regard to purchase of raw material, manufacture of final goods and clandestine removals. There is no seizure of goods or statements from the purchaser of goods who have paid money and the amounts received by them appellants have also not recovered nor there is any proof that amount said to have been received, has flown back. Therefore, the dropping of proceedings is proper & legal (SIC) we do not find any merit in the revenue appeal and same is rejected.
(Pronounced & Dictated in Open Court)