Customs, Excise and Gold Tribunal - Bangalore
Raam Tyres Ltd. vs Commissioner Of Central Excise on 19 May, 2005
Equivalent citations: 2005(188)ELT408(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. This is an appeal against Adjudication Order No. 54/2000, dated 28-11-2000 passed by the Commissioner of Central Excise, Visakhapatnam.
2. On scrutiny of the financial statements and other records, it was revealed that production figures shown in the Balance Sheets were not tallying with the Central Excise records. In fact, there was a difference of 22,017 number of tyres. On the basis of the investigation, Revenue came to the conclusion that the appellants had removed the above mentioned tyres without accounting them in the Central Excise records and without payment of duty. Statements of the Managing Director, Manager (Finance) were taken. The Adjudicating authority came to the conclusion that the tyres had been removed without payment of duty. He has confirmed a duty amount of Rs. 20,29,580/- under Rule 9(2) of C.E. Rules, 1944 read with proviso to Section 11A(1) of Central Excise Act, 1944. He has also imposed a mandatory penalty under Section 11AC of the Central Excise Act. Further penalty of Rs. 2 lakhs under Rule 173Q has been imposed. Interest also has been demanded. The appellants have strongly challenged the impugned order.
3. Shri Maruti, the learned Advocate appeared for the appellant and Shri R.V. Ramakrishnappa, the learned JDR appeared for Revenue.
4. The learned Advocate urged that apart from the discrepancy between the Balance Sheet and the Central Excise records, there is no other corroborative evidence for any clandestine removal. Higher figures were shown in the Balance Sheet only for getting financial support from the banks. Moreover, the appellant unit is a defunct unit. The Manager (Finance), in his statement, has stated that the company had a practice of issuing commercial invoices much before the sales and all the sales figures as recorded in the commercial invoices were recorded in Annual Balance Sheets. However, the figures supplied to the Central Excise Department were based on actual clearances and as such there is no short payment of Central Excise Duty.
5. The learned Counsel relied on the following case laws :
(i) Utkal Galvanizer Ltd. v. CCE - (Tri. - Kolkata) In the above case, it has been held that burden of proving clandestine clearance lies upon Revenue to be discharged by production of sufficient and affirmative evidence.
(ii) In Suvarna Polymers Pvt. Ltd. v. CCE, Hyderabad - 2000 (120) E.L.T. 148 (Tribunal), it has been held that demands raised solely on the basis of the statement furnished by the assessee to the banks are not sustainable.
(iii) In the case of CCE, Patna v. Universal Polyethylene Industries - 2001 (130) E.L.T. 228 (Tri. - Kolkata), it has been held that the standard of proof in case of clandestine removal has to be on the basis of absolute proof and not on the basis of preponderence of probabilities. Inflated figures in Balance Sheet shown for the purpose of loan cannot be the basis of demand of CE Duty.
6. The learned JDR referred to the adjudication order and said that the Managing Director has accepted that the figures shown in the Balance Sheet are correct. He also relied on the following case laws :
(i) Ram Gelkem Industries Pvt. Ltd. v. CCE, Madura -1997 (89) E.L.T. 178 (Tribunal)
(ii) Usha Rectifier Corporation (1) Ltd. v. CCE, New Delhi - 2001 (130) E.L.T. 485 (Tri. - Del.).
(iii) CCE, Chandigarh v. Pushpanjali Steel Alloys P. Ltd. - (Tri. - Del.).
7. We have considered the records of the case carefully. Even though there is discrepancy between the Balance Sheet and Central Excise records, the Manager .(Finance) has stated the reasons for the same. According to him, the Company used to issue commercial invoices much before the sale. He has stated that the Central Excise figures represent the correct production and removal. However, the Commissioner has not accepted his explanation. No doubt, the irregular maintenance of records raises our suspicions. But it is difficult to sustain a case of clandestine removal merely on the basis of discrepancy between Balance Sheet and Central Excise records. Revenue should have conducted more investigations to unearth corroborative evidence. When there is an allegation of removal of nearly 22,000 number of tyres clandestinely, Revenue should have found out at least a few cases of the purchasers of the tyres. This has not been done. The appellant unit also appears to be a sick unit. The case laws cited by the learned Advocate are all in appellants' favour. In these circumstances, we set aside the OIO and allow the appeal.
(Pronounced in open Court on 19-5-2005)