Custom, Excise & Service Tax Tribunal
Cce, Jaipur vs 4. Shri Dharam Chand Jain on 13 January, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
COURT NO. III
Excise Appeal No. 1568-1571/2006-EX[SM]
[Arising out of Order-In-Appeal No. 32-35(MPM)CE/JPR-l/2006 dated 14.02.2006 passed by CCE, Jaipur]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
CCE, Jaipur Appellant
Vs.
M/s. Welcure Drugs & Pharmaceuticals Ltd.
Bhiwadi (Rajasthan)
2. Shri Sandeep Jain,
3. Shri Sanjeev Jain,
4. Shri Dharam Chand Jain Respondent
Coram: Honble Ms. Archana Wadhwa, Judicial Member Appearance:
Shri B.B. Sharma, DR for the Appellants Shri Pradeep Jain, Advocate for the Respondent Date of Hearing: 13.01.2014 FINAL ORDER NO._50071-50074 /2014 Per Ms. Archana Wadhwa:
Being aggrieved with the order passed by Commissioner (Appeals), revenue has filed the present appeal. I have heard Shri B.B. Sharma, learned AR appearing for the revenue, and Shri R. Krishnan appearing for the respondent.
2. As per facts on record the respondent M/s. Welcure Drugs & Pharmaceuticals Ltd. are engaged in the manufacture of Pharmaceuticals formulations. Appellants factory as also sales offices cum godowns and residential premises of their director/authorized representative were put to search on 31.02.2000 and various incriminating document were recovered. The Revenue also obtained photocopy of the invoices supplied by an unknown informer. In all these invoices consignee was shown as the office of the manufacturing unit. The said photocopies of the invoices were having the same serial number of the regular/genuine invoices but the name of the consignee, description, quantity and the value of the goods shown in the photocopy of the invoices were different from the details shown in the regular invoices.
3. Statement of Sh. Dharmendra Singh, authorized representative was recorded on 19.04.2000 wherein he deposed that the signature on the photocopies of the invoices appeared to be similar to his signatures but the same were actually not his signature. The analysis report of the said invoices showed that writing and signature shows significant similarities.
4. Further, certain photocopies of Challans were also recovered from the residence of the respondent and it was found that the invoices were issued in respect of the same, relatable to 20%, 40%, 50% and 100% of the quantity mentioned therein. Shri K.K. Jain, person responsible for purchase and sales, in his statement, deposed that these Challans are order recording forms whereas the goods are being dispatched as per the availability and financial position of the customer. The other three respondents also confirmed the above views in their statements recorded during investigations.
5. On the above basis i.e. photocopies of invoices received from the informer and the order recording forms proceedings were initiated against the appellants for confirmation of demand of duty of Rs. 15,52,116/- and Rs. 8,44,347/-. The said show cause notice resulted in passing of an order by the original adjudicating authority confirming the total proposed demand of Central Excise duty of Rs. 23,96,463/- and imposition of identical penalty under Section 11AC on the manufacturing unit. In addition penalty of Rs. 5,00,000/- each was imposed on the other three respondents.
5. On appeal against the above order, Commissioner (Appeals) held in favour of the respondent by observing that allegations of clandestine removal cannot be upheld on the basis of the photocopies of the invoices supplied by a casual informer. No original or duplicate were supplied by the informer nor any original or duplicate or the purported photocopies of the invoices were found in the factory premises or in the residential premises or office at Delhi. There is no admission in any of the statement recorded from the directors/employees of the company. As such by referring to various decision of the Tribunal as also of various High Courts, he held in favour of the assessee. For better appreciation I reproduce the relevant para of the Commissioner (Appeals):-
5. I also find that out of 52 invoices received from the casual informer, 2 photo copy invoices were sent to the Forensic Science Laboratory, Rajasthan and test results obtained by the Central Excise Officers also reveals that there are significant similarities between the material photo copies and the genuine invoices and qualified their report by observing provided that the disputed photo writing and signatures marked as Q-1 to Q-3 are true and faithful reproduction of the originals. Only 2 invoices were sent for examination of the writing / hand writing to the FSL whereas 52 invoices in all were involved. I agree with the contention of the Appellants that based upon the observations in relation to only two invoices, there can not be any presumption that other 50 invoices also could be brought under the scope of the FSL report. It is necessary to compare the hand writing / signature in all the 52 invoices because comparison of the hand writing or the signature is required to be done with reference to each and every document and not a representative sample as there is no assumption that the hand writing / signature in the other 50 photo copies of the invoices are the same as in the 2 invoices which were alone sent to FSL for examination. I also agree that the corresponding genuine invoices issued from the factory have not in any way been disputed in regard to their genuineness. There are allegations that duty to the extent of Rs. 8,44,347/- has been evaded, then goods worth more than Rs. 52.77 lakhs should have been cleared without payment of duty. I find that such a huge Clandestine clearance can not take place without corresponding huge and significant variance and discrepancy in the stock of raw materials, finished goods in the factory. The visiting officers examined the finished goods stock as well as stocks of raw materials and found neither excess nor shortage in any manner. Moreover in all cases of Clandestine removal stock verification is invariably done and excesses and shortages are noticed. It is an invariably done and excesses and shortages are noticed. It is an exiomatic truth that an assessee can not manipulate clearances worth more than Rs. 0.50 crores of goods without significant discrepancy and variation in the stocks of raw materials/ finished goods, sources of funds, proof of sale realization, excess consumption of electricity etc., thus I hold that the photo copies of invoices given by the informer are bogus, fabricated and false appear to be fabricated by process of cutting and pasting only.
6. I do not find, any infirmity in the above views of Commissioner (Appeals). Admittedly, allegations of clandestine removal are serious allegation and cannot be upheld on the basis of photocopies of some of the invoices, supplied by an in un-identified informer. There is no disclosure on record to show as to from where the Revenue received the said photocopies of the invoices. Further, investigation conducted by the Department did not result in any evidence to reflect upon the clandestine manufacture and clearance of the final product. The various case lows discussed by the Commissioner (Appeals) in his impugned orders are in favour of the respondents. As such, I reject the Revenue appeals on the above ground.
7. As regards clandestine removal of goods based on the order Booking Forms/Challan, the Commissioner (Appeals) held as under:-
6. As regards Clandestine removal of goods based on the order Booking Forms/Challans/Bills-Duty involved Rs 15,53,116/-. I find that the alleged Bills/Challans are the order recording Forms of the Appellants and all are internal documents, prepared at Delhi Office as none of the customers as shown in the bills/challans: have ever admitted to having received the quantity of materials indicated in the respective bills/ challans: even the department has not summoned any of those customers and recorded any statement from them in order to establish the point that those quantities were infact supplied to them. Mere allegation is not proof: in the absence of customers statements to support the case, there can not be an adverse inference of clandestine removal of goods. Even where customers had given statements, the Honble Tribunal has in case of M/s Paras Laminates Pvt. Ltd. Vs. CCE, Jaipur reported in 2005 (180) ELT 73(Tri.) held that the department has to produce corroborative evidence of procurement of raw material in excess, source of funds, excess and extraordinary consumption of electricity, excess raw material and finished goods stock etc. In the above case, there were statements of dealers they had not supplied the goods and still the Tribunal held that evidence was not sufficient. Therefore, the allegation that those bill/challans representing certain quantities were infact cleared from the factory stands miserably unsubstaintiated and uncorroborated. Customers premises were also searched by the department but nothing incriminating was found. If this is to be accepted, these customers premises must have yielded discrepancies either in the form of challans/ documents issued by the Appellants or discrepancies in actual stock etc. Nothing of that type/nature was fund: therefore, the alleged bills/ challans did not in any way represent sale of goods to the respective customers either from the factory or from the branch office. They were only order recording forms for internal use. Therefore, these challans can not form basis for the purpose of alleged clandestine removal of goods.
In view of above facts and following the ratio of case laws as above I hold that it is settled law that based upon private records, there can not be any inference of Clandestine removal of goods unless there is corroborative evidence in the form of excess raw material consumption, no recovery of cash/cheques, unaccounted source of purchase of raw materials, source of funds, excess consumption of electricity, excess or shortage of raw material or finished goods in the factory, evidence of transportation of goods in forms of transport vouchers, Lorry Receipts or statement of transporters affirmatively to the effect that they had transported the quantities of goods represented by those order recording forms and the like. Appellants plea bears a force, that the said challans are nothing but these are, Order Recording form, used for monitoring of dispatches at Sales office. These can not be used for covering the consignment. I find that, if it is a case of clandestine removal, the department has failed to bring on record the evidence regarding receipt of excess raw material, use of excess electricity, variation in stock at factory/ sales office or dealers office and flow back of funds. I find that the said challans or the ledger are merely slips or statements recovered from the residence of one of the Director of the Appellant, but these are uncorroborated and un cross examined. Therefore, any demand based only on the basis of these documents is not sustainable in law, unless other corroborative evidences are available on record. I find that the department has failed to bring on record, the statements of the customers to corroborate such clearances. I also find that the ratio of the above case laws is squarely applicable in the instant case. Accordingly, following the ratio of the above case laws, I hold that the clandestine removal is a serious charge against the Appellants which is required to be discharged by the Adjudicating Authority by producing of sufficient and tangible evidences and not on the basis of preponderance of probabilities. Accordingly, I hold that department has failed to prove that the impugned goods were manufactured in the factory of the Appellants and were removed clandestinely from the factory of the Appellants. Therefore, the charges of clandestine removal are not sustainable and thus the impugned order is not maintainable in law. Accordingly, I hold that the demand to the tune of Rs. 15,52,116/- is also not sustainable and I set aside the same.
8. It is seen from above that the Revenues only reliance is on the order forms recovered from the residential premises. All the respondents have clarified in their statement that such order are only for Booking of the goods and do not relate to clearance of the goods mentioned therein. The clearance of the final product is only about percentage of such quantities shown in order Booking Forms which is dependent upon various factors. In the absence of any evidence to support revenue allegation, I am of the view that the appellant authority has correctly set aside the demand. Accordingly, Revenue appeal is rejected on the above ground also.
9. As a result, all the four appeals filed by the revenue are rejected.
(Pronounce in the open Court) (Archana Wadhwa) Member (Judicial) Jyoti* ??
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