Custom, Excise & Service Tax Tribunal
Bhawani Moulders Pvt.Ltd vs C.C.E., Raipur on 2 January, 2017
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH
Appeal No. E/2684, 2685 & 2686/2008-EX [DB]
[Arising out of the common Order-In-Original No. 126-129/2009 Dated 28.01.2009 passed by Com. of Central Excise, Raipur]
Bhawani Moulders Pvt.Ltd.,
Shri Vikas Agarwal,
Shri Vijay Kumar Agarwal Appellant
Vs.
C.C.E., Raipur Respondent
Appearance:
Sh. K.K. Anand, Ld. Advocate for the appellant Sh. R.K. Manjhi, Ld. AR for the respondent CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. Ashok K. Arya, Member (Technical) Date of Hearing. 02.12.2016 Date of decision. 02.01.2017 Final Order No. 50040-50042/2016 Per Ashok Jindal:
1. The appellants are in appeal against the impugned order where in demand of duty has been confirmed on the allegation of clandestine clearance of finished goods along with the interest and penalty is on all the appellants.
2. The brief facts of the case are that on 14.06.2003, a search was conducted in the premises of M/s. Super Steel Rolling Mills, Raipur who is one of the buyers of appellants wherein he has stated that they received non alloys goods from the appellant involving duty amounting to Rs. 1,20,425/-. Thereafter a search was conducted in the factory premises of the appellant on 25.07.2003 wherein some storage of finished goods 4.062 MT was found which involved the duty of Rs. 40,568/-. During the search one note book was found in the dickey of Hero Honda Motor cycle owned by Shri Sarat Kumar Das (the supervisory of labour contractor of the appellant, Shri Purna Ramdas ). The statement of Shri Sarat Kumar Das was also recorded who stated that the note book contains the details of loading and unloading of goods of the appellant. Thereafter, a statement of two transporters were recorded who stated that they were transporting 250-300 MT per month from the factory of the appellant to various customers. Statement of authorized signatory shri Sarat Kumar Das was also recorded who stated that Shri Purna Ramdas and Shri Saleem Khan are a supervisors and also stated these contractors do not maintain any records. He also stated that Shri Vikas Agarwal is supervisor of the production work and he is able to tell about the entries made in the note book and he was not aware of in such diaries maintained by Shri Sarat Kumar Das and also does not have any knowledge of any consignment to sent to M/s. Super Steel Rolling Mills. Statement of Shri Purna Ramdas was also recorded who stated that he is engaged in delivery of raw material and removing slay from ingots on contract basis and 15 labourers were employed in the factory of the appellant. Statement of Shri Saleem Khan was also recorded. Thereafter Shri Sarat Kumar Das retracted his statement by way of affidavit of 25.07.2003. Statement of Shri Sunil Agarwal authorized signatory was also recorded. After the investigation, a Show Cause Notice was issued to the appellants to demand duty on the ground of clandestine removal of MS Ingots from factory along with the interest and to impose penalty. The said Show Cause Notice was adjudicated and the demand of duty along with interest was confirmed and penalty was also imposed on all the appellants. Aggrieved from the said order, the appellants are before us.
3. The Ld. Advocate for the appellants submits that the whole case is based on the statement of Shri Sarat Kumar Das and the note book recovered from his custody. He submits that Shri Sarat Kumar Das has retracted his statement within 48 hour through a duly sworn affidavit before notary public. The said affidavit was on record and the veracity of truthfulness of the affidavit has not been tested by the adjudicating authority, therefore, the affidavit filed by Shri Sarat Kumar Das is having evidential value and the same cannot be brushed aside in the light of the decision of the Honble Apex Court in the case of Mehta Parikh Company reported in A/R 1956 SC 554 wherein it has been held that the deponents of affidavit is required to be called for cross examination with the reference to the statement made in the affidavit. In the absence of that the statement of Shri Sarat Kumar Das cannot relied upon. He further submitted that Shri Purna Ramdas, the contractor was not confronted with the said note book who has stated that only 15 labourers were working with the appellant and the fact clearly shows that the said note book did not pertain to the payment of wages relating to appellant No. 1 only. He further submitted that the note book contains the names of other two manufactures located in the same area apart from the appellant namely M/s. Bhiwani Metals and Bhiwani Casting which shows that the said note book did not contain exclusively entries pertain to the appellant. He further submitted that the transporters made the statement that they are transporting roughly 250-300 MT of MS Ingots per month but never said that in respect of consignments mentioned the truck numbers were appearing in the note book. He further submitted that no enquiries were made from the customers of the appellant except M/s. Super Steel Rolling Mills for whom these transporters have transported the goods. He further submitted that no statement of Production Manager or the Authorized Representative or Director was ever recorded therefore without confrontation of the note book, the demand is not sustainable. He further submitted that there were allegations in the Show Cause Notice that the appellant has received sponge iron and scrap during the said period but there were no efforts were made to ascertain the facts from whom the said goods were received and how the payments were made to the suppliers of these goods. He further submitted that it is alleged that as per the note book the appellant had cleared a quantity of 1943.044 MT of non-alloy steel on payment of duty. Infact, the appellant had cleared total quantity of 8959.975 MT of MS ingots during the said period. Therefore, the said note book cannot be relied upon to allege clandestine removal of goods. He further submitted that in the note book, it has been alleged that the appellant had received 2009.371 MT of sponge iron, the said quantity cannot manufactured 8959.975 MT of MS ingots. He further submitted that to manufacture the alleged clandestine quantity of MS ingots the appellant required at least 1,24,13,120 units of electricity during the relevant period but no such evidence is available for the use of such huge quantitys of electricity by the appellant. He further submitted that the department conducted pilot experiments in that factory twice to find out per unit consumption for 1 MT of MS ingots which were found to be in order, the said pattern of electricity consumption was not relied upon by the adjudicating authority. The weighbridge where the goods manufacture by the appellant were never examined to find out the clandestine removal of goods by the appellant. Therefore, in the absence of any corroborative positive evidence apart from the note book and the statement of Sarat Kumar Das, the charge of clandestine removal of goods is not sustainable. He also submits that the Ld. Commissioner has also relied upon several statements to render adverse findings without examining the makers of said statements under Section 9 (D) of Central Excise Act. Therefore, these statements are not admissible.
4. On the other hand Ld. AR submitted the impugned order that after thorough examination of the evidences place before the adjudicating authority the charge of clandestine goods have stand proved.
5. Heard the parties considered submissions.
6. On the careful considerations and submissions of both the sides we find that the case of the Revenue is based on the note book recovered from the possession of Shri Sarat Kumar Das (Supervisor of Shri Purna Ramdas Labour Contractor) and the various statements.
7. We have seen that Shri Sarat Kumar Das has retracted his statement by way of affidavit which was filed before the department and the adjudicating authority has not considered the retraction made by Shri Sarat Kumar Das by way of affidavit. Infact, Shri Sarat Kumar Das has filed the affidavit which is having a evidential value and without examining the contents of the affidavit, the adverse interference cannot be drawn as held by Honble Apex Court in the case of M/s. Mehta Parikh and Company (supra) wherein Honble Apex Court observed as under:
The cash book of the appellants was accepted and the entries therein were not challenged. No further documents of vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. The appellants took it that the affidavits of these parties were enough and neither the Appellate Assistant Commissioner, nor the Income-Tax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross-examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the Revenue to challenge the correctness of the cash entries or the statements made by those deponents in their affidavits. Therefore the statement of Shri Sarat Kumar Das cannot be relied upon to allege clandestine removal of the goods.
8. Further, we find that a note book has been recovered from the Motor Cycle of Shri Sarat Kumar Das and on the basis of entries made in that note book, the demand has been confirmed holding that the entries in the note book pertains to the appellant. Some of the extract of the note book has been produced by the appellant before us and on being physical examination of the said note book, we find that it bears the name of M/s. Bhiwani Casting and Bhiwani Metals apart from the entries pertains to the appellant. But no efforts were being made by the Revenue to investigate the contents of the note book with M/s. Bhiwani Casting or M/s. Bhiwani Metals. Moreover, the labour contractor Shri Purna Ramdas was also not confronted with the note book. We also take note of the fact that the said note book was not confronted with the authorized signatory of the appellant and no inculpatory statement has been given by Shri Sarat Kumar Jain and the statements of Shri Vikas Agarwal and Vijay Agarwal were not recorded.
9. We also take note of the fact that during the course of investigation, some shortage of finished goods were found for which duty works out to Rs. 40,568 and the same has been admitted therefore, the demand on that account is confirmed along with the interest and equivalent amount of penalty is also imposed on M/s Bhiwani Moulders Pvt. Ltd.
10. Rest of the demand is based on the note book and statement of Shri Sarat Kumar Das and transporters etc. But as discussed above, the contents of the note book is not reliable evidence to allege clandestine removal of finished goods and the statement of Shri Sarat Kumar Das was retracted by way of affidavit and same has not been examined in that circumstance these evidences are not reliable evidence to allege clandestine removal of goods. We also find that in the case of R.A. Casting Pvt. Ltd. reported in 2009 (237) E.L.T. 674 (Tri.-Delhi.) this Tribunal has laid down certain norms to allege clandestine removal of goods which are reproduced as under:
22. The clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidences relating to:
i. Receipt of raw material of inside the factory premises, and non-accountal thereof in the statutory records.
ii. Utilization of such raw material for clandestine manufacture of finished goods;
iii. Manufacture of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, packing material used, records of security officers, discrepancy in the stock of raw materials and final products;
iv. Clandestine removal of goods with reference to entry of vehicle/ truck in the factory premises, loading of goods therein, security gate records, transporters documents, such as L. Rs, statements of lorry drivers, entries at different check posts, forms of the Commercial Tax Department and the receipt by the consignees;
v. Amount received from the consignees, statement of the consignees, receipts of sale proceeds by the consign or its disposal.
No such evidences to the above effect has been brought by the Revenue on record therefore, the demand is not sustainable against the appellant alleging clandestine removal. Moreover, we also take note of the fact that pilot experiments were conducted to ascertain the electricity consumption for manufacturing of One MT of MS ingot twice and same were found in order therefore, Revenue has failed to establish how the goods were manufactured in the factory of the appellants.
11. As there is no positive evidence has been produced by the Revenue to allege clandestine removal goods, therefore the impugned order is not sustainable except for the demand of duty of Rs. 40,568/- .
12. In these circumstances, the charge of clandestine removal of goods is set aside and the demand on account of shortage of finished goods during the course of investigation is confirmed. In result, the following the order is passed that is the Duty demand of Rs. 40,568/- along with the interest is confirmed and penalty is also imposed on M/s. Bhawani Moulders (P) Ltd. in terms of the Section 11AC of the Act.
[Pronounced in open Court on 02.01.2017] (Ashok Jindal) Member (Judicial) (Ashok K. Arya) Member (Technical) NK Page 10 of 10 E/2684, 2685 & 2686/2008-EX [DB]