Custom, Excise & Service Tax Tribunal
M/S. Sharda Motor Industries vs Cce & St, Ltu, Delhi on 3 May, 2012
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM,
NEW DELHI-110066
COURT NO. II
E/Stay/2298-99/2011 in and
Central Excise appeal Nos. 1734-35 of 2011-SM
[Arising out of Order-in-Appeal No.17-18/2011 dated 7.4.2011 passed by the Commissioner (Appeals), Central Excise & Service Tax, New Delhi]
Date of Hearing/decision: 3rd May, 2012
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. Sharda Motor Industries
Shri Ramesh Saxena Appellants
Vs.
CCE & ST, LTU, Delhi Respondent
Present for the Appellant : Shri B.L. Narasimhan, Advocate Present for the Respondent : Shri Sanjay Jain, D.R. Coram: Honble Shri D.N. Panda, Judicial Member FINAL ORDER NO. ________________ Per D.N. Panda:
1.1 Learned Counsel Shri Narasimhan, submits that search conducted on 27.8.2008 resulted in finding of 480 sets of impugned goods which were seized and provisionally released on payment of redemption fine and duty. The goods have suffered duty. While the goods were awaiting recording in statutory record, the Revenue authorities made search and failed to reconcile the quantity of goods found with the circumstantial evidence which were placed before them. While replying to show cause notice the appellant clearly brought out that raw material i.e. fabrics were issued from stock of raw material for job work and return of job worked goods were recorded. That remained undisputed which is patent from show cause notice itself.
1.2 If statement relied upon by Revenue recorded on 27.8.2008 is perused, that also establishes such fact. Relying on reply to question No. 4, it was submitted that the appellant affirmed answer to the investigation that materials are being sent to Sharda Motor Industries, Surajpur Industrial Area, Greater Noida. In the answer to question No. 5 the description of the goods were explained. In answer to question No. 10 evidences were recorded suggesting about goods referred to in respect of serial numbers in Panchnama establishing manufacture thereof by the appellant and that was awaiting recording in statutory register. So also, description was given about job worked goods. The authority below did not consider the evidence so given. But it went against the appellants holding that the goods are liable to confiscation. Even the appellant in Para 3 of reply to show cause notice made its stand clear that various raw materials were given for job work and such raw materials were job worked.
1.3 It was further submitted that there was no scope for suspicion to hold that there was an attempt to remove the finished goods without payment of duty since goods were found in the factory itself. It was also submission of Shri Narasimhan that from the day of search the stand of job work and issuance of raw material for such work as well as receipt of job worked goods by appellant was well known to investigators. Therefore, there was no scope at all for any clandestine removal when the goods came from job worker under appropriate excise evidence against issuance of raw material recorded. It was also submitted that the quantity of goods manufactured by the appellant and the quantity of job worked goods were well described to the investigation team. In all these circumstances there is no scope to hold that the appellant had made any attempt to make clandestine removal of excisable goods. He relied on the judgement of Honble High Court of Gujarat in the case of CCE, Vapi vs. Nakoda Textile Industries Ltd. 2009 (245) ELT 44 (Guj.) to submit that when the storage of raw material and job worked goods have been fairly brought on record there cannot be any conclusion to hold that there was clandestine removal. Therefore, neither redemption fine nor penalty is imposable. Lastly, The Appellant accordingly prays that not only stay applications may be allowed, appeals may also be disposed of being interconnected each other.
1.4 So far as appeal No. E/1735/11 is concerned, learned Counsel argues that when the principal is not liable to any penal consequence of law, the person connected with the same allegation cannot be brought to charge.
2. In counter, Revenues submission is that there was no recording of goods and there was violation of law. When the goods were found by investigation and those were not accounted, the appellants were bound to face confiscation and penalty. Hence, both stay applications and appeals are liable to be dismissed.
3. Heard both sides and perused the record.
4.1 Investigation made on 27.8.2008 remained undisputed. Finding of unaccounted 480 sets of impugned goods in the factory of the appellant also remained undisputed. But more peculiar evidence that was suggested to investigation was about the origin and destination of job worked goods. The appellants did not fail to say how the goods came and from whom it came. Even though it was stated in the evidence recorded under Section 14 of Central Excise Act, 1944, investigation appears to choose to ignore the evidence relating to goods found in the course of investigation. No investigation was done at the job worker end. Investigation also failed to examine whether job workers were paid job charges. There was no effort made by investigation to examine whether the raw material claimed to have been issued to job worker were verifiable from record. Stock records of raw material were not examined. The aspect as to whether in the past the appellant had ever received any goods on job work was not investigated. So also investigation did not probe to find out whether any job work order was placed with any job worker. Answer to all these questions is negative.
4.2 When the circumstantial evidence were chosen to be evidenced by appellants on the basis of preliminary evidence recorded under Section 14, that brought out material facts for scrutiny by investigation Revenue could not discard plea of appellant discovering any material evidence against appellants plea of job work and manufacture of the day. Added to that, it is also strange how the authority below made concurrent finding against the appellant without hearing the pleading of the appellant on the evidence stated in the averments made beginning from 28.7.2008 to 18.2.2009, while reply to show cause notice was filed. The appellants appears to have only plea that finished goods came from job worker on friday and goods manufactured on the same day remained unaccounted for two days because of Saturday and Sunday and accounting staff were absent. Investigation has miserably failed without any investigation from any past history of manufacture to find out whether goods manufactured on Friday or goods job worked received on that day remained unaccounted till Monday. They also did not examine manufacturing record of Friday to arrive at a proper conclusion on the inventory of goods. Not only investigation but also adjudication proceeded baselessly and hypothetical adjudication was done.
4.3 In view of the above, the appellants claiming to have paid the duty, there shall be no further levy of duty on the goods seized because seizure was also unwarranted when the goods were not found to be without evidence, nor evidence exist to hold attempt to clear excisable goods causing evasion of duty. Therefore, confiscation was unwarranted and redemption fine was not imposable.
4.4 Next question comes up for determination is that, whether there should be imposition of penalty. To reach to a conclusion, appellants design to make an attempt for evasion or causing evasion is guiding factor. There is no case of attempted evasion as is revealed from the factual matrix as depicted above and the strength of evidence did not disclose contumacious conduct of appellant. So also, there is no evasion since the allegation failed to stand. But violation of law occurred for not recording the goods on Friday which calls for levy of penalty. At this juncture, it was asked to the appellant to plead defence, if any, on the gravity of offence to decide the quantum of penalty. Shri Narasimhan, learned Counsel says that when nothing could subsist on allegation there should be no penalty at all. Such a proposition can not be approved to allow excisable goods to remain unaccounted. Therefore, imposition of penalty of Rs. 5,000/- shall be appropriate under Rule 27 of Central Excise Rules, 2002. Except this penalty, no other penalty shall sustain. The appellant M/s. Sharda Motors Industries succeeds partly and its appeals partly allowed. Connected appellant Shri Ramesh Saxena succeeds fully and that is allowed. Impugned order is set aside to such extent.
5. In view of the aforesaid decision, both stay applications get disposed.
(Dictated & pronounced in the Open Court.) (D.N. PANDA) JUDICIAL MEMBER RK 7