Custom, Excise & Service Tax Tribunal
Arising Out Of The Order-In-Appeal ... vs C.C.E. & S.Tax, Vadodara I on 2 February, 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, O-20, NMH Compound Ahmedabad Appeal No.E/185/2007 Appeal No.E/186/2007 Arising out of the Order-in-Appeal No.Commr.(A)/249 to 252/VDR-I/2006 dated 29.11.2006 passed by the Commissioner (Appeals), Central Excise, Customs and Service Tax, Vadodara I. Western India Ceramics Pvt. Limited .. Appellants Chetan K. Patel Vs. C.C.E. & S.Tax, Vadodara I .. Respondent-Revenue
Appearance:
Present Shri Mithil Dave, Advocate for the appellants Present Dr. Jeetesh Nagori, A.R. for the Respondent-Revenue Coram: Honble Dr. D.M. Misra, Member (Judicial) Date of hearing:10.10.2017 Date of pronouncement: 02.02.2018 Final Order No. 10287-10288 /2018 Per Dr. D.M. Misra:
These two Appeals are filed against the Order-in-Appeal No. Commr.(A)/249 to 252/VDR-I/2006 dated 29.11.2006 passed by the Commissioner (Appeals), Central Excise, Customs and Service Tax, Vadodara I.
2. Briefly stated the facts of the case are that the factory of the Appellant was visited by the Central Excise officers on 23.6.2004 and during the course of verification of the stock, excess stock of 22435 boxes of Glazed Vitrified Tiles valued at Rs.81,71,500/- as well as shortage were noticed in the finished goods of Glazed vitrified Tiles as recorded in the RG-1 Registrar. On further investigation, it came to the notice of the Department that the Appellant had allegedly manufactured and cleared finished goods clandestinely without payment of duty. Admitting to the shortages, clandestine clearances the Appellant paid total duty of Rs.1,72,743/- on the same day. Further investigation led to the seizure of vitrified Tiles cleared without payment of duty lying in the customers premises viz. M/s Delite Ceramics. On completion of investigation, show cause notice was issued demanding duty of Rs.8,09,807/- alleging clearance of goods without payment of duty, and proposal for penalty; confiscation of the excess quantity of finished goods seized and personal penalty on other co-noticees. On adjudication, the demand was confirmed with equal amount of penalty and amount paid was appropriated; personal penalty on co-noticees imposed under Rule 26 of Central Excise Rules,2002. Aggrieved by the said order, the Appellants filed Appeals before the Commissioner (Appeals),who in turn, rejected the Appeals. Hence, the present Appeals.
3. Ld. Advocate, Shri Mithil Shri P.M. Dave, Advocate for the Appellant submits that the Appellant does not dispute the duty paid on shortage of goods noticed during the course of stock taking and sample of Tiles cleared without payment of duty. However, they dispute the demand of Rs.7,16,266/-; out of which Rs.1,13,443/- paid during the course of visit of the officers admitting clearance without payment of duty. He has submitted that M/s Labh Traders is the consignor in all the cases and thus the Appellants are not the consignor, therefore, if there was any correctness in the allegation of clandestine clearance, then the Appellant should be the consignor and M/s Labh Trader as consignee. Further, he has submitted that payments were received by M/s Labh Traders and not by the Appellant in respect of the Tiles shown delivery challans. He has also submitted that signatures and vouchers of the Appellant and in the receipts of M/s Labh Traders had not been, verified by any professional hand-writing analyst, therefore the allegation that M/s Labh Traders is fictitious firm is not correct. Further, he has submitted that customers themselves were not clear about the alleged transactions, that is, whether they had received the goods from the Appellant or through M/s Labh Traders, hence, the allegation of clandestine clearance is not tenable in law. Further, he has submitted that confessional statements and random, scattered challans of M/s Labh Traders and LRs, found in the premises of the Appellant itself does not establish clandestine manufacture and clearance of goods by the Appellant through M/s Labh Traders. Further, he has submitted that the Department has only carried out investigation without ascertaining the factual allegation undertaking proper verification of the documentary evidences, therefore, the allegations made in the show cause notice are totally baseless and unfounded. In support, he has referred to the judgment of the Tribunal in the case of M/s Esvee Polymers vs. C.C.E., Chennai 2004 (165) ELT 291 (Tri-Chennai). Further, the ld. Advocate has submitted that there was no evidence of purchase of raw materials that were used in the manufacture of finished goods removed clandestinely, also consumption of excess electricity was not established by the Department. Further, he has submitted that the personal penalty imposed on the Director is unsustainable as the day to day affairs were looked after by the employees of the company and there was no instance brought on record to show involvement of the Director in the clandestine manufacture and clearance of the tiles. Further, he has submitted that since penalty has already been imposed on the company, therefore, penalty on the Director is unjustified.
4. Per contra, the ld. A.R. for the Revenue has submitted that on the basis of information, search was carried out in the factory premises of the Appellant and during the course of search, irregularities were found in the stock of finished goods in the form of shortage and excesse when compared to daily stock account (DSA) i.e. RG-1 register. The Director of the Appellant company admitted such shortage and they have discharged duty on the said shortage, also the goods cleared without payment of duty by using transport document found in the factory was admitted and duty paid on such clandestine clearance. Further, he has submitted that the entire transaction of sale of manufactured Tiles without payment of duty and receiving consideration was carried out by creating a fictitious firm as M/s Labh Traders. The said firm was found to be non-existence; on verification of the address of the proprietor mentioned in the bank records of the said firm. Further, he has submitted that the buyers in their statements disclosed that purchases were made by them through the representative of the Appellant even though the payments were made in the name of M/s Labh Traders as per the request of the Appellants representatives. Shri Chetan K. Patel, Director of the Appellant responsible for all administrative works, including day to day functioning of central excise & customs work of the company, in his statement has accepted clearance of finished excisable goods without payment of duty and consequently discharged the duty on the shortages and samples cleared without payment of duty and the clearances against LRs found during search operation of their factory. The dispatch clerk Shri Jagdishbhai T. Patel has also admitted clandestine manufacture and clearance of goods. It is his contention that none of the statements was retracted nor the Appellants sought cross-examination of the witnesses, therefore, the ld. Commissioner (Appeals) has rightly upheld the Order of the adjudicating authority which was passed placing reliance on these evidences.
5. Heard both sides and perused the record. I find that the Appellant had disputed the duty of Rs.7,16,266/- of which Rs.1,13,443/- relates to clearance of 360 boxes of glazed vitrified tiles under LRs No.4145 dated 19.6.2004 of M/s Bafna Transport Company and 230 boxes under LR No.574 dated 22.6.2004 of M/s Kathiyad Transport seized from the premises of the Appellant. In the said documents, the consignor was M/s Labh Traders. The ld.Commissionr (Appeals) in the impugned order confirmed the said amount observing that it was debited on 23.6.2004 on the day of visit of the officers and this payment was not contested before the adjudicating authority being admitted by Shri Satish A. Shah, Authorised Signatory of the Appellant in his statement dated 23.6.2004. Also, the statement was not retracted. I do not find any discrepancy in the order of the ld. Commissioner (Appeals). Instead of clarifying the position, how the LRs of different transport companies lying in the premises where the consignor was shown as M/s Labh Traders, the Appellants made a bald attempt in assailing the order of the ld. Commissioner (Appeals) on this issue. On the balance of amount of Rs.6,02,823/-,the ld. Commissioner (Appeals) mainly analyzing the evidences of the buyers of the vitrified tiles observed that the Appellant had created a fictitious firm in the name and style of M/s Labh Traders and the illicit clearance of vitrified tile was made in the name of said fictitious trading firm to various customers. On detailed analysis of the evidences of the customers, who purchased the Glazed Vitrified Tiles, neamely, Shri Pragesh Kumar Rameshbhai Patel, partner of Brij Builders, Shri Rajni Tribhovandas Mistry, Proprietor of M/s C. Rajnibhai & Co. , Shri Ashok Chahabilds Parekh, Partner of M/s Om Developers, Shri Amit Jayantilal Shah, Representative of M/s Navkar Agency, Shri Abdul Mohamed Ranzanali Pattarwal, Proprietor of M/s Pipe Suppliers, Shri Motilal J. Mehta, Partner of M/s Poonam Construction, Shri Ajay P. Salvi, Legal Advisor of M/s Karia Devleopers, Shri Hisamuddin alias (Yusuf) Sayyed, proprietor of M/s Venus Trading Corpn. , observed that each of these customers had categorically stated that the order for purchase of vitrified tiles was made to the marketing personnel of the Appellant after seeing the sample of glazed vitrified tile which was received by them from to time under invoices and delivery challans of M/s Labh Traders, Padra, Vadodara. The representative of the Appellant informed them that M/s Labh Traders is their sister concern and they had wrongly received payments. Besides, the ld. Commissioner (Appeals) has also observed that the illicitly cleared glazed vitrified tile found at the customers premises M/s Delite Ceramics and M/s Amol Supplier which were placed under seizure, and these customers have also confirmed that they have received tiles by placing orders on the Appellant company through their marketing representative but the Tiles were received under invoices of M/s Labh Traders. All these statements remain uncontroverted and the Appellant at no point of time has requested for cross-examination of these evidences. Besides, from the statement of the Director, it is concluded by the authorities below that M/s Labh Traders was a fictitious firm and created only for the purpose of clearance of vitrified tiles by the Appellant without payment of duty to various traders. On the issue of confiscation of excess quantity of 22,453 boxes of glazed vitrified tiles seized during the course of visit to the factory of the Appellant, the ld. Commissioner (Appeals) observed that even though the Director Shri Chetan K. Patel in his statement furnishing explanation on the excess stock submitted that approximately 10,000 boxes were in semi-finished condition and not reached at RG-1 stage, and certain quantity of tiles were rejected and returned by their customers, however failed to furnish any evidence in this regard before the authorities. Hence, the explanation furnished by the Director of the Appellant was not accepted and confiscation was directed. Even before thus forum, Appellant failed to substantiate by furnishing evidences the reason for such excess stock found in the premises of the Appellant on the date of visit of the office. Therefore, considering the other circumstances, shortage in the stock, clearance of the of vitrified tiles cleared clandestinely and seizure of the certain quantity of goods in the premises of the buyers, it can safely be inferred that excess quantity of Vitrified Tiles found in packed in boxes was not in semi finished condition but was kept to be cleared without payment of duty, hence liable for confiscation. Also, regarding imposition of penalty on the Director, the authorities below had observed that the entire activity of manufacture and clearance of goods was carried out at the behest of Director and hence, the Director is liable to be subjected to personal penalty. I do not find any reason to interfere with this finding also.
6. In view of the above discussion, the impugned order is upheld and the Appeals are dismissed.
(Pronounced in open Court on 02.02.2018) (Dr. D.M. Misra) Member (Judicial scd/ E/185-186/2007-SM 8