Custom, Excise & Service Tax Tribunal
M/S. Vikram Cement (P) Ltd vs Commissioner Of Central Excise on 4 October, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. 3829 of 2006 SM
Excise Appeal No. 21 - 22 of 2007 SM
Date of Hearing: 11.6.2012
Date of decision: 4.10.2012
[Arising out of Order-in-Appeal No. 423, 424 & 425-CE/APPL/KNP/2006 dated 30.3.2006 passed by the Commissioner of Central Excise (Appeals), Kanpur]
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 : Yes
of the CESTAT (Procedure) Rules, 1982 for
publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair : Seen
copy of the Order?
4. Whether Order is to be circulated to the : Yes
Departmental authorities?
---------------------------------------------------------------------------------------
M/s. Vikram Cement (P) Ltd. Appellants
Sunil Kumar Gupta
Anil Kumar Gupta
Vs.
Commissioner of Central Excise Respondent
Kanpur
Appearance:
Ms. Sukriti Das, Advocate for the Appellants
Shri Sanjay Jain, AR for the Respondent
ORAL ORDER NO . ________________________
Per Archana Wadhwa:
As per facts on record, appellant is engaged in the manufacture of cement. Their factory was put to search by the officers on 29.9.04 and shortage of 362.502 MT was found in the stock of clinker which is an inputs for the manufacture of their final product. Further, the Revenue recovered certain loose papers S.No. 112 to 115 which revealed clearance of 255 consignments of 2740 MT of Cement during the month of February. When such clearances were compared with admitted clearances in the statutory records, it was found that the same was not reflected therein. Statement of the appellants representative as also their Director was recorded, wherein they admitted the shortage of raw materials as also clearances of their final product to various parties against cash, without payment of duty.
2. On the above basis, proceedings were initiated against the appellant resulting in confirmation of demand of Rs.6,57,600/- on the clandestinely cleared cement as also for denial of Cenvat credit of Rs. 90,626/- in respect of 362.502 MT of short found clinker. The said proceedings culminated into an impugned order passed by the authorities below and upheld by the Commissioner (Appeals). Hence, the present appeal.
3. I have heard Ms. Sukriti Das, learned Advocate appearing for the appellant and Shri Sanjay Jain, learned DR appearing for the Revenue.
4. As regards the shortage of clinkers, the appellants have taken a stand that the same was made on eye estimation and not on actual weighment. Keeping in view nature of the said goods, the allegation of shortage are not sustainable. It is not possible to dispose of clinker in the market except to use the same in the factory.
5. As regards the quantity of final products clearance, the appellants have submitted that the loose slips recovered from their premises do not show clearance of the cement. Infact the maximum capacity of their plant is 1000 MT per month and it is not possible to clear 2740 MT cement in February, 2004, in addition to 303 MT of cement admittedly cleared on payment of duty in the said month. As regards the loose slips, she submitted that the show cause notice used the expression that the said loose papers containing date-wise dispatches of cement bags, truck number and name of the consignee were probably prepared by his factory staff. It is their case that if the number of truck and the name of the buyers was available, Revenue should have made any inquiries from them. She further submits that a huge part of their factory is lying vacant which has been given on rental basis to various stockers of maurang and concrete. The said private documents might have been left over by the said private parties who are selling maurang and concrete on sq.ft basis. Inasmuch as the clinker is procured from the manufacturer and used as 95% of raw material, the procurement of same from outside State without a valid trade tax form 31 is impossible. They also relied upon various decisions to submit that strong suspicion, strange coincidence and grave doubts cannot take place of legal proof. To establish charges of clandestine removal, it is essential for the prosecution to establish that the secret books of accounts relates to the business transaction carried out by the party.
6. Countering the arguments, Shri Sanjay Jain, learned AR appearing for the Revenue, submits that appellants authorised representative has admitted the shortages of clinker and as such the appellant is liable to reverse the Cenvat credit of the same. As regards clandestine removal, he submits that inasmuch as the Director has admitted in his submissions, as regards sale of cement, there was no need for the Revenue to further investigate the matter either through the transporters or through the buyers. As such, he prays for upholding the impugned orders.
7. After appreciating the submissions made by both the sides, I find that the shortages of clinkers involving the duty element of Rs.90,626/- are based upon the shortages detected at the time of visit of officers. No inventory stand made by the officers indicating weighment of actual stock. Admission of authorised representative is only for the shortages detected at the time of visit and there is no admission on his part that the said clinkers was cleared by them or stand used in the manufacture of cement, which was cleared without payment of duty. As such, by extending the benefit of doubt to the appellant, I set aside the confirmation of demand on the said count along with setting aside of penalty.
8. As regards clandestine removal, Revenues case is based upon recovery of the some loose sheets during the course of search of the factory. I have seen the said loose papers, which are relied upon documents in the show cause notice. On going through the said loose documents, I find that there is no indication to show that the same belonged to cement. Revenue has taken into consideration the statement of Director, which is to the effect that number of bags, figures reflected in the said loose papers relate to the cement which stand cleared by them clandestinely.
9. The issue required to be decided is as to whether the said statement alone can be made the basis for arriving at the finding of clandestine removal. What is evidentiary value of the said statement, in the absence of other corroborative evidence on record. The Honble Delhi High Court in a recent judgement in the case of Commissioner of Income Tax vs. Dhingra Metal Works. Has considered the evidentiary value of the statement of Director given at the time of search of the factory sought to be relied upon by the Revenue. While examining the evidentiary value of the said statement in the absence of any other evidence, the Honble High Court observed that it is settled law that though the admission is extremely important piece of evidence, it cannot be said to be conclusive and it is open to the person who has made the admission to show that this is incorrect. I also note that there are numerous decision of the Tribunal laying down that such admission of shortages without there being any admission of clandestine removal, cannot be considered to be conclusive evidence to establish the guilt of the assessee. Burden of proof is on the revenue and is required to be discharged effectively. Clandestine removal cannot be presumed merely because there was shortages of the stock or on the recovery of some loose papers.
10. As such, I am of the view that the statement, which was recorded on the date of visit of the officers, cannot, when standing along, take the place of evidence so as to hold against them, especially when the appellant have explained that the said loose papers may relate to various stockists, which are working from their premises on rental basis.
11. Apart from the above, I note that the truck numbers as also complete name of the purchasers was duly mentioned in the said loose papers. For the reason best known to the Revenue, they have made no efforts to go to the transporters, truck drivers etc. and to the buyers to arrive at the truth. Majority decision in the case of Tejal Dyestuff Industries as reported in [2007 (216) ELT 310 (Tri)] Tribunal held that the Revenue cannot make its case on the basis of statement alone in the absence of any independent evidence to corroborate the same. The said decision was confirmed by Honble High Court of Gujarat as reported in 2009 (234) E.L.T. 242 (Guj.), when the appeal filed by the Revenue was dismissed. Further, Tribunal in the case of CCE v. Luxmi Engineering Works as reported in 2001 (134) E.L.T. 811 (Tri.-Del.), has held that there being no corroborating evidence in the form of receipt of raw materials or sale of final products to each buyers, the allegations of clandestine removal cannot be upheld. The said decision was upheld by Honble High Court of Punjab & Haryana as reported in 2010 (254) E.L.T. 205 (P & H), laying that even if some records recovered during raid and corroborated by some supportable evidence for attempt of clandestine production and removal, it is necessary to have some positive evidence of clandestine production and removal.
12. Learned AR has not been able to explain the half hearted investigation of the Revenue to establish their case on the basis of statements alone and without undertaking further investigation.
13. Plethora of judgements have held that is for the revenue to establish the case of clandestine removal by production of concrete and tangible evidence. I find that apart from loose papers, which on the face of it cannot be related to the appellants business accounts and the sole statement of Director, there is no other evidence to reflect upon the clandestine activities of the appellants. The appellants have also taken a stand that it is beyond their capacity to manufacture more than 1000 MT per month and as such the Revenues allegation that they cleared more quantity in the month of February, 2004 have to be taken with the pinch of salt.
13. In view of the foregoing discussion, I set aside the confirmation of demand against the appellant and imposition of penalties imposed upon them.
14. Appeals are allowed with consequential relief to the appellant.
(Pronounced in the open court on 4.10.2012)
( Archana Wadhwa ) Member(Judicial)
ss
??
??
??
??
8