Customs, Excise and Gold Tribunal - Delhi
Madhu Aluminium Pvt. Ltd. And Ors. vs Cce on 16 August, 2002
Equivalent citations: 2002(84)ECC619
ORDER P.S. Bajaj, Member (J)
1. The above-captioned appeals have been directed against the common order-in-original dated 20.2.02 passed by the Commissioner vide which he has confirmed the duty demand and imposed penalties on the appellants, as detailed in the order itself.
2. The appellant No. 1 is a company engaged in the manufacture of aluminium extruded profiles, while appellants Nos. 2 & 3 are directors of the company, and appellant No.4 is an authorised signatory. The factory premises of the company was visited by the preventive officers of the Central Excise on 22.6.99. After completing inspection and checking of the raw materials stock, the statements of employees were also recorded. Ultimately, show cause notice was served on the company vide which duty demand of Rs. 45,15,285 was raised and penalty of equal amount was also proposed to be imposed on it. On the other appellants also, penalty was proposed to be imposed under Rule 209A. The confiscation of plant, machineries and building etc. was also sought to be made. The allegations made in the show cause notice were these (i) the appellant company wrongly showed melting loss of 3 to 3.5% as against actual loss of 1 % and the excess production of 2% to 2.5% removed by them through parallel invoices, without payment of duty, through M/s. Usha Roadways, (ii) they failed to enter 159.987 Mt. of aluminium ingots and scrap in their statutory record and cleared the goods manufactured out of this raw material in a clandestine manner without payment of duty, (iii) lorry receipts resumed from the premises of M/s. Usha Roadways and M/s. Veshno Devi Road Lines showed clandestine removal of the goods by the appellants during the period April 98 to Feb. 99 without payment of duty.
3. The appellants contested the correctness of the show cause notice. They denied of having wrongly shown burning/melting loss as 3.5% and maintained that this was accepted and normal loss which had been correctly shown by them. They also denied of having made clandestine removal of the goods from the factory.
4. The Commissioner who adjudicated the show cause notice, confirmed the duty demand of Rs. 45,15,285 with equal amount of penalty on the company appellant No. 1, besided ordering confiscation of the plant, machineries, land & building of the company and also imposed penalty of Rs. 5,00,000 each on appellants Nos. 2 & 3 and of Rs. 50,000 each on the appellant No. 4 and Kedar Dattatary, through the impugned order.
5. The learned Counsel for the appellants has contended that there is no reliable evidence on record to substantiate any of the allegations made in the show cause notice against the appellants and that the impugned order had been based on the presumptions and assumptions wrongly. The impugned order deserves to be set aside.
6. On the other hand, the learned SDR has only reiterated the correctness of the impugned order.
7. We have heard both sides and gone through the record.
8. The company appellant No.1 is admittedly engaged in the manufacture of aluminium extruded profiles. They are using aluminium ingots and aluminium scarp in the manufacture of this product. The first allegation made against the company in the show cause notice is that in the process of manufacture of finished product (aluminium extruded profile) melting loss was only to the extent of 1.5%, whereas they had show this loss to the extent of 3.5% which was excess of the actual loss and thereby they had in fact made excess production of the finished goods and cleared those goods without payment of duty, during the period April 95 to March 98. To substantiate this allegation, reliance has been placed by the Commissioner on the statements of Kedar Dattatray, Junior Administrative Officer/authorised signatory. Shri Rajendra Kumar Chauhan, supervisor of foundry section and Ramesh Pinge, factory manager of the company who allegedly stated before the officers at the time of visit that in converting aluminum ingots into aluminium extruded profiles the melting loss was only of 1.5%, while the same was shown as 3 to 3.5% and excess production so accrued was removed without payment of duty through parallel invoices. But the cross-examination of none of these persons was allowed to the company appellant No.1, without any sufficient cause. No doubt, the request for cross-examination of these witnesses was accepted by one Commissioner earlier and notices were even issued to them but on his transfer, his successor reviewed that order and disallowed the request for cross-examination of the witnesses. Therefore, the statement of none of these witnesses could be used legally against the company appellant No. 1 for concluding that melting loss was wrongly shown by it during the disputed period and that the company, in fact, manufactured the goods from the excess material and removed the same without payment of duty.
9. The plea of the company that melting loss to the extent of 3.5% shown by them was not in any manner exhorbitant for incorrect, had not been properly appreciated by the learned Commissioner. The company showed before the Commissioner that even income-tax authorities accepted and allowed wastage to the extent of 5.57%. They also brought to the notice of the Commissioner that as per input/output norms in the EXIM Policy 5% loss is permissible. The company had also referred to the proceedings of the international conference on aluminium (INCAI, 98) Vol.2 and submitted that metal recovery in melting operation has been shown as 94% and as such, the accepted melting loss comes to 6%. The company further produced the affidavit of Rajendra Kumar Chauhan and Avinash Anant Joglekar, witnesses, wherein, they had explained the process of manufacture of aluminium extruded profiles from aluminium ingots and calculated the melting loss to the extent of 5.2%/ 5.6%. All these facts even have been mentioned by the Commissioner in the impugned order itself, but has failed to appreciate the same and give due weightage. He also in fact ignored these facts on the simple ground that authorised signatory Kedar Dattatray and other employees of the company named above, had admitted that melting loss comes to only 1 to 1.5%. But they could not be taken to be an expert on the issue and moreover, they were not allowed to be cross examined by the company. The authenticated evidence adduced by the company, referred to above, could not be over-looked. The company had even produced the balance sheet copy for the year 1999-2000 of M/s. Man Industries, Pithampur which indicated that the said company showed melting loss in the range of 8 to 9% on the ingots. The affidavit of Shri Joglekar who is B. Tech in the metallurgy and had worked 12 years in the Indian Aluminium Company, could not be brushed aside by the Commissioner wherein he had assessed the melting loss at 5.6%. Even the income-tax authorities, though initially in the year 1995-96 allowed melting loss to the extent of 1.5% but in that year the unit of the company worked only for 1 & 1/2 months and lateron in the next financial year the income-tax authorities accepted and allowed wastage to the extent of 5.57% to the appellant company.
10. Therefore, the allegation of the department that the appellant company showed wrongly excess loss in the range of 3 to 3.5% as against 1.5%, does not stand established from any substantial evidence.
11. Moreover, there is not an iota of evidence on record to prove that by showing the alleged excess burning loss, the appellant company manufactured excess finished goods and removed the same in the clandestine manner, without payment of duty during the disputed period i.e. April 95 to March 98.
12. The allegations of the department that during the period, raw, materials to the extent of 156.53 MT was not accounted for in the books of accounts and from that material the appellant company manufactured the finished goods and thereafter cleared the same without payment of duty, also do not stand proved at all. These allegations, in fact, had been based only on the petty vouchers of Rs. 30, Rs.100, Rs. 200 etc. and this fact has hot been disputed by the learned Commissioner in the impugned order itself. But none of those vouchers indicated the receipt of raw materials by the appellant company from the supplier. The vouchers related to the incurring of the labour charges and weighment charges of ingots. In para 10.2 of the impugned order, the Commissioner has referred to the detail of few vouchers. One of the voucher was of Rs. 30 vide which charges for weighment of ingots were paid by the appellant company, while another voucher was of Rs. 100 vide which payment was made to the labour and the other was of Rs. 200 through which loading charges were paid to the labour, The Commissioner has also made reference to the statement of Vishnu Garg, employee of the appellant company who allegedly disclosed that the company used to first weigh the ingots on Weigh Bridge for which an entry of Rs. 30 was made in the cash book towards weighment charges and thereafter ingots were got unloaded. But Vishnu Garg joined the appellant company in March 97 and earlier to that period, he had no knowledge about the working of the company. Moreover, he himself has explained that he was neither competent nor had any personal knowledge regarding the slips or facts relating to unloading. The other witnesses namely Kedar Dattatray and Ramesh Pinge had not stated anything in relation to the slips and the petty vouchers in question. They had nowhere stated that all these slips and vouchers pertain to the receipt of raw materials by the appellant company. Similarly, Rajindra Kumar Chauhan, employee had nowhere admitted in his statement that slips and vouchers in question related to the receipt of raw materials in clandestine manner by the company. He rather, in his affidavit, explained that slips and vouchers were prepared in order to make payment to the workers in respect of the work done by them in the factory on a particular day. Therefore, from the mere petty slips and vouchers in question no such inference could be drawn as has been done by the Commissioner, that the appellant company received raw materials and thereafter manufactured the final product, out of the same and cleared in a clandestine manner, without payment of duty.
13. The allegations of clandestine removal of the goods by the appellants during the period April 98 to May 99 had been based mainly on 29 lorry receipts resumed from the premises of M/s. Usha Roadways and M/s. Vashno Devi Roadlines. But in none of those receipts, the detail of the goods despatched, name and address of the consignors and consignees, description and quantity of the goods and amount of freight charges had been recorded. There is nothing on the record to suggest if any of the consignees of the goods had admitted the receipt of the goods from the appellant company without cover of invoices in a clandestine manner. In the resumed receipts, only words "Madhu" as consignor and "Mumbai" as consignee had been indicated. These receipts were, nodoubt, produced by Umed Khan when the premises of M/s. Usha Roadways was searched by the officers, but he, in this statement, only stated that the goods were transported on 'to pay' basis. From these lorry receipts, it could not be concluded that the goods were cleared by the appellant company in a clandestine manner. No enquiries were made from the octroi barrier and check post to check if truck of the company M/s. Usha Roadways carried the goods of the appellant company. The lorry receipts were inconclusive and insufficient to attribute the clandestine removal of the goods by the appellant company.
14. Similarly, the recovery of 4 lorry receipts from the premises of M/s Vashno Devi Roadlines in the absence of any corroborative evidence was insufficient to prove the charge of clandestine removal of the goods against the appellant company. The statement of Sanjay Yadav, driver-cum-owner of the truck did not also advance the charge of clandestine removal against the appellant company. He had simply deposed that he used to transport the goods of the appellant company and for which he used to pay commission to Shri Kedar Dattatray. He also deposed about the missing documents and the L.R. book but there is no evidence to prove that through those lorry receipts, the goods were transported by the appellant company, in a clandestine manner.
15. The allegations against the appellant company about the non-recording of the scrap in the record received in the month of June 1999, also did not, in any manner, establish the charge of clandestine removal of the goods against it. The scrap was not modvatable and for that reason, it was not entered in RG-23A. The appellant company has explained that this scrap was used in the manufacture of profiles which were cleared from the factory in the month of July and August 1999 against the payment of duty. The duty was paid by them by making entry in PLA.
16. In our view, from the evidence referred to by the learned Commissioner in the impugned order, the charge of clandestine removal of the goods by the appellant company during the disputed period, in the light of what had been discussed above, does not stand proved. It is well settled that duty on the charge of clandestine removal of the goods cannot be confirmed against the assessee on the basis of assumptions and presumptions. Rather, it can be confirmed only on the strength of tangible and cogent evidence which, in our view, is lacking in the instant case.
17. In view of the discussions made above, the impugned order of the Commissioner cannot be sustained against the appellants and the same is ordered to be set aside in toto. All the appeals of the appellants are accepted with consequential relief, permissible under the law.