Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S.Rajaguru Spinning Mills (P) Ltd on 25 May, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/834/2001
[Arising out of Order-in-Appeal No.77/2001 (CBE)(GVN) dated 27.04.2001 passed by the Commissioner of Customs & Central Excise (Appeals), Trichy]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
Honble Mr. P.KARTHIKEYAN, Member (Technical)
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 the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Central Excise, Coimbatore
Appellant
Versus
M/s.Rajaguru Spinning Mills (P) Ltd.
Respondents
Appearance :
Shri V.V. Hariharan, JCDR Shri S. Kandasamy, Cons. For the Appellant For the Respondents CORAM:
Honble Ms.Jyoti Balasundaram, Vice-President Honble Mr. P. Karthikeyan, Member (Technical) Date of hearing : 25.05.2009 Date of decision : 25.05.2009 Final Order No.____________ Per Jyoti Balasundaram This is an appeal filed by the Revenue. Vide the impugned order, the Commissioner allowed the appeal filed by the respondents against demand of differential duty of Rs.11,50,609/- against the respondents under Section 11A of the Central Excise Act (the Act) and equal amount of penalty imposed on them under Section 11AC of the Act. We have heard both sides. The impugned demand had been raised by the original authority on the basis that the Day Book recovered from the premises of the respondents showed realization of higher amounts compared to the amounts adopted for payment of duty on clearances of Viscose Staple Fibre yarn made by the respondents during the period 1997-1999. The original authority found that the figures in the Day Book tallied with the corresponding representing the amounts paid to the respondents by a yarn broker namely M/s.Kothari Trading Corporation as reflected in his accounts. In the impugned order, the Commissioner found that apart from the Day Book and the records of M/s.Kothari Trading Corporation, a third party, Revenue could not produce any evidence to substantiate the allegation of evasion of duty to the extent confirmed. He found that the respondents had vehemently denied the ownership of the Day Book relied on by the Revenue. He also noted that the scribe of the said Day Book could not be identified nor his statement obtained. Relying on the case law, he found that such a record could not be relied on to find evasion of duty without the statement of the Managing Director of the respondent-company had been recorded by the authorities. No question had been posed to him as regards the Day Book and his version of existence has been obtained in the statements. The Commissioner also found that there was no one-to-one co-relation between the entries in the Day Book and the entries in the register maintained by M/s.Kothari Trading Corporation. There was no evidence to indicate that the respondents had received amounts as indicated in the records of M/s.Kothari Trading Corporation over the Day Book. Mere suspicion could not replace the proof required in proving the offence of the type involved. He found that the departmental authorities did not gather evidence to substantiate the evasion from the investigation with regard to the recording of the statement of the Managing Director, who had stated that no excess amount had been realized by the respondents as shown in the Day Book. The Commissioner also found that the demand of differential duty was raised in respect of 5341 bags whereas the corresponding quantity cleared on payment of duty under proper documents was 5016 bags. That no investigation had been conducted with reference to under valuation and no enquiries had been done with the respondents about the Day Book entries etc. had been confirmed by the investigative officer during cross-examination. Relying on the ration of the Tribunals decision in Rhino Rubber Products Ltd. Vs Commissioner of Central Excise reported in 1996 (85) E.L.T. 260 (T), the Commissioner (Appeals) found that the impugned demand and penalty were not sustainable in law. We have carefully considered the case records and the submissions made by both sides. In the appeal filed by the Revenue, no valid grounds have been raised to challenge the findings of the Commissioner (Appeals). The appeal is based on the existence of material which the first appellate authority found to be not relatable as evidence. The appeal proceeds on the basis that denial of ownership of the respondents of the Day Book seized was no found to discard it as evidence. That the entries in the Day Book match with the entries in the registers maintained by M/s.Kothari Trading Corporation was adequate circumstance which establish excess realization by the respondents and evasion. We find that charge of evasion cannot be found solely on the basis of records of third party. Revenue has not been able to establish receipt of excess amounts against clearances of yarn by the respondents. The Commissioner (Appeals) also had found that the Day Book and the records of the broker did not match in entirety. He had found discrepancies in important aspects between the entries in the Day Book and the records of the yarn broker. In the decision of the Tribunal in the case of Rhino Rubbers Pvt. Ltd., it was held that third partys records were not reliable when no direct links cannot be established between the records and offending transactions. In the circumstances, we find that the appeal filed by the Revenue seeking to restore the order of the original authority is devoid of merit. In the result, we sustain the impugned order and dismiss the appeal filed by the Revenue.
(Dictated and pronounced in open court)
(P.KARTHIKEYAN) (JYOTI BALASUNDARAM)
MEMBER (T) VICE-PRESIDENT
ksr
27-05-2009
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