Custom, Excise & Service Tax Tribunal
M/S Icconol Petroleum Pvt. Ltd vs Commissioner Of Central Excise, ... on 27 March, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/86114/13 (Arising out of Order-in-Appeal No. BC/413/RGD/2012-13 dated 27.11.2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-II). For approval and signature: Honble Shri Anil Choudhary, 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 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s ICCONOL Petroleum Pvt. Ltd. Appellant Vs. Commissioner of Central Excise, Mumbai-III Respondent Appearance: Shri Prasad Paranjape, Advocate for Appellant Shri V.K. Agarwal, Addl. Commissioner (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 27.03.2015 Date of Decision: 16.10.2015 ORDER NO. Per: Shri Anil Choudhary
The appellant, M/s ICCONOL Petroleum Pvt. Ltd., is a manufacturer of industrial and automotive lubricants, paraffin wax, and petroleum jelly falling under chapter heading 27 of Central Excise Tariff Act, 1985, is in appeal against Order-in-Appeal dated 27.11.2012 passed by the Commissioner of Central Excise and Customs (appeals), Mumbai III, Raigad, by which the demand raised for alleged clandestine removal was confirmed with interest and penalty.
2. The appellant, in course of the business, cleared their finished products to various buyers including Krishna marketing at Ahmedabad and Jay Enterprises at Rajkot. Some of the Goods manufactured where also cleared for captive consumption. The factory premises of the appellant were searched by the officers of the preventive wing on December 3, 2005 and thereafter the office was searched on December 6, 2005. In criminating documents were seized under Panchanama. One of the documents recovered was an octroi receipt number 5829 of Municipal Corporation of greater Mumbai dated 30/11/05 which reflected details of goods cleared by appellant vide their invoice numbers 633, 634, 635, 636, 637 and 638. On comparing the quantum and dates mentioned on the invoices with the details reflected on the octroi receipt, it was found that details on both documents were varying. In fact invoice number 634 was supposedly for clearance made for captive consumption. Further during scrutiny the investigation found three invoices bearing same serial number 606 and 2 invoices bearing same serial number, that is, 613. The statement of Mr. D.P. Singh Director of appellant was taken on 6/12/05 wherein he stated that they had issued the last invoice number 638. On being shown pre-authenticated blank invoices number 641 to 645 and 653 to 657 and was asked about the invoices bearing numbers 639, 640 and 646 to 652, he replied that the said invoices were missing. Further scrutiny of documents revealed that V. Trans and Lalji Mulji transport, were the principal transporters of the goods cleared by the appellant. It also appeared that the appellant had clandestinely cleared goods to Jay Enterprises, Rajkot and Krishna marketing, Ahmedabad. The investigation visited and searched the premises of Jay Enterprises at Rajkot and found some invoices which appeared to be parallel/bogus. Statement of proprietor J. Mehta was recorded on 14.12.2005 wherein he stated that he was engaged in sales/marketing of lubricating oil and grease in and around Rajkot and was procuring goods from appellant. He further confirmed that material was dispatched mainly through the V. transport and LM transport. It appeared to Revenue that the appellant have cleared goods to Jay Enterprises and others on invoices bearing same serial numbers. He further stated that once the materials received from appellant were disposed of, the corresponding documents such as invoices, lorry receipts, etc. were returned to the appellant and this was being done on a regular basis, as per the directions of the appellant. Further the payments for the purchases from the appellant were made in cash for the period 2004-05 and 2005 06. Similarly the office premises of Krishna marketing were also searched on 14.12.2005 at Ahmedabad. Various documents were seized under Panchanama. In their godown premises, 153 numbers of assorted sized packages of products of the appellant were found, valued at Rs.2,35,650/- which was seized, as the same were found to be unaccounted. The proprietor/person in charge was unable to produce duty paying documents for the same. In the statement recorded of Mr. M. B. Ojha, he stated that his wife is the proprietor of Krishna marketing and he was looking after day-to-day work. The firm was engaged in trading activity of automotive oil, lubricants, etc. That most of the purchases were from appellant and they were instructed to return Central Excise invoices alongwith lorry receipts back to the appellant. That they used to make payments in cash for the goods purchased. Further most of the goods are received through LM transport and V. Trans. On being shown the lorry receipt numbers/GC note as per the following table Sr. No. GC No. & date Invoice No. Description/Qty Value 1 0974862/15.09.05 427,428,429,430 & 431 Lubricating Oils 7654 Kgs.
460465.76 2 0974937/20.09.05 448 Lubricating Oils 3350 Kgs.
116805.4 3 0974057/13.08.05 349 to 353 Lubricating Oils 6240 Kgs.
372449.8 2.1 After going through the above Mr. Ojha agreed with the contents that the said materials as mentioned in the lorry receipts were received by them under the cover of Central Excise invoices. However the Excise invoices were returned back to the appellant. On being shown copies of Central Excise invoices which were mentioned in the lorry receipts, Mr. Ojha admitted that some of the invoices were in the name of other customers, even though they had received the goods. He further stated that their average monthly purchases from the appellant was Rs.8-10 lakhs. Earlier they were trading in the name and style of M/s. Blue spot agencies (Proprietor Mr. Manoj Ojha). In the Further statement recorded by the investigation of Mr. Ojha he confirmed the earlier statement and also produced a statement comprising of 2 pages of LM transport which reflected the materials received by them from the appellant. Except about 4 entries, he confirmed, they received the goods from the appellant.
3. The investigation also recorded the statement of Anil P Mishra, the Branch Manager of V. Trans. Ltd., Vijay Bhanushali, Branch Manager of M/s Lalji Mulji Transport Ltd., Dhirajlal Amritlal Modi, Manger of the appellant, Praveen Jadhav, Accountant of the appellant, Tushar Shah, MD of the appellant, Manjit Singh Kohli, Director of M/s Kohli Automobiles Pvt. Ltd. (buyer of the goods of the appellant) and one Shabbir Rampurwala, Accountant of the appellant. That Mr. Manoj Ojha of Krishna Marketing, Ahmedabad vide his letter dated 16.12.2005 and also Mr. Jitendra Mehta, proprietor of M/s Jay Enterprises, Rajkot vide letters dated 16.12.2005 retracted the statement stating that the same were recorded under threat, force and coercion. Further, statements of Jitendra Mehta of Jay Enterprises was recorded on 28.12.2005 wherein he stated that earlier statements were given voluntarily and without any pressure. Similar statements were given by Manoj Ojha of Krishna Marketing on 6.1.2006.
3.1 In the course of investigation, the appellant vide their letter dated 23.1.2006 addressed to the Joint Commissioner of Central Excise, Raigad stated that during the period Sept., 04 to Nov, 05, they dispached finished goods to Krishna Marketing and Jai Enterprises. Although the goods were sent to the above mentioned parties, the same were billed to M/s Gurukrupa Marketing, Raipur, M/s Manoj Agro Traders, Gwalior, M/s Raj Trading Company, UP and M/s Kohli Auto, Delhi for commercial reasons. However, proper excise duty has been discharged by them. Sale proceeds realised from both Krishna Marketing and Jai Enterprises have been properly accounted in their Books of Account. None of the customers who received the goods or have been billed by them, availed CENVAT Credit on the same. The reconciliation of entire sale transaction and dispute revealed that there is no loss of revenue to the exchequer. Copy of the reconciliation statement was also annexed and the same is also filed in the appeal memo as Exhibit F.
3.2 Show-cause notice dated 8.12.2006 was issued to the appellant calling upon them to show cause as to why Central Excise duty amounting to Rs.48,49,843/- with Edu. Cess of Rs.96,996/- as indicated in Annexure, should not be demanded and recovered, invoking extended period of limitation. Further, why not penalty be imposed under Rule 25 of the Central Excise Rules read with Section 11AC. Penalty was also proposed under Rule 26 on M.D. Mr. Tushar Shah & Mr. D.K. Singh, Director and also interest and penalty was proposed on the appellant company with further proposal of confiscation of the goods seized, valued at Rs.2,35,650/- from the premises of Krishna Marketing, Ahmedabad and penalty was also proposed under Rule 25 on Krishna Marketing, Blue Spot Agencies, Ahmedabad and Jay Enterprises, Rajkot.
3.3 The appellant contested the show-cause notice by filing interim reply and also reserving their right to file final reply after receipt of copies of relied upon documents vide their letter dated 02.01.2007, also attached comprehensive list of the documents required by them to file proper reply to the show-cause notice. In response, the Superintendent by letter dated 22.1.2007 informed that the documents have already been supplied along with show-cause notice. Further, informed that the date of hearing is fixed on 16.4.2007. Although the appellant filed an interim reply dated 6.2.2007, they reiterated their request for relied upon documents categorically stating therein that it is only an interim reply and final reply shall be submitted only after receipt of a copy of the documents sought by them. Further, cross-examination of 25 persons including Central Excise Officers was prayed for. The request for relied upon documents was again reiterated by letter dated 12.3.2007 stating therein that the documents are crucial and the entire demand was sought to be confirmed based on the relied upon documents. A copy of which is not supplied till date. The Superintendent vide its letter dated 30.3.2007 called upon the appellant to give specific reasons and ground as to why cross-examination of the various persons have been requested and also directed to file a reply on merits. The appellant again vide their letter dated 10.4.2007, stating that cross-examination of the persons mentioned in their interim reply was necessary to establish that the excisable goods were never cleared by them without payment of duty. The Supdt. by its letter dated 15.5.2007 again furnished a copy of the show-cause notice with some of the documents further informing the appellant that other records sought by them vide letter dated 22.1.2007 did not have any bearing on the show-cause notice dated 8.12.2006 and accordingly, the same was not required to be furnished. On the subsequent date of hearing fixed on 29.1.2008, the appellants had sought adjournment on the ground that since the documents relied upon in the show-cause notice are yet to be furnished by them and therefore, they are not in a position to file the detailed reply and once again requested for supply of the copies of all the documents relied upon vide their letter dated 21.01.2008.
3.4 In the personal hearing held on 26.2.2008, the appellant prayed for dropping of the show-cause notice in view of the interim reply and alternatively to allow them cross-examination and also supply all the copy of the documents as prayed earlier on 02.1.2007. Again the appellant vide letter dated 7.3.2008 informed the Superintendent that they would be sending their representative to collect all the documents as sought for by them vide their letter dated 2.1.2007 and 21.1.2008. In spite of the request made, appellant was not furnished or supplied with the documents nor the prayer for cross-examination was disposed of by an interim order. The show-cause notice was adjudicated vide Order-in-Original dated 31.3.2008 by the Additional Commissioner, who confirmed the proposed demand and penalty against the appellant and further penalties were imposed on the other noticees (under Rule 26 Rs.49,46,839/- on Mr. Tushar Shah & Mr. D.K. Singh; confiscation of goods worth Rs.2,35,650/- seized from Krishna Marketing, Rs.1.5 lakhs under Rule 25 read with Section 11AC each on Krishna Marketing, Blue Spot Agency and Jay Enterprises). In the said order, no discussion was made regarding the request of the appellant for cross-examination of witnesses.
3.5 Being aggrieved, the appellant had challenged the Order-in-Original before the Commissioner (Appeals), who was pleased to dismiss the appeal by his order dated 5.9.2008 for non-compliance of pre-deposit ordered. Being aggrieved, the appellant filed appeal before this Tribunal mainly on the ground of principle of violation of natural justice as the appellants were not given copy of documents relied upon by the Revenue nor had permitted cross-examination leading to miscarriage of justice, there being no proper opportunity of hearing made available. This Tribunal vide its final order No. A/254-259/09/EB/C-I dated 11.8.2009 directed the appellant Icconol Petroleum to make pre-deposit of Rs.20 lakhs towards duty and also furnish a Bank Guarantee of Rs.5 lakhs within a period of four weeks and subject to that remanded the case back to the adjudicating authority with respect to all the parties with direction to furnish all the documents that are relied upon in the show-cause notice. Further direction was given to deal with the request of the cross-examination of various persons as sought by the appellant, in accordance with law.
3.6 Pursuant to directions of this Tribunal, the adjudicating authority allowed the cross-examination of Mr. Jitendra Mehta, proprietor of Jay Enterprises, Manoj Ojha, Vijay Bhanushali, Anil P Mishra, D.K. Singh, Praveen Jadhav, Dhirajlal A Modi. However, in respect of the cross-examination prayed for, for the examination of Mr. Harish Katara, Inspector and Mr. Mukesh Srivstava, Superintendent, who were involved in the investigation and drawing of show-cause notice was not allowed observing that no statement or cross-examination is required and further they have acted in their official capacity and as such, the statements are not necessary.
3.9 The cross-examination (as recorded) have been quoted in the Order-in-Original dated 30.3.2012. The appellant also filed further representation inter alia stating that they have dispatched goods in regular course of business to various buyers including Krishna Marketing, Ahmedabad and Jay Enterprises, Rajkot. It was also contended that no final product manufactured were cleared without payment of duty, as the invoices were raised in the name of other parties for commercial consideration. It is further stated that the Revenue has failed to produce the alleged fake/parallel invoices seized during investigation. It was further contended that the documents, on the basis of which the duty has been worked out, copy is not provided, such vague duty cannot be confirmed. It was further contended that the description of the goods as mentioned in Annexure A1 & A2 of the show-cause notices are vague, as products like, lubricant material, Icconol Oil, engine oil were never cleared by the appellant. It was further contended that various grades and types of oil were manufactured and the same are dispatched in various pack sizes from 1 Ltr. to 250 ml packs and the Revenue has not produced any evidence to show that the goods have been cleared without payment of duty. It was further stated that relied upon documents etc. till date have not been furnished to them in spite of specific direction by this Tribunal. As entire demand is based on the theory of clandestine removal based on parallel/fake invoices, therefore, a copy of the documents sought for is important, without which the appellants are unable to defend their case. This Tribunal takes notice, that the adjudicating authority in para 23.1(P) has taken notice of the various letters by which documents were requested for, including letter dated 21.1.2012 filed by the appellant after the order of the Tribunal. In the circumstances, the appellant urged that no adverse inference can be drawn without supply of the documents relied upon. It was further contended that the case of the Revenue is mainly based on lorry receipt recovered from the transporters and recovery of few bills in the name of M/s Gurukrupa Marketing, Raipur, M/s Manoj Agro Traders, Gwalior, M/s Raj Trading Company, UP and M/s Kohli Auto, Delhi for commercial reasons.
3.10 It is further contended that none of the transporters have said that the goods have been cleared without payment of excise duty. It was further contended that the sale proceeds received from Krishna Marketing and Jay Enterprises have been properly recorded in the Books of Account of the appellant maintained in the ordinary course of business. In the lorry receipt from the Transporter, only invoice no. are mentioned and on the basis of the same, the conclusion drawn by the Revenue as to clandestine removal is erroneous and have no legs to stand. It was further contended that Revenue has to establish clandestine removal, but onus has not been discharged and the whole demand is based on assumptions and presumptions and thus impugned demand is fit to be dropped. The appellant had also reiterated its request for cross-examination of the two officers of the Department namely, Mr. Harish Katara, Inspector and Mr. Mukesh Srivastava, Superintendent and also contended that in absence of their cross-examination, the proper reply could not be filed as they had prepared the annexures of the show-cause notice, which forms the basis of demand.
3.11 It was also contended that even otherwise there is calculation error in the demand. Further, the applicable rate was also disputed. It was contended that upto the period 2001, the applicable rate was 9.60% and w.e.f. 1.3.2005, the rate was changed to 16.32%. It was further contended that the duty already paid by the appellant has not been considered for the period under consideration. The re-adjudication was done vide Order-in-Original dated 30.3.2012 wherein the authority with respect to supply of relied upon documents have also referred to the correspondence, prior in the earlier round of litigation and further mentioned that all documents have been handed over on 15.7.2010, and referred to miscellaneous application before CESTAT that the documents were handed over on 7.7.2010. Further, the documents as required by letter dated 13.1.2012 were handed over by 20.1.2012, duly acknowledged. It is further recorded that non-relied upon documents have not been supplied, as the same have got no implication in the show-cause notice. In respect of refusal of cross-examination of the Inspector & Superintendent, it was observed that neither they are witnesses under the proceedings nor their statements were recorded, or there is evidence in proceedings and hence, action or work is done by them in the official capacity.
3.12 It was further observed that the Revenues case is based on parallel set of invoices having same sr. no. So far retraction of statement by Mr. Jitendra Mehta of Jay Enterprises and Mr. Manoj Ojha is concerned, it was observed that, in their subsequent statement (subsequent to retraction), they have again reiterated their earlier statements. It was further observed that in the course of cross-examination, a common question was asked whether M/s ICCONOL Petroleum Pvt. Ltd. ever asked them to carry/transport goods without invoice and obvious reply (No) was given by the witnesses as per their mutual convenience. It was further observed that invoice generated were used and thereafter returned to the appellant and destroyed and subsequently parallel no. of invoices were generated in a clandestine manner, and no manufacturer will preserve the two set of invoices. In such a case, only few invoices which was recovered are available, which were supplied to the appellant on 20.12.2006. It was further observed that the staff members of the appellant have confirmed the generation of parallel set of invoices, which are not retracted.
3.13 As regards the denial by the transporter that they were never asked to transport the goods without invoices, it was concluded that it does not mean that there was invoice with the consignment and that invoice no. with details of goods including value is mentioned in the lorry receipt, the same reached to the main (designated) buyer, and on completion of transportation, the invoices were returned/destroyed. It was thus concluded that the invoice No. mentioned in the lorry receipt are reliable, only few invoices could be recovered during search and seizure which proved the modus operandi. It was further concluded that the appellant was engaged in clandestine removal of goods on parallel invoices and in particular removed goods to Krishna Marketing, Blue Spot Agencies and Jay Enterprises, without payment of duty, and as such the duty as quantified in the Annexure II is recoverable subject to calculation of cum duty price.
3.14 Further, it is observed that the demand has been calculated on the basis of evidence shown, various consignments notes containing CE Invoices No. issued to one customer and invoice with the same no. issued to different customers, which have been withdrawn from the premises of the appellant/their buyers/transport companies, as more fully observed in para 28.1 of the Order-in-Original.
3.15 As regards the contention of the appellant that lorry receipt is not acceptable evidence, it was observed that the allegation is based on certain lorry receipts recovered from the premises of Transporter, which show that the goods in transportation pertaining to lorry receipt have been received by the transporter from the factory of the appellant. Further, in the instant case, the consignment notes contained invoice no. and consignee address, details of goods and value along with available invoices have been taken in evidence to prove that Central Excise invoice no. of similar series and no. have been issued by the appellant to different customers in order to evade payment of duty.
3.16 As regards the answer given by the buyers-namely, Krishna Marketing and Jay Enterprises during cross-examination, that they were not aware for the goods supplied to them were on parallel or bogus invoices. It was observed that no inference in favour of the appellant can be drawn because these buyers got one invoice and not two and is not in a position to answer.
3.17 As regards the annexure to the reply of the appellant, the adjudicating authority observed as follows: -
a) Annexure 1 to the written submission filed by the noticee:
The Annexure A-1 and A-2 of the show-cause notice dated 08.12.2006 shows details of the Consignment No., value of the goods and duty worked thereon examined with the relevant documents available on the records. It is seen that the value of the goods taken from the consignment notes issued by the transporting company for the purpose of calculation of the duty appears to be total invoice value inclusive of Assessable Value, Central Excise duty, other elements etc. The noticees contention in the matter appears to be correct. Total value of clearance in annexure A-1 & A-2 of the show-cause notice is Rs.3,03,11,519/-. Considering the rate of duty as 16.32% including Education Cess, the assessable value comes to Rs.2,60,58,734/-, taking the total invoice value as cum duty price. On this revised assessable value the Central Excise duty amount comes to Rs.42,52,785/-, which is recoverable from the noticee.
(b) Annexure 2 to the written submission filed by the noticee:
Noticees contention is not correct and not acceptable. The value of Rs.39,05,293/- is correctly shown as per Consignment Note No. 1327133 and the said amount is already appearing at Sr. No. 43 of the Annexure A-1 of the impugned show-cause notice dated 08.12.2006. There is no evidence submitted by the noticee to substantiate their claim. They did not discharge their burden satisfactorily to claim concession.
(c) Annexure 3 to the written submission filed by the noticee:
Noticees contention is not acceptable as they have not produced any documentary evidence claiming exemption rate of duty @ 9.60% such as declaration filed with the department or any notification, statutory returns etc.
(d) Annexure 4 to the written submission filed by the noticee:
Noticees contention is not acceptable as they have not produced details of specific documents viz. serial number of invoices and date of M/s Krishna Marketing or M/s Jay Enterprises which said to have not been considered by the department. In their statements M/s Jay Enterprises and M/s Krishna Marketing has confirmed to have returned their invoices to M/s IPPL, therefore the contention of the noticee becomes meaningless.
(e) Annexure 5 to the written submission filed by the noticee:
Noticees contention is not acceptable as
(i) The invoice No. viz. 625 dated 23.11.2005 and 653 dated 17.08.2005 are not included in the Annexure A-1 or A-2 of the impugned show-cause notice dated 08.12.2006.
(ii) Further invoice No. 639 dated 03.12.2005 is included at S. No. 46 of the Annexure A-1 of the present demand notice dated 08.12.2006 on the grounds that the goods have been cleared clandestinely under two sets of invoices.
In view of the above it is found that the working of duty submitted by the noticee is not correct. 3.18 So far the question of limitation is concerned, it was held that the case of clandestine removal is made out against the appellant and as such the proviso of Section 11A is invocable and have been rightly invoked. Further, the appellant and others were held liable to penalty. Accordingly, the appellant was ordered to pay the reduced demand of Rs.42,52,785/- along with equal amount of penalty under Rule 25 read with Section 11AC. Further, penalty of Rs.1 lakhs under Rule 26 was imposed on Mr. Tushar Shah, MD and D.K. Singh, Director of the appellant, and also demanded the interest. The goods valued at Rs.2,35,650/- seized under Panchanama from the premises of Krishna Marketing was ordered to be confiscated with an option to redeem the goods on payment of redemption fine of Rs.50,000/- and further penalty of Rs.25,000/- each was imposed on Krishna Marketing, Blue Spot Agencies and Jay Enterprises under Rule 26 of Central Excise Rules.
3.19 Being aggrieved, the appellants preferred appeal before the Commissioner (Appeals), who vide the impugned order dated 27.12.2012 dismissed the appeal, upholding the Order-in-Original.
3.20 Being aggrieved with the dismissal of appeal, the appellants are before this Tribunal.
4. It is urged by the learned Counsel for the appellant that the main allegation of the Revenue is that the appellant have issued parallel invoices and have cleared excisable goods without payment of appropriate duty. It is stated that it is not the case that they have not paid the duty of excise on the goods removed. The whole demand is based on assumption and presumption in view of some parallel no. of invoices, which is a clerical error. It is further vehemently urged that there is miscarriage of justice as there have been violation of the principles of natural justice for the reason that the appellant was not provided copy of all the relied upon documents as well as non-relied upon documents. During the hearing held on18.9.2014, this Tribunal appreciated that all the relevant documents have not been supplied to the appellant and as such directed the appellant to give a list of all the documents, a copy of which have not been provided to them. And accordingly directed the learned AR to obtain the original copy of all the documents and produce before this Tribunal. The appellant vide their letter dated 24.9.2014 filed a list of documents which were not provided to them. During the hearing held on 13.3.2015, the learned AR submitted a copy of report dated 21.1.2015 from the Assistant Commissioner, Central Excise along with some original invoices, copy of which was provided to the appellant at the time of hearing. Based on the list, copies of invoices which were provided to the appellant and comparative sheet has been prepared, which is annexed to form part of this order.
5. It is further urged that the Revenues case is that the appellant have cleared excisable goods to their two vendors namely, Krishna Marketing and Jay Enterprises, Rajkot. The appellant contends that they have cleared all their goods on payment of appropriate duty. Since these two customers did not maintain proper records and did not preserve excise invoices for the goods, the same cannot be a ground to allege that the appellant have cleared the goods without payment of duty. Further, there is inconsistency in the statement of the two vendors as they have stated that sometime they use to destroy the invoices and sometime they have returned the invoice of the appellant. Thus, for the lapse on the part of the customers in maintaining their records and/or failure to produce copies of Central Excise invoices in respect of the goods purchased or lying in stock, cannot be a ground for alleging clandestine clearance on the part of the appellant. Further, the Revenue has not produced any evidence that all their stock lying in the premises of the customers was not duty paid. The whole case of the Revenue is based on retracted statements as well as assumption and presumption drawn. Further, in the cross-examination, these two customers have denied receiving any non-duty paid goods from the appellant and further stated that they were never instructed by Mr. Tushar Shah, Director of the appellant or any other officer of the appellant to return invoices after receipt of the goods. Thus, the whole demand as made out in the show-cause notice is unsubstantiated and based on some vague information collected from the transporter. As Revenue has failed to produce a copy of the alleged parallel invoice(s) as mentioned in the Annexure A1-A2 of the show-cause notice, save and except 8 invoices, the balance demand is fit to be set aside. Further, attention was drawn that some of the consignments at Sr. No. 1, 9, 27, 28 and 46 alleged to have been cleared as appearing in annexure A1- A2 to the show-cause notice, are in fact consignments cleared by other companies and not by the appellants and the same was demonstrated by drawing attention to the lorry receipt at the time of hearing. Further, the appellant also demonstrated that at one instance, Sr. No. 1 of Annexure A1 to show-cause notice, the rate per kg. applied in one consignment is inflated almost 10 times the average per kg price of the goods manufactured and cleared by the appellant. In the facts and circumstances, the failure of the Revenue to produce a copy of the invoices other than 8 invoices, the balance demand raised is only on basis of assumption and presumption, is fit to be set aside.
5.1 The allegation of the Revenue that parallel set of invoices was used to deliver the goods to the customers of the appellant in northern part of India is also based on assumption and presumption as the same is not corroborated by any of the evidence such as movement of goods nor any such duplicate invoice was brought on record.
5.2 It was further reiterated that the Revenue had not found anything against the statutory input-output norms in the production record of the appellants. Further, all the input raw materials are sourced from PSU is on proper payment of duty and documents and there is no case made out by the Revenue that unaccounted inputs were acquired, used in production and clandestinely removed.
6. The learned AR relied upon the finding in the impugned order and the Order-in-Original and reiterated the same. He further stated that it is clear from the available 8 copies of invoice of the same no., which is sufficient to prove that the goods have been cleared twice, one on payment of duty and second time without payment of duty. The total value of the 8 invoices comes to Rs.7,31,140.17.
6.1 The learned AR relied on the ruling of the Apex Court in the case of Commissioner of Customs, Madras Vs. V. Bhoormul 1983 (13) ELT 1546 (SC), wherein it has been observed that in the case of clandestine activity, it is difficult for the revenue to prove there case and as such, the Revenue is not required to prove this case with mathematical precision to a demonstrable degree. The Revenue is required to prove its case to such an extent, so that a man of ordinary prudence will believe in the preponderance or probability of offence having been committed. Accordingly, he prays for dismissal of the appeals.
7. Having heard both sides and after perusal of the records, I find that the case of the Revenue is based on only statements of the proprietors of company, two buyers namely, Jay Enterprises and Krishna Marketing which were subsequently retracted and the stand have been consistently maintained by them in the course of cross-examination to the effect that they have neither received any non-duty paid goods nor they were instructed by the officers of the manufacturer to return invoices/documents. From the perusal of the various relied upon documents and the copies of the documents submitted by the Revenue before the Tribunal, and a chart have been drawn by the Revenue. The appellant admitted that there are only 8 invoices available in the relied upon documents, against which it appears that the goods have been cleared twice. The appellant have clearly agreed to confirmation of demand attributable to all these 8 invoices, the clearance value of which totals Rs.7,31,140.17 along with interest. It is further seen from the record that other than the 8 invoices, there is no evidence produced by the Revenue in support of the allegation of clandestine removal as alleged on the basis of parallel invoices. It is settled law that clandestine clearance as alleged by Revenue, the onus is on the Revenue to produce copies of the invoices etc. in support of its allegation. In the absence of such parallel invoices, the allegation cannot survive. Further, I find that the Revenue have not brought anything on record to support any unaccounted acquisition/ procurement of inputs (raw materials). Rather the inputs of the appellant are acquired from the PSU and the same are duly accounted for and duty paid. Thus, it appears that the Revenue have made out a half baked case of clandestine removal and the same is not sufficient save and except the 8 parallel invoices as noticed herein above and accepted by the appellant. Further, it is settled law that a confessional statement cannot be the sole basis for establishing clandestine clearance in absence of other corroborative evidence. The duty on the value of clandestine clearance of Rs.7,31,140.17 have been worked out by the Revenue on the direction of the Tribunal @ Rs.92,144/-. Accordingly, the balance demand is set aside. The appellant is accordingly ordered to pay the above amount along with interest, which can be adjusted against the amount of pre-deposit of Rs.20 lakhs and additional amount of Rs.5 lakhs, lying with the department against encashment of Bank Guarantee. Further, equal amount of penalty of Rs.92,144/- is retained against the appellant ICCONOL Petroleum Products under Section 11AC read with Rule 25 of Central Excise Rules, 2002. The personal penalty imposed on the Managing Director Mr. Tushar Shah and Mr. D.K. Singh, Director of the appellant under Rule 26 of Central Excise Rules are reduced to Rs.15,000/- each, The penalties under Rule 26 on Krishna Marketing, Blue Spot Agencies and Jay Enterprises are set aside. The confiscation of the goods valued at Rs.2,35,650/- at the premises of Krishna Marketing is also set aside.
8. Thus, the appeal is allowed in part.
(Pronounced in Court on ) (Anil Choudhary) Member (Judicial) Sinha 12 Appeal No. E/86114/15