Custom, Excise & Service Tax Tribunal
M/S Astron Zinc Industries vs C.C.E. & S.T.-Ahmedabad-Iii on 12 January, 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Zonal Bench 2nd Floor, Bahumali Building, Nr Girdharnagar Bridge, Asarwa Ahmedabad 380 004 Appeal No. : E/11188,11189,11190/2017 Arising out of OIA-AHM-EXCUS-003-APP-261-263-16-17 dt 28/02/2017 passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals) -AHMEDABAD 1. M/s Astron Zinc Industries 2. Shri Upeshbhai H Thakkar 3. Shri Hasmukhbhai Thakkar - Appellant(s) Vs C.C.E. & S.T.-Ahmedabad-iii - Respondent(s)
Represented by For Applicant(s) : Shri Rahul Gajera, Advocate For Respondent(s) : Shri A Mishra, Authorised Representative CORAM :
Shri M V Ravindran, Hon'ble Member (Judicial) Date of Hearing : 05/01/2018 Date of Decision : 12/01/2018 ORDER No. A/10131-10133/2018 Per : Shri M V Ravindran, These three appeals directed against OIA OIA-AHM-EXCUS-003-APP-261-263-16-17 dt 28/02/2017 passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals) AHMEDABAD. Since these appeals are directed against the very same OIA they are disposed of by a common order.
2. The relevant facts that arises for consideration after filtering out unnecessary details are that M/s Astron Zinc industries (main appellant) the firm registered with Central Excise Dept was visited by the officers on 1.2.2014, and on physical stock taking carried out in the premise, it was noticed that there was a shortage of final products to the quantity of 20,275 kgs. Statements of Shri H M Thakker, and Shri U H Thakker were recorded on 2.3.2014 and subsequently further investigation was carried out wherein the Dept. officers was found various challans in the factory premises and office premises. After completion of the investigation, show cause notice was issued for the demand of the duty liability has been allegedly removed without payment of duty, interest thereof and also imposing penalty on the main appellant and penalties on the two other appellants. All the three appellants contested the show cause notice on merits as also on limitation. The Adjudicating Authority did not accept the contentions raised and confirmed the demands raised alongwith interest and imposed penalties on all the three appellants. The appellants preferred appeal before the First Appellate Authority also were rejected.
3. The Ld Counsel appearing for the three appellants takes the Bench through the entire case records and submits that the lower authorities have only relied upon partners statements under which the demand of duty liability has been confirmed; that there is no corroborative evidence as to clandestine manufacture and clearance of goods; that no allegation for purchase of unaccounted raw materials; that the statements of all the partners were retracted on the next day by addressing a letter to the investigating authority that the explanation of shortages was properly given. It is the submission that the delivery challans on the basis of which demand were raised were in fact only for the movement of the goods cleared which can be only for the reason that the final invoices are a prepared subsequently from their office premises and handed over to transporters; despite having the delivery the challans, the Revenue authorities have not recorded any statement of the purchasers to whom the goods were delivered hence the demand of duty is incorrect. He would rely upon the following piecemeal:
i) Arya Fibres Pvt Ltd vs CCE, Ahmedabad 2014(311)ELT.529 (Tri Ahmd).
ii) Poly Tex Industries vs AC CE, Thanjavur 2012(281)ELT.48 (Mad)
iii) HM Pipes Pvt Ltd vs CCE, Jaipur 2015(325)ELT.924 (Tri.Del)
iv) Tejwal Dyestuff Industries vs CCE, Ahmedabad 2007(216)ELT.310 (Tri.Ahmd)
v) CCE vs Anil Agrawal 2013(287)ELT.489 (Tri Del.)
4. Ld DR on the other hand draws the attention of the Bench to the various statement recorded. It is the submission that of one of the claim of the main appellants in the statement recorded Mr Thakker in which he does not know English is incorrect submission as the statement correctly records, Mr Thakker was explained the contents of the statements in his language by one of his employees; that the so called retraction filed by the Appellants is determined by the finding of the lower authorities on what was received by the addressee was the request for copies of the statements and not the affidavit which was filed for retraction of the statements; the subsequent submissions has to no shortage of the stock, is totally incorrect submissions as if the details were available at the time of investigation they should have been produced; the challan which were recovered from the office premises and the factory premises which indicated illicit clearance of is very important evidence which is not explained by the appellant in the appeal, It is his further submission that having admitted the shortage of the finished goods it has to be assumed clandestine removal of the same, and duty liability arises and the main appellant has admitted the facts and discharged duty liability voluntarily which would indicate that there was clandestine removals. He relied upon the following case laws:
i) Bayir Extracts Pvt Ltd vs CC, Bangalore 2012(285)ELT.97 (Tri Bang.)
ii) CCE, Madras vs Systems & Components Pvt Ltd 2004(165)ELT.136 (SC)
iii) Vinod Solanki vs UOI 2009(233)ELT.157 (SC)
5. On careful consideration of the submissions made both sides, it is noticed that the entire case of the Revenue of the demand of duty based upon any allegation of clandestine removal is on the following evidences:
i) Statement of Shri H M Thakore and Shri U H Thakore, delivery challans recovered at the factory and office premises summary of which is made in the Annexure of the show cause notice that the main appellant discharged duty liability voluntarily and requested for waiver of issuance of show cause notice indicates that there was clandestine removal.
6. I find from the records that the main appellant has been taking consist plea before the lower authorities that demand of the duty is incorrectly worked out and there is no clandestine removal of goods. The finished goods physical stock vis-`-vis record on the day of visit has been properly explained by the appellants before the lower authorities and also before the First Appellate Authority explanation which has not been properly appreciated. The explanation is as under:
RG 1 stock on 28/02/2014 - 35,275 kgs Production on 1.3.2014 upto the time of stock taking - 10,550 kgs Total - 45,825 kgs Less clearances under invoice 199, 200 and 201 dt 1.3.2014 - 20,000 kgs 25,825 kgs Physical stock found as per Panchnama - 25,550 kgs
7. The above said explanation given by the main appallant was not dealt in any manner by the lower authorities. The demand of the duty on the ground of clandestine removal on the details as per the delivery challan recovered from the factory premises and office premises, which again is incorrect as this is the only one part of the story. It is undisputed that the delivery challans were in fact indicating the name of the purchaser; no efforts were made by the Revenue authorities to record the statements any of purchaser of the finished goods, more so when the delivery challans had the name and address of the purchasers. In my considered view, the investigation in this case is done haphazardly as the Officers of the Revenue not recorded any statement of transporters or purchasers whose name according to the revenue was mentioned on the delivery challans recovered from the factory premises and office premises of the main appellant.
8. Considered from yet another angle, it is noticed that the demand of duty on clandestine removal is worked out without considering the most material aspects of clandestine manufacture of the goods. In order to remove goods clandestinely there has to manufacture of the said goods. There is no iota of an evidence produced by the by the Revenue in the allegation in the show cause notice of purchasing of unaccounted raw-material, clandestinely manufactured the goods which could have been ascertained by the unexplained consumption of resources and the movement of the goods clandestinely from the factory premise is not established in any form. If it is the case of the Revenue that main appellant has approximately removed clandestinely 2,78,200 kgs of Zinc oxide during the period October 2013 - Feb. 2014 which is next to impossible unless done by the transporters transporting the bags of Zinc Oxide. In the entire investigation, Revenue authorities have not called in any transporter for recording of statement or the partners were also not questioned as to how the movement of such huge quantity of Zinc Oxide took place; also there is no evidence to show that the main appellant or the individual partners had received any amount of consideration in cash which remain unaccounted. In the absence of the any evidence and further investigation by the authorities on these points, I find that Revenues case fails miserably face on the allegation of clandestine removal of the goods by the main appellant. The Division Bench of the Tribunal in the case Arya Fibre Ltd - 2014(311)ELT.529 (Tri. Ahmd) has held that there has to be corroborative evidence of actual manufacture of the goods and clearance to identify the persons, place of appellants made in order to upholdi the allegation of clandestine removal.
9. In the absence of any evidence, the demand of duty on the main appellant is not sustainable and is liable to be set aside and I do so.
10. Since the demand of duty liability on the main appellants is set aside, question of demand of interest and penalties on the three appellants does not arise.
11, In view of the foregoing, on merits itself the appeals are disposed off, I am not recording any findings on the various other submissions made by both sides.
12. In my considered view, in view of the foregoing, the impugned order is sustainable liable to set aside and I do so. The impugned order is set aside and the appeals are allowed with consequential relief, if any, as per law.
(Pronounced in the open Court 12/01/2018) (M V Ravindran) Member (Judicial) swami 2