Custom, Excise & Service Tax Tribunal
M/S. Shree Nakoda Ispat Ltd vs C.C.E. Raipur on 1 July, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/52449, 52293, 52294/2015-[SM]
[Arising out of Order-In-Appeal No.RPR/EXCUS/000/COM/015/EX/2015
dated: 31.03.2015 passed by CCE Raipur]
For approval and signature:
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
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 Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. Shree Nakoda Ispat Ltd. ...Appellant
Sh. Sanjay Goel, Director
Sh. Anant Dave. Director
Vs.
C.C.E. Raipur Respondent
Appearance:
Mr. Kamal Jeet Singh, Advocate for the Appellant Mr. Vaibhav Bhatnagar, (DR) for the Respondent CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing. 23.03.2016 Date of Decision.01.07.2016 Final Order No. 52473-52475 /2016 Per S.K. Mohanty:
These appeals are directed against the impugned order dated 31.03.2015 passed by the ld. Commissioner of Central Excise, Raipur whereby a demand of Central Excise duty of Rs. 49,33,696/- has been confirmed and equal amount of penalty has been imposed on M/s Shree Nakoda Ispat Ltd. (for short, referred to as the appellant company). Besides, personal penalty of Rs. 5,00,000/- and Rs.6,00,000/- have also been imposed on the Directors Shri Sanjay Goel and Shri Anant Dave respectively.
2. Central Excise duty demand and penalty have been confirmed in the impugned order mainly on the ground that excisable goods were removed from the factory in a clandestine manner, without discharging the Central Excise duty liability. The reasons assigned for confirmation of duty demand in the impugned order are as under:-
i) The Department has recovered photocopies of four invoices from some sources, showing clearance of sponge iron fines to M/s. Rooplaxmi Industries Pvt. Ltd., which are not accounted for in books of the appellant company; whereas, invoices bearing same serial number and date were issued by appellant to M/s. Ram Dayal Verma and M/s. Ajaya Shanker Verma for sale of Dolachar, duly entering such sale particulars in the books of accounts. Further, it has been alleged that both these firms are not traceable in the address indicated in the invoices.
(ii) The Department has recovered three loose sheets of papers pertaining to the month of July 2011, showing removal of sponge iron fines, sponge iron lumps and M.S. Ingots wherein the names of the buyers are mentioned in abbreviated form.
(iii) 26 nos. of Gate Pass Books were recovered for the period 25.03.2010 to 31.03.2010 and 05.04.2011 to 03.08.2011 by the Department. On comparison of the gate passes for July 2011 with the loose papers recovered from the factory of the appellant, it was noticed that the gate passes show clearance of Dolachar to M/s. Ramdayal Verma and M/s. Ajay Shankar Verma, whereas on the reverse side of the gate passes, the names of the purchasers of M.S. Ingots and sponge Iron fines have been mentioned.
(iv) On the basis of the entries made on the reverse side of gate passes for the period March' 2010 and April to June' 2011, Central Excise duty demand has been raised, for which no loose papers were referred to by the Department.
3. The appellant has assailed the impugned order inter alia, on the following grounds:-
3.1 The Department has not disclosed the source from which the photocopies of invoices were recovered, showing alleged sale of sponge iron fines by the appellant to M/s Rooplaxmi Industries Pvt. Ltd. That the photocopies were not recovered during the search from the premises of the appellant company, buyers of the appellant company, directors of the appellant company, any transporters or employees of the appellant company. That the person from whom these photocopies have been received was not identified and was not produced for cross-examination to ascertain the origin and authenticity of these photocopies. That the originals of these four photocopies of invoices were not produced for verification/comparison to ascertain whether photocopies were genuine and true copies of the originals. To support its submission that photocopies are not admissible as evidence in the absence of originals thereof, the appellant has relied on the following decisions rendered by the judicial forums:-
(a) J. Yashoda Vs. K. Shobha Rani - 2007 (212) ELT 458 (SC) (b) Collector Vs. East Punjab Traders - 1997 (87) ELT 11 (SC)
(c) Truwoods Pvt. Ltd. Vs. CC - 2005 (186) ELT 135 (CESTAT)
(d) Indian Optics Pvt. Ltd. Vs. Commr. - 2000 (123) ELT 1022 (CESTAT)
(e) South Indian Television (P) Ltd. Vs. CC - 2001 (136) ELT 243 (CESTAT) 3.2 Further, to support its stand that duty demand cannot be confirmed on the basis of documents recovered from third party, the appellant has relied on the decisions of this Tribunal passed in the following cases:-
(a) Sakeen Alloys Pvt. Ltd. Vs. CCE - 2013 (296) ELT 392 (CESTAT)
(b) CCE Vs. Chola Spinning Mills (P) Ltd. - 2009 (92) RLT 731 (CESTAT)
(c) Raj Sandeep Vs. Collector - 2013 (102) ELT 1028 (CESTAT)
(d) Commr. Vs. Rexin Sea India Ltd. - 2003 (156) ELT 147 (CESTAT)
(e) Rama Shyama Papers Ltd. Vs. CCE - 2004 (168) ELT 494 (CESTAT) 3.3 With regard to recovery of three loose sheets of papers pertaining to the period July' 2011, showing alleged removal of sponge iron fines, lumps and M.S. ingots, the submissions of the appellant are that those papers are photocopies only and in absence of the originals thereof, reliance cannot be placed on the photocopies. That the panchnama drawn in the unit of the appellant does not give a description of any of the resumed records and that the person from whose possession these three loose sheets (photocopies) have been recovered and the person who has written those loose papers have not been identified or questioned regarding the contents of those papers. That the transporters and purchasers have not been identified and questioned and no confirmation has been obtained from them regarding the clearances of alleged excisable goods by the appellant. That the statements of Shri Ajay Kumar Dewangan, Dispatch Clerk and Shri Anant Dave, Director of the appellant company are neither voluntary nor true and were written as per the wishes of the Departmental investigating officers. That the Department has not obtained any confirmation from the transporters that the excisable goods were transported from the unit of the appellant to the premises of the alleged purchasers on the dates mentioned in the loose sheets without cover of Central Excise invoices. That the affidavits of Shri Ramdayal Verma and Shri Ajay Sankar Verma produced before the Department clearly show the details of invoices of the appellant company, against which Dolachar were purchased by them during the period July' 2011. Further, the transporters through affidavits have also confirmed that they have delivered Dolachar in the premises of the above named buyers. Thus, the appellant contended that in absence of any corroborative evidence, the charges of clandestine removal cannot be sustained based on the alleged loose sheet of papers.
3.4 As regards the findings in the impugned order on 26 nos. of gate pass books resumed by the Department officers, the submissions of the appellant are that the gate passes are for clearance of Dolachar only. That the handwriting on the reverse of those gate passes is not of any employees of the appellant's company. The person who has written on the reverse of the gate passes has not been identified and questioned. The security guards of the appellants unit who allow the goods to leave the factory premises after verifying with the gate passes have also not been questioned and no confirmation has been obtained from them regarding the description of the goods removed on those alleged gate passes. The labourers who have loaded the goods into the vehicles have also not been questioned. There is no allegation in the show cause notice that the appellant has shown higher percentage of production of Dolachar vis-`-vis other finished goods. In the absence of these evidences, the allegation that the appellant has removed sponge iron fines, sponge iron lumps and M.S. Ingots on those gate passes is not sustainable.
3.5 In addition to the above grounds, the appellant has also stated that the transporters namely, Shri Shiv Shankar Tiwari and Shri Ram Dayal Yadav in their affidavits have deposed that they have transported Dolachar from the factory of the appellant for delivery at its customer's site. That two loose papers referred to in para 13 of the SCN do not belong to the appellant and have not been prepared under instructions of any of the Directors or officers of the appellant company. With regard to the Daily Production Report, alleging clandestine clearance of 846.89 M.T. of finished goods, the submissions of the appellant are that the alleged slips are not the official records of the appellant and do not reflect the actual production and that the person who has prepared those slips has not been identified and questioned by the Department as to the authenticity of the contents of those slips. Regarding shortage in stock of goods, the submission is that the visiting officers conducted physical verification by eye estimation only, without undertaking the actual weighment of goods.
4. Heard Shri Kamal Jeet Singh, ld. Advocate for the appellant and Shri Vaibhav Bhatnagar, ld. D.R. for the Revenue and examined the appeal papers and the written submission filed by the appellant during the course of hearing of appeal.
5. The present proceedings have been initiated by the Department based on the photocopy of invoices bearing Nos. 01059 dated 07.06.2011, 01073 dated 08.06.2011, 01146 dated 14.06.2011 and 01331 dated 27.06.2011 gathered from some sources, which were allegedly issued by the appellant against supply of Sponge Iron Fines to M/s Roop Laxmi Industries India Pvt. Ltd, without accounting for the sale particulars in the Central Excise records. The case of the Department is that other set of invoices (4 nos.) bearing same serial number were also issued by the appellant for clearance of Dolachar in favour of M/s Ramdayal Verma and Ajay Sankar Verma. Thus, it was alleged by the Department that Sponge Iron Fines were removed by the appellant in clandestine manner, without discharging Central Excise Duty liability. There is no reference either in the SCN or in the impugned order as to the source of receipt of the photocopy of the invoices. Further, it is an admitted fact that those invoices were not recovered during the course of search from the factory premises of the appellant and that no confirmation has been obtained from the alleged buyers regarding receipt of the goods in question. Since, the appellant is contesting to the fact that no Sponge Iron Fines were removed under the cover of alleged invoices and that the originals of the photocopies were not produced for verification/comparison to ascertain whether photocopies were genuine and true copies of the originals, in my opinion, a photocopy, merely as a piece of paper, cannot be considered as having any evidentiary value. In this context, Section 63 of the Evidence Act, 1872 provides that secondary evidence is not admissible until the non-production of primary evidence is satisfactorily explained. The Hon'ble Supreme Court in the case of J. Yashoda - Vs. - K. Shobha Rani, reported in 2007 (212) ELT 458 (S.C.) have held that secondary evidence cannot be admitted without non-production of the original one. Thus, it is imperative that the contents of photocopies should be compared with the contents of their respective originals. In absence of the original documents, the photocopies, not being even secondary evidence, are not admissible in evidence. No enquiries have been conducted by the Department at the buyer's end to verify as to whether they have purchased the goods covered under the alleged photocopy of invoices from the appellant. Therefore, demand of duty in such an eventuality will not sustain, as held by this Tribunal in the case of Sakeen Aloys Pvt. Ltd. - Vs. - CCE, Ahmedabad, reported in 2013 (296) ELT 392 (Tri.-Ahmd.).
6. The genuineness of the invoices issued by the appellant against supply of Dolachar was disputed by the Department on the ground that it is not feasible to trace out the buyers on the basis of vague address furnished by the appellant. In arriving at such conclusion, the SCN has referred to four persons named in the panchnama, who have stated that they are not aware of the whereabouts of the buyers of Dolachar. In this context, I find from the appeal paper book that the appellant had enclosed the affidavits sworn by Shri Ram Dayal Verma and Shri Ajay Shankar Verma, who have given the particulars of voter ID and voter slip issued in their behalf by the concerned authorities. Further, they have also stated that the consignments of Dolachar as per the disputed invoices were purchased by them from the appellant company. I also find from the appeal paper book that the drivers of the vehicles used for transportation of Dolachar have confirmed through affidavits that they have delivered the appellant's goods at the site of above named buyers. The above stated affidavits together with their enclosures irrefutably establish the existence of the buyers of Dolachar in the address indicated in the invoices and that the goods were purchased by them from the appellant. Thus, the fact that four persons are not aware of the whereabouts of the above referred buyers does not conclusively establish that Dolachar has not been supplied by the appellant company and not received by the buyers named in the invoices. I also find that the submissions made by the appellant in this regard before the adjudicating authority have not been addressed in the impugned order. Hence, I am of the view that the onus to prove the involvement of the appellants in clandestine activity with the intent to evade payment of duty has not been satisfactorily discharged by the Revenue, justifying confirmation of the duty demand.
7. The impugned order has confirmed the duty demand on the basis of loose sheet of papers pertaining to the month July' 2011 recovered from the premises of the appellant company, wherein Sponge Iron Fines, Sponge Iron Lumps and MS Ingots were allegedly shown as removed to various buyers namely M/s Hanuman Ispat Pvt. Ltd., Raipur, M/s Balaji Loha Pvt. Ltd., Raipur, M/s Roop Laxmi Industries India Pvt. Ltd., Raipur etc. It is an admitted fact on record that the Department had not produced the original copies of the loose sheets to the appellant for verification, that the name and identity of the person who has prepared those sheets were not disclosed, that the name of the appellant has not been mentioned in the said sheets and that no specific confirmation has been obtained from the alleged buyers or transporters of goods that the appellant had supplied the goods as per information contained in those loose sheet of papers. Further, there is no evidence available on record that the goods as per those sheets were seized/detained by the Central Excise Department or any other Government agencies. Thus, in absence of any cogent evidence of clearance of excisable goods as reflected in the alleged loose sheets, the charges of clandestine removal with intent to evade payment of duty, in my opinion, cannot be leveled, justifying confirmation of duty demand. It is a settled principle of law that in adjudication proceedings, the charge of clandestine removal has to be definitely established on the basis of preponderance of probabilities, but in cannot be merely on the basis of presumptions and assumptions. This Tribunal in the case of Kuber Tobacco Products Ltd. - Vs. - Commissioner of Central Excise, Delhi, reported in 2013 (290) ELT 545 (Tri.-Del.) has held that suspicion however grave cannot replace proof and that the Revenue is not relieved altogether of burden of producing some credible evidence in respect of the facts in issue. In the case in hand, admittedly the Revenue has not brought any tangible evidence to discharge its burden of proof of clandestine removal of goods.
8. I find that based on Annexure F-1 and Annexure F-2 of the SCN, the impugned order has confirmed the duty demand on the alleged ground that during the period March' 2010 and April to July' 2011, the appellant had purportedly cleared sponge iron fines, sponge iron lumps and ingots to various buyers named in the reversed side of the gate passes without discharging the Central Excise duty liability. On perusal of the appeal paper book, I find that some of the alleged buyers named in the SCN through affidavits denied having received any quantities of sponge iron or MS ingots as per the particulars reflected in the reverse side of the gate passes. Further, the owners of the vehicles referred to in the annexure to SCN have also confirmed that they have transported Dolachar from the factory of the appellant to the buyers premises and not the alleged goods namely, sponge iron fines, sponge iron lumps and ingots. I also find that in the reply to the SCN, the appellant had undertaken to produce those transporters and alleged buyers for cross-examination, if needed by the Department. However, the adjudicating authority did not call those persons for cross-examination. Thus, in such situation, the affidavits, in my opinion, cannot be brushed aside and should be accepted as evidence of non-receipt of the alleged goods.
9. With regard to two loose papers (referred in para 13 of SCN), the submissions of the appellant that those papers do not belong to them have not been addressed in the adjudication order. Further, no enquiry has been made regarding nature of vehicles referred in those papers and no confirmation has been obtained from the transporters that they have transported sponge iron fines and M.S. ingots on the dates mentioned therein from the unit of the appellant to the premises of the named consignees. Hence, in my considered view, no reliance can be placed on these loose papers to confirm the duty demand.
10. As regards the alleged production reports referred to in the impugned order, I find that the adjudicating authority has not taken into consideration the facts stated by Shri Anant Dave in his statement dated 15.02.2013, wherein he has stated that the production slips are not the official records and do not reflect the actual production of the appellant's unit. Further, the Department has also not identified and questioned the person, who has prepared the production slips regarding the authenticity of the contents therein. Thus, in absence of any corroborative evidence on record like illicit procurement of raw material, production capacity of the appellant, transportation of un-accounted for raw material/finished goods, name of alleged buyers etc., the allegation of clandestine manufacture and removal of the finished goods cannot be leveled against the appellant. In this context, this Tribunal in the case of Hindustan Machines -Vs. - CCE, 2013 (294) ELT 43 (CESTAT), K.V. Textiles Pvt. Ltd. -Vs. -CCE, 2009 (240) ELT 397 (CESTAT) and Deccan Granites - Vs. - Commissioner, 2003 (151) ELT 582 (CESTAT) has held that demand of duty cannot be confirmed on the basis of private/internal records and production slips.
11. It is an admitted fact on record that the Department has not carried out any physical verification of alleged shortage in stock and the same was based on eye estimation only. Thus, in absence of actual physical weighment of stock of finished goods, the allegation of shortage, in my considered view, is not sustainable.
12. The statement of Shri Ajay Kumar Dewangan, Dispatch Clerk, recorded during cross examination (reproduced at page 51 in the impugned order) reveals that the appellant had not removed the excisable goods without the Central Excise invoices and that he had not voluntarily admitted to pay the duty and the statement to that effect was written by the Officers of Central Excise Department. Further, Shri Anant Dave, Director of the company has retracted from his statement through the reply to the SCN that duty payment was made voluntarily towards alleged clandestine removal of goods. The ld. Commissioner of Central Excise has not considered such statements in proper prospective and discarded the same on the ground that the earlier statements were not retracted immediately. The initial admission and alleged voluntary payment of the duty amount by Sh. Anant Dave, Director and Sh. Ajay Kumar Dewangan, Dispatch Clerk, by itself does not conclusively establish the clandestine clearance of the excisable goods. The subsequent retraction and alleged pressure for admission and payment cannot be brushed aside lightly. In such case, it has become imperative to have further corroboration, so that non-duty paid clearance as alleged could be sustained. The facts and circumstances in this case did not bring out such set of evidence to conclude in favour of Revenue the allegation of clandestine removal. In this context, the principles decided by the Hon'ble Delhi High Court in the case of CCE, Delhi-I - Vs. - Vishnu & Co. Pvt. Ltd., reported in 2016 (332) ELT 793 is to the effect that even if the statement is retracted afterward, the same retracted statement along with other documents produced in defense cannot be considered as reliable evidence for adjudication of the dispute. Further, this Tribunal in the case of Centurian Laboratories - Vs. - Commissioner of Central Excise, Vadodara, 2013 (293) ELT 689 (Tri.-Ahmd.) has held that mere confessional statement recorded earlier is not enough to conclude that the assessee is engaged in clandestine removal of goods. In this case, summarily rejection of subsequent statement/ submissions/affidavits by the adjudicating authority is not in consonance with law.
13. From the foregoing discussions, it became apparent that the department has not led any corroborative evidence to support the allegations of clandestine clearance. There is no evidence regarding procurement of raw material, transportation of raw material, payment for unaccounted raw material and its transportation to sustain the allegation of clandestine manufacture and removal by the appellant. No evidence has been led by the Department to show that the appellant had sufficient production capacity to produce the quantity of goods alleged to have been produced clandestinely. There is no allegation that the appellant has shown excess production of dolachar vis-`-vis sponge iron. There is no evidence regarding excess consumption of electricity. No enquiry has been conducted from any of the alleged purchasers of the disputed goods to have been cleared clandestinely. No unaccounted cash has been recovered from the unit of the appellant during the search. The statement of only the dispatch clerk of the appellant was recorded but no statement was recorded from any other employee, labourer or gate man of the appellant unit. No evidence has been found regarding receipt of money consideration for the alleged unaccounted clearance of finished goods. In the absence of this corroborative evidence, in my considered view, the demand of duty is not sustainable and the penalty is also not imposable on the appellant and its two directors.
14. Therefore, I do not find any merits in the impugned order, and thus, the same is set aside and the appeals are allowed in favour of the appellants.
(Pronounced in the open Court on 01.07.2016) (S.K. Mohanty) Member (Judicial) Neha 15 | Page E/52449,52293,52294/2015-[SM]