Custom, Excise & Service Tax Tribunal
M/S. Madhu Aluminium Pvt. Ltd vs Cce, Indore on 17 June, 2015
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, PRINCIPAL BENCH NEW DELHI
Date of Hearing:21.01.2015
Date of Decision:17.06.2015
Excise Appeals Nos.E/377, 378, 379, 380, 381, 382 and 383 of 2006-EX(DB)
[Arising out of common Order-in-Original No.90/Commr/IND/CEX/05 dated 18.11.2005 passed by the Commissioner of Central Excise & Customs, Indore]
M/s. Madhu Aluminium Pvt. Ltd. Appellants
M/s.Nagina Enterprises
M/s.Mahaveer Metal Works Ltd.
M/s.Peeraj Trade Link
M/s.Ficon Aluminium Pvt. Ltd.
Shri Mahendra Kumar Sethia
Shri Manish Raj Jain
Vs.
CCE, Indore Respondent
Appearance:
Rep. by Shri Alok Barthwal, Advocate for the appellants.
Rep. by Shri Pramod Kumar, DR for the respondent.
For approval and signature:
Honble Shri Rakesh Kumar, Member (Technical) Honble Shri 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?
Coram: Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial).
Final Order No.51918-51924/2015 dated 17.06.2015 Per Rakesh Kumar:
The facts leading to filing of these appeals are, in brief, as under:-
1.1 M/s.Madhu Aluminium Pvt. Ltd., Plot No.355-357, Sector-I, Pithampur (hereinafter referred to as MAPL) are engaged in the manufacture of Aluminium Profiles and Sections chargeable to central excise under chapter 76 of the Central Excise Tariff. Shri Manishraj Jain, Shri Mohanlal Sethia and Shri Mahendra Sethia are the Directors of MAPL. While Shri Manishraj Jain and Shri Mohanlal Sethia have share holding in MAPL, Shri Mahendra Sethia does not have any share holding and is a paid Director, who functions on salary of Rs.15,000/- plus residence and vehicle provided by MAPL. According to the Appellants, Shri Mohanlal Sethia had joined MAPL as a paid Director on Feb. 2003. M/s. Mahaveer Metal, Mumbai (hereinafter referred to as MM), M/s. Nagina Enterprises, Mumbai (hereinafter referred to as NE), M/s. Ficon Aluminium (P) Ltd. (FAPL) and M/s. Peeraj Trade Links (hereinafter referred to as PTL) all located at 17, Abdul Rehman Street, Mumbai, which deal Aluminium Profiles and Sections. Shri Manishraj Jain is partner of NE.
1.2 On receipt of an intelligence that MAPL are engaged in evasion of duty, the officers of Directorate General of Central Excise Intelligence (DGCEI) on 18.09.2003, searched the following premises:-
(A) Factory premises of MAPL;
(B) Office premises of MAPL at Sunrise Tower, Indore;
(C) Premises of NE, MM, FAPL and PTL at Mumbai;
(D) Office premises of Capital Road Lines and Parcel Service at Indore and Mumbai (Mumbai premises were searched on 7.01.2004);
(E) Residential premises of Shri Mahendra Sethia at Indore.
1.2.1 While no discrepancy in the stock of raw materials or finished goods were detected in the factory premises of MAPL, in godown premises of NE, Mumbai, 352 bundles of Aluminium Profiles totally weighing 20,359 kgs. were found and since the same appeared to have originated from the factory premises of MAPL, Pithampur and since no duty paying documents could be produced , the same were placed under seizure on reasonable belief that the same had been cleared clandestinely by MAPL without payment of duty.
1.2.2 From the residential premises of M/s. Mahendra Sethia, a number of documents consisting of files, note books, etc. were found and the same appeared to be containing details of receipt of the raw materials- Aluminium scrap from various suppliers and sale of the Aluminium Sections and Profiles to various parties and these documents were placed under seizure under a panchnama. On preliminary scrutiny, the documents marked in the Panchnama as a A-3, A-4, A-5,A-7, A-10, A-11 and A-12 appeared to be containing details of purchase of Aluminium scrap and sale of Aluminium Profiles/Sections during the period from January,2003 to September, 2003, the documents marked as A-8 appeared to be containing similar details for the period from December, 2000 to December, 2002 and similarly, the documents marked as A-13, A-14 and A-15 also appear to be containing the similar details.
1.2.3 In course of the search of the premises of transporters - Capital Road Lines and Parcel Services, 104, Loha Mandi, Indore, the officers seized two correspondence books containing details of the LRs for transportation of the goods from Indore to Mumbai under which the goods were delivered to various customers in Mumbai. During the search of another office of Capital Road Lines and Parcel Service at 28, Vinayak Apartment, Loha Mandi, Indore, entry register containing LR-wise details of the dispatch of the goods from Indore to various destinations were seized. From the scrutiny of this register, it appeared that the goods actually booked by MAPL to their various customers in Mumbai had been booked in the name of Metchem India Ltd. In this regard, Shri Mangal Singh, Manager of Capital Road Lines in his statement dated 18.09.2003 stated that the goods booked in the name of Metchem India, Jainco Aluminium and Narmada Trading by showing them as consignors had actually been loaded from the factory of MAPL under the direction of Shri Jayanti Bhai and the goods had been delivered to NE, Mumbai and M/s. Tarachand Fouzmal, Mumbai.
However, on inquiry with Shri Jayant Bhai, Proprietor of M/s.Metchem India, it was found that he was ex employee of MAPL but he refuted the statement of Shri Mangal Singh of Capital Road Lines.
1.2.4 On 7.1.2004, the premises of Capital Road Lines and Parcel Services at Mumbai were searched. A computer print out from the computer in the premises of the Capital Road Lines and Parcel Services, Mumbai was resumed. The print out appeared to contain the details of consignments of Aluminium Profiles and Sections transported from Indore to Bombay and also the details of the consignments of scrap dispatched from Mumbai.
From the print out, it appeared that the Aluminium scrap was being dispatched from Mumbai in the name of different consignors like M/s. Navdurga Metal, M/s. B.K. Metal, M/s. Ganesh Metal, M/s. Ambika Metal and was being cosigned to M/s. Mallinath Aluminium, New Delhi. However, on inquiry, M/s. Mallinath Aluminium, New Delhi was found to be a fictitious entity, which was not existing. The statement of Shri Tilak Raj Lodaya, Representative of Capital Road Lines at Mumbai was recorded, wherein he stated that the consignments of Aluminium Scrap dispatched from Mumbai with M/s. Navdurga Metal, M/s. B.K. Metal, M/s. Ganesh Metal, M/s. Ambika Metal etc. as consignors had actually been delivered to MAPL, Pithampur and the freight for the same had been paid by Shri Manish Raj Jain of M/s.Nagina Enterprise.
1.2.5 The documents recovered from the transporters, Capital Road Lines and Parcel Services at Indore/Mumbai and enquiry with their persons appeared to corroborate the entries in the documents recovered from the residential premises of Shri Mahendra Sethia and it appeared that while MAPL was receiving Aluminium Scrap from various suppliers of Mumbai at their factory at Pithampur, the scrap was being booked for transportation with the Branch Office of Capital Road Lines at Mumbai in the name of fictitious persons as consignors and was being consigned to Mallinath Aluminium, New Delhi, a fictitious entity while the same was actually being received at the factory premises of the MAPL at Pithampur. Some of the suppliers of scrap of Aluminium Scrap as mentioned in the documents recovered from the residential premises of Mahendra Sethia were Shri Manoj, Rajesh Mungad, Krishna Metal Corporation, Tulsi, Ashok Domani, etc. Inquiry with the transporters also appeared to corroborate the entries in the documents recovered from the residential premises of M/s. Mahendra Singh regarding dispatch of the finished goods and it appeared that the finished goods were dispatched by MAPL to NE, M/s. Tarachand Fouzmal (TF) etc. and these consignments of Aluminium Profiles and Sections were being transported by Capital Road Lines by showing M/s.Metchem India, M/s.Jainco Aluminium and M/s. Narmada Trading as the consignors while the goods were actually being loaded from the factory premises of MAPL.
1.2.6 Inquiry was made with Shri Devendra Dawani, Excise Clerk of MAPL in the factory at Pithampur and on being shown the weighment slips recovered from the godown premises of M/s. NE, MM, FAPL and PTL. Mumbai along with 359 bundles of Aluminium Profiles weighing 20352 kgs., he stated that though those weighment slips had been prepared by him the same had been prepared on the instructions of Shri Mahendra Sethia, but no goods had been dispatched. This statement of Shri Davendra Dawani appeared to be false as when he accepted that the weighment slips had been prepared by him, there is no explanation for the presence of those weighment slips in the godown of M/s.NE along with the consignment of 352 bundles weighing 20,352 kgs. found in the godown and these goods, therefore, appeared to have been cleared by MAPL, Pithampur without payment of duty.
1.2.7 On the basis of entries regarding dispatch of the finished goods in the documents A/3, A/4, A/5, A/7, A/10, A/11 & A/12 recovered from the residential premises of Shri Mahendra Sethia, the investigating officered prepared a chart enclosed as Annexure-I to the show cause notice giving details of the Aluminium Sections which appeared to have been cleared clandestinely without payment of duty to various parties during the period from Jan. 2003 to September, 2003. Total value of these clearances is Rs.76,41,20,031/- and the duty chargeable on these clearances is Rs.1,22,35,525/-. Similarly, on the basis of the entries in the documents A-8, recovered from the residential premises of Mahendra Sethia, officers prepared Annexure 1 A which contained the details of clearances of Aluminium Profiles by MAPL to various buyers during the period from December, 2000 to October, 2001 without payment of duty. The total value of these clearances was determined as Rs.99,93,578/- and the total duty involved on these clearances was determined as Rs.15,98,972/-.
1.2.8 On the basis of the entries in the documents A/3, A/4, A/5, A/7, A/10, A/11 & A/12 recovered from the residential premises of Mahendra Sethia, which appeared to be the details of receipt of the Aluminium Scrap, the Investigating Officers prepared a chart enclosed as Annexure-2 to the show cause notice. In this chart, the details of receipt of the Aluminium Scrap during Jan. 2003 to September, 2003 have been compiled and according to this Chart, the total quantity of Aluminium Scrap received by MAPL without any accountal was 7,36,749 kgs. valued at Rs.6,39,39,104/-. Similarly, on the basis of the documents, A-14 & A/15, the officers prepared a chart enclosed as Annexures -29 to the show cause notice which contains details of the Aluminium Scrap, supplied by different scrap suppliers of Mumbai in the name of M/s. Mallinath Aluminium, New Delhi. The total quantity received as per the details in Annexure A/13, A/14 & A/15 is 48,141 kgs. during the period from 31.05.2003 to 17.08.2003. Similarly, another Chart enclosed as Annexure-30 to the show cause notice based on the entries in the documents A/5 & A/7 was prepared which shows the details of receipt of unaccounted Aluminium scrap by MAPL, Pithampur by different suppliers of Mumbai in the name of M/s. Mallinath Aluminium, New Delhi during the period March, 2003 to 17.05.2003.
1.2.9 According to the Department, the details regarding receipt of raw materials, as given in Annexure-2 to show cause notice are clear evidence of unaccouted receipt of Aluminum Scrap by MAPL and its use unaccounted manufacture of Aluminum Profiles/Sections which appeared to have been cleared clandestinely without payment of duty.
1.3 In view of the above investigations, a show cause notice dated 15.03.2004 was issued by the Addl. Director General of Directorate General of Central Excise Intelligence, Ahmedabad to M/s. MAPL, Pithampur, Shri Mahendra Kumar Sethia, Shri Manish Raj Jain, M/s. Nagina Enterprises, M/s. Mahaveer Metal, M/s. Ficon Aluminium (P) Ltd and M/s. Peeraj Trade Link for
(a)recovery of central excise duty amounting to Rs. 1,38,34,497/- (Rs.1,22,35,525/- + Rs.15,98,972/-) appeared to have been evaded in respect of the clearances of Aluminium Profile as detailed in Annexure-1 and Annexure-1A to the show cause notice which includes the duty chargeable on 20,359 kgs of the goods seized from the godown premises of M/s. Nagina Enterprises, Mumbai under proviso to Section 11A(1) of the Central Excise Act, 1944 along with interest on it read with Section 11 AB;
(b) imposition of penalty on MAPL under Section 11AC; and (c )imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on Shri Mahendra Kumar Sethia, Manish Raj Jain, M/s. Nagina Enterprises, M/s. Mahaveer Metals Works Ltd., M/s. Ficon Aluminium Pvt.Ltd. and M/s. Peeraj Trade Link. Mumbai.
1.4 The above show cause notice was adjudicated by the Commissioner vide order-in-original dated 18.11.2005 by which he
(a) Confirmed central excise duty demand of Rs.1,38,34,497/- against MAPL, Pithampur under proviso to Section 11A(1) of Central Excise Act, 1944 along with interest on this duty under Section 11 AB;
(b) Imposed penalty of equal amount on MAPL under Section 11 AC; and
(c) Imposed penalty under Rule 26 of the Central Excise Rules, 2002 on other noticees as under:-
(i) M/s. Mahendra Kumar Sethia, Director of M/s.MAPL Rs.10,00,000/-
(ii) Shri Manish Raj Jain, Rs.10,00,000/-
Director of M/s.MAPL
(iii) M/s. Nagina Enterprises Rs. 2,00,000/-
(iv) M/s.Mahaveer Metal Works Rs. 2,00,000/-
(v) M/s.Ficon Aluminium(P)Ltd. Rs. 2,00,000/-
(vi) M/s.Peeraj Trade Link,Mumbai Rs. 2,00,000/-
The Commissioner by this order also ordered the confiscation of 20,359 kgs. of Aluminium Profiles seized from the premises of M/s.Nagina Enterprises, Mumbai with option to be redeemed on payment of redemption fine in lieu of confiscation value of Rs.5 Lakhs. The demand in respect of these goods seized at Mumbai is included in the duty demand of Rs.1,38,34,497/-.
1.5 Against this order of the Commissioner, these appeals have been filed.
2. Heard both the sides.
3. Shri Alok Barthwal, Advocate, ld. Counsel for the appellants made the following submissions:-
(1) The search of the residence of Shri Mahendra Sethia, Director, MAPL, factory premises and Office premises of MAPL and of the premises of the transporters at Indore had been made on 18.09.2003. In course of search of the factory premises on 18.09.2003, neither any shortage or excess of raw materials was found nor any shortage or excess of the finished goods had been detected. Since the last date of duty demand based on the documents recovered from the residential premises of Shri Mahendra Kumar Sethia is 15.09.2003 and the officers visited the factory on 18.09.2003, if the allegation of receipt of unaccounted Aluminium Scrap by MAPL and allegation of unaccounted manufacture and clandestine clearances of Aluminium profiles/sections is correct, the officers would have found unaccounted stock or unaccounted shortage of raw materials or unexplained excess stock or shortage of finished goods but no such excess or shortage in stock of raw materials (Aluminium Scrap) or finished goods was found. This supports the appellants plea that the documents recovered from the residential premises of Shri Mahendra Sethia on the basis of which the Departments allegation of duty evasion against MAPL is based, are not reliable and do not reflect the actual quantum of finished goods manufactured and cleared and actual receipt of the raw materials in the factory of MAPL.
(2) Though Shri Mahendra Sethia in his statements dated 18.09.2003 16.10.2003 and 17.10.2003 has stated that the note books recovered from his residential premises pertain to the actual figures of sale and purchase made by MAPL but subsequently he retracted these statements stating that the figures contained in these diaries/files seized from him are imaginary figures prepared for the purpose of preparing documents for taking loan from the bank.
(3) Though the Department seeks to corroborate allegation of clandestine removal based on the entries in the documents recovered from the residential premises of Shri Mahendra Sethia by alleging that the appellant during the period Jan. 2003 to September, 2003 received unaccounted consignment of Aluminium Scrap from suppliers in Mumbai, this allegation is also based on the documents recovered from the residential premises of Shri Mahendra Sethia, no inquiry has been conducted with anyone of the alleged Aluminium Suppliers .
(4) The Department relies upon the statement of Shri Mangal Singh of Capital Road Lines, Loha Mandi , Indore , wherein he stated that the Capital Road Lines had provided transportation to MAPL for transportation of the goods from the factory at Pithampur to M/s. NE, Mumbai and M/s.TF, Mumbai and that while bilties had been prepared in the name of M/s.Metchem India, M/s.Jainco Aluminium and M/s. Narmada Trading, the goods had actually been loaded from the factory premises of MAPL, Pithampur under supervision of Shri Jayanti Bhai. However, Shri Jayanti Bhai who was ex employee of MAPL, and was proprietor of M/s.Metchem India, on inquiry with him refuted the statement of Shri Mangal Singh, Manager of Capital Road Lines. Subsequently, in course of cross-examination of Shri Mangal Singh in course of adjudication, he stated that he was not aware as to from where the goods had been loaded. No inquiry has been made with the drivers of the trucks to ascertain as to from where the goods had been loaded and where the same had been delivered. In view of this, the statement of Shri Jayanthi Bhai of M/s.Metchem India is of no evidentiary value.
(5) The false nature of entries in the documents seized from the residential premises of Shri Mahendra Sethia becomes clear from the fact that as per his own statement dated 18.09.2003 and 16.10.2003, he was the Director of MAPL since Fab. 2003. Even Shri Manishraj Jain, the other Director of MAPL in his statement dated 4.2.2004 has stated that Shri Mahendra Sethia had jointed MAPL as Director since Feb. 2003 and this factual position has not been contradicted either in the show cause notice or in the Order-in-Original. When Shri Mahendra Sethia has jointed MAPL w.e.f. Feb., 2003 and he was paid Director and he was working on salary of Rs.15,000/- p.m. plus vehicle and residence provided by the company and when prior to Feb., 2003, he, admittedly, was not working in MAPL, there is no explanation as to how the entries for the period prior to Feb., 2003 are there in the documents recovered from his premises. There is no explanation given by the Investigating Officers for this.
(6) The Adjudicating Authority has not taken into consideration the evidence on record during cross examination. Shri Mahendra Sethia in his cross examination on 14.2.2005 in an answer to a Question-(4) had stated that records seized from his residence did not reflect true and clear clearance by MAPL and he explained that the purpose of writing those documents was to get the loan from the bank. Similarly, Shri Mangal Singh, employee of Capital Road Lines in his cross examination had stated that he never personally supervised loading of the goods from MAPL. Similarly, in course of his cross examination, Shri Mahendra Jain, Manager, Capital Road Lines, also stated that he had only signed the statement in his writing and he did not remember the contents of the statement and that he did not personally supervise the loading of the goods at the factory of MAPL.Shri Tilak Lodaya, Manager of M/s.Capital Road Lines, Mumbai during his cross examination stated that the computer print-out generated from his computer at the Mumbai Office of the Capital Road Lines had been generated on 15.01.2004 but he was made to sign the same on back date i.e. 7.1.2004. It was obligatory on the part of the adjudicating authority to have taken into consideration the averments made by the witnesses in course of their cross examination which has not been done.
(7) Though Shri Mahendra Sethia in his statement dated 16.10.2003 had stated that MAPL were selling Aluminium profiles to different customers such as M/s.Railway Tracks and Others and their details were also mentioned in the documents, absolutely no inquiry has been conducted by the Department with these parties. Similarly, no inquiry has been conducted with the alleged suppliers of Aluminium Scrap. Merely on the basis of the entries in the records maintained by the transporters, the allegation of unaccounted receipt of raw materials and clandestine clearance without payment of duty on finished goods cannot be made.
(8) The Department has alleged sale of goods without invoices and without payment of duty to a number of parties, a large number of which are located at places other than Mumbai. The transporters, Capital Road Lines in their statement have only stated that they had supplied the goods to two parties viz. M/s.NE and M/s. TF, whereas perusal of Annexure-1 and Annexure-1A of the show cause notice reveals that there were a large number of other parties also like M/s. Jainco Aluminium and M/s.Calcutta Steels, M/s. Shri Raj Kumar Vishdas, Jaipur, M/s.Rail Track, M/s. Ambika Krishan, M/s.Rajesh at Jaipur, M/s. Bharat Aluminium, M/s.Laxmi Aluminium, etc. but neither any inquiry has been conducted with these alleged consignees nor the alleged sales made to these persons are corroborated by the transporters records. It would be seen that there are a number of purported buyers whose names and figures in Annexure-1 and 1A to the show cause notice on the basis of which, the duty has been demanded on the quantity of 6,99,851.06 kgs in Annexure 1 for the period Jan. 2003 to September, 2003 and another duty demand on 85520.34 kgs. of Aluminium Profiles has been made under Annexure1A for the period December, 2000 to October, 2001, but no evidence has been brought on record to show as to how the goods were transported to these alleged buyers of clandestinely cleared goods. Though the name of M/s.Tarachand Fauzmal has figured in the statement of transporters and the firm is situated at Mumbai but even in this case also, the Department has neither visited the premises of M/s.Tarachand Fouzmal nor has recorded any statements. Therefore, on this very ground itself, the duty demand on the quantity of 699,851.06 kgs. of profiles in Annexure-1 for the period Jan. 2003 to September, 2003 and the duty demand of 85,520.34 kgs. in Annexure-1A for the period December, 2000 to October, 2001 would not be sustainable.
(9) Shri Tilak Raj Lodaya, Authorised Representative of Capital Road Lines in his statement dated 7.1.2014 has stated that the computer print out recovered and seized from his office was containing details of the transportation provided by MAPL to Shri Manishraj Jain for transportation of Aluminium scrap from Mumbai to Indore under different names as per direction of Shri Manishraj Jain. He further stated that the computerized print out taken from the Mumbai office of the Transport Company also contained the details of the Aluminium Profiles consigned from Indore Branch in the name of different parties, M/s. Jainco Aluminium , M/s.Metchem India, etc. to M/s.Nagina Enterprises, Mumbai. He also disclosed the freight regarding transportation of the profiles from MAPL factory to Mumbai factory and transportation of the scrap from Mumbai to MAPL factory was being paid by Shri Manishraj Jain, Director, MAPL. However, Shri Manishraj Jain, Director, MAPL in his statement dated 4.2.2004 has flatly refused that MAPL had any customer at Mumbai. On being confronted with the computer print-outs taken from Capital Road Link Office at Mumbai, he refused to have dispatched any goods to MAPL.
(10) The print-out at the premises of Capita Road Lines, Mumbai was seized on 7.1.2004 and it shows this rundate on all pages except 8 to 13. The pages 8 to 13, containing entries regarding consignments of Aluminium Scrap dispatched to M/s.Mallinath Aluminium, New Delhi show the rundate as 15.01.2004. As per the statement of Shri Tilak Raj Lodaya, these pages had been signed by him on 15.01.2004 on back date 7.1.2004 under pressure of the investigating officers. The rundate of pages 8 tof 13 was 15.01.2004, their print-out could not have been taken on 7.1.2004. This renders the truthfulness of this printout as doubtful.
(11) While the statements of the transporters employees implicate Shri Manish Raj Jain, in respect of booking of consignments of scrap from Mumbai for delivery at MAPL, Pithampur and consignments of Aluminium profiles/sections from Pithampur to Mumbai, he has not been questioned in this regard. He was not confronted with various documents seized from transporters except the computer printout seized from the premises of Capital Road Lines, Mumbai to which he stated that he has neither received any goods from MAPL nor dispatched any goods to them.
(12) The entire duty demand is based on the documents A/3, A/4, A/5, A/7, A/10, A/11, A/12, A/8, A/13, A/14 & A/15 seized from the residential premises of Shri Mahendra Sethia and his initial statement with regard to these documents. But in the entries in these documents, nowhere the words Aluminium Profiles or Aluminium Sections or Aluminium Scrap have been used. When neither the statements of alleged buyers of clandestinely cleared Aluminium Profiles/sections have been recorded, nor the statement of alleged suppliers of unaccounted Aluminium Scrap have been recorded and no truck number or lorry receipt is mentioned in these document, and no amount relating to sale or purchase has been seized, the duty demand against MAPL based on the above mentioned documents seized from the residential premises of Shri Mahendra Sethia would not be sustainable.
(13) The installed capacity of MAPL, as certified by G.M., District Industries Centre, Dhar (M.P.) is 600 MT per shift per year. The unit is running for only one shift per day. If the allegation of clandestine removal during Jan. 2003 to September, 2003 is accepted, it would translate into production of 2.698 times their installed capacity, which is not possible. Moreover the allegation of clandestine manufacture and removal of Aluminium profiles/sections during Jan. 2003 to September, 2003 and from December, 2000 to October, 2001 is not supported by power consumption. While Average power consumption per kg. of Aluminium sections/profiles produced during 1.1.2000 to 30.09.2002 was 1.06 units/kg., the same during 1.1.2001 tofd 30.09.2001 was 1.18 units/kg. and during 1.1.2003 to 30.09.2003 was 1.24 units/kg. Similarly, the labour employed during 1.1.2001 to 30.09.2001, 1.1.2002 to 30.09.2002 and 1.1.2003 to 30.09.2003 were 17, 20 and 29 respectively.
(14) The show cause notice alleged that from scrutiny of the note book marked A/3 to A/5, A/7, A/10, A/11 recovered from the residence of Shri Mahendra Sethia , it appeared that a sum of Rs.29,66,023/- had been paid on account of Shri James Paul by MAPL to Shri Yogesh Dubey and Shri Patelji. These persons were summed by the Investigating Officers but they did not appear. Shri Devendra Dawani, Authorised Signatory of MAPL in his statement dated 12.01.2004 has stated that Shri Dubey was the Production in charge of MAPL who was a man of the contractor - Shri James Paul and had left the MAPL two months back. According to the statement of Shri Mahendra Sethia, Shri James Paul was providing man power to their factory and was being paid @ Rs.3250/- per metric tone of finished products produced for the same. The Commissioner in the impugned order, after noting that the labour contractors could not be summoned in spite of the efforts of the Investigating Officer, has still relied upon the statement of Shri Devendra Dawani stating that these persons were labour contractors of MAPL. No reliance can be placed on the said entries in the diaries of Shri Mahendra Sethia which show the payment to Shri Yogesh Dubey and Shri Patilji on account of Shri James Paul, when the statement of these persons have not been recorded. In any case, Shri Devendra Dawani during his cross examination, in course of adjudication has categorically stated that his statement dated 12.01.2004 had been recorded under pressure. In any case, when the factory was of the appellant company was working in only one shift, the production which is alleged during the period of dispute is not possible and not only this, even the power consumption of the unit which is not disputed is not compatible with the quantum of production, which is being alleged.
(15) The appellant rely upon the following judgements of the Tribunal and High Courts in support of their plea that the evidence on record is not sufficient to sustain the allegation of duty evasion:-
(i) CCE,Chennai Vs. Dhanavilas (Madras) Snuff Co.
2003 (153) ELT 437 (Tribunal-Chennai) Wherein it was held that merely on the basis of entries of dispatch of finished goods in private parcel note book , the allegation of duty evasion cannot be made against an assessee in absence of any other credible corroborative evidence.
(ii) S.T. Texturiser Vs. CCE, Surat-I 2006 (200) ELT 234 (Tribunal-Mumbai) Wherein it held that entries made in private register cannot be made the sole basis for arriving at the value of clandestine manufacture and clandestine removed and that statements made by two women partners under Section 14 of the Central Excise Act, 1944 are not comparable to confession recorded under Section 164 of Code of Criminal Procedure before a Magistrate and as such said statement is to be corroborated by the evidence of removal without payment of duty and that such statements without corroborative evidence cannot be considered to be supportive of the allegation of clandestine removal.
(iii) Arch Pharmalabs Ltd. Vs. CCE, Hyderabad 2005 (182) ELT 413 (Tribunal-Bang.) Wherein it was held that commercial invoices and delivery challans prepared by the appellant solely for raising higher bank loans and entries made in the private diary cannot be made the basis for establishing clandestine removal when no evidence has been produced by the Revenue in respect of the unaccounted receipt of inputs or manufacture of finished goods and removal thereof.
(iv) T.G.L. Poshak Corporation Vs. CCE, Hyderabad 2002 (140) ELT 187 (Tribunal-Chennai) Wherein it was held that the note books maintained by the workers and other private accounts cannot be the basis for establishing the charge of clandestine removal without any other corroborative evidence with regard to purchase of raw material, manufacture of final products, flow back of money or any seizure from or any statement from purchasers.
(v) CCE, Chandigarh Vs. Laxmi Engineering Works 2010 (254) ELT 205 (P&H) Wherein Honble Punjab & Haryana High Court held that even if some private records are discovered during raid and some of such records are corroborated by some supportive evidence, for establishing the allegation of clandestine removal and duty demand based on the same, it is necessary to have some positive evidence of clandestine manufacture and clandestine removal.
(vi) CCE Vs. Vishwa Traders Pvt. Ltd.
2013 (287) ELT 243 (Gujarat) Wherein the Honble High Court upheld the Tribunals order setting aside the duty demand against the assessee which was based on the certain private records of production and sale of the goods recovered from the employees of the assessee company.
In view of the above, it was pleaded that the impugned order is not sustainable.
4. Shri Pramod Kumar, ld. Joint CDR defended the impugned by reiterating the findings of the Commissioner in the impugned order and in this regard, he emphasized the following points:-
(1) The duty demand is based on the records A/3, A/4, A/5, A/7, A/10, A/11, A/8, A/13, A/14 & A/15 recovered from the residential premises of Shri Mahendra Sethia, one of the Directors of the appellant company. These records are written by Shri Mahendra Sethia in his own handwriting and the same in his statements had been explained by him as containing the details of the purchase of the raw materials and sale of the finished goods. Besides this, he had also named four scrap suppliers and two buyers in Mumbai of the clandestinely removed goods. The authenticity of these documents has not been rebutted by Shri Mahendra Sethia.
(2) Shri Mahendra Sethia in his statements dated 16.10.2003, 17.10.2002 and 23.12.2003 has stated that they had purposefully indulged in clandestine removal of the goods to save excise duty and in these statements, he has admitted that the scrap supplied by one Shri Tulsi was not entered in the raw materials register though the Aluminium scrap supplied by Shri Jugraj was entered in the raw materials register. Besides this, he also explained that the entries with Code N, pertained to sale of the Aluminium Profiles to M/s. Nagina Enterprises and the entry Code No.TF pertained to the sale of Aluminium Profiles to Tarachand Faujmal of Mumbai. Shri Mahendra Sethia in his statement had explained pagewise entry in the documents recovered from him.
(3) The entries in the documents recovered from the premises of Shri Mahendra Sethia with regard to sale of Aluminium Profiles to some buyers of Mumbai are also corroborated by the documents recovered from the transporters Capital Road Lines and the statements of their employees. M/s.MAPL in respect of the clandestine clearance to buyers in Mumbai were showing the consignors names like Metechem India , M/s.Narmada Traders, etc. The freight in respect of these dispatches to Mumbai was being paid by Shri Manishraj Jain, Director of MAPL, who was also a partner of M/s.Nagina Enterprises.
(4) The documents recovered from the transporters clearly indicated that the consignments of Aluminium Scrap were being booked by Shri Manishraj Jain from Mumbai by showing bogus names as consignors and showing M/s.MallinathAluminium, New Delhi as consignee and all these consignments were being received in the factory of MAPL. On enquiry, Shri Mallinath Aluminium were found to be a fictitious party.
(5) At the time of search of godown of M/s. Nagina Enterprises, Mumbai, 352 bundles of Aluminium Profiles totally weighing 20,359 kgs. had been found alongwith weighment slips. These goods along with the weighment slips had been placed under seizure. Since these consignments appeared to have originated from the factory of MAPL at Pithampur, inquiary was made with Shri Davendra Dawani, Excise Clerk of MAPL and he while admitting that the weightment slips had been prepared by him claimed that no goods had been cleared. There is no explanation as to how the weightment slips prepared by Shir Davendra Dawani were recovered from the godown of M/s.Mahaveer Metals/M/s.Nagina Enterprises at Mumbai alongwith 352 bundles of Aluminium Profiles weighing 20359 kgs. From this, it is clear that this consignment of Aluminium Profiles had been manufactured in the factory of MAPL at Pithampur and had been clandestinely cleared to M/s.Nagina Enterprises at Mumbai.
(6) The allegation of unaccounted manufacture and clandestine removal is also supported by huge unaccounted payment of labour charges to a labour contractor, Shri James Paul. There is entry regarding payment of labour charges in the documents recovered from the residential premises of Shri Mahendra Sethia.
5. We have considered the submissions from both the sides and perused the records.
6. The main appellant MAPL in their factory at Pithampur, Madhya Pradesh, manufacture Aluminium Sections and Profiles. Their main raw materials is Aluminium scrap from which they manufacture Aluminium ingots, which, in turn, are used in extrusion machine for manufacture of Aluminium Profiles/sections. Certain quantity of Aluminium ingots/billets are purchased from outside also. The appellant company is a Private company of which there are three Directors, Shri Manishraj Jain, Shri Mohan Lal Sethia and Shri Mahendra Sethia. There is no dispute about the fact that Shri Mahndra Sethia is a paid Director, who works on salary of Rs.15,000/- per month plus residence and car provided by the appellant company and he had joined this company in Feb. 2003 and that Shri Manishraj Jain and Shri Mohan Lal Sehtia have share holding in the appellant company, Shri Mahendra Sethia does not have any share holding in MAPL. There is also no dispute about the fact that Shri Manishraj Jain is a partner of M/s. Nagina Enterprises which is a group concern at Mumbai alongwith three other group concerns M/s. Mahaveer Metal Works, M/s.Ficon Aluminium Pvt. Ltd. and M/s. Peeraj Trade Lines, all located at 17, Abdul Rehman Street, Mumbai. These firms are engaged in trading of Aluminium Sections and Profiles.
7. The allegation against the appellant company, MAPL is that during the period from Jan. 2003 to September, 2003 and from December, 2000to December, 2002, it had indulged in large scale of evasion of duty by receiving huge quantity of unaccounted scrap from certain suppliers of Mumbai, which was used in unaccounted manufacture of Aluminium Sections/Profiles, which were cleared to the various parties including M/s. NE, Mumbai and M/s.TF, Mumbai without payment of duty. This allegation of duty evasion is based on the following evidences:-
(a) Documents recovered from the residential premises of Shir Mahendra Sethia in course of its search on 18.09.2003 alongwith his statement recorded on 16.10.2003, 17.10.2003 and 23.10.2003;
(b) Recovery of 352 bundles weighing 20,359 kgs. of Aluminium Profiles valued at Rs.22,39,490/-from the godown at 157, Pangera Pole, 3rd Lane, Mumbai of Nagina Enterprises along with hand written weighment slips containing details of size and number of Aluminium profiles coupled with statement dated 12.01.2003 of Shri Devendra Dawani, Excise Clerk of MAPL stating that weighment slips recovered from the above mentioned premises had been prepared by him but he did not know about the consignee of the goods;
(c ) The documents recovered from the search on 18.09.2003 of the office premises of Capital Road Line and Parcel Services at 104, Loha Mandi, Indore and 28, Vinayak Apartments, Indore and also on 7.1.2004 from Mumbai office of the transport company read with the statement dated 18.09.2003 of Shri Mangal Singh, Manager, Capital Road Lines, Indore and of Shri Tilak Raj Lodaya, Representative of Capital Road Lines, Mumbai;
(d) Computer printout seized from the Mumbai office of Captial Road Lines and Parcel Services showing dispatch of the consignment of scrap from Mumbai to M/s.Mallinath Aluminium, Delhi and consignments of Aluminium Profiles from MAPL to Mumbai.
(e) Inquiry report in respect of Mallinath Aluminium, Delhi indicating that it was a fictitious firm and statement of Shri Tilak Raj Lodaya stating that the consignments of scrap being sent in the name of M/s.Mallinath, New Delhi were being unloaded at the factory premises of MAPL, Pithampur and the transportation charges for the same were being paid by Shri Manishraj Jain;
(f) Eight consignments of scrap detailed in Annexure-29 to the show cause notice mentioned in the computer printout seized from the Mumbai office of Capital Road Lines which were dispatched from the Mumbai with M/s.Nav Durga Metals and M/s. Ganesh Metals, Mumbai as the consignors and consigned to M/s.Mallinath Aluminium, New Delhi in respect of which the weightment of the trucks had been done at a Dharamkanta near Pithampur and the weighment slips in respect of which mentioning the vehicle numbers and the date of weighment had been recovered from the residential premises of Shri Mahendra Sethia which indicated that the consignments mentioned in the computer printout which were consigned to M/s.Mallinath Aluminium, New Delhi had actually been unloaded at the factory premises of MAPL, Pithampur;
(g) In respect of 34 consignments of Aluminium Scrap mentioned in computer print-outs seized at Mumbai Office of Capital Road Lines which had been dispatched from Mumbai in the name of Mallinath Aluminium, New Delhi and whose details are mentioned in the Annexure-30 to the show cause notice, entries were found at page 130 & 131 in file A-13 recovered from the residential premises of Mahendra Sethia.
7.1 In view of the above evidence it has been alleged that unaccounted Aluminium scrap was being received by MAPL, Pithampur from Mumbai and though the scrap was being transported by the Capital Road Lines and Parcel Services showing M/s.Mallnath Aluminium, New Delhi as the consignee, the goods covered under the LRs were being unloaded at the factory premises of Pithampur and it has been alleged that it is this unaccounted scrap which was used for unaccounted manufacture of Aluminium Profiles/Sections, which has been cleared clandestinely to various parities including Nagina Enterprises and Tarachand Fauzmal, Mumbai. The duty demand of Rs.1,22,35,525/- whose details are mentioned in Annexure A-1 to show cause notice is based on the documents A/3, A/4, A/5, A/6, A/7, A/8, A/11 and A/12 recovered from the residential premises of Mahendra Sethia and these documents contain the details regarding the purchase of Aluminium Scrap and removal of Aluminium Profiles during the period Jan. 2003 to September, 2003. The duty demand of Rs.15,98,972/- for the period December, 2000 to December, 2002 is based on the entries regarding purchase of Aluminium scrap and sale of Aluminium Profiles during the period from December, 2000 to December, 2002 as mentioned in the documents A-8 recovered from the residential premises of Mahendra Sethia. On the basis of these entries Annexure-1A has been prepared giving the details of the calculation of this duty demand.
8. While the basic documents for calculation of duty demand against MAPL for the period from Jan. 2003 to September, 2003 and December, 2000 to October, 2001 are the files/documents marked as A/3, A/4, A/5, A/7, A/8, A/10 , A/11 and A/12 seized from the residential premises of Shri Mahendra Sethia read with his statement dated 18.09.2003 and subsequent statements explaining these entries, the entries in the documents of Shri Mahendra Sethia mention only the date of sale, consignees name, quantity, rate and value and do not mention the details of the transporters. Shri Mahendra Sethia, however, in his subsequent statement had claimed that the entries in these documents do not represent real transactions, as these documents had been prepared to prepare a proposal for obtaining loan from the bank. However, we find that in respect of the sales to certain parties of Mumbai M/s. NE, Mumbai, M/s.TF, Mumbai etc. the details of the sales as recorded in the documents recovered from the residential premises of Mahendra Sethia are corroborated by the entries in the entry Register and computer printout recovered from the office of Capital Road Lines and Parcel Services at Indore and Mumbai. Annexure 32 to show cause notice gives the details of such consignments based on the records of Capital Road Lines at Indore dispatched to M/s. NE, Mumbai during the period from 21.04.2003 to 6.9.2003. Annexure 33 to show cause notice contains details of the consignments, based on the computer print out seized from the transporters office at Mumbai to M/s. NE, Mumbai, M/s. TF, Mumbai, M/s. Deepak Metal, Mumbai, M/s. Ambica Aluminium Profiles, Mumbai & M/s. R. Ganesh & Company, Mumbai.
8.1 In the entry Register of Capital Road Lines at Indore the dispatch of a number of consignments to M/s.Nagina Enterprises and some parties of Mumbai are shown with consignors name as M/s.Metchem India. However, Shri Mangal Singh, Manager of Capital Road Lines and Parcel Services in his statement date 18.09.2003 has stated tht the goods booked in the name of M/s.Metchem India had actually been loaded from the factory premises of MAPL under the directions of Shri Jayanti Bhai. Shri Jayanti Bhai was found to be proprietor of M/s.Metchem India and was an ex-employee of MAPL. Though Shri Jayanti Bhai in his statement refutes the statement of Shri Mangal Singh of Capital Road Lines, the fact remains that the entries regarding sale of consignment of Aluminium Profiles/Sections to M/s.NE are corroborated by the details of the LRs as mentioned in the Register maintained by the transport company. The details of such consignments are compiled in Annexure-32 of the show cause notice. In respect of these consignments detailed in the Annexure-32, whose details are recorded in the documents recovered from the residential premises of Mahendra Sethia and which as per the records of the transporters M/s. Capital Road Lines had been transported to Mumbai, the claim of Shri Mehendra Sethia that these entries do not represent real transaction is difficult to accept as the documents recovered from residences of Shri Mahendra Sethia are corroborated not only by the documents recovered from the transporters Capital Road Lines, Indore, but also from the fact that on date of search of the godown of M/s. Nagina Enterprises on 18.09.2003, 352 bundles of Aluminium Profiles weighing 20,359 kgs. had been recovered along with the weighment slips containing details of size and numbers of the Aluminium profiles and further, inquiry revealed that weighment slips had been prepared by Shri Devendra Dawani, Excise Clerk of MAPL and Shri Devendra Dawani in course of recording his statement dated 12.01.2004 has accepted that the weighment slips recovered from Nagina Enterprises had been prepared by him. Though in course of his cross examination, at the time of adjudication, Shri Devendra Dawani has stated that he had prepared these weighment slips on the instructions of Shri Mahendra Sethia but no goods had been cleared, the fact remains that there is no explanation for presence of weighment slips prepared by Shri Devendra Dawani of MAPL at the godown of M/s.NE, Mumbai alongwith 352 bundles of Aluminium Profiles weighing 20,352 kgs. From this, it is also clear that 20,352 kgs. of bundles of Aluminium Profiles seized from the godown of Ms/s. NE, Mumbai had been cleared without payment of duty. The presence of 352 bundles of Aluminium profiles in the godown of Nagina Enterprises along with the weighment lists, which had been prepared by Shri Devendra Dawani, Excise Clerk, MAPL at Pithampur is a clear evidence of clandestine removal of Aluminium Profiles/sections by MAPL to Nagina Enterprises.
8.2 Annexure-29 to the show cause notice giving details of 8 consignments of scrap, which as per records of the Capital Road Lines, Mumbai had been dispatched from Mumbai to M/s. Mallinath Aluminium, New Delhi under truck no.MP 09KB1868, under Truck no.6681 MP 09012, Truck No.MP 09 KB 8416, MP 09 KB 2448, MP 09KP 8030, MP 09KB 100 and MP 0906527 on different dates during the period from 31.05.2003 to 17.08.2003, which on inquiry of Shri Mallinath, was found to be a non-existent company. From the residential premises of Mahendra Sethia the weighment slips of these consignments mentioning the truck nos. have been recovered. The weighment slips are from Dharamkanta located close to the factory of MAPL. In our view, the 8 consignments detailed in Annexure-29 to the show cause notice are a clear evidence that these consignments dispatched to Mallinath Aluminium, New Delhi had actually been unloaded from the factory premises to MAPL. Similarly, Annexure-30 to the show cause notice gives details of the consignments of Aluminium/scrap which had been dispatched from Mumbai in the name of various consignors and which are consigned to M/s.Mallinath Aluminium, New Delhi, the details of which are mentioned in the computer print recovered from the transporters premises at Mumbai. The details of these consignments are also found at page-130 to 131 of file A/13 recovered from the residential premises of Shri Mahendra Sethia.
8.3. In view of the above discussion, we hold that the duty demand in respect of the consignments cleared by the appellant company to M/s. NE, Mumbai, whose details are given in Annexures 32 of the Show cause notice, has to be confirmed.
8.4 However as regards the alleged clearances to M/s. Nagina Enterprises, Mumbai, M/s. Tarachand Fouzmal, Mumbai, M/s.Ambika Aluminium Profiles, M/s. Deepak Metals and M/s. G. Gajendra & Company detailed in Annexure in 33 to the show cause notice, though these clearances detailed in the computer printout seized from the Mumbai premises of Transporters, M/s. Capital Road Lines are corroborated by the entries in the documents recovered from the residential premises of Shri Mahendra Sehtia, except in respect of M/s.NE, no inquiry has been made with other parties M/s. TF, M/s. Ambika Aluminium Profiles, M/s. Deepak Metals and M/s. G. Gajendra & Co., Mumbai. They have not been even show caused for imposition of penalty under Rule 26 of the Central Excise Rules, 2002. In respect of M/s. Tarachand Fouzmal, M/s. Ambika Aluminium, M/s. Deepak Metals and M/s. G. Gajendra & Co., other than the computer print out seized from the transporters at Mumbai and documents recovered from the premises of Shri Mahendra Sethia, these is no other evidence of clearances to these parties. Therefore, we hold that in respect of Annexure-33 to the show cause notice, the duty demand has to be upheld only in respect of the clearances to M/s. Nagina Enterprises and not in respect of alleged clearances to M/s. Tarachand Fouzmal, M/s.G. Gajendra & Company and M/s. Ambika Aluminium and M/s. Deepak Metals.
9. The documents recovered from the residential premises of Shri Mahendra Sethia show the sales to a number of other parties, i.e. other than M/s. Nagina Enterprises, M/s. Tarachand Fouzmal, M/s. G. Gajendra & Company, M/s. Ambika Aluminium Profiles & M/s. Deepak Metals, which are not corroborated by any documents recovered from the premises of the transporter, Capital Road Lines & Parcel Services. These parties are from places other than Mumbai. No inquiry has been conducted with these parties. In our view, in respect of the such entries in the private records maintained by Shri Mahendra Sethia which are not corroborated by any other evidence, in form of transporters documents or statement of the customers or goods manufactured by MAPL having been recovered from their premises, the duty demand would not be sustainable. According to the appellant duty demand on the quantity of 6,99,851 kgs. of Aluminium Profiles/sections mentioned in Annexure-1 for the period Jan. 2003 to September, 2003 and duty demand on the quantity of 85520 kgs. mentioned in Annexure-1A for the period December, 2000 to October, 2001 is in respect of alleged clearance of Aluminium Profiles and Sections as per the private records maintained by Shri Mahendra Sethai which are not corroborated by any documents of the transporters, and in respect of which absolutely, no inquiry has been conducted. In our view, the duty demand on this quantity would not be sustainable.
10. In view of the above discussion, the duty demand is upheld only in respect of the consignments detailed in Annexure 32 and 33 to the show cause notice which are consigned to M/s. Nagina Enterprises and the same has to be quantified by the Commissioner. Besides this the duty has to be demanded from MAPL in respect of 352 bundles of Aluminium profiles seized from the godown of M/s.NE, Mumbai. The rest of the duty demand has to be set aside. The penalty imposable on the appellant company, MAPL under Section 11 AC and penalty under Rule 26 of the Central Excise Rules, 2002 imposable on Shri Mahendra Sethia, Shri Manish Raj Jain and M/s.Nagina Enterprises would be in proportion to the duty demand which is confirmed against MAPL.
11. As regards penalty on M/s. MM, M/s.FAPL and M/s. PTL since there is no allegation that they had received non-duty paid Aluminium Sections/Profiles cleared from MAPL and their names do not figure in Annexure 32 and 33 of the show cause notice and as such, they have not received non-duty paid goods from MAPL, penalty on them is not sustainable and the same is set aside.
12. As regards the confiscation of the goods seized from the godown of Nagina Enterprises, Mumbai, the same is upheld.
13. Accordingly, the matter is remanded to the Commissioner only for quantification of the duty demand against MAPL in terms of our directions in this order. Penalty imposable on MAPL under Section 11 AC would be equal to the duty demand which is confirmed against MAPL and the penalty imposable on Shri Mahendra Sethia, Shri Manish Raj Jain and M/s. Nagina Enterprises, Mumbai under Rule 26 of the Central Excise Rules, 2002 would be in proportion to the duty demand, which is confirmed against MAPL.
[pronounced in the open court on 17.06.2015] (Rakesh Kumar) Member (Technical) ( S.K. Mohanty) Member (Judicial) Ckp.
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