2012 (1) TMI 108 - AT - Central Excise

Duty demand - Assessee engaged in the manufacture of computers and was selling them in the name of M/s. Com Trade Agency and he was receiving the bills, receipts and quotations in the name of M/s. Com Trade Agency using the blank letter heads found in the office belonging to M/s. Com Trade Agency - Held that - Commissioner (Appeals) has recorded a finding that the cheque book of M/s. Com Trade Agency was recovered from the premises of appellant when the same does not find mention in the panchnama at all. Therefore, there is no basis for this finding. Further, no investigation has been carried out with the bank to find out who had opened account in the name of M/s. Com Trade Agency and who operated this account, especially in view of the fact that both the statements of Shri Rajesh Manglani were retracted. Signatures will obviously not tally with the actual signature of Shri Rajesh Manglani, which he has put in the statement etc. Findings of both the lower authorities are not clear as to which signature tallies with which and there is no clarity as to who issued the bills in the name of M/s. Com Trade Agency. In this case also, the efforts made by the officers in recording statement of the buyers would have been of great help if the buyers were to say that they had dealt with M/s. Siddhi Computers or Shri Rajesh Manglani. None of 6 buyers whose statements have been recorded have stated that they had dealt with Shri Rajesh Manglani or they had purchased the computers from M/s. Siddhi Computers. All of them have admitted that they purchased computers from M/s. Com Trade Agency. These statements, in reality, go totally against the case of the Department since the finding is that the M/s. Com Trade Agency was a dummy unit, whereas the buyers are saying that they have purchased the computers from M/s. Com Trade Agency. There is no evidence of any efforts having been made to trace Shri Harish Soni, either by the Department or by the party - Department has not been able to make out a case against the appellant as regards manufacture of computers and clearance of the same - Decided in favour of assessee.

Summary

Issues:
Search operation findings at M/s. Siddhi Computers premises leading to duty demand and penalties.

Analysis:
The judgment by the Appellate Tribunal CESTAT Ahmedabad involved a case where a search was conducted at the premises of M/s. Siddhi Computers, Ahmedabad, resulting in the discovery of a blank letterhead of M/s. Com Trade Agency and 36 invoices issued by the same agency. The partner, Shri Rajesh Manglani, admitted to manufacturing and selling computers under the name of M/s. Com Trade Agency. The Central Excise officers calculated clearances based on the found invoices, leading to a demand for duty of Rs. 2,10,900 and penalties of Rs. 2 lakhs on M/s. Siddhi Computers and Rs. 20,000 on Shri Rajesh Manglani.

The appellant's counsel argued that there were factual errors in the lower authority's orders, such as the presence of M/s. Com Trade Agency's cheque books at the appellant's premises and the handling of the agency's bank account by Shri Rajesh Manglani. The counsel highlighted discrepancies in witness testimonies and the absence of incriminating evidence from the recovered items. The appellant's counsel also questioned the reliance on Shri Rajesh Manglani's retracted statement and the lack of verification regarding the ownership and operation of M/s. Com Trade Agency's bank account.

The Appellate Tribunal noted discrepancies in the lower authorities' findings, particularly regarding the recovery of M/s. Com Trade Agency's cheque book and the lack of investigation into the agency's bank account ownership. The Tribunal emphasized the importance of verifying such crucial details to strengthen the Department's case. Additionally, the Tribunal found inconsistencies in the identification of signatures and the lack of clarity on who issued invoices in M/s. Com Trade Agency's name. The Tribunal highlighted the absence of buyer statements supporting the Department's claims and the failure to locate Shri Harish Soni, raising doubts about the case against the appellant.

Ultimately, the Tribunal concluded that the Department failed to substantiate the allegations against the appellant regarding the manufacture and clearance of computers. Apart from Shri Rajesh Manglani's statement, no other evidence supported the Revenue's case. Consequently, the Tribunal ruled in favor of the appellants, granting them the benefit of doubt and overturning the impugned order.