2015 (4) TMI 689 - AT - Central Excise

Clandestine clearance of goods - Removal of goods without issuance of proper invoices - Penalty u/s 11AC - Confessional statement by assessee - Whether duty could be demanded on the basis of confessional statement only as other evidences relating to manufacture, procurement of raw materials and transportation have not been produced by Revenue and such retraction of statement will have effect - Difference of opinion - Majority order - Held that - statement dated 4.10.2001 had never been retracted until 1.8.2003 when the proprietor tried to claim that the entries in the loose sheets broadly tallied with their RG-I register. But for almost close to two years from 4.10.2001 there had been no representation alleging that the statement dated 4.10.2001 was obtained under duress. Indeed the statement dated 4.10.2001 was also confirmed by Shri Rajender Kumar, authorised signatory in his statement dated 8.10.2001 for which again there have been no allegations/representation that the same was obtained under duress. - proprietor was repeatedly summoned on 7.1.2003, 26.3.2003 and 1.8.2003 but he appeared only on 1.8.2003 when he so claimed. Difference between the quantities shown in the loose sheets and the RG-I register is precisely 500 pouches with respect of the pouches of ₹ 1 each and in full hundreds like 100, 200, 500 (save for one which is 150) for pouches of ₹ 2 each. Such neat differences are too neat to be really realistic in the given circumstances and raise a doubt about the genuineness of the RG-I register produced on 1.8.2003 when the said RG-I register was never produced by the appellants on the day of the visit/search and thereafter up to almost two years (i.e. up to 1.8.2003). The RG-I register was not recovered during search also. There was also no mention of the RG-I register in the statements of the proprietor or the authorised signatory; not even to the effect that it existed even if not found then, although RG-I register is required to be present in the factory 24x7 and is required to be made available to Central Excise officers on demand for verification. All of these facts, factors and circumstances are compelling to infer at least on the principle of preponderance of probability that the so called RG-I register produced on 1.8.2003 was nothing but a result of manipulation and fabrication. Further even at the time of recording statement dated 1.8.2003 Shri Praveen Kumar did not expressly retract his earlier inculpatory statement nor allege any duress or threat. Indeed the statement dated 4.10.2001 of Shri Praveen Kumar was written by his son and signed by him (i.e. Shri Praveen Kumar) and none of them in its immediate aftermath made any representation that the same was not voluntary. Indeed even the payment of duty has never been alleged by the proprietor or the authorised signatory to have been made involuntarily under duress or threat or inducement. In the case of K.G. Augustine Vs. CC - 1996 (5) TMI 253 - CEGAT, MADRAS , it was held that the statement made by person to be considered voluntary and true even if retracted when circumstances not showing any use of threat or coercion and also when corroborated by statements of other persons. In the case of K.I. Pavunny Vs. Assistant Collector (HQRS), Central Excise Collectorate, Cochin - 1997 (2) TMI 97 - SUPREME COURT OF INDIA , the Supreme Court held that confessional statement under Section 108 of the Act, 1962 is admissible as person giving statement is not an accused and voluntary statement is not to be a characterised to have been obtained by threat, inducement or promise and further, that the burden is on the person to prove that his statement was obtained by threat inducement or promise. - Decided favour of Revenue.

Issues Involved:
1. Recovery of 14 loose sheets from the residential premises.
2. Statements of the proprietor and authorized signatory.
3. Allegations of clandestine removal of excisable goods.
4. Corroboration of documentary evidence with statutory records.
5. Retraction of statements and their validity.
6. Adjudicating authority's reliance on statements and recovery of documents.
7. Comparative analysis of loose sheets and statutory records.
8. Voluntary payment of duty and its implications.
9. Difference of opinion between judicial and technical members.

Issue-wise Detailed Analysis:

1. Recovery of 14 Loose Sheets:
The officers of the Anti-Evasion branch, Delhi-I Commissionerate, recovered 14 loose sheets from the residential premises of the appellant on 4.10.2001. These sheets were alleged to contain details of clandestine clearances of excisable goods without payment of duty.

2. Statements of the Proprietor and Authorized Signatory:
The proprietor, in his statement dated 4.10.2001, admitted the recovery of the loose sheets and stated that they contained details of clearances made without discharging Central Excise duty. The authorized signatory corroborated this statement on 8.10.2001. Both statements were recorded under Section 14 of the Central Excise Act, 1944.

3. Allegations of Clandestine Removal:
The show cause notice dated 5.11.2003 alleged that the loose sheets detailed the receipt and utilization of pouches and lime tubes, which were used to pack unmanufactured branded chewing tobacco and cleared without accounting for them in the daily stock account register or paying the required duty.

4. Corroboration of Documentary Evidence with Statutory Records:
The appellant argued that the loose sheets contained details of pouches and lime tubes, which were duly recorded in their statutory records. They submitted that the quantities mentioned in the loose sheets were reflected in the RG-1 register and RT-12 returns, with minor differences attributed to loss/wastage during manufacturing.

5. Retraction of Statements and Their Validity:
The appellant retracted the initial confession in a statement dated 1.8.2003, claiming the loose sheets were duplicates of statutory records. The adjudicating authority and Member (Technical) found this retraction to be an afterthought, especially since it came almost two years after the initial confession and voluntary payment of duty.

6. Adjudicating Authority's Reliance on Statements and Recovery of Documents:
The adjudicating authority confirmed the demand for duty based on the initial statements and the recovery of the loose sheets, which were considered as evidence of clandestine removal. The authority dismissed the retraction as unconvincing.

7. Comparative Analysis of Loose Sheets and Statutory Records:
Commissioner (Appeals) compared the quantities in the loose sheets with the statutory records and found a minor difference of 500 pouches per month, attributed to loss/wastage. This comparison led to the conclusion that the loose sheets were not indicative of clandestine removal.

8. Voluntary Payment of Duty and Its Implications:
The appellant voluntarily paid Rs. 9,00,000 through cheques and an additional Rs. 4,00,000 via TR-6 challans. The adjudicating authority and Member (Technical) viewed this voluntary payment as an admission of guilt and evidence supporting the initial statements.

9. Difference of Opinion Between Judicial and Technical Members:
Member (Judicial) concluded that the demand for duty could not be based solely on confessional statements without corroborative evidence of manufacture, procurement of raw materials, and transportation of goods. Member (Technical) disagreed, emphasizing the validity of the confessional statements and the supporting documentary evidence. The third member, R.K. Singh, sided with the Member (Technical), leading to the final decision in favor of the Revenue.

Final Decision:
The appeal filed by the Revenue was allowed, confirming the demand for duty and penalty based on the initial confessional statements and the recovery of the loose sheets, which were considered valid evidence of clandestine removal of excisable goods.

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