2015 (11) TMI 1473 - AT - Central Excise

Waiver of pre deposit - Duty demand - Clandestine removal of goods - Parallel invoices - Held that - Department mainly relies upon the statement dated 27/7/2010 of Shri Subodh Gupta and the documents recovered from his premises. However, besides this, there is also a lot of other evidence which indicates that SMS-Ghaziabad was receiving unaccounted copper ingots from Shivam, Mayank and Vasudev. On the day of search, i.e., on 27/7/2010, Investigating Officers intercepted a motor cycle driven by Shri Mohd. Ishraf at Swea Dham Mandoli Industrial Area and while his questioning was going on, a Tata 407 Vehicle with registration no. DL-1LM4572 was also intercepted by the officers. This vehicle was driven by one Shri Anil Kumar and another person named Shri Arvind Kumar, labourer of SMS-Ghaziabad was also sitting in the vehicle. It was loaded with copper ingots which according to the driver and Shri Arvind Kumar had been loaded from the premises of Maynak Metals, Binni Ki Bhatti, Mandoli Industrial Area, Sewa Dham, Shahdara. All these evidences indicate that SBU was firm floated by Shri Sandeep Gupta in the name of his employee Shri Subodh Gupta. It is also seen that while goods manufactured by SMS-Ghaziabad were being cleared under parallel invoices without payment of duty to M/s. Sandeep Metal Supply, Chawari Bazar, M/s. Sandeep Metal Supply were showing purchase of the same goods from a number of suppliers namely, M/s. Sai Enterprises, JMD Trading, M/s. Mahalaxmi Agency, M/s. M.K. Traders, M/s. First International Business Limited, Tirupati Marketing Sales India, Delhi, M/s. Shivam Traders-Delhi, M/s. Pacific Sales (India), Delhi, M/s. Aadhar Technology Private Limited-Dariyaganj, New Delhi and M/s. Apurva Enterprises-Ajmeri Gate, Delhi and on enquiry either these firms were found to be closed since long or were not existing or they denied having supplied copper strips or copper wires to M/s. Sandeep Metal Supply, Chawri Bazar. There is a lot of evidence on record against SMS-Ghaziabad and the copper ingots suppliers Shivam, Mayank and Vasudev and as such it cannot be said that entire case of the department against SMS-Ghaziabad, Shivam, Mayank and Vasudev is based only on the statement of Shri Subodh Gupta and on the basis of the documents recovered from his premises. - prima facie view that criminal complaint filed by Shri Sandeep Gupta against Shri Subodh Gupta before ACJM, Ghaziabad is only a strategy to dissociate himself from the documents recovered from the premises of Shri Subodh Gupta - this is not the case for total waiver from the requirement of pre-deposit and while granting dispensation from the provisions of section 35F of the Central Excise Act, 1944, the appellants, namely, SMS-Ghaziabad, Mayank, Shivam and Vasudev must be put to some conditions of pre-deposit to safeguard the interests of the Revenue. - Partial Stay grated.

Issues Involved:
1. Alleged evasion of Central Excise Duty by M/s. SMS-Ghaziabad.
2. Procurement of copper ingots without bills from Mayank, Shivam, and Vasudev.
3. Clandestine clearance of copper strips and wires.
4. Recovery of unaccounted stock and incriminating documents.
5. Role of Shri Subodh Gupta and his statement.
6. Issuance of show cause notices and adjudication.
7. Denial of cross-examination of Shri Subodh Gupta.
8. Requirement of pre-deposit for hearing appeals.

Detailed Analysis:

1. Alleged Evasion of Central Excise Duty by M/s. SMS-Ghaziabad:
The department alleged that M/s. SMS-Ghaziabad, a manufacturer of copper strips and wires, was involved in large-scale evasion of Central Excise Duty during the period from 19/6/2009 to 26/7/2010. They purportedly procured copper ingots without bills from Mayank, Shivam, and Vasudev, and cleared the finished goods clandestinely without payment of duty.

2. Procurement of Copper Ingots Without Bills:
The investigation revealed that SMS-Ghaziabad was procuring copper ingots without bills from Mayank, Shivam, and Vasudev. This was supported by the interception of a Tata 407 vehicle carrying copper ingots without duty-paying documents and the statements of individuals involved, including Shri Anil Kumar and Shri Arvind Kumar, laborers of SMS-Ghaziabad.

3. Clandestine Clearance of Copper Strips and Wires:
The department alleged that SMS-Ghaziabad cleared finished goods clandestinely under parallel invoices without payment of duty. This was corroborated by the recovery of incriminating documents, including kacha slips and parallel invoices, from the premises of SMS-Ghaziabad and Shri Subodh Gupta.

4. Recovery of Unaccounted Stock and Incriminating Documents:
During searches, unaccounted stock of raw materials and finished goods was found at the premises of SMS-Ghaziabad, Mayank, Shivam, and Vasudev. Additionally, incriminating documents, including kacha slips and parallel invoices, were seized from the premises of Shri Subodh Gupta, who was alleged to be the production manager of SMS-Ghaziabad.

5. Role of Shri Subodh Gupta and His Statement:
Shri Subodh Gupta's statement was crucial to the department's case. He admitted to managing the production and clearance of goods at SMS-Ghaziabad and explained the modus operandi of clandestine clearances. However, the appellants contested his statement, alleging that he falsely implicated them and fabricated documents to implicate Shri Sandeep Gupta.

6. Issuance of Show Cause Notices and Adjudication:
Two show cause notices were issued, demanding duty, interest, and penalties from SMS-Ghaziabad, Mayank, Shivam, and Vasudev. The Commissioner of Central Excise Ghaziabad adjudicated the notices, confirming the duty demands and imposing penalties.

7. Denial of Cross-Examination of Shri Subodh Gupta:
The appellants argued that the denial of cross-examination of Shri Subodh Gupta vitiated the proceedings. They contended that the entire case was based on his statement and documents recovered from his premises. The department, however, maintained that there was substantial evidence apart from Shri Subodh Gupta's statement.

8. Requirement of Pre-Deposit for Hearing Appeals:
The Tribunal considered the submissions and evidence and concluded that the appellants had a prima facie case. However, it directed SMS-Ghaziabad, Mayank, Shivam, and Vasudev to deposit 50% of the duty demand within eight weeks to safeguard the interests of the Revenue. The requirement of pre-deposit of penalties for Shri Sandeep Gupta was waived.

Conclusion:
The Tribunal directed compliance by SMS-Ghaziabad, Mayank, Shivam, and Vasudev by 06/08/2015 and pronounced the order on 07/05/2015. The stay applications were partly allowed, subject to the conditions of pre-deposit.

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