2014 (5) TMI 293 - AT - Central Excise

Clandestine removal - estimation of value of clearance - demand based on packing and folding register - non consideration of production capacity and electricity consumption figures - Held that - said register indicates at specific pages which are allotted to Shri Krishna Screen Print Art; activity undertaken by them of cutting and folding of the processed fabrics, the entries thereto which have been culled out in the Annexure A to the show cause notice indicate that the said packing register specifically points out the activity undertaken by M/s. Sunira Traders for Shri Krishna Screen Print Art. Shri Rajan Ishwar Jariwala who is the sole person who is aware of entire activity of Shri Krishna Screen Print Art, M/s. Shri Govardhan Textiles, M/s. Sunira Traders and M/s. Sunita Textiles, was in the knowledge of the entire activity and was the only beneficiary of the evaded duty, which was not paid on the manmade fabrics which were processed on machine in Shri Krishna Screen Print Art and cleared as hand processed material of M/s. Shri Govardhan Textiles. An admission made by the sole beneficiary of such an activity is itself enough to hold against the appellants. - adjudicating authority was correct in coming to the conclusion in holding that the appellant Shri Krishna Screen Print Art is liable to be visited with the duty liability, interest thereof and penalty; penalty on Shri Rajan Ishwar Jariwala and M/s. Shri Govardhan Textiles. - Decided against the assessee.

Summary

Issues Involved:
1. Allegation of evasion of central excise duty by Shri Krishna Screen Print Art.
2. Validity of the evidence and statements used to support the demand.
3. Production capacity and electricity consumption discrepancies.
4. Role and activities of M/s. Shri Govardhan Textiles and M/s. Sunira Traders.
5. Credibility of retracted statements and affidavits.
6. Request for remand of the case for reconsideration.

Detailed Analysis:

1. Allegation of Evasion of Central Excise Duty
The primary issue involves the allegation that Shri Krishna Screen Print Art processed fabrics using power and then sent them to M/s. Sunira Traders for folding and packing. These were subsequently cleared under the name of M/s. Shri Govardhan Textiles to evade central excise duty. The adjudicating authority confirmed the demand for duty, interest, and penalties based on this allegation.

2. Validity of Evidence and Statements
The appellant contested the reliance on documents and statements, arguing that the evidence was insufficient to sustain the charge of clandestine removal. The packing register from M/s. Sunira Traders was crucial, but the appellant argued it was not directly linked to Shri Krishna Screen Print Art. However, the Tribunal found that the statements of Shri Rajan Ishwar Jariwala and Shri Narendra Solanki, which admitted the connection between the packing register and the processed fabrics, were credible. The Tribunal noted that these statements were recorded over several years and were consistent.

3. Production Capacity and Electricity Consumption Discrepancies
The appellant claimed that their production capacity was limited to 30,000 to 40,000 meters and that the adjudicating authority erred in its calculations. They also argued that the electricity consumption figures were not properly considered. The Tribunal found that the certificate from the Chartered Engineer did not hold evidentiary value as it lacked details on machinery and production observations. The argument regarding electricity consumption was dismissed as the case was based on the packing register, which was corroborated by the proprietor's admissions.

4. Role and Activities of M/s. Shri Govardhan Textiles and M/s. Sunira Traders
The appellant argued that M/s. Shri Govardhan Textiles operated independently and had its own hand processing unit. However, the Tribunal noted that Shri Rajan Ishwar Jariwala was the proprietor of all involved entities and could influence document preparation. The Tribunal found that the documents provided by M/s. Shri Govardhan Textiles were not credible as they surfaced only during the reply to the show cause notice and not during the investigation.

5. Credibility of Retracted Statements and Affidavits
The appellant claimed that the statements of Shri Rajan Ishwar Jariwala were recorded under duress and were retracted through affidavits. The Tribunal found no evidence of duress in the affidavits and noted that the retractions did not cover all statements, particularly the one dated 18.01.2005, which admitted the evasion activities. The Tribunal held that these admissions were sufficient to support the demand.

6. Request for Remand of the Case
The appellant requested that the matter be remanded for reconsideration, arguing that the production capacity and other aspects were not properly evaluated. The Tribunal rejected this request, stating that the evidence conclusively proved the evasion of duty and that a remand was unnecessary.

Conclusion
The Tribunal upheld the adjudicating authority's decision, confirming the duty liability, interest, and penalties on Shri Krishna Screen Print Art, Shri Rajan Ishwar Jariwala, and M/s. Shri Govardhan Textiles. The appeals were rejected, and the Tribunal found no reason to interfere with the original order. The judgment was pronounced on 23.04.2014.