2015 (4) TMI 853 - AT - Central Excise

Clandestine removal of goods - parallel invoices - Duty evasion - Malafide intention - Preponderance of evidence - Held that - Municipality record being public record proved the questionable modus operandi of the respondent manufacturer showing movement of clandestinely removed goods. Recording of higher quantity of production after visit by investigation self speak suppression of production prior to search. Suppressed production cleared clandestinely was proved from blank and parallel invoices found by investigation. The dealers tabulated herein before having been found to be buyers of such goods, they supported case of Revenue. Plea of unrealiability of photocopies failed to sustain when signature of director of respondent company therein was found to be same as reported by Govt. document examiner. Blank copies of invoices found from invoice book show ill intention of respondent manufacturer in absence of any explanation therefor. Goods in the factory of respondent manufacturer was found during search to have been unaccounted. It is settled law that Revenue need not prove its case with mathematical precision. Once the evidence gathered by investigation brings out preponderance of probability and nexus between the modus operandi of the respondent with the goods it dealt, and movement of goods from origin to destination is possible to be comprehended, it cannot be ruled out that circumstantial evidence equally play a role - it is not only the photocopy that was used against the respondents, there are other credible and cogent documentary evidence, circumstantial evidence including oral evidence as well as experts report went against the respondents for which stand of Revenue cannot be criticized. The best evidence when demonstrate the modus operandi beginning from finding of unaccounted goods in the factory till parking of clandestinely removed goods and also throw light on the intention behind suppression of production which was established and corroborated by recording of higher quantity after search, the respondents made futile exercise in their defence. - For the clear case of evasion based by cogent and credible evidence came to record, dealing with the other citations made by respondents is considered to be mere academic exercise - Decided in favour of Revenue.

Issues Involved:
1. Jurisdiction and procedural aspects.
2. Allegation of excise duty evasion by M/s. Surya Cotspin Ltd.
3. Evidence of clandestine removal of goods.
4. Adjudication by the original authority and subsequent appeal.
5. Validity and reliability of evidence.
6. Decisions cited by the respondents.
7. Tribunal's analysis and conclusion.

Issue-wise Detailed Analysis:

1. Jurisdiction and Procedural Aspects:
The appeals arose from a common cause and were initially before the division bench. Due to the enhancement of pecuniary jurisdiction from Rs. 10 lakhs to Rs. 50 lakhs, the appeals were reassigned to a single bench. The division bench had directed that a copy of the final order in a related case be kept on record for these appeals.

2. Allegation of Excise Duty Evasion by M/s. Surya Cotspin Ltd.:
The respondent, M/s. Surya Cotspin Ltd., was accused of evading excise duty amounting to Rs. 22,61,821/-. The investigation revealed that the company had removed 2,76,050 kgs of unaccounted cotton yarn without payment of duty under certain invoices issued to different dealers. Penalties were imposed on the company and its directors, as well as on the dealers who were buyers of the duty-evaded goods.

3. Evidence of Clandestine Removal of Goods:
The investigation found unaccounted cotton yarn in the factory, discrepancies in invoice books, and recovered photocopies of parallel invoices. Statements from key individuals, including a supervisor who admitted to the issuance of parallel invoices for clandestine removal, supported the allegations. The investigation also corroborated the evidence with octroi receipts and transporters' records, revealing the movement of unaccounted goods.

4. Adjudication by the Original Authority and Subsequent Appeal:
The adjudicating authority examined the evidence and concluded that the respondent habitually cleared goods clandestinely, resulting in excise duty evasion. However, the Commissioner (Appeals) exonerated the respondents, citing the non-production of original invoices and violation of natural justice principles. The Revenue appealed this decision, arguing that multiple factors, not just the parallel invoices, contributed to the adjudication.

5. Validity and Reliability of Evidence:
The respondents contended that photocopies of invoices were unreliable and that findings based on the sales tax department's report were not binding. They argued that the evidence, including the blank invoices and statements, was insufficient to prove the case against them. However, the Tribunal found that the evidence gathered, including statements, octroi records, and the report of the Govt. document examiner, was credible and supported the case of clandestine removal.

6. Decisions Cited by the Respondents:
The respondents relied on various judicial decisions to argue that the adjudication was flawed. However, the Tribunal noted that the probative value of the other evidence could not be ruled out and that the respondents failed to rebut the evidence presented by the Revenue.

7. Tribunal's Analysis and Conclusion:
The Tribunal concluded that the clandestine removal of goods was proven by multiple factors, including the recording of higher production quantities after the investigation, corroborated by octroi records and statements. The Tribunal held that the Commissioner (Appeals) erred in ignoring vital evidence and material facts. It emphasized that fraud and justice are sworn enemies and that the evidence gathered unambiguously proved the evasion of excise duty. The Tribunal allowed all the Revenue appeals, affirming the adjudication's findings and penalties.

Conclusion:
The Tribunal's judgment reinstated the findings of the adjudicating authority, holding that M/s. Surya Cotspin Ltd. and its associates were guilty of excise duty evasion through clandestine removal of goods. The appeals by the Revenue were allowed, and the penalties imposed by the original authority were upheld.

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