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2015 (7) TMI 182 - AT - Central ExciseEvasion of duty - Clandestine removal of goods - No duty paying documents could be produced - Held that - Allegation against the appellant company, MAPL is that during the period from Jan. 2003 to September, 2003 and from December, 2000to December, 2002, it had indulged in large scale of evasion of duty by receiving huge quantity of unaccounted scrap from certain suppliers of Mumbai, which was used in unaccounted manufacture of Aluminium Sections/Profiles, which were cleared to the various parties including M/s. NE, Mumbai and M/s.TF, Mumbai without payment of duty - it has been alleged that unaccounted Aluminium scrap was being received by MAPL, Pithampur from Mumbai and though the scrap was being transported by the Capital Road Lines and Parcel Services showing M/s.Mallnath Aluminium, New Delhi as the consignee, the goods covered under the LRs were being unloaded at the factory premises of Pithampur and it has been alleged that it is this unaccounted scrap which was used for unaccounted manufacture of Aluminium Profiles/Sections, which has been cleared clandestinely to various parities including Nagina Enterprises and Tarachand Fauzmal, Mumbai. Documents recovered from the residential premises of Shri Mahendra Sethia show the sales to a number of other parties, i.e. other than M/s. Nagina Enterprises, M/s. Tarachand Fouzmal, M/s. G. Gajendra & Company, M/s. Ambika Aluminium Profiles & M/s. Deepak Metals, which are not corroborated by any documents recovered from the premises of the transporter, Capital Road Lines & Parcel Services. These parties are from places other than Mumbai. No inquiry has been conducted with these parties. In our view, in respect of the such entries in the private records maintained by Shri Mahendra Sethia which are not corroborated by any other evidence, in form of transporter s documents or statement of the customers or goods manufactured by MAPL having been recovered from their premises, the duty demand would not be sustainable. According to the appellant duty demand on the quantity of 6,99,851 kgs. of Aluminium Profiles/sections mentioned in Annexure-1 for the period Jan. 2003 to September, 2003 and duty demand on the quantity of 85520 kgs. mentioned in Annexure-1A for the period December, 2000 to October, 2001 is in respect of alleged clearance of Aluminium Profiles and Sections as per the private records maintained by Shri Mahendra Sethai which are not corroborated by any documents of the transporters, and in respect of which absolutely, no inquiry has been conducted. In our view, the duty demand on this quantity would not be sustainable. Duty demand is upheld only in respect of the consignments detailed in Annexure 32 and 33 to the show cause notice which are consigned to M/s. Nagina Enterprises and the same has to be quantified by the Commissioner. Besides this the duty has to be demanded from MAPL in respect of 352 bundles of Aluminium profiles seized from the godown of M/s.NE, Mumbai. The rest of the duty demand has to be set aside. The penalty imposable on the appellant company, MAPL under Section 11 AC and penalty under Rule 26 of the Central Excise Rules, 2002 imposable on Shri Mahendra Sethia, Shri Manish Raj Jain and M/s.Nagina Enterprises would be in proportion to the duty demand which is confirmed against MAPL. As regards penalty on M/s. MM, M/s.FAPL and M/s. PTL since there is no allegation that they had received non-duty paid Aluminium Sections/Profiles cleared from MAPL and their names do not figure in Annexure 32 and 33 of the show cause notice and as such, they have not received non-duty paid goods from MAPL, penalty on them is not sustainable and the same is set aside. - As regards the confiscation of the goods seized from the godown of Nagina Enterprises, Mumbai, the same is upheld - Matter remanded back - Decided in favour of assessee.
Issues Involved:
1. Allegation of duty evasion by MAPL. 2. Reliability of documents recovered from the residential premises of Shri Mahendra Sethia. 3. Corroboration of evidence from transporters. 4. Statements and cross-examinations of witnesses. 5. Inquiry with alleged suppliers and buyers. 6. Capacity of MAPL to produce alleged quantities. 7. Penalty imposition on various parties. 8. Confiscation of goods. Detailed Analysis: Allegation of Duty Evasion by MAPL: The main allegation against MAPL is that during the periods from January 2003 to September 2003 and December 2000 to December 2002, the company engaged in large-scale evasion of duty by receiving unaccounted scrap from Mumbai, using it to manufacture Aluminium Sections/Profiles, and clandestinely clearing these without payment of duty. The duty demand totals Rs. 1,38,34,497/-. Reliability of Documents Recovered: The case relies heavily on documents recovered from the residential premises of Shri Mahendra Sethia, which allegedly detail the purchase of raw materials and sale of finished goods. Shri Mahendra Sethia initially admitted these documents reflected actual transactions but later retracted, claiming they were fabricated for obtaining bank loans. The Tribunal found these documents to be partially reliable, as some entries were corroborated by other evidence. Corroboration of Evidence from Transporters: Evidence from the transporters, Capital Road Lines, corroborated the entries in the documents recovered from Shri Mahendra Sethia's residence. The Tribunal upheld the duty demand for consignments detailed in Annexures 32 and 33 to the show cause notice, which were consigned to M/s. Nagina Enterprises, as these were corroborated by transport records. Statements and Cross-Examinations of Witnesses: Statements from Shri Mangal Singh and Shri Tilak Raj Lodaya of Capital Road Lines were crucial. They initially supported the Department's case but later retracted or altered their statements during cross-examination. The Tribunal noted discrepancies and inconsistencies in these statements, affecting their reliability. Inquiry with Alleged Suppliers and Buyers: The Department did not conduct inquiries with many alleged suppliers and buyers mentioned in the documents. The Tribunal found this lack of inquiry significant, particularly for parties other than M/s. Nagina Enterprises, leading to the dismissal of duty demands based solely on uncorroborated documents. Capacity of MAPL to Produce Alleged Quantities: MAPL's installed capacity was 600 MT per shift per year, and the unit operated only one shift per day. The Tribunal found the alleged production of 2.698 times the installed capacity implausible. Additionally, power consumption records did not support the alleged production levels. Penalty Imposition on Various Parties: Penalties were imposed under Section 11AC of the Central Excise Act and Rule 26 of the Central Excise Rules, 2002. The Tribunal upheld penalties proportionate to the confirmed duty demand against MAPL, specifically for Shri Mahendra Sethia, Shri Manish Raj Jain, and M/s. Nagina Enterprises. Penalties on M/s. Mahaveer Metal, M/s. Ficon Aluminium, and M/s. Peeraj Trade Link were set aside due to lack of evidence. Confiscation of Goods: The Tribunal upheld the confiscation of 20,359 kgs of Aluminium Profiles seized from M/s. Nagina Enterprises, Mumbai, with an option for redemption on payment of a fine. Conclusion: The Tribunal partially upheld the duty demands and penalties against MAPL and associated parties, specifically for transactions corroborated by transport records. The rest of the duty demands were set aside due to lack of corroborative evidence. The matter was remanded to the Commissioner for quantification of the confirmed duty demand and corresponding penalties. The confiscation of goods from M/s. Nagina Enterprises was upheld.
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