2017 (5) TMI 950 - AT - Central Excise

Clandestine clearances - parallel invoices - apart from invoice books which are in the form of statutory documents, two books of parallel invoices bearing the same serial numbers as that of genuine invoices were recovered indicating clandestine removal of finished goods - the details of clearances of goods given in these GRs do not match with the details found in corresponding excise invoices which showed that finished goods were removed clandestinely against these GRs without being entered in statutory records with intent to evade payment of duty - shortage of stock - wrongful availment of credit - Held that - as regards shortage, the stock taking has been duly recorded in the relevant panchnama and it is on record that the stock taking was conducted in the presence of responsible persons representing the assessee. Both the persons representing the assessee have agreed to the result of the stock verification. Shri Umesh Khutenta, one of the witnesses of the stock verification, has been cross-examined before the adjudicating authority and he has stated the procedure adopted for stock taking - This procedure, to our minds, appears entirely reasonable and cannot be faulted with at this stage specially since there has been no murmur of protest against such procedure any time before. It is also seen from record that Sh. Sanjay Mandal, authorised person of the assessee who witnessed the stock taking, Sh. Nagendra Dutt Sharma, Excise Clerk, Sh. Mahendra Kumar Kabra, Director have also, in separate statements, have concurred with the stock taking. Sh. Srivats Rathi, Director have also agreed to such shortages. In view of the above, we find no reason to interfere with such demands. Parallel invoices - Held that - various persons on the side of assessee have admitted that goods covered by all these documents were cleared without accounting the same in the statutory records and without payment of Central Excise duty. It is further on record that none of the statements have ever been rectracted. In view of the fact that the factum of clandestine clearance has been admitted by all concerned including Sh. Srivats Rathi, Director, we find no reason to interfere with the demand of Central Excise duty based on these records - It is well established that what stands admitted need not be proved by revenue. Alleged fraudulent availment of cenvat credit of ₹ 50 lakhs - Held that - the credit of ₹ 50 lakhs on 27.10.2007 was taken fraudulently without any supporting invoices for receipt of inputs/ capital goods. The fraud has been compounded by the attempt to fabricate a debit entry for a like amount. The fraud also stands admitted by Sh. Nagendra Dutt Sharma, Excise Clerk. Sh. Mahendra Kumar Kabra, Director as also Sh. Srivats Rathi, Director. Consequently, we find no reason to interfere with the impugned order on this point also. Appeal rejected - decided against appellant-assessee.

Summary

Issues:
- Alleged clandestine removal of finished goods
- Shortage of raw materials and finished products
- Alleged fraudulent availment of Cenvat credit

Analysis:

Alleged Clandestine Removal of Finished Goods:
The central issue in this case revolves around the alleged clandestine removal of finished goods by the appellant-assessee. The Revenue officers discovered parallel invoices and GR books indicating the clandestine removal of finished goods without payment of Central excise duty. The appellant contested these allegations, arguing that there was no concrete evidence of such removal. However, statements from various employees, including directors, confirmed the clandestine clearance of goods. The Tribunal noted that these admissions, including from the Director, were consistent and unretrected, leading to the conclusion that the goods were indeed removed clandestinely. The Tribunal upheld the demand for Central Excise duty based on these records.

Shortage of Raw Materials and Finished Products:
Another significant issue was the shortage of raw materials and finished products found during stocktaking. The appellant challenged the duty demands raised on these shortages, claiming that the stocktaking was based on estimates rather than actual weighment. However, the Tribunal found that the stocktaking process was reasonable and duly recorded, with responsible persons from the assessee company agreeing to the results. Witness statements and concurrence from the Director further supported the accuracy of the stocktaking process. Consequently, the Tribunal upheld the duty demands related to these shortages.

Alleged Fraudulent Availment of Cenvat Credit:
The case also involved the alleged fraudulent availment of Cenvat credit amounting to ?50 lakhs. The appellant argued that this was a genuine clerical mistake, emphasizing that no excess credit was noticed during a departmental audit. However, upon investigation, it was revealed that the credit was taken fraudulently without supporting invoices, and attempts were made to fabricate entries to cover up the fraud. Statements from involved individuals, including the Director, confirmed the fraudulent activity. The Tribunal found no reason to interfere with the impugned order on this matter, upholding the decision regarding the fraudulent availment of Cenvat credit.

In conclusion, the Tribunal upheld the impugned order, rejecting the appeals filed by the appellant-assessee and the Director. The judgment highlighted the importance of consistent statements and evidence in establishing allegations of clandestine activities and fraudulent practices in excise matters. The decision underscored the significance of thorough investigations and adherence to statutory records to prevent duty evasion and fraudulent credit practices.