9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (7) TMI 1039 - AT - Central ExciseClandestine manufacture and clearance of Sponge Iron - undervaluation of Sponge Iron removed during the period from January 2006 to June 2009 - entire demand has been calculated on the basis of the documents seized from the premises - retraction of statements - Section 9D of the Central Excise Act, 1944 - penalty on the Managing Director of the appellant-firm - Confiscation of 18,156.96 MT of Sponge Iron. HELD THAT - The impugned order has considered the documents seized from the premises of DCPWB as documents maintained by VSPL, on the basis of the statements recorded from the Managing Director on various dates. It is also alleged that some of the entries available in the seized documents tally with the invoices raised by the appellant for their actual transactions. Accordingly, the ld. adjudicating authority concluded that since Smt. Chunia Nandi is one of the Directors of VSPL and also the Proprietor of DCPWB, Shri D. Nandi has kept these documents in the premises of DCPWB and he has control over these documents. The ld. adjudicating authority cited the provisions of Section 36A of the Central Excise Act, 1944 and observed that these documents can be admitted as evidence and duty can be demanded based on the entries available in these documents. A perusal of the provisions of Section 36A reveals that the documents seized from another premises can be admitted as evidence provided the author of the entries made in the documents has been identified. Once the identity of the person in whose handwriting the documents are written is established and his statement is taken admitting that it is his handwriting, then the documents can be admitted as evidence - the requirements as provided under Section 36A are not fulfilled in this case and hence the seized documents cannot be presumed to be documents relating to the appellant company and relied upon to demand Central Excise Duty from the appellant-company. In the case of METAL FITTING (P) LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, DELHI 1997 (4) TMI 146 - CEGAT, NEW DELHI it has been held that entries in private diary and loose papers are not sufficient evidence to establish charge of shortages and the burden is on the Department to prove shortages and clandestine removal. In the case of DULICHAND SILK MILLS (P) LTD. VERSUS COMMISSIONER OF C. EX., HYDERABAD 2001 (4) TMI 147 - CEGAT, CHENNAI , it has been held that to establish the allegation of clandestine removal, the statement of manager of the assessee alone not sufficient. It is observed that no statement has been recorded either from the owner of the premises or from the person who was in possession of the seized documents at the time of seizure. Regarding the admission statement recorded from Shri Nandi, it is observed that he has retracted his statements by writing a letter to the jurisdictional Commissioner and by filing a sworn in affidavit before the Notary Public and contented that on 30.06.2009; his statement was taken late in the night, when he was under custody, under coercion, threat and duress, at Bhubaneswar Headquarters. It is observed that an admission statement taken under such situation alone cannot form the basis for inferring clandestine removal. The ld. adjudicating authority has simply brushed aside the retractions as mere afterthoughts. When the statements recorded are retracted, its evidentiary value comes down. In such circumstances, further corroborative evidences required to substantiate the allegations of clandestine removal. It is observed that other than the entries in the note books and loose sheets and the statements recorded, there is no other corroborative evidence available in this case. The appellant relied on the decision in the case of KRISHNA CO. VERSUS COLLECTOR OF CENTRAL EXCISE, JAIPUR 1997 (10) TMI 138 - CEGAT, NEW DELHI wherein it has been held that demand based on note books without any other evidence of production and clandestine removal is not sustainable. A perusal of Section 9D of the Central Excise Act, 1944 clearly establishes that unless a person who has made the statement is examined as a witness before the adjudicating authority, no reliance can be placed on any statement recorded under section 14 of the Central Excise Act. Any statement recorded under Section 14 of the Central Excise Act could be admitted in evidence only after the process of examination and cross examination is completed under Section 9D - it is observed that the procedure set out under Section 9D is a mandatory procedure and without following this procedure, no reliance can be placed on any statement recorded under Section 14 of the Central Excise Act, 1944. The allegation of clandestine clearance cannot be sustained on the basis of statements alone. There must be some positive evidences like purchase and consumption of unaccounted raw materials, discrepancy between recorded stock and physical stock, seizure of any goods en route, consumption of excess electricity, actual clandestine removal of finished goods without payment of duty, mode of removal, evidence of transporters and buyers of the clandestinely removed goods and flow back of funds pertaining to clandestine removals - the demands confirmed on account of clandestine removal in the impugned order without any of the above mentioned evidences are not sustainable. Since the demands of duty on account of clandestine removal and undervaluation is not sustained and set aside, the question of demanding interest and imposing penalty on the appellant company does not arise. Penalty imposed on Appellant No. 2, the Managing Director, Shri Digambar Nandi - HELD THAT - The alleged role of Appellant No. 2 in commission of the offence is not established. Accordingly, the penalty imposed on the Appellant No. 2 viz. Shri. Nandi, Managing Director of the appellant-company is set aside. Confiscation of 18,156.96 MT of Sponge Iron - HELD THAT - The allegation of clandestine removal and undervaluation is not sustained and set aside and hence, the question of confiscation of the goods alleged to have been cleared clandestinely without payment of duty does not arise. Accordingly, the order for confiscation and imposition of redemption fine in the impugned order is set aside. The impugned order is set aside - appeal allowed.
Issues Involved:
1. Demand of Central Excise Duty and penalty based on alleged clandestine removal and undervaluation of goods. 2. Admissibility and reliability of seized documents and statements. 3. Imposition of penalty on the Managing Director. 4. Confiscation of goods and imposition of fine in lieu of confiscation. Issue-wise Detailed Analysis: 1. Demand of Central Excise Duty and Penalty: The demand of Central Excise Duty amounting to Rs. 1,67,57,630/- along with interest and an equal amount of penalty was confirmed by the Commissioner based on the alleged clandestine removal and undervaluation of Sponge Iron by the appellant, VSPL. The demand was primarily based on entries in two notebooks and loose sheets seized from the premises of DCPWB, a third-party concern owned by the wife of the appellant's Managing Director. 2. Admissibility and Reliability of Seized Documents and Statements: The Tribunal observed that the seized documents were not directly linked to the appellant company as the author(s) of the entries were unidentified. The documents were written mostly in pencil by unknown persons, and the Department failed to establish their relationship with the appellant company. The Tribunal emphasized that the provisions of Section 36A of the Central Excise Act, which allow for the presumption of the truth of the contents of documents, were not fulfilled because the authors were not identified. The Tribunal cited previous judgments (e.g., Forward Resources Pvt. Ltd. vs. Commissioner of Central Excise & Service Tax, Surat-I) to support that documents seized from another premises cannot be admitted as evidence without identifying the author. The Tribunal also noted that the statements of the Managing Director, Shri Digambar Nandi, and other staff members were retracted. Shri Nandi claimed his statements were taken under duress and coercion. The Tribunal held that retracted statements without corroborative evidence cannot form the basis for confirming demands. The Tribunal referred to the decision in G-Tech Industries vs. Union of India, which mandates that statements recorded under Section 14 of the Central Excise Act must be corroborated by examination and cross-examination under Section 9D. 3. Imposition of Penalty on the Managing Director: The penalty imposed on Shri Digambar Nandi, the Managing Director, was based on his alleged role in the clandestine clearance and undervaluation. However, the Tribunal found that the Department did not provide sufficient evidence to implicate him in these activities. The Tribunal held that since the demands of duty on account of clandestine removal and undervaluation were not sustained, the penalty on the Managing Director was also not sustainable. 4. Confiscation of Goods and Imposition of Fine in Lieu of Confiscation: The order for confiscation of 18,156.96 MT of Sponge Iron and the imposition of a fine of Rs. 10,00,000/- in lieu of confiscation were based on the alleged clandestine removal and undervaluation. Since the Tribunal set aside the allegations of clandestine removal and undervaluation, the order for confiscation and the imposition of fine were also set aside. Conclusion: The Tribunal set aside the impugned order, including the demand of Central Excise Duty, penalties, and orders for confiscation and fine. The appeals filed by the appellants were allowed with consequential relief as per law. The judgment emphasized the need for corroborative evidence and proper adherence to legal procedures for statements and document admissibility.
|
