9911796707
TMI Blog2006 (9) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... y it and was also resorting to undervaluation of its finished excisable goods, the officers of the Directorate General of Central Excise Intelligence (DGCEI), Regional Unit Vadodara on 8-7-2002 conducted simultaneous search operations at the factory premises of the applicant, the office premises situated at Mumbai, the residential premises of the Director, factory manager, accountant, production manager, transporter/s and the premises of dealers and during the course of such search operations, large numbers of incriminating documents were resumed for further investigations. 3. Investigations made revealed that the applicant had entered into agreements with raw materials suppliers and had procured large quantities of raw materials, without accompanying bills/invoices or any other documents showing licit nature of such procurements. These were stored in the factory premises of the applicant without being accounted for in its books except to the extent it desired to place on record and on which appropriate input stage duty credit under MODVAT/CENVAT was availed by it. The said raw materials were then subjected to manufacturing process for manufacture of Ceramic Glaze Fritz. The appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting authority. 6. The applicant filed application on 6-10-2005 before the Commission under Section 32E of the Act for settlement of the case covered by the aforesaid Show Cause Notice admitting a duty liability of Rs. 20,65,680/-. 7. The impugned Show Cause Notice was again adjudicated by the Commissioner of Central Excise and Customs, Vadodara-II vide Order-in-Original No. II/VDR-II/MP/05 dated 30-10-2005 (issued on 5-12-2005) confirming the demand of Central Excise duty of Rs. 90,50,293/- besides levying interest and imposing penalty on the applicant and the co-applicants. 8. The co-applicants also filed their applications on 3-2-2006 under Section 32E of the Act for settlement of their case covered by the aforesaid Show Cause Notice. 9. The case was first heard for admission on 7-12-2005. The crux of the arguments tendered by the ld. Advocate on the admitted duty liability was that there are 2 relevant columns for calculating the duty liability viz. (a) sale value of the transactions shown on the bills/invoices; (b) sale value of the transactions other than the amount shown on the bills realized in cash. With reference to the latter it was sought to be arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting a value of more than Rs. 10,000/- per MT to the goods alleged to have been removed clandestinely. By resorting to arbitrary valuation the demand has been inflated by denying the SSI exemption to the applicant. Even assuming that the department has correctly alleged clandestine removals against the applicant the total demand cannot exceed Rs. 35,03,850/-. However, this was without prejudice to the contention that the applicant s liability does not exceed Rs. 20,73,680/- as disclosed by it. The applicant vide letter dated 6-3-2006 again amended the duty liability to Rs. 31,11,020/- which it again attributed to typographical and clerical mistake. 12. The next hearing in the case was held on 7-3-2006. During the hearing the applicant submitted that as per the directives given by the Bench vide their Interim Order No. 56/CEX/2005 dated 8-12-2005 at para 5, it has furnished its rejoinder (self-contained report) to the Revenue on 2-2-2006 but in reply has not yet received the Revenue s report. Further, the applicant had vide its letter dated 27-12-2005 addressed to the Commissioner, Excise Customs, Vadodara-II requested for copies of certain relied upon documents which have still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the applicant for reduced duty liability was incorrect, mala fide, deliberately made with intent to mislead the Commission and that it had not come up with true and full disclosure of the facts in its application which, therefore, deserves to be rejected. 16. The ld. Advocate during the hearing again submitted that the difference between the duty admitted and the duty demanded in the Show Cause Notice is on account of the following :- (i) It is the applicant s contention that there was no undervaluation of the goods. The applicant is not admitting any additional duty on this count. (ii) For clandestine removals the applicant is admitting a duty liability of Rs. 20,73,680/- in respect of 173 spurious invoices. Explaining its stand in respect of (ii) above the ld. Advocate further submitted that the case of the Revenue is based on the records seized from the residence of Shri Anilkumar Jadhav an accountant in the applicant-company. It is the applicant s contention that Shri Anilkumar Jadhav in order to settle some score with the company had maintained and doctored records at his residence so that he could land the applicant in trouble. The ld. Advocate further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant was Rs. 20,73,680/-. However, if the Commission is not inclined to give any consideration to the fraud committed by Shri Anilkumar Jadhav on the applicant, the admitted duty liability of the applicant would be Rs. 31,11,020/-. The Bench pointed out to the ld. Advocate that the applicant should admit only one amount, as the exact duty evaded is known only to the applicant and not to the Bench or the Revenue. The ld. Advocate then submitted that the applicant is admitting the duty liability of Rs. 31,11,020/-. 18. The Revenue objected to the admission of the case as the applicant had not made a true and full disclosure of its duty liability. The Revenue submitted that the duty demand is based not only on the records seized from the residence of Shri Anil Kumar Jadhav, but also other corroboratory records including those seized from Shri B.M. Patel, Factory Manager of the applicant-company (co-applicant herein) and from its Mumbai office. The Revenue also submitted that though the bank note book which was seized from the Mumbai Office of the applicant was not readily available, there were other documents to prove the illicit amounts received by the applicant. Finally the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing more than a prudent man s estimate as to the probabilities of the case. (ii) Since it is exceedingly difficult, if not absolutely impossible for the prosecution to prove facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden. (iii) Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on the person concerned and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. Revenue, inter alia, in the light of above principles claims to have proved their case of the clandestine removals and undervaluation on the basis of documents/records recovered and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could pay only Rs. 8,00,000/- out of the total outstanding amount. The Commission vide Order No. 5/Interim Order/CEX/RNP/2006 dated 7-7-2006 acceding to the request of the applicant directed the applicant to pay the balance admitted duty amount of Rs. 9,61,020/- within 30 days of receipt of the order along with 18% interest. 23. The applicant deposited the balance admitted duty liability of Rs. 9,61,020/- along with interest as ordered in Interim order dated 7-7-2006 vide T.R.6 Challan dated 10-8-2006. 24. The final hearing of the case was first held on 23-8-2006 when Shri Vivek Maheshwari, Director appeared on behalf the applicant s company with a request for adjournment of the hearing for two weeks on personal reasons. When the Bench asked him to explain the reasons, he could not spell these out but merely submitted that his Advocate Mr. Willingdon has so asked. The Commission vide Order No. 88/Interim Order/RNP/2006 dated 25-8-2006 noted that in the case several adjournments had already been given. However as the applicant s Counsel had not come, a short adjournment was granted and the case was listed for final hearing on 29-8-2006. The applicant was also informed that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vivek Maheshwari, Director of the applicant-firm. Further records were also seized and statements recorded from the raw material suppliers of the applicant. Similarly records were also seized and statements recorded from the purchasers of the finished goods. From the records they are able to prove the dubious means adopted by the applicant right from start to finish i.e., from illicit purchase of raw materials to production and final sale of the goods. These were corroborated with statements recorded of persons from whom the applicant had purchased the raw materials, the employees of the applicant and the buyers of the finished products. Shri Vivek Mahaeshwari, Director of the applicant-company had been confronted with all these documentary evidences, as well as statements recorded, who, after having carefully and thoroughly examining each such documentary evidence had placed his detailed observations/explanations in his recorded statements. None of the statements, all of which were recorded on the basis of incontrovertible documentary evidences, had ever been retracted by the authors of such statements, any time in the past, even though 2 years has lapsed between the issue of Sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learance in the preceding financial year exceeding Rs. 3 crore after computation of clandestine clearance and undervaluation : Rs. 3,16,192/- 29.1 We have gone through the records of the case and the rival submissions. At the very beginning we are constrained to observe that all along the adjudication and settlement proceedings, the co-applicant Shri Vivek Maheswari, Director of the applicant-company has only tried to protract the matter instead of co-operating for early and quick decision. In all, as referred in the foregoing paras he was given 4 hearings before Order-in-Original dated 28-11-2003 was passed by the adjudicating authority but on none of the occasions he attended. Again at the time of de novo adjudication he was given 6 hearings during a span of 6 months but he never attended any of the hearings. He kept on asking for documents. Through a letter dated 22-8-2005 he acknowledged to the original authority to have received all the relied upon documents. Again he pressed for the non-relied upon documents through a letter dated 14-9-2005. Through a letter dated 29-9-2005 he was furnished zerox copies of all the documents (non-relied upon). Through a letter dated 30-9-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a short adjournment with a caution that no further adjournment would be granted. However, on 29-8-2006 when the matter came up for hearing the co-applicant Shri Maheshwari again asked for adjournment. In view of the conduct of the applicants we are of the opinion that the applicant and the co-applicant Shri Maheswari have no interest to settle the case but to drag the matter or to buy more time on one or the other pretext. 29.3 The very first ingredient of the settlement application as enshrined in Section 32E(1) of the Act is that there shall be full and true disclosure of the duty liability involved in the case. It is observed that the applicant, at first, at the time of filing of the application disclosed a duty liability of Rs. 20,65,680/-, thereafter through a letter dated 25-11-2005 received by the Bench on 2-12-2005, it revised its duty liability to Rs. 20,73,680/-. After Interim Order dated 8-12-2005 (supra) it submitted that : even assuming that the department has correctly alleged clandestine removals against the applicants, the total demand cannot exceed Rs. 35,03,850/-. Through a letter dated 6-3-2006 received in the Commission on 10-4-2006, the duty liability w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (viii) Statement of Shri Anil R. Jadav, Accountant of applicant-company dated 8-7-2002 and 5-4-2003. (ix) Statements of Shri Manharbhai J. Patel, Partner of M/s. Sun Boarax Industries dated 6-8-2002. (x) Statement of Shri Dharmendra V. Patel, Partner of M/s. Amar Ceramics Industries dated 7-8-2002 and 18-11-2002. (xi) Statement of Shri Ashok Jethabhai Patel, Director of M/s. Excel Ceramics Pvt. Ltd. dated 8-8-2002 and 3-12-2002 In nutshell each important functionary looking after the work of the factory certified the authenticity of the documents recovered and seized from different premises and certified the fact of suppression of production and removals thereof clandestinely without payment of duty. None of these statements have ever been retracted or even challenged prior to approaching the Commission (emphasis supplied). Shri Anil Kumar Jadav, Accountant of the applicant company from whose residence maximum documents have been recovered and seized in his statements dated 8-7-2002 and 5-4-2003 has certified the genuineness of the documents recovered from his residence and has averred that those were being maintained at the behest of Shri Vivek Maheswari, the Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operandi of purchase of raw materials on cash/draft and non-accountal thereof, suppression of production out of the same and clandestine removal of such production without payment of duty and realization of sale-proceeds in cash/draft. It has further been revealed from the documents and corroborated by the statements that for licit clearances an amount over and above the invoice value was also realized in order to avoid payment of duty thereon (case of undervaluation). 29.7 Shri Dhananjay Kumar Singh, Production Supervisor of the applicant-company has corroborated the note pad showing the actual production out of which only a part was reflected in the statutory records. He further deposed that there were two furnaces working in two batches of twelve hours and average capacity of each batch was 1300 kgs and on an average 4 to 5 batches were produced per day. Thus it is evident that a large amount of production was suppressed. The document seized from the residence of production manager Shri Ashok Kumar Ranjan when compared to R.G. 1 register reflect it. 30. Before credence is attached in all these corroborative statements we would like to recall Section 14(2) of the Act : All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the licit clearances. Applicant has in its submissions dated 6-3-2006 (supra) has taken an arbitrary value of Rs. 10,000/- per MT saying that this is the maximum price charged by his competitors; however it has failed to submit any proof in respect of its claim. As against this, the demand of the Revenue is based on actuals realized as shown in different documents and corroborated by different persons in their statements, especially the recipients of the goods and Accountant working in Mumbai office. The collection of money over and above the invoice value is also established from various records seized and the various statements recorded and relied upon contrary to the assertion of the applicant that the allegation of undervaluation is based entirely on the documents seized from the residence of Mr. Jadav. The same is further corroborated by different records seized from the office premises of the applicant viz. flat file marked 6, seized diary marked 14, seized note book marked 15 etc. Accountant of the applicant s company Mr. Devasia in his statement dated 24-3-2003 also on the basis of various documents seized from various premises and his personal knowledge has certifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... call that in the present case prosecution has already been launched against the applicant-company and the co-applicant and director of the applicant-company Shri Vivek B. Maheshwari. Bench after carefully considering the proviso to sub-section (1) of Section 32K of the Act holds that in view of the same no immunity can be granted to the applicant and the co-applicant No. 1. Interest : This is a case of evasion of duty by clandestine removals by issuing spurious invoices and also by undervaluation of the goods. The applicant has derived financial gain by not paying the duty when it was due. The applicant is therefore liable to pay interest at the appropriate rate on the belated payment of duty. The Revenue shall calculate the amount of interest as ordered aforesaid within 15 days of the payment of the balance duty amount as ordered above and communicate it to the applicant, who thereupon shall pay it within the next 15 days. The applicant shall furnish proof of payment of interest, both to the Commission and the Revenue. Penalty : We find that the applicant and the co-applicant Shri Vivek Maheshwari have not made a full and true disclosure of their duty liability. Accordingly we ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
