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TMI Blog2007 (6) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... and imposition of redemption fine of Rs. 30,000/-. A sum of Rs. 5 lakhs is imposed as penalty on Shri Nareshbhai F. Shah, partner of M/s. Tejwal Dyestuff Industries, Rs. 25,000/- as penalty on Shri Heshbhai M. Shah, authorized signatory of M/s. Tejwal Dyestuff Industries. In addition, a penalty of Rs. 25 lakhs, each is imposed on Shri Jayeshbhai Bhimani and Shri Jignesh J. Bhimani representing the firm which allegedly supplied the invoices. 2. Heard both sides. 3. The relevant facts, in brief, are as follows : (a) During the visit by the officers on 4-6-03, shortages in respect of certain finished goods and inputs valued at Rs. 3,44,769/- were detected and excess in respect of certain other finished goods and inputs valued at Rs. 1,55,685/- was found and the excess found goods seized. (b) Shri Heshbhai M. Shah, the authorized signatory and Shri Hitesh R. Patel, in-charge of the production and Laboratory furnished the details of the raw materials which were required for the manufacture. They also admitted that Linear Alkyl Benzene (LAB), Soda Ash, and some other inputs were not brought into the factory and were not consumed in the manufacture of finished products and they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hai F. Shah into making a statement that payment was received back in cash. (f) All the persons had retracted the statements within two days of recording of statement by filing affidavit before Notary Public. However, the said retraction affidavits were enclosed only along with their reply dated 23-3-2005. 5. After evaluating the submissions and replies and those of the personal hearings, the Commissioner has held that appellant firm was guilty of receiving only documents without receipt of goods and taking Cenvat credit fraudulently and passed the order referred earlier. 6. Learned Advocate for the appellants M/s. Tejwal Dyestuff Industries and connected parties submits that the case is merely based on statements of some persons which have been promptly retracted. Further, the statement of partner, authorized signatory, production in-charge of the firm were not corroborated by the statements of the persons representing raw materials supplying units. The statement of the partner of transport company does not prove anything positive. Further, the investigation has not been carried out with the driver of the vehicle to conclusively prove that LAB was not delivered to the factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months later on 5-10-03 confirming the same facts. Under these circumstances, his claim that within two days of recording his statements he went to Notary Public and gave affidavits retracting his statements and kept such affidavits safely with him and produced the same along with his reply dated 23-3-2005 does not amount to retraction of the statements and does not deserve any consideration. 10. The statement of Shri Nareshbhai F. Shah has admissions on several aspects. He clearly admits that inputs like LAB are not required for use in the manufacture; the inputs have not been received; only documents have been received on which credit has been wrongly taken; Bhimani Group of Companies have returned the cash after deducting commission. Of these admissions on various aspects, the admissions like non-receipt of the main inputs in the factory, non-use of the same and taking credit merely based on document are clearly corroborated by the evidence of his own employees, namely, Shri Heshbhai F. Shah, authorized signatory and Shri Hitesh R. Patel, production in-charge. The other admission regarding receipt of cash back from Bhimani Group of Companies, the same is not corroborated. Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bhai F. Shah by furnishing only duty paying documents and paid back in cash after taking their commission. This part of the finding is based only on the statement of Shri Nareshbhai F. Shah which is not otherwise corroborated, therefore, the finding of collusion by these appellants cannot be sustained even when the allegations against M/s. Tejwal Dyestuff Industries and their partner and employees are sustained and the benefit of doubt should be given in favour of Shri Jayeshbhai Bhimani and Shri Jignesh J. Bhimani. 15. In the light of the above, the appeals are disposed of as follows : (a) The appeals by Jayeshbhai Bhimani and Jignesh J. Bhimani are allowed. (b) Demand of duty, demand of interest against M/s. Tejwal Dyestuff Industries are sustained. Penalty imposed on M/s. Tejwal Dyestuff Industries is reduced from Rs. 50 lakhs to Rs. 20 lakhs (rupees twenty lakhs only). (c) Having sustained penalty on the partnership firm, separate penalty of Rs. 5 lakhs on Shri Nareshbhai F. Shah may not be required and accordingly set aside. (d) Penalty imposed on Shri Heshbhai M. Shah, production in-charge is reduced from Rs. 25,000/- to Rs. 10,000/- (rupees ten thous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission. As such, allowing of appeal of Shri Jayeshbhai Bhimani and Shri Jigneshbhai Bhimani on the ground that statement of Shri Nareshbhai Shah and of Shri Heshbhai M. Shah, Production incharge of M/s. Tejal Dyestuff Industries, without any corroboration is in accordance with the law of evidence. As such, I agree with the said part of the order proposed by learned Member (Technical). 19. However, I ask myself a question. What would be the effect of allowing of Bhimani s appeal on the basis of insufficient evidences, on the case against M/s. Tejal Dyestuff Industries. Having not admitted the correctness of the statement of Shri Nareshbhai F. Shah and Shri Heshbhai M. Shah to the extent that the cheque amount given to Shri Bhimani was being received back by them in cash and having believed that part of their statement which is to the effect that only invoices were being received without actual receipt of the goods, at the time of extending benefit to Shri Bhimani, can the same statement be made basis for holding against them. It is to be kept in mind that if benefit is extended to Shri Bhimani, it will lead to the effect that the goods were also being sent along with invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he officers. 21. During the course of adjudication, appellant strongly contended that the statements were recorded under duress and were not correct reflection of the true state of affairs, have strongly relied upon the contemporary statutory document, record and returns which stands verified and assessed by the concerned officer and submitted that the Revenue s contention of incapability of LAB and Soda Ash in the final product, can not stand on the sole basis of statement, which on face of it are contrary to the statutory record. It is seen that Revenue s case is that LAB (which relates to major demand) was not at all capable of being used in the appellant s final product. This view has been upheld by the adjudicating authority on the basis of statement given by Shri Shah. 22. Though the said statements were retracted immediately by way of filing an affidavit before notary, but the same do not stands accepted by adjudicating authority on the ground that the same were produced on record along with the reply to the show cause notice. As such, he concluded that retraction was manipulated. On the other hand, the appellants have contended that by retracting it before the notary by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imani whereas the appellant was procuring the said raw material from other sources also i.e. M/s. Reliance Industries and M/s. Gujrat Heavy Chemicals Ltd. There is not even a whisper of any allegation in respect of the material received from other two sources. If it is the Revenue s case that LAB is not at all required for manufacture of appellant s final product, it is not understood that why investigations in respect of procurement of the said material from the above two sources have not been conducted by them. 25. It is further seen that appellant have strongly contended before adjudicating authority that the goods were received along with the invoices as is clear from the octroi receipt. It is recorded in the order that copies of octroi receipts were produced before adjudicating authority. However, he has chosen to rely upon the statement of proprietor of the transport company to the effect that the goods were being delivered to the dealer s representative before octroi check posts. It is not understood as to how the said statement can be given preference over the documentary evidence in the shape of octroi receipt. The adjudicating authority has observed that M/s. Tejal Dy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd others. It is seen that transactions between M/s. Tejal Dyestuff Industries and Shri Bhimani were running in crores and there is nothing to establish the money flow back. The above points may be minor, as observed by adjudicating authority, but when viewed cumulatively are sufficient to throw out the Revenue s case. 27. It is also seen from the order of the Commissioner, as recorded in Para 12 that, he has arrived on a finding that the appellant procured raw material and invoices worth Rs. 8 crores approx, whereas their clearance of final product during the period 1999 to 2004 were only to the tune of Rs. 3.56 crores. This finding arrived by adjudicating authority stands strongly contested by the learned advocate on the ground that firstly the said fact was not mentioned in the show cause notice and secondly the same is factually incorrect in as much as the sale during the said period were to the tune of Rs. 9 crores. In support, they have produced certificate of their chartered accountant on record. 28. Similarly, the fact of deposit of amount of Rs. 25 lacs towards duty, during the course of investigations, in my views, cannot be a factor leading to assessee s admission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t especially in view of the fact that there is no evidence showing either the actual removal of the goods or reflecting upon intention on the part of M/s. Tejal Dyestuff Industries to remove the same without payment of duty. Accordingly, I set aside the confiscation of the excess found goods. 33. In view of the foregoing, I set aside confirmation of demand of duty against M/s. Tejal Dyestuff Industries except upholding of demand of Rs. 55,163. Confiscation of goods is also set aside. Penalties imposed upon the said appellant and Shri Heshbhai M. Shah are also set aside. Further, I agree with ld. brother, Shri M. Veeraiyan that penalties imposed upon Shri Jayeshbhai Bhimani and Shri Jignesh J. Bhimani and Shri Nareshbhai F. Shah are to be set aside and I order accordingly. 34. All the appeals are disposed off in the above manner. Sd/- (Archana Wadhwa) Member (Judicial) DIFFERENCE OF OPINION 35. Whether the demand of duty of Rs. 1,09,35,008/- against M/s. Tejal Dyestuff Industries along with interest is to be upheld as held by Member (Technical) or the same is to be set aside as observed by Member (Judicial) ? 36. Whether the demand of duty of Rs. 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs, namely, Linear Alkyl Benzene (LAB), Soda Ash and other inputs, in their factory. On 4th June, 2003, the Excise Officers visited the factory of the assessee, M/s. Tejal Dyestuff Industries, and conducted stock verification, as a result of which, a shortage of finished goods and inputs valued at Rs. 3,44,769/- involving duty of Rs. 55,163/- was noticed. Moreover, excess of finished goods and inputs totally valued at Rs. 1,55,685/- were lying there and were, therefore, seized on a reasonable belief that they were liable to confiscation. During the investigation, from the statements of the authorized signatory of the assessee, Shri IIesh and the person incharge of production and laboratory of the assessee, Shri Hitesh, and also from the statement of the partner of the assessee firm, Shri Nareshbhai, it appeared that, during the period from 1999-2000 to 2003-2004 (upto 30th June, 2003), the appellant-assessee had shown to have received various inputs, such as, LAB (1168.437 MT), Soda Ash (589.525 MT), and five other inputs described in the show cause notice, and had availed total Modvat/Cenvat credit of Rs. 1,09,90,171/-. According to the Revenue, Modvat/Cenvat credit was availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee and its two employees. The demand for recovery of modvat/cenvat credit of Rs. 1,09,35,008/- was confirmed against the assessee, M/s Tejal Dyestuff Industries, and a penalty of Rs. 50,00,000/- was imposed on that firm. Demand of recovery of the excise duty of Rs. 55,163/- was also confirmed against the assessee in respect of the shortage of the finished goods and the raw material. The finished goods and the raw material valued at Rs. 1,55,685/-, which were seized under the Panchnama dated 4th June, 2003, were ordered to be confiscated with a redemption fine of Rs. 30,000/-. The amount of Rs. 25,00,000/-, which was paid by the assessee during the course of investigation, was ordered to be appropriated and interest as recoverable under Section 11AB of the Act was ordered to be paid. The original noticees, Shri Jayeshbhai Bhimani, Director of Jinal Chemicals Pvt. Ltd. and Shri Jignesh J. Bhimani, Director of Bhimani Chemicals Pvt. Ltd., and also P.M. Bhimani Orgo Chem. P. Ltd. and Proprietor of M/s. Parshwa Chemicals, were imposed a penalty of Rs. 25,00,000/- each, while the partner of the assessee was imposed a penalty of Rs. 5,00,000/- and the authorized signatory of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that they were identical and, therefore, it should be inferred that they were prepared by the Excise Authorities themselves. He further submitted that, all statements should carry equal evidentiary value and that evidentiary value will not depend upon whether the statement is in favour of the Revenue or not. He submitted that, the invoices of the inputs tallied with the octroi receipts. Moreover, the payments were all made by cheques. This fact was accepted in the statements of Bhimanis and their ledger account also supported the same. Since there was no flow back of cash proved, there was no valid reason to infer that the amounts were returned to the assessee. He also submitted that, the expert s evidence showed that, LAB could be used in the products manufactured by the appellants. 48.1 The learned Counsel for the appellants relied upon the decision of the Tribunal in Ghodavat Panmasala Products v. CCE, Pune, reported in 2004 (175) E.L.T. 182, for pointing out that, the Tribunal did not rely upon confessional statements which were given in order to avoid tension, since the Department did not adduce any primary evidence or other proof in the form of sale proceeds, cash etc. to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Customs, Bangalore, reported in 2006 (200) E.L.T. 593, for the proposition that in a quasi judicial proceedings the Tribunal was concerned more with a pre-ponderance of probability rather than proof beyond reasonable doubt. He also relied upon the decision of the Tribunal in CCE, Indore v. Prashant Electrode, reported in 2006 (196) E.L.T. 297, in which the Learned Single Member had observed in para 4 of the order that, the statement of the partner admitting the shortages was itself an end of investigation inasmuch as there was no further requirement of any investigation. He also referred to the decision of the Tribunal in Customs Appeals No. 754 759 of 1998 decided on 12-1-2007, for the proposition that, notwithstanding the retraction, the confession which amounted to admission would bind the maker of the confession. 50. There can be no dispute over the proposition that admitted facts need not be proved and that the confession would be binding on the maker of the confession. The confession by the partner of the assessee and by the employees of the assesse would ordinarily be binding on the assessee. However, such confession would not bind the co-noticees without corrobo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limits from Aslali Naka in the same tankers is amply borne out from the octroi receipts. If the appellant-assessee had not received the goods sent under these invoices, it would not have been in possession of the octroi receipts, were produced by the assessee. In other words, if the goods were delivered elsewhere within the municipal limits, the octroi receipts would ordinarily be with the person who has taken them from the Octroi naka. Therefore, there was no reason to infer that the goods were delivered outside octroi Naka of Aslali and that they were not delivered to the consignee. 53. The fact that payments in respect of the inputs covered by the invoices were made by cheques, is not at all disputed. There is no iota of evidence to justify any inference that there was flow back of the amount of more than six crores of rupees over the period in question from Bhimanis to the assessee in cash after having received the payments by cheques and deducting 2% by way of commission. Ordinarily, when an amount of more than rupees six crores is paid against the invoices, covering the inputs, it would be difficult to contemplate the imprudence of returning cash amount of more than Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Revenue Officers should be careful to ensure that they are not tricked out of a regular and detailed investigation by making strategic confessions which are retracted by preparing affidavits soon after they are made and which affidavits are again strategically withheld from the Revenue Officers, so that they become complacent and do not carry out a fuller investigation. It appears that the Revenue Officers in the present case have fallen victim to this type of strategic confessional statements which have been retracted soon after they were made in the affidavits which were withheld by the deponents till the proceedings came up before the Commissioner, by which time the damage of not a making fuller investigation, thinking that the confessional statements are made and not retracted, was already done. The Revenue Officers have not even cared to investigate into the types of final products manufactured by the appellants despite detailed declarations which were on record with them, which showed that all these inputs, particularly LAB and Soda Ash were being used by them for their final products. Some of these declarations which are on record as Annexure A (Collectively) show th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the appellant, M/s. Tejal Dyestuff Industries as well as penalty imposed on it and recovery of interest ordered to be recovered cannot, therefore, be sustained. However, the demand of Rs. 55,163/- for the shortage of finished goods and raw material has been correctly confirmed and the liability in respect of this amount is not being disputed, as stated by the learned counsel for the assessee. The Commissioner did not deal with the explanation given by the assessee for not entering the goods which were found in excess in RG-1 Register. According to the assessee, there was a system of checking the real weight of the product prior to the stage of clearance, and that the real weight of the product was taken only at the time of despatch. This is why ONCBS, which was a product, which was not yet tested and the real weight of which was yet to be ascertained, was not entered in RG-1 Register. Since the explanation of the assessee was plausible, the confiscation of the excess goods cannot be sustained. 55. For the foregoing reasons, concurring with the findings of Member (Judicial), it is opined that the confirmation of demand of duty against the appellant, M/s. Tejal Dyestuff Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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