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TMI Blog2012 (10) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... umentary evidences are required to be given preference over the oral statements. X X X X Extracts X X X X X X X X Extracts X X X X ..... trading firms from whom M/s. New Era Metals had purchased various aluminum products like Sections and profiles etc as 'Second Sale'. The total number of trading firms from whom M/s. New Era Metals had purchased the goods were seven. The officers conducted searches at the premises of such trading firms, who had supplied the aluminum sections to M/s. New Era Metals. However, the summons issued to some of the trading firms were returned back by the postal authorities with remarks as "incomplete address and/or not traceable". Some of the trading firms who could be contacted, were put to search and investigation. M/s. Hari Metal could be located and put to search. Shri Harshad Parmar of M/s. Siddharth Trading Co. produced on record copies of BST and CST registration certificates. He also admitted that he was a proprietor of 3 other firms viz. M/s. Sydney Enterprise, M/s. Shrishti Enterprises and M/s. Sidney Sales Corporation. He produced all the relevant documents viz. bills issued by other firms, tax bill and CST/Service Tax registration etc. However, he submitted before the officers that he had only issued sales bills without any physical purchase of such goods and as such no purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out bearing the name of M/s. Shreeji so as to hide the identity of the manufacturer. The officers also scrutinized the lorry receipts etc containing the details of the aluminum extrusion from the factory premises upto the outskirts of Mumbai. 2.8 Similarly, the documents recovered from M/s. New Era Metals were scrutinized based upon which the officers entertained a view that M/s. New Era Metals, in fact, procured the goods manufactured by M/s. Shreeji and camouflaged the same by sale bill of various trading firms. The said goods were being cleared by M/s. Shreeji under the cover of Central Excise invoices upto the outskirts of Mumbai where the papers were being replaced by the invoices of trading firms. The said invoices of the trading firms were being prepared at Bhayander and Mira Road at the outskirts of Mumbai but before Dahisar Octroi check post. Such documents were thereafter presented before Dahisar Octroi authority to suppress the real identity of the goods. After clearance from octroi, consignment was sent to premises of M/s. New Era Metals. 2.9 Similarly, the documents recovered from residential premises of Shri Ajay Lajji Ashar, Production Manager of M/s. New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te appearing for the appellants and Shri J.S. Negi, learned SDR appearing for the Revenue. 4. The ld. Advocate appearing for the appellants have strongly contested the said confirmation of demand on the ground that the same is based upon conjectures and surmises and the statements of various persons, some of which were also retracted. The statements of representatives of trading firms and M/s. New Era Metals are in the nature of statements of co-noticees, which cannot be made the sole basis for arriving at the finding against the appellant, there being no corroborative evidence on record. The Ld. Advocate has submitted that the entire case of the Revenue is based upon the belief entertained by Revenue that M/s. New Era Metals was created only to camouflage the illegal activities of M/s. Shreeji. He submits that it is on record that M/s. New Era Metals is an independent firm dealing in sale purchase of aluminum products and has bought the goods from various trading firms who have issued the bills to them and the consideration for the same stand paid by M/s. New Era Metals to the trading firms by way of cheque. Sales Tax stand paid on such transactions and assessment by Sales T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;He further argued that not a single supplier of unaccounted raw material stand identified by the Revenue. In order to manufacture 16.75 lakh kgs of finished goods alleged to be clandestinely removed, the appellant require more than 21 lakh kgs of imported raw material scrap. There is no proof of procurement of such a huge quantity of unaccounted raw material and use of power required for manufacturing such a high amount of finished goods. The said appellant is importing aluminum scrap for manufacturing their finished goods, but there is no proof of import of any extra aluminum scrap or procurement of the same indigenously. 4.5 As regards confirmation of demand of duty on account of 3 buyers, he submits that admittedly the said buyers have procured the goods from other suppliers but were compelled to submit that they were procuring from M/s. New Era Metals and goods were manufactured by M/s. Shreeji. He submits that the buyers who have procured the goods from traders are not in a position and have means to verify as to who has manufactured the goods. They have made payments to the supplier of the goods by way of cheque and confirmation of demand of duty on the basis of their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely because in one packing slips names "Laxmi" and "Crystal" appear, it cannot be assumed that excisable goods were clandestinely removed to them. Demand of duty merely on this ground is therefore unsustainable. 4.10 That there is substantial duplication in demand of Central Excise duty calculation inasmuch as the impugned order does not state that the demand under each worksheet is on different goods. That demand of duty, at the most, has to be restricted to the private production slips since the demand on other counts will always be reflected in production records of M/s. Shreeji. This fact buttresses their plea that entire demand is highly inflated, artificial and based on conjectures and surmises, since the so called clandestine clearance can never be in excess of private production records. In other words, M/s. Shreeji could not be held liable to duty demand in excess of proof of manufacturing undertaken by them (from private production records). This plea is, however, without prejudice to the other contentions raised in defence. 4.11 That personal penalty under Rule 26 on partners of trading firms is uncalled for, since as per the allegation, no goods exist, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of investigation, have admitted the above modus operandi. The fact that the said statements were subsequently retracted shall not reduce the evidentiary value of the statements, as the Commissioner has already discussed such retractions being under the advice of the advocate. On being queried about the non-tendering the said deponents for cross examination, Shri J.S. Negi, SDR submits that inasmuch as the statements were in detail and were corroborative of each other, there was no need to offer the said deponents for cross examination. He also submits that the fact of recovery of excess furnished goods and raw materials from the factory of M/s. Shreeji at the time of visit of the officers, strengthens the Revenue's case. 6. We have considered the submissions made by both sides and have gone through the impugned order. 7. For the sake of clarity, the various imputations, on the basis of which the duty stands confirmed by Adjudicating Authority against the appellant are being reproduced in a tabulated form. S. No. Quantity (Kgs) Duty (Rs.) Basis 1 2.24 lakhs 37,23,764/- On the basis of statement of 3 buyers stating that they procured the goods from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal and M/s. Virtual Metals. 8.2. We find that the entire basis for confirmation of demand on the above ground is based upon the statement of representatives of 3 buyers. Admittedly, the bills show the supply of the goods by M/s. Hari Metal and M/s. Virtual Metals. Lorry receipts also show the transportation of the same from M/s. Hari Metal and M/s. Virtual Metals. As such, there is enough documentary evidence to show purchase and transportation of the goods from M/s. Hari Metal and M/s. Virtual Metals. The said documentary evidence does not stand rebutted by Revenue by producing any positive and tangible documentary evidence. The same stand discarded by Adjudicating Authority based upon the statements of the buyers. As such, the buyers have not been produced for cross examination. To rest the case on the statements of co-noticees without any other independent evidences is risky. Confirmation of demand on such basis without there being an iota of evidence to show the manufacture of the said goods by M/s. Shreeji is against the established principles of law. The other statements referred to and relied upon by Adjudicating Authority while confirming on said counts are the gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, as discussed in detail in the foregoing paras. The goods i.e. aluminum profiles were manufactured and clandestinely cleared from M/s. Shreeji, without payment of Central Excise duty, which were received and further sold by M/s. New Era Metals, Mumbai. However, M/s. New Era Metals instead of showing their transactions with M/s. Shreeji, had shown purchases of such goods from the seven trading firms from which only purchase bills were received and no goods were purchased. Shri Kamlesh Sapra, Partner of M/s. New Era Metals vide statement dated 9-5-2005 had also admitted that the file No. A/1 & A/2, seized from the office-cum-godown premises of M/s. New Era Metals contained the purchase bills of the trading firms, from whom they had received only bills on commission basis. He categorically admitted that actually, the goods were received from M/s. Shreeji, Dadra. As per the sales register marked as A/10 seized from the office-cum-godown premises of M/s. New Era Metals and the sales details, submitted by letter dated 6-8-2005, M/s. New Era Metals has sold 1232744.450 kgs of aluminum extruded product valued at Rs. 16,16,21,101/- involving Central Excise duty (including education ces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ji stand retracted by them, by way of filing an affidavit duly sworn on oath. Such retractions stand not accepted by Adjudicating Authority on the ground that all the persons have given the statements containing details which can only be in the personal knowledge of the said deponents. He has further observed that such retractions were under the advice of an advocate, as admitted by Shri Patel in his subsequently recorded statement. 8.9 We find that the fact that Shri Patel in his statement admitted the retraction of earlier statements was under the advice of the advocate, is itself indicative of the pressure utilized by the officers. Having retracted the statement (may or may not be under the advice of advocate), no reasonable prudent person appearing before Revenue authority for the second time, would detail such advice by his advocate on his own unless he is pressurized by Revenue. The fact that Shri Patel, Director, in his statement, deposed that the earlier retraction was under the advice of advocate, is itself indicative of pressure by the officers. 8.10 In any case, we find that such statements by itself cannot be made the basis for upholding finding of clandesti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured by M/s. Shreeji. 8.13 Similarly, the reasons advanced by Revenue as regards re-use of Excise invoices and various lorry receipts for movement of the goods till the municipal limits of Mumbai do not advance the Revenue's case inasmuch as the same are not available for all the removals. It is only in respect of a few Excise invoices and lorry receipts that interpolation has been found. Such interpolation stand explained by the appellant on account of clerical mistake. Otherwise also, it does not appeal to common sense that any manufacturer would re-use Excise invoices and lorry receipts for covering transportation of the goods, till Mumbai municipal limits, where the papers would be replaced with the invoices of trading firms. The appellant could have utilized the invoices of trading firms for the entire transportation of the goods in respect of initially clearing goods under re-used Excise invoices. As per the statements of various persons, blank copies of the invoices of various trading firms were being given to the person accompanying the consignment. The said person use to make invoices before crossing the municipal limits. Such invoices of the trading firms w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UOI as reported in 1978 (2) E.L.T. (J 172) (S.C.), it was held that the findings based on such presumptions and assumptions without any tangible evidence will be vitiated by an error of law in the absence of any other reliable and concrete substantive evidence. Retracted statements and the invoices allegedly issued by the manufacturer remained uncorroborated by any independent unimpeachable evidence, such as purchase of raw-materials/consumption of electricity/purchase of goods by buyers, etc and it was held that the Revenue has not succeeded in proving the allegation of clandestine manufacture and clearance of pipes in that case. 9.2 Similarly in the case of M/s. Someshwara Cements & Chem. Ltd. v. CCE, Hyderabad as reported in 2005 (191) E.L.T. 1062 (Tri.-Bang), it was held that benefit of doubt is to be extended to the assessee when investigations by Revenue are not thorough. In the case of M/s. Abba Rubbers v. CCE, Cochin as reported in 2006 (193) E.L.T. 471 (Tri.-Bang), it was observed that consumption of one raw material is insufficient in absence of any evidence of procurement of main raw material along with clandestine sale of final product and electricity consumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (38) RLT 891 (CEGAT) = 2000 (92) ECR 325 = 2000 (120) E.L.T. 148 Inflated figures submitted to bank are not sufficient grounds to allege clandestine production & removal should be co-related - Raw materials & power consumed. 12. 2000 (40) RLT 1077 (T) - Commissioner of C.E. v Dashmesh Casting (P) Ltd. Allegation based on octroi records showing movement of respondents' truck. No other evidence brought on record. Allegation not established. 13. 2000 (121) E.L.T. 46 (T) = RLT 2000 (41) 348 - CCE, Meerut v. Raman Ispat Evidence note book showing production of steel ingots receipt and consumption of raw materials/scrap no investigation done with person who made the entries. No investigation with traders who returned the scrap. Clandestine removal not established. 14. 2000 (120) E.L.T. 505 (T) K.J. Diesels (P) Ltd. v. CCE., Kanpur Difference in RG 1 closing stock and monthly statement alone is not sufficient to a duty demand on alleged clandestine removal in the absence of any corroborating evidence. 15. 2000(116) E.L.T. 618 (T) = 1999 (34) RLT 662 (CEGAT) Grauer &. Weil (India) Ltd. v. CCE, Meerut. Circumstantial evidence not sufficient to establish clandestine removal - Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hy as reported in 2006 (204) E.L.T. 607 (Tri.-Chennai), laying down that in the absence of any evidence showing excess consumption of raw materials or of electricity or receipt of sale consideration, the charges of clandestine removal cannot be upheld. Hon'ble High Court of Gujarat in the case of CCE, v. M/s. Vidya Laminates Pvt. Ltd as reported in 2007 (211) E.L.T. 382 upheld the findings of the Tribunal as arrived at in the case of M/s. Vidya Laminates Pvt. Ltd as reported in 2006 (197) E.L.T. 260 (Tri.-Mumbai), laying down that the burden to prove the clandestine removal lies solely and exclusively on the Department and is required to be discharged by concrete and clear evidence. The list is un-ending and we do not intend to multiply the same. However, a special reference may be made to the majority decision in the case M/s. Tejal Dyestuffs Industries v. CCE, Ahmedabad as reported in 2007 (260) E.L.T. 310 (Tri.), wherein it was held that the Revenue cannot make its case on the basis of statement in the absence of any independent evidence to corroborate the same. The said decision was confirmed by Hon'ble High Court of Gujarat as reported in 2009 (234) E.L.T. 242 (Guj.), when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racted statements without corroborative evidence, cannot be upheld. 11. Further, the demand of duty of Rs. 33,425/- on the basis of names "Laxmi" and "Crystal" in the private packing slips recovered from the factory of M/s. Shreeji, cannot be upheld for the same reasons. 12. For the reasons recorded above, we confirm the demand of Rs. 26,20,792/- against M/s. Shreeji Aluminum Pvt. Ltd. Penalty to the extent of 100% is also imposed upon them in terms of provisions of Section 11AC and in terms of law declared by Hon'ble Supreme Court in the case of M/s. Dharamendra Textile Processors as reported in 2008 (231) E.L.T. 3 (S.C.). However, we find that the adjudicating authority has not extended the option to the appellant to pay the said due along with 25% of the penalty within a period of 30 days from the date of passing of the order by him, in which case, the penalty shall stand reduced to 25%, in terms of the proviso to Section 11AC. The Tribunal in the case of M/s. Swati Chemicals & Others - 2009 (94) RLT 684 (CESTAT) = 2009 (248) E.L.T. 421 (Tri.) and Hon'ble High Court of Gujarat in the case of M/s. Exotic Associates v. CCE, - 2010 (252) E.L.T. 49 (Guj.), has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises of M/s. Shreeji reflected clandestine activity of M/s. Shreeji, which were being maintained by the said appellant, resulting in confirmation of demand of duty of Rs. 26 lakhs (approx.), he is liable to penalty. However, keeping in view that he was only an employee working under the directions of management, penalty on him is reduced to Rs. 10,000/- (Rupees Ten Thousands only). 14.2 As regards penalties of varying amounts imposed upon all other appellants, who are either trading unit, Marketing Manager of M/s. New Era Metals, we find that even as per the Revenue's own allegations, the said firms only raised and issued bills and there were no accompanying goods. Though we have not accepted above stand of Revenue, but even if the same is held to be correct, no penalty can be imposed upon them in view of the law declared by Tribunal in the case of M/s. Ekta Enterprises as reported in 2005 (180) E.L.T. 219 (Tri.-Mumbai). As such, the penalty imposed upon all the appellants is set aside. 15. All the appeals are disposed off in above terms. (Pronounced in Court on_____ Sd/- (B.S.V. Murthy) Member (Technical) Sd/- (Archana Wadhwa) Member (Judicial) 16. [Per : B.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons as per the work orders were neither accounted by M/s. Shreeji nor by the buyers as purchased from M/s. Shreeji and the transactions were made in cash and according to the revenue the aluminium castings were routed through two dealers created for this purpose. 22. Seized file A/8 recovered from the factory contains details of packing slips prepared and issued during the period from 3-10-2004 to 31-3-2005 and they were serially numbered from 1 to 488. Shri Jassubhai D. Chauhan, Packing Supervisor admitted having prepared the packing slips and these packing slips contained details such as section numbers, weight, number of pieces and length of aluminium profiles and most of the packing slips were prepared without the name of M/s. Shreeji, so that the manufacturer's identity could not be found. 23. File A/16, A/52 seized from M/s. Shreeji's factory contained lorry receipts containing details of aluminium extrusions dispatched from the factory premises up to the outskirts of Mumbai. Investigation revealed that lorry receipts were reused for transportation up to the outskirts of Mumbai and fresh lorry receipts were prepared to cover the transportation of goods via Dahisar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 29. Seized file A/5 & A/6 recovered from M/s. New Era Metals were purchase orders given to M/s. Shreeji and the partner Shri Kamlesh Sapra admitted that these orders were placed by Shri Ajay Lalji Ashar, Marketing Manager of M/s. Shreeji. 30. The seized register marked as A/10 from M/s. New Era Metals is sales and purchase register for the year 2004-2005. Photocopies of packing slips and sales made to various customers by M/s. New Era Metals available correspond to original copies recovered from the factory premises of M/s. Shreeji vide seized file No. A/19 and A/33. 31. File A/1 & A/2 recovered from premises of Shri Ajay Lalji Ashar contained copies of work orders in respect of three buyers viz., M/s. R. K. Enterprises and two other purchasers. M/s. R.K. Enterprises admitted that goods were received actually manufactured by M/s. Shreeji but the bill was received by M/s. Hari Metal and amount was paid through Shri Kiritbhai Patel in cash and they had not accounted for the same. Shri Kiritbhai Patel in the statement subsequently recorded also admitted this. 32. Seized file A/11 recovered from office premises of M/s. Shreeji Aluminium at Mumbai contained a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments has not been questioned and authenticity of documents has not been questioned. In the case of Shri Ajay Ashar, the work order was found in his residence and the same copies of the work orders were found in the factory of M/s. Shreeji and the dispatch details were also available. Buyers accepted that they had received the goods and the traders, who had provided the bills, had shown bogus purchases of extrusions and admitted the same. In such a situation, just because Shri Ajay Ashar was not produced for cross-examination, I am not able to understand how the appellants would have shown that these documents cannot be relied upon. Similarly in the case of Shri Virendra Kumar Mishra, Production Supervisor he has admitted the genuineness of the documents and the details given therein. Once again, the documents recovered, their authenticity, their recovery and their maintenance have not been questioned. As regards Shri Kamlesh Sapra, various documents recovered from M/s. New Era Metals such as photocopies of packing slips, originals of which were available in the factory; the bills from the trading firms, who had not purchased aluminium to supply; and the fact that Shri Ajay Asha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the buyers had shown the goods to have been procured from other suppliers has no legs to stand. 37. Another submission that was made was that there is duplication of duty demand. However, no evidence has been produced in support of this claim. 38. Another important point which has not been denied by the appellant is that when search was conducted, inputs and finished products were found in excess in the factory. Shri Keshrimal Jain, Proprietor of S.V. Metals admitted that there were seven firms which were set up by him in his name or in his relative's name and he was handling all the business. He also admitted that he had prepared bills and supplied the same to M/s. New Era metals without receiving/supplying any aluminium products. In the case of M/s. Munish Metal, he had not prepared the bills but had given book containing blank invoices to M/s. Shreeji Aluminium. There is no evidence to show that these statements have been retracted. He also admitted that since they were not supplying the goods but they were actually not purchasing the goods also, however to show purchases in the books, they were showing such purchases from their other firms. He also admitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and admitted the fact that packing slips were prepared by Shri Jassubhai D. Chauhan and he also admitted that goods were actually manufactured, packed and cleared in the name of fictitious trading firms. Further, Shri Ajit Kumar Mondal prepared a work sheet in his own handwriting wherein he worked out the quantity of aluminium extrusions, sections cleared clandestinely on the basis of : packing slips available in the two seized files and various documents : shown to him. It cannot be therefore said that the statement of Shri Mondal, Excise Clerk and Shri J.D. Chauhan, Packing Supervisor were generated in nature and not specific. Shri Kirit Khimjibhai Patel/Thumer in his statement dated 9-9-2005 admitted that M/s. Hari metal was opened only to facilitate transactions between M/s. Shreeji and M/s. New Era Metals. Further, Shri Ramesh Khanuja, Purchase In-charge of M/s. R.K. Enterprises and Shri Tarun Khanuja, Partner of M/s. R.K. Enterprises, Shri Rupesh Vyas, Ex-Manager of Unique Decor, Shri Rameshchandra Goyal of M/s. Goyal Aluminium House, admitted that aluminium sections ordered by them were actually manufactured and cleared from M/s. Shreeji but the bills were received from M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned. 44. The next issue to be considered is the demand of duty of Rs. 2,25,82,462/-. This amount has been worked out on the basis of sales register maintained by M/s. New Era Metals and the period is 4/2004 to 5/2005. The main ground for challenging confirmation of this demand is that the case is based on the statements of various persons and the statements have been retracted and further the appellants have urged that the fact that Shri Babubhai K. Patel,. Director admitted that earlier retraction was under the advise of advocate itself is indicative of pressure by the officers. In this case it is not the only ground on which the learned Commissioner has rejected the retractions filed by various appellants. For the purpose of convenience and better appreciation, it would be proper to reproduce the observations of the Commissioner with regard to retraction. This is contained in para 33.1 and the same is reproduced below. 33.1. The notice in their defence contended that during the course of investigation, the confessional statements of persons who are alleged to have been involved in the alleged clandestine manufacture, removal and disposal of finished goods have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assisting him during the recording of this statement. His said request was considered and his statement was recorded as orally narrated by Shri Babubhai Kanjibhai Patel, and the written form of which was thoroughly verified and explained to Shri Babubhai Kanjibhai Patel, by Shri Ajit Kumar Mondal. Further, In order to facilitate his [Babubhai] understanding, the officers asked the questions In Gujarati and he, after understanding the question, had given his reply in Gujarati, which had been translated into English by Shri Ajit Kumar Mondal, and tendered to the officers recording of the said statement, and the same had been typed on computer on his request. In his above statement' dated 14-10-2005, on being asked regarding the filing of a retraction before the Advocate & Notary, AT & Post Dadra, inter alia retracting his statement dated 17-3-2005, which had been recorded under Section 14 of Central Excise Act, 1944, Shri Babubhai stated that the same were filed by him, as per the advice offered to him by his advocate, defending his case before the Hon'ble Sessions judge, Silvassa. Further, in his above statement, he was also shown his earlier statement dated 17-3-2005 and after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir statements were voluntary statements given by them and there was no question of their statements being recorded under duress or threat. Moreover, I find that these statement are not only the evidences of the case, these are corroborated by various evidences as discussed above in the foregoing paras. I also find that once a responsible person like the main Directors of the firm who were managing the affairs of the firm had admitted in no uncertain terms the illegal activities of their unit there was no further proof required to corroborate the admitted position. An admitted fact need not be put to proof by other evidences. The allegation that admission of above said persons was taken under duress or coercion. The Managing Director of the factory is a seasoned person and there is no reason to infer any coercion or duress as these statements are not only the evidences of the case, these are also corroborated by various evidences as discussed above in the foregoing paras. Further, the said statements contained plethora of the facts, which are in the knowledge of the persons only and are duly corroborated by various evidences. Also, the statements the above said persons clearly bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rading firm wherein he has stated that he used to issue cheques in the name of another firm set up by him for purchase of aluminium extrusions/profiles but the cheque was never encashed but handed over to M/s. New Era Metals and commission of 0.75% collected. The appellants have not been able to show that these seven trading firms had aluminium with them for supply. There is a clear admission by these persons that they did not have aluminium to supply and the firms were set up on the advice of Director of M/s. Shreeji. Further, officers have also recovered a letter written by the Director to the Assistant General Manager, Syndicate Bank wherein he has stated that Shri Ajay Ashar is doing the marketing of M/s. Shreeji, which is established by documentary evidences such as work orders recovered from his residence. The register recovered from the factory of M/s. Shreeji shows one furnace was earmarked for production of orders placed by Shri Ajay Ashar. This statement admitting exclusive furnace and its production has not been retracted. There was clear admission on the basis of packing slips and production records by the Excise In-charge, Production Supervisor, six assistants, two Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese persons admitting issue of bills without supply of goods should be rejected. On the other hand appellant canvassed the point that department should produce proof of raw materials and proof of manufacture. Further, I also find that we cannot run away from the fact that both learned sister and myself have agreed that the demand for Rs. 26,20,792/- has to be confirmed because it is based on a production register recovered as A/24 and other evidences available on record discussed by me and learned sister in her order above. At this juncture, it is necessary to note that this register covers the period from December 2003 to November 2004, for which the details of unaccounted production is available. Having upheld the demand for the earlier period on the basis of very same production register, we cannot come to the conclusion that there were no clandestine removals or there were no clandestine clearances or there was no unaccounted production in the subsequent period especially in view of the evidence which I have discussed above. The question is only of quantification, since clandestine production is established. As regards the quantification, in view of the observations of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence. I fully agree that the findings of clandestine removal are required to be based on evidences and not on the basis of assumptions and presumptions. However, I am not able to agree that clandestine removal must be established beyond doubt. 47. In the context of clandestine activity such as smuggling, clandestine removal of excisable goods without payment of duty, and time & again, the Tribunal and Court have adopted preponderance of probability as a standard. 47.1 In the case of Maharashtra State Board of Secondary and Higher Education v. K.S. Gandhi & Ors - (1991) 2 SCC 716, it was observed as follows : "37. It is thus well settled law that strict rules of the Evidence Act, and the standard of proof envisaged therein do not apply to departmental proceedings or domestic tribunal. It is open to the authorities to receive and place on record all the necessary facts though not proved strictly in conformity with the Evidence Act The evidence must be germane and relevant to the facts in issue. In grave cases like forgery, fraud, conspiracy, misappropriation etc seldom direct evidence would be available. Only the circumstantial evidence would furnish the proof&helli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such clearances in some register and append their signatures. 47.4 In case of Carpenter Classic Exim Pvt. Ltd v. CC, Customs - 2006 (200) E.L.T. 593 (Tri.-Bang.), the Tribunal has observed as follows : "Shri Kabbur has also confirmed that part of the amount is collected by cash and the balance by cheque. Ms. Jagruty Sevak in her statement has confirmed the practice of collecting part of the amount from the Customers by cash. The documents seized indicate that the value declared for customs purposes is much less than the actual value. When Ravi Karumbaiah and Sanjeev Kabbur were confronted with the documents seized the entire modus operandi was revealed. Shri Karumbaiah has accepted that the undervaluation is to the extent of 65%. This has been corroborated by Sanjeev Kabbur. There is no evidence to show that the statements recorded under Section 108 of the Customs Act have been retracted. In other words, the contents of the documents seized have been corroborated by the statements of Karumbaiah and Kabbur. It is true that Thomas Mathew's statement has not been recorded moreover, there is no evidence of any investigation conducted abroad. No doubt there are certain deficienci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in company records. Hon'ble High Court also observed that no person will maintain authentic records of illegal activities. The decision of Hon'ble High Court is squarely applicable to this case also since the quantum of production has been estimated. This case stands on a much better foundation. Quantity sold to New Era has been worked out on the basis of bills under which trading firms had shown the goods to have been sold. These trading firm owners admitted they had created bogus firm and bogus purchase document of aluminium products and in reality no aluminium product was bought or sold but bills were raised for 0.75% commission. Bill books of three firms were found in M/s. Shreeji. Copies of same packing slips were found in M/s. Shreeji and New Era. Excise clerk and all others admitted. Production register for December 2003 to November 2004 shows unaccounted production. 47.6 Even in case of criminal appeal, in the case of State of Rajasthan v. Mohan Lal as reported in 2009 (237) E.L.T. 435 (S.C.), Hon'ble Supreme Court observed as under : "36. Doubts would be called reasonable if they are free from a zest for abstract speculation. Law cannot afford any favourite ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce between departmental proceedings under Section 71(1) and prosecution for illegal possession under Section 85(1). A combined reading of Sections 8(1), 71(1) and 85 of the 1968 Act made it clear that the legislature intended to provide for two separate proceedings before two different forums and there is no conflict of jurisdictions between the Authorised Officer acting under Section 71(1) to direct confiscation on being satisfied that an offence has been committed and the magistrate making an order on conviction of an accused under Section 85(1) and that mere acquittal in the trial before the Magistrate, in every case, cannot result in setting aside, ipso facto, of the orders of confiscation passed by the competent authority under the Act. That merely because there was acquittal in the trial before the Magistrate, due to paucity of evidence or otherwise, would not entail nullification of the order of confiscation of the seized articles in every case. {(See : Divl. Forest Officer v. G.V. Sudhakar Rao reported in [(1985) 4 SCC 573]}. In any event, on a plain reading of Sections 8(1) and 71(1) it is clear that the Authorised Officer was required to be satisfied that an offence under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esumption in law of evidence is a rule indicating the stage of shifting the burden of proof. From a certain fact or facts the Court can draw an inference and that would remain until such inference is either disproved or dispelled. 14. For the purpose, of reaching one conclusion the Court can rely on a factual presumption. Unless the presumption is disproved or dispelled or rebutted the Court can treat the presumption as tantamounting to proof. However, as a caution of prudence we have to observe that it may be unsafe to use that presumption to draw yet another discretionary presumption unless there is a statutory compulsion. This Court has indicated so in Suresh Budharmal Kalani v. State of Maharashtra - 1998 (7) SCC 337. "A presumption can be drawn only from facts - and not from other presumptions - by a process of probable and logical reasoning". 15. Illustration (a) to Section 1.14 of the Evidence Act says that the Court may presume that "a man who is in the possession of stolen goods soon after the theft is either the thief or has received the goods knowing them to be stolen, unless he can account for his possession". That illustration can profitably be used in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsported did not have any aluminium products at all and have admitted issue of bills without supply of goods and copies of; same packing slips have been recovered from M/s. Shreeji and M/s. New Era Metals. In any case it would be unfair to Revenue if we rely upon the decision of the Tribunal in the case of Shree Nathji Industries to decide in favour of the assessee in this case, since the date of decision in the case of Shree Nathji Industries was on 4-2-2011 whereas this matter was heard on 3-2-2011. 49. I also find that the submission that the department has failed to travel the distance between "must be true" and "might be true" is not correct. In my opinion, the results of the investigation covered by the revenue are sufficient to show that there was clandestine removal by the appellants and in this case voluminous records, documents, registers, unretracted statements, statements of deponents, who did not retract and whose cross examination was not sought leads to the conclusion that the department has not been able to unearth the full quantum of duty evaded and whatever has been found has definitely happened. In this case there is no extra polation; actually clandestine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eji. This file at page 60-61 contained two packing slips giving details such as section numbers, weight, number of pieces and length of aluminium extrusions/profiles. Shri Ajit Kumar Mondal admitted that these goods were cleared to M/s. Crystal Corporation and M/s. Laxmi Metal on 15-3-2005 without payment of Central Excise duty. Having held that the statement of Shri Ajit Kumar Mondal have to be relied upon and further having noted the fact that the statement is based on two packing slips containing the details and the instance of packing slips would mean that the goods have been produced. The statement of Shri Ajit Kumar Mondal has to be accepted as true and demand has to be sustained. In the result, the impugned order passed by the learned Commissioner as regards the duty demand on various accounts is fully sustainable and accordingly I uphold duty demand of Rs. 2,94,85,968/-. 53. Penalty to the extent of 100% of duty is also to be upheld on M/s. Shreeji in terms of provisions of Section 11AC and in terms of law declared by the Hon'ble Supreme Court in the case of UOI v. Dharamendra Textile Processors as reported 2008 (231) E.L.T. 3 (S.C.). Further, as observed by learned J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at large scale clandestine removal took place and large scale non-accountal of production took place with the active knowledge of Shri Ajit Kumar Mondal, penalty is imposable. However, I agree with the ld. Judicial Member that keeping in view that he was only an employee working under the direction of management and was only a clerk looking after excise matters, penalty on him is to be reduced to Rs. 10,000/- (Rupees Ten Thousand Only). 56. However, in view of the conclusion reached by me, the penalty imposed on the Directors and the Excise Clerk was excessive, some reduction is warranted in the case of other parties also and taking into account the role played by them, gravity of the offence, etc., I propose to reduce penalty on all these persons/firm. 57. As regards the penalty on M/s. New Era Metal, I find that the firm knowingly accepted bills raised by trading firms while receiving goods from M/s. Shreeji thereby abetting in evasion of Central Excise duty by M/s. Shreeji. Even though M/s. New Era Metal has sold all the goods under bills and on payment of Sales Tax, by doing so on fictitious purchases from trading firms, the evasion of Central Excise duty by M/s. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowingly purchased the goods and obtained bills from persons who had not supplied the goods and paid the money in cash thereby facilitating Central Excise duty evasion. Both of them are liable to penalty. Penalty of Rs. 5 lakh on Shri Tarun Khanuja is reduced to Rs. 50,000 (Rupees Fifty Thousand Only) and penalty of Rs. 5 lakh imposed on Shri Rameshchandra Goyal is reduced to Rs. 50,000 (Rupees Fifty Thousand Only). 61. As regards the penalty imposed on Shri Salim Saheb Patel Kindimani, Proprietor of M/s. B. S. Patel Roadways, I notice that he has played a significant role in the evasion of duty by M/s. Shreeji. He provided entire blank lorry receipts books to M/s. Shreeji to facilitate clandestine removal. Further he did not account for all the transport transactions carried out through this vehicle to M/s. Shreeji and arranged only for such transaction as per the instructions of Shri Ajit Kumar Mondal, Excise In-charge. He was very well aware of the fact that lorry receipts were utilized for effecting clandestine removal by M/s. Shreeji. Accordingly, he is also liable to penalty under Rule 26 of Central Excise Rules, 2002. However penalty of Rs. 10 lakh imposed on Shri Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty of Rs. 10 lakh imposed on Shri Salim Saheb Patel Kindimani is to be reduced to Rs. 1 lakh (Rupees One Lakh Only) as held by Member (Technical) or has to be set aside as held by learned Member (Judicial). The Registry is directed to place the matter before Hon'ble President for consideration and orders for reference to 3rd Member to resolve the differences of opinion. (Pronounced in Court on_____) Sd/- (B.S.V. Murthy) Member (Technical) Sd/- (Archana Wadhwa) Member (Judicial) DIFFERENCE OF OPINION 62. [Per : Dr. P. Babu, Member (T)]. - This case has been placed before me for decision due to the difference of opinion between Member (Judicial) and Member (Technical) which is reproduced as below : POINTS OF DIFFERENCE OF OPINION (i) Whether the demand for Rs. 37,23,764/- being the duty on aluminium cleared to three buyers has to be upheld as held by [Member (Technical) or has to be set aside as held by learned Member (Judicial). (ii) Whether the duty demand of Rs. 2,25,82,462/- has to be upheld as held by Member (Technical) or has to be set aside as held by learned Member (Judicial). (iii) Whether duty demand on the goods seized in the godown of M/s. New Era Metals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reeji Aluminum Pvt. Ltd. 2,94,85,968/- 2,94,85,968/- (Sec. 11AC) 26,20,792/- 26,20,792/- Shri Paresh Patel (MD of Shreeji) - 30,00,000/- (Rule 26) 75,000/- (sic) - 75,000/- **Shri A.K. Mondal (employee of Shreeji) - 10,000/- (Rule 26) 10,000/- M/s. New Era Metals (Partnership firm) - 25,00,000/- (Rule 26) NIL Shri Kamlesh Sapra Partner of New Era - 10,00,000/-(Rule 26) NIL Shri Ajay Ashar (employee of New Era) - 10,00,000/-(Rule 26) NIL ***Shri Keshrimal Jain, Trader - NIL NIL ***Shri Chandu Jain, Trader - NIL NIL ***Shri Harshad Parmer, Trader - NIL NIL ***Shri Kirit Patel, Trader - NIL NIL Shri Tarun Khanuja, Buyer - 50,000/- (Rule 26) NIL Shri Ramesh Goyel Buyer - 50,000/- (Rule 26) NIL Shri Salim Saheb Kindimani, Transporter - 1,00,000/- (Rule 26) NIL * Rs. 26,20,792/- duty and equal penalty confirmed by both Hon'ble Members and no difference lies in this regard. ** Penalty on Shri Mondal confirmed by both Hon'ble Members, equal to Rs. 10,000/- and no difference lies in this regard. *** Penalties on traders set aside by both Hon'ble Members equal to Rs. 10,000/- and no difference lies in this regard. 64.&ems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere subsequently retracted. The Revenue mainly relied upon certain packing slips procured from the office/godown of M/s. New Era Metals and certain work orders stated to be signed by Shri Ajay Ashar found in the factory premises. Certain blank LR books and invoice books of two trading firms were found in M/s. Shreeji Aluminium Pvt. Ltd.'s factory. 67. In the written submissions, the appellant contended that the Hon'ble Member (Judicial) who recorded the findings that the demand is solely based on statements and in the absence of any tangible and sufficient evidences the demand is not sustainable. It was argued that the finding of Hon'ble Member (Technical) in this regard wherein the demand stands confirmed were on the grounds of general work orders found in the premises of Shri Ajay Ashar, Marketing Manager of M/s. New Era Metals and copies of general packing slips and its copies and general packing slips were found in the premises of M/s. Shreeji. Statements of the suppliers that they did not actually supply goods have not been retracted. Shri Ajit Mondal and Shri J.D. Chauhan, both employees of M/s. Shreeji admitted to the production and clearance of goods. They argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) allowed the appeal by observing that there is no concrete evidence on record to show manufacture of the goods by the appellant in that case and its clearance through a trading firm. The ratio of the above decision is applicable to the facts of the present case also. For ready reference, one relevant paragraph from the said order is reproduced below. "Similarly, in the case of M/s. Shingar Lamps Pvt. Ltd v. CCE, Chandigarh as reported in 2002 (150) E.L.T. 290 (Tri.-Del), it was held that in the absence of any evidence of excess consumption of raw material or of electricity to support the allegation of excess production and their removal, the demand cannot be upheld on the basis of clandestine removal. The said decision was again upheld by Hon'ble High Court of Punjab & Haryana as reported in 2010 (255) E.L.T. 221 (P & H), reiterating the necessity of production of positive evidence of clandestine removal. To the similar effect are the Tribunal's decisions in case of M/s. Chemco Steels Pvt. Ltd v. CCE, Hyderabad-I as reported in 2005 (191) E.L.T. 856 (Tri.-Bang), M/s. Andra Cements Ltd. v. CCE, Guntur as reported in 2005 (191) E.L.T. 1046 (Tri.-Bang), M/s. Ruby Chlorates (P) Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber (Judicial) in her order had confirmed the demand of Rs. 26,20,792/- against Shreeji Aluminium. However, relying upon the judgment of the Tribunal in the case of M/s. Swati Chemicals & Others 2009 (94) RLT 684 (CESTAT) and Hon'ble High Court of Gujarat in the case of M/s. Exotic Associates v. CCE - 2010 (252) E.L.T. 49 (Guj), it was held that where no such option stand extended by the authorities below, the same can be extended by appellate authority and gave an option to pay entire duty along with interest along with 25% of penalty within 30 days. The penalty imposed on trading units, marketing manager of New Era were set aside as per the law declared by the Tribunal in the case of M/s. Ekta Enterprises as reported in 2005 (180) E.L.T. 219 (Tri.-Mumbai). Hon'ble Member (Judicial) reduced penalty imposed on others also. 70. In the context of clandestine activity, Hon'ble Member (Technical) has opined that he is not able to agree that clandestine removal must be established beyond doubt. He has relied upon the judgments in the following cases : 1. Maharashtra State Board of Secondary and Higher Education v. K.S. Gandhi & Ors. - (1991) 2 SCC 716. 2. D. Bhoormull - 1983 (13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lakhs twenty-five thousand, five hundred and twenty-six only) is set aside along with setting aside of demand of duty of Rs. 33,424/- (Rupees Thirty-three thousand four hundred twenty-four only); (iii) The demand of duty of Rs. 26,20,792/- (Rupees Twenty, six lakh twenty thousands seven hundred ninety two only) is confirmed; (iv) The penalty imposed on M/s. Shreeji Aluminum Pvt. Ltd. is set aside except penalty of Rs. 26,20,792/- (Rupees Twenty- six lakh twenty thousand seven hundred ninety-two only) being 100% of duty confirmed against them. However, they are given an option to deposit the said dues along with 25% of penalty within 30 days from the present order, in which case the same shall stand reduced to 25%; (v) The penalties on Shri Paresh Patel and Shri Babubhai Patel stand reduced from Rs. 75,00,000/- (Rupees Seventy-five lakhs only) and Rs. 50,00,000/- (Rupees Fifty lakhs only) respectively to Rs. 75,000/- (Rupees Seventy-five thousand only; (vi) Penalties imposed on Shri A.K. Mondal which stands reduced from Rs. 10,00,000/- (Rupees ten lakhs) to Rupees 10,000/- (Rupees Ten thousand only); and (vii) Penalties imposed on all other appellants stand set aside. Sd/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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