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TMI Blog2013 (6) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... program register cannot be held to be a relevant statement. Revenue authorities have recorded the statements of the owners of vehicles who were engaged by the appellant for transportation of the goods. The said statements do not indicate that the owners were self-driving the vehicles and they would be in a position to give correct particulars as regards invoices, where the name and city of the consignee is mentioned. In the absence of any such corroborative evidence as to that the transportation were made by the said vehicles and that the material transported was nothing but plastic films and sheets and reliance placed by the Revenue authorities on the statements of the transporters is incorrect and such statements do not instill the confidence that the appellant had removed the plastic films and sheets in the guise of LFT. The adjudicating authority has not recorded any finding that the appellant was receiving excess payment than the amount indicated on 814 invoices in Annexure II to the Show Cause Notice, even after scrutinizing the documents resumed from the head office of the appellant. The appellant had, in their statement, clearly stated that the head office of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of duty on the goods cleared by the appellants on the ground that RMCL had actually cleared films/sheets in the guise of Lay Flat Tubing (LFT for short). Impugned order has been passed confirming demand of Rs. 72,27,371/- on this ground. A penalty equal to the duty demanded has also been imposed under Section 11AC of the Central Excise Act, 1944 on RMCL and interest has been demanded as applicable. Penalties have also been imposed on the other two appellants namely Shri Anil Agarwal, Director and Shri K.B. Nair, General Manager, Production and Excise. 2. Shri Vishal Agarwal, Chartered Accountant on behalf of the appellants submitted that the demand for differential duty can be dealt with under two categories. In fact the show cause notice also comprises of two annexures on the same basis. Annexure A-1 covers the duty demand of Rs. 11,07,596/- on the ground that RMCL had cleared plastic laminated films/sheets in the guise of LFT to Eastern Group of Companies in Kerala and there were in all 103 clearances to them. The second demand amounting to Rs. 61,19,775/- is covered by 814 clearances of Plastic laminated films/sheets in case of LFT to non-existent customers. 2. With regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made out in the notice. Shri K.B. Nair had stated that granules i.e. inputs were cleared as such in the guise of LFT whereas the case of the department is that the appellants had cleared LFT in the guise of sheets/films. It was also submitted that Shri Anil Agarwal had only accepted the statement of others but there was no positive admission of removal of films in the guise of LFT. Further, he also submitted that Shri Kamlesh Pandey whose statement was dealt with the production register had joined the appellant firm only eight months back. Further he also submitted that allegation in the show cause notice is that quantity cleared is LFT was not mentioned in the production register but he submits that this quantity has been mentioned in the RG-1 and Central Excise records. He also submits that Shri Santosh Singh, Excise Clerk had clearly stated that he did not know that what was being cleared and he was only preparing invoices and his job ended with preparation of invoices. 3. As regards Annexure A-2 relating to demand of Rs. 61,19,775/- on the ground that plastic film/sheet was cleared in the guise of LFT to non existent buyers, he submitted that Shri Santosh Singh, Shri Kamles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them; the statements of vehicle owners could not be relied upon as they cannot be expected to remember what happened 2-3 years back when did not maintain any records; further no cross-examination of transporter and other person was granted in spite of specific request and pointing out above referred discrepancies. 4. Learned DR on behalf of the Revenue submitted that the case was based on documentary evidence and corroborating statements of various persons and since documentary evidence corroborated the statements of various persons, the fact that no cross-examination was allowed would not affect the defence at all. Further, he pointed out that for all clearances of LFT to the existing customers based on purchase orders, purchase order wise production was available in the production program register. The fact that details in the production program register tallied with the RG-1 except in the case of clearances to non-existent buyers, whose address and details were not available would show clearly that there was deliberate manipulation of the statutory records. The fact that LFT figures were found only in the RG-1 register and invoices would strengthen the case of department. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods for the appellant nor any of the group companies. Shri Amrutbhai Patel owner of the two vehicles also stated that he had never transported goods to non existent buyers but had transported nearby factories located at Daman, Silvasa, Bhilad, Valsad etc. He also stated that mostly plastic films have been transported. He was one of the transporters who had carried a lot of consignments for the appellants. Shri Shailesh N. Patel owner of two vehicles, out of which one was owned by his wife, also gave the similar statement. It was submitted by the learned DR that none of these statement except that of Shri K.B. Nair was retracted, which is at a later date only and is clearly an after thought. 6. We have considered the submissions made by both the sides As regards clearances to Eastern Group Companies, in respect of which demand of duty to the extent of Rs. 11,07,596/- has been confirmed, the Commissioner has come to the conclusion that sheets/films were cleared showing the same as lay flat tubings in 103 clearances to various companies belonging to Eastern Group in Kerala. The Commissioner has based this conclusion on annexure to show cause notice and one purchase order which he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared in the guise of LFT, we find that the case of the department is supported by following evidences; Shri Kamlesh Pandey, Production Supervisor had clearly stated that production program register was maintained by the Company in respect of the orders received for manufacture of LFT. Investigating officers also found in respect of the clearances to regular purchasers who made payment through cheque as soon as purchase order was received, the entries were made in the production program register. Further, the documents seized from the premises of RMCL-III like program books, payment slips, other registers, purchase orders etc. indicated that only on a few occasions LFT have been manufactured and in most of the cases, laminated sheets/films were manufactured. The details in the RG-1 register as regards LFT does not tally with the details given in the production program register. The four production program registers recovered were related to the production of four extruder machines installed in the factory and the registers contained the details like size, quantity, roll, sample, weight are shown. Further, this coupled with the statement of Shri Kamlesh Pandey who stated that product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived by them has to be treated as cum duty amount. Appellants relied upon the decisions of Hon ble Supreme Court in the case of Maruti Udyog Limited reported in 2002 (141) E.L.T. 3 in support of this claim. In this there is no dispute or there is no allegation by the department that the appellants had received additional consideration over and above what is shown in the invoice. The invoice price is not disputed. The amount received is not disputed. Appellants have actually paid amount of 8% to department which is what they have shown in the invoice. There is no evidence to show that the value was decreased or increased. Therefore, there is no reason to reject the request for treatment of this amount as cum duty price. It is an accepted principle that when a transaction value is available, we need not require a Chartered Accountant to certify that the price charged includes all the elements. Only in the case of refund claim, assessee is required to show that the duty liability has not been passed on. This is not a case of claiming refund. In any case in the absence of any evidence of collection of extra amount and also in view of the fact that the department s demand of duty is ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original adjudicating authority for the purpose of recalculation of duty and penalty under Section 11AC. However, in view of the fact that the original adjudicating authority had not extended the option to pay penalty to the extent of 25%, in case of full discharge of liability if the same is paid within 30 days from the date of receipt of order, an option is required to be given to the appellants to pay 25% of the duty towards penalty and duty along with interest within thirty days while deciding the amount afresh. Penalty on Shri Anil Agarwal is reduced to Rs. 2,00,000/- (Rupees two lakhs) under Rule 26 of Central Excise Rules, 2002 and to Rs. 25,000/- (Rupees twenty five thousand only) on Shri K.B. Nair under Rule 26 of Central Excise Rules, 2002. Appeals of Shri Anil Agarwal and Shri K.B. Nair are disposed off in above manner. (Pronounced in the Court on .2010) Sd/- (B.S.V. Murthy) Member (Technical) 13. [Order per : Archana Wadhwa, Member (J)]. - After having gone through the order proposed by my learned Brother, I proceed to record a separate order in respect of confirmation of demand of duty of Rs. 61,19,775/- and imposition of penalties. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stic laminated films and plastic bags. The fact that appellants has cleared LFT is also not being disputed by the Revenue inasmuch as such clearances have been made to known and established buyers i.e. M/s. Eastern Groups of Companies in Kerala and two others also. As per the appellants, such LFT were manufactured in roll for the customers who want to use it after printing etc. according to their requirement and such customers buy the goods at the factory gate mostly on cash payment and payments were made either at Daman or at their Mumbai office as per their convenience. It is only where plastic lamination films/sheets and plastic bags are manufactured for their specific customers as per their requirement of size and color etc., they make a program for manufacture of such goods which is reflected in various records maintained by them like program books, program slips, order register, purchase orders etc. The said registers did not bear any remarks about the description of the goods i.e. either LFT or Films/sheets etc. The same are mostly described by width/micron and the other requirements etc. It is only in few places that the word tubing is written in the program registers. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of Shri Kamlesh Pandey, Production Supervisor, recorded on 21-7-2005. It stands deposed in the statement of Shri Kamlesh Pandey that wherever the word Lay Flat Tubing is mentioned in the Production Register along with the party s name, the same represent that LFT has been manufactured and dispatched and wherever there is no mention of LFT, they had manufactured plastic sheets and cleared to respective parties. The Revenue has strongly relied upon the above statement of Shri Kamlesh Pandey. Apart from submitting that program register is being maintained only in respect of those parties, who has placed orders on the appellant and wherever such LFT are being manufactured in role without any specific order of the customer and without any specification by the customer, such production registers are not being maintained, it also stand strongly contended before us that admittedly said Shri Kamlesh Pandey joined the appellants as Production Supervisor since last eight months from the date of recording of his statement. As such it stands contended that the person, who has been with the appellant only for a period of 8 months, cannot be in knowledge of the facts for the period Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e buyers are appearing, they have cleared plastic sheets/films and not LFT. However, in spite of such detailed addresses of the buyers available, Revenue has chosen not to contact them and verify the factual position. It seems a little strange that the buyers have ordered for LFT as per the requisition, why would they buy goods different from the one required by them. In the absence of any such cross-verification from the buyers, statement of Shri K.B. Nair which is contradictory and does not inspire confidence, cannot be made the basis for arriving at findings of clandestine removal. Apart from that it is also noticed that the said statement was subsequently retracted by Shri Nair on 22-7-2005 by sending such letter under postal certificate. 20. The statement of Shri Anil Agarwal, Director of the Company merely confirms what is stated by the employees. There is no admission on his part as regards clearance of sheets instead of tubings. That, the statement of employees has been held to be as not relevant, the statement of Shri Anil Agarwal, cannot be relied upon. 21. It is further seen that the Revenue has relied upon the statement of vehicle owners which stands discussed in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. This fact reflects upon the voluntary character of the statements and tilts the evidence of the same being fabricated and recorded as per the whims of the investigation. Though the above plea was raised before the Commissioner, he has not adverted to the same. I agree with the learned advocate that conducting the search for a period of eight hours and thereafter recording the statements of seven deponents on the same very day seems to be not only improbable but impracticable also. The said statement cannot be said to have been made after scrutinizing the documents seized under annexure to the Panchnama or after consulting other relevant records. 23. After having discussed various statements, the correctness of which has been held to be doubtful, I proceed to consider the evidentiary value of the same. It is well settled that the statements alone cannot be made the basis for upholding the findings of clandestine removal without there being any corroborative evidence. The Hon ble Delhi High Court in the case of Vinod Kumar Shahdev v. UOI - 2009-TIOL-465-HC-DEL-FEMA (Delhi) has held that once the alleged statement is retracted by making allegation of force and duress, the onus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the sales in respect of 814 clearances have been made against cash, under the cover of excise invoices without disclosing the names of the buyers so as to avoid any future investigations at the buyers end. The appellants have contended that sales reflected cash and carry sales by individuals at their factory gate. As per the provisions of Rule 11(2) of the Cenvat Credit Rules, 2002, there is no requirement in the law to give complete address of buyers of the goods. The provisions of said Rule are being reproduced :- The invoice shall be serially numbered and shall contain the registration number, address of the concerned Central Excise Division, name of the consignee, description, classification, time and date of removal, mode of transport and vehicle registration number, rate of duty, quantity and value of goods and the duty payable thereon. 26. As is clear from the above, the sale invoices are required to provide information as regards various factors and there is no requirement of mentioning complete address of the buyers. As such, I fully agree with the learned advocate that not writing the complete address on the said invoices cannot lead to any adverse findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional 1.9% liability on the appellant even if the entire 100% clearances are held to be that of sheets. As such, even the economics of the case supports the appellant s stand that there was no monetary benefits for them to clear the sheets in the guise of LFT in respect of small portion only. 29. After having held that there is no sufficient evidence on record to establish that the clearance of LFT was in fact the clearance of sheets, I proceed to decide on the technical grounds raised by the appellants. It stands contended by the appellants before the adjudicating authority that they were not in existence prior to January 2005. Appellant being a Public Limited Company was incorporated only on 7 Jan 2005 and entered into a partnership with M/s. Mayura Industries on 17 January 2005 as per partnership deed. Thereafter, partnership was dissolved by deed of dissolution on 5 March 2005 and the appellant had taken over the running business of M/s. Mayura Industries with effect from 6 March 2005. A new Central Excise Registration was taken by them and the appellant s registration in the name of Mayura Industries was surrendered. Inasmuch as the appellants and M/s. Mayura Industries were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the said period and was incorporated only on 7-1-2005 and took over the running business of M/s. Mayura Industries with effect from 6-3-2005, the confirmation of demand against them for the period prior to 6-3-2005, cannot be upheld. 31. In view of the foregoing discussion, I hold that demand of confirmation of duty of Rs. 61,19,775/- against the appellant along with interest and imposition of penalty is neither justifiable nor warranted and the same is accordingly set-aside with consequential relief to the appellants. 32. Inasmuch as the appeal of M/s. Radha Madhav Corporation Limited stands allowed by me, the imposition of penalty on Shri Anil B. Agarwal, Director and Shri K.B. Nair, General Manager of Excise matters, has to be set-aside. Accordingly, the same are set-aside and their appeals are allowed with consequential relief. 33. As I agree with the findings arrived at by my learned brother in respect of setting aside of duty of Rs. 11,07,596/- and the consequent confirmation of interest and imposition of penalty, the said part of the order is not being interfered with. Sd/- (Archana Wadhwa) Member (Judicial) DIFFERENCE OF OPINION (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any allegation and any evidence to show that the difference in the cost of lay flat tubings and sheets was recovered by the appellants in addition to the consideration as reflected in their records would weaken the case of Revenue. (l) Whether the fact that the credit on duty paid on the inputs at the rate of 16% was sufficient for the appellants to discharge their duty liability in respect of the final products, without any additional liability (only to the extent of 1.9%) to pay out of PLA, would be a relevant factor to hold in their favour. (m) That, appellants were incorporated as Company in January 2005 and were granted a new Central Excise license with effect from 6-3-2005, whether the duty, if any, clearances effected by an earlier partnership firm i.e. M/s. Mayura Industries can be fastened upon them for prior to the said period. (n) Whether there is sufficient and positive evidence available in the facts and circumstances of the present case so as to arrive at adverse findings of clearance of sheets in the guise of lay flat tubings or not. (o) Whether the appeals are required to be partially allowed as held by Member (Technical) or they have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. (i) Whether such statements of various persons is sufficient to prove the charge of clandestine removal activities, without any other independent corroborative evidence. (j) Whether there was any requirement under the law to give complete address of the buyers and absence of the address in the invoices was with a mala fide intention on the part of the appellants. (k) That, whether the absence of any allegation and any evidence to show that the difference in the cost of lay flat tubings and sheets was recovered by the appellants in addition to the consideration as reflected in their records would weaken the case of Revenue. (l) Whether the fact that the credit on duty paid on the inputs at the rate of 16% was sufficient for the appellants to discharge their duty liability in respect of the final products, without any additional liability (only to the extent of 1.9%) to pay out of PLA, would be a relevant factor to hold in their favour. (m) That, appellants were incorporated as Company in January 2005 and were granted a new Central Excise license with effect from 6-3-2005, whether the duty, if any, clearances effected by an earlier partnership firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated by his other employees. It is his submission that so far as the statements of the transporters, which has been relied upon by the lower authorities, none of these statements were of the drivers of the vehicles. It is his submission that it was the statement of the owner who were not able to say whether they have transported the goods of the appellant when they were shown the invoices. It is his submission that most of the times the drivers only were taking decision of transportation of the goods. It is his submission that in any case, the statements recorded of owners of the transporters 2-3 years down the line, would indicate that said statements were given by the transporters, based upon the memory. It is his submission that the appellant had requested for cross examination of the transporters, which is denied by the adjudicating authority without giving any proper reasoning. It is also his submission that the Revenue has sought to allege undervaluation on the short payment of duty on the ground that the appellant had not indicated the names and complete addresses of the purchasers in those invoices. It is his submission that such invoices do not require the appellant to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission that the owners of the vehicles have also agreed and stated that they transported the goods only if the invoice has full address and not incomplete address. It is his submission that the demand raised by the Revenue on 814 invoices, in Annexure 2 of the Show Cause Notice was not having any full address. It is his submission that the cross examination which was sought by the appellant was denied, is correct as the cross examination of witnesses cannot be demanded as a matter of right. It is his submission that in the case in hand, it is merely a statement, but from the corroborative evidences of the records and the documents seized from the premises of the appellant clearly established the clearances of plastic films/sheets in the guise of LFT. He would submit that the judgment of Hon ble Apex Court in the case of Surjeet Singh Chhabra v. UOI, 1997 (89) E.L.T. 646 (S.C.) will be applicable. It is his submission that the judgment of the Tribunal in the case of Fortune Impex v. C.C.E., Calcutta - 2001 (138) E.L.T. 556 (T) will also be applicable in this case. It is his submission that one of the defence put up by the assessee is that Shri K.B. Nair, General Manager (Excise P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he process is not required to be proved for the said purpose, however the Revenue is not relieved altogether of the burden of producing some credible evidence in respect of the fact in issue. 39. Plethora of case-laws has been cited by both the sides, and ratio of these case-laws has been duly considered by me. To arrive at a finding as to whether there has been undervaluation, essentially peculiar facts of the case and the evidence relied upon in the background facts, have been seen. 40. As rightly observed by the Hon ble Member (Judicial), it should not be forgotten that the charge of clandestine removal in the guise of some other goods, connotes accusation of serious nature and therefore is required to be established with cogent evidence, and while the evidence obtained cannot be discarded totally but should be scrutinized and examined carefully and what weight should be attached to such material should be decided depending upon facts of each case. 41. The ld. Representative for the Revenue has taken me through the findings and the material which the ld. Member (Technical) has considered in support of the charges in the two Show Cause Notices. 42. As per the Revenue, evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance placed by the Revenue on this statement of Shri Kamlesh Pandey seems to be flawed for more than one reason. Firstly, it is undisputed that Shri Kamlesh Pandey was in employment of the company only prior to 8 months on the date when his statement was recorded and could not have explained the details of the entries made in any register prior to his employment. Secondly, said statement does not indicate that there were clearances of plastic sheets and films in the guise of LFT. Thirdly, Shri Kamlesh Pandey has only explained the activities of the appellant in recording the production in the programme register, I find that there is no further evidence or statement to indicate that these Plastic sheets and films were cleared in the guise of LFT. In my opinion, no much credence can be given to the statement of Shri Kamlesh Pandey, to hold that there was clandestine clearance of plastic films and sheets in the guise of LFT. (b) Reliance is placed by the adjudicating authority on the statement of Shri Santosh Singh, who was working as Excise Assistant. On perusal of his statement recorded on 21-7-2005, he has recorded that he was shown sales invoices of plastic sheets and films f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could implicate that the appellant was indulged in removal of plastic sheets in the guise of LFT. The said Shri Santosh Singh has categorically stated that he has not personally or physically monitored the loading and clearances, not aware who and how the payment of transportation in respect of these clearances are made, that he was not aware of mode of transportation and names of the transporters of these clearances. The above statement given by Shri Santosh Singh, which has been relied upon by the adjudicating authority to hold that the appellant had cleared the plastic sheets and films in the guise of LFT, seems to be totally unconnected, inasmuch as the said Shri Santosh Singh has not implicated the appellant in any way, and there is no further corroboration in any form whatsoever. In view of this, in my opinion, the statement of Shri Santosh Singh does not help the Revenue s case of charge of removal of plastic films and sheets in the guise of LFTs. (c) As regards the statement of Shri K.B. Nair, General Manager (Excise Production), I find that in his statement recorded on 21-7-2005, there is an inherent contradiction in his statement recorded. At one place in his statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicated on the 814 invoices. It is also seen that the investigating authorities have shown the invoices of 2004 also to the said transporters and asked them various questions. The owners of the transporters have stated that they are transporting the goods by the said Mayura Industries/Radha Madhav Corporation Ltd. (ii) It is also seen from the various statements that these transport owners are not able to produce the bills which were raised by them for the purpose of payment of transportation charges. (iii) It is also seen that the owners have not indicated that they were self driving the said vehicles during the relevant period of time which would indicate that they were aware of the kind of goods transported under specific invoices. (iv) It is also seen that some transporters have indicated that many times the material was delivered to Kachigam, Somnath, and Daman, where the factories are situated, no specific inculpatory statement was given. It can be seen that the Revenue authorities have recorded the statements of the owners of vehicles who were engaged by the appellant for transportation of the goods. The said statements do not indicate that the owners were sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esumption and assumption drawn by the adjudicating authority that this was in order to thwart the investigation, is totally incorrect. (f) I find that there is no dispute to the fact that the LFT is lower in cost than the plastic sheets and films. This undisputed fact is duly supported by the invoices raised by the appellant. Assuming that the Revenue s charge of clearances of plastic films and sheets in the form of LFT is correct, there is no corroborative evidence or evidence collected by the Revenue in any form to indicate that the appellant had received the excess payment in cash for the differential value between the LFT and Plastic films sheets. I find that on 27-7-2005, the investigating authorities had visited the appellant s office in Mumbai and drawn a Panchnama, wherein they had withdrawn various documents which are listed as under : S.N. Description of the documents/records Page/Period 1. Diary containing C/C account details 1 to 174 2. Register containing c/a account details 2005 1 to 282 3. - - 2001 1 to 207 4. - - 2002 1 to 207 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. The business of M/s. Mayura Industries was taken over by the current appellant M/s. Radha Madhav Corporation Ltd. w.e.f. 6-3-2005. In my view, the demand of duty, if any, for the period prior to 6-3-2005 can be raised only on Mayura Industries and not on M/s. Radha Madhav Corporation Ltd., as M/s. Radha Madhav Corporation Ltd. is a Public Limited Company, and the Public Limited Company is a legal persona in the eyes of law and having distinct and identifiable entity. To come over to such a valid legal proposition, the adjudicating authority, in his order-in-original recorded that the charges are against M/s. Radha Madhav Corporation Ltd. and seen referring to them earlier known as Mayura industries . In the entire proceedings, I find that there is no evidence which has brought on record to indicate that M/s. Radha Madhav Corporation Ltd. has taken over the running company of M/s. Mayura Industries along with its assets and liabilities. There is no whisper or evidence indicating that M/s. Radha Madhav Corporation Ltd. has admitted that they are liable for any legal dues by M/s. Mayura Industries during the period before taking over of M/s. Mayura Industries. 48. There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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