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TMI Blog2016 (10) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... ter were recovered which has not been corroborated with the Lorry receipt or commercial invoice - when except confirmation from alleged consignee, no single statement is on record and no cross examination was allowed to check veracity of confirmation; the demand cannot be made on such value. Even though the demand is mainly based upon the commercial invoices, but during investigation any excess production than recorded in books of the Appellant concern was not found - Appeal is partly allowed. - Excise Appeal No. E/3083-3084 & 3270/2006-E[SM] - Final Order No. 54027-54029 /2015 - Dated:- 7-10-2016 - Hon'ble Mr. S.K. Mohanty, Member ( Judicial ) Mr. M.R. Sharma (DR) for the Appellant Mr. Manish Saharan (Advocate) for the Respondent ORDER Per S. K. Mohanty These appeals are directed against the Order-in-Appeal No. IND-I/176-177 dated 28.04.2006 passed by the Commissioner (Appeals), Indore. The Appeal Nos. 3083 and 3084 has been filed by the Commissioner, Central Excise Indore, whereas the Appeal No. 3270 of 2006 has been filed by M/s Modern Laboratories. Initially the adjudicating authority had confirmed a demand of ₹ 15,86,351/- along with penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, the Commissioner (Appeals) upheld the adjudication order, but reduced the demand on the ground of exclusion of traded goods, repetition of entries and sales tax. He also set aside the penalty imposed on Shri Arun Kharia. The revenue is aggrieved with the order to the extent it reduces the duty, penalty and waived redemption fine on the Appellant company and also against setting aside of penalty on Shri Kharia. The Appellant company has filed appeal against upholding of demand and penalty, contending interalia, that the order passed by the Commissioner (Appeals) is not proper and justified in as much as merits of the case were not properly appreciated by him. 3. The Ld. Advocate appearing for the Appellant company submits that the demand was made on the basis of commercial invoice, register and chart found from factory and office and the value of clearances was worked out in Annexure 65 and 66 to the show cause notice. That in SCN it was alleged that in the said Annexure 65 and 66 for the year 1998-99 and 1999-2000 respectively, the details of commercial invoices were corroborated with column No. 14,15 and 16 i.e. details of Lorry Receipt, Nos. and name of transporter, payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of a single alleged consignee was recorded or relied upon in the show cause notice to show that the goods were received by them. That the Commissioner (Appeals) has upheld demand only on the ground that majority of sales were to three parties of Raipur namely, M/s Bharat Sales, M/s Kothari Medical Surgical and M/s Brijkishore, who have certified their ledgers in follow up reports. He submits that the Commissioner (Appeals) has wrongly rejected their claim as except acknowledgment by these three parties, there is no other evidence to show that the goods were allegedly supplied to other parties also. That even in case of the said three parties, neither any statement was recorded nor their cross examination was granted to verify their claims. Further, no LR was found. That in absence of any statement and rejection of request for cross examination, the ledgers which are the property of the third party, cannot be relied upon. That in case of demand on value of ₹ 4,74,525/- as shown in Annexure B1 for the year 1998-99, the demand was confirmed on the basis of reports received from parties. That when neither the statements of such parties were recorded nor cross examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s found though reliance has been placed upon LR nos. That the reliance has been placed upon the statement of two transporters namely Shri Kuldeep Singh, Prop. of M/s New Bombay Road lines and Shri Bharat Kumar, Partner of M/s Shree Maharaja Road lines and their two dispatch register. However it can be seen that in Annexure 65 that there is no mention of any dispatch register details. Moreover, in absence of LRs and non granting of cross examination, no reliance can be placed upon mere statements or LR numbers. Thus, he submits that the demand is illegal. He places reliance upon the judgment of BASUDEV GARG Vs. CCE, 2013 (294) E.L.T. 353 (Del.). He also places reliance upon the judgment of Tribunal in the case of FLEVEL INTERNATIONAL Vs. CCE , 2016 (332) E.L.T. 416 (Del.) and ASWANI CO. Vs CCE DELHI-I 2015 (327) E.L.T. 81 (Tri. - Del.), wherein the tribunal held that in case the department failed to show existence of any of extraordinary circumstances under Section 9D of Central Excise Act, 1944 to justify denial of right to cross-examine the witnesses, the same is a serious infraction for initiation of the adjudication proceedings. That simply stating that cross-examination of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation as to what was the value of traded goods and exempted goods, it cannot be said that the amount received in bank account of M/s Modern is sale proceeds of goods without payment of duty. That the visiting officers did not found any extra purchase of raw material, extra manpower, consumption of power or any manufacturing records, which can show that they have produced any unaccounted goods. That being a pharmaceutical unit, they have to maintain batch wise records of medicines manufactured by them. That since no discrepancy has been found from their factory, the allegation against them is not sustainable. He submits that only on the basis of commercial invoices or the register, it cannot be said that the goods were cleared clandestinely. He relies upon the following judgments : (i) ARCH PHARMLABS LTD. Vs. CCE, HYDERABAD (182) ELT 413 (TRI-BANG) (ii) CCE, BHOPAL Vs. L.B.SONS 2011 (274) ELT 271 (TRI-DEL) (iii) CCE, JAIPUR Vs. DOLSUN CONTAINERS PVT. LTD. 2004 (302) ELT 287 (TRI-DEL) (iv) VASAVI SYNTHETCIS (P) LTD Vs. CCE, VISAKHAPATNAM (2001) ELT 446 (TRI- BANG) (v) CCE, COIMBATORE Vs. SANGHMITRA COTTON MILLS (P) LTD 2004 (163) ELT (472) (TRI) 3.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted from duty till June 98 99. The show cause notice nowhere states the value of exempted and traded goods. Each and every clearance was held to be dutiable which clearly shows that the show cause notice was issued and the demand was confirmed without any basis and merely on the basis of commercial invoice or balance sheet. Thus the demand having been confirmed without proper investigation, cannot be allowed to sustain and should be set aside on this ground alone. 3.4 He submits that during the investigation the goods valued at ₹ 69,088/- were also seized as may be observed from Para 3 of the show cause notice on the ground that the same were found in excess and for which separate show cause notice was issued by the department. Though the adjudication authority ordered for confiscation of goods but the Commissioner (Appeals) vide Order-in-Appeal No. IND/-I/600/2003 dt. 10.11.2003 set aside the order. The revenue filed an appeal before the Appellate Tribunal but the same was rejected vide Order No. A/1697/04- NBS dt. 09.11.2014/ 08.12.2014. The Tribunal held that the fact of the goods not having been entered in RG- 1 will not invite penal action unless there is some ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess it is supported by any evidence of removal. Hence the demand on value of ₹ 40,99,056/- for the year 1998 99 as shown in Annexure K1 and on value of ₹ 45,48,417 for the year 1999 2000 as shown K2 is not sustainable. 7. Further, the Appellant M/s Modern has claimed deduction of amount of ₹ 21,89,383/- and of ₹ 28,50,066/- for the year 1998-99 and 1999-2000 respectively as summarized in Annexure A1 and A2 from the clearance value shown in Annexure 65 and 66 of the show cause Notice. The deduction was claimed on the ground that though Lorry receipt numbers was mentioned against such commercial invoices but no LR was found either from the Appellant premises or from the transporter or from the consignee. That similarly in case of payment details such as cheques or Demand Draft numbers, the Appellant had pleaded before Commissioner (Appeals) that there is no evidence that the said cheques or Demand Draft were received by the Appellant or deposited in their bank accounts. In case of some clearance the reference of follow up report was given but the Appellant had pleaded that only on the basis of follow up reports demand cannot be confirmed since no statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I find that in case of entries appearing in Annexure B1 amounting to ₹ 4,74,525/-, the Appellant has sought deduction for the year 1998 99 and of ₹ 2,85,760/- in case of Annexure B2 for the year 1999 2000 is based only upon certain purchase orders on the ground that the demand was made merely on the basis of purchase order with no other evidence of clearance of goods. I find that except purchase order no evidence of clearance of goods is appearing in Annexure 65 and 66. In such case, I hold that the demand on the aforesaid values cannot be allowed to sustain merely on the ground that M/s Modern had received purchased orders. In absence of any evidence of clearances of goods or delivery thereof, it cannot be said that the goods were manufactured and cleared by Appellant concern. The Appellant company has also sought deduction of ₹ 9,91,071/- for year 1998 99 on the ground against all such entries shown in Annexure 65 there is no corresponding commercial invoice. Similar claim has been made by them in respect of value of ₹ 7,74,302/- in Para I of their appeal memo. It is contended that the value of goods has been computed merely on the basis of chart and it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under notification No. 8/99 CE dt. 28.02.1999. Thus the duty demand on ₹ 1,85,961/- i.e ₹ 60,126/- is liable to be recovered from the Appellant concern. I therefore hold that the Appellant is liable for duty of ₹ 91,832/- only and the remaining demands are not sustainable. As regard penalty under Section 11AC, I find that an amount of ₹ 1,00,000/- already stands deposited at the time of investigation and an amount of ₹ 6,506/- was debited by them from PLA during their clearances of goods in normal course and shown in monthly returns. Since ₹ 6,506/- out of total demand of ₹ 91,832/- and ₹ 1,00,000/- was paid at the time of investigation, I find that the duty stands paid before issue of show cause notice. I, therefore, hold that the Appellant concern is liable for penalty of ₹ 21,331/- i.e. 25% of ₹ 85,236/- only. The appeal filed by the appellant company is thus partly allowed. 10. As regard the Revenue s appeal against setting aside of the duty demand by Commissioner (Appeals), it is seen that the demand has been dropped on the ground of repetition of figures, exempted goods, traded goods and some small amount on ac ..... 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