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TMI Blog2016 (12) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... few evidences are available, the inferences have to be made out of those evidences on the yardstick of preponderance of probability and offenders are to be strictly dealt with accordingly. The appeals where, allowance are made, the matter is remanded to Commissioner, who shall take decision afresh - appeal allowed by way of remand. - E/2614 -18/2005-EX[DB], E/881/2007 and E/1109/2008-EX[DB] - A/55782-55788/2016-EX[DB] - Dated:- 9-12-2016 - Dr. Satish Chandra, President And Mr. Ashok K Arya, Member (Technical) Mr. R.K. Manjhi, DR - For Appellant/Revenue Mr. C. Hari Shanker, Senior Shri Prem Ranjan - For Respondents ORDER Per Mr. Ashok K Arya 1. Both sides have been heard. 2. All the seven Appeals have been filed by the Department. First five appeals [Nos.E/2614 to 2618/2005] are against the adjudication order No.49/Commr/CH/IND/2004, dated 30.06.2004, passed by the Commissioner of Central Excise, Indore whereunder demand of ₹ 6,99,31,414/- is dropped. 2.1 Revenues sixth appeal No.E/881/2007 is against the Order-in-Appeal dated 10.1.2007, whereunder interest on the refund amount of ₹ 6 lakhs sanctioned to the respondent, M/s S.K Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the refund of ₹ 6 lakhs vide Order-in-Appeal No.IND-I/82/2008 (De novo) dated 9.4.2008. 3.1.4 Thereafter the appellant filed appeal against the above Order-in-Appeal dated 9.4.2008 which is registered as Appeal No.E/1109/2008 [Appeal No.7] and is linked for decision with the Revenues appeals No.E/2614 to 2618/2005, which are presently under consideration and decision by the Tribunal. 3.2 The Commissioner (Appeals) order dated 11.10.2006 has been implemented by the Dy. Commissioner and refund claim was allowed but no interest thereon was paid to respondent No.1, M/s. SK Industries. The respondent No.1 again approached Commissioner (Appeals), Indore against non-payment of interest and Commissioner (Appeals) vide his order No.IND/1/03/2007; dated 10.01.2007 directed Dy. Commissioner to sanction interest due to the respondent No.1, M/s. SK Industries. This Order-in-Appeal dated 10.01.2007 was also appealed before this Tribunal by CCE, Indore, which is registered by CESTAT as E/881/2007 [Appeal No.6]; this appeal along with the appeals No.E/2614 to 2618/2005 will also be disposed off during present proceedings by the Tribunal. Meanwhile, Dy. Commissioner sanctioned inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before the Tribunal, and vide Final Order No.A/724-728/03-NB-C, dated 03.12.2003, the Tribunal again remanded the case for adjudication afresh after affording an opportunity of cross-examination of the witnesses. The impugned adjudication order was passed thereafter. Vide the impugned order dated 30.06.2004, the demand of duty of ₹ 6,99,31,440/- was dropped. Thereafter, the Department, namely, CCE, Indore is in appeal against the order dated 30.6.2004 before this Tribunal. 5. Revenue has been represented by Shri R.K. Manjhi, ld. Authorised Representative (AR),. His main submissions based on the appeal memorandum inter alia as under: i (a) The Commissioner has not appreciated that from Central Excise point of view Pan Masala/Gutka are highly evasion prone commodities. The very nature of this trade breeds evasion because the pouches are sold through countless numbers of small street side kiosks, where no records are kept. (b) Further, the process of manufacture of pan-masala/gutka is very simple with no requirement of any elaborate machinery or capital investment. (c) Moreover, the incentive and lure for evasion is very high in view of the high central exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trucks and the accompanying invoices were issued by a trading firm namely M/s. Parasnath Traders, Gwalior. (d ) That on the challans and other documents accompanying the seized consignment of Mahak brand Gutkha the description given was only gutkha with no mention of the brand name. (e ) It is also an admitted and undisputed fact that as far as their trade in gutkha was concerned, M/s. Parasnath Traders was dealing only in Mahak brand of gutkha. This is not only categorically stated by Shri Jagdish Singh Rana, Proprietor, M/s. Parasnath Traders in his statement dated 23.09.1997, but also affirmed by him during his cross-examination done on 26.05.2004 by the party before the Adjudicating Authority. (f) In the follow up search conducted at the premises of M/s. Parasnath Traders only Mahak brand of gutkha was seized, which had also admittedly been cleared by the party without payment of duty. (g) That prior to 14.10.1995, M/s. Parasnath Traders (PNT)was known as M/s. Raja Sales Agency and that in the transition period the stationery of M/s. Raja Sales Agency(RSA) was also being utilised by M/s. Parasnath Traders. (h) In the course of search operation cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clandestinely cleared gutkha from Gwalior to New Delhi. (m) Apart from the above documents, several crossing account statements were recovered from the premises of the Motor Transport Company which were prepared by them at destination at the time of delivery of goods. While the description of goods that were consigned by M/s. Parasnath Traders to self at New Delhi was given as gutkha on the challans, in the corresponding crossing account statements the description was clearly mentioned as Mahak Pan Masala. In fact Shri SK Jain, partner of M/s. SK Industries has admitted in his statement dated 16.09.1997 that 214 bags that was transported under these two challans were cleared by them from their factory without payment of duty. (n) In all, around 416 transport challans were recovered on which M/s. Parasnath Traders / Raja Sales Agency had transported gutkha from Gwalior to Delhi and on the basis of which the entire duty demand in Annexures A, B and C of SCN was worked out. The break up and nature of description of goods on these challans is as follows:- (i) On 20 challans (evidencing evasion of ₹ 36.57 lakhs), the consignors name was shown as Parasnath Traders ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re booked by M/s. Parasnath Traders, it came directly from the factory of the respondent, M/s. SK Industries to their godown. (ii-e) The description of goods that was given on the challans of the transporter and invoices of M/s. Parasnath Traders that were accompanying the two consignments of 233 bags of Mahak brand gutkha seized on 08.07.1997, was only gutkha with no mention of the brand name. The party has categorically admitted having cleared these consignments from its factory without payment of duty. The seizure of Mahak brand gutkha, when documents accompanying the goods, described them only as gutkha provides clinching evidence of the conclusion arrived at in the Show Cause Notice that what was being transported was Mahak brand gutkha when the description of goods in the challan was given only as gutkha. (ii-f) Apart from the above example of the documents accompanying the seized goods other clear cut documentary evidence that supports the conclusion in the Show Cause Notice is in the nature of crossing account statements and money receipt recovered from the Delhi branch office of the transporter that correspond to the challans on which the description of goods was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no reason to mis-declare supari dust as gutkha. Since all the consignments were consigned to self, a copy of the bilty would have been given to the consignor and they seem to have never objected earlier for a wrong description being given on the bilties. On being asked Shri Jagdish Rana, Proprietor could give no reason, whatsoever, as to why the description was given on their invoices as gutkha if actually supari dust was being sent. Since a copy of the bilty or challan is also given to the consignor particularly when goods are consigned to self at destination, M/s. Parasnath Traders never objected to this mis-declaration of description of goods on the challans. (ii-k) Even on the dispatch register of Motor Transport Company against such dispatches the words CZ were written which, as disclosed by the managers of Motor Transport Company was a code word used for Gutkha. The averment of the respondent party that the words CZ denoted the consignor i.e., M/s. Parasnath Traders is clearly an after-thought as the manager of the transporter Shri Ravinder Sharma in his first statement recorded on the date of seizure, i.e., 08.09.1997 had categorically stated that the code CZ denoted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de of supari dust. (e) On the documents accompanying the seized Mahak brand gutkha consignments also the description of goods was given as gutkha. (f) Even in documents that were prepared by the transporter at destination at the time of delivery of goods to the consignee, like money receipt, crossing account statement, that could be recovered, the description of goods was given as gutka. (g) Statement of the godown in-charge and manager of the transporters confirmed that what was transported on the bills of M/s. Parasnath Traders was gutka of various brands manufactured by the respondent and that the gutkha was coming straight from the factory of the respondent, M/s. SK Industries. (h) Even if the bags were not opened, the persons handling these bags at transporters end would by the very difference in the nature of two products, i.e., packed gutka on one hand and supari dust on the other, know the nature of contents. Supari dust, which is cheap bulk raw material, would not be packed in the same manner as finished gutka in pouches. (i) There can be absolutely no reason / motive for clearance and transportation supari dust in the guise of gutka. The converse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hak Brand by the respondent firm M/s S.K. Industries, Gwalior. 9. Presently, the appellant and the respondents are before this Tribunal in the 3rd round of litigation. On earlier two occasions, the duty demand issued under show cause notice dated 26.2.1998 was confirmed and penalties were imposed by the Commissioner. When respondents last time came in appeal before this Tribunal, the matter was remanded back to the original adjudicating authority, who while deciding 3rd time did not confirm the demand proposed by the show cause notice and no penalties were imposed as proposed in the show cause notice. Consequently, the Department (Revenue) is in appeal before the Tribunal. A summary of earlier happenings is given again below: 9.1 The notice dated 26.2.98 adjudicated first time by the Commissioner of Central Excise , Indore who vide Order-in-Original dated 26.3.99 confirmed the demand for recovery and imposed penalties on the noticee-respondents No.1 to 5. Aggrieved by this order dated 26.3.99, the Noticee No.1 preferred appeal before CESTAT. The CESTAT vide its final Order No.A/1104-8/99-NB(DB) dated 3.12.99 remanded the case for fresh adjudication. 9.2 Commissioner of Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant M/s S.K. Industries. 11.1 In case of 233 bags of Mahak brand gutkha which were seized from two mini trucks on 8.7.97 on which duty liability had been computed as ₹ 5,57,640/-, Shri Anil Kumar Jain, Authorised signatory of M/s S.K. Industries (Noticee respondent No.1) admitted in his statement recorded under Section 14 of the Central Excise Act, 1944 that these goods were removed from their factory without issuing invoice and without payment of duty leviable thereon. Further, Shri Sunil Kumar Jain, who is Noticee-respondent No.2 and who is partner in the above noticee firm M/s S.K. Industries, also in his statement dated 16.9.97 recorded under Section 14 of Central Excise Act, 1944 admitted the responsibility for clandestine removal of the said 233 bags of Mahak brand pan masala/gutkha and deposed that duty liability on seized goods was paid vide PLA Entry No.60 dated 23.7.97 which is ₹ 5,57,640/-. 11.2 The noticee-respondent i.e. M/s S.K. Industries argues that the relevant challans, entries were made not by Shri Jagdish Singh Rana, who is proprietor of M/s Parasnath Traders, Gwalior through whom suparidust was sent further via Transport company to Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be discarded, rather it clearly proves the allegation of Revenue in this regard. 11.7 The respondents argue that the Department did not go into the vital facts as to whether the noticee was in a position to manufacture gutkha worth of ₹ 10 crores per year with the pattern of purchase, sale and power consumption or not. It is in common knowledge that the manufacturing gutkha pan masala does not require any high tech machinery/technology. Even small room apartment or a middle size room, wherein a big number of gutkha manufacturing machines can be installed and the turnover can reach per year even over ₹ 20- 30 crores depending upon the marketing capacity and accessibility to market. The respondents further argue that no indiscrepancy is found in their record by the Revenue during physical verification of the stock of raw material and finished products; therefore, they should not be suspected for unaccounted manufacture and clearance. It is a well known fact that when the respondents have unaccounted manufacturing and clandestine clearance, such activities in factory premises are done with elaborate planning. Whenever during surprise check, they are caught red ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. While demand is based on transport challans and money receipts/GRs only, these challans and money receipts/GRs were receovered mainly from office(s) of the concerned transporter namely, Motor Transport India (P) Ltd. (MTIPL), Gwalior/Delhi. 11.9.2 In case of goods at Annexure A 20 challans have been mentioned and duty involved is of ₹ 36.57 lakhs. Here the main evidences to sustain the charge of unaccounted manufacturing and clandestine clearance without payment of duty are : i) Consignors name on the documents relating to the goods is Parasnath Traders (PNT), who is the same, whose name was found in the documents concerning the goods, which were found cleared without payment of duty during transit check, and therefore, seized then; ii) Description given for the goods in the documents is Mahak/Sahara brand which are manufactured by the respondent No.1, M/s S.K. Industries only; iii) Mr. Sunil Kumar Jain, Partner, M/s S.K. Industries admitted to have manufactured these goods; iv) M/s S.K. Industries paid initial duty deposit of ₹ 6 lakhs in this regard. 11.9.3 in case of goods at Annexure B to SCN concerning 334 challans (recovered from offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the impugned order dated 30.6.2004 has failed to appreciate above evidences and fact of payment of duty and the fact of seizure, where no duty paying documents were available and other evidences on record not only in respect of these 233 bags of Mahak Pan Masala seized but also in case of all the goods at Annexures A, B C of Show Cause Notice. There is sufficient evidence including the statements of Shri Anil Kumar Jain and Sunil Kumar Jain which on record prove the charges of clandestine manufacture and clearance of the impugned goods i.e. Mahak brand gutkha/pan masala. 11.11 It is important to state that unaccounted manufacture and clandestine removal are always secret activities and persons concerned always try their best not to leave behind any of their foot prints in the form of any evidences of their nefarious activities. We refer to the CESTAT observations in the case of Gulabchand Silk Mills Pvt. Ltd. Vs. Commissioner of Central Excise, Hyderabad [2005 (184) E.L.T. 263 (Tri.-Bang.)] wherein it inter alia observes as under : 9. The entire statement of Shri Gopal Gupta is very revealing. On the point of manipulation of invoice, Shri Bhavani Kishore, Accountant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would be impossible to establish all the links of clandestine activity without any break. In this case, the statements or the admissions are supported by the recovery of non-duty paid goods as well as incriminating documents . A modus operandi of paying only one tenth of the duty actually payable has been graphically described by Shri Gopal Gupta and Shri Bhavani Kishore in their statements. Hence, in our view, the adjudicating authority has rightly confirmed the demand based on the quantity of 11 lakh Lmts. of MMF cleared without payment of duty on the basis of admission by Shri Gopal Gupta, corroborated by the incriminating documents, unaccounted goods and the statements of all others. When a fact is admitted it doesnt need further corroboration. We have no reason to believe that the statements have been taken under duress. We also hold that the retraction made after two months is an afterthought. The denial of cross-examination of the two persons Shri Bhavani Kishore and Shri Gouri Shankar Gupta does not vitiate the proceedings. [Emphasis supplied] 11.12 Based on above discussions and observations of the Tribunal quoted above, we are of the considered view that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent mans estimate as to the probabilities of the case. 31. . .. .. 32. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on the person concerned : and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in `Law if Evidence (12th Edn. Article 320, page 291), the presumption of innocence is, no doubt, presumptio juris : but every days practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. 333], this Tribunal held that it is not necessary for the department to establish a fact with mathematical precision. Once the presumption as to the existence of a fact is raised against the assessee that the input has not been transported in the vehicle mentioned in the invoices, it is reasonable to say that the inputs were not received in the factory. In the case of R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami V.P., (order dated 8-10-2003 in Civil Appeal No. 10585 of 1996) the Honble Apex Court held as follows : Whether a civil or a criminal case, the anvil for testing of proved, disproved and not proved, as defined in Section 3 of the Indian Evidence Act, 1872 is one and the same. A fact is said to be proved when, if considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of a particular case, to act upon the supposition that it exists. It is the evaluation of the result drawn by applicability of the rule, which makes the difference. The probative effects of evidence in civil and criminal cases are not however always the same and it has been laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt. There is an unmistakable subjective element in the evaluation of the degrees of probability and the quantum of proof. Forensic probability must, in the last analysis, rest on robust common sense and, ultimately, on the trained intuitions of the Judge...(emphasis supplied) 14. The Honble High Court of Himachal Pradesh in the case of Commissioner Central Excise Vs. International Cylinders Pvt. Ltd. [2010 (255) E.L.T. 68 (H.P.) has observed that no law can be interpreted in a manner so as to give premium to illegal and criminal activities; it is a basic common sense that no person will maintain authentic records of the illegal activities or manufacture being done by it. The present case concerns with evasion of payment of duty of excise and above observations of Honble High Court of H.P..are rightly applicable here. 15. CESTAT, Bangalore in the case of Ramachandra Rexins Pvt. Ltd. Vs. Commissioner of Central Excise, Bangalore-I [2012 (295) E.L.T. 116 (Tri.-Bang.) also holds that only yardstick is preponderance of probabilityand not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is held as recoverable from the respondent No.1, M/s S.K. Industries in terms of Show cause notice dated 26.2.98. (ii) Penalty of ₹ 6,99,32,440/- which is equivalent to central excise duty evaded for the subject goods is imposed under Rule 173Q of CER, 1944 read with Section 11AC of the CEA, 1944. (iii) In respect of confiscation under Rule 173Q(2) of Central Excise Rules, 1944 of the concerned land, building, plant machinery material, conveyance and any other things used in connection with the manufacture, production, storage, removal or disposal of the subject goods which were unaccountedly manufactured and clandestinely removed without payment of duty, however, Revenue has not adduced any evidence of availability of these items (land, building, plant machinery etc.) on todays date, and the matter is over 19 years old; we, therefore, are not passing any order on the confiscation of the said items/goods, and then there cannot be any question of imposing any redemption fine in this regard. (iv ) Considering the roles played by the concerned noticee-respondent(s) respective penalties are imposed on the on them as under: (a) Sunil Kumar Jain is the partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thousand only) is imposed on Shri Hari Krishna Agrawal under Rule 209A of CER, 1944. Appeal No.E/881/2007 17. The Commissioner (Appeals) vide impugned order No.IND-I/3/2007 dated 10.1.2007 allowed the appeal of the respondent No.1 M/s S.K. Industries against the Order-in-Original No.54/CEX/REF/DC/06 dated 27.11.06 and corrigendum No.C.V (18)Ref/34/06 dated 7.12.06 whereunder M/s S.K. Industries was not given interest on the grant of refund of ₹ 6 lakhs, whereas the interest had arisen out of the Order-in-Appeal No.IND I/326/06 dated 11.10.06 passed by the Commissioner (Appeals), Central Excise, Indore. Thus the Commissioner (Appeals) vide the impugned order dated 10.1.2007 granted interest to M/s S.K. Industries on the refund amount of ₹ 6 lakhs. Revenue in this appeal prays that the Order-in-Appeal passed by the Commissioner (Appeals) may be quashed. 18. As refund amounting to ₹ 6 lakhs had become due to the respondent, M/s S.K. Industries on account of Commissioner, Central Excise, Indores order No.49/Commr/ CEX/IND/2004 dated 30.6.2004 against which the Department filed the main appeal(s) (No.E/2614 to 2618/2005), which are being decided by this ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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