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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 ..... lenged. 2.2 Revenues seventh appeal No.E/1109/2008 is against the Commissioners Order-in-Appeal dated 9.4.2008, where refund of Rs. 6 lakhs sanctioned to the respondent No.1, M/s S.K. Industries has been challenged. 3. The impugned Order-in-Original No.49/Commr/ CEX/ND/2004 dated 30.6.04 (against which first five apepals No.E/2614 to 2618/2005 have been filed) decided the Show Cause Notice dated 26.02.1998, issued by CCE, Indore-I, where the following five respondents are the noticees:- (i) M/s. S.K. Industries, Gwalior (ii) Shri Sunil Kumar Jain, Partner, M/s. S.K. Industries; (iii) Shri Suresh Kumar Jain, Manager, M/s. S.K. Industries; (iv) Shri Jagdish Singh Rana, Proprietor, M/s. Parasnath Traders, Gwalior; (v) Shri Hari Krishna Agrawal, Manager, M/s. Motor Transport of India P. Ltd., Gwalior. 3.1 Meanwhile, when the demand of Rs. 6,99,31,414/- had been dropped by the impugned adjudication order dated 30.06.2004, the respondent, namely, M/s. S.K. Industries filed the refund claim for Rs. 6 lakhs as the said Rs. 6 lakhs had been paid vide PLA entry No.70/1997, dated 16.09.1997 by the Noticee/assessee, M/s. SK Industries against the duty leviable about which the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007. 3.3 The appellant, namely, CCE, Indore (Revenue) prayed that above appeals filed by them and registered as E/2614 to 2618/2005 and E/881/2007 be tagged together for decision. 3.4 The Revenues appeal No.E/1109/2008 after the hearing held on 22.6.2010 was ordered by the Tribunal to be linked with the main appeal Nos.E/2614 to 2618/2005. Thus it is a third round of litigation before the Tribunal. 4. Briefly the facts are that the main matter, formally started with the issue of the Show Cause Notice (SCN) dated 26.02.1998 to the five noticee respondents after the interception of two mini trucks on 08.07.1997 by the officers of Central Excise, Gwalior Division. The said trucks were carrying gutka/pan masala of Mahak brand. The officers of Central Excise recorded the statements of various persons under Section 14 of the Central Excise Act, 1944 and found that said two mini trucks carried 233 bags of gutka / pan masala valued at Rs. 27,88,200/-, which had been cleared without issue of invoices and without payment of duty. These goods along with the trucks were seized by the Revenue under Panchnama dated 08/09.07.1997. Later, the duty liability for these 233 bags of gutka / pan mas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. (d) While on one hand, evasion is very high, on the other, it is very difficult to establish evasion on the basis of records simply because either no records are maintained or whatever kuccha records kept are destroyed within a short time. (e) The financial transactions are invariably made in cash with no legitimate records whatsoever. Most of the inputs also come from the unorganised sector. (f) The investigations into cases of evasion are, therefore, limited and circumscribed by the extent of recovery of incriminating documents and collation of circumstantial evidence. This background and realities of pan masala/gutka trade have to be borne in mind while collectively appreciating the evidences unearthed and adduced in any investigation into evasion of duty. ii (a) The courts repeatedly have recognised and accepted the difficulty of establishing a case of clandestine clearance with mathematical precision in view of the very surreptitious nature of this activity, with secrecy and stealth being its covering guards and the damage it causes to the economy of a country. (b) Though often quoted, but extremely pertinent, were the observations of the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs/Raja Sales Agency from Gwalior to New Delhi consigned to self. In some of these challans the description of goods was given as Mahak brand gutkha and in others as only gutkha (i.e. similar to the description given in documents accompanying the seized consignments. (i) None other than Shri SK Jain, partner of M/s. SK Industries, honoured the search warrant that was issued for the search of premises of M/s. Parasnath Traders. (j) It was categorically admitted by Shri Bhagirath Kushwah, godown in-charge of the transporter in his statement dated 08.0.1997 that the seized document had come from the factory of the respondent, M/s. SK Industries and that the documents or bills of M/s. Parasnath Traders did not accompany the consignment. This was also affirmed by Shri Ravindra Sharma, Branch Manager of Motor Transport Company (MTC) in his statement dated 08.07.1997 wherein he, inter alia, stated that the goods transported under bills of M/s. Parasnath Traders came to their godwon directly from the factory of the respondent, M/s. SK Industries and that whatever goods that come under the bills of M/s. Prasnath Traders is pan masala of various brand manufactured by M/s. SK Industries, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement dated 16.09.1997 has admitted that the pan masala / gutkha transported on these 20 challans was cleared from their factory without payment of duty and the party had also deposited Rs. 6 lakhs vide PLA entry No.70 dated 16.09.1997 as part payment for these clearances and he promised to deposit the remaining amount on a later date as there was no balance in their PLA on that date. (ii) On 334 challans (evidencing duty evasion of Rs. 6.26 crores) consignors name was also given as Parasnath Trader / Raja Sales Agency (RSA) and description of goods was given only as gutkha without specific mention of the brand name which was consigned to self at New Delhi. In respect of these challans listed in Annexure B although the description of goods transported was mentioned as gutkha, a very reasonable conclusion had been drawn in the Show Cause Notice (SCN)that it was Mahak brand gutkha that was transported under these challans. This conclusion has been drawn on the basis of following clear-cut evidence available on record, which has already been discussed above. (ii-a) It is an admitted fact that the only brand of gutkha that Parasnath Traders or Raja Sales Agency was dealing in wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was being done by the respondent, M/s. SK Industries. (ii-g) The godown in-charge, i.e., Shri Bhagirath Kushwah as well as the manager, Shri Ravinder Sharma of the Gwalior branch of the transporter have categorically stated in their statement recorded on 08.07.1997 that goods were transported on the invoices of M/s. Parasnath Traders was gutkha of brand manufactured by the respondent, M/s. SK Industries and that these goods used to come from the factory of the respondent, M/s. SK Industries directly. The godown incharge Shri Bhagirath Kushwah and Shri Ravinder Sharma, Manager have not been cross-examined by the party and hence the facts stated in these two statements remain undisputed and irrefuted. (ii-h) Shri Ravinder Sharma, Branch Manager of the transporter in his statement dated 08.07.1997 had also stated that although the goods transported by them were gutkha of various brands manufactured by the respondent, M/s. SK Industries, they did not mention the specific brand name on the challans as they did not open the bags. While it may be accepted that the godown in-charge or the manager were not opening the bags, it cannot be accepted that even by not opening the bags they wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment for trade in supari dust and from the registration certificates regarding State and Central Sales Tax, relied upon as Annexure K to the Show Cause Notice, it is clear that M/s. Parasnath Traders were registered only for trade in pan masala chutney and mineral water only. (iii) On 62 challans listed in Annexure-C to Show Cause Notice (evidencing duty evasion of Rs. 36.52 lakhs) consignors name was M/s. Raja Sales Agency and goods were consigned to self at New Delhi and description was given as gutkha, but delivery was taken by the respondent, M/s. SK Industries at New Delhi. (iii-a) Regarding these 62 challans there is clear cut evidence that these were of Mahak Brand as delivery of goods was taken by the respondent , M/s. SK Industries themselves. This fact of delivery being taken by the respondent party is evident not only from the corresponding money receipts that were recovered but was also confirmed by Mr. Hari Krishna Agarwal, Manager of Motor Transport Company in his statement dated 09.07.1997. 5.2 The ld. Authorised Representative (AR)in addition inter alia submits that:- (i) The demand is not based on presumptions and assumptions but is based on documents wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Revenue has not been arbitrary or unreasonable while computing the value as for three different periods three different values have been taken which range from Rs. 4,500/- per bag to Rs. 9,600/- per bag depending on the average value per bag cleared during that period. 5.4 The ld. A.R. emphasises that clandestine manufacture and removal of goods namely, Mahak brand Pan Masala without payment of duty, has been proved by the facts and circumstantial evidence on record; therefore, the impugned order is to be quashed and the show cause notice has to be sustained. 6. The respondents have been represented by ld. Sr. Advocate, Shri C. Hari Shanker and ld. Advocate Shri Prem Ranjan. They reiterate the findings given in the impugned order and further inter alia submit as follows:- (i) The challan entries were made not personally by Shri J.S. Rana, Proprietor of M/s. Prasnath Traders, but by his Munshi Shri Girish, who is illiterate and did not verify which was the subject material. (ii) Shri Hari Krishna Agrawal, Manager of the transport company has stated that paan masala and supari dust were being disbursed and transported. It was clarified by Mr. Hari Krishna Agrawal during cros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Final Order No.A/1104-08/99-NB(DB) dated 3.12.99 remanded the matter to the adjudicating authority for deciding afresh. The then Commissioner , Central Excise, Indore decided the show cause notice by dropping the demand and not imposing any penalties on any of the noticee-respondents. Revenue is now in appeal before this Tribunal against the said adjudication order dated 30.6.2004. 10. It is to be noted that that the show cause notice was issued on 26.2.98 and the impugned order No.49/COMMR/CEX/IND/2004 dated 30.6.2004 mentions that the said show cause notice dated proposed the following: (i) Recovery of duty of excise amounting to Rs. 6,99,31,440/- from Noticee No.1 and for adjustment of amount already paid vide PLA E. No.70 dated 16.7.70. (ii) Imposition of penalty on the Noticee No.1 under Rule 173Q of Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944. (iii) Confiscation of land, building, plant and machinery, material, conveyance or any other things used in connection with manufacture of storage or removal of such goods, in terms of Rule 173Q(2) of the Central Excise Rules, 1944. (i) Imposition of penalty under Rule 209A of the Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for said goods with them belonged to Mahak brand gutkha only. 11.3 The respondents M/s S.K. Industries and others also argue that M/s Parasnath Traders were selling supari dust. However it is on record that they did not have any registration with States Department of Sales Tax for sale of supari dust. Other circumstantial evidences do not indicate that under the guise of Mahak brand gutkha, supari dust was being sold by Parasnath Traders or by the respondent M/s S.K. Industries. 11.4. Show cause notice on pages 5 6 mentions that Gautam Singh, booking clerk of Motor Transport of India (P) Ltd. (MTIPL), New Delhi clearly admits in his statement recorded under Section 14 of Central Excise Act that corresponding crossing account statements were prepared by him on the basis of challans received by him from Gwalior along with the consignments. He further admits that description of the goods as per challans was Gutkha only, whereas on the crossing account statement the description of the goods was given by him as Mahak brand pan masala as per instructions of the party, who took the delivery of the goods. 11.5 The respondents M/s S.K. Industries and others argue that there is no col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture and clandestine clearance cannot be denied by the respondents. 11.8 The respondents argue that the entire demand was made on the basis of third party documents. They further state that none of the documents have been recovered from their own premises. We have come to the considered view that the respondents M/s S.K. Industries are very clever in the illegal activity of duty evasion. It is their modus operandi to keep the factory premises completely clear and clean of adverse and incriminating documents. Now they have been caught red handed in the form of seizure made on 8.7.1997of unaccounted/clandestinely removed goods during the transit check by the officers of the Central Excise officers. The respondents, therefore, cannot say that the entire demand is based on the documents belonging to the third party; they admit that the goods seized were clandestinely manufactured and cleared by them and no duty on such goods was paid by them. All these facts have been admitted by Shri Sunil Kumar Jain, who is the responsible functionary (partner) in the respondent unit namely, S.K. Industries. When they did not issue any document for clandestine manufacture and clearance, the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the old name of PNT. ii) description of goods given in the documents again is Gutkhaonly. iii) Goods were consigned to self only and the delivery in Delhi was take by the respondent, M/s S.K. Industries only. iv) Description of the goods given in the transport challans was based on the invoices issued by PNT/RSA only. v) Both the godown in-charge, Shri Bhagirath Kushwah, and Manager of Gwalior Branch of Transporter, Shri Ravinder Sharma admitted in their statements dated 8.7.1997 recorded under Section 14 of the C.Ex. Act, 1944 that subject goods, Gutkhawere received from the factory of the respondent, M/s S.K. Industries only and were transported on the invoices of M/a PNT. vi) the payment of the freight for the transportation was made by the respondent, M/s S.K. Industries only. vii) The respondent, M/s S.K. Industries could not substantiate its claim that the goods were not Gutkha but were suparidust. viii) The code CZ mentioned in documents also refer to goods, Gutkhaonly. 11.9.4 In case of the goods at Annexure C to SCN, 62 money receipts/GRs have been mentioned and duty involved is Rs. 36.52 lakhs. In order to prove evasion of duty of Central Excise for these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that they received processed fabrics from M/s. GSML with bills and without bills. In respect of goods purchased without bills the payments are made in cash. 10. Shri Nirmal Kumar Gupta Proprietor of M/s. KT in his statement has stated that they do not receive any delivery challan or invoice along with the processed fabrics received from M/s. GSML. The consignment will be sent on a kutcha bill showing the quantity of processed fabrics and number of packages. Such type of kutcha bills are available from the files recovered from his residence under panchanama dated 15-5-1997. On few occasions they have received the processed fabrics along with Central Excise invoice. So the practice of sending non-duty paid goods from M/s. GSML is very evident not only from the statements of the various persons, but also the incriminating documents. In any type of clandestine activity, the persons try their best not to leave any evidence. We cannot expect persons indulging in clandestine clearance to faithfully put the details of all such clearances in some register and append their signature. This is never done. Hence, clandestine activity at best can be established only by circumstantial evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Honble Supreme Courts decision in the case of Collector of Customs Madras and others vs. D. Bhoormull 1983 (13) ELT 1546 (SC) and and the Honble High Court of Himachal Pradeshs decison in the case of Commissioner Central Excise Vs. International Cylinders Pvt. Ltd. [2010 (255) E.L.T. 68 (H.P.) al where Honble High Court observes 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. 12. There are thus sufficient evidences against the respondents in respect of the charges mentioned in the show cause notice i.e.unaccounted manufacture and clandestine removal of the goods without payment of duty. We refer to the Honble Supreme Courts decision in the case of Collector of Customs, Madras and Others Vs. D. Bhoormull [1983 (13) E.L.T. 1546 (S.C.)].The Honble Supreme Court in the said case observed as under : 30. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in issue. It will only alleviate that burden to discharge which very slight evidence may sight.[Emphasis supplied] In the present proceedings also, the activities and the transactions perpetrated by the respondents are unaccounted manufacture and clandestine clearances to evade payment of Central Excise duty and these are definitely in the nature of white collar crimes like smuggling, evasion of taxes/duties of State etc., and observations of the Honble Supreme Court made in the above decision are aptly applicable to the present facts. Therefore, the appellants cannot argue that for all the transactions, there is need of making 100% proof available. The Department has been able to prove its case of unaccounted manufacture and clandestine clearances beyond reasonable doubt as discussed and analysed in earlier paras of this order. 13. It is to be noted again that it is not necessary for the Revenue to establish the unaccounted production and clandestine clearances without payment of Central Excise duty on the part of the Respondent, M/s S.K. Industries with mathematical precision. If there are enough evidences on record as well as the statements of the concerned persons to indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged amounts to treason or felony, a much higher degree of assurance is required. (BEST, S. 95). While civil cases may be proved by a mere preponderance of evidence, in criminal cases the prosecution must prove the charge beyond reasonable doubt.(See Sarkar on Evidence, 15th Edition, pp. 58-59) In the words of Denning LJ (Bater V.B, 1950, 2 All ER 458, 459) It is true that by our law there is a higher standard of proof in criminal cases then in civil cases, but this is subject to the qualification that there is no absolute standard in either case. In criminal cases the charge must be proved beyond reasonable doubt, but there may be degrees of proof within that standard. So also in civil cases there may be degrees of probability. Agreeing with this statement of law, Hodson, LJ said Just as in civil cases the balance of probability may be more readily fitted in one case than in another, so in criminal cases proof beyond reasonable doubt may more readily be attained in some cases than in others. (Hornal V. Neuberger P. Ltd, 1956 3 All ER 970, 977). 75.6 . . .. 75.7 The concepts of reasonable doubt and preponderance of probabilityhave been lucidly explained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , support and sustenance for the conclusions drawn here regarding the charges of unaccounted manufacture and clandestine clearances without payment of duty of Central Excise against the respondents. 17. Along with conclusions drawn above, it is to be observed again that the activities like unaccounted production and clandestine removal without payment of due taxes to the National Exchequer gravely hurts the economy of the Nation. In other words, these kinds of activities are in the nature of economic offences and are termed as white collar crimes gravely affecting the society as a whole including the common man on the street. These are the offences which affect the society as a whole and cannot, therefore, be taken lightly. Whenever the perpetrators of such offences get caught, such evils and evil doers are to be tackled and combated effectively by applying the relevant laws and by taking the law and law enforcement to their logical conclusion. However, it does not mean that offenders could be booked without evidences. In fact, when there is no evidence, there is no offence and no offender. The point is that when such evil activities are done in utter secrecy and in an organized m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he evasion of central excise duty by the respondent No.1. (b) Shri Suresh Kumar Jain, son of Shri Ghanshyam Das Jain, is the Manager with the respondent No.1, M/s S.K. Industries. He was looking after the entire works of manufacturing of gutkha and pan masala and also the matters relating to labour, sale/marketing of the goods from the factory of the respondent No.1. From the facts, it is clear that he being in-charge of day to day operation, had full knowledge of unaccounted manufacture and clandestine removal and played an important role in evasion of duty of central excise by the respondent No.1. A penalty of Rs. 5 lakhs (five lakhs) therefore, is imposed on Shri Suresh Kumar Jain under Rule 209A of CER , 1944 for his role and involvement in evasion of Central Excise duty. (c) Shri Jagdish Singh Rana is the proprietor of M/s Parasnath Traders (PNT) He is the noticee respondent No..4. He assisted the respondent No.1 in evasion of central excise duty. He played support part in the execution of modus operandi used by respondent No.1 in evasion of central excise duty. The impugned activities in respect of the subject goods were conducted by M/s Parasnath Traders, whose propriet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order-in-Appeal No. IND-I/82/2008 (de novo) dated 9.4.2008. The Commissioner vide this impugned order dated 9.4.08 allowed the appeal of M/s S.K. Industries which was against the Order-in Original No.19/CEX/REF/DC/05 dated 26.7.06 passed by the Deputy Commissioner rejecting the refund claim of Rs. 6 lakhs filed by M/s S.K. Industries. 20. We find that refund claim of Rs. 6 lakhs had arisen on account of Order-in-Original No.49/COMMR/CEX/IND/2004 dated 30.6.2004 which was passed by the Commissioner, Indore and against this order , the Revenues main appeal(s) (No.E/2614 to 2618/2005) are being decided by this order. As we are setting aside the Order-in-Original dated 30.6.2004, consequential proceedings which arose out of the said order dated 30.6.2004 have to be examined in terms of our order in main appeal (s) against the said order dated 30.6.04. 20.1 Therefore, this matter is fit to be remanded back to the Commissioner, who shall decide the subject matter afresh in terms of the Tribunals decision being made herein in the main appeal(s) against the adjudication order No. .49/COMMR/CEX/IND/2004 dated 30.6.2004. The Commissioner shall decide the matter de novo after giving fresh o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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