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TMI Blog2017 (4) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... nder proviso to Section 11 (A) (1) of CEA, 1944, along with interest thereon, which demand been upheld by the Commissioner (Appeals) in the impugned order, does not call for any interference. For the same reasons, equal penalty imposed on the appellants under Section 11 AC ibid is also justified and appeal on this count also cannot succeed. Appeal dismissed - decided against appellant. - E/450/2006 and E/475, 476 and 477/2006 - 40186-40189/2017 - Dated:- 10-2-2017 - Shri D.N. Panda, Judicial Member And Shri. Madhu Mohan Damodhar, Technical Member Shri S. Murugappan, Advocate for the Appellant Shri Jude Joseph, AC (AR) for the Respondent Per Madhu Mohan Damodhar These four appeals emanate from a common impugned order upholding the following consequences ordered by the original authority. Sl.No A.No Name of the appellant Status of the appellants Amount involved in Rs. 1. E/475/2006 M/s. Raja Rajeswari Spinning Mills (P) Limited, Vedasandur-624710 Dindigul District Manufacturer of cotton yarn and First ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted production revealed that RRM had suppressed their actual production of cotton yarn during the period June 2002 and July, 2002. viii) Comparison of the cone winding production details files, shift-wise spinning production and production log book recovered from RRM with the RG1 indicated that RRM had accounted the cone production as Hank Production during 2/2002 and 3/2002 to evade payment of duty. Further on comparing the production details contained in the diary of Factory Manager of RRM with RG1 indicated that during the period from 4/01 to 7/01 indicated that though RRM accounted the cone yarn manufactured by them as hank yarn. ix) Computer statements / P L accounts recovered from RRM containing the details of accounted sales and the actual sales indicated clandestine removal of cotton yarn without payment of duty. x) The calculation based on the freight amount paid by Shri. Palanisamy of SVA as available in the notebook No.1, 14/15, 1 12/15 and 1 13/15 indicated that SVA have received a total quantity of 140260 kgs of cotton yarn (approx,) during the period 6/2002 to 9/2002. xi) Documents recovered from the godown of SVA revealed sale of cotton yarn witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rule 26 of Central Excise Rules, 2002. vi) Penalty of ₹ 25,000/- was imposed on Shri P. Dhandapani, Prop, of Sakthi Unit, Job worker of Raja Rajeswari Spinning Mills (P) Ltd., Vedasandur under Rule 26 of Central Excise Rules, 2002. vii) Penalty of ₹ 25,000/- was imposed on Shri M. Selvam, Prop. of Arasan Textiles, Dindigul, Job worker of Raja Rajeswari Spinning Mills (P) Ltd., Vedasandur under Rule 26 of Central Excise Rules, 2002 . 4. On appeal, the Id. Commissioner (Appeals) vide the common impugned order dated 22.3.2006 upheld the order of the original authority. Hence these appeals before this forum, by RRM (Appeal No.E/475/2006), Shri M Ramamoorthy, Director of RRM (Appeal No.E/476/2006), Shri R. Palanisamy, (Appeal No. E/450/2006) and Shri P. Dhandapani (Appeal No. E/477/2006). 5. When the matter came up for hearing, Id. counsel vehemently opposed the adjudication on the ground that when the principal appellant RRM had sent the goods for the purpose of job work, there is no fault that can be found against that appellant. If at all there is any breach of law, that may be attributable to job worker and duty liability shall be confined to the job ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 2002 Cones: 55318 kgs Cones: 4321 kgs Hanks: 22576 kgs d. From a comparison of the production details contained in the diary of Shri. Mohan Kumar, factory Manager of RRM with the RG1, it appeared that though they had actually produced cone yarns, accounted the same as hank yarn during 4/2001 to 7/2001 as given below: Details 40's 10 s 20's Diary of FM 3638 bags 799 bags 140 bags Accounted 22533 kgs (450 bags) 10600 kgs (212 bags) 3500 kgs (70 bags) The details of production contained in his diary have also been confirmed by Shri Mohan Kumar in his statement dated 17.09.2002. e. In the books of accounts or RRM, it is shown that they have sent various counts of cotton cone yarn to job workers like M/s. Arasan Textiles and M/s. Sakthi Reeling Unit for conversion into hank yarn. Verification conducted by the officers with Arasan Textiles indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titious names to cover up the actual sales of cone yarn by RRM through Shri Palanisamy. Further though the invoices have been raised against many such names as above, the payments on this count were made by Shri Palanisamy. g. The note books No.11/15, 3/15, 4/15 and 5/15 recovered from the godown premises of SVA contains the details of payments made by Shri Palanisamy to RRM and other mills during the period from 12/1999 to 12/2001 as illustrated below: Date: 02.04.2001 Raja Rajeswari Spg. Mills - Cash BOB - P. Chinnasamy - ₹ 1,00,000/- and K. Rajkumar: ₹ 1,00,000/- From the above it appeared that though invoices were raised by RRM in the name of different parties, payments were made by Shri Palanisamy only. Furthermore, the payments received by RRM from Shri Palanisamy / SVA are clearly distinguishable from the records maintained by him. 10. Ld. Counsel has contended that since RRM had sent the goods for the purpose of job work, any breach of law should be attributable to the latter only. However, from the facts on record, this contention does not hold water. From the evidences available it clearly comes out that RRM had shown in their books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on cone yarn in the guise of hank yarn to evade payment of duty. It is pertinent to note that the admissions made by Shri Palanisamy in his statement have not been since retracted by him or denied at any stage, including during adjudication process. From these evidences, the stark picture that emerges is that bills for hank yarn were raised by RRM in the name of different parties, in actuality, only cone yarn was cleared from RRM and delivered to Shri Palanisamy, who in turn sold such goods without any bills to his customers. The purported buyers of the hank yarn so raised by RRM were found to be non-identifiable or fictitious, Cone yarn invoiced as hank yarn in the name of unidentifiable fictitious parties were actually delivered at the place of Shri Palanisamy or at the places instructed by Shri Palanisamy. Investigations have also conclusively proved that although the invoices under cover of which invoices described as hank yarn were sent to Shri Palanisamy, corresponding invoices of Shri Palanisamy of SVA clearly indicate that the goods sold by them are cone yarns only. 13. The entire modus operandi also stands exposed by Shri S. Subramanian, Accountant, Central Excise autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrieved from M/s. Arasan Textiles, M/s. Shakthi Reeling Unit etc., diary and note books retrieved from Sh. Palanisamy/SVA containing interalia details of receipt of cotton yarn from RRM fictitious invoices raised by RRM, etc. These documents have enabled corroboration of modus operandi and have confirmed the clandestine removals and resultant evasion of duty. From the worker-wise production note book and yarn realization statement recovered from RRM, the fact of suppression of actual production viz-a-viz. books of accounts could be established. Suppression of production has also been established from the cone winding production detail files. From the shift-wise production file recovered from RRM, it has clearly emerged that the appellants have accounted only 40s un-sized cones and did not account any other variety. So also, from cone winding production note books for the month of June, 2002 to August, 2002, it is established that the actual production of yarn has not been accounted by RRM in the books of accounts during the relevant period. It has also been proved that RRM had accounted cone production as hank production during 02.2002 to 03.2002 and also during 04/2001 to 7/2001. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn was cleared by RRM to Sh. Palanisamy/SVA and the same was in turn sold by the latter to various customers. However tine variety of cotton yarn, whether cone or hank, is deliberately not mentioned in the bills raised by SVA. ix) RRM have received the sale proceeds directly from the broker Shri. Palanisamy for all the clearances of cotton yarn cleared to various persons through him and the sale proceeds were received in cash for the unaccounted clearances. 17. Appellants have contended before us that investigation was faulty and that there is credibility in the evidences and conclusions of the adjudicating authority. We do not find any merit in his contention. In our opinion, the investigation has more than adequately established the questionable modus operandi adopted by the appellants. Thus Revenue has discharged burden of proof. On the other hand, appellants failed to satisfactorily counter the stand taken and evidence adduced by Revenue against them. Preponderance of probability is in favour of Revenue when appellants failed to come out with clean hands. Although appellant tried that investigation should be in dark to unearth the offence committed, they failed since s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et with. 18. Viewed in the totality of the facts and circumstances of the appeals before us, in our considered opinion; the contentions of the appellant manufacturer (RRM) fail on all counts. This being so, the duty liability of ₹ 49,24,207/- evaded through such subterfuge by the appellants and demanded by the original authority under proviso to Section 11 (A) (1) of CEA, 1944, along with interest thereon, which demand been upheld by the Commissioner (Appeals) in the impugned order, does not call for any interference. For the same reasons, equal penalty imposed on the appellants under Section 11 AC ibid is also justified and appeal on this count also cannot succeed. 19. In Appeal No. E/476/2006, appellant Shri M. Ramamoorthy has denied the allegations leveled against him. I-le has further contended that allegations in the SCN were based on presumptions and assumptions and hence they were not liable to duty and demand in the SCN was unsustainable and not maintainable in law; he used to visit the mills occasionally only and he did not interfere with the day-to-day activities of the factory; that, the sales transactions were not directly under his supervision. He has furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pheld penalty on him which is excessive and unwarranted; that no SCN was issued to M/s. SVA that though he is a person acting as independent cotton yarn procurer as well as depot in charge of RRM, there were no specific charges against him in the capacity of yarn procurer; that in the absence of guilt, personal penalty could not be imposed on him under Rule 26 of the Rules. However, from analysis of the facts on record it clearly emerges that in his statements dated 17.09.2002 and 5.10.2002, the said appellant had laid bare the modus operandi followed in this case, including his own role therein. Incriminating diary and other documents recovered from the godown of and from R. Palanisamy, have clearly implicated the appellant in the entire clandestine removal and duty evasion exercise. In fact, Shri R. Palanisamy in his statement dated 17.09.02 and 5.10.02 has confirmed that the uncounted receipts of cotton yarn from RRM and payment of amounts towards sale proceeds of the same. The appellant has not adduced any proof of having retracted his statement at any point of time. His inculpatory admissions have not been undone in the course of examination of various persons during adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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