9911796707
TMI Blog2017 (4) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11AC of the Central Excise Act. (v) Penalty under Rule 26 of Rs. 13,00,00/- was imposed upon Shri Ambadas Santosh Nagargoje and of Rs. 7,00,000/- on Shri Santosh Nagargoje, both Directors. (vi) Penalty of Rs. 10,000/- each was imposed upon Accountant Shri Kishore Hiralal Kothari and Shri Jayant Vasantrao Kulkarni. 2. The brief facts of the case are that Appellant M/s Ambika Waste Management Pvt. Ltd. are engaged in manufacture of MS Ingots falling under chapter 72 of the Central Excise Tariff Act, 1962. M/s Ambika and other Appellants were issued show cause notice dt. 29.04.2005 stating that the revenue officers during their visit to the factory of M/s Ambika on 04.11.2004 initiated investigation and conducted searches. During stock taking excess stock of 35.585 MT of MS Ingots valued at Rs. 7,65,078/- and excess stock of 300 MT of non cenvatable MS Scrap was found and the same being unaccounted was seized. From the weighbridge record pertaining to 5 - 6 days before the search it was found that 371.980 MT of MS Ingots were consigned to the customers but no central excise invoices were raised involving duty of Rs. 9,78,902/-. It was also found that the production of MS In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess MS Scrap than recorded in records. The statement of Shri Kishore was obtained against his will. Shri Kishore in his cross examination on 20.01.2016 has clearly stated that he was looking after financial and not concerned with incoming/outgoing of vehicle. Shri Kishore in his cross examination has stated that 70 - 80 tonnes of raw material was received in M/s R.L. Steel where he is accountant and was not received by the Appellant firm. He has given possible production from 70 - 80 tonnes of raw material. As regard clearances of M.S Ingots from the Appellant factory he submits that though Shri Kishore confirmed the challans showing 86 consignments of transporter towards goods but did not state that the same was loaded from the Appellant factory. Shri Umakant Mahajan in his statement dt. 05.11.2004 had clearly stated that the weighment of M.S. Scrap and preparation of slips was looked after by Shri Balu Bade and at the time of visit by Shri Ravindra Nagargoje. That statement of Shri Abasaheb Santosh Nagargoje, Partner of M/s R,L, Scrap Merchant was recorded on 06.11.2004 wherein he has nowhere stated that unaccounted scrap was sent to Appellant, but stated that they sent 20 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner out of 300 MTs. of MS Scrap (raw material) which were alleged to be unaccounted in SCN, held that 191.820 MT cannot be seized as the same was recorded in Goods receipt report but could not be accounted for in Form IV and Cenvat records due to visit of officers and therefore ordered confiscation of only 108.180 MTs of scrap pertaining to 35 consignments. The confiscation of said quantity is illegal as the excess stock has been alleged by comparing the weighbridge slips with the quantity entered in GRR (Goods Receipt report) of Form IV and alleging that quantity of 108.180 remained unaccounted. The officers did not verify the goods by physical verification and in absence of same excess stock of MS scrap cannot be alleged. The quantity of MS Scrap lying in stock was 24246.995 MT which was not physically verified. The charge is mainly based upon the statement of Shri Umakant Mahajan and Shri Kishore Kothari who stated that the said quantity was not entered whereas the fact is that both these persons were not even remotely connected with operation of weighbridge and Goods Receipt report. It can be seen from the statement of Shri Mahajan that the said work of weighbridge and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80 to 100 MT per month. That the Appellant firm had the capacity to manufacture 11 MT. of Ingots per heat and as such the capacity of 10 MT stated by the Appellant firm is incorrect and that the average consumption of Unit is 700 Units per MT against consumption of 868 Units per MT of Appellant Unit. The Ld. Commissioner has also placed reliance upon the statement of Shri Kishor Kothari, Accountant of the Appellant Unit and Shri Umakant Mahajan and compilation statement signed by director Shri Ambadas Nagargoje. 5.1 We find that the allegation of receipt of 80 - 100 MT of unaccounted scrap per month and estimated production of MS ingots has been made on the basis of statement dt. 15.04.2005 of Shri Kishore Kothari and compilation statement signed by the director. We find that the statement of Shri Kishore Kothari and Shri Umakant Mahajan stands negated during their cross examination but the same was declined to be considered on the ground that the cross examination were conducted after long time. We are unable to go with the reasoning advanced by the Ld. Commissioner. The statement of Shri Kishore Kothari cannot be made basis for demand unless the same is corroborated with an ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablished against Appellants. In such view of facts when the alleged receipt of MS Scrap itself is not confirmed resultantly the manufacture and clearance of MS ingots does not sustain. The Ld. Commissioner has contended that the average unit consumption is 700 Units per MT whereas the Appellant has shown the average consumption as 868 Units Per MT. We find that no physical test was conducted at the Appellant factory to show the consumption otherwise. Even otherwise only on the basis of consumption of electricity it cannot be concluded that the Appellant has produced excess quantity. The Appellant in their appeal memo has relied upon the letter D.O.F No.381/89/06/651 of March' 2006 addressed by the Director General Audit to chief Commissioner, Ranchi wherein it was directed that if the Steel Units shows more than 1000 Unit per MT consumption in that case the investigation should be conducted by recording statements of transporters after collecting corroborative evidences. It has been further stated in the letter that the normal consumption ranges between 555 to 1026 Units Per MT. We find that even when the revenue considers the power consumption of 555 to 1026 of similar units ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not take place. Further that the statement of Shri Kishore Kothari stands retracted and that during the cross examination stated that he was neither concerned with loading of goods nor despatch of goods. In such circumstances we find that the statement of Shri Kothari cannot be made basis for confirmation of demand. Further the officers did not make any investigation with the transporters/ buyers of the goods. It was necessary for them to verify the weighment slips with corroborative evidence. In such case when there is no investigation about removal of the goods, the demand cannot be made. We are therefore of the view that the demand of Rs. 92,12,475/- is not sustainable and is set aside. 5.3 There is another demand of Rs. 1,13,220/- on account of clandestine clearance of runners and risers and cenvatable re-rollable scrap alleged to have been cleared to M/s Amar Steel Industries. We find that the demand is based upon the statement of Shri Kothari which already stands retracted and negated during cross examination. Further to find that the show cause notice relies upon the statement dt. 18.03.2005 of Shri Raju Govinda Gorade, Accountant of M/s Amar Steel who accepted receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvatable raw material by M/s R.L. Scrap. The officers should have physically verified entire stock lying in the factory and then should have come to the conclusion regarding excess stock. Also there is no investigation from the vehicle owners as whether the goods were unloaded in the Appellant's factory. In absence of same we are of the view that the goods cannot be confiscated. In view of our above findings we therefore hold that the demand of duty and confiscation of goods against Appellant Unit is not sustainable.
5.5 As regard imposition of penalty under Rule 26 on Shri Ambadas Santosh Nagargoje, Shri Santosh Nagargoje, both Directors of M/s Ambika and upon Accountant Shri Kishore Hiralal Kothari and Shri Jayant Vasantrao Kulkarni, we find that since the duty demand and confiscation of goods has been set aside, there is no question to impose penalty upon the aforesaid persons. We therefore set aside the penalties imposed upon them.
6. In view of our above discussions and findings, we set aside the impugned order and allow the appeals with consequential reliefs. Accordingly CO stands disposed of.
(Pronounced in Court on 15/03/2017) X X X X Extracts X X X X X X X X Extracts X X X X
|
