9911796707
TMI Blog2017 (5) TMI 1373X X X X Extracts X X X X X X X X Extracts X X X X ..... his fact (brought on record by appellants). Further appellants have led evidence that Mr. S. K. Tyagi had retracted his statement within a few days vide letters dated 17/04/2002 & 22/04/2002 addressed to the D. G. of DGCEI, New Delhi. The contention of Revenue that factory of M/s MSL was running for 7 more hours, than declared, is untenable, being based only on the basis of statements of some employee. The same does not stand in view of order dated 18/03/1998 passed by commissioner of Central Excise, Kanpur, determining the Annual Capacity of production at 17 MT per day. Further under the facts and circumstances, extended period of limitation is not invokable. The impugned order is also bad and unsustainable for non-compliance of the provisions of Section 9 D of the Act. The case of Revenue is not proved and the allegations are sham and illusory and Show Cause Notice is not maintainable - appeal allowed - decided in favor of assessee. - E/907 & 908/2006-EX[DB] with E/MISC/70431/2016 - A/70465-70466/2017-EX[DB] - Dated:- 19-12-2016 - Mr. Anil Choudhary, Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical) Shri Amit Jain, Advocate, with Shri Atul Gupta, Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same management, which was engaged in manufacture of M.S. Ingots and Runners Risers, etc. classifiable under Chapter Sub-heading No.7206.90 of Central Excise Tariff Act, 1985 and their basic raw materials were M.S. Scrap, Sponge Iron and the like. All the three companies had their separate factories but had a common corporate office or head office at 123/528A, Factory Area, Fazalganj, Kanpur. Although they maintain separate accounts and finance, but some of the employees in the head office were working for more than one company. On 04/01/2002, a search was conducted in the premises of the appellants including the said Hans Castings Limited and records including Hard Discs of Computers were seized, further statements of the employees etc. were recorded. Further, data from the Hard Discs was also retrieved by Revenue. In that search, no irregularity was found in either of the appellant companies, and M/s Hans Castings Ltd. (under same management). 4. A second search was conducted on 15/04/2002, again by DGCEI. In the course of search, certain documents were recovered as well as statement of various persons were recorded. Thereafter, Show Cause Notice, dated 17/02/2005, was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch registers marked - DSPCH were recovered from a wheat field, located inside the factory premises of M/s MSL (listed in Annexure A-1) to the Panchnama dated 15/04/2002 (RUD No.45) and from office premises of the factory listed at (Annexure A-2) to the Panchnama of even date. During the search, in the factory of M/s MSL on 15/04/2002, Shri Sushil Kumar Tyagi - Authorized Signatory of M/s MSL was present. On his personal search a diary in the shape of pad was recovered and the name of one, Shri Ram Kumar Thekedar, appeared on the first page of this diary (resumed vide Serial No.9 of Annexure A-2, RUD No.45). On being asked about the whereabouts of Shri Ram Kumar, Thekedar, Shri Tyagi replied that Ram Kumar was living with his father-in-law Shri Murli at village Tatyaganj, Kanpur which was about 1 km away from MSL. The officers accompanied with Shri Tyagi to the residence of Shri Murari Lal, father-in-law of Ram Kumar Thekedar, situated at Tatyaganj, Kanpur. The wife of Shri Murari Lal (mother-in-law of Shri Ram Kumar Thekedar) was present and the search was conducted in her presence. During the course of search different records connected with MSL were recovered which were resumed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s MSL, which implies that any goods which entered M/s MSL were recorded in such registers. It appeared to Revenue that this clearly indicates that RCPT registers maintained by M/s MSL are genuine and correct. Although some of the receipt shown in RCPT registers was mentioned in M/s MSL's statutory records, but in a large number of cases, entries in receipt registers - RCPT registers were not accounted by MSL in their statutory records more fully described in Annexure D J to the Show Cause Notice. It further appeared that the entries not accounted in the statutory records of M/s MSL and shown in the RCPT registers of M/s MSL, were actually invoiced to M/s HML and M/s HML had taken credit on these goods. For example, as per page 7 of RCPT register at Serial No.1, on 13/04/2002, 47 numbers of Billets weighing 40.820 MT were received from SAIL, Kanpur by Truck No.RJ - 06G/3643 in M/s MSL. Such entries were compared with the monthly returns/RG 23 A Part-I register of MSL and it was observed that no such consignment have been shown to have been received in MSL in that month. Similarly, as per page 7 of this RCPT register at Serial No.1, on 07/10/2001, 43 pieces of Billets we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by SAIL for such consignments must have been in the name of MSL. Further, he admitted that they made entries of the raw materials in their excise records only in those cases where trucks carrying the GR's and invoices where in the name of MSL and only such production of M.S. Strips, manufactured out of raw materials the details of which were entered in the excise records, was entered in the statutory records; that in those cases where consignments received in M/s MSL did not have invoice of SAIL in their name, they neither entered such raw material in their excise records nor entered the production of M.S. Strips manufactured out of such unaccounted raw material in their statutory records. On such observations and based on the statement of Shri Tyagi, it appeared to Revenue that raw materials purchased by M/s HML from SAIL mostly did not reach M/s HML but was delivered to M/s MSL and M/s MSL did not return such goods after shearing etc. to M/s HML, rather processed the raw material and manufactured its output and cleared them clandestinely. Further M/s HML have taken Cenvat credit without receiving the inputs. It further appeared that wherein the remark CH was written it mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no idea why such records were maintained. On being shown the unused invoice book appearing at Serial No.7 of Annexure A-1, Serial No.27 28 of Annexure B, RUD 45, without any serial number and loose/unused invoices, he admitted that those invoices contained signatures of Rajesh Tiwari, the Authorized Signatory of M/s MSL but expressed his inability to explain the records. On comparison of the records of receipt and dispatch with the dispatches made by transporters to the factory premises of M/s MSL as reflected in their records recovered from the combined office premises of M/s MSL, HML HCL, and other transporter premises earlier on 04/01/2002, the goods shown, are dispatched by the transporters to M/s MSL, were also found to be entered in RCPT register maintained by M/s MSL and the same have been tabled in the form of Annexure-D to the Show Cause Notice. Further summons were issued (five in number) on different dates to Shri Zakir Ali Shri Atul Tiwari of M/s MSL, the persons who made the entries in the above RCPT - DSPCH and other records resumed on 15/04/2002. But they did not turn up and M/s MSL returned the summons issued for Shri Zaki Ali Atul Tiwari, stating that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods were transported within 6 hours time. 6. Based on such observations it appeared to Revenue that:- i) M/s HML had received invoices from SAIL Yard, Kanpur/CGS, Kanpur/Naini, Allahabad for billets/slab and taken Modvat/Cenvat credit on these goods but the goods were diverted to MSL. The shortage of raw materials in their record (due to non-receipt of them) was substituted by receipt of raw materials locally including those from HCL. A chart showing quantity of billets/slab so diverted to MSL has been prepared as Annexure D to the notice. Thus, M/s HML have fraudulently availed credit of ₹ 1,51,17,528/- on 9246.880 MT of billets/slabs during the period from April, 2000 to 15/04/2002, which appears recoverable from them under Rule 57AH(1) of the erstwhile Central Excise Rules, 1944, Rule 12 of the erstwhile Cenvat Credit Rules, 2001 and the Rule 12 of the Cenvat Credit Rules, 2002 read with Section 11A 11AB of the said Act. As HML have contravened the provisions of Rules 57AB, 57AE of the erstwhile Central Excise Rules, 1944, Rules 3 7 of the erstwhile Cenvat Credit Rules, 2001 Rules 3 7 of Cenvat Credit Rules, 2002, they are liable to penal action under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecoverable from them under Rule 57AH(1) of the erstwhile Central Excise Rules, 1944, Rule 12 of the erstwhile Cenvat Credit Rules, 2001 and Rule 12 of the Cenvat Credit Rules, 2002 read with Section 11AB of the said Act. As HCL has contravened the provisions of Rules 9(1), 52A, 53, 57AB, 57AE, 173F, 173G of erstwhile Central Excise Rules, 1944, Rules 4, 6, 8, 10, 11 of erstwhile Central Excise (No.2) Rules, 2001 Rules 4, 6, 8, 10, 11 of erstwhile Central Excise Rules, 2002, Rules 3 7 of the erstwhile Cenvat Credit Rules, 2001 and Rules Rules 3 7 of the Cenvat Credit Rules, 2002, they are liable to penal action under Rule 57AH(2) read with Rule 173Q of the erstwhile Central Excise Rules, 1944, Rule 25 of erstwhile Central Excise (No.2) Rules 2001 and Rule 25 of Central Excise Rules, 2002, Rule 13(2) of Cenvat Credit Rules, 2002. iii) MSL had received 9246.880 MT of billets as shown in Annexure D to the Show Cause Notice) [on the basis of private records maintained in the form of RCPT and resumed on 15/04/2002 (duly supported by Annexure A prepared on the basis of GRs/transport documents etc. recovered on 04/01/2002) from the SAIL stock yard, at Panki, Kanpur/CGS, Kanp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise duty (Annexure G ). Thus, MSL are liable to pay Central excise duty amounting to ₹ 1,39,696/- on the clearances of 92.970 MT of billets under Rule 57AH(1) of erstwhile Central Excise Rules, 1944, Rule 12 of the erstwhile Cenvat Credit Rules, 2001 and Rule 12 of the Cenvat Credit Rules, 2002 read with Section 11AB of the said Act. As MSL have contravened the provisions of Rules 9(1), 52A, 53, 57AB, 57AE, 173F, 173G of erstwhile Central Excise Rules, 1944, Rules 4, 6, 8, 10, 11 of erstwhile Central Excise (No.2) Rules, 2001 and Rules 4, 6, 8, 10, 11 of Central Excise Rules, 2002, Rules 3 7 of the erstwhile Cenvat Credit Rules, 2001 and Rules 3 7 of the Cenvat Credit Rules, 2002, they are liable to penal action under Rule 57AH(1) read with Rule 173Q of the erstwhile Central Excise Rules, 1944, Rule 25 of erstwhile Central Excise (No.2) Rules, 2001 and Rule 25 of Central Excise Rules, 2002 and Rule 13(2) of the erstwhile Cenvat Credit Rules, 2001 Rule 13(2) of Cenvat Credit Rules, 2002. iv) Since Shri Rajiv Kant, Director of MSL HML, Shri Vijay Kant, Director of HML HCL and Shri Ajay Kant, Director of MSL HML were managing all the day to day affair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sa, taking credit of duty which was not otherwise due thereon, showing receipt of pig iron which was not actually received in their unit and taking credit in the unit which was not due to them, using these diverted raw materials in the manufacture of finished goods which, in turn, were cleared without accountal in their statutory records without payment of duty by using dual set of invoices in contravention of the provisions of Central excise Rules, as discussed above in detail, they have not only suppressed the vital facts from the department but also forged the documents and cleared the excisable goods without payment of duty which resulted in huge evasion of duty. Therefore, the first proviso to Section 11A of the said Act is clearly invokable in the instant case for demand of Central Excise duty for extended period. viii) Wherever in the Show Cause Notice the provisions relating to erstwhile Central Excise Rules, 1944, Central Excise (No.2) Rules, 2001, Cenvat Credit Rules, 2001 have been invoked or referred, these may be read with the saving provisions of Section 38A of the said Act. 7. Accordingly, the appellants HML was required to show cause as to why Cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was confirmed, further duty of ₹ 8,13,489/- was also demanded as credit wrongly taken involved on 556.740 MT of MS Ingots and further demand of ₹ 34,099/- was confirmed for billets found short on 04/01/2002. (b) The demand of duty ₹ 3,28,571 involved on 256.696 MT of end cuttings/scrap removed clandestinely was confirmed. (c) Duty of ₹ 1,39,676/- was confirmed, being the duty involved on 92.970 MT of billets removed clandestinely. (d) Further, the penalty of ₹ 1,69,86,756/- was imposed under Section 11 AC read with Rule 57AH(2), Rule 173Q of Central Excise Rules, 1944 read with Rule 25 of Central Excise Rules, 2002. (C) Further, penalty was also imposed in individual capacity on Shri Rajeev Kant ₹ 10 lakhs, Shri Vijay Kant ₹ 10 lakhs. Shri Rajeev Kant ₹ 10 lakhs, Shri Rajesh Dheer, the Authorised Signatory of MSL ₹ 50,000/- further no penalty was imposed on Shri S.K. Tyagi in absence of service of show cause notice on him. 9. Being aggrieved the appellant-assessees filed appeals before this Tribunal. The appeal of one, appellant Hans Casting Limited, was dismissed for non-making of pre-deposit. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of search different documents or records relating to Maitri Steels Ltd. were found/recovered. The officers prepared inventory of all such records/documents and seized them for further investigation. On being asked from Shri Sukh Devi, she accepted that the seized documents are of Maitri Steels Ltd. and further these have been kept through her son-in-law, Ram Kumar Thekedar. On such documents recovered, the signature of all the concerned including the panchas was made on the inventory, where as Smt. Sukh Devi put her thumb impression. 10. The ld. Counsel points out that without there being any lead and/or any relation being stated and established with the said Shri Ram Kumar Thekedar, there was no reason worthwhile leading to the belief of the officers of the search team, that records relating to Maitri Steels Ltd. have been secreted at the premises of Shri Murli, in the room rented by Shri Zakir Ali. Further, nowhere in the Panchnama there is mention of any documents recovered from the Wheat field. It is further pointed out by the ld. counsel that the signature of the panchas in Annexure A-1 A-2 is not at the usual place as is found normally in the Panchn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellants into untold difficulties and misery. Further Panchnama nowhere mention as to how Revenue got access to the rented room/house of Shri Zakir Ali in the house of Mr. Murli. As per the Panchnama, Shri Zakir Ali was admittedly not present at the time of search and seizure. Further no investigation was carried out to find out who was the fabricator or author of such documents, allegedly private records purportedly recovered from the adjacent Wheat field and the rented room of Shri Zakir Ali. Admittedly, the Director/In-charge, Mr. Rajeev Kant had denied any knowledge about those documents and/or also denied that they were maintained at the instance of the management of the appellant companies. It is further urged that such questionable documents established receipt of excess goods (goods which were meant for HML) received by MSL, production and sale of excess goods by MSL, however during search no such evidence like excess raw material, excess production, excess goods was found during the second search also. In case the appellants would have been involved in clandestine manufacture/production it would not been possible for them to get tallied the records of raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d duty paid inputs to MSL. The Revenue failed to demonstrate any benefit accruing to HML or MSL, due to indulgence in such practices. Admittedly both the companies are under the same management and are closely held companies. 11. It is further urged that vide the impugned order, it has been held that MSL clandestinely manufactured and cleared 7,651.817 MT of MS Strips. It is submitted that the annual production records for the financial year 2000-01 to 2001-02, are as under:- FINANCIAL YEAR INSTALLED CAPACITY (MT) RECORDED PRODUCTION (MT) 2000-01 6,239 6,504.495 2001-02 6,239 6,623.625 The said Data is supported by certificate of the Chartered Accountant, forming part of the annual accounts, duly audited. The certificate of Chartered Accountant has been annexed by way of additional evidence in the appeal. That it is evident from the production records duly certified by the Chartered Accountant that it is not possible for MSL to have clandestinely manufactured and cleared 7,651.817 MT of MS Strips more t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 15/04/2002 and the statements recorded at that time without any lead the Revenue straightway went for search at house of Mr. Murali for no reasons. Shri Ram Kumar Thekedar stated that he had got rented out one room in the house of his father-in-law Murari Lal to Mr. Zakir Ali, the clerk of MSL and Shri S.K. Tyagi, Manager Authorized Signatory of MSL, used to keep records related to MSL in that room and that he had never seen those records, but Shri Zakir Ali, the clerk of MSL had told him that the said records related to Attendance, Salary, Receipt of raw materials Dispatches of finished goods of MSL. Thus, the documents recovered are not in the ordinary course of the search and seizure, and planting of documents is premeditated by the said Shri Sushil Kumar Tyagi - Authorized Signatory of M/s MSL and Shri Zakir Ali in collusion with others. Further statement given by one, Rajkumar Tiwari - labour supervisor of MSL was recorded, wherein he stated that he was working for last three years and was getting ₹ 1500 per month salary. He has also admitted that when the Central Excise officers visited the factory on 15/04/2002, he had hidden the private records relating to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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