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TMI Blog2017 (11) TMI 1502X X X X Extracts X X X X X X X X Extracts X X X X ..... val - In the facts of the present case it is an admitted fact that no investigation has been conducted as to procurement of raw material to manufacture such huge quantities of excisable goods, no attempt to be made find whether the appellant had the capacity to manufacture such a huge quantity of excisable goods as has been alleged in the SCN, no attempt is made to ascertain as to whether there had been any buyer of excisable goods cleared from the appellant’s premises clandestinely, there is no evidence found regarding transportation of such clandestinely removed goods, there is no evidence of any excessive power consumption, which is an important factor for determining clandestine removal. Such a large-scale production and clearance cannot be made without consuming excess power. No attempt has been even made to determine the electricity consumption pattern of the appellant during the relevant period, including the period of dispute. Thus, the allegation of the clandestine removal made by revenue have got no legs to stand and is fit to be set aside. Cross-examination - Held that: - in view of the admission of the illegal activity and admission to have made clearances without p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts have resorted to undervaluation of their clearances. 2. This is the second round of litigation. In the first round, this Tribunal vide Final Order dated 9 May, 2003, remanded the matter back to the adjudicating authority on the ground of violation of principles of natural justice, being non-supply of relied upon documents. Thereafter, the relied upon documents are supplied. Pursuant to remand, order in original dated 15 May, 2009, have been passed confirming excise duty amounting to ₹ 29,71,483/- on the finished goods allegedly removed clandestinely, the duty of ₹ 10,210/- have been demanded leviable on 160 numbers of Godrej brand mortise locks allegedly found short at the time of physical verification, the duty of ₹ 2,00,249/- have been confirmed being leviable on Secur brand locks removed clandestinely by the appellant, further ₹ 151/- have been confirmed as duty leviable on two number of locks removed clandestinely. Further, duty of ₹ 4,17,471/- have been confirmed on the goods undervalued and removed during the year 1998 - 99. Further an amount of ₹ 6,19,281/- have been confirmed on secur brand goods cleared at Nil rate of duty under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctively valued at ₹ 5,52,926/- were seized by the officers. 5. The search was conducted at M/s Batra Enterprises, Karol Bagh, New Delhi, the distributor of the appellant, on 07 May, 1999, where from some documents were resumed for investigation purposes. It was noticed that during the year 1995, the appellant had entered into an agreement with Godrej Boyce Manufacturing Company Ltd. (hereinafter referred to as Godrej for short) for manufacturing locks under Godrej brand and for supplying locks to the said company. Some invoices were also recovered, raised in the name of Godrej Boyce on which it was noticed that duty of Central Excise was not paid. On follow-up action at the premises of Godrej, Mumbai, the invoices issued by the appellant to Godrej were resumed alongwith payment particulars made to appellants, by Godrej for last five years. On scrutiny of records so acquired, it was observed that there were two sets of invoices bearing same serial numbers. It was noticed that the invoices bearing same serial numbers in a particular financial year were having different dates of removal of goods. However, the quantity of goods dispatched and name of the consignees shown o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars were used for a single transaction only. Shri Agrawal further stated that all above activities were carried out by Shri Lal Singh, the concerned person, who was the Authorized Signatory. Further, deposed that Shri Lal Singh had never informed the management about the said adjustments. Shri Agrawal further stated that Shri Lal Singh was working with the company approximately for the last six years. Shri Agrawal M.D. of the said unit further accepted that Shri Lal Singh was authorized to authenticate the invoices also. 6. Shri Lal Singh the authorized signatory, in his statement recorded under Section 14 before the Superintendent (Preventive) on 29 December, 1999, inter-alia stated that he had been serving in Secur Industries Ltd since August, 1992. He also informed that he was still authorized signatory, the party had not served any notice for termination of services. Shri Lal Singh also submitted a letter dated 6 September, 1999 endorsing the fact that he was authorized signatory of the appellant at least up to 06 September, 1999. The authenticity of the above letter was got verified from the concerned Deputy Commissioner, Central Excise Division, Ghaziabad. In his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable with them. Shri Pravesh Sahani, authorized signatory of appellant submitted purchase invoice bills file for 1996 onwards vide letter dated 15 May, 2000. On examination of purchase bills, as well as the balance sheets for the year 1996-97 and 1997-98, it was noticed that as per balance-sheet of both the years, purchase amount was 85.34 lakhs and 106.20 lakhs respectively whereas actual purchase amount of raw materials as arrived from the bills were ₹ 91.10 lakhs and ₹ 128.95 lakhs (including an amount of ₹ 1.35 lakhs, which was reported by them vide their letter dated 17 May, 2000) respectively. 8. On scrutiny of the file resumed from the factory regarding correspondence with Godrej, it was noticed that a letter dated 6 October, 1998 (Annexure - K to the SCN) was served to Shri H.P. Agrawal of Secur Industries Ltd, by Shri Kartik N. Modi, General Manager purchase of Godrej alleging therein that the appellant had openly started selling cylindrical locks with the packing in the name and style of Godrej in Delhi market. They further implicated them for selling the locks with Godrej brand name in open market in Delhi. Further, the same file at page number 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Annexure- A to E, having incidence of duty to the tune of ₹ 29,71,483/-. 9. Further perusal of another invoice no.364 dated 20 th November, 1998 through which goods valued at ₹ 9,63,792/- were consigned to M/s Suman Enterprises, Karol Bagh, Delhi, indicated that no duty was paid. It was further noticed that invoice no.35 dated 2 nd May, 1998, pertaining to Secur Industries Ltd, Loni Road was available in the records resumed from Secur Industries, Sahibabad, which was not a part of invoices issued by the depot at Loni Road. Through this invoice 400 number of Godrej locks valued at ₹ 1,48,700/- were consigned to M/s Natani Traders, Mumbai and no duty was paid against these goods. But there was another invoice no.35 dated 07 May, 1998 which shows clearance of these GNSSRND ENT locks sets of value 855 to Shri Sushil Kumar on payment of duty. Therefore, it was alleged that the goods dispatched vide invoice no.35 dated 2 nd May, 1998, consigned to Natani Traders was without payment of duty. From this it was also alleged that the appellant was engaged in clandestine removal of Secur brand goods too by issuing parallel set of invoices. It further appeared that so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed that in this connection, he followed the instructions of Shri Ashutosh Agrawal - M.D. In such cases, the payments were received in cash by Shri Ashutosh Agrawal. On scrutiny of record, revealed to Revenue that in most cases were prices were shown much lower, the quantities of locks very huge in comparison to quantity supplied to genuine customers. Vide letter dated 17 May, 2000, the appellants informed that they were unable to trace out the records pertaining to Loni Road, which were required by the Department. Thus, it appeared that the appellant had deliberately not submitted the records required for investigation, lest the actual price charged is known by the Department. For illustration a particular variety of Secur brand locks namely GN brand RND PTC locks is taken. The appellant had cleared 1855 numbers of locks to various customers, out of which 932 locks were supplied to genuine customers on an average price of ₹ 361.55/- per piece, the maximum price charged was ₹ 420.30/- and 923 pieces were supplied in the name of fake customers on an average price of ₹ 164.07/-, which is less than 50% of the depot prices. Thus, it appeared that the appellants had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the prices were shown much lower on the invoices issued to fake customers than the actual prices from their genuine buyers. The locks were supplied to the genuine customers on an average price of ₹ 361.55/- per piece and to the fake customers on an average price of ₹ 164.70/-, which was much less being about 50% of the depot price. Thus, it is case of the Revenue that there has been suppression in the value of goods while effecting some of their clearances. 11. It is further urged that these allegations are based solely on the statement of Shri Lal Singh ex-employee of the appellant company, a letter dated 06 October, 1998, which was served upon the appellant by officers of Godrej, namely, Shri K.N. Modi, General Manager purchase, alleging that appellant had openly started selling cylindrical luggage locks with the packaging in the name and style of Godrej in Delhi market. Minutes of meeting held amongst Shri K.N. Modi, Shri M.N Shenai and Shri K Nair (all belong to Godrej) and Shri Ashutosh Agrawal M.D. of the appellant company held on 08 October, 1998, wherein it was recorded that Godrej brand of cylindrical and mortise locks were available in the market witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the ruling of Hon ble Supreme Court in the case of G.T.C Cigarettes and of the Hon ble Delhi High Court in the case of J K Cigarettes Ltd v/s CCE, 2009 (242) ELT 189 . The learned Commissioner have erred in observing that compliance with the directions of the Hon ble Supreme Court in G.T.C Industries is not required when a party does not respond to summons. This contention of the learned Commissioner is not tenable in view of the provisions of section 14 of the Act which provides for power to summons persons to give evidence and produce documents in inquiries under the Act and particularly sub Section 3 of Section 14 provides, every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of Section 193 and section 228 of the Indian Penal Code, 1860. Thus, all the powers of a court are vested in the adjudicating authority to enforce appearance of the person and or evidence in any proceedings under the Act. Thus, the learned Commissioner have erred in not exercising the jurisdiction vested in him in ensuring the attendance of the witnesses for their examination and cross-examination as required under Section 9D of the Act. The learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cleared from the appellant s premises clandestinely, there is no evidence found regarding transportation of such clandestinely removed goods, there is no evidence of any excessive power consumption, which is an important factor for determining clandestine removal. Such a large-scale production and clearance cannot be made without consuming excess power. No attempt has been even made to determine the electricity consumption pattern of the appellant during the relevant period, including the period of dispute. Thus, the allegation of the clandestine removal made by revenue have got no legs to stand and is fit to be set aside. So far the minutes of the meeting held between the personnel of Godrej and the Managing Director, Shri Agrawal of the appellant - it mainly alleges Godrej brand locks were being sold in the open market. That apart, the said minutes of the meeting was not signed by the appellant, who in his letter dated 31 st October, 1998 have clearly denied the allegations. Further, the appellant had much prior thereto, written to Godrej on 11 th May, 1996 expressing concern on the fact that Godrej brand locks were being surreptitiously sold in the open market. The learned Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorized signatory of the appellants had never rebutted his statements. His statements are further corroborated by the documentary evidence, and clearly establish and link the threads of clandestine activity and removal of the goods. Thus, the statement of Shri Lal Singh have evidentiary value and the same is reliable and cannot be brushed aside on the pretext of an appeal for cross-examination. The learned AR further states that the appellants have admitted that they were in the practice of issuing parallel set of invoices. The first one being issued for clearance with fake PLA entry/RG 23(II) entries as payment of duty while actually they did not have any balance in their accounts. Hence, in view of the admission of the illegal activity and admission to have made clearances without payment of duty, they cannot escape the liability by throwing the burden of evasion and illegal activity on the employee and on the plea that they were misguided by misplaced advice of their own authorized representative whose cross-examination have been sought. The learned AR also relies on the ruling of the division bench of this Tribunal in Shalini Steels Private Ltd v/s CCE reported at 2010 (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er find that, save and except presumption as to double removal of the goods on the parallel set of invoices, no case of actual removal have been made out, save and except based on the statement of the said Shri Lal Singh. I further find that no question have been put to Shri Lal Singh even in the course of investigation as to who were the buyers of such clandestinely removed goods, as alleged. Further, there is no case of any excess raw materials availability, excess consumption of electricity or other factors of production required for the alleged clandestine manufacture and clearance. Further I find no study have been made with respect to the capacity of production whether the appellant had such capacity to produce such alleged clandestine quantities. I further find that as relied upon by the counsel for the appellants on the ruling of Hon ble Punjab and Haryana High Court in the case of Ambika International and others being judgment dated 17 June, 2016 in CWP No.12615 of 2016. The Hon ble High Court have laid the following guidelines to be followed by judicial authorities with respect to reliability of statements in evidence: - (i) In the event that the Revenue intendes to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubts have been raised by the officers of Godrej. Further, prior to that meeting appellant have also vide a separate letter informed Godrej regarding availability of spurious locks in the name of Godrej in the market, expressing concern. Thus, I hold that the show cause notice is presumptive and also the impugned order are unsustainable as learned Commissioner have selectively relied on the evidence on record. Under the facts and circumstances, I hold that the allegation of clandestine manufacture and removal is not established. Save and except that the appellants were dodging the Revenue by paying the duty after a few days of removal, which they were required to debit at the time of removal. In this view of the matter I impose a penalty of ₹ 5000/- both on the company appellant and its Managing Director Shri Ashutosh Agrawal. Thus, the appeal is allowed in part and the impugned orders are set aside, save and except imposition of penalty under Rule 27 of CER, 2002. The appellant shall be entitled for the consequential benefits. Accordingly, I further direct the appellant company to pay a lump sum amount of ₹ 50,000/- towards interest for the admitted late payment of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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