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TMI Blog2018 (2) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... asija, Consultant, Shri Jitendra Singh, Advocate & Shri Vineet Kumar Singh, Advocate for Respondent ORDER Per: Anil G. Shakkarwar The present Miscellaneous Application is filed by Revenue, praying for early hearing. The respondent did not object to the same and therefore, the Miscellaneous Application is allowed and with the consent of both the sides main appeal is heard on merits. 2. The present appeal is directed against Order-in-Original No. 02/COMM/CEX/GZB/2017-18 dated 23/05/2017 passed by Commissioner of Central Excise & Service Tax, Ghaziabad. The appeal is filed by Revenue. 3. The brief facts of the case are that the respondents were engaged in the manufacture of Chewing Tobacco bearing Brand names; Bharat & Vani falling under Tariff Item No. 24039910 of Schedule to Central Excise Tariff Act, 1985. The respondents were issued with two Show Cause Notices. Through Show Cause Notice dated 25/08/2015 respondents were called upon to show cause as to why excess finished goods valued at ₹ 7,14,533/- (MRP Value at ₹ 15,87,851/-) involving Central Excise duty of ₹ 6,32,933/- & raw-material valued at ₹ 1,36,83,980/- seized at the factory premises of respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of unaccounted cash. Further they submitted before the Original Authority that the transporters never open the packages booked for transportation when the goods are booked for transportation and stated that goods were generally booked by Shri Manoj and Shri Tiwari both of whom were booking agents and were not in the employment of the respondent. They further submitted before the Original Authority that it was assumed in the said Show Cause Notices that the goods booked under the Bills of the alleged fake/pseudo firms were manufactured and cleared by the respondents irrespective of the description of the goods in the Bills issued by the said firms. They also stated that the calculation of duty was also on the basis of assumptions. Before the Original Authority, Shri Devendra Singh was cross-examined on 27/02/2017. On 06/03/2017, Shri Anil Mishra & Shri Tapan Das were cross-examined. They further submitted that there was no evidence to prove that the goods booked on invoices of various firms belonged to the respondents and were manufactured and cleared clandestinely. They further submitted that Shri Atul Kumar in his statement dated 07/12/2016, stated that his earlier statements were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts recorded during investigation by summing up its findings in Para-26 as under:- The entire case was predicated on the statements which were denied during cross-examination. 2.2 The above findings recorded in the Order passed by the Adjudicating Authority are contrary to the facts and are at variance with the very spirit & thrust of investigations discussed in the Demand-cum-SCN wherein the statements of various witnesses are not the sole evidence but have merely been used as corroboration of physical and documentary evidence gathered during investigations. 2.3 Various findings with regard to the evidentiary value of statements recorded by investigating officers are not only contrary to the facts on record but are self-contradictory displaying lack of application of mind. As an example, it has been recorded in Para-23 of the OIO that Shri Atul Kumar Chaurasia, Partner and Authorized representative of M/s MPE, though admitted various offences in his statements dated 26.02.2015, 27.02.2015 and 21.08.2015, denied everything in his statement dated 07.02.2016. Even a casual reading of the statement dated 07.02.2016 shows that he agreed with his previous statements which were s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department stating that though the said Shri Tiwari was their employee, but he left the job without any forward address. The said Mukesh Tiwari never joined investigations. It is not clear if Shri Manoj Ji referred to the same Shri Tiwari. Prior to the deposition of the said Shri Manoj Ji before the A/A, the question of goods under seizure being fake/counterfeit never came up. The first SCN covering the seizure portion of the case was issued on 25.08.2015 which was duly received by the main Noticee and in which details of all goods placed under seizure were provided and all Panchnamas, Statements etc. were provided as RUDs. However, at no stage M/s MPE claimed the seized goods as fake/counterfeit/not belonging to them. They, in fact, applied for provisional release of the seized goods, submitted Bonds/Bank guarantees and got all the goods released provisionally except one consignment. However, based on this unusual deposition of someone who did not have the status of a witness, the A/A erred in holding all the finished goods seized at various places other than the factory premises as fake/counterfeit, thereby not only exonerating the main Noticee from the charge of clande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value ₹ 15,8,7851/-) were seized from the factory premises. The goods being low value product, the amount represents enormous quantities in terms of no of units. As against a recorded balance of 15,566 units of various packings, a total of 60,859 units were physically found which is almost the four times the recorded balance. Neither the representative of the main Noticee who was present during the Panchnama proceedings, could offer any explanation for presence of such enormous quantity of unaccounted finished goods, nor during adjudication proceedings, the main notice offer any cogent explanation. The consignee of these goods was the same which has also been making recorded purchases. Contrary to its findings quoted above that statements are the only evidences in the case, the A/A also held presence of such enormous quantity of unaccounted finished goods as contrary to law and ordered confiscation of these goods. ii) Huge quantities of unaccounted raw material & packing material, collectively valued at over ₹ 1.36 crores was seized from the factory of the main Noticee. Further, unaccounted raw material & packing material collectively valued at ₹ 23.34 Lakh wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and no duty was paid. Moreover, the quantity mentioned in the said invoice was 9000 tin boxes while actual recovery was of 10,080 tins boxes. vi) Another consignment of 10 bags found to contain identical goods valued at ₹ 2,88,000/- (MRP) was also seized from the same transporter the same day. However, this consignment, though identical to consignment of 21 packages in all respects, was covered by a fake invoice purportedly issued by another company which on investigation, was found to be non-existent. This physical as well as documentary evidence was further corroborated by the owner/staff of the transport company as well as by the Atul Chaurasia, who also sought provisional release of these goods. vii) Similar seizures of finished goods manufactured by the main Noticees under their own brand names were also seized from several far off places such as Bareily, Dalkhola (Disstt. Uttar Diajpur, WB) etc. as well as from Delhi & Gurgaon which were at various stages of transit and were destined for buyers figuring in the recorded sales of M/s MPE. These consignments were mostly found booked under fake invoices of non-existent companies and were generally found mis-declared a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted that the seized goods had been received from M/s MPE for transportation; that presently they (i.e. M/s MPE) were using fake bills of M/s Delite Trading Company and M/s Frontier Trading Company and that they had transported the goods of M/s MPE on the bills of M/s D. K. Enterprises, M/s MPE, M/s Delite Trading Company and M/s Frontier Trading Company. During the course of his statement dated 26.02.2015, a chart (RUD-19) was prepared on the basis of computerized data and Booking register data provided by Shri Devender Singh containing the details of goods booked by M/s MPE at M/s NECC on the bills of fake firms namely M/s D. K. Enterprises, M/s MPE, M/s Delite Trading Company, M/s Frontier Trading Company etc., which was duly signed by Shri Devender Singh in his agreement and also for their correctness. That the above statement dated 26.02.2015 of Shri Deveder Singh was corroborated by Shri Anil Mishra, another Booking Clerk of M/s NECC in his voluntary statement dated 02.03.2015. Both these statements got further corroboration from Shri Laxman Kumar Sharma, Manager of M/s NECC in his voluntary statements dated 27.02.2015 & 12.04.2016. 2.9 Details of other such seizures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Waxpol General Merchant etc., the names of which were used by M/s MPE for booking their clandestine removed consignments with the transporters were fake & non-existent got corroborated from physical verification conducted at the addresses mentioned on these invoices which revealed that these firms/companies namely M/s Delite Trading Company, B-78, Jhilmil Industrial Area, Delhi, M/s D. K. Enterprises, B-12/5, Site-IV, Sahibabad Indl Area, Sahibabad, Ghaziabad and M/s Waxpol General Merchant, 1682, Gali Peepal Mahadev, Hauz Qazi, Delhi, were fake and non-existent. 2.12 In spite of there being overwhelming evidences on record, the Adjudicating Authority has vacated the seizures made at the premises of the transport companies as well as from the trucks intercepted enroute; dropped the demand of duty of ₹ 18,41,688/- on the clandestinely cleared and seized goods raised in show cause notice dated 25.08.2015; dropped the demand of duty of ₹ 7,38,84,583/- raised in the impugned show cause notice dated 03.01.2017 and also dropped the penal proceedings proposed against the Co-Noticees even though duty paid nature of the finished goods was not established. 2.13 The Adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the persons/witnesses as relied upon in the impugned show cause notices, have the evidentiary value in view of the above settled law of the Hon'ble Apex Court. 2.16 That the Adjudicating Authority has erred in not considering the fact that in the instant case the confessional statements are inculpatory and specific and had never been retracted, therefore, the said statements are admissible as evidence. In this regard, reliance is placed on the judgment of the Hon'ble CESTAT, New Delhi in the case of Commissioner of Central Excise, Raipur vs Hi Tech Abrasive Ltd. reported as 2017 (346) ELT 606 (Tri.-Del), wherein the Hon'ble CESTAT has held that when the confessional statement is inculpatory and specific and was never retracted, said statement is admissible as evidence. The relevant portion of the above said judgment is reproduced below:- Demand clandestine removal Shortage of inputs and finished goods Evidence of Statement of Director admitting that clearances shown in chart, prepared by Department on basis of entries in loose sheets and note-books found on premises of assessee and sister concern, were made without payment of duty or issuing of invoices Said confessional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds him and, therefore, in the facts and circumstances of this case the failure to give him the opportunity to cross-examine the panch witnesses before the principle of natural justice. It is contended that the petitioner had retracted within six days from the confession. Therefore, he is entitled to cross-examine the panch witnesses before the authority takes a decision on proof of the offence. We find no force in this contention. The Customs officials are not police officers. The confession, though retracted, is an admission and binds petitioner. So there is no need to call Panch witnesses for examination and cross-examination by the petitioner. In the instant case, the statements were recorded from February, 2015 to March, 2016 and the retractions were made only 27.02.2017 & 06.03.2017 during the cross-examination i.e. after lapse of a long period from the dates of recording of the relied upon statements. Similarly, the Hon'ble Supreme Court in the case of Telestar Travels Pvt. Ltd. Vs. Special Directory of Enforcement reported as 2013 (289) ELT 3 (SC) had held that if the statements are based on consideration of relevant facts and circumstances and found to be voluntary, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms Act, 1962 Proceedings under Section 108 ibid is a judicial proceeding and if any retraction of confession to be made, to be made before same authority who originally recorded the statement Confessional statements never retracted before the authority before whom the statement was recorded, belated retractions of statements after about one and half years cannot take away the evidentiary value of original statement. [Para 5.5] In the instant case, not to speak of making retractions to the officer to whom the statements were given, even no retraction or complaint about obtaining statements under coercion, was ever made by any of the persons connected with the Co-Noticees, whose statements have been relied upon in the impugned show cause notices, except during cross-examination. 2.20 That the Adjudicating Authority has erred in not considering the fact that the statements dated 26.2.2015, 27.2.2015 and 21.8.2015 tendered by Shri Anil Kumar Chaurasia under Section 14 of the Central Excise Act, 1944, were tendered by him voluntarily and, during his last statement dated his last statement dated 7.12.2016 he was again shown his previous 3 statements, he signed the same in token of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statements as of no evidentiary value, the facts and circumstances are vastly different. In case cited supra, searches were conducted on 25.10.1994, the statements of accused person were recorded on 26.10.1994 and 27.10.1994 and the accused was arrested and produced before the Hon'ble Court with request for remand on 28.10.1994. The accused person filed written retraction before the Hon'ble Court before whom he was produced for remand, which was the first opportunity available to him. However, in the instant case no retractions were ever filed by any of the witnesses including Shri Atul Kumar Chaurasia and they merely alluded to unexplained pressure by the officers during cross-examination. Thought the Hon'ble Supreme Court granted benefit to the accused on the ground that there were no other evidences corroborating the retracted confessional statement, but an important observation was also recorded by the Apex Court which appears to have missed the attention of the A/A (Though it is one of the Head notes) and is reproduced below:- Whereas mere retraction of a statement may not be sufficient to make the confessional statement irrelevant for a purpose of the proceedings in a cri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson as was held in Bhagwan Singh V/s. State of Punjab [AIR 1952 SC 2147, para 30]. If it is established from the record or circumstances that the confession is shrouded with suspicious features, then it falls in the realm of doubt. The confession must be one implicating the accused in the crime. It is not necessary that each fact or circumstance contained in the confession is separately or independently corroborated. It is enough if it receives general corroboration. It is seen that in Barkat Ram s case, this Court accepted the retracted confessional statement and upheld, on that basis, the conviction. In Vallabhda Liladhar s case and also in Rustom Das s case the retracted confessional statement found basis for conviction and in the latter the recoveries were relied as corroborative evidence. In Haroom Abdulla s case, this Court used the evidence of co-accused as corroborative evidence. There is no discussions in the OIO as to whether the A/A conducted any exercise to weigh the evidences vis-`-vis confessional statements or whether any grounds were found to consider the confessional statements as having been recorded under threat, coercion or inducements, even though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t alleged in extracting statement but police action on complaint not produced and medical report not mentioning assault Statement of such proprietor true and voluntary and not recorded under coercion and duress and subsequent retraction not relevant Statement of accountant of raw material supplier that appellants were actual owners of such supplier firm, not retracted and the same corroborated by documentary evidences Invoices with address of appellants reached raw material supplier proving link between such supplier and appellant Gold transactions by members of appellant s family prima facie amounting to money laundering Preponderance of probability established Duty demand of ₹ 33.20 crore confirmed in impugned order Penalty totaling ₹ 67 crore higher and reduced to ₹ 5 crore each on all three appellants Rule 209A of erstwhile Central Excise Rules, 1994 Rule 26 of Central Excise Rules, 2002 [Paras 4, 5, 5.2 , 5.3, 5.6, 5.7.2, 6] Evidence Preponderance of probability Confiscation of goods, confirmation of duty evaded and imposition of penalty Standard of proof required in departmental proceedings is preponderance of probability Adjudicating Authority or Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the correct quantum of duty but the Adjudicating Authority straight away dropped the demand of duty in spite of plethora of evidences available on record to prove that M/s MPE had evaded the Central Excise duty by illicitly procuring the unaccounted raw material, manufacturing and clearing their final products clandestinely without payment of Central Excise duty. Even A/A in such situations themselves usually suggest a formula for duty calculation based on their judgment and the jurisdictional authorities are directed to recalculate the duty accordingly. However, no such attempt was made. 2.27 That M/s MPE by admitting their duty liability, had voluntarily paid ₹ 4 Crores towards their duty liability, as detailed in Para 26 of the impugned Show Cause Notice dated 03.01.2017 and the said assessee had never disputed the voluntary payment or had claimed refund of the same. Thus, the Adjudicating Authority has erred in not considering the fact that it is a settled law that where an assessee comes forward to pay the Central Excise duty voluntarily, the clandestine removal is proved. In this regard, reliance is placed on the judgment of the Hon'ble Apex Court in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f their volition and not outcome of any duress. (emphasis supplied) 2.28 The adjudicating Authority has erred in vacating the seizures of finished goods seized at the premises of the transporters as well as from their trucks intercepted enroute. The Adjudicating Authority while vacating the said seizures has held that there is no evidence incontrovertibly linking the party (M/s MPE) with the seized goods as the seized goods were brought to the transporters premises not by anybody from the party but by their booking agent who admitted to bungling. It has been repeatedly admitted by employees of transport companies that the goods were brought to them for booking by Shri Mukesh Tiwari from the Factory of M/s MPE, who claimed to be an employee of M/s MPE. Even Shri Atul Chaurasia, in his letters dated 22.11.2016 & 06.05.2016 to the department admitted that the said Shri Tiwari used to be their employee and since left the job somewhere around May, 2015 i.e. 3 months after the initiation of investigations. Thus, the aforesaid findings of the A/A are purely based on the mysterious deposition of a defence witness namely Shri Manoj Ji which has already been discussed in detail in Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and various statements of employees of transporting companies, as well as the un-retracted statement by the partner of M/s MPE clearly show that the goods belong to M/s MPE and is further corroborated from the fact that M/s MPE not only deposited ₹ 4 Crore towards duty liability and obtained provisional release of almost all the goods. No evidence to show duty-paid nature of the finished goods under seizure appeared either during investigation or during Adjudication proceedings. Therefore, there are no grounds for the A/A to vacate the seizures, drop the demand of duty on finished goods illicitly removed from the manufacturer s premises, exonerate the manufacturer from penalty. 2.30 That the Adjudicating Authority has committed a grave error in vacating the seizures of the unaccounted raw materials seized in the factory premises as well as in the godown of M/s MPE on the ground that the said unaccounted raw materials were neither manufactured by M/s MPE nor they had availed Cenvat credit thereon. The Adjudicating Authority in support of his findings, has relied upon the judgments of the Hon'ble CESTAT in the cases of CCE, Surat Vs. M/s Narmada Fabrics Pvt. Ltd. 2009 (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above judgment are reproduced below:- 7. On a plain reading of the said Rule, particularly Clause (b), it is clear that if any producer or manufacturer or registered persons of the warehouse or a registered dealer, does not account for any excisable goods produced or manufactured or stored by him, then all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, shall be liable to penalty. The argument of the ld. Adcocate is that the expression excisable goods mentioned in Caluse (b) of the said Sub-rule, referes only to the goods manufactured by the manufacturer and cannot be made applicable to excisable goods procured by him as raw materials to be used in the manufacture of finished excisable goods is, in my opinion, an incorrect interpretation of the said clause. The said Rule 25 is a penal provision and enumerated various situations and clause (b) of the Sub-rule (1) is directed against non-accountal of excisable goods produced or manufactured or stored refers, inter alia, also to a manufacturer, who does not account for any excisable goods produced or manufactured or stored by him. The word or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeals filed by the appellants. Consequently, the orders of the lower authorities are upheld and the appeals filed by the appellants are hereby dismissed. 2.31 That the Adjudicating Authority has wrongly dropped the penal proceedings against the Co-Noticees fully knowing that from the confessional statements relied upon in the impugned Show Cause Notice, it was crystal clear that the said Co-Noticees were in league with M/s MPE in transporting the clandestinely removed finished goods by M/s MPE on fake bills of fake firms, purchasing of clandestinely cleared finished goods of M/s MPE as well as supplying of unaccounted raw materials to M/s MPE and their roles have already been given in the impugned Show Cause Notice dated 03.01.2017. Therefore, dropping of penal proceedings against the Co-Noticees is illegal and they are liable to penal action as rightly proposed in the impugned Show Cause Notice. 5. Heard the ld. A. R. for Revenue, who presented the above stated grounds of appeal. 6. Heard the Counsel for the respondent, who has summarized the grounds raised by Revenue as follows:- (i) That the Adjudicating Authority instead of relying on the statements recorded duri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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