9911796707
TMI Blog2018 (9) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... nal rate under notification No. 5/98 CE, dt. 02.06.98. Based on intelligence that the unit was indulging in clandestine manufacture and removal of cement, without payment of excise duty, the departmental officers searched the factory premises in the presence of independent witnesses on 03.11.98, verified the physical stock, found 549 nos. of HDPE bags short and also found 20,450 HDPE bags stored in separate room, as they were not accounted for in the records of the factory, the officers have seized them under a Mahazar and deposited with the appellants under a proper undertaking. The officers from Hqrs. Anti- Evasion simultaneously searched the registered office of the appellants and residence of the Managing Director and recovered excise/private records for scrutiny. The officers also found shortage of cement in silos when compared with the factory records. Two files containing details of cement manufactured & removed were recovered from the registered office and residence. The papers containing details of bags purchased (with bills and without bills), were also recovered by the excise officers from the personal briefcase of the M.D. The scrutiny of the records for the period 97-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, and imposed personal penalty of Rs. 5,00,000/- on the MD Sri M.M. Reddy under Rule 209 A of CE Rules. Being aggrieved with the said order the appellants have filed these appeals. The appellants and the MD vide the statement of facts and grounds of appeal dt. 28.05.2001 have contended that the proceedings are based on presumptions and they requested to drop the proceedings. They have stated that shortage of gypsum had occurred because of evaporation and handling losses and transporting the goods without packing. The gypsum also contained moisture. Regarding nonaccountal of HDPE / PP bags, it was explained that the bags were purchased from middlemen and the difference noticed by the department was on account of repeating the figures. The difference was also on account of non-accountal of rejected bags. 3. Aggrieved by such an order, the appeal was preferred to the First Appellate Authority. The First Appellate Authority upheld the orders of the Adjudicating Authority. Challenge to such an order before the Tribunal, culminated in the matter being remanded, the First Appellate Authority by the impugned order in these appeals following due process of law, and upheld the Order-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps recovered by the officers are indicating of clandestine removal of cement and said slips are duly signed by the authorised persons of the assessee. It is her submission that the authorised persons of the company accepted the contents of the slips to be true and correct in the statements recorded by the officers. It is here submission that appellant has not been able to explain the expenses of unaccounted HDPE Bags, shortage of cement and the shortage of Gypsum and unaccounted procurement of raw materials like limestone, clinkers etc. It is her submission that the Revenue had recorded supplier of HDPE Bags who had stated that they were selling HDPE Bags to appellants sometimes by raising bills and sometimes without bills. It is her submission that all these evidences were appreciated by the First Appellate Authority and a correct view has been taken. She relied upon the decision of the Apex Court in the case of Commissioner of Central Excise, Mumbai Vs. Kalvert Foods India Pvt. Ltd., [2011-TIOL-76-SC- CX] for the proposition that statements recorded and made by the Managing Director of the Company and other persons should be relied upon and clandestine removal of the excise goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion discussed above, absolutely brings forth no material incriminating the accused in the alleged offence. As rightly argued, unless the accused is proved to have clandestinely removed the material in the bags which were found in his factory premises, no offence under Section 9(1)(b) and 9(1)(bb) can be alleged against him. Attempt to commit the offence under Section 9(1)(b) is also an offence under Section 9(1)(d) which is evasion of payment duty. It being punishable with the same sentence, conviction can be recorded for the same, but unless it is proved that cement was clandestinely removed, clause (b) of Section 9(1)(d) does not get attracted. The liability of the accused to pay duty arises only when goods are manufactured and removed from the specified place. Otherwise it requires proof of mensrea. The case of prosecution is not that the accused has in fact removed the goods. They have only assumed based on the unaccounted for bags found in the premises of A.1 company, that there would have been clandestine removal of goods and evasion of duty. The statement of the accused marked as Ex. P13 referred to one Rama Krishna as his accountant as a person who can explain the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t paying duty. It is stated that moisture content of 15 to 30% is possible apart from transport losses. The booklet filed by the accused also shows that 15 to 40 of free moisture is contained in the phospogypsum formed in dehydrate process. The evidence of the prosecution witnesses itself probabalises the variation due to the said reasons. The case of the prosecution, as contended, seems to be based on assumptions. As per the fact as stated in the complaint and as per the evidence of P.W.2, A.1 company received 1290.86 M.T. of gypsum from the suppliers, whereas only 1147.819 M.T. of gypsum was shown in the raw material account (Form IV) and the company also did not account for 39.42 M.T. of gypsum, resulting in non accountal of gypsum to a tune of 182.461 M.Ts. As per the averments of the compliant the consumption of gypsum for manufacture of 1 MT. Of cement is 0.0376 M.T. As per the contention of the accused and the booklet filed by him, there is a possibility of 15 to 30% of reduction in the quantity of gypsum after it is dried up. The cement that could have been manufactured with 182.461 M.Ts. of gypsum is 4852.69 M.Ts. But if the factor of reduction in the quantity of gypsum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Single Judge of the Bombay High Court had the occasion to consider this question in a case under the Foreign Exchange Regulation Act in Criminal Application No. 1070 of 1999 (Hemendra M. Kothari v. Shri W.S. Vaigankar, Assistant Director, Enforcement Directorate (FERA), Govt., of India and State of Maharashtra), decided on 25-4-2007 and on a review of large number of decisions of this Court and other courts it came to the following conclusion :- It may be noted that in the present case the applicant was "21. exonerated by the Dy. Director of Enforcement, who was adjudicating authority, in the adjudication proceedings. Admittedly that order was not challenged in appeal by the respondent and thus that order has become final. I have already noted the facts and findings of the adjudicating authority in detail. The adjudicating authority had clearly come to the conclusion that there was no material to hold the present applicant guilty for contravention of the provisions of FERA and he was completely exonerated. When in the departmental proceedings before the adjudicating authority, the department could not establish the charges, it is difficult to imagine how the department cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs as well as adjudication proceedings are based upon the same set of evidences and if entails an exoneration by one court, it can be considered to exonerate from other proceedings. It has to be recorded here that in the cases in hand before me, the evidences relied upon by the Revenue in the adjudication proceedings were the same as were relied upon before the Learned Special Judge for Economic Offences. 9. Hon'ble High Court of Madras in the case of Commissioner of Customs (Import), Chennai Vs. A. Mohammed (supra) had an occasion to consider the question as to whether exoneration of accused under Section 239 of Cr. P.C was sufficiently adequate to exonerate the accused in the adjudication proceedings. Their Lordships held as under: "Against the order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai, dated 9-11-2006 made in Final Order No. 1059/2006 [2007 (209) E.L.T. 271 (Tribunal)], the Commissioner of Customs (Import) has filed the present Appeal under Section 130(1) of the Customs Act, 1962, by formulating the following substantial questions of law : (i) Whether the observation of Customs, Excise and Service tax Appellate Tribunal th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant that the SIIB had booked the case on Specific Intelligence that sandalwood was being smuggled out in the guise of export cargo by the first respondent. The officers of the SIIB detained the container and unearthed the goods, after a detailed adjudication, the original authority confiscated the entire goods and imposed a fine of Rs. 5,00,000/- against the first respondent on the ground that he was actively involved in smuggling the goods, which factum has been totally lost sight of by the Tribunal while allowing the appeal filed by the first respondent. 5. We heard the arguments of the learned counsel and perused the material on record. 6. It is on record that as against the action taken by the appellant for prosecuting the first respondent, the first respondent filed an application under Sections 397 and 401 of the Cr.P.C. before this Court. Upon a fullfledged enquiry, this Court discharged the first respondent under Section 239 of the Cr.P.C. This Court has held that the first respondent was dealing with red sander wood during the relevant period of time. The goods detained by the Department were only sandal wood, sandal wood chips peacock feathers and mica powder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the alleged smuggling activities, we are of the view that the Tribunal is correct in allowing the appeal filed by the first respondent and there is no question of law, much less substantial question of law arising to admit this appeal. Accordingly, this Civil Miscellaneous Appeal is dismissed. There will be no order as to costs. 10. The law on the point of exoneration in criminal proceedings, which requires standard of proof beyond all reasonable doubts, has to be considered as yardstick to come to the conclusion proceedings before the Tribunal. In the case in hand, since, prosecution launched against the assessee and the Shri M.M. Reddy was quashed and they were acquitted, I find that the reliance placed by the Revenue in the same set of evidence cannot hold ground to confirm the demands raised along with interest and imposed penalties on appellants. 11. On this point itself, the impugned order is set aside. The entire Order-in-Appeal is set aside. In view of the same, I am not recording any findings on various submissions made by both sides. 12. In view of the foregoing, the impugned order is set aside and the appeals are allowed. (Order pronounced on 11/09/2018 in open co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
