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TMI Blog2018 (11) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... riminating documents as under:- (a) a pen drive used by Shri Vivek Agarwalla; (b) two CPU/HD of the PCs maintained in the factory-cum-office; (c) Hard Disk of the laptop used by Shri Vivek; (d) one slip pad; (e) one writing pad; (f) certain loose Slips, which were made as "made-up file"; and (g) nine books of Weighment Slips. 2. Statements of suppliers and also buyers were recorded besides conducting verification and investigation at their ends. On the basis of such investigation conducted, it appeared to the department that appellants have indulged in unaccounted purchase of raw materials as well as unaccounted production and clearance of finished goods. Show-cause notice No.46/2009, dated 20.08.2009 was issued proposing to demand an amount of Rs. 1,55,90,044/- towards TMT bars/rods being duty for the period Aug. '05 to 18.03.2008 along with interest and for imposing penalties. After due process of law, the original authority vide order impugned herein confirmed the duty demand of Rs. 1,55,90,044/- along with interest and imposed equal penalty under section 11AC of the Central Excise Act, 1944. An amount of Rs. 25,00,000/- already paid by the appellants was ordered to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh has been seized; (v) He pointed out that as per the investigation and figures raised in the show-cause notice, the case of department is that the appellants have procured 4436.798 MTs. of Ingots/billets. They alleged that the department alleges that appellants have clandestinely manufactured and removed 5498.371 MTs. of TMT bars and scrap. Thus, the demand of excise duty has been quantified as Rs. 1,55,90,044. The said quantification of duty is erroneous for the reason that if the department's case is to be accepted the appellants would be having negative balance of raw materials during the time of search. Department has not justified this to establish that how it is possible for the appellants to produce 5498.371 MTs. of finished goods from 4436.798 MTs. of raw materials. The inference drawn on the impracticable input-output ratio is illogical and legally unsustainable; (vi) The theory of the Revenue is that the items marked "K" [Kacha] were unaccounted sales and "P" [Pucca] represented transactions with bills. But the inferences of the original authority disproves the very basis/foundation on which the case is built up. With regard to the unaccounted purchases no evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " every month. If so, it has to be inferred that the officers were aware of the averments made in the show-cause notice and hence, the extended period of limitation is not invocable. It is pertinent to submit that there is "no averment of collusion" to justify extended period of limitation. (x) The statement recorded on 20.11.2008 of Shri P. Dhamodaraswamy, Director of M/s. Talent Engineering Pvt. Ltd., who is one of the suppliers of raw materials, says that that they were manufacturing only MS ingots in their Unit, namely, M/s. M/s. Talent Engineering (Che.) Pvt. Ltd., and that it was not in the name of M/s. Amma Alloys (India) Pvt. Ltd. It is also stated that payments were received from the appellants only by way of cheques, DD and RTGS. Further, the goods were supplied to appellants only against invoices. Though the adjudicating authority observed that the statement of Shri P. Dhamodaraswamy is complete and valid, proceeded to confirm the demand based on such statements, which is self-contradictory; (xi) The statements given by Shri Vivek Agarwalla were only computer typed by the officers investigating the offence so as to suit their requirements and thereafter the signature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one pen drive throws much light to the clandestine activities of the appellant-Company. On a comparison of the data in the printouts taken out from the pen drive with the duly accounted invoices, it was noticed that the transaction with indication "K" in the printouts did not have corresponding purchases/sales invoices. The statement of Shri Vivek Agarwalla, who is the Chief Executive Officer of the appellant-Company shows that he has looking after the entire activities of the factory like, purchase, production, clearance, labour relations etc. He stated that wherever alphabet "K" was indicated against the name of the supplier, the same showed that the transaction is "Kacha". Kacha, which means without bills against the name of the party noted therein. For example, when "K" was indicated against M/s. Hi-tech it means that the billets (raw materials) were purchased by appellants without bills from the said party. He also stated that in the stock summary for the months Jan.'07 to Jan.'08, the marking as "P" was indicated. The alphabet "P" represented "Pucca" transactions, which means transactions with bills. Shri Vivek Agarwalla stated that the transactions were entered by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned order. He submitted that the appellants have made the chart/worksheet showing the negative balance of stock by adopting Opening Stock of raw materials from Form-IV register. Whereas, the purchases and production figures are taken by them from the data as per the pen drive. The learned Authorised Representative argued that the documentary evidences retrieved from the pen drive, spiral pad, my writing pad, loose sheets of paper etc., brought out the clandestine clearances made by the appellants. Together with these documents, the statement of CEO of the company Shri Vivek Agarwalla would establish that appellants were indulging in unaccounted purchase and sales. The figures shown indicating Kacha receits of raw materials retrieved from pen drive of the appellants tallied with the unaccounted transactions of M/s. Hi-tech Mineral Industries P. Ltd. For these reasons, it is very much established that the appellants were not maintaining statutory records in a proper manner. Therefore, the figures furnished by appellants in Form-IV of the register cannot be considered as the actual receipts of raw materials during the relevant period. In such circumstances, the worksheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was fully aware of such clandestine activities, if any, does not bring out as to how the department was aware of such activities. Merely pointing out certain figures noted in the pen drive it cannot be said that the department had been put to knowledge of such hidden activities of the appellant. 10. The Modus Operandi adopted by the appellant was to first clear the goods along with invoices and later the invoices were returned by the buyers to the appellant itself. The transaction was thus executed by payment of cash and, therefore, the sale was not recorded in the statutory records. The statements of various persons recorded by the department, supported the documentary evidences unearthed during the investigation, the clandestine clearance has been fully established by the department. The impugned order therefore requires no interference. 11. Heard both sides. 12. The main evidences relied by the department and alleged to be recovered from the premises of the appellant-Company, are under:- (a) a pen drive (b) two CPU/HD of the PCs maintained in the factory-cum-office; (c) Hard Disk of the laptop used by Shri Vivek; (d) one slip pad; (e) one writing pad; (f) certain loose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. Merely because such accounts are hidden from the authorities would not make the records unreliable. It is also pertinent to mention that the pen drive etc., was submitted before Government Examiner of Questioned Documents and a report called for. It is not reported that the data contained therein was tampered in any manner. Therefore, the contention of the appellant that the data retrieved from the pen drive is private records and, therefore, not admissible as per section 36B is unacceptable. 14. Further, it is pertinent to note that the figures/transactions noted in the data retrieved from the pen drive tallied with the unaccounted transactions maintained in the computer of M/s. Hi-tech Industries P. Ltd., who are one of the major suppliers of raw materials to the appellant. The transactions in the pen drive indicated two types of transactions. One with the mark "K" [Kacha] and the other with the mark "P" [Pucca]. According to the CEO, the kacha transactions were unaccounted, whereas, the pucca transactions were supported by bills and payment by cheques/RTGS. On investigation with M/s. HI-tech, it was brought out that they also maintained the unaccounted supply to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts such as, my writing pad, notebook and spiral pad had been returned by him on a day-to-day basis and subsequently entered into the laptop, computer and saved in the pen drive for further transmission to their head office. 17. Another evidence, which is relied by the department is the weighment slip books, which contains details of inward movement of ingots/raw materials and outward movement for TMT bars end melting etc., and finished products. Shri Mantu is the person in-charge of weighment. It can be seen that apart from statements, the documents recovered from the appellant's-factory supports the case of clandestine clearance alleged in the show-cause notice. The argument of the learned counsel that the whole case is based on statements only and not supported by any corroborative evidence is, therefore, without any factual basis. 18. The quantification of the demand in the show-cause notice has been challenged by the learned counsel contending that the figures given therein if adopted as alleged purchase of raw material and alleged production, the resultant figures therein when considered against the opening stock of raw materials would result in negative balance of stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tampering of evidence especially, when GEQD has not reported any such tampering. 19. The learned counsel has argued on the ground of limitation also. Interestingly, the said argument has been an argument which lacks clarity and cloaked with ambiguity. He adverted to page 96 of the appeal book, which is one of the page of printouts taken from the pen drive. Under the heading "Commission" certains amounts are noted against "Name/CE". It is the argument of the learned counsel that these amounts would denote that the department is fully aware of the activities of the appellant and, therefore, there is no suppression of facts. That if the pen drive is accepted as an evidence for clandestine/unaccounted purchase/sales, then, these figures denoting payment of commission is also to be accepted by the department. The figures denoted in the said page are as under:- Sl. No. Date Particulars Amount (in Rs.) 01 02.05.2006 Mani 20,000 02 08.05.2006 Central Excise - T 10,000 03 08.05.2006 Central Excise - C 12,500 04 11.05.2006 Central Excise - A 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, the documents recovered corroborate the statements given by the CEO, Shri Vivek Agarwalla. The case in M/s. Nabha Steels also does not assist the appellants for the reason that the entire case was based on Kacha slips found in the premises. Here the Kacha transactions were accounted in the pen drive/computer used by Shri Vivek Agarwalla and it corresponded with the unaccounted transactions of their supplies of raw material, M/s. Hi-tech Industries and, therefore, distinguishable. 22. The learned Authorised Representative has relied upon the following decisions:- (i) Commissioner of Central Excise, Mumbai Vs. M/s. Kalvert Foods India Ltd., reported in 2011 (270) E.L.T. 643 (S.C.). The relevant portion reads as under:- "18. During the course of arguments learned counsel appearing for the respondent submitted before us that although the aforesaid statements of Managing Director of the Company and other persons were recorded during the course of judicial proceedings but the same were retracted statements, and therefore, they cannot be relied upon. However, the statements were recorded by the Central Excise Officers and they were not police officers. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acie shows that illegal activities were being carried, the burden would shift to the manufacturer. It was impossible for the department to prove how many cylinders were being carried in the trucks. However, if the department proves that the trucks crossed the barriers carrying some cylinders for which no record was maintained in the factory nor any excise duty was paid then the presumption can be drawn that the trucks were carrying cylinders as per the capacity of the trucks. The approach of the Tribunal that it was for the department to prove what was the quantity of goods carried in each truck which crossed the barrier and of which there is no entry in the records of the Company is totally illegal. Once the illegal activity was proved, the burden shifted upon the assessee." (iii) In M/s. Gopal Industries Ltd., Vs Commissioner of Central Excise, Indore reported in 2007 (214) E.L.T.19 (Tri.-LB), the Tribunal observed as under:- "18.1 The "Daily report tin factory" note-book contained details of production and issue of tin containers by the appellant, which did not reflect in the statutory record. The details of production and clearance of tin containers were also shown in the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us places. The daily report showed particulars of the opening stock, production and the closing stock of the said excisable goods. Admittedly, the production of the tin containers, which was recorded in these daily record books and which were removed, did not appear in the statutory record i.e. RG. 1 register of the appellant. This not a case where mere private record without anything more is relied upon. The private record was recovered from the factory of the appellant, and it is established beyond doubt and not even disputed that it was so recovered and that it belonged to the appellant. The nature of particulars contained in this private record clearly go to show their intrinsic authenticity about the clandestine production and removal of the excisable goods by the appellants who had obtained the excise registration for the manufacture of such goods in the firm name. There cannot be more authentic evidence than recovery of the said private record from the appellant's factory which admittedly was prepared and bears the signatures of the supervisors of the factory, from the statements of the partner Shri Yogesh Garg, the Electronics Engineer, Shri Awadesh Kumar Saxena who has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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