9911796707
TMI Blog2019 (1) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... stinely removed M.S. Ingots was recovered in the form of private record maintained in the premises of M/s Pankaj Ispat Limited. - During the search in the premises of the appellant No.1, no record has been recovered to suggest any clandestine receipt of the raw materials, namely, MS Ingots from which they purportedly manufactured and cleared quantity of 8316.357 MTs of their finished goods i.e. angle, channel and bars. There is no other evidence with respect of purported clandestine manufacture or clearance of 8316.357 MT of finished goods. The third party evidence can be considered as a mere starting point of investigation and cannot be considered as a reliable evidence without corroboration. The whole case against the appellant has been made merely on the basis of certain records found in the premises of M/s Pankaj Ispat Ltd. and a generalised confessional statement of Sh. Pankaj Aggarwal that the records found from his premises are correct. These records contained entries not only of the appellant but also many other parties. Record of removals and specific entries in the private records of Pankaj Ispat Ltd. pertaining to the appellant were not questioned. There is no corroborat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52 MT of MS channels/Angles - Held that:- The appellant was under a stautory obligation to properly account for all the cenvatable inputs and finished goods in the statutory records. The failure would meet with all the consequences of demand and penalties. A mere mathematical possibility that the shortage of CI moulds could have resulted in manufacture of excess finished stock of angles, channels etc. could not be accepted without respective entries in record. The claim is all the more not acceptable because the appellant has been found to be indulging in clandestine manufacture and clearance - Demand, interest, penalty and redemption fine are upheld. The penalty of 39,96,040/- against the appellant is upheld out of total penalty of 3,79,32,215/- and rest is set aside. The redemption fine of 15,97,000/- imposed in the impugned order is upheld. Appeal allowed in part. X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 2011-12 respectively, cleared by Noticee No.5 during the said period. 3. In the course of search operation of Noticee No.1, on physical verification the stock of MS Angles/Channels (finished goods) was found in excess by 191.752 MT and the stock of MS Ingots (raw material) and C.I. Ingot Mould were found short by 15.85 MT and 322.288 MT respectively as compared to the stock declared by Noticee No 1. The excess stock of 191.752 M.T. of MS Channels/Angles valued at ₹ 63,88,218/-was seized under Rule 24 of Central Excise Rules, 2002. 4. Shri Bajarang Jain (Noticee no 2) in his statement dated 13.02.013 admitted the aforesaid difference in its stock of finished goods and raw material. The amount of central excise duty involved in the 'MS Ingot' and (C.I. Ingot Mould' found short worked out to ₹ 14,24,796/- (CENVAT ₹ 13,83,296/- + Ed Cess ₹ 27,666/- + S&H Ed Cess ₹ 13,834/-) 5. On correlation, of total transactions of sale of goods to Noticee No.1, as recorded in the private records recovered from Noticee No.5 transactions of only893.245 MT of M.S. Ingot during the period 2010-11(From June'10) and transactions of 231.690 MT of M.S. Ing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the said material receipts. 12. In his Statement dated 13.02.2013, 1Shri Lalit Verma, Lab Chemist of Noticee No.1, on being shown the "IN" slips recovered from the lab of Noticee No1, confirmed that all these slips were related to the goods received in the factory of Noticee No.1. 13. In his statement dated 13.02.2013j Shri Bajrang Jain (Noticee No.2) Director of Noticee No 1, showed his agreement with both the above statements and accepted that some of the material received by it (as shown in "IN" slips) was not entered in its statutory records. He fully agreed with the, method adopted for physical verification of stock conducted in its factory and expressed his readiness to pay the Central excise duty on finished goods against the stock of raw material found short as well as the unaccounted raw material. He also accepted that Noticee No. 1 used to issue receipts of the material but denied that the receipts recovered from Noticee No.5 were issued by it. Later on Noticee No.1 paid Central Excise duty of ₹ 30,00,000/- vide challans dated 15.02.2013 and ₹ 2,96,039/- through Cenvat Credit Account. 14. Shri Radhe Shyam Yadav, dispatch Clerk of Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signments (totaling to 133.050 MT) of M.S. Ingots to Noticee No.1 worked out to ₹ 4,76,904/-(including Ed, Cess and S&H Ed. Cess). 19 On verification at the end of Noticee No. 7, M/s Raipur Steel Casting India Ltd., it was noticed that two consignments (totaling to 39.860 MT) of M.S Ingots were removed by it to Noticee No 1 without payment of duty. Shri Nitish Kumar Agrawal Director of Noticee No.7 in his statement dated 20.02.2013 accepted the same and agreed to deposit the duty liability and paid the central excise duty involved therein amounting to ₹ 1,11,854/-(including Ed. Cess and S&H Ed. Cess) along with interest amounting to ₹ 900/- vide GAR-7 challan No.30005 dated 22.02.2013. 20. On verification at the end of M/s N.S. Ispat (India) Pvt. Limited (Noticee no 8), it was noticed consignments collectively weighing to 100.490 MT of M.S. Ingots were cleared without payment of duty and without issuance of Central Excise invoices. Shri Mukesh Pandey, Director of Noticee No.8, in his statement dated 20.02.2013 accepted the same and deposited the Central Excise duty involved therein amounting to ₹ 3,58,955/- (including Ed. Cess and S&H Ed. Cess) along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Central Excise duty. The Central Excise duty involved in the said clandestine removal was worked out to ₹ 3,39,36,175/- (including Ed. Cess and S&H Ed. Cess). 26. Similarly, as per the loose papers ("In" slips) recovered from the premises of, Noticee No.1 and as per the result of the enquiry conducted at the end of Noticee No. 6 to 12 as accepted by Noticee No.2 in his statement dated 13.02.2013, 686.560 MT of M.S Ingots and 15.950 MT of Sponge Iron procured by Noticee No. 1 from Noticee No. 6 to 12 and 197.890 MT of MS ingots received from M/s Rashmi Sponge & Power Industries, were not accounted for and it appeared that by using the said quantity of raw material, it manufactured 630.106 MT of Rolled products and removed the same clandestinely without issuing the Central Excise invoices and without payment of Central Excise duty. The Central Excise duty involved in the said clandestine removal was worked out to ₹ 25,71,244/- (including Ed. Cess and S&H Ed. Cess). 27. On the basis of above investigations, a combined show cause notice was issued to all the twelve Noticees as listed in the above table which culminated in confirmation of demands, imposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk receipts seized from the premises of the appellants on 13.02.2013 (samples of two are reproduced in para 5.4.3 of the show cause notice). Shri Bajrang Jain, in his statement dated 13.2.2013 denied that these receipts belong to the appellants. Shri Radhey Shyam Yadav in his statement dated 08.07.2013 accepted the signatures on some of them as his. However, when called for cross-examination he did not appear. Shri Sahu, who had initially confirmed the signature of Shri Radhey Shaym on these receipts denied it at the time of his cross-examination on 19.03.2015. He further claimed that evidence was produced before the adjudicating authority that M/S Pankaj Ispat Ltd. for in the habit of forging documents but no finding has been given in the impugned order. Shri Jain's admission to pay duty was not in respect of finished goods manufactured out of unaccounted raw materials procured from M/s Pankaj Ispat Ltd. Shri Jain categorically denied having received any unaccounted raw materials from Pankaj Ispat Ltd. His admission to pay duty was in connection with the 'IN slips' and discrepancies noticed during stock taking. But this admission was only to avoid the harassment meted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.4 As regards Shortage of 15.85 MT of M S Ingots, found at the time of stock-taking, he submitted that the same was because of weighment error and was barely 0.08 % of the actual consumption of MS Ingots in one year which cannot he attributed to clandestine clearances. He relied upon the case law in Beco Industries Ltd vs. CCE, Jamshedpur 2000 (121) ELT 650 (Tribunal) and Pacific Granites Ltd vs. CCE, Jaipur 2001(128) ELT 421 (Tri-Del) in support of that the shortages noticed during stock taking are to be spread over the period to which the production relates. Further, duty could not be demanded on 15.85MT of MS ingots and 330.228 MT of CI Ingot Mould which can be considered as raw materials on which no Cenvat credit had been taken. He further stated that difference in MS ingots was also within the permissible tolerance limits of 1.78% in terms of the Standards of Weight and Measures (packaged Commodities) Rules, 1977. Submissions with respect to confiscation of 191.752 MT of MS channels/Angles valued at ₹ 63,88,218/- and imposition of redemption fine of ₹ 15,97,000/- 28.5 The confiscation of 191.752 MT has been contested by the learned advocate on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scation and that similar views have been held in the case of Steel Tubes of India Ltd vs CCE Indore [2007(217)ELT506(Tri-LB)], Jayantilal Thakkar vs UOI [2006(195)ELT9(Bom)1, Rakesh Kumar Garg vs Commissioner of Central Excise [2016(331)ELT321(Del)] etc. This condition is not satisfied in respect of the 3 Directors. APPEAL NO. 50497/2016-EX[DB] FILED BY ROOPLAXMI INDUSTRIES INDIA PVT. LTD. 30. The Ld. Advocate appearing on behalf of the appellant has argued that demand has been confirmed merely on the basis of documents recovered from third party and confessional statement of the third party's Director. The document i.e. IN slips on the basis of which demand of clandestine removal has been confirmed have been recovered from the premises of a third party, viz. HIPL (Hanukripa Ispat Pvt. Ltd.) and third party documents cannot be relied in evidence. That the charge of clandestine removal is not supported by any tangible evidence. There is no confessional statement either of Director or any employee of the appellant with respect to clandestine removal. Nor there is any statement from the transporters with respect to clandestine removals. Reliance has been placed upon the case law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during 2010-11 and 2011-12 respectively, M.S. Ingots of a quantity 893.245 MTs and 231.690 MTs during the year 2010-11 and 2012-12, were found recorded in the appellant's record, thus, the authenticity of private record recovered from M/s Pankaj Industries Ltd was established. There is no other evidence with respect of purported clandestine manufacture or clearance of 8316.357 MT of finished goods. We observe that third party evidence can be considered as a mere starting point of investigation and cannot be considered as a reliable evidence without corroboration. We find that whole case against the appellant has been made merely on the basis of certain records found in the premises of M/s Pankaj Ispat Ltd. and a generalised confessional statement of Sh. Pankaj Aggarwal that the records found from his premises are correct. These records contained entries not only of the appellant but also many other parties. Record of removals and specific entries in the private records of Pankaj Ispat Ltd. pertaining to the appellant were not questioned. There is no corroboration to the same with any corresponding record of purchase in the appellants factory, manufacture, sale of finished goods, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him; (f) use of electricity far in excess of what is necessary for manufacture of goods otherwise manufactured and validly cleared on payment of duty; (g) statements of buyers with some details of illicit manufacture and clearance; (h) proof of actual transportation of goods, cleared without payment of duty; (i) links between the documents recovered during the search and activities being carried on in the factory of production; etc." While going through these tests, we find that the revenue has failed to establish the charge of clandestine removal on these parameters. 30.3 A similar issue of assumed manufacture on the basis of records of supply of raw materials found in the third party premises was examined in the case of 1996 (85) E.L.T. 260 (Tribunal-MADRAS) RHINO RUBBERS PVT. LTD. Versus COLLECTOR OF CENTRAL EX., BANGALORE and it was held that it is not safe to rely only on the third party's records evidence when no direct links of the transactions established. Other parameters like electricity consumption etc. should have been considered before demanding duty on the alleged clandestine manufacture and removal of goods. The bench has observed as under: "We have considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lans and ledger shown to me today, I have not accounted 7750 Kgs. of Carbon Black purchased during 1987-88 and 2275 Kg. Purchased during 1988-89 from M/s. Chemtech Industries, Bangalore. I agree that I have seen today these invoices, delivery challans and ledger. The K.S.T. No. indicated in the invoices belongs to my factory and the payment have been indicated in cash. I know the number to I.T. Rules, payment should be made either by cheque or D.D. for purchases of goods valued more than ₹ 2,500. The cash payment against purchase of C/B was made by Shri Kashinath another Director of our company. I will produce Shri Kashinath before you on 22-8-1989 at 4 p.m. As far as I know, I have not purchased any carbon black as per the above mentioned unaccounted invoices." The above does not go to show that there was any acceptance by him that he had purchased the quantity of carbon black as has been stated in the order of the learned lower authority. He is referring only to the entries made in his name in the ledger of M/s. Chemtech Industries and has clearly stated that he has not purchased any carbon black as per the abovementioned unaccounted invoices and has pointed out to Shri K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials. However, we are not inclined to accept this argument of the Ld. advocate because once the non accountal of these raw materials was accepted by the appellant, the onus lied upon him to prove that the same were not used in the manufacture of finished goods. Once this onus is not discharged upon, the presumption would always be that the same were used in the clandestine manufacture of finished goods. He has further contested the contents of certain IN slips on the ground that the signatures of Sh. Radhey Shyamdo not tally on certain In slips. We are also not inclined to accept this argument as all the IN slips were recovered from their premises alongwith other In slips and merely that the signatures did not tally do not lessen the veracity of these slips. The advocate has further contested the demand arising out of certain supplies received as per these In slips from M/s Rashmi Sponge & Power Industries, M/s N.S. Ispat ( India) Pvt. Ltd., M/S Shri Ram Rolling Mills & M/s Rooplaxmi Industries Pvt. Ltd. Demand against whole of a quantity of 197.890 MT received from M/s Rashmi Sponge & Power Industries and a quantity of 25.520 MT of raw material received from M/s N.S. Ispat ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of demand and penalties. A mere mathematical possibility that the shortage of CI moulds could have resulted in manufacture of excess finished stock of angles, channels etc. could not be accepted without respective entries in record. The claim is all the more not acceptable because the appellant has been found to be indulging in clandestine manufacture and clearance as discussed in para supra. Accordingly, we uphold the demand against shortages as well confiscation of the excess stock. Demand, interest, penalty and redemption fine are upheld. In view of above, we uphold the penalty of ₹ 39,96,040/- against the appellant out of total penalty of ₹ 3,79,32,215/- and rest is set aside. The redemption fine of ₹ 15,97,000/- imposed in the impugned order is upheld. APPEAL NO. E/50476/2016-Ex[DB] FILED BY SHANKAR LAL JAIN DIRCETOR, ALLEAL NO. E/50489/2016-EX[DB] FILED BY KAILASH CHANDRA AGRAWAL DIRCETOR, E/50491/2016-EX[DB] FILED BY BAJRANG LAL JAIN DIRCETOR 31 Shri Bajrang Jain, Director responsible for the purchase and procurement of Raw materials, Shri Shankar Jain, Director responsible for the work related to production of finished goods, Shri Kailash Agrawal, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
