9911796707
TMI Blog2024 (5) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants. Admittedly, in the case in hand this Tribunal in the case of M/S ARYA FIBRES PVT. LTD., M/S NOVA PETROCHEMICALS LTD. AND OTHERS VERSUS CCE AHMEDABAD-II [ 2013 (11) TMI 626 - CESTAT AHMEDABAD ] has laid down the certain parameters to establish clandestine removal of goods, the show cause notice is not in conformity with the criteria in the case of Arya Fibres Pvt.Ltd. The allegation of clandestine removal of goods is not sustainable. Moreover, the statements which has been relied by the adjudicating authority in the impugned order, are not tested as per procedure prescribed under section 9D of the Central Excise Act, 1944 to find out the genuineness of the statements recorded during the course of investigation - the allegatoin of clandestine removal of goods by appellant No.1 is not sustainable against the appellants, the same has been alleged on assumption and presumption without corroborative evidences, therefore, no demand of duty is sustainable against the appellants alleging clandestine removal of goods, consequently, no penalty can be imposed on the appellants. It is further noted that the Ld.Counsel for the appellant has taken the ground that they have paid the entir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at that address. It was also revealed in the investigation that the premises at the aforesaid address is only a vacant land and no business activities related to trading of goods of iron and steel by M/s. Bharat Suppliers or any other company have ever taken place there. Certain documents were seized which included a letter addressed to appellant No.2 from M/s.Lamba Trading, Lucknow envisaging an abstract of three demand drafts drawn in favour of M/s. Bharat suppliers and counterfoils of deposit slips of Vijaya Bank, Rabindra Sarani Branch, Kolkata carrying evidences of deposit of the aforesaid demand drafts at the account No.4598 of M/s. Bharat Suppliers maintained with the said bank. The investigations conducted at the aforesaid branch of Vijaya Bank revealed that all the three demand drafts were credited at the aforesaid account of appellant No.4. It is therefore alleged that the investigation provides ample evidence to prove beyond doubt that appellant No.2 was the actual person who carried out all business transactions on behalf of M/s. Bharat Suppliers and determined all other aspects of business like delivery of goods, negotiating terms and conditions with the buyers, coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, namely M/s. Bharat Suppliers by way of suppression of material facts, mis-declaration / mis-statement and exercise of fraudulent practices. The confession made by Shri Radhe Shyam Agarwala, partner of M/s. Bengal Iron Corporation, vide his statement dated 20.01.2007 recorded under the summons proceedings to the effect that the finished excisable goods manufactured in the factory of Noticee No.1 were dispatched under cover of challans of M/s. Bharat Suppliers and the fact that no central excise invoice was issued in respect of such despatches coupled with the revelations tendered by the proprietor of erstwhile existed M/S. Lamba trading Co., Lucknow to the effect that it was Shri Prakash Agarwala, business activities of M/s. Bharat Suppliers leads to the inference that Shri Radhe Shyam Agarwala and his son Shri Prakash Agarwala, both partners of noticee No.1 were quite abreast with the day to day functioning of the company and their fraudulent practices and had actually connived at the acts of omissions and commissions leading to evasion of Central Excise duty. Shri Radhe Shyam Agarwala and his son Shri Prakash Agarwala, both partners of noticee no.1 appear to have managed, direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty thereon. No evidence to the contrary has been disclosed. It is his submission that it has been found on investigation by DGCEI authorities that there existed a firm (not "company" as wrongly stated in the show cause notice) in the name and style of M/s. Bharat Suppliers, which was owned, managed and controlled under the proprietorship of Shri Biplab Mondal, who admittedly managed and controlled all the purchases and sales of the traded goods of the said firm and that his place of business was at Kona, Benaras Road, P.S. Liluah, Howrah-711323, as evidenced from the Certificate of Enrolment issued by the Provisional Tax Officer, Howrah, bills, challans and other transaction documents. 5. It is his submission that M/s. Bharat Suppliers were engaged in the business of sanitary pipes, fittings and they were supplying the said items purchased from different places of Belgachia and from different parties. Purchases of the goods were made by M/s. Bharat Suppliers through brokers, including those of the appellant. All the bank accounts were that of M/s. Bharat Suppliers, which were opened and operated exclusively by its sole proprietor Shri Biplab Mondal. The sale proceeds of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed goods had been manufactured and/or removed from the factory. 6. Further, there is no material disclosed to evidence that any raw material in excess of what were declared by the appellant and/or brought into the factory during the material period and utilised in or in relation to the manufacture of dutiable final products, were brought into the factory, as no such excess raw materials were purchased. There is also no evidence disclosed that consumption of electricity in the factory could and did produce quantities of the finished products in excess of the quantities manufactured and cleared by the appellant upon payment of duty. No discrepancy has been found in the stock of raw material or finished goods in the factory. There is also no material on record nor any evidence to establish that there had been any sale of goods by the appellant, cleared from its factory without payment of duty to any party. As a matter of fact, there is not an iota of evidence disclosed which even prima facie evidenced manufacture of unaccounted dutiable finished products by the appellant and/or clearance thereof. There is even no quantification of the goods said to have been manufactured and cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys Pvt. Ltd. Vs. CCE, 2013 (296) ELT 392 (T) (ix) Principal Commissioner Vs. Shah Foils Ltd., 2021 (377) ELT A87 (SC), affirming Principal Commissioner of CGST & Central Excise Vs. Shah Foils Ltd. 2020 (372) ELT 632 (Guj) (x) Principal Commissioner of CGST & Central Excise Vs. Nutan Ispat & Power Ltd. 2024 (1) TMI 672 - CESTAT NEW DELHI 8. He further submits that there is no evidence that any of the subject bank accounts, opened and operated by Sri Biplab Mondal/ Bharat Suppliers were opened at the appellant's instance or any of the appellant firm's partner/ partners were involved in the opening and/or operation of the same. There is also no evidence that the said accounts were opened at the appellant firm's instance or request. From the show cause notice and the said order, it would be seen that the entire case against the appellant has been purported to be built upon, besides incorrectly alleged "confession", on the following facts:- (i) A letter dated 21st March 2006 of Lamba Trading, Lucknow whereunder first and second copy of a Form 'C' relating to a transaction of M/s. Bharat Suppliers with Lamba Trading vide a bill dated 27th June 2003, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading, Lucknow and such transactions were done through brokers. As such and even otherwise, none of these relied upon documents establishes that the subject goods sold by M/s. Bharat Suppliers to Lamba Trading, for which Lamba Trading effected payments and issued Form 'C' in favour of M/s. Bharat Suppliers only were in respect of goods manufactured and cleared by the appellant that too without payment of duty. The contrary finding made in the said order is mere assumption, which is ex-facie evident from the impugned order and the show cause notice. 11. The allegation in the show cause notice and finding in the impugned order that although Sri Biplab Mondal was shown to be the proprietor of Bharat Suppliers, the actual business activities of the said firm were carried out under the control, instruction and supervision of Sri Prakash Agarwala, the appellant no. 3, is also a finding which has no substance or merit whatsoever. In fact, it is self-contradictory as would be evident from the show cause notice itself. The statements of Sri Biplab Mondal, all recorded under Section 14 of the Act and all of which, therefore, have evidentiary value, conclusively establishes that it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of duty through Bharat Suppliers and/or was an undertaking to pay such duty as would be demanded, a mere perusal of the statement dated January 20, 2007 would show that the undertaking of Sri Radheshyam Agarwala was only in respect of goods covered by these three torn invoices and that too in the event it was found that no excise duty was paid thereon. Moreover, nowhere in the said statement of Sri Radheshyam Agarwala did he ever acknowledge or confess that the goods sold by Bharat Suppliers were goods manufactured and cleared by the appellant without payment of duty. This fact also in no manner whatsoever establishes that the goods were manufactured and cleared by the appellant firm without payment of duty. 14. He further submitted that the said purported statement having been obtained under compulsion, coercion and threat and having been retracted on January 22, 2007, within two days of recording of the said statements by the DGCEI authorities, as per settled law, the same has no evidentiary value and no reliance can be placed thereon in the absence of any corroborative evidence, as in the instant case. Reliance in this regard is placed upon, inter alia, the following decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any justifiable or valid reason or basis being disclosed. 17. The show cause notice and/or the said order have purported to draw an inference that the business of Bharat Suppliers was that of selling of goods manufactured and cleared by the appellant without payment of duty, because of the fact that Bharat Suppliers and its proprietor Sri Biplab Mondal had not prepared their balance sheets and/or had not paid income tax or filed income tax returns. This is incomprehensible. Whether or not Sri Biplab Mondal and Bharat Suppliers had complied with their obligations under the Income Tax Act, 1961 or had prepared balance sheets and Profit and Loss accounts can by no stretch of imagination lead to the conclusion that the goods sold by the said firm were goods manufactured and cleared by the appellant without payment of duty. This is an assumption which clearly demonstrates the patent perversity and untenability of the impugned order and finding therein against the appellant. 18. The impugned order has purported to rely upon the statement of Rajeev Lamba, proprietor of M/s Larnba Mohita Trading Co. and Lamba Trading Co. dated 18th June 2009. A perusal of his statement, would show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Pvt. Ltd. vs Union of India 2014 (300) ELT 25 (Guj) 21. He further submitted that without prejudice to the aforesaid and fully relying on the same, further and in any event, it would be seen that the entire amount deposited in the banks in the accounts of Bharat Suppliers during the period May 2005 to October 2007 and May 2005 to July 2006 respectively have been taken as sale price relating to excisable goods allegedly manufactured and cleared by the appellant without payment of duty and accordingly Central Excise duty and Education Cess allegedly payable have been determined and consequently demanded in the show cause notice and confirmed by the impugned order. The amounts deposited in these two bank accounts obviously included payments received by Bharat Suppliers for goods sold by it, as stated in the show cause notice and also by Sri Biplab Mondal in his statements under Section 14 of the Act, from Lamba Trading, Lucknow, to whom the said M/s. Bharat Suppliers sold goods during the period June 2005 to October 2007. There is no evidence to the contrary disclosed. In fact there is even no allegation or finding that payments from Lamba Trading, Lucknow were received in cash. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order by saying that it is a fact on record that the business premises shown by proprietor of appellant No.4, was of appellant No.1 and appellant No.2 & 3 were dealing with the buyers and suppliers on behalf of M/s. Bharat Suppliers and also selling the goods and receiving the payment thereof on behalf of M/s.Bharat Suppliers. Moreover, the documents were also recovered from the possession of premises obtained by appellant No.1 and the appellant No.2 & 3 also admitted in their statements that they were indulged in the activity of clandestine removal of goods and the buyers have also certified that appellant No.2 & 3 were dealing with them on behalf of M/s. Bharat Suppliers. Therefore, the Revenue has been able to establish the case of clandestine removal of goods, accordingly, the impugned order is to be upheld. 27. Heard the parties, considered the submissions. 28. We find that in this case the sole allegation against the appellant No.1, 2 & 3 is that they are selling their manufactured goods without issuance of the central excise invoices in the guise of M/s. Bharat Suppliers, a trading firm. 29. To allege that the appellants are engaged in the activity of clandes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ination of the said statements is required to be done. All these aspects are missing in this case. 32. From the investigation and facts, it is not coming out anywhere that the payment received in the bank account of M/s. Bharat Suppliers was sent to appellant No.1, 2 or 3 by any means and there is no admission to that extent by the appellants. 33. The Ld.Counsel for the appellant relied on the decision of Hon'ble Delhi High Court in the case of Commissioner of Central Excise, Delhi-I vs. Vishnu & Co. Pvt.Ltd. [2016 (332) E.L.T. 793 (Del.)] to say that - "38. In the present case it needs to be first observed that there was no 'confession' as such by any of the noticees as to their involvement in the activities alleged against them in both the SCNs. The Department relied on the statements made by third parties including transporters, agents, and their employees. Where such statements are subsequently retracted or resiled from, it becomes necessary for the Department to produce other evidence which is of an independent nature which corroborates the retracted statements. 39. The CCE has in the Orders-in-Original proceeded to rely on the retracted statements or on statements of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of the SCNs. Since it is relying on such statements, it is the responsibility of the Department to ensure their presence for cross-examination. As already mentioned, whenever such witnesses (i.e. six of them) were produced for cross-examination they resiled from their earlier statements. 43. It is not a matter of mere coincidence that none of the witnesses who were cross-examined stood by their earlier statements. It is one thing to overlook this feature on the premise that all of them were under the pressure and control of the noticees. The other approach is to view this with some caution and ask what might be the case if the remaining witnesses were also produced for cross-examination? Importantly, what would be the prejudice caused to the noticees, in such circumstances, by their non-production for cross-examination? Thus a doubt is created in favour of the noticees when such witnesses do not turn up for cross-examination. It is the latter approach that has weighed with the CESTAT. That, in view of this Court, was a possible approach and does not render its order perverse on that score." 34. Further, we find that in the case of Principal Commissioner of CGST & Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was under the ownership of M/s. SFPL, the officers should have made investigation. Thus in such circumstances, the demand on account of clandestine removal cannot be made. In case of Davinder Sandhu Impex Ltd. - 2016 (337) E.L.T. 99 (Tri. - Del.), the tribunal has held that - 6. In this case during the course of investigation, the statement was recorded and the statement given by Shri Baldev Singh, Managing Director admits that there is a shortage of 10 to 15% for manufacturing the final product and it is also admitted by Shri Baldev Singh that they have cleared certain goods without payment of duty, but the said statement was retracted by Shri Baldev Singh who claims to be that same has been recorded under influence and duress, thereafter, another statement was recorded on 3rd May, 2005 which was also retracted on the same day, where also same statement recorded which is a typed one and it is the claim of the Revenue that same has been typed by Shri Dinesh Kumar (who is an employee of the appellant) in the office of the Department. To that effect, Shri Dinesh Kumar filed an affidavit on 1st August, 2006 that the statement has been typed by the officers of the Department thems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) E.L.T. 529 (T), TGL Poshak Corporation v. CCE, 2002 (140) E.L.T. 187 (T). In view of said judgments we find that the charges of clandestine removal on the basis of pen drive data and sheets are not sustainable." 9. In view of the aforesaid findings of facts arrived at by the Tribunal, after considering the material placed before it, no question of law much less any substantial question of law arises for consideration out of the impugned order and accordingly, the appeals are summarily rejected. No order as to cost." 35. Further in the case of Principal Commissioner of CGST & Central Excise, Raipur vs. M/s. Nutan Ispat & Power Ltd. And Others [2024 (1) TMI 672 - CESTAT NEW DELHI], this Tribunal has observed as under:- 12. The case of the Revenue is that the respondents have indulged in clandestine removal of raw material and finished goods and this allegation is based on the 4 notebooks recovered from the residential 9 premises of Sri Sarma. The issue of clandestine removal of goods have been considered by the Tribunal in the case of Arya Fibres Pvt. Ltd. vs. CCE, Ahmedabad - 2014 (311) ELT 529, laying down the parameters to prove clandestine removal of goods, which are quo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to the admissibility of evidence to allege clandestine manufacture and removal of goods. The High Court of Gujarat in the case of Principal Commissioner of CGST & C.Ex vs. Shah Foils Ltd - 2022 (372) ELT 632 while affirming the view of the Tribunal that onus to prove clandestine removal must be discharged by sufficient, cogent and unimpeachable evidence, dismissed the department's appeal. The same has been further affirmed by the Apex Court in 2021(377)ELT 87. On applying the parameters as referred above, we find that there is absolutely no evidence that NIPL had received unaccounted raw material from the parties whose names have been mentioned in the various charts drawn by the Department or any details about the transportation of the said raw material or that the payments were made either to the suppliers of unaccounted material or to the transporters. Similarly, there is no evidence on record that NIPL had supplied unaccounted finished goods to various parties or about the receipt of the unaccounted payments from these buyers of the unaccounted finished goods. Nor there is any evidence of transportation of the unaccounted finished goods. Needless to say that manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diary cannot be made the basis for establishing clandestine manufacture and removal of the fabrics. It has been repeatedly held by the Courts that clandestine manufacture and clearance cannot be readily inferred from few documents and statements unless the allegations are also corroborated and established on evidences, relatable to or linked with actual manufacturing operations. As far as the present demand is concerned, there is no such evidence forthcoming in the records before us to suggest clandestine manufacture and clearance by the appellant. Mere reliance on notebooks/diaries or statements cannot be considered as enough evidence for clandestine manufacture and clearances." (Emphasis laid) In M/s. Sada Shiv Steel Mills vs. CCEx, Chandigarh - 2017 (357) ELT 481, the Tribunal once again observed that no corroborative evidence in support of the claim has been produced by the Revenue to allege clandestine removal of goods and only thirdparty records have been relied which does not have any evidentiary value in the light of the decision of Raipur Forging Pvt. Ltd. vs. CCE, Raipur - 2016 (335)ELT 297. The Principal Bench in M/s. Anjani Steel Ltd vs. Commissioner of Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also that the notebook did not show the actual sale or clearances of the goods or payments, received or raw materials purchased as some of the entries were fabricated to take revenge from the company. Though he was the trusted employee of NIPL and was working for the last 20 years but with the joining of nephew of the main director in 2007-08, his importance in the company got reduced and even the facilities which were extended to him were also curtailed and his salary was also not increased. The cross examination of Sri Sarma was conducted on 19.03.2015 and the relevant part thereof is reproduced below:- "Q.No.7. Whether during the period you were director of the company, any goods were ever cleared without payment of duty. Ans. No. Q.No.8 Whether the note books withdrawn from your residence and marked as Sr.No.1,2,6 and 7 of the Panchnama dated 09.12.2011 depict actual sales, clearance of goods or payment received or raw materials purchased. Ans. The figures mentioned in these note books do not show the actual sale or clearance of the goods or payment received or raw material purchased. In these note books, I have fabricated certain entries. Q.No.9. I am showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. I agree that said note books contain the details of recorded transactions of Nutan Ispat & Power Ltd. as well as some fabricated entires. Q.No.13. Please explain which are you correct statements, i.e. the first statement dated 9-12.2011 or subsequent statements dated 10.04- 2012 and 11.04.2012 in respect of entries contained in note book 16 no.1,2, 6 and 7 seized from your residence on 9.12.2011. Ans. The statements recorded on 10-04-2012 and 11-04-2012 are my correct statements and I stand by the same." 16. On the basis of the statement and cross examination of Sri Sarma, the adjudicating authority rightly concluded that during the period under consideration he was only a paid director in NIPL on salary of Rs. 25,000/ per month and not a promoter director. While working as director, he used to look after work of accounts of incoming of raw materials, verification of sales invoices and banking related matters but there was no permission to him by the company to take the account books at home. We would like to quote the findings of the Commissioner in the impugned order as under :- "34.4.3. Considering the above facts, I would not be out of place to conclude that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterials and sale of finished goods by the Noticee No.1 and 4 and in absence of any material evidences, it would also not be proper and justified to charge the Noticee No.1 and 4 with the allegation of clandestine purchase and removal of raw materials as well as clandestine manufacture and removal of finished goods without payment of duty, as alleged in the impugned show cause notice. In Commissioner of Central Excise, Delhi vs. Vishnu & Company Pvt. Ltd, 2016 (332) ELT 793, the Delhi High Court was faced with a situation where the department relied on the statements made by third parties, which were subsequently retracted or relied from and it was held that it becomes necessary for the department to produce other evidence, which is of an independent nature, which corroborates the retracted statements and further observed as under: "41. What the above submission overlook is the 'reliability' of such statements. Once it is shown that the maker of such statement has in fact resiled from it, even if it is after a period of time, then it is no longer safe to rely upon it as a substantive piece of evidence. The question is not so much as to admissibility of such statement as much ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2005 (67) RLT 97 (Tri.)] held that even if the assessee fails to explain the shortages themselves, the charge of clandestine removal cannot be imputed in absence of independent investigation to corroborate the allegation. As rightly observed by the Commissioner (Appeals), the investigations have failed to bring the charge of clandestine removal by leading evidences in the form of statement of buyers, transporters, flow back of funds, extra use of electricity, etc. He has rightly concluded that huge quantity of sponge iron would require a large fleet of lorries/trucks for their transportation and in the end in the absence of any such evidence on record, the findings of clandestine removal cannot be upheld. I also note that the Revenue has not produced any evidence for procurement of such a huge raw material to manufacture the said quantum of assessee's final product. Before the final product is removed, the same is required to be manufactured. As such, heavy onus is placed upon Revenue to establish the manufacture of the said goods. There are no statements on records, either admitting the manufacture of the said goods or removal of the same in clandestine manner. As such, I fully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sen only one transport company M/s. Amar Freight Carrier and has relied on some Loading advices and Bilities which were recovered from their office premises. There is no explanation by the department as to why they had chosen only one of the transporter and did not take the pain to investigate the other 21 transport companies. None of the truck owners/drivers of the truck numbers found mentioned were interrogated." 36. Admittedly, in the case in hand this Tribunal in the case of Arya Fibres Pvt.Ltd. vs. Commissioner of Central Excise, Ahmedabad-II [2014 (311) ELT 529 (Tri.Ahmd.)] has laid down the certain parameters to establish clandestine removal of goods, the show cause notice is not in conformity with the criteria in the case of Arya Fibres Pvt.Ltd. (supra). The allegation of clandestine removal of goods is not sustainable. 37. Moreover, the statements which has been relied by the adjudicating authority in the impugned order, are not tested as per procedure prescribed under section 9D of the Central Excise Act, 1944 to find out the genuineness of the statements recorded during the course of investigation. 38. Therefore, we hold that the allegatoin of clandestine removal of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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