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TMI Blog2024 (10) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the purported manufacturing process which has also been mentioned in those statements also meet the same fate. It is failed to find from record about any manufacturing process being witnessed by the department during search in the godown. Mere finding some table alongwith walls having electricity socket and few TV sets or its parts cannot be considered as corroborative evidence. From the allegations and arguments, the department tried to pitch it to the extent that the appellant was dealing only in cash payment in order to avoid the identity of its customers. But the ledger account of the appellant establishes other way round. Most of the payments were received through banking channel and the account numbers of the buyers were also mentioned in the ledger. On the sale invoices issued by the appellant, name and address of the buyer alongwith VAT TIN were clearly mentioned from which the bank details and the whereabouts of the said buyers were ascertainable. What the department did, instead of getting the details from the records provided by the appellants by way of ledger, sale invoice etc. they tried to get them through Google search on internet. Therefore there are no force in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice therein was also issued to the appellant by DRI on 15.7.2016. As per case records, the basis of the instant show cause notice is the information received from DRI in the year 2016 itself but still the instant show cause notice came to be issued much belatedly in the year, 2020 after invoking the extended period which is not invokable. Mere recovery of certain parts or TV sets or cartons in the instant case is not sufficient to prove clandestine manufacture/assembling or removal. Clinching evidence is required to be produced by the department to substantiate the allegations levelled against the appellants beyond any reasonable doubt which, in the facts of the present case, the department has failed to prove. Neither any evidence of manufacturing of finished goods i.e. TV sets nor its onward transportation or its buyers have been produced on record by the department. Statements, if any, can only provide the missing links to corroborate facts and they cannot, of themselves, establish facts or the whole claim of alleged events. As the duty demand itself has been set aside, there is no question of any interest, and/or penalties etc. On the ground of limitation also the show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai Zonal Unit that the appellant had imported flat panel TV sets of Sony Samsung Brand after splitting them into Panels Kits, while mis-declaring the value as well as their description as parts of TV sets . By such misdeclaration they allegedly availed 100% customs duty exemption on panels, which constitute 75-80% of the cost of TV sets, undervalued the TV sets and consequently evaded customs duties and by importing as parts of TV sets , the CVD applicable on MRP was also being evaded. Accordingly a search was carried out by DGGI in the office and godown of the appellant in the month of May, 2016. It is pertinent to mention that similar search was conducted by DRI also in the month of February, 2016 and goods documents/ records were seized by them at that point of time under Panchnama. Left over documents, whatever available, were seized by the department herein on 20.5.2016. Statements of various persons including the partner of the firm Mr. Moti Bhatia were also recorded by them. On the conclusion of investigation, a Show Cause Notice dated 28.9.2020 was issued to the appellant, after invoking extended period demanding central excise duty amounting to Rs.9,93.80,686/- alongw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to learned counsel although the presence of TV sets and parts were properly explained to the officials but they did not listen. Learned counsel further submits that the purported statements of Shri Subhash Gamre and Shri Bikash Chhetri, employees of appellant during the course of investigation, which were recorded u/s. 108 of the Customs Act, 1962, were relied upon in the impugned order but their respective cross-examinations recorded before the learned Commissioner were totally discarded by him while adjudicating the show cause notice. For the sake of argument only, learned counsel submits that if the demand of central excise duty is upheld then the appellant would become entitle to cenvat credit of CVD, SAD and cess paid on the imported inputs and also the accumulated cenvat credit pertaining to their Goa factory. Learned counsel also challenged the duty calculation which, according to him, is on higher side as it was done by adopting the price list of Sony Samsung brand TV sets which is contrary to the provisions of Section 4A of Central Excise Act, 1944 and the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. Learned counsel also chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice in issue alleges that the appellant has assembled parts of TV sets to make TV sets at their Bhiwandi gown, which amounts to manufacturing and hence liable for central excise duty at the applicable rates. It further alleges that although the appellant is into manufacturing activity but it has neither taken the central excise registration nor discharged the central excise duty liability nor filed the statutory central excise returns. Rather they suppressed the material facts from the authorities concerned. Whereas it is the case of the appellant that they imported complete TV sets and kept it in their godown at Bhiwandi for doing their trading activity. Neither they assembled any TV sets in their Bhiwandi godown nor manufactured or cleared them from their Bhiwandi godown. 9. During search of the godown in issue on 20.5.2016 by the then DCGEI (now DGGI ), on the basis of information of DRI, some papers invoice etc. were allegedly taken into possession and few statements were recorded. During search they alleged to have also noticed few empty cartons and some assembling facilities by attaching few tables to the wall in the rear portion of the godown and it has been allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of excisable goods, there needs to be positive evidence for establishing evasions. Mere suspicion is not sufficient to prove clandestine removal unless it is supported by sufficient cogent evidence. In cases of clandestine manufacture and removal, burden is on the revenue to prove its case with clinching, reliable and independent corroborative evidences. The department herein has mainly relied upon the statements recorded u/s. 108 ibid and also some invoices recovered during the course of search of godown premises. 12. Now we have to see the statements of appellant s employees viz. Shri Subhash Gamare and Shri Bikas Chhetri, recorded by DRI u/s. 108, Customs Act, 1962 on 5.2.2016, which have been heavily relied upon in the show cause notice and by the adjudicating authority as well while passing the impugned order. Although during their respective cross-examination before the learned Adjudicating Authority both the persons expressed ignorance about any manufacturing or assembling process in the godown premises in issue, but the same was discarded by the adjudicating authority by terming it as an afterthought and observed that their statements u/s. 108 ibid had been made voluntaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u present? Ans.:Yes, I was present, and made my signature, however, no one translated it in Hindi. I do not know what is written in it. 13. Similarly Mr. Bikas Chetri s statements, who at the relevant time was also working as loader, were also recorded in English language and during cross-examination he also replied in the same way that he did not know what was written in his statement dated 5.2.2016 as nothing was explained to him by the person recording his statements. During his cross-examination Mr. Chetri in response to a specific query, has replied that he is doing the job of loading/unloading of goods whereas in the alleged voluntary statement recorded by DRI on 5.2.2016 it has been mentioned that he assembled LED TV sets. His cross-examination is also extracted as under:- Q.1: In 2015-16, what work were you doing in M/s.Sunder International at Bhiwandi Godown? Ans.: I was doing Loading and Unloading work. Q.2: Were you assembling the TV set? Ans.: No Q 3: Was any assembly of TV set possible at godown? Ans.: No Q.4: I am showing your statement dated 05/02/2016, it has signature of Bikas Chetri, is it your signature? Ans.: Yes Q.5: Can you mention what is written in the state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments were made voluntary. Therefore, no reliance can be placed upon such statements. 15. So far as the statements of Mr. Moti Bhatia, partner of the appellant firm, which were recorded u/s. 14 of the Central Excise Act, 1944 and which have been relied upon by the learned Authorised Representative in support of the case of clandestine manufacture/removal, we find that there is no such admission of clandestine manufacture or removal. Rather in his statements recorded from time to time during investigations, he denied the allegation of assembling any TV set at his godown at Bhiwandi. What he mentioned was that the appellant is engaged in Import and Export of Electronic goods like TVs, monitors and accessories, parts, panels and camera. He also stated that they are engaged in the trading of finished goods as well as parts of the TVs from this Mumbai office and they were also engaged in the manufacture of Crown Brand TVs at their factory located at Bicholim, Goa. When a specific query was made as to why Excise duty is not paid on the said goods inspite of admitting the facts before the DRI officials about the firm s activity of assembly of the parts of TVs at their Bhiwandi godown and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. During the search at Bhiwandi, the officials found some wooden tables with the wall adjoining each other, covered with plastic and certain electrical points at regular intervals on the walls facing the tables and they arrived at the conclusion that those were placed to assemble the parts in order to make it complete TV sets. They also alleged to have seen some assembled TV sets. In our view mere presence of wooden table or electrical connections by its side or of the TV sets does not lead to an inevitable inference that the appellants were indulging into the assembling/ manufacturing activity. 19. It is the case of the department and also the finding of the learned Commissioner that the case is booked by the department on the basis of the statements as well as on the basis of manufacturing process of the appellant and recovery of certain documents from the godown, which collectively established that the appellant assembled parts of TV sets at their godown at Bhiwandi that amounts to manufacture and liable to Central Excise duty. Since the statements recorded cannot be relied, as already discussed by us in earlier paragraphs, the purported manufacturing process which has also bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two buyers nowhere mentioned that they purchased TV or its parts from the appellant. Therefore, from that reply no inference can be drawn against the appellant. The department failed to produce any purported buyer of the alleged assembled TV set or any confirmation of purchase of assembled TV or its parts from any of the purported buyer. The inference drawn by the department against the appellant on the basis of the cash receipts are also unfounded. From the allegations and arguments, the department tried to pitch it to the extent that the appellant was dealing only in cash payment in order to avoid the identity of its customers. But the ledger account of the appellant establishes other way round. Most of the payments were received through banking channel and the account numbers of the buyers were also mentioned in the ledger. On the sale invoices issued by the appellant, name and address of the buyer alongwith VAT TIN were clearly mentioned from which the bank details and the whereabouts of the said buyers were ascertainable. What the department did, instead of getting the details from the records provided by the appellants by way of ledger, sale invoice etc. they tried to get th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of probabilities. Revenue did not produce any clinching corroborative evidence to discharge its obligation to prove clandestine removal. Their case is mainly based upon conjecture and surmises. The department failed to establish that the appellant received spare parts etc. clandestinely or some other corroborative evidence to support clandestine removal of complete TV sets from the godown. 21. Learned Commissioner, while adjudicating the show cause notice dt.28.9.2020, has also relied upon the Order dated 11.07.2017 of the Settlement Commission (WZB) in case of appellant i.e. M/s. Sunder International while arriving at the conclusion that the appellant had brought parts of TV sets at their Biwandi godown, which were assembled to manufacture the complete TV set and cleared them fraudulently without payment of Central Excise duty. Now we will examine whether the Adjudicating Authority is justified in relying upon the Settlement Commission s order while arriving at the aforesaid conclusion. In the said order the Settlement Commission has recorded that the appellant (i.e. applicant therein) imported complete LED TV sets though in SKD condition and RSP is required to be declared on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing adjudication at the time of filing the application for settlement. The Settlement Commission has to see whether there is full and true disclosure of duty liability which has not been disclosed by the applicant therein before the proper officer and the manner in which such liability has been incurred. The adjudication of show cause notice by concerned authorities, in respect of which a settlement application has been made and allowed to be proceeded with, is not only contrary to the statutory scheme but also defeats the very purpose of the settlement provisions. By approaching the Settlement Commission, the allegation contained in the show cause notice cannot be said to be proved against the applicant therein. Our aforesaid view is supported by the decision of this Tribunal in the matter of Indian Oil Corporation Ltd. vs. CCE, Mumbai; 2011 (274)ELT 561 (Tri. Mum.) wherein it has been held that by approaching the Settlement Commission, the allegation has not been proved against the assessee and the same remained unproved. Similarly a Larger Bench of the Tribunal in the matter of Bosch Chassis Systems India Ltd. vs. Commissioner; 2008 (232) ELT 622 (Tri.LB) has held that mere fili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case. 28 i) In view of the above discussions, I conclude that the Noticee had brought parts of TV sets at their Bhiwandi Godown, which were assembled to manufacture the complete TV set , classifiable under CET No. 85287211, cleared these TV sets fraudulently, without payment of Central Excise duty at the appropriate rate, by resorting to the modus operandi discussed above, and has caused huge loss to the exchequer. Therefore the demand of Central Excise duty raised through instant SCN is liable to be confirmed. such a finding does not have sanction of law. 24. In view of our discussion in the preceding paragraphs we are satisfied that, as the department has failed to establish any case against the appellant, the duty demand alongwith interest and respective penalties as mentioned in the show cause notice in issue herein cannot survive. 25. Learned counsel also contested the invocation of extended period on the ground that the facts were within the knowledge of the department in the year 2016 itself but still the show cause notice was issued to them much belatedly on 28.9.2020. According to learned counsel, the said submission was made before the Adjudicating Authority also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained. When the first SCN issued all the relevant facts were within the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. We agree with the view taken in the aforesaid judgments and respectfully following the same, hold that there was no suppression of facts on the part of the assessee/appellant. 27. The Principal Bench of the Tribunal also in the matter of Karamjeet Singh Co.Ltd. vs. CGST, Customs Excise-(2024) 21 Centax 69 (Tri.-Del.) while setting aside the show cause notice therein, held as under: 11 . ------ Based on the audit's observations, the Commissioner issued the SCN dated 8.4.2011 covering the period 16.8.2002 to 31.12.2008 invoking extended period of limitation. It is a well settled legal position that once the issue is within the knowledge of the department, it cannot allege that the assessee suppressed any facts with intent. Therefore, the SCN dated 8.4.2011 covering the period 16.8.2002 to 31.12.2008 is completely time barred and cannot be sustained. [emphasis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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