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TMI Blog2025 (1) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... ea, Malwan, Distt. - Fatehpur (noticee no.1) under the proviso to erstwhile Section 11A(1) of the Central Excise Act, 1944 {now Section 11A(4)} alongwith the interest on the said amount of duty at appropriate rate under the erstwhile Section 11AB {now Section 11(AA)} of the Central Excise Act, 1944. 02. I impose a penalty of Rs. 1,86.15.736/- (Rupees One Crore Eighty Six Lakh Fifteen Thousand Seven Hundred Thirty Six only) equal to the said amount of Central Excise duty upon M/s Shree Radhey Radhey Ispat Pvt. Ltd., D-17 to 21. UPSIDC Ind!. Area, Malwan, Distt. Fatehpur (noticee no.1) under Rule 25 of the Central Excise Rules, 2002 read with the erstwhile Section 11AC (now Section 11AC(a)} of the Central Excise Act, 1944. 03. I impose a penalty of Rs 50,00,000/- (Rupees fifty lakhs only) upon Shri Vijay Jakhodia, Director of M/s Shree Radhey HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Radhey Ispat Pvt. Ltd. (noticee no.2) under Rule 26 of the Central Excise Rules, 2002. 04. I impose a penalty of Rs 50,00,000/- (Rupees fifty lakhs only) upon M/s Kamdhenu ispat limited, A-1114, RIICO Industrial Area, Phase-III, Bhiwadi, District ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued to M/s KIL for alleged evasion of service tax by suppressing the gross royalty received by M/s KIL from their franchisees. Statements of Shri Ravi Saini, AGM of M/s KIL, Shri Rattan Garg, Assistant of Shri Ravi Saini and Shri J. K. Yadav, Data Entry Operator found working at the secret office who in their statement inter alia admitted hiring of a rental premises and maintaining incriminating records of productions, clearance and sale of account of their Bhiwadi unit in the name of fictitious firm 'Jai Ambey' on the direction of their CMD. 6. The officers also scrutinized the records recovered from the related premises of M/s KIL, which include Franchisees Agreement, Annual Reports / Balance Sheets of M/s KIL, data retrieved from the laptop/pen drives/ CPUs and ST-3 Returns for the corresponding period i.e. April, 200 to September, 2008. The laptop/ pen drives/ CPUs were also forwarded to the Government Examiner of Questioned Documents [GEQD], Hyderabad. The forensic report/data recovered by GEQD reflected much high figures of receipt of royalty during the period from 01.04.2008 to 08.10.2008, as compared to figure shown in ST-3 returns of the same period by M/s KIL. 7. That o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; Being Cheque no. 633068dt. 19.06.2008 received for royalty 185866 7. 30-Jun-08 Radhey Radhey (new a/c) 574 2986 Debit Note Travelling Gurgaon 2986 8. 30-Jun-08 Radhey Radhey (new a/c) 599 449580 Royalty from Radhey Radhey, Kanpur 449580 9. 11-Jul-08 Radhey Radhey (new a/c) 660 9000 Being cash received royalty 9000 10. 17-Jul-08 Radhey Radhey (new a/c) 707 130000 Being cash received for royalty 130000 11. 29-Jul-08 Radhey Radhey (new a/c) 740 337080 Being Cheque no. 634076 dt. 22.07.08 for royalty 337080 12. 31-Jul-08 Radhey Radhey (new a/c) 853 338780 Royalty from Radhey Radhey, Kanpur 301650 Service Tax 37130 2011@Rs. 150 13. 27-Aug-08 Radhey Radhey (new a/c) 1002 337080 Being Cheque no. 634154 received for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty of Rs.50 lakhs each on Appellant No.2 & Appellant No.3. The sole basis of the allegation of clandestine clearance upon the Appellant No.1 and other Appellants was the difference shown in the GEQD report and the invoices raised by M/s KIL upon the Appellant No.1 alongwith ER-1 filed by the Appellant No.1. It is the case of the Department that the increased value of royalty shown in the GEQD report are the actual value of royalty and therefore, high quantity of TMT Bars are manufactured and cleared by the Appellant No.1. 11. By the impugned Order-In-Original the learned Commissioner confirmed the demand as proposed in the SCN and also imposed equal amount of penalty under Rule 25 of the Central Excise Act, 2002 read with Section 11 AC of the Central Excise Act, 1944. Hence the present appeal. 12. Learned Advocate appearing on behalf of the Appellant submitted that the quantity of the TMT Bars manufactured and shown in the invoices raised by M/s KIL alleges that the ER-1 filed by the Appellant No.1. The allegation was solely made on the basis of GEQD Report whose evidentiary value is negative. 13. He further submitted that the statements of alleged employees of M/s KIL except M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red goods or any receipt of consideration against such alleged clandestinely manufactured goods. Thus, without adducing any evidence in support of such facts, a charge of clandestine removal cannot be sustained merely on assumption and presumption due to such alleged higher amount of royalty recorded by M/s KIL, where even correctness and truthfulness of such recording itself is not established. 21. Reliance in this regard is placed upon the following judgment of the Hon'ble Allahabad High Court in Continental Cement Company v. UOI, 2014 (309) ELT 411 (All.), wherein the Court categorically stated that: "12. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects : (i) To fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f data by representative of M/s. KIL does not establish actual payment by the appellant. No evidence of actual payment has been brought on record by Revenue. Further, as held by Hon'ble Allahabad High Court that clinching evidence of the nature of purchase of raw material, use of electricity, sale of final products, clandestine removal and the more flowback of funds are required to be established in the case of clandestine removal. Such aspects have not been investigated into and therefore, the ruling by Hon'ble Allahabad High Court in the case of Continental Cement Co. (supra) are applicable in the present case. We, therefore, hold that manufacture of such quantity of goods on which Central Excise duty of around Rs. 5.5 crores was demanded is not established. Since Central Excise duty is on manufacture and manufacture is not established, therefore, there is no basis for demand of Central Excise duty to the tune of Rs. 5,58,89,762/-. Since the demand is not sustainable the penalty is on the appellants are not sustainable. 8. We, therefore, set aside the impugned order and allow all the appeals with consequential relief to the appellants." 23. Apart from above decision, the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in sub-section (2) and the other provisions contained in this Section are satisfied in relation to the statement and the computer in question. Further Section 36B(2)(a) of the Act provides the conditions with respect to the computer printouts that the computer printout containing the statement has to be produced by the computer during the period over which the computer was used regularly to store or process information for the purpose of any activities regularly carried on over that period by the person having lawful control over the use of the computer. As the noticee no.- 1 and their officials had no lawful and/or administrative control over the use of the computers, pen drives and laptops etc. recovered from the premises at J- 1200 and other premises of KIL during search made on12.11.2008 by the officers of DGCEI, the conditions provided under Section 36B(2)(a) of the Act are not fulfilled." 28. Thus, once such printout is not admissible in evidence then nothing survived in this case to hold clandestine clearance of the goods by the Appellant. 29. The computer printouts allegedly retrieved from Laptops, CPUs, and pen drives recovered from the secrete premises of M/s KIL is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a murmur as to what were the various commission or omission on the part of the Appellants in Order to invoke in the First proviso to Section 11 A(1) of the Central Excise Act, 1944.That on the basis of record recovered from the third party and without confronting the same from the person, who has prepared the same, extended period has wrongly been invoked against the Appellants in absence of any positive proof of alleged clandestine removal. 34. Further the Show Cause Notice is clearly barred by limitation in as much as on the same set of evidence Show Cause Notices invoking extended period of limitation were issued to M/s KIL on 09.05.2011 and 24.10.2011, respectively, and after more than one and half year of culmination of investigation show Cause Notice has been issued to the Appellants. 35. With regards to the penalty on Appellant No.1 we find that the Revenue has completely failed to produce any positive and affirmative evidence to show any contumacious conduct or deliberate violation of fiscal statute on the part of the Principal Appellant in order to make them liable for invocation of penal provisions, as such penal action is not warranted in the matter. 36. With regards ..... X X X X Extracts X X X X X X X X Extracts X X X X
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