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TMI Blog2013 (6) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... and interest has been demanded as applicable. Penalties have also been imposed on the other two appellants namely Shri Anil Agarwal, Director and Shri K.B. Nair, General Manager, Production and Excise. 2. Shri Vishal Agarwal, Chartered Accountant on behalf of the appellants submitted that the demand for differential duty can be dealt with under two categories. In fact the show cause notice also comprises of two annexures on the same basis. Annexure A-1 covers the duty demand of Rs. 11,07,596/- on the ground that RMCL had cleared plastic laminated films/sheets in the guise of LFT to Eastern Group of Companies in Kerala and there were in all 103 clearances to them. The second demand amounting to Rs. 61,19,775/- is covered by 814 clearances of Plastic laminated films/sheets in case of LFT to non-existent customers. 2. With regard to annexure A1 relating to clearances to Eastern Group Companies, he submits that Commissioner has relied upon the purchase order dated 19-8-2004 of Adimali Agro Food Industries and this purchase order has been relied upon as evidence on the ground that the purchase order shows the order of Natural film whereas invoice number 988 dated 1-9-2004 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moval of films in the guise of LFT. Further, he also submitted that Shri Kamlesh Pandey whose statement was dealt with the production register had joined the appellant firm only eight months back. Further he also submitted that allegation in the show cause notice is that quantity cleared is LFT was not mentioned in the production register but he submits that this quantity has been mentioned in the RG-1 and Central Excise records. He also submits that Shri Santosh Singh, Excise Clerk had clearly stated that he did not know that what was being cleared and he was only preparing invoices and his job ended with preparation of invoices. 3. As regards Annexure A-2 relating to demand of Rs. 61,19,775/- on the ground that plastic film/sheet was cleared in the guise of LFT to non existent buyers, he submitted that Shri Santosh Singh, Shri Kamlesh Pandey, Shri K.B. Nair and Shri Anil Agarwal were contradictory as discussed above. Further, he submitted that the adjudicating authority has relied upon various grounds to come to the conclusion that plastic films/sheet was cleared in the guise of LFT to non-existent customers namely, cash for sale was deposited in Mumbai office; invoices to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of the Revenue submitted that the case was based on documentary evidence and corroborating statements of various persons and since documentary evidence corroborated the statements of various persons, the fact that no cross-examination was allowed would not affect the defence at all. Further, he pointed out that for all clearances of LFT to the existing customers based on purchase orders, purchase order wise production was available in the production program register. The fact that details in the production program register tallied with the RG-1 except in the case of clearances to non-existent buyers, whose address and details were not available would show clearly that there was deliberate manipulation of the statutory records. The fact that LFT figures were found only in the RG-1 register and invoices would strengthen the case of department. If the fact of production of LFT was correct, it would have figured in the production program register since that was the basis on which the machines were operated. Staff involved in the production would rely only on the production program register. He also submitted that it was significant to note that only in respect of these 814 clearance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the transporters who had carried a lot of consignments for the appellants. Shri Shailesh N. Patel owner of two vehicles, out of which one was owned by his wife, also gave the similar statement. It was submitted by the learned DR that none of these statement except that of Shri K.B. Nair was retracted, which is at a later date only and is clearly an after thought. 6. We have considered the submissions made by both the sides As regards clearances to Eastern Group Companies, in respect of which demand of duty to the extent of Rs. 11,07,596/- has been confirmed, the Commissioner has come to the conclusion that sheets/films were cleared showing the same as lay flat tubings in 103 clearances to various companies belonging to Eastern Group in Kerala. The Commissioner has based this conclusion on annexure to show cause notice and one purchase order which he has personally verified wherein the purchase order shows films/sheets whereas invoice shows lay flat tubing. He has also relied upon the statement of Shri K. Prabhakar, Assistant General Manager of Eastern Group who has admitted that only 2058.78 kgs of LFT were purchased. He has also relied upon the statement of Shri K.B. Nair, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the clearances to regular purchasers who made payment through cheque as soon as purchase order was received, the entries were made in the production program register. Further, the documents seized from the premises of RMCL-III like program books, payment slips, other registers, purchase orders etc. indicated that only on a few occasions LFT have been manufactured and in most of the cases, laminated sheets/films were manufactured. The details in the RG-1 register as regards LFT does not tally with the details given in the production program register. The four production program registers recovered were related to the production of four extruder machines installed in the factory and the registers contained the details like size, quantity, roll, sample, weight are shown. Further, this coupled with the statement of Shri Kamlesh Pandey who stated that production program register was maintained supports the case of the department. The defence advanced by the appellants is that Shri Kamlesh Pandey had joined only eight months back and even though he stated that register was maintained under the instruction of Shri H.K. Singh, no statement of Shri H.K. Singh was recorded. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d additional consideration over and above what is shown in the invoice. The invoice price is not disputed. The amount received is not disputed. Appellants have actually paid amount of 8% to department which is what they have shown in the invoice. There is no evidence to show that the value was decreased or increased. Therefore, there is no reason to reject the request for treatment of this amount as cum duty price. It is an accepted principle that when a transaction value is available, we need not require a Chartered Accountant to certify that the price charged includes all the elements. Only in the case of refund claim, assessee is required to show that the duty liability has not been passed on. This is not a case of claiming refund. In any case in the absence of any evidence of collection of extra amount and also in view of the fact that the department's demand of duty is based on the very same invoice and the correctness thereof, the same invoices cannot be ignored for the purpose of treating it as cum duty price. Therefore, we consider it appropriate that the appellants' claim for treating the amount as cum duty price has to be upheld. Needless to say the extended period would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within 30 days from the date of receipt of order, an option is required to be given to the appellants to pay 25% of the duty towards penalty and duty along with interest within thirty days while deciding the amount afresh. Penalty on Shri Anil Agarwal is reduced to Rs. 2,00,000/- (Rupees two lakhs) under Rule 26 of Central Excise Rules, 2002 and to Rs. 25,000/- (Rupees twenty five thousand only) on Shri K.B. Nair under Rule 26 of Central Excise Rules, 2002. Appeals of Shri Anil Agarwal and Shri K.B. Nair are disposed off in above manner. (Pronounced in the Court on .......2010) Sd/- (B.S.V. Murthy) Member (Technical) 13. [Order per : Archana Wadhwa, Member (J)]. - After having gone through the order proposed by my learned Brother, I proceed to record a separate order in respect of confirmation of demand of duty of Rs. 61,19,775/- and imposition of penalties. As I agree with the order of my learned brother dropping the demand of Rs. 11,07,596 along with dropping of penalty and interest in respect of the same, the said part of the order is being concurred with. The demand of duty of Rs. 61,19,775/- stands confirmed against the appellant on the allegations an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LFT were manufactured in roll for the customers who want to use it after printing etc. according to their requirement and such customers buy the goods at the factory gate mostly on cash payment and payments were made either at Daman or at their Mumbai office as per their convenience. It is only where plastic lamination films/sheets and plastic bags are manufactured for their specific customers as per their requirement of size and color etc., they make a program for manufacture of such goods which is reflected in various records maintained by them like program books, program slips, order register, purchase orders etc. The said registers did not bear any remarks about the description of the goods i.e. either LFT or Films/sheets etc. The same are mostly described by width/micron and the other requirements etc. It is only in few places that the word tubing is written in the program registers. The said program registers, apart from reflecting the production of LFT also reflects the production of plastic lamination sheets/films, which stands cleared by the appellant on payment of appropriate duty of excise of 16%. 16. While contesting Revenue's allegation of having cleared sheets/f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured and dispatched and wherever there is no mention of LFT, they had manufactured plastic sheets and cleared to respective parties. The Revenue has strongly relied upon the above statement of Shri Kamlesh Pandey. Apart from submitting that program register is being maintained only in respect of those parties, who has placed orders on the appellant and wherever such LFT are being manufactured in role without any specific order of the customer and without any specification by the customer, such production registers are not being maintained, it also stand strongly contended before us that admittedly said Shri Kamlesh Pandey joined the appellants as Production Supervisor since last eight months from the date of recording of his statement. As such it stands contended that the person, who has been with the appellant only for a period of 8 months, cannot be in knowledge of the facts for the period April 2003 to July 2005, for which the demand is being confirmed. I agree with the above contention of the appellant. Admittedly Shri Pandey was associated with the appellant company only for a period of about 8 months and as such, his deposition as regards clearances of sheets under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r LFT as per the requisition, why would they buy goods different from the one required by them. In the absence of any such cross-verification from the buyers, statement of Shri K.B. Nair which is contradictory and does not inspire confidence, cannot be made the basis for arriving at findings of clandestine removal. Apart from that it is also noticed that the said statement was subsequently retracted by Shri Nair on 22-7-2005 by sending such letter under postal certificate. 20. The statement of Shri Anil Agarwal, Director of the Company merely confirms what is stated by the employees. There is no admission on his part as regards clearance of sheets instead of tubings. That, the statement of employees has been held to be as not relevant, the statement of Shri Anil Agarwal, cannot be relied upon. 21. It is further seen that the Revenue has relied upon the statement of vehicle owners which stands discussed in detail by my learned brother in the order proposed by him. I find that such statement given by the vehicle owners, which were not driving the vehicles themselves, is based upon their memory, without the support of any documentary evidence. The drivers were not summoned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the same. I agree with the learned advocate that conducting the search for a period of eight hours and thereafter recording the statements of seven deponents on the same very day seems to be not only improbable but impracticable also. The said statement cannot be said to have been made after scrutinizing the documents seized under annexure to the Panchnama or after consulting other relevant records. 23. After having discussed various statements, the correctness of which has been held to be doubtful, I proceed to consider the evidentiary value of the same. It is well settled that the statements alone cannot be made the basis for upholding the findings of clandestine removal without there being any corroborative evidence. The Hon'ble Delhi High Court in the case of Vinod Kumar Shahdev v. UOI - 2009-TIOL-465-HC-DEL-FEMA (Delhi) has held that once the alleged statement is retracted by making allegation of force and duress, the onus to prove that the said statement was voluntary, shifts to the Government. In the present case apart from findings that each and every statement relied upon by the department does not conclusively support the charge of clandestine removal, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that sales reflected cash and carry sales by individuals at their factory gate. As per the provisions of Rule 11(2) of the Cenvat Credit Rules, 2002, there is no requirement in the law to give complete address of buyers of the goods. The provisions of said Rule are being reproduced :- "The invoice shall be serially numbered and shall contain the registration number, address of the concerned Central Excise Division, name of the consignee, description, classification, time and date of removal, mode of transport and vehicle registration number, rate of duty, quantity and value of goods and the duty payable thereon." 26. As is clear from the above, the sale invoices are required to provide information as regards various factors and there is no requirement of mentioning complete address of the buyers. As such, I fully agree with the learned advocate that not writing the complete address on the said invoices cannot lead to any adverse findings against them. There is nothing on record to show that complete address were not given in the invoices deliberately. As such, observations made by the adjudicating authority are admittedly in the nature of surmises and conjectures. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear the sheets in the guise of LFT in respect of small portion only. 29. After having held that there is no sufficient evidence on record to establish that the clearance of LFT was in fact the clearance of sheets, I proceed to decide on the technical grounds raised by the appellants. It stands contended by the appellants before the adjudicating authority that they were not in existence prior to January 2005. Appellant being a Public Limited Company was incorporated only on 7 Jan 2005 and entered into a partnership with M/s. Mayura Industries on 17 January 2005 as per partnership deed. Thereafter, partnership was dissolved by deed of dissolution on 5 March 2005 and the appellant had taken over the running business of M/s. Mayura Industries with effect from 6 March 2005. A new Central Excise Registration was taken by them and the appellant's registration in the name of Mayura Industries was surrendered. Inasmuch as the appellants and M/s. Mayura Industries were two separate legal entities under a different constitution, the appellant cannot be settled with the responsibilities of payment of duty in respect of goods cleared prior to 6-3-2005, inasmuch as the duty liability, is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005, cannot be upheld. 31. In view of the foregoing discussion, I hold that demand of confirmation of duty of Rs. 61,19,775/- against the appellant along with interest and imposition of penalty is neither justifiable nor warranted and the same is accordingly set-aside with consequential relief to the appellants. 32. Inasmuch as the appeal of M/s. Radha Madhav Corporation Limited stands allowed by me, the imposition of penalty on Shri Anil B. Agarwal, Director and Shri K.B. Nair, General Manager of Excise matters, has to be set-aside. Accordingly, the same are set-aside and their appeals are allowed with consequential relief. 33. As I agree with the findings arrived at by my learned brother in respect of setting aside of duty of Rs. 11,07,596/- and the consequent confirmation of interest and imposition of penalty, the said part of the order is not being interfered with. Sd/- (Archana Wadhwa) Member (Judicial) DIFFERENCE OF OPINION (a) Whether the statement of various persons recorded during the investigation have to be held as admissible evidence, as held by learned Member (Technical) or the same have to be held as not conclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y allegation and any evidence to show that the difference in the cost of lay flat tubings and sheets was recovered by the appellants in addition to the consideration as reflected in their records would weaken the case of Revenue. (l) Whether the fact that the credit on duty paid on the inputs at the rate of 16% was sufficient for the appellants to discharge their duty liability in respect of the final products, without any additional liability (only to the extent of 1.9%) to pay out of PLA, would be a relevant factor to hold in their favour. (m) That, appellants were incorporated as Company in January 2005 and were granted a new Central Excise license with effect from 6-3-2005, whether the duty, if any, clearances effected by an earlier partnership firm i.e. M/s. Mayura Industries can be fastened upon them for prior to the said period. (n) Whether there is sufficient and positive evidence available in the facts and circumstances of the present case so as to arrive at adverse findings of clearance of sheets in the guise of lay flat tubings or not. (o) Whether the appeals are required to be partia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; Whether the recording of seven statements on the date of search itself which was conducted for about eight hours can be said to be made after scrutinizing the seized records/documents. (i) Whether such statements of various persons is sufficient to prove the charge of clandestine removal activities, without any other independent corroborative evidence. (j) Whether there was any requirement under the law to give complete address of the buyers and absence of the address in the invoices was with a mala fide intention on the part of the appellants. (k) That, whether the absence of any allegation and any evidence to show that the difference in the cost of lay flat tubings and sheets was recovered by the appellants in addition to the consideration as reflected in their records would weaken the case of Revenue. (l) Whether the fact that the credit on duty paid on the inputs at the rate of 16% was sufficient for the appellants to discharge their duty liability in respect of the final products, without any additional liability (only to the extent of 1.9%) to pay o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the clearances effected by the appellant in the 814 invoices in dispute. Hence, the production programme register was irrelevant as the entries never matched with respect to the clearances in dispute. It is his submission that the statement of the director Shri Anil Aggarwal only talks about the acceptance of what has been stated by his other employees. It is his submission that so far as the statements of the transporters, which has been relied upon by the lower authorities, none of these statements were of the drivers of the vehicles. It is his submission that it was the statement of the owner who were not able to say whether they have transported the goods of the appellant when they were shown the invoices. It is his submission that most of the times the drivers only were taking decision of transportation of the goods. It is his submission that in any case, the statements recorded of owners of the transporters 2-3 years down the line, would indicate that said statements were given by the transporters, based upon the memory. It is his submission that the appellant had requested for cross examination of the transporters, which is denied by the adjudicating authority without giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on), Shri Kamlesh Pandey, Production Supervisor and Shri Santosh Singh, Excise Assistant, would indicate that the appellant had cleared the plastic films and sheets in the guise of LFT. It is his submission that Shri Anil Aggarwal, Director of the appellant company had accepted the statements given by these employees. It is his submission that the owners of the vehicles have also agreed and stated that they transported the goods only if the invoice has full address and not incomplete address. It is his submission that the demand raised by the Revenue on 814 invoices, in Annexure 2 of the Show Cause Notice was not having any full address. It is his submission that the cross examination which was sought by the appellant was denied, is correct as the cross examination of witnesses cannot be demanded as a matter of right. It is his submission that in the case in hand, it is merely a statement, but from the corroborative evidences of the records and the documents seized from the premises of the appellant clearly established the clearances of plastic films/sheets in the guise of LFT. He would submit that the judgment of Hon'ble Apex Court in the case of Surjeet Singh Chhabra v. UOI, 1997 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The allegation against the assesse is of clandestine removal and under-valuation of goods. It is necessary to ascertain whether in the peculiar facts of the case, there was sufficient cogent, unimpeachable, relevant and credible material evidence so as to establish the case against the appellant company applying the test of preponderance of probability. Although every link of the process is not required to be proved for the said purpose, however the Revenue is not relieved altogether of the burden of producing some credible evidence in respect of the fact in issue. 39. Plethora of case-laws has been cited by both the sides, and ratio of these case-laws has been duly considered by me. To arrive at a finding as to whether there has been undervaluation, essentially peculiar facts of the case and the evidence relied upon in the background facts, have been seen. 40. As rightly observed by the Hon'ble Member (Judicial), it should not be forgotten that the charge of clandestine removal in the guise of some other goods, connotes accusation of serious nature and therefore is required to be established with cogent evidence, and while the evidence obtained cannot be discar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 8 programme books seized by them and sought clarifications from him with reference to the entries made. I find that on Page No. 3 of his statement, he indicated that wherever there is mention of the party's name in the first column, it represented the manufacturing of LFT and wherever there is no mention of LFT along with party's name, they have manufactured the plastic sheets and cleared to the respective parties. The reliance placed by the Revenue on this statement of Shri Kamlesh Pandey seems to be flawed for more than one reason. Firstly, it is undisputed that Shri Kamlesh Pandey was in employment of the company only prior to 8 months on the date when his statement was recorded and could not have explained the details of the entries made in any register prior to his employment. Secondly, said statement does not indicate that there were clearances of plastic sheets and films in the guise of LFT. Thirdly, Shri Kamlesh Pandey has only explained the activities of the appellant in recording the production in the programme register, I find that there is no further evidence or statement to indicate that these Plastic sheets and films were cleared in the guise of LFT. In my opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ample the addresses have been mentioned as Ramesh B. Rana, Daman, Shailesh B. Tandel, Daman, Ashok D. Patel etc. In the similar fashion, no complete addresses have been mentioned on majority of the invoices of lay flat tubing. I put my dated signature on the sample invoices in token of having perused the same." It can be seen from the above reproduced portion of the statement of Shri Santosh Singh that there is nothing which could implicate that the appellant was indulged in removal of plastic sheets in the guise of LFT. The said Shri Santosh Singh has categorically stated that he has not personally or physically monitored the loading and clearances, not aware who and how the payment of transportation in respect of these clearances are made, that he was not aware of mode of transportation and names of the transporters of these clearances. The above statement given by Shri Santosh Singh, which has been relied upon by the adjudicating authority to hold that the appellant had cleared the plastic sheets and films in the guise of LFT, seems to be totally unconnected, inasmuch as the said Shri Santosh Singh has not implicated the appellant in any way, and there is no further corroborati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n perusal of the said statement, I find that there are many commissions and omissions which are very clear. (i) that statement was recorded after almost a period of 1 year down the line the clearances were made which is evident from all the statements. For example, the investigating authority showed the invoices issued by M/s. Mayura Industries in the year 2005-2006 to the various transporters, supposedly, whose vehicle number was, indicated on the 814 invoices. It is also seen that the investigating authorities have shown the invoices of 2004 also to the said transporters and asked them various questions. The owners of the transporters have stated that they are transporting the goods by the said Mayura Industries/Radha Madhav Corporation Ltd. (ii) It is also seen from the various statements that these transport owners are not able to produce the bills which were raised by them for the purpose of payment of transportation charges. (iii) It is also seen that the owners have not indicated that they were self driving the said vehicles during the relevant period of time which would indicate that they were aware of the kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete address of the buyer of the goods. The adjudicating authority has drawn a conclusion of the assumption that by not giving full address, the appellant had forestalled the investigation that could be done by the Revenue. In my considered view, this is nothing but the presumption of the adjudicating authority, as there is no restriction in any law for selling of the goods on cash and carry basis. In the absence of any other evidence indicating that such cash and carry sale is unlawful, the presumption and assumption drawn by the adjudicating authority that this was in order to thwart the investigation, is totally incorrect. (f) I find that there is no dispute to the fact that the LFT is lower in cost than the plastic sheets and films. This undisputed fact is duly supported by the invoices raised by the appellant. Assuming that the Revenue's charge of clearances of plastic films and sheets in the form of LFT is correct, there is no corroborative evidence or evidence collected by the Revenue in any form to indicate that the appellant had received the excess payment in cash for the differential value between the LFT and Plastic films & sheets. I find that on 27-7-2005, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effected by M/s. Mayura Industries, which was a partnership firm registered with Central Excise authorities. The business of M/s. Mayura Industries was taken over by the current appellant M/s. Radha Madhav Corporation Ltd. w.e.f. 6-3-2005. In my view, the demand of duty, if any, for the period prior to 6-3-2005 can be raised only on Mayura Industries and not on M/s. Radha Madhav Corporation Ltd., as M/s. Radha Madhav Corporation Ltd. is a Public Limited Company, and the Public Limited Company is a legal persona in the eyes of law and having distinct and identifiable entity. To come over to such a valid legal proposition, the adjudicating authority, in his order-in-original recorded that the charges are against M/s. Radha Madhav Corporation Ltd. and seen referring to them "earlier known as Mayura industries". In the entire proceedings, I find that there is no evidence which has brought on record to indicate that M/s. Radha Madhav Corporation Ltd. has taken over the running company of M/s. Mayura Industries along with its assets and liabilities. There is no whisper or evidence indicating that M/s. Radha Madhav Corporation Ltd. has admitted that they are liable for any legal dues by M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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