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M/s. NR. Sponge Pvt. Ltd., Shri Sanjay Agarwal Versus Commissioner of Customs & Central Excise, Raipur

2015 (4) TMI 736 - CESTAT NEW DELHI

Clandestine removal of goods - Duty evasion - Goods removed by the appellant-Company without issue of invoice and without payment of duty - Suppression of production - Imposition of penalty on director of company - Held that:- Recovery of the loose sheets and pencil written ledger from the premises of the appellant in the course of search proved the entries therein as representative of the clandestinely removed goods which were well within the knowledge of the appellant. Active involvement of ap .....

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f Dolochar by the appellant.

The statement recorded from shift supervisors being self speaking cannot be brushed aside because they were the persons within whose knowledge goods were manufactured and cleared. Their evidence was believable, cogent and credible for the reason that they vividly described methodology of production. - Preponderance of probability was against the appellant. Pleading of no statement recorded from buyer, no excess electricity consumption found, no raw materi .....

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as successful and its suffering was established.

Without human intervention evasion does not occur by an artificial person which is a company - Thus burden of Revenue was considerably lightened by preponderance of probability. Sri Sanjay Agarwal, Director, showed his knowledge about possession of various incriminating evidence by the company. That demonstrated the methodology of evasion - However, penalty on director is reduced - Decided against the assessees. - APPEAL Nos. E/1650 & 1 .....

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e other appeal relates to imposition of penalty of ₹ 5,00,000/- on the Director of the manufacturing company. 2. During visit by Central Excise officers on 04.10.2006 to the premises of M/s. N.R. Sponge Pvt. Ltd., who is the main appellant, following material facts and evidence surfaced:- (i) The daily stock register was maintained by appellant company upto 30.09.2006. Investigating team asked the Director of the appellant-Company to furnish stock of the finished goods and inputs as on 04. .....

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to loading advices and gate passes showing removal of excisable goods. Such sheets were maintained by the appellant for the period from 28.09.2006 to 02.10.2006. On comparison of the entries contained therein with the Central Excise invoices, it was revealed that 562.130 MT of Sponge iron and 81.010 MT of Dolochar were removed by the appellant-Company without issue of invoice and without payment of duty. (iii) Records listed at serial nos.3,4,6,7,8,10,11 & 12 of the Annexure-B to panchanama .....

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is of feed rate as well as dip of the bunker. Scrutiny revealed that the appellant-Company had suppressed production of 1580.950 MT of Sponge iron. (iv) Scrutiny of the record mentioned at s.no.22 of the Annexure to the panchnama dated 04.10.2006 which was pencil handwritten ledger revealed that the said ledger contained sale account of Sponge iron indicating the truck number and the payment receipt. When the entries therein were compared with Central Excise invoices issued by appellant-Company .....

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ntant/Cashier of the appellant-Company revealed that the ledger stated above was maintained by him and his subordinate. He also authenticated the photocopy of the ledger. He stated that the entries therein were correct and demonstrates evasion of duty. But he could not reveal whether the ledger in question maintained was with the knowledge Director Shri Sanjay Agrawal. (vi) Statement dated 10.04.2007 of the Director Shri Sanjay Agrawal of the appellant-Company revealed that the ledger book perta .....

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ds at the destination. After perusal of the disputed consignment notes he confirmed that the quantity of the goods mentioned therein have been transported from the consignor to the consignee resulting in removal of 69.180 MT of Sponge iron without issue of Central Excise invoice. 4. The scrutiny of the bilty books recovered from the business premises of M/s. Giriraj Roadlines, Raipur on 20.12.2006 revealed that the appellant-Company had removed substantial quantities of Sponge iron without payme .....

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ders, Proprietor Shri Kailash Agrawal, a broker/commission agent of iron & steel on 20.12.2006 also confirmed that the appellant-Company had removed a large quantity of excisable goods without payment of duty. 6. The records seized from the various business premises of the appellant-Company and others revealed that the Company had removed 1574.725 MT of Sponge iron valued at ₹ 1,57,27,368/- involving Central Excise duty of ₹ 25,16,375/- and education cess of ₹ 50,330/- and .....

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lica of the show-cause notice and what that was reported by investigation was simply endorsed by the adjudicating authority without testing the veracity thereof. The statement recorded from Shift Supervisor is not admissible in evidence because they are incompetent to give such statement. Presumption of arise of 56% of output from an unit of input has no sanction in law for which there cannot be presumption of any unaccounted quantity manufactured by appellant. 7.2 It was also submission on beha .....

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When there was no evidence showing suppression of raw material purchased and no evidence showing unaccounted transport of goods made, the adjudication does not sustain. Similarly, in absence of any excess consumption of electricity and unaccounted labour payment, estimation of the clandestine clearance is uncalled for. There was no cash receipt discovered by investigation to allege unaccounted clearance of the goods. There should be chain of evidence required to be established to hold that inves .....

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the following case laws:- (a) T.G.L. Poshak Corporation Vs. CCE, Hyderabad 2002 (140) ELT 187 (Tri. Chennai) (b) CCE, Chandigarh I Vs. Shingar Lamps Pvt. Ltd. 2010 (255) ELT 221 (P&H) (c) CCE, Meerut I Vs. R.A. Castings Pvt. Ltd. 2011 (269) ELT 337 (All.) (d) Padala Veera Reddy Vs. State of Andhra Pradesh & Ors AIR 1990 SC 79 (e) CCE Vs. Vandana Art Prints Pvt. Ltd. 2008 (221) ELT 27 (Guj.) (f) Kumar Trading Company Vs. Commissioner of Trade Tax, Lucknow 2008 (230) ELT 240 (All.) (g) Hil .....

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counted clearance of 562.130 MTs of Sponge Iron and 81.010 MTs of Dolochar. Secondly, the pencil written ledger (Sl. No. 24 of Panchanama dated 4.10.2006) proved unaccounted sales of Sponge Iron with full details of truck number and payment receipts. That corroborated with majority of entries in the excise record and invoices and unrecorded transactions gave raise to demand against 887.560 MT of Sponge Iron escaping duty liability being sold without any invoice. Thirdly, the materials recovered .....

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ant had removed large quantities of excise goods without payment of duty. 8.3. According to Revenue, all the statements recorded from the Shift Supervisor, transporters, Accountant and the Director successfully proved the questionable modus operandi of the appellant, its oblique motive in clearance of clandestinely removed goods. Shortage of finished goods found during physical verification also demonstrated clandestine removal thereof by the appellant. 32 loose sheets as well as pencil written .....

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ant in the course of search proved the entries therein as representative of the clandestinely removed goods which were well within the knowledge of the appellant. Active involvement of appellant in that regard came to record since those materials were in the custody of the appellant. It is common sense that the materials having utility to the possessor thereof are only possessed by him. He proves ownership thereof and is answerable to the contents therein. Entries on such incriminating materials .....

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respectively. Those clearances were not substantiated by excise invoices. When certain entries in the pencil handwritten ledger matched with the central excise invoices and other entries did not match, the unmatched entries, became testimony of clandestine removals not supported by invoices. Accordingly, such clearances became subject-matter of allegation in respect of removal of 887.560 MT of Sponge Iron without payment of excise duty. Similarly, the loose sheets when evaluated, that proved rem .....

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ise invoices. That resulted in loss of revenue. He therefore admitted to make payment of the duty evaded without controverting the Revenue implication of the entries in pencil handwritten ledger and chits recovered from possession of appellant during search. Entire pleading of the appellant therefore failed to sustain when malafide of the appellant came to record. Clandestine removal was well within the knowledge of the shift supervisors, accountant, Director, transporters and commission agent. .....

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r, no excess electricity consumption found, no raw material purchase found unaccounted and no input output ratio prescribed by law is of no use to it. Revenue discharged its onus of proof bringing out the allegation in the show-cause notice succinctly. But, the appellant miserably failed to discharge its burden of proof. It did not come out with clean hands. 10.5 It is not only one evidence, but multiple echoed evidence demonstrated oblique motive of the appellant and proved its malafide. Theref .....

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nal Cylinders Pvt. Ltd. - 2010 (255) E.L.T. 68 (H.P.), the Hon ble Himachal Pradesh High Court held that no person will maintain authentic record of illegal activities. Burden shifts to manufacturer once Department proves something illegal being undertaken. It is elementary jurisprudence that no law can be interpreted in a manner so as to give premium to illegal and criminal activities. Hon ble High Court of Rajasthan in the case of Rajesh Goyal Vs. Union of India 2012 (284) ELT 164 (Raj.) viewe .....

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lence shaking of the socio-economic-political system in an otherwise healthy, wealthy, effective and vibrant society and ultimately, such excise duty or the tax evaders can create a parallel economy in the state which may pose a serious threat to the nation. In the present State of affairs, the economic offences are undoubtedly more grave in nature than those offences which are otherwise said to be grave. Revenue need not prove its case with mathematical precision. Evasion occurs under the conce .....

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