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2015 (4) TMI 853 - CESTAT NEW DELHI

2015 (4) TMI 853 - CESTAT NEW DELHI - 2015 (328) E.L.T. 650 (Tri. - Del.) - Clandestine removal of goods - parallel invoices - Duty evasion - Malafide intention - Preponderance of evidence - Held that:- Municipality record being public record proved the questionable modus operandi of the respondent manufacturer showing movement of clandestinely removed goods. Recording of higher quantity of production after visit by investigation self speak suppression of production prior to search. Suppressed p .....

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explanation therefor. Goods in the factory of respondent manufacturer was found during search to have been unaccounted.

It is settled law that Revenue need not prove its case with mathematical precision. Once the evidence gathered by investigation brings out preponderance of probability and nexus between the modus operandi of the respondent with the goods it dealt, and movement of goods from origin to destination is possible to be comprehended, it cannot be ruled out that circumstan .....

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ntention behind suppression of production which was established and corroborated by recording of higher quantity after search, the respondents made futile exercise in their defence. - For the clear case of evasion based by cogent and credible evidence came to record, dealing with the other citations made by respondents is considered to be mere academic exercise - Decided in favour of Revenue. - Appeal Nos. E/2566-2580/2005 [SM], Appeal No. E/120/2006 [SM] - Final Order Nos. 50690-50705 - Dated:- .....

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l No. 121/06-EX [DB] on 5.12.2013 in the case of CC, Chandigarh Vs. Vinay Traders arising out of common cause as is in the present batch of appeals directed Registry to keep a copy of the final order passed therein vide No. 58638/13 in records of the present batch of appeals registered as E/2566/2005 to 2580/2005 and E/120/2006. 1.2 Revenue being unsuccessful before learned Commissioner (Appeals) has challenged his decision in these appeals contending that as perverse and ill-founded sanctioning .....

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n Kumar, Accountant of the Company. So also the parties (who were delers of the offending goods) as tabulated hereinafter faced penalties of ₹ 10,000/- each being buyers of duty evaded goods being concerned with the same. However, all these respondents were exonerated by learned Commissioner (Appeals) from charge of evasion. 2.1 Respondent, Surya Cotspin Limited was manufacturer of Cotton Yarn. Investigation found that it had removed 2,76,050 kgs. of unaccounted Cotton Yarn without payment .....

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00/- 8. M/s. Kailash Hosiery Company E/120/2006 10,000/- 9. M/s. Vinay Traders 10,000/- 10. M/s. Saurabh Yarn Agency E/2576/2005 10,000/- 11. M/s. Ultra Wear E/2574/2005 10,000/- 12. M/s. Ganpati Textiles. 2.2 Investigation had information that the Respondent M/s. Surya Cotspin Limited suppressing production quantity of cotton yarn and were clearing the same without payment of duty using parallel set of invoices issued to different buyers. Search was therefore conducted on 3.3.2001 to its premis .....

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ious day, i.e., 2/3/2001. 2.3 Investigation recovered an invoice book in the course of search. That did not contain folio numbers 251 to 300 and such fact was admitted by Shri Rajesh Goel, Director in his statement dated 03/03/2001. According to him, that book was resumed by Sales Tax Department on 21/2/2001 for some investigation and from that invoice book, invoices numbers 251 to 289 were issued. 3.1 On 7/03/2001, a person, named, Shri Swarat Singh along with another handed over photocopies of .....

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relevant documents, i.e., invoices, GRS and octroi receipts were destroyed by that respondent. He further stated that 114 copies of parallel invoices were xeroxed by him to expose duty evasion made by the respondent company. 3.2 The parallel invoices stated above when cross verified, it was revealed that 21 invoices were instrumental for clearance of unaccounted goods and 93 invoices were parallel which were used to clandestinely clear 220 to 300 kgs. of yarn valued ₹ 2,41,65,681/- to diff .....

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hose invoices with the evidences gathered from octroi authority of Ludhiana Municipality corroborating entry of clandestinely removed goods to that municipal jurisdiction. 4.2 To find out relevancy of the parallel invoices, some of the invoices were sent for examination by Govt. document examiner. That authority informed that the documents were copies of some original and signature appearing therein were of Shri Madan Lal, Director of the respondent manufacturer. 4.3 Ld. Adjudicating authority f .....

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7 kgs. of cotton yarn on 21.02.2001. Such goods were clandestinely cleared by the respondent manufacturer in terms of Invoice Nos. 290 and 291, both dated 21.02.2001 and without accompanying invoices for which those were seized by the sales tax authority. The invoice book recovered from the factory of the respondent manufacturer by the sales tax department of Patiala on 21.02.2001 revealed that invoice Nos. 290 and 291 were blank. Such evidence also proved methodology of clandestine clearances e .....

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evasion of excise duty of ₹ 22,61,821/- recoverable from M/s. Surya Cotspin Ltd. with equal amount of penalty under Rules 9(2) and 173Q of Central Excise Rules read with section 11AC of Central Excise Act, 1944. Similarly, penalty of the aforesaid magnitude were levied on the persons concerned and involved therein. 7. Objecting to the adjudication, when respondents went in appeal before ld. Commissioner (Appeals), they were exonerated from charges. He allowed their appeals on the ground th .....

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nly the parallel invoices contributed to the adjudication, but various factors like recording of higher production quantity subsequent to visit by investigation proving suppression of production , report of Govt. examiner showing signature of directors of respondent company on the parallel invoices, seizure of goods in the course of search by sales tax authority, octori record showing movement of clandestinely removed goods, seizure of two blank invoices, finding of physically inventorised stock .....

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re not produced. Respondents relied on the following decisions to contend that adjudication is bad in law:- i. CCE Vs. Welcure Drugs & Pharmaceuticals Ltd. [2014 (303) ELT 236 (Tri. Del.)]. ii. Pan Parag India Ltd. Vs. CCE [2013 (291) ELT 81 (Tri.)] iii. TM Industries Vs. CCE [1993 (68) ELT 807 (Tri.)] iv. J. Yashoda Vs. K. Shobha Rani [2007 (212) ELT 458 (SC)] v. Collector Vs. East Punjab Traders [1997 (89) ELT 11 (SC)] vi. Truwoods Pvt. Ltd. Vs. CC 205 (186) ELT 135 (Trib.)] vii. South Ind .....

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s. The blank copy of invoices is not the evidences since Shri Nirmal Singh who authorised release of the goods was neither an employee of the respondent manufacturer nor he was connected to any dealer of the goods. The driver carrying the goods in the truck did not say that the goods came from the premises of the respondents. Parallel invoices were brought by unscrupulous persons to cause damage to the respondents. Examination of the documents by Govt. examiner did not establish the case of Reve .....

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its burden of proof. Respondent failed to demolish the adjudication based on multiple factors including the statements recorded under Section 14 of Central Excise Act, 1944. Municipality record being public record proved the questionable modus operandi of the respondent manufacturer showing movement of clandestinely removed goods. Recording of higher quantity of production after visit by investigation self speak suppression of production prior to search. Suppressed production cleared clandestin .....

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in the factory of respondent manufacturer was found during search to have been unaccounted. No doubt copy of copy is inadmissible in evidence as has been held the Honble Supreme Court in the case of Collector of Customs, Bombay Vs. East Punjab Traders [1997 (089) ELT 0011 (SC)], but in the present case, parallel invoices were not the only material to hold clandestine removal. There are several other contributory factors as argued by Revenue and found by learned Adjudicating Authority establishe .....

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Respondent manufacturer with the aid of its dealers tabulated above dealing with clandestinely removed goods. 13. When the material evidence established fraud against Revenue white collar crimes committed under absolute secrecy shall not be exonerated from penal consequence of law following Apex Court judgment in the case of K. I. Pavunny v. AC, Cochin - 1997 (90) E.L.T. 241 (S.C.). An act of fraud on Revenue is always viewed seriously. Fraud and collusion vitiate even the most solemn proceeding .....

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party himself or from the ill will towards the other is immaterial. The expression fraud involves two elements, deceit and injury to the deceived. Undue advantage obtained by the deceiver, will almost always call loss or detriment to the deceived. Similarly a fraudis an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by anothers loss. It is a cheating intended to get an advantage. (See S.P. Changalvaraya .....

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f High School and Intermediate Education [2003 (8) SCC 311], Ram Chandra Singhs case (supra) and Ashok Leyland Ltd. v. State of T.N. and Another [2004 (3) SCC 1]. Suppression of a material document would also amount to a fraud on the court (see Gowrishankar v. Joshi Amha Shankar Family Trust, [1996 (3) SCC 310] and S.P. Chengalvaraya Naidus case AIR-1994 SC-853. No judgment of a Court can be allowed to stand if it has been obtained by fraud. Fraud unravels everything and fraud vitiates all trans .....

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idence gathered by investigation brings out preponderance of probability and nexus between the modus operandi of the respondent with the goods it dealt, and movement of goods from origin to destination is possible to be comprehended, it cannot be ruled out that circumstantial evidence equally play a role. In the present case, it is not only the photocopy that was used against the respondents, there are other credible and cogent documentary evidence, circumstantial evidence including oral evidenc .....

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