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M/s. Kalpana Industries, Shri NK. Surana, Director Versus Commissioner of Central Excise & ST., Daman, Commissioner of Central Excise & ST., Daman Versus M/s. Kalpana Industries

2015 (5) TMI 136 - CESTAT AHMEDABAD

Shortage of finished goods and raw material - Clandestine removal of goods - Hed that:- Authorised signatories of assessee company admitted shortage of the goods and agreed to pay the duty leviable thereon - They also accepted that there is difference in recording of production in two registers, in RG-1 and Daily Progress Report Register. - appellant in their reply to show cause notice retracted the statements. I find that after the visit of the officers, the appellant had accepted the Panchnama .....

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Shri N.K. Surana in his statement admitted the shortage of the raw materials. It is noted that shortage of raw material for various resins. There is no material available on record that the raw materials were clandestinely removed. The appellant contended that the shortage of raw material was consumed in the finished goods, removed clandestinely and the demand of duty was confirmed. There is no requirement of one-to-one co-relation of input and finished goods in the CENVAT scheme. Hence .....

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ated with any evidence and therefore, it can not be accepted in the eye of law. Hence I agree with the findings of the lower authorities in respect of demand of duty in the Daily Progress Report Register.

Regarding the imposition of penalty on the Director of the Company, I find that he has stated in his statement that he was not aware of the maintenance of Daily Progress Report Register in their factory. The findings of the lower authorities that the Director was aware of clandestine .....

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mber (Judicial) And Mr. P. K. Das, Hon ble Member (Judicial),JJ. For the Petitioner : Shri H.D. Dave, Advocate For the Respondent : Shri G.P. Thomas, Authorised Representative ORDER Per : Mr. P.K. Das; The relevant facts of the case, in brief, are that M/s. Kalpana Industries Limited, the assessee, engaged in the manufacture of PVC Compound and PVC waste and scrap and PVC Master Batches classifiable under Chapter 39 and 32 of the Schedule to the Central Excise Tariff Act, 1985. On 14.11.1997, th .....

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RG-1 register. A statement dated 15.11.1997 of Shri L.P. Choraria, Authorised Signatory of the assessee was recorded. Further, statements dated 05.01.1998 and 18.12.1998 of Shri N.K. Surana, Director were also recorded. 2. Show cause notice dated 18.01.1999 was issued proposing demand of duty on the shortage of finished goods and raw materials as well as differential duty on the basis of Daily Progress Report Register and RG-1, alongwith interest and to impose penalty of equal amount of duty. I .....

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y on the other noticees. The Tribunal by final order No. A/1575 to 1576/WZB/06-C-III (EB) dated 24.7.2006, set-aside the adjudication order and remanded the matter to the adjudicating authority to pass an order after observing the principles of natural justice. In de-novo adjudication, the adjudicating authority confirmed the demand of Central Excise duty amounting to ₹ 14,04,884/- alongwith interest and imposed penalty of equal amount of duty on the assessee. It has also appropriated the .....

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qual amount of duty and also reduced the penalty to Rs. One lakh on Shri N.K. Surana, Director. It has set-aside the demand of duty of ₹ 3,62,346/- and penalty on the shortage of finished goods. The assessee and its Director filed appeals before the Tribunal. Revenue also filed appeal against the impugned order to the extent of modification of the adjudication order. 3. Learned Advocate on behalf of the appellant submits that the Tribunal by remand order directed the adjudicating authority .....

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idence of procurement of raw materials and use of electricity, sell of goods to the buyers and collection of money etc. in respect of alleged clandestine removal of goods. It is submitted that there is no shortage of the raw materials and finished goods during the verification since stock in process was not taken into consideration. Further, the visiting officers have taken the stock on eye estimation basis, as there is no detail of stock taking mentioned in the Panchnama. In any event, the shor .....

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shed goods as on 14.11.1997 was not deducted from the RG-1 balance, which was found during stock verification on 24.6.1998. It is further submitted that investigation was conducted on 14.11.1997 and the show cause notice was issued on 18.01.1999, which was barred by limitation, as held by the Hon'ble Supreme Court in the case of CCE, Mangalore vs. Pals Microsystems Limited 2011 (270) ELT 305 (SC). 4. He also relied upon the various decisions as under:- (a) Sisco Industries Limited vs. Commis .....

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E.L.T. 438 (Tri. Del.) (f) Fact Paper Mills Limited vs. Commissioner of Central Excise, Bhavnagar - 2014 (314) ELT 449 (Ahmd.) - 5. On the other hand, the learned Authorised Representative for the Revenue reiterates the findings of the Commissioner (Appeals). He submits that Shri L.P. Choraria, Authorised Signatory in his statement dated 15.11.1997 confirmed the contents of the Panchnama dated 14.11.1997, and clandestine removal of goods and shortage of raw materials and finished goods. Shri N. .....

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ment and on the contrary, he has confirmed his earlier statement even after one year on 18.12.1998. In these circumstances, there is no requirement of cross-examination of the Panchas, Director and Authorised Signatory. He relied upon the decision of the Hon ble Supreme Court in the case of Surjeet Singh Chhabra vs. Union of India - 1997 (89) ELT 646 (S.C.) and the decision of the Hon ble Kerala High Court, in the case of K.P. Abdul Majeed vs. Commissioner of Customs, Cochin - 2014 (309) ELT 671 .....

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possible that the assessee had manufactured the goods and kept in their stock. It is also contended that the demand of duty on the basis of Daily Progress Report Register is corroborated with the statement of the Authorised Signatory and the Director of the assessee, who admitted the clearances of the goods on the basis of Daily Progress Report Register and therefore, there is no need of cross-examination of the writer of the said record. It is submitted that demand was raised, not merely on the .....

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Signatory of the assessee in his statement dated 15.11.1997 admitted the shortage of the finished goods as well as raw materials as mentioned in the Panchnama and fully admitted that they have removed the finished goods illicitly without preparing the Central Excise invoices and without payment of Central Excise duty. Regarding the shortage of raw materials, it is submitted that they have removed the finished goods illicitly without following the Central Excise procedure. As against the Central .....

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d 05.01.1998 accepted the contents of the statement of Shri L.P. Choraria and the Panchnama dated 14/15.11.1997. He also admitted shortage of the goods and agreed to pay the duty leviable thereon. He also accepted that there is difference in recording of production in two registers, in RG-1 and Daily Progress Report Register. He stated that he was not aware of the Daily Progress Report Register maintained in the factory. Shri N.K. Surana, in his further statement dated 18.12.1998 confirmed the e .....

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Retractions of statement in reply to the show cause notice is not corroborated with any evidence and therefore, such a retraction can not be accepted. So I agree with the findings of the lower authorities that there is no requirement of cross-examination. 9. Regarding the shortage of raw materials, the appellant stated that the said raw materials were used in the finished goods, cleared clandestinely as alleged and the demand of duty on finished goods was set-aside by the Commissioner (Appeals) .....

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es could not have been used in manufacture the finished goods (PVC compounds) found short. It is further observed that these raw materials found short were clandestinely removed from their factory without payment of duty. 10. I am unable to agree with the finding of the Commissioner (Appeals). I find that Shri N.K. Surana in his statement admitted the shortage of the raw materials. It is noted that shortage of raw material for various resins. There is no material available on record that the raw .....

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finished goods, the Commissioner (Appeals) observed as under:- 22. However, the appellants have raised a relevant point that though some physical shortages were noticed as per recorded balances on 14.11.1997, the appellants had not reduced the RG-1 recorded balance by the alleged shortage and had carried forward the recorded balance subsequently. It is also true that when the stock taking was done in their factory, subsequently, on 26.04.1998 by the department officers no discrepancy was noticed .....

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case, duty cannot be demanded on this score. In other words, the demand on this account amounting to ₹ 3.62 Lakhs cannot be sustained. I find that this point was raised by the appellants before the adjudicating authority also [14 (e) of the OIO refers] but he has not bothered to even discuss this point. The Revenue in their grounds of appeal stated that the Authorised Signatory admitted the shortage of finished goods in his statement and therefore, there is no need to prove the shortage. C .....

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e demand of duty of ₹ 5,98,470/- on the basis of Daily Progress Report Register. The main argument of the appellant is that the employee, who maintained this register was not examined. I find that the Director and the Authorised Signatory of the assessee had admitted the authenticity of the register in various statements. They have not disowned this register at any point of time, before filing of the reply to show cause notice. It is already observed stated that retraction of statement in .....

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adopted while determining shortage. It should not be concluded on mere surmises or assumption or presumption. In the present case, there was enquiry by the Central Excise officers by recording statements and therefore, the said case law will not be applicable here. (b) In the case of Power Electrical & Electronics (supra), the assessee is alleging that Revenue officers had not taken into account the quantity available in factory and used in the manufacture of finished goods. In the present c .....

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a), the stock verification done wrongly as the pipes segregated into three categories of Light, Medium and Heavy and weight per meter length of each category assumed and total weight of all pipes are arrived at. In the present case, the assessee in their statements had never pointed out that the stock verification was done on eye estimation basis and therefore, the said case law will not be applicable in the present case. (e) In the case of Fact Paper Mills Limited (supra), the Director retracte .....

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and investigating officers had not recorded statement of any of the security persons. In the present case, a register was found in the office premises of the assessee and the Authorised Signatory had admitted the said document. (g) It is evident from the record that in present case, the enquiry was conducted on various dates to corroborate clandestine removal of goods, and , the extended period of limitation would be invoked. 14. Regarding the imposition of penalty on the Director of the Compan .....

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