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CCE, Salem Versus M/s. Sree Srinivasa Processing

2015 (6) TMI 46 - CESTAT CHENNAI

Duty demand - Clandestine removal of goods - Confiscation of seized goods - Imposition of redemption fine - Held that:- Statements recorded from the Managing Partner and also from the Proprietor of SCM and Managing partner of AP & Sons, cannot be said to be recorded in duress or by force. These statements were voluntarily made by the deponents before the central excise officers. Even if any of the statements were retracted subsequently, it cannot be held as invalid as in the instant case none of .....

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11069.30 mts. dyed woven fabrics cleared without payment of duty and established past clearances with the ledgers, private records, white sheets and white papers of the respondent co. These white papers are not unsigned papers but they contain the details of quantity, colour and amount which are duly signed by Shri C. Manikandan, which was recovered from the supplier confirms the delivery of the processed fabrics and receipt of job charges in cash. Decision in the case of Commissioner of Centra .....

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with Rule 25 of CER under Section 11AC of CE Act equivalent to the revised demand - Decided partly in favour of assessee. - E/442/2003 & E/CO/16/2004 - Final Order No. 40553 / 2015 - Dated:- 22-5-2015 - Hon ble Shri R. Periasami,J. For the Appellant : Shri Rammohan Rao, DC (AR) For the Respondent : Shri S. Venkatachalam, Adv. ORDER Revenue filed appeal against the Order in Original No. 14/2010 dated 20.03.2010 passed by the Commissioner of Central Excise, Coimbatore against dropping of proceedi .....

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espondent). Dyed cotton woven fabrics were loaded from the respondent factory at 15.00 hrs and the same were transported for delivery at M/s. Sindu Cotton Mills, (herein after SCM), Erode. The said fabrics valued at ₹ 2,49,059/-were seized on the reasonable belief that the same were processed and cleared clandestinely without payment of duty and without central excise documents by the respondent and the van was also seized. Officers conducted series of follow up actions and recorded statem .....

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gently and Shri C. Manikandan, staff of their company, without their knowledge taken the fabrics and agreed pay the duty on the seized goods. Further, statement was recorded from Shri S. Rajasekaran on 16.04.2001 and 21.06.2001 wherein he has deposed that as the processing charges are low they could not pay the central excise duty for the processed fabrics and also stated that the parties were not interested in paying duty for fabrics processed. They have also been forced to clear small portion .....

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98 they have processed and cleared the fabrics only after the payment of duty. Since the market was very poor afterwards and as the parties insisted for processing without payment of duty and raised invoices for limited quantity and assured that such lapses would not happen in future. 3. Investigating officers conducted detailed search and follow up actions visited the premises of various suppliers of grey fabrics and also visited SCM on 07.03.2001 and verified the records in the presence of Shr .....

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pay the job charges to him after taking the delivery of the fabrics and also after getting his signature on a white paper. 4. Officers also visited the premises of M/s. A.P.& Sons and verified the records and recorded statement from Shri P. Murugesan, Managing Partner dated 09.03.2001. He deposed in his statement that they used to send grey fabrics and get it processed from the respondent unit. He also admitted in his statement that the respondents used to issue central excise bills on some .....

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y raise bills but they used to pay only Rs. @3.50 for dying and ₹ 2.40 per mtr. for bleaching without bills. He also admitted that they processed approximately 10,000 mtrs per month from the respondent from 1997-98 to 1999-2000 and in 2000-2001 they have processed 30000 mtrs. fabrics per month and settled the job charges (with or without bills). He also admitted that they have not sent the fabrics with delivery challan and also admitted that the respondent used send the fabrics along with .....

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rom Shri J. Manoharan on 27.03.2001, Owner of the van and Shri P. Subramaniam, Proprietor of Shri Balaji Fabrics. On completion of investigation, a show cause notice was issued to the respondent proposing demand of central excise duty of ₹ 22,05,090/- on the dyed woven cotton fabrics as detailed in annexure-3 of the show cause notice under proviso to Section 11A and also proposed penalty under Rule 173Q read with Rule 25 and under Section 11AC and also demand of interest. Show cause notice .....

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enalty. SCN was also issued to Shri S. Rajasekaran, Managing partner of the respondent company, Shri J. Manoharan, owner of the van, Shri A.Pavun, driver of the van for penalty under Rule 209A read with Rule 26 of CER, 2001. 6. Commissioner Central Excise, Coimbatore in the impugned order dropped further proceedings in respect of excise duty demanded on the clandestine removal of goods except on 11069.30 mtrs. dyed woven fabrics seized under mahazar on 06.03.2001. He confirmed the duty of ₹ .....

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amp; Sons. He also ordered confiscation of the van valued at ₹ 1,50,000/- and ordered appropriation of ₹ 15,000/- towards fine and imposed penalty of ₹ 10,000/- on Shri R. Rajasekaran under Section 38A of the CEA,1944 read with Rule 26 of CER,2001. And imposed a penalty of ₹ 5000/- on Shri C.A. Pavun, Driver of the van under Rule 209A. CBEC reviewed the said order and Revenue preferred appeal against dropping of proceedings. 7. Ld. AR on behalf of the Revenue reiterated t .....

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tinely without accounting and without payment of central excise duty. The lot register recovered from SCM clearly proves the quantity of grey fabrics sent to the respondent unit. Two files containing white papers recovered at the premises of SCM issued by the respondent contained the details of process carried out and amount collected on the fabrics supplied by SCM. He further submits that statement by the Managing Partner Shri R. Rajashekaran clearly admitted the clandestine removal of processe .....

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oyee of the respondent company where he signed as cash received. White paper also contain the quantity, colour of the processed fabrics. He submits that the department has established beyond doubt. In the case of clandestine removal, Department is not required to establish with clear evidence as the respondent deliberately destroyed the records and preponderant of evidence is sufficient. He relied on the following case laws in support of his contention: 1. Gulabchand Silk Mills Pvt. Ltd. Vs. C .....

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dent reiterated the findings in the impugned order and also reiterated the grounds made in the cross appeal filed by them. The adjudicating authority rightly dropped the proceedings. He submits that entire case has been made out by the department based on the statements recorded from various persons and no corroborative evidences or witnesses produced. The statements recorded were also retracted subsequently. Statement of Shri C. Manikandan was relied by the department but he never stated that t .....

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the department is arbitrary on the alleged clearance of processed fabrics and the quantity shown in the work sheet is wrong. The department erroneously indicated excess quantity of 7661.15 mtrs. shown in respect of SCM for 2000-2001. He also submits that excise duty demanded @ 24% for the year 2000-2001 (16%BED and 8% ADE) whereas the correct rate of duty is 16% (8% BED and 8% ADE). He further submits that the quantity of clandestine removal to AP & Sons as shown by the department for the y .....

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ndent on the clearances of processed fabrics to SCM and AP & Sons. He relied upon the following case laws in support of his contention. 1. Sanket Food Products Pvt. Ltd. Vs. CCE 2005 (188) ELT 107 (Tri.) 2. Premium Packaging Pvt. Ltd. Vs. CCE 2005 (184) ELT 165 (Tri.) 3. Rama Shyama Papers Ltd. Vs. CCE 2004 (168) ELT 494 (Tri.-Del) 4. Kumar Cotton Mills Pvt. Ltd. Vs. CCE 2008 (229) ELT 273 (Tri.-Ahmd.) 11. I have carefully considered the submissions of both the sides and perused the records .....

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of ₹ 20,000/- on the confiscated goods seized under mahazar and ₹ 15,000/- on the owner of the vehicle and also imposed a penalty of R. 39,850/- on the respondent and ₹ 10,000/- on Shri R. Rajasekharan, Managing Partner and ₹ 5,000/- on Shri A. Pavun, driver of the van. 12. I find from the SCN that there are five co-noticees namely, M/s. Sindu Cotton Mills (SCM), AP & Sons, Shri S. Rajasekaran, Shri C.A. Pavun, Shri J. Manoharan. The Revenue appeal is only against the .....

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re of dyed cotton woven fabrics of 11069.30 mtrs. valued ₹ 2,49,059/- pertaining to the respondent unit without valid documents transported in a matador van on 6.3.2001 and intercepted in transit check. Shri C. Manikandan, an employee of the respondent company accompanied the said van containing the dyed woven fabrics. After seizure statements were recorded from Shri C. Manikandan, Shri R. Rajasekharan, Managing partner of the respondent company, Shri A.C. Pavun, driver and other individua .....

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/s. AP & Sons, Erode, verified the records and recorded statement from Shri P. Murugesan, Managing Partner of AP & Sons. Statements also recorded from Shri P. Subramaniam, Proprietor of M/s. Sree Balaji Fabrics on 29.06.2001 and from the owner of the vehicle Shri J. Manoharan, and from Shri C.A. Pavun, Driver of the vehicle. The investigation established clandestine removal of goods by recovery of private records from SCM, AP & Sons and Sree Balaji Fabrics etc., and from the responde .....

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by surmises. 15. The lower authoritys findings is not well founded for the reasons that the entire investigation emanated from the seizure of dyed cotton woven fabrics of 11069.30 mtrs. clandestinely removed from the respondents unit without any valid documents and without payment of central excise duty, which is not in dispute. It is clearly brought out in the investigation that Shri C. Manikandan, an employee of the respondent company had accompanied the said goods for delivery to SCM and h .....

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tted that the goods under seizure were cleared without accounting and without payment of duty and also admitted that they were supplying the processed fabrics to both SCM and AP & Sons in the past from 1997-98 onwards. He clearly admitted that initially during the period 1997-1998 they used to clear the processed fabrics only on payment of duty under central excise invoices and subsequently due to severe market crunch, suppliers insisted them for processing grey fabrics without payment of du .....

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m SCM etc. The adjudicating authority failed to take note of the above statement of Shri R. Rajasekaran, Managing partner of the respondent unit, which is supported by other statements and records. 16. Further I find that the department clearly established the receipt of non duty paid processed fabrics by SCM. On perusal of copies of white paper dated 07.04.2000 which clearly shows the supply of 1005.01 mts. and it is duly signed by Shri C. Manikandan for delivery of goods and cash received. Ano .....

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learly shows the description of goods and quantity of processed fabrics delivered and cash received. These vital evidences were not discussed by the adjudicating authority. Therefore, the department has clearly brought out in the SCN clandestine clearance of processed fabrics without payment of duty with connivance of the suppliers ie., SCM and AP & Sons through their employee. 17. It is also pertinent to state that the statements of Shri K.P. Senthil kumar, Proprietor of SCM and Shri P.Muru .....

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after getting signature on the white sheets. This clearly confirms modus operandi adopted by the respondent unit in connivance of the suppliers. Shri P. Murugensan, Managing Partner, in his statement clearly admitted that they used to send grey fabrics to the respondent unit and receive processed fabrics and they used to pay at different rates depending on whether the goods with bills or without bills. Iin the case of processed fabrics received with bills / invoices they paid, ₹ 8 to 10 p .....

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tions between the respondent. Any statements recorded before the central excise officer is a valid evidence and it cannot be said to be coercive. The Honble Supreme Court in the case of CCE Mumbai Vs. Kalvert Foods India Pvt. Ltd. (supra) has clearly held that statement recorded by officers only be made with personal knowledge and not obtained through coercion or duress or through dictation. Relevant portion of the sad decision is reproduced as under:- 18. During the course of arguments learned .....

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he details about the functioning of the company which could be made only with personal knowledge of the respondents and therefore could not have been obtained through coercion or duress or through dictation. We see no reason why the aforesaid statements made in the circumstances of the case should not be considered, looked into and relied upon. 19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of thei .....

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tements of the concerned persons were of their volition and not outcome of any duress. The ratio of the Honble Apex Court decision squarely applicable to the present case and the statements recorded from the Managing Partner and also from the Proprietor of SCM and Managing partner of AP & Sons, cannot be said to be recorded in duress or by force. These statements were voluntarily made by the deponents before the central excise officers. Even if any of the statements were retracted subsequen .....

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established from interception of van carrying fabrics and seizure of 11069.30 mts. dyed woven fabrics cleared without payment of duty and established past clearances with the ledgers, private records, white sheets and white papers of the respondent co. These white papers are not unsigned papers but they contain the details of quantity, colour and amount which are duly signed by Shri C. Manikandan, which was recovered from the supplier confirms the delivery of the processed fabrics and receipt of .....

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on 178A does not apply, the burden of proving that the goods are smuggled goods, is on the Department. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the onus cast by it, we must pay due regard to other kindred principles, no less fundamental, or universal application. One of them is that the prosecution or the Department is not required to prove its .....

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asis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent mans estimate as to the probabilities of the case. 31. The other cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered to use the words of Lord Mansfield in Blatch v. Archar (1774) 1 Cowp. 63 at p. 65 According to the Proof which it was in the power of one si .....

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r case and the burden of proof is on the respondent to prove otherwise. 20. Further, in the case of Gulabchand Silk Mills Pvt. Ltd. (supra) the Honble Tribunal clearly held that clandestine activity can be best established by circumstantial evidence and it is humanly impossible to establish every link in the chain of clandestine activity. The ratio of the above decisions squarely relevant to the present case. By respectfully following the above judgements, I hold that the adjudicating authority .....

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cords for past clearances confirms that the respondent used to clear the fabrics without payment of duty which is duly authenticated by the signature of the employee Shri C. Manikandan. It also confirms that the respondents are habitual in clearing the goods without payment of duty and without valid invoices and occasionally with payment of duty. Three top persons of the respondent companies and the suppliers namely Shri R. Rajendran, Shri K.R. Senthil Kumar and Shri P. Murugesan had clearly adm .....

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ngly, impugned order is liable to be set aside to the extent of dropping the excise duty demand of ₹ 22,05,090/- on the goods cleared for the period from 1996-97 to 2000 to 2001 (upto 6.3.2001). 21. The respondent in their cross objection pleaded that they are eligible for cum-tax benefit and they are eligible for modvat credit. Respondent also disputed Annexure-3 of the SCN on total quantity arrived by the department for the year 2000-2001 and also contended that Revenue charged higher ra .....

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g adoption of higher rate of duty in respect of the quantity cleared for the year 2000-2001. On perusal of Notification No. 17/2000-CE dated 01.03.2000, I find that correct rate of duty chargeable is @ 16% (8% BED and 8% ADE) and not 24% (16% BED and 8% ADE) as indicated in SCN. Lower authority to redetermine the demand. Accordingly, I hold that the revised duty @ 16% (BED 8% + AED 8%) is applicable for the year 2000-2001 and same is liable for confirmation at the revised amount. The lower autho .....

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6.03.2001) is 24625.15 MT the quantity shown in Annexure-III as 16964 MTs is liable to be revised subject to verification of the RGI records by the lower authority and if found correct the differential duty on excess quantity of 7661.15 MT is liable to be excluded. (iv) The respondents other contention in respect of quantity accounted for the clearance made to AP & Sons that duty has been demanded twice on the seized quantity. I find from Annexure-III to the SCN, the quantity has been corre .....

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