TMI Blog2015 (6) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Central Excise, Mumbai Versus M/s. Kalvert Foods India Pvt. Ltd. & Ors. [2011 (8) TMI 24 - SUPREME COURT OF INDIA] followed. Demand raised in the SCN dated 17.07.2001 is confirmed after allowing the cum-tax benefit and after applying correct rate of duty for 2000-2001 and on revised quantity for 2000-2001 in respect of clearance of goods to SCM - Demand of interest is confirmed under Section 11AB on the revised demand - Penalty imposed on the respondent M/s. SSP under Rule 173 Q of CER read 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 : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri C. Manikandan and his brother Shri Varadarajan for getting the processing charges on the fabrics processed and delivered to SCM. He also stated that they have cleared approximately 1000 to 1500 mtrs. of fabrics per month without payment of central excise duty. He deposed that from January,1997 to April, 1998 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 Shri K.R. Senthil kumar, Proprietor of SCM and also recorded his statement. He also admitted that they are getting grey fabrics processed from the respondent unit from 1991-1997 onwards. He also admitted that they received the processed fabrics from the respondent without payment of duty and without central excise invoices and occasionally respondent used to deliver the processed fab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 also proposes for confiscation of 11069 mts. of dyed cotton woven fabrics valued ₹ 2,49,059/- seized under mahazar on 06.03.2001 and demanded duty of ₹ 39,850/- and appropriation of duty already paid. Show cause notice was also issued to M/s.AP. Sons proposing confiscation of 4630 mtrs. of dyed woven fabrics valued at ₹ 94,915/- appeared to have been processed by the respondents and cleared without payment of duty seized under mahazar on 09.03.2001 and also proposed for penalty. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the evidences relied by the department and also white papers bearing the signature of Shri C. Manikandan, employee 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. CCE, Hyderabad-II 2005 (184) ELT 263 (Tri.-Bang.) 2. CCE, Mumbai Vs. Kalvert Foods India Pvt. Ltd. 2011 (270) ELT 643 (S.C.) 3. G.K. Mittal Vs. CCE,Noida 2012 (284) ELT 355 (Tri.-Del.) 4. Surjeet Singh Chhabra Vs. UOI 1997 (89) ELT 646 (S.C.) 5. Maganlal Gulabchand Shah Vs. UOI 1992 (*59) ELT 235 (Guj.) 6. Poonam Plastic Industries Vs. Collector of Customs 1989 (39) ELT 634 (Tri.) 7. Bute Cosmetics Vs. CCE,Trichy 2001 (135) ELT 886 (Tri.-Chen.) 9. On the other hand the Ld. Advocate for the respondent reiterated the findings in the impugned order and also reit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions of both the sides and perused the records and grounds of appeal where the Revenue filed appeal against dropping of the proceedings. On perusal of the SCN dated 17.07.2001 I find that excise duty of ₹ 22,05,090/- on the dyed woven fabrics removed without payment of duty during the period from 1996-97 to 2000-2001 as per the Annexure III to the SCN. The adjudicating authority in the impugned order dropped the major demand and confirmed duty of ₹ 39,850/- in respect of seized goods of 11069.30 mtrs. and imposed redemption fine 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 respondent M/s. Sree Srinivas Processing. Revenues main grounds of appeal is against the order dropping the demand proceedings on the alleged clandest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 his signature was found in the white papers relating to past clearances. The adjudicating authority failed to consider the vital statements recorded from Shri R. Rajasekaran, who is the Managing Partner of the respondent company and Shri K.R Senthil Kumar, Proprietor of SCM and statement of Shri P. Murugesan, Managing Partner of AP Sons, the top persons who mange the entire activities. Statements were recorded on 06.03.01, 16.04.01 and 21.06.01 from Shri R. Rajasekaran, who voluntarily admitted 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 durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation as already deposed by Shri R. Rajasekaran, Managing Partner of the respondent company in his statement. They have not only admitted that they used to send fabrics to the respondent unit for processing and received the processed fabrics without bills but also confirmed that they used to pay the job charges to Shri C. Manikandan, 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 per mtr. for dying and ₹ 6 for bleaching and for goods received without bills, they paid ₹ 3.50 for dying and ₹ 2.40 for bleaching. These facts clearly prove the well established modus operandi for clandestine removal by the respondent. 18. The statements of Shri R. Rajasekaran, Shri K.P. Senthil Kumar and Shri P. Murugesan are of vital import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor 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 the statements were retracted immediately. In the case of clandestine removal as evident from their modus operandi as discussed above, the respondent had cleverly master minded with the connivance of SCM and AP Sons for clearance of the processed fabrics without accounting in their records without payment of duty and ensured all evidences are destroyed immediately after the transaction is complete. The department had clearly 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 delive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts of the present case as the department in the present case is clearly proved and established the clandestine removal and proved their 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 apparently failed to consider all the above evidences and ignored the specific allegations brought out in the SCN particularly when the respondent clandestine removal of goods was caught red handed during the road check itself is an undisputed evidence corroborated with past clearance by same modus operandi by the same employee engaged by the respondent. It is established beyond doubt the malafide intention to evade payment of duty by the respondent. Recovery of white sheets, ledger, private records for past clearances confirms that the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for confirmation at the revised amount. The lower authority is directed to recompute the duty amount to the extent indicated above. (iii) As regards the quantity, the respondents plea that during 2000-2001 the duty has been demanded on excess quantity of 7661 MT fabrics cleared in 2000-2001 to SCM. As per Annexure-III of SCN the quantity shown as per invoice is 16964 MT whereas the correct quantity entered as per RG-I register was 24625.15 MT. Since the RGI register is a statutory record and if the correct quantity indicated in RGI account (as on 06.03.2001) 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 correctly computed and the respondents have not come out with any clear evidence. Therefore, the same is liable for rejection. (v) As regards ..... X X X X Extracts X X X X X X X X Extracts X X X X
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