TMI Blog2015 (7) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... hampur and it has been alleged that it is this unaccounted scrap which was used for unaccounted manufacture of Aluminium Profiles/Sections, which has been cleared clandestinely to various parities including Nagina Enterprises and Tarachand Fauzmal, Mumbai. Documents recovered from the residential premises of Shri Mahendra Sethia show the sales to a number of other parties, i.e. other than M/s. Nagina Enterprises, M/s. Tarachand Fouzmal, M/s. G. Gajendra & Company, M/s. Ambika Aluminium Profiles & M/s. Deepak Metals, which are not corroborated by any documents recovered from the premises of the transporter, Capital Road Lines & Parcel Services. These parties are from places other than Mumbai. No inquiry has been conducted with these parties. In our view, in respect of the such entries in the private records maintained by Shri Mahendra Sethia which are not corroborated by any other evidence, in form of transporter s documents or statement of the customers or goods manufactured by MAPL having been recovered from their premises, the duty demand would not be sustainable. According to the appellant duty demand on the quantity of 6,99,851 kgs. of Aluminium Profiles/sections mentioned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al excise under chapter 76 of the Central Excise Tariff. Shri Manishraj Jain, Shri Mohanlal Sethia and Shri Mahendra Sethia are the Directors of MAPL. While Shri Manishraj Jain and Shri Mohanlal Sethia have share holding in MAPL, Shri Mahendra Sethia does not have any share holding and is a paid Director, who functions on salary of ₹ 15,000/- plus residence and vehicle provided by MAPL. According to the Appellants, Shri Mohanlal Sethia had joined MAPL as a paid Director on Feb. 2003. M/s. Mahaveer Metal, Mumbai (hereinafter referred to as MM ), M/s. Nagina Enterprises, Mumbai (hereinafter referred to as NE ), M/s. Ficon Aluminium (P) Ltd. (FAPL) and M/s. Peeraj Trade Links (hereinafter referred to as PTL ) all located at 17, Abdul Rehman Street, Mumbai, which deal Aluminium Profiles and Sections. Shri Manishraj Jain is partner of NE. 1.2 On receipt of an intelligence that MAPL are engaged in evasion of duty, the officers of Directorate General of Central Excise Intelligence (DGCEI) on 18.09.2003, searched the following premises:- (A) Factory premises of MAPL; (B) Office premises of MAPL at Sunrise Tower, Indore; (C) Premises of NE, MM, FAPL and PTL at Mumbai; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in his statement dated 18.09.2003 stated that the goods booked in the name of Metchem India, Jainco Aluminium and Narmada Trading by showing them as consignors had actually been loaded from the factory of MAPL under the direction of Shri Jayanti Bhai and the goods had been delivered to NE, Mumbai and M/s. Tarachand Fouzmal, Mumbai. However, on inquiry with Shri Jayant Bhai, Proprietor of M/s.Metchem India, it was found that he was ex-employee of MAPL but he refuted the statement of Shri Mangal Singh of Capital Road Lines. 1.2.4 On 7.1.2004, the premises of Capital Road Lines and Parcel Services at Mumbai were searched. A computer printout from the computer in the premises of the Capital Road Lines and Parcel Services, Mumbai was resumed. The print out appeared to contain the details of consignments of Aluminium Profiles and Sections transported from Indore to Bombay and also the details of the consignments of scrap dispatched from Mumbai. From the print out, it appeared that the Aluminium scrap was being dispatched from Mumbai in the name of different consignors like M/s. Navdurga Metal, M/s. B.K. Metal, M/s. Ganesh Metal, M/s. Ambika Metal and was being cosigned to M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been prepared by him the same had been prepared on the instructions of Shri Mahendra Sethia, but no goods had been dispatched. This statement of Shri Davendra Dawani appeared to be false as when he accepted that the weighment slips had been prepared by him, there is no explanation for the presence of those weighment slips in the godown of M/s.NE along with the consignment of 352 bundles weighing 20,352 kgs. found in the godown and these goods, therefore, appeared to have been cleared by MAPL, Pithampur without payment of duty. 1.2.7 On the basis of entries regarding dispatch of the finished goods in the documents A/3, A/4, A/5, A/7, A/10, A/11 A/12 recovered from the residential premises of Shri Mahendra Sethia, the investigating officered prepared a chart enclosed as Annexure-I to the show cause notice giving details of the Aluminium Sections which appeared to have been cleared clandestinely without payment of duty to various parties during the period from Jan. 2003 to September, 2003. Total value of these clearances is ₹ 76,41,20,031/- and the duty chargeable on these clearances is ₹ 1,22,35,525/-. Similarly, on the basis of the entries in the documents A-8, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises, M/s. Mahaveer Metal, M/s. Ficon Aluminium (P) Ltd and M/s. Peeraj Trade Link for - (a) recovery of central excise duty amounting to ₹ 1,38,34,497/- (Rs.1,22,35,525/- + ₹ 15,98,972/-) appeared to have been evaded in respect of the clearances of Aluminium Profile as detailed in Annexure-1 and Annexure-1A to the show cause notice which includes the duty chargeable on 20,359 kgs of the goods seized from the godown premises of M/s. Nagina Enterprises, Mumbai under proviso to Section 11A(1) of the Central Excise Act, 1944 along with interest on it read with Section 11 AB; (b) imposition of penalty on MAPL under Section 11AC; and (c) imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on Shri Mahendra Kumar Sethia, Manish Raj Jain, M/s. Nagina Enterprises, M/s. Mahaveer Metals Works Ltd., M/s. Ficon Aluminium Pvt.Ltd. and M/s. Peeraj Trade Link. Mumbai. 1.4 The above show cause notice was adjudicated by the Commissioner vide order-in-original dated 18.11.2005 by which he (a) Confirmed central excise duty demand of ₹ 1,38,34,497/- against MAPL, Pithampur under proviso to Section 11A(1) of Central Excise Act, 1944 along with interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a that the documents recovered from the residential premises of Shri Mahendra Sethia on the basis of which the Department s allegation of duty evasion against MAPL is based, are not reliable and do not reflect the actual quantum of finished goods manufactured and cleared and actual receipt of the raw materials in the factory of MAPL. (2) Though Shri Mahendra Sethia in his statements dated 18.09.2003 16.10.2003 and 17.10.2003 has stated that the note books recovered from his residential premises pertain to the actual figures of sale and purchase made by MAPL but subsequently he retracted these statements stating that the figures contained in these diaries/files seized from him are imaginary figures prepared for the purpose of preparing documents for taking loan from the bank. (3) Though the Department seeks to corroborate allegation of clandestine removal based on the entries in the documents recovered from the residential premises of Shri Mahendra Sethia by alleging that the appellant during the period Jan. 2003 to September, 2003 received unaccounted consignment of Aluminium Scrap from suppliers in Mumbai, this allegation is also based on the documents recovered from the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endra Sethia in his cross examination on 14.2.2005 in an answer to a Question-(4) had stated that records seized from his residence did not reflect true and clear clearance by MAPL and he explained that the purpose of writing those documents was to get the loan from the bank. Similarly, Shri Mangal Singh, employee of Capital Road Lines in his cross examination had stated that he never personally supervised loading of the goods from MAPL. Similarly, in course of his cross examination, Shri Mahendra Jain, Manager, Capital Road Lines, also stated that he had only signed the statement in his writing and he did not remember the contents of the statement and that he did not personally supervise the loading of the goods at the factory of MAPL.Shri Tilak Lodaya, Manager of M/s.Capital Road Lines, Mumbai during his cross examination stated that the computer print-out generated from his computer at the Mumbai Office of the Capital Road Lines had been generated on 15.01.2004 but he was made to sign the same on back date i.e. 7.1.2004. It was obligatory on the part of the adjudicating authority to have taken into consideration the averments made by the witnesses in course of their cross examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure-1 for the period Jan. 2003 to September, 2003 and the duty demand of 85,520.34 kgs. in Annexure-1A for the period December, 2000 to October, 2001 would not be sustainable. (9) Shri Tilak Raj Lodaya, Authorised Representative of Capital Road Lines in his statement dated 7.1.2014 has stated that the computer print out recovered and seized from his office was containing details of the transportation provided by MAPL to Shri Manishraj Jain for transportation of Aluminium scrap from Mumbai to Indore under different names as per direction of Shri Manishraj Jain. He further stated that the computerized print out taken from the Mumbai office of the Transport Company also contained the details of the Aluminium Profiles consigned from Indore Branch in the name of different parties, M/s. Jainco Aluminium , M/s.Metchem India, etc. to M/s.Nagina Enterprises, Mumbai. He also disclosed the freight regarding transportation of the profiles from MAPL factory to Mumbai factory and transportation of the scrap from Mumbai to MAPL factory was being paid by Shri Manishraj Jain, Director, MAPL. However, Shri Manishraj Jain, Director, MAPL in his statement dated 4.2.2004 has flatly refused that M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per day. If the allegation of clandestine removal during Jan. 2003 to September, 2003 is accepted, it would translate into production of 2.698 times their installed capacity, which is not possible. Moreover the allegation of clandestine manufacture and removal of Aluminium profiles/sections during Jan. 2003 to September, 2003 and from December, 2000 to October, 2001 is not supported by power consumption. While Average power consumption per kg. of Aluminium sections/profiles produced during 1.1.2000 to 30.09.2002 was 1.06 units/kg., the same during 1.1.2001 tofd 30.09.2001 was 1.18 units/kg. and during 1.1.2003 to 30.09.2003 was 1.24 units/kg. Similarly, the labour employed during 1.1.2001 to 30.09.2001, 1.1.2002 to 30.09.2002 and 1.1.2003 to 30.09.2003 were 17, 20 and 29 respectively. (14) The show cause notice alleged that from scrutiny of the note book marked A/3 to A/5, A/7, A/10, A/11 recovered from the residence of Shri Mahendra Sethia , it appeared that a sum of ₹ 29,66,023/- had been paid on account of Shri James Paul by MAPL to Shri Yogesh Dubey and Shri Patelji. These persons were summed by the Investigating Officers but they did not appear. Shri Devendra Dawani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocedure before a Magistrate and as such said statement is to be corroborated by the evidence of removal without payment of duty and that such statements without corroborative evidence cannot be considered to be supportive of the allegation of clandestine removal. (iii) Arch Pharmalabs Ltd. Vs. CCE, Hyderabad 2005 (182) ELT 413 (Tribunal-Bang.) Wherein it was held that commercial invoices and delivery challans prepared by the appellant solely for raising higher bank loans and entries made in the private diary cannot be made the basis for establishing clandestine removal when no evidence has been produced by the Revenue in respect of the unaccounted receipt of inputs or manufacture of finished goods and removal thereof. (iv) T.G.L. Poshak Corporation Vs. CCE, Hyderabad 2002 (140) ELT 187 (Tribunal-Chennai) Wherein it was held that the note books maintained by the workers and other private accounts cannot be the basis for establishing the charge of clandestine removal without any other corroborative evidence with regard to purchase of raw material, manufacture of final products, flow back of money or any seizure from or any statement from purchasers. (v) CCE, Chandigarh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from him. (3) The entries in the documents recovered from the premises of Shri Mahendra Sethia with regard to sale of Aluminium Profiles to some buyers of Mumbai are also corroborated by the documents recovered from the transporters Capital Road Lines and the statements of their employees. M/s.MAPL in respect of the clandestine clearance to buyers in Mumbai were showing the consignor s names like Metechem India , M/s.Narmada Traders, etc. The freight in respect of these dispatches to Mumbai was being paid by Shri Manishraj Jain, Director of MAPL, who was also a partner of M/s.Nagina Enterprises. (4) The documents recovered from the transporters clearly indicated that the consignments of Aluminium Scrap were being booked by Shri Manishraj Jain from Mumbai by showing bogus names as consignors and showing M/s.MallinathAluminium, New Delhi as consignee and all these consignments were being received in the factory of MAPL. On enquiry, Shri Mallinath Aluminium were found to be a fictitious party. (5) At the time of search of godown of M/s. Nagina Enterprises, Mumbai, 352 bundles of Aluminium Profiles totally weighing 20,359 kgs. had been found alongwith weighment slips. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Mumbai. These firms are engaged in trading of Aluminium Sections and Profiles. 7. The allegation against the appellant company, MAPL is that during the period from Jan. 2003 to September, 2003 and from December, 2000to December, 2002, it had indulged in large scale of evasion of duty by receiving huge quantity of unaccounted scrap from certain suppliers of Mumbai, which was used in unaccounted manufacture of Aluminium Sections/Profiles, which were cleared to the various parties including M/s. NE, Mumbai and M/s.TF, Mumbai without payment of duty. This allegation of duty evasion is based on the following evidences:- (a) Documents recovered from the residential premises of Shir Mahendra Sethia in course of its search on 18.09.2003 alongwith his statement recorded on 16.10.2003, 17.10.2003 and 23.10.2003; (b) Recovery of 352 bundles weighing 20,359 kgs. of Aluminium Profiles valued at ₹ 22,39,490/-from the godown at 157, Pangera Pole, 3rd Lane, Mumbai of Nagina Enterprises along with hand written weighment slips containing details of size and number of Aluminium profiles coupled with statement dated 12.01.2003 of Shri Devendra Dawani, Excise Clerk of MAPL stating that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Sethia. 7.1 In view of the above evidence it has been alleged that unaccounted Aluminium scrap was being received by MAPL, Pithampur from Mumbai and though the scrap was being transported by the Capital Road Lines and Parcel Services showing M/s.Mallnath Aluminium, New Delhi as the consignee, the goods covered under the LRs were being unloaded at the factory premises of Pithampur and it has been alleged that it is this unaccounted scrap which was used for unaccounted manufacture of Aluminium Profiles/Sections, which has been cleared clandestinely to various parities including Nagina Enterprises and Tarachand Fauzmal, Mumbai. The duty demand of ₹ 1,22,35,525/- whose details are mentioned in Annexure A-1 to show cause notice is based on the documents A/3, A/4, A/5, A/6, A/7, A/8, A/11 and A/12 recovered from the residential premises of Mahendra Sethia and these documents contain the details regarding the purchase of Aluminium Scrap and removal of Aluminium Profiles during the period Jan. 2003 to September, 2003. The duty demand of ₹ 15,98,972/- for the period December, 2000 to December, 2002 is based on the entries regarding purchase of Aluminium scrap and sale of Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory premises of MAPL under the directions of Shri Jayanti Bhai. Shri Jayanti Bhai was found to be proprietor of M/s.Metchem India and was an ex-employee of MAPL. Though Shri Jayanti Bhai in his statement refutes the statement of Shri Mangal Singh of Capital Road Lines, the fact remains that the entries regarding sale of consignment of Aluminium Profiles/Sections to M/s.NE are corroborated by the details of the LRs as mentioned in the Register maintained by the transport company. The details of such consignments are compiled in Annexure-32 of the show cause notice. In respect of these consignments detailed in the Annexure-32, whose details are recorded in the documents recovered from the residential premises of Mahendra Sethia and which as per the records of the transporters M/s. Capital Road Lines had been transported to Mumbai, the claim of Shri Mehendra Sethia that these entries do not represent real transaction is difficult to accept as the documents recovered from residences of Shri Mahendra Sethia are corroborated not only by the documents recovered from the transporters Capital Road Lines, Indore, but also from the fact that on date of search of the godown of M/s. Nagina En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the consignments of Aluminium/scrap which had been dispatched from Mumbai in the name of various consignors and which are consigned to M/s.Mallinath Aluminium, New Delhi, the details of which are mentioned in the computer print recovered from the transporters premises at Mumbai. The details of these consignments are also found at page-130 to 131 of file A/13 recovered from the residential premises of Shri Mahendra Sethia. 8.3. In view of the above discussion, we hold that the duty demand in respect of the consignments cleared by the appellant company to M/s. NE, Mumbai, whose details are given in Annexures 32 of the Show cause notice, has to be confirmed. 8.4 However as regards the alleged clearances to M/s. Nagina Enterprises, Mumbai, M/s. Tarachand Fouzmal, Mumbai, M/s.Ambika Aluminium Profiles, M/s. Deepak Metals and M/s. G. Gajendra Company detailed in Annexure in 33 to the show cause notice, though these clearances detailed in the computer printout seized from the Mumbai premises of Transporters, M/s. Capital Road Lines are corroborated by the entries in the documents recovered from the residential premises of Shri Mahendra Sehtia, except in respect of M/s.NE, no inq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the consignments detailed in Annexure 32 and 33 to the show cause notice which are consigned to M/s. Nagina Enterprises and the same has to be quantified by the Commissioner. Besides this the duty has to be demanded from MAPL in respect of 352 bundles of Aluminium profiles seized from the godown of M/s.NE, Mumbai. The rest of the duty demand has to be set aside. The penalty imposable on the appellant company, MAPL under Section 11 AC and penalty under Rule 26 of the Central Excise Rules, 2002 imposable on Shri Mahendra Sethia, Shri Manish Raj Jain and M/s.Nagina Enterprises would be in proportion to the duty demand which is confirmed against MAPL. 11. As regards penalty on M/s. MM, M/s.FAPL and M/s. PTL since there is no allegation that they had received non-duty paid Aluminium Sections/Profiles cleared from MAPL and their names do not figure in Annexure 32 and 33 of the show cause notice and as such, they have not received non-duty paid goods from MAPL, penalty on them is not sustainable and the same is set aside. 12. As regards the confiscation of the goods seized from the godown of Nagina Enterprises, Mumbai, the same is upheld. 13. Accordingly, the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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