GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
What's New Case Laws Highlights Articles News Forum Short Notes Statutory TMI SMS More ...
Extracts
Home List
← Previous Next →

2015 (10) TMI 968 - CESTAT MUMBAI (LB)

2015 (10) TMI 968 - CESTAT MUMBAI (LB) - TMI - Clandestine removal of goods - Penalty under Rule 26 - Evasion of duty - Insufficient evidences - Trading activity - Violation of principle of natural justice - Difference of opinion - Majority order - Held that:- no credence can be paid to the capacity determined in 1999 under the compounded levy scheme. Capacity was not determined during the period in question. Duty is to be demanded from the appellant for clandestine clearances based upon availab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing activity.

Clandestine purchase of MS ingots was not from one source but from number of sources and at times through brokers. Suppliers of MS ingots as also brokers had confirmed the correctness of the information indicated in the diaries recovered from the appellant's office in Mumbai. It is also noted that majority of the supplier of MS ingots in turn have paid the duty for the clandestinely cleared MS ingots to the present appellant. In such a situation, in my considered view, a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and without bills. The Revenue has demanded the duty on the goods cleared without bill. In his statements during investigation, Shri Faruk Shaikh has admitted the details. It is also important to note that Shri Faruk Shaikh along with the diaries was apprehended during the search at the appellant's factory itself.

All the MS bars which are shown as cleared without bills from the appellant's unit, were in reality cleared from the appellant's unit without payment of duty and the duty .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

with the statements and the documentary evidence has been recovered from the appellant's own office and the appellant has admitted the details in these records, the same are required to be confirmed and the appellant is liable to pay duty, interest and consequential penalty on the same. These will be required to be recomputed by original authority. Personal penalties will also be required to be proportionately redetermined including the clearance through Shri Farukh Shaikh. - evidences collecte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent. Even if we ignore the statements, the only conclusion from the documents particularly regarding procurement of clandestinely cleared goods will be what has been proposed by the Revenue. Only in respect of some of the buyers of MS bars, though in the statements they have accepted purchase of clandestinely cleared MS bars, but Revenue has failed to point out the corresponding entries in record No. 23, 24 and 26 and as mentioned with reference to point No. 2 of the difference of opinion, the d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m - Dated:- 11-9-2015 - Ashok Jindal, Member (J), P S Pruthi, Member (T) And P K Jain, Member (Technical) - Third Member on Reference For the Petitioner : Shri D B Shroff & Shri Ashok Kumar Singh, Advs For the Respondent : Shri S Dewalwar, Addl Commissioner (A.R.) ORDER Per Ashok Jindal The main appellant namely M/s Shri Salasar Ispat Pvt. Ltd. has filed appeal against the impugned order confirming the demand of duty along with interest and imposition of penalty on account of clandestine rem .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Nashik on information that the appellant is engaged in a large scale evasion of duty on clearance of their final product clandestinely. During the course of search, no incriminating documents were found. No unaccounted raw materials or finished goods were found in the premises. All entries in the statutory records tallied with the stocks of inputs and finished product found were as per the accounts books maintained by the appellant but the department recovered three documents namely Record Nos. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

basis of these records, statement of Shri Parvesh Gautam on 18.12.2006 and statement of broker Shri Faruk Sheikh on 19.12.2006 were recorded in which Shri Faruk Sheikh has stated that he has acted as a broker for various parties and he had brokered the purchase of 578.240 MT of TMT bars from the appellant during the impugned period. But during the course of cross-examination on 29.7.2009, Shri Faruk Sheikh retracted his statement saying that no goods were sold by the appellant to him without cov .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e adjudicating authority that the records No. 23, 24, and 26 are in the handwriting of Shri R.L. Gautam whose statement was never recorded and as observed by the revenue that nearly 75% of the entries mentioned in those records pertains to Gautam Enterprises and Shiv Ganesh Parvati. It is also contended that the Directors of the appellant company have retracted their statements recorded during the course of investigation stating that their statements were recorded under duress. It is further sub .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cture of TMT/CTD bars but no documentary evidence was produced that the appellant had purchased the above material in their factory. It was contended 7426.530 MT of ingots to manufacture 7426.530 metric tons of TMT/CTD bars is only on presumption basis. It was contended by the appellant before the adjudicating authority in reply to the show-cause notice that the installed capacity of the appellants factory is only 4441 MT per year and as per the records during the period of six months in dispute .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

attern. No evidence was found by the investigating team regarding the use of furnace oil for the purpose of heating the furnace. For transporting the goods alleged to have been purchased and sold clandestinely, the appellants would have required over 1000 trucks during the impugned period. He further submits that during the course of search, no incriminating documents were found in the factory and office of the appellants. No excess raw material were found on verification of the stocks. It is pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ellants. Aggrieved by the said order, the appellants are before us. 3. Heard both sides. 4. In defence of their appeals, the learned Counsel for the appellants submits that the entire case is built up on the basis of information contained in the private note books /collection books / chits recovered from the premises of Gautam Enterprises at Mumbai. The said notebook is not written in the handwriting of any of the directors of the company. It is in the handwriting of Mr. R.L. Gautam whose statem .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e course of cross-examination, the supplier of MS Ingots has denied any clandestine removal. Moreover, the statements of 3 brokers relied by the revenue, recorded during the cross examination, have also stated that they have never purchased goods from the appellants without Central Excise invoices and their statements were recorded during investigation under duress. In these circumstances, the incriminating statement recorded during the course of investigation of these persons cannot be relied u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er the decision in the case of Parmarth Iron Pvt. Ltd. v. CCE - 2010 (255) ELT 496 (All). 4.1 It is also submitted that unless the exceptions carved out in Section 9D of the Central Excise Act, 1944 are clearly made out, the statements cannot be regarded as being relevant and therefore cannot form the basis of proving the truth of the facts contained in the statements unless the deponents thereof are produced for cross-examination as held by the Hon'ble Delhi High Court in the case of Basude .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

acity is taken then the production works out to 2221 MT whereas the appellant had manufactured/cleared 2600 MT on the strength of Central Excise invoices. If the quantity of clandestine removal is taken into account, the appellant should have manufactured atleast 10,000 MT TMT bars during the impugned period. This is impossible to produce such a huge quantity during that period in teh absence of excess machinery or production capacity in the factory of the appellant. To support this argument, th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

umption during the period and the electricity consumed remains similar all the times. He further submits that the department has not verified the production capacity and the electricity consumed. Therefore, the claim of the department is on presumption basis that such a huge production and clearance have been done without payment of duty is not tenable as per the decision of Galaxy Indo Fab Ltd. v. CCE - 2010 (258) ELT 254 (T). He further submitted that no records pertaining to the alleged cland .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

roi receipt was produced. As during the course of search in the factory, no incriminating documents were found and the stock of raw materials tallied with the Books of Accounts, therefore, the allegation cannot be made against the appellant for clandestine removal of the goods. He further submitted that the Balance Sheets of M/s Gautam Enterprises and M/s. Shiv Ganesh Parvati show that those firms were engaged in the activity of trading of ingots and sale of bars manufactured out of such ingots. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be set aside. 5. The learned A.R. who appeared for the Revenue has also submitted a written submission. On the basis of these submissions, it is argued that the ingots were recorded as per the entries found in the private record seized during the course of investigation and they have admitted the supply of M.S. Ingots to the appellants. As per the Hon'ble Supreme Court judgement in the case of CCE Madras v. Systems & Components Pvt. Ltd. 2004 (165) ELT 136 (SC), what is admitted, need n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

al, without payment of duty by the appellant as per the decision in the case of Patel Products vs. CCE - 2003 (151) ELT 650 (Tri. - Del). 5.2 He further submits that clandestine activity at best can be established only by circumstantial evidence as held by the Tribunal in the case of Gulabchand Silk Mills v. CCE - 2005 (151) ELT 650 (Tri. Bang.). 5.3 He further relied on the judgement of the Hon'ble Supreme Court in the case of Collector of Customs, Madras and Others v. D. Bhoormull - 1983 ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ecords. It is further submitted that the production capacity depends on number of hours and raw material used during the course of manufacturing of the final product. He further submitted that details of the transporter, vehicle No. etc were not necessary to be ascertained as the evidence for establishing the charge and proving the facto of clandestine removal is available in the records. In these circumstances, he prayed that the impugned order is required to be upheld. 6. After hearing both th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ents were denied. More over the claim of the appellant is that the hand writing in some of the records was not of the appellants. The said fact was not examined during the course of adjudication by the adjudicating authority. It is also found that the records recovered from the office premises of M/s Gautam Enterprises as claimed by the appellants are not in the handwriting of the appellants but in the handwriting of Shri R.L. Gautam but unfortunately no statement of Shri R.L. Gautam was recorde .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d that no activity has been dealt with the appellant without any Central Excise documents. Revenue has not proved any contrary to these evidence with support of any documents on record. 6.2 Further, we observed that the department has alleged that the appellant has purchased 7474.305 MT of ingots and received in their factory. As the factory of the appellant is located in Dindori, Nasik and the ingots manufacturers situated at Sinnar, Nasik. Between the factory of the appellant and the supplier, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

were manufactured out of these ingots purchased without cover of Central Excise invoices and cleared clandestinely and no effort was made to prove how the goods were transported from the factory of the appellant to the market and no effort was made to find out is there any change in the patter of production capacity or in the electricity consumption to manufacture these final product. No effort was made to find out is there any excess purchase of furnace oil for manufacturing of TMT bars as the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

equired some supportive evidence to establish the case of clandestine removal which the revenue failed to do so. 6.4 We further find that during the course of adjudication, the appellant sought cross examination of about 31 persons whose statements were relied upon by the Revenue. Out of those persons, only 4 persons were allowed and all the 4 persons who appeared for cross-examination have stated that they have dealt with the appellants and all the dealings were done with the appellants under t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t of cross-examination in any quasi judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in Section 9D of the Central Excise Act, 1944. The circumstances referred to in Section 9D, as also in Secti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sijudicial proceedings. The Division Bench also observed as under:- "29. Thus, when we examine the provision as to whether the provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial authority. The very fact that the statement of such a person can be treated as relevant only when the specified ground is established, it is obvious that there has to be object .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ding of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject to judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted." 6.6 Further in the case of J & K Cigarette Ltd. - 2009 (242) ELT 189 (Del.) the issue of constitutional validity of Section 9D of Central Excise Act, 1944 came up .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an opinion has to be supported with reasons; (iv) before arriving at this opinion, the authority would give opportunity to the affected party to make submissions on the available material on the basis of which the authority intends to arrive at the said opinion; and (v) it is always open to the affected party to challenge the invocation of provisions of Section 9-D of the Act in a particular case by filing statutory appeal, which provides for judicial review." 6.7 Further we find that the p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n reply to the show-cause notice as well as before the adjudicating authority that their production capacity was fixed in the year 1998 under the scheme of compounded levy and the production capacity was fixed @ 4441 MT per year and thereafter there is no change in pattern of production. The capacity was fixed for 24 hrs of working by the appellant in their factory. In these circumstances, when the production capacity has not been increased as claimed by the appellant and has not disproved by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has raised a specific point relating to the impossibility of production capacity from the appellants factory to the extent of demand made by the department and the adjudicating authority ignored the said ground taken as defence by the appellant that the installed capacity could not permit production of huge quantity of processed fabrics as has been calculated by the department. In those situation, this Tribunal came to the conclusion that the department has not verified during the course of inve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ter it is the claim of the appellant that there is no increased in production capacity fixed by the revenue and as this claim has not been examined during the course of investigation as well as in adjudication, we find it is a vital evidence for the fate of issue. Moreover, the electricity consumption was also not checked. Therefore, the ratio laid down by this Tribunal in the case of Galaxy Indo Fab Ltd. (supra) squarely applicable to the facts of this case and we hold that it will be absurd to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e, such huge quantity cannot be produced in the factory of the appellant. We also find that the appellant, in alternate, has claimed that entries pertains in private records are of trading activities which has not been discarded by the revenue but the appellants have produced some evidence for these trading activities by way of IT Returns and Balance Sheets. We also note that the Central Excise duty payable on the manufacture of the goods, as the goods in question can't be produced by the ap .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ess quantity of alleged clandestine removal by the appellant therefore Central Excise duty cannot be demanded. Moreover, when the claim of the appellant is that these activities pertain to trading activity. In these circumstances, we hold that the Revenue has failed to prove their case of manufacturing of excess quantity of goods and clandestine clearance thereof without payment of duty. In these circumstances, the charge of clandestine removal of the goods is set aside. Consequently, the impugn .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The facts may not be repeated. The whole case centers around the various evidences which were produced through investigations and relied upon by the department. On the other hand, my learned Brother has found lack of evidences in establishing the evasion of duty. Therefore, I think it would be appropriate to analyse the matter evidence-wise. 12. Various evidences brought out in the investigations need to be considered. First, they are in the form of confessional statements of the Directors of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that the main concerned persons of SSIPL namely the Directors Shri Parvesh Gautam and Shri Pravin Gautam have in their statements dated 18.12.2006, 02.01.07, 05.01.07, 06.01.07 and 20.12.06 accepted the correctness of the transactions reflected in their private records. The brokers through whom the M.S. Ingots were procured viz. Shri Kamal Singh Dassani vide his statement recorded on 09.01.2007, Shri Vijay Kumar Jindal on 09.01.07, 15.01.07 and 17.01.07 admitted the clandestine deals. Shri Jinda .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

gh the brokers, namely Shri Amit Burakia (Bhagwati Steel Cast Ltd.) vide his statement on 22.01.07, Shri Suresh Mittal (M/s. Ishu Super Steel Pvt. Ltd.) on 23.01.07, Shri Mohit Satbir Sarlia (M/s. Silver Ispat Pvt. Ltd.) on 23.01.07, Shri Jayprakash Mittal (M/s. Silver Ispat Pvt. Ltd.) on 16.01.07 and Shri Stbir Sarlia (M/s Sarlia Steel Pvt. Ltd.) on 23.01.07 also corroborated the transactions of clandestine sale. Mr. Manek Shah of MITC Rolling Mills in his statement dated 23.07.2007 identified .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

7, Shri Harshad K Modi, Proprietor of M/s. Rushin H. Modi on 18.01.07, Shri Ketan H. Shah, Patner of M/s. D. Ketan & Co. on 22.01.07 also confirmed the clandestine transactions. In fact, Shri Arvind Shah, Shri Chirag Busa in his statement dated 23.5.2008, Shri Bhupendra Amarchand Shah in his statement dated 16.5.2008, Shri Kunal Kishore Gandhi, Shri Lalit Jain in his statement dt. 19.01.2007 all confirmed entries in Record No. 23 which reflect clandestine transactions in cash between them an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

atter it was obviously not possible to provide such documents and conduct enquiries in relation to the transport. It is true that in cases of clandestine production and removal, assessees will try not to leave any evidence which can trap them. On the other hand, paras 2.1 and 2.1.1 of Annexure I to the show-cause notice show how methodically the Revenue has been able to decipher the records. The sample pages of Note Books seized from Shri Umesh Modi which figure at Sl.No. 1,2,3,4,5,6 of the anne .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ara gives a sample of page No. 129 of Collection Book for 2006-07 recovered from the possession of Shri Faruk Shaikh where entries have been deciphered to indicate the name of supplier (wherein the words Salasar has been scored out and Praveen has been written) quantity of goods, rate per Kg. of goods, value of goods and payment details. With reference to this records Shri Faruk Shaikh confessed that the clearances effected by the manufacturers of TMT bars as recorded in the two collection books .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

posed by the said persons in their statements to be true. The acts of SSIPL have been corroborated by documents resumed from other persons who were connected with the transactions such as the supplier of raw material or the purchaser of the finished goods. Simply because some of the persons retracted their submissions will not nullify and abrogate the submissions with reference to the records seized. The private records seized and deciphered cannot be brushed away as evidence without substance. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he continued to give confessional statements although retracting them later. 13. The next piece of evidence relates to the production reflected in the records, vis-a-vis Annual Production Capacity determined in the year 1999 under Compounded Levy Scheme. The contention of the learned Counsel is that the Annual Production Capacity determined in June 1999 by the Range was 4444 M.T only whereas the clandestine clearance alleged by the department comes to 7697 M.T. for the six months period from Ju .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was withdrawn later by the Government, precisely because the actual capacity could be tweaked by changing the above parameters but the duty payable would remain the same. In other words, the capacity practically could be much more than declared and verified capacity. In any case, the plea of the Counsel that the capacity was not changed after 1999 cannot be accepted because it was never verified subsequently. Capacity determined in 1999 has no relevance in 2006. The change in number of utilized .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

use Notice Total quantity ought to have been declared in ER-1 Returns as production 1 July, 2005 173.120 31.110 204.23 2 Sept.2005 245.360 39.485 284.845 3 Oct.2005 223.160 18.925 242.085 4 Nov.2005 195.250 16.935 212.185 5 Jan.2006 Not available 61.240 6 Feb.2006 Not available 21.085 7 April, 2006 219.580 21.940 241.520 8 May, 2006 366.410 40.785 407.195 9 June, 2006 273.120 18.975 292.095 10 July, 2006 364.020 895.865 1259.885 11 Aug, 2006 372.850 1074.425 1447.275 12 Sept, 2006 349.495 1580.7 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hed to the declared capacity of 1999. 14. The next piece of evidence which has been discussed in the cross examination. The contention of the appellant is that out of 31 persons, cross-examination was conducted in only 5 cases. It is seen that Shri Ashok Kumar Singh at the time of personal hearing held on 01.07.2009 before the Commissioner, C.Ex, & Cus., Nashik, showed his willingness to cross-examine 5 persons, namely (i) Shri Pradip Sargoi (ii) Vijaykumar Mittal (iii) M/s Bhavshakti Steel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ross-examination of the remaining two persons namely, Shri Pradip Sargoi and Shri Vijaykumar Mittal as they did not appear for cross-examination and the next date was fixed on 08.9.2009. Accordingly, letter dtd 04.8.2009 was issued to Shri Pradip Sargoi and Shri Vijaykumar Mittal to appear on 08.09.2009. However, the appellant vide their letter dtd. 5.8.2009 requested for postponement of hearing fixed on 08.9.2009 to 09.9.2009 as their counsel representing the case was not available on the said .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oss-examination of two new persons, namely, Shri Madhu Singh Parmar and Shri Harshad Modi to appeared on 06.10.2009 for cross-examination. After the cross-examination held on 06.10.2009, the appellant vide their letter dtd. 30.10.2009 informed that they would file reply within 10 days. Shri Singh filed reply in the matter vide his letter dtd. 30.10.2009. Shri Singh filed another reply vide his letter dtd. 18.11.2009. The case was finally heard on 18.11.2009. Shri Singh appeared on the said date. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iz. Shri Prevesh Gautam and Pravin Gautam and it is in the hand writing of Shri R.L Gautam, their father. Further he contended that a number of entries had not been taken into consideration as they were not applicable to the appellants. The plea is that the entire quantity of 7447 M.T. is purchased as a part of the trading activity of that firm. The fact that only entries pertaining to appellant which were suspect and in respect of which corroborative confessions were made by persons involved in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was the proprietor o M/s. Gautam Enterprises, which was engaged in the trading of Iron and Steel products; that he admitted that M/s. SSIPL used to purchase the M.s Ingots either through brokers or directly from various manufacturers without cover of Central Excise invoice and without payment of Central Excise duty, that the record no. 23 & 24 seized from his office premises at Mumbai contained the information relating to transactions of M.S. Ingots/TMT Bars and the record No. 26 contained t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

M/s SSIPL on 18.12.2006 under Panchanama, and he admitted that the seized record no. 23 and 24 contained transactions pertaining to the sale of TMT Bars manufactured by M/s SSIPL and the purchase of raw materials viz. M.S. Ingots along with certain other trading transactions and the seized record no. 26 was the cash book maintained by his brother Shri Pravesh Gautam. On being shown page nos. 17 and 18 of record no. 30, seized from the Nashik office premises of M/s SSIPL on 18.12.2006 under Panc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s of transactions and one Note Book containing bills and receipts of payments) reflected the clandestine transactions done by Shri Pravesh Gautam and Shri Pravin Gautam. Shri Pravesh Gautam had confessed to the Panchas that the said premises was used as office premises for SSIPL and M/s. Gautam Enterprises (his father R.L. Gautam being Proprietor). In the face of all the private records seized, the appellants have not succeeded in their belated pleas as they have not explained the various entire .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

used. It is not always not possible to provide all the evidence in cases of clandestine activity which can, at best, be established only by circumstantial evidence as held by the Tribunal in the case of Gulabchand Silk Mills Pvt. Ltd. vs. CCE Hyderabad II - 2005 (184) ELT 263 (Tri-Bang). It was held by the Tribunal that "in any type of clandestine activity, the persons try their best not to leave any evidence. We cannot expect persons indulging in clandestine clearance to faithfully put the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

establish all the links of clandestine activity without any break. In this case, the statements or the admissions are supported by the recovery of non-duty paid goods as well as incriminating documents. In the present case I find that the statements and admissions are indeed supportive of the incriminating documents. 16. Learned Counsel's contention that the statements have been retracted is of no help in the face of the Hon'ble Supreme Court judgement in the case of Surjit Singh Chhabr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ons only reflect only a fickle mind and in any case the point to be noted is that the Directors verified the entries in the seized records to be true. In case they wanted to say that these entries were not true, they could have come up with documentary evidence such as purchase bill, sale bill, payment details, accounts of purchase of purchasers and sellers etc. which they failed to do satisfactorily. 16.2 It was held by the Hon'ble Supreme Court in the case of CCE Madras vs. System Componen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. In doing so, he was not throwing the burden of proving what the Department had to establish, on Bhoormull. He was simply giving him a fair opportunity of rebutting the first and the foremost presumption that arose out of the tell-tale circumstances in which the goods were found, regarding their being smuggled goods, by disclosing facts within his special knowledge". In the present case, evidences in the form of diaries recovered are corroborated by the confessional statements of various p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

above, demand of service tax (sic) is upheld. 17. As the activities of clandestine procurement of inputs, clandestine product and clearance of finished goods stand established, interest under Section 11AB and penalties under Section 11AC on M/s. Salasar Ispat Pvt. Ltd. and the penalties under Rule 26 of the Central Excise Rules, 2002 on Shri Pravesh Gautam and Shri Pravin Gautam are upheld. 18. In the above terms, the impugned order is upheld and appeals are dismissed. Difference of Opinion In v .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

investigation are for the trading activity of the appellant and no duty is payable on the trading activity Or Member (Technical) is correct in holding that the capacity was never determined during the period in question and duty is to be demanded from the appellant for clandestine clearances. 2. Whether Member (Judicial) is correct in holding that the evidence on the basis of which the demand has been confirmed against the appellant are not sufficient to hold that the appellant has removed that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r Member (Technical) is correct in holding that adequate opportunity was given and further cross-examination was not requested especially on last date of hearing by the advocate and relying on case of Surjit Singh Chhabra (supra). (Prononuced in Court in 28.01.2015) ORDER NO.M/4569/15/EB Appeal Nos.E/483 to 485/10-Mum Date of Hearing: 15.6.2015. 6.7.2015 & 10.7.2015 For the Appellants : Shri D B Shroff, Senior Adv., Shri Ashok Kumar Singh & Ms Mahi Lalka, Advs. For the Respondent : Shri .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s made in the order-in-original as also by Member (Technical). 20. The first point referred to me is as under:- 1. In the facts and circumstances of the case whether Member (Judicial) is correct in holding that the appellant is not having the production capacity to manufacture 10,000 tons of TMT/CTD bars during the impugned period. Therefore, on the basis of records seized during the course of investigation are for the trading activity of the appellant and no duty is payable on the trading activ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

changed after that and as per that production capacity, they could not have produced the assumed production as per the demand notice. On the other hand, learned AR's contention is that production capacity determined in 1999 was for purpose of charging the excise duty under compounded levy scheme and has nothing to do with actual production or the real production capacity. The learned AR's contention was also that in case of rolling mill by slight change in the parameters, the production .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erwent changes and finally the scheme itself was given up after some time as it was found the scheme itself is unworkable. It was also submitted that in such a situation, no importance can be given to the annual production capacity determined in 1999 for production of goods in 2006. Learned AR also submitted that purported production capacity is not based upon specification of manufacturer of plant or any authoritative literature. 20.2 I have given considerable thought to the issue. There are ma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

turer which would indicate the production capacity of the plant. Similarly, no authentic literature on subject is produced to support the production capacity. As far as the determination of annual production capacity as per the compounded levy scheme which was introduced in 1998 and abandoned after 2-3 years, not much credence can be given. First of all, compounded levy scheme is introduced generally for evasion prone commodities. Further, rules for determining the annual production capacity are .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

which can be fairly accurate. Even in case of furnace, time for one round can be area of subjectivity. In case of rolling mill, there is no such standardization or parameter. It is for this reason that the appellant has not produced any catalogue etc. of the original rolling mill manufacturer so as to support their contention. It is also true that the rules framed in 1998 was based upon certain parameters as elaborated by Member (Technical) in his order. The criteria was also amended as it was f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed levy scheme. I do agree with Member (Technical) that the capacity was not determined during the period in question. I also agree with Member (Technical) that duty is to be demanded from the appellant for clandestine clearances based upon available evidences. Thus I agree with Member (Technical) on this point. 20.3 Learned Member (Judicial) has also mentioned that therefore on the basis of records seized during the course of investigation are for trading activity of the appellant and no duty i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

were used for trading activity. 21. The second point referred to me is as under:- "2. Whether Member (Judicial) is correct in holding that the evidence on the basis of which the demand has been confirmed against the appellant are not sufficient to hold that the appellant has removed that goods clandestinely. Or The evidence collected by the Investigating team during the course of investigation are sufficient to prove the charge of clandestine removal as held by Member (technical)." 21 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

been clandestinely purchased by the appellant is based upon the record Nos. 23, 24 and 26 recovered from office of the appellant in Mumbai. This office was a combined office of the appellant and two other firms controlled by the same family. One of these was Gautam Enterprises whose proprietor is Shri R. L. Gautam, father of the directors of the appellant company. The other firm is Shiv Parvati Enterprises which is again a partnership company and is looked after by Shri Parvesh Gautam who is di .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m was shown all the diaries. He in his statement has explained the contents of the diary and how it was being maintained. It is not as if that the entries which are being claimed for Shri Salasar Ispat i.e. the present appellant, were any time being claimed by Shri Pravesh Gautam or any one else as that belonged to Gautam Enterprises or Shiv Parvati Enterprises. Even before investigating officer or adjudicating authority or before this Tribunal the appellants have never indicated any of the entr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the entries which are being considered by the Revenue as pertaining to M/s. Shri Salasar Ispat Ltd. Thus, in effect, whatever has been done by the Revenue, if at all there is anything incorrect or inaccurate, it is in favour of the appellant and the appellant cannot have any grievance in such a situation. A lot is being said about retraction of the statements made by Shri Pravesh Gautam and Shri Pravin Gautam. I have seen these retractions. These retractions, to my mind, are of no consequence a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed upon these Records. These are factual matters based upon documents. If there is any incorrectness in these, the same could have been pointed out either during investigation or at the time of original adjudication. No such thing was done even before this Tribunal. No such infirmity has been pointed out. In view of this position, retractions of statement of Shri Pravesh Gautam and Shri Pravin Gautam are required to be totally ignored. 21.2 I also note that clandestine purchase of MS ingots was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

concerned, there can be no doubt and is proved. 21.3 As far as the second aspect i.e. the sale of bars is concerned, I observe that the demands have been made based upon the assumed production from MS ingots clandestinely cleared by original manufacturer and received by the appellant. Demand is not entirely based upon the clandestinely cleared MS bars as found in the Record Nos. 23, 24 & 26 or the records recovered from Shri Faruk Shaikh, one of the brokers based in Nashik. It is also noted .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

owever, perhaps Revenue was not able to correlate for the total quantity of MS bars with MS ingots and they adopted the assumed production method. It is seen from the impugned order that there are two types of evidences for the clandestine clearance of MS bars. The first evidence is from the diaries of Shri Faruk Shaikh. The diaries recovered from him indicated the purchase of clandestinely cleared MS bars during the period 2005-06 and 2006-07 (upto December 2006 i.e. the time of search). It was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

9;s factory itself. I find that during the cross-examination, Shri Faruk Shaikh has tried to backtrack and stated that he has not purchased any MS bars without bills. However, the said cross-examination has to be ignored for the simple reason that the diaries indicated clearances of both types vis. With bill and without bill and Shri Faruk Shaikh at no point of time has produced the bills corresponding to the clearances which were shown as without bills in the diary. Similarly, even the appellan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r 2005-06 is 188.78 MT. During 2006-07 upto June, the same is 81.700 MT and from July to December 2006, the quantity is 352.770 MT. Duty, interest and penalties for clandestine clearance for these clearances is required to be computed. The second part of the demand is based upon the statement of various buyers of the appellant company as detailed in para 5.5 of the impugned order. I find that the statements of about 20 buyers were recorded, out of which the last six buyers are in reality, the bu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted 16.5.2008 has not only admitted purchase of about 400 MT of MS bars but the same was also supported by various entries in record No. 23 at page 11, 24, 43, 46, 66, 75, 83, 94, 99, 143 and 162. Similarly, there were entries in record No. 24 at page 12 and 34. In my considered view, demand corresponding to 400 MT of MS bars need to be upheld/confirmed. Similarly, in respect of Mangal Steels, Mumbai, the admission is for a very specific quantity of 21 MT, which again appears in record No. 23 at .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

00 MT of MS bars. This is again supported by details in record No. 23. Demand for the said 400 MT will also be required to be confirmed. In case of R.J. Steel Traders, Shri Mukesh J. Gupta has not specified the quantity though in record No. 23 there are entries at various pages. However, since no estimate of quantity or value is indicated, demand cannot be confirmed. Even the Revenue on the basis of entries has not estimated quantity or value. Similar is the position in respect of M/s. Airoli Ir .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

office in Mumbai did indicate the clandestine sale of MS bars. However, the Revenue has failed to precisely correlate or arrive at the quantity so cleared. As mentioned earlier, there are correlations in respect of few of the buyers and in my considered view, as far as these clearances are concerned, since these are based upon documentary evidence along with the statements and the documentary evidence has been recovered from the appellant's own office and the appellant has admitted the detai .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the corresponding entries in record No. 23, 24 or 26 or estimate value or quantity from such entries, the same are not sustainable. In view of the above analysis, in my considered view, the evidences collected by the investigating team during the course of investigation are sufficient to the extent described above to prove the charge of clandestine removal. However, demand for the remaining quantity is not sustainable for want of sufficient evidence. I agree with Member (Technical) that the evid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tinely. 22. The third point referred to me is as under:- "3. Whether the Member (Judicial) is correct after relying on the case law in the case of Basudev Garg( supra) that the cross-examination was not granted to the persons whose statements have been relied on to hold that the charge of clandestine removal is in violation of principle of natural justice. Or Member (Technical) is correct in holding that adequate opportunity was given and further cross-examination was not requested especial .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and the courts that many of the grounds which are taken in writing are not pressed during the arguments and only some of these are pressed. From the sequence of various letters as also the records of personal hearing, it appears that though the advocate for the appellant initially asked for cross-examination of 31 persons but later on, was satisfied with the cross-examination of 5 persons which were agreed by the adjudicating authority. I have also seen that after everything was over, in the fin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the appellant company. The details written in the documents were very precise which includes dates, supplier's name, broker's name, exact quantity, rate etc. In most of the statements, all that was done was to explain or confirm the details already indicated in the document and the case of the Revenue is based upon such document. Even if we ignore the statements, the only conclusion from the documents particularly regarding procurement of clandestinely cleared goods will be what has be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

further cross-examination was not requested especially on the last date of hearing by the advocate and also relying his decision on the case of Surjit Singh Chhabra (supra). I do not think that there has been any violation of the principles of natural justice in the present facts and circumstances of the case. I, therefore, agree with Member (Technical) on point No. 3. 23. (1) In view of the preceding discussion, as far as the first point referred to me is concerned, I agree with Member (Technic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Advanced Search


Latest Notifications:

    Dated      Category

20-7-2017 Cus (NT)

20-7-2017 GST CESS Rate

19-7-2017 IT

19-7-2017 IT

18-7-2017 IT

18-7-2017 CE (NT)

18-7-2017 CE

18-7-2017 GST CESS Rate

15-7-2017 Kerala SGST

14-7-2017 Andhra Pradesh SGST

14-7-2017 Cus (NT)

14-7-2017 Cus

13-7-2017 Co. Law

13-7-2017 Co. Law

13-7-2017 ADD

13-7-2017 ADD

12-7-2017 Jammu & Kashmir SGST

12-7-2017 Gujarat SGST

12-7-2017 Gujarat SGST

12-7-2017 CGST Rate

More Notifications


Latest Circulars:

21-7-2017 Goods and Services Tax

20-7-2017 Goods and Services Tax

20-7-2017 Goods and Services Tax

19-7-2017 Goods and Services Tax

19-7-2017 Income Tax

18-7-2017 Customs

17-7-2017 Customs

14-7-2017 Income Tax

13-7-2017 Central Excise

13-7-2017 Customs

More Circulars



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version