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2016 (4) TMI 56 - CESTAT MUMBAI

2016 (4) TMI 56 - CESTAT MUMBAI - TMI - Clandestine clearance - goods cleared twice - unaccounted acquisition/procurement of inputs - Held that:- Revenue is based on only statement of the proprietors of company, two buyers namely, Jay Enterprises and Krishna Marketing which were subsequently retracted and the stand have been consistently maintained by them in the course of cross-examination to the effect that they have neither received any non-duty paid goods nor they were instructed by the offi .....

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produced by the Revenue in support of the allegation of clandestine removal as alleged on the basis of parallel invoices. It is settled law that clandestine clearance as alleged by Revenue, the onus is on the Revenue to produce copies of the invoices etc. in support of its allegation. In the absence of such parallel invoices, the allegation cannot survive.

Further, find that the Revenue have not brought anything on record to support any unaccounted acquisition/procurement of inputs( .....

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idence.

The duty on the value of clandestine clearance of ₹ 7,31,140.17 have been worked out by the Revenue on the direction of the Tribunal @ ₹ 92,144/-. Accordingly, the balance demand is set aside. The appellant is accordingly ordered to pay the above amount along with interest, which can be adjusted against the amount of pre-deposit of ₹ 20 lakhs and additional amount of ₹ 5 lakhs, lying with the department against encashment of Bank Guarantee. Further, eq .....

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ued at ₹ 2,35,650/- at the premises of Krishna Marketing is also set aside. - Decided partly in favour of assessee - Appeal No. E/86114/13 - Dated:- 16-10-2015 - Anil Choudhary, Member (J) For the Appellant : Shri Prasad Paranjape, Adv For the Respondent : Shri V K Agarwal, Addl. Commissioner (AR) ORDER Per Anil Choudhary The appellant, M/s ICCONOL Petroleum Pvt. Ltd., is a manufacturer of industrial and automotive lubricants, paraffin wax, and petroleum jelly falling under chapter headi .....

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for captive consumption. The factory premises of the appellant were searched by the officers of the preventive wing on December 3, 2005 and thereafter the office was searched on December 6, 2005. In criminating documents were seized under Panchanama. One of the documents recovered was an octroi receipt number 5829 of Municipal Corporation of greater Mumbai dated 30/11/05 which reflected details of goods cleared by appellant vide their invoice numbers 633, 634, 635, 636, 637 and 638. On comparin .....

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had issued the last invoice number 638. On being shown pre-authenticated blank invoices number 641 to 645 and 653 to 657 and was asked about the invoices bearing numbers 639, 640 and 646 to 652, he replied that the said invoices were missing. Further scrutiny of documents revealed that V. Trans and Lalji Mulji transport, were the principal transporters of the goods cleared by the appellant. It also appeared that the appellant had clandestinely cleared goods to Jay Enterprises, Rajkot and Krishna .....

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ices bearing same serial numbers. He further stated that once the materials received from appellant were disposed of, the corresponding documents such as invoices, lorry receipts, etc. were returned to the appellant and this was being done on a regular basis, as per the directions of the appellant. Further the payments for the purchases from the appellant were made in cash for the period 2004-05 and 2005-06. Similarly the office premises of Krishna marketing were also searched on 14.12.2005 at A .....

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was engaged in trading activity of automotive oil, lubricants, etc. That most of the purchases were from appellant and they were instructed to return Central Excise invoices alongwith lorry receipts back to the appellant. That they used to make payments in cash for the goods purchased. Further most of the goods are received through LM transport and V. Trans. On being shown the lorry receipt numbers/GC note as per the following table Sr.No. GC No. & date Invoice No. Description/Qty Value 1 0 .....

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al Excise invoices which were mentioned in the lorry receipts, Mr. Ojha admitted that some of the invoices were in the name of other customers, even though they had received the goods. He further stated that their average monthly purchases from the appellant was ₹ 8-10 lakhs. Earlier they were trading in the name and style of M/s. Blue spot agencies (Proprietory Mr. Manoj Ojha). In the Further statement recorded by the investigation of Mr. Ojha he confirmed the earlier statement and also p .....

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ellant, Manjit Singh Kohli, Director of M/s Kohli Automobiles Pvt. Ltd. (buyer of the goods of the appellant) and one Shabbir Rampurwala, Accountant of the appellant. That Mr. Manoj Ojha of Krishna Marketing, Ahmedabad vide his letter dated 16.12.2005 and also Mr. Jitendra Mehta, proprietor of M/s Jay Enterprises, Rajkot vide letters dated 16.12.2005 retracted the statement stating that the same were recorded under threat, force and coercion. Further, statements of Jitendra Mehta of Jay Enterpri .....

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to the above mentioned parties, the same were billed to M/s Gurukrupa Marketing, Raiput, M/s Manoj Agro Traders, Gwalior, M/s Raj Trading Company, UP and M/s Kohli Auto, Delhi for commercial reasons. However, proper excise duty has been discharged by them. Sale proceeds realised from both Krishna Marketing and Jai Enterprises have been properly accounted in their Books of Account. None of the customers who received the goods or have been billed by them, availed CENVAT Credit on the same. The re .....

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king extended period of limitation. Further, why not penalty be imposed under Rule 25 of the Central Excise Rules read with Section 11AC. Penalty was also proposed under Rule 26 on M.D. Mr. Tushar Shah & Mr. D.K. Singh, Director and also interest and penalty was proposed on the appellant company with further proposal of confiscation of the goods seized, valued at ₹ 2,35,650/- from the premises of Krishna Marketing, Ahmedabad and penalty was also proposed under Rule 25 on Krishna Market .....

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along with show-cause notice. Further, informed that the date of hearing is fixed on 16.4.2007. Although the appellant filed an interim reply dated 6.2.2007, they reiterated their request for relied upon documents categorically stating therein that it is only an interim reply and final reply shall be submitted only after receipt of a copy of the documents sought by them. Further, cross-examination of 25 persons including Central Excise Officers was prayed for. The request for relied upon documen .....

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.4.2007, stating that cross-examination of the persons mentioned in their interim reply was necessary to establish that the excisable goods were never cleared by them without payment of duty. The Supdt. by its letter dated 15.5.2007 again furnished a copy of the show-cause notice with some of the documents further informing the appellant that other records sought by them vide letter dated 22.1.2007 did not have any bearing on the show-cause notice dated 8.12.2006 and accordingly, the same was no .....

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the show-cause notice in view of the interim reply and alternatively to allow them cross-examination and also supply all the copy of the documents as prayed earlier on 02.1.2007. Again the appellant vide letter dated 7.3.2008 informed the Superintendent that they would be sending their representative to collect all the documents as sought for by them vide their letter dated 2.1.2006 and 21.1.2008. In spite of the request made, appellant was not furnished or supplied with the documents nor the pr .....

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on 11AC each on Krishna Marketing, Blue Spot Agency and Jay Enterprises). IN the said order, no discussion was made regarding the request of the appellant for cross-examination of witnesses. 3.5 Being aggrieved, the appellant had challenged the Order-in-Original before the Commissioner (Appeals), who was pleased to dismiss the appeal by his order dated 5.9.2008 for non-compliance of pre-deposit ordered. Being aggrieved, the appellant filed appeal before this Tribunal mainly on the ground of prin .....

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and subject to that remanded the case back to the adjudicating authority with respect to all the parties with direction to furnish all the documents that are relied upon in the show-cause notice. Further direction was given to deal with the request of the cross-examination of various persons as sought by the appellant, in accordance with law. 3.6 Pursuant to directions of this Tribunal, the adjudicating authority allowed the cross-examination of Mr. Jitendra Mehta, proprietor of Jay Enterprises, .....

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e cross-examination (as recorded) have been quoted in the Order-in-Original dated 30.3.2012. The appellant also filed further representation inter alia stating that they have dispatched goods in regular course of business to various buyers including Krishna Marketing, Ahemdabad and Jay Enterprises, Rajkot. It was also contended that no final product manufactured were cleared without payment of duty, as the invoices were raised in the name of other parties for commercial consideration. It is furt .....

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. It was further contended that various grades and types of oil were manufactured and the same are dispatched in various pack sizes from 1 Ltr. To 250 ml packs and the Revenue has not produced any evidence to show that the goods have been cleared without payment of duty. It was further stated that relied upon documents etc. till date have not been furnished to them in spite of specific direction by this Tribunal. As entire demand is based on the theory of clandestine removal based on parallel/fa .....

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pon. It was further contended that the case of the Revenue is mainly based on lorry receipt recovered from the transporters and recovery of few bills in the name of M/s Gurukrupa Marketing, Raipur, M/s Manoj Agro Traders, Gwalior, M/s Raj Trading Company, UP and M/s Kohli Auto, Delhi for commercial reasons. 3.10 It is further contended that none of the transporters have said that the goods have been cleared without payment of excise duty. It was further contended that the sale proceeds from Kris .....

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sumptions and presumptions and thus impugned demand is fit to be dropped. The appellant had also reiterated its request for cross-examination of the two officers of the Department namely, Mr. Harish Katara, Inspector and Mr. Mukesh Srivastava, Superintendent and also contended that in absence of their cross-examination, the proper reply could not be filed as they had prepared the annexures of the show-cause notice, which forms the basis of demand. 3.11 It was also contended that even otherwise t .....

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d to the correspondence, prior in the earlier round of litigation and further mentioned that all documents have been handed over on15.7.2010, and referred to miscellaneous application before CESTAT that the documents were handed over on 7.7.2010. Further, the documents as required by letter dated 13.1.2012 were handed over by 20.1.2012, duly acknowledged. It is further recorded that non-relied upon documents have not been supplied, as the same have got no implication in the show-cause notice. In .....

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ncerned, it was observed that, in their subsequent statement (subsequent to retraction), they have again reiterated their earlier statements. It was further observed that in the course of cross-examination, a common question was asked whether M/s ICCONOL Petroleum Pvt. Ltd. ever asked them to carry/transport goods without invoice and obvious reply (No) was given by the witnesses as per their mutual convenience. It was further observed that invoice generated were used and thereafter returned to t .....

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ver asked to transport the goods without invoices, it was concluded that it does not mean that there was invoice with the consignment and that invoice no. with details of goods including value is mentioned in the lorry receipt, the same reached to the main (designated) buyer, and on completion of transportation, the invoices were returned/destroyed. It was thus concluded that the invoice No. mentioned in the lorry receipt are reliable, only few invoices could be recovered during search and seizu .....

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ontaining CE Invoices No. issued to one customer and invoice with the same no. issued to different customers, which have been withdrawn from the premises of the appellant/their buyers/transport companies, as more fully observed in para 28.1 of the Order-in-Original. 3.15 As regards the contention of the appellant the lorry receipt is not acceptable evidence, it was observed that the allegation is based on certain lorry receipts recovered from the premises of Transporter, which show that the good .....

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e buyers-namely, Krishna Marketing and Jay enterprises during cross-examination, that they were not aware for the goods supplied to them were on parallel or bogus invoices. It was observed that no inference in favour of the appellant can be drawn because these buyers got one invoice and not two and is not in a position to answer. 3.17 As regards the annexure to the reply of the appellant, the adjudicating authority observed as follows:- "a) Annexure 1 to the written submission filed by the .....

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ion in the matter appears to be correct. Total value of clearance in annexure A-1 & A-2 of the show-cause notice is ₹ 3,03,11,519/-. Considering the rate of duty as 16.32% including Education Cess, the assessable value comes to ₹ 2,60,58,734/-, taking the total invoice value as cum duty price. On this revised assessable value the Central Excise duty amount comes to ₹ 42,52,785/-, which is recoverable from the noticee. (b) Annexure 2 to the written submission filed by the no .....

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9;s contention is not acceptable as they have not produced any documentary evidence claiming exemption rate of duty @ 9.60% such as declaration filed with the department or any notification, statutory returns etc. (d) Annexure 4 to the written submission filed by the noticee: Noticee's contention is not acceptable as they have not produced details of specific documents viz. serial number of invoices and date of M/s. Krishna Marketing or M/s Jay Enterprises which said to have not been conside .....

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oice No. 639 dated 03.12.2005 is included at s. No. 46 of the Annexure A-1 of the present demand notice dated 08.12.2006 on the grounds that the goods have been cleared clandestinely under two sets of invoices. In view of the above it is found that the working of duty submitted by the noticee is not correct." 3.18 So far the question of limitation is concerned, it was held that the case of clandestine removal is made out against the appellant and as such the proviso of Section11A is invocab .....

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f Krishna Marketing was ordered to be confiscated with an option to redeem the goods on payment of redemption fine of ₹ 50,000/- and further penalty of ₹ 25,000/- each was imposed on Krishna Marketing. Blue Spot Agencies and Jay Enterprises under Rule 26 of Central Excise Rules. 3.19 Being aggrieved, the appellants preferred appeal before the Commissioner (Appeals), who vide the impugned order dated 27.12.2012 dismissed the appeal, upholding the Order-in-Original. 3.20 Being aggrieve .....

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a clerical error. It is further vehemently urged that there is miscarriage of justice as there have been violation of the principles of natural justice for the reason that the appellant was not provided copy of all the relied upon documents as well as non-relied upon documents. During the hearing held on 18.9.2014, this Tribunal appreciated that all the relevant documents have not been supplied to the appellant and as such directed the appellant to give a list of all the documents, a copy of wh .....

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of hearing. Based on the list, copies of invoices which were provided to the appellant and comparative sheet has been prepared, which is annexed to form part of this order. 5. It is further urged that the Revenue's case is that the appellant have cleared excisable goods to their two vendors namely, Krishna Marketing and Jay enterprises, Rajkot. The appellant contends that they have cleared all their goods on payment of appropriate duty. Since these two customers did not maintain proper reco .....

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espect of the goods purchased or lying in stock, cannot be a ground for alleging clandestine clearance on the part of the appellant. Further, the Revenue has not produced any evidence that all their stock lying in the premises of the customers was not duty paid. The whole case of the Revenue is based on retracted statements as well as assumption and presumption drawn. Further, in the cross-examination, these two customers have denied receiving any non duty paid goods from the appellant and furth .....

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nd is fit to be set aside. Further, attention was drawn that some of the consignments at Sr. No. 1,9,27, 28 and 46 alleged to have been cleared as appearing in annexure A1-A2 to the show-cause notice, are in fact consignments cleared by other companies and not by the appellants and the same was demonstrated by drawing attention to the lorry receipt at the time of hearing. Further, the appellant also demonstrated that at one instance, Sr. No. 1 Annexure A1 to show-cause notice, the rate per kg. a .....

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ia is also based on assumption and presumption as the same is not corroborated by any of the evidence such as movement of goods nor any such duplicate invoice was brought on record. 5.2 It was further reiterated that the Revenue had not found anything against the statutory input-output norms in the production record of the appellants. Further, all the input raw materials are sourced from PSU is on proper payment of duty and documents and there is no case made out by the Revenue that unaccounted .....

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the ruling of the Apex Court in the case of Commissioner of Customs, Madras vs. V.Bhoormul - 1983 (13) ELT 1546 (SC),wherein it has been observed that in the case of clandestine activity, it is difficult for the revenue to prove there case and as such, the Revenue is not required to prove this case with mathematical precision to a demonstrable degree. The Revenue is required to prove its case to such an extent, so that a man of ordinary prudence will believe in the preponderance or probability o .....

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were instructed by the officers of the manufacturer to return invoices/documents. From the perusal of the various relied upon documents and the copies of the documents submitted by the Revenue before the Tribunal, and a chart have been drawn by the Revenue. The appellant admitted that there are only 8 invoices available in the relied upon documents, against which it appears that the goods have been cleared twice. The appellant have clearly agreed to confirmation of demand attributable to all th .....

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