TaxTMI 
TaxTMI 
2016 (8) TMI 932
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....nalty of Rs. 15,000,00/- (Rupees Fifteen lakh only) each stand imposed upon Shri Vinod Gupta, along with imposition of penalty of Rs. 10,00,000/- (Rupees Ten lakh only) on Shri Ajay Singhal, and Shri Sanjay Singhal, Directors of CIL. Further, penalty of Rs. 10,00,000/- (Rupees Ten lakhs only) each stand imposed upon M/s. J R Alloys Castings (P) Ltd., Bhiwadi, and M/s. Seth Alloys (P) Ltd., Bhiwadi. 2. As per facts on record, M/s. CIL, Bhiwadi, Rajasthan are engaged in the manufacture of angles and channels by using the raw materials in the shape and form of ingots, billets and scrap etc. They are registered with the Central Excise authorities for payment of duty of excise and maintain requisite records in the ordinary course of their business. The appellants also have an office at West Patel Nagar, New Delhi where they are registered with the local Sales Tax authorities for the purpose of trade in identical goods. 3. As per facts on record, the factory premises of the appellant were put to search on 27.8.2002 and various checks and verifications were undertaken. As a result of stock taking, certain stock of raw material as also final product was found short and certain incriminat....
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....his reply and his relative being the Director of CIL, the entries made in the documents were belonging to CIL and carried out further investigation. Accordingly, the statement of Director of CIL were also recorded. Shri Sanjay Singhal in his statement deposed that loose documents recovered from his residence were relatable to dispatch of finished goods from the CIL. Similarly, statement of other Directors were also recorded on various dates wherein he gave their explanations in respect of various entries made in the documents received / recovered from the residential premises of Shri Vinod Kumar Gupta as also from the residence of Shri Sanjay Singhal, Managing Director. 6. It is further seen that at the time of visit of officers in the assessee factory, certain documents believed to be incriminating were recovered from the personal possession of Shri K K Dabral, production Incharge of the Company. They were scrutinized and on examination, it was found that the same contained information regarding datewise running of the factory for the period July, 2002 to August, 2002. As per the Revenue, the details given in the said chart matched with the details given in the documents recovere....
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....on availability of transporters. One Shri Kailash Galghat, proprietor of M/s. Shahpura Alwar Road lines, Bhiwadi admitted on 15.5.06 and stated that his transport company was engaged in transporting the goods of CIL and he was not having direct interaction with the company but was dealing with their agent Shri Anil Agarwal; a blank GR of his transport company was handed over to the driver of the vehicle and the GR is always filled by the people at the time of loading of the vehicle. 9. Searches were also conducted by the Revenue at the factory premises of the raw materials supplier M/s. Reby Casting Pvt. Ltd. and M/s. J R Alloys Casting Pvt. Ltd. , Bhiwadi on 27.8.02. Shri Bharat Bhushan Bansal, Director of Reby Castings in his statement recorded on 13.11.03 deposed that they were supplying MS ingots to CIL. On being shown the documents recovered from the residence of Shri Vinod Kumar Gupta, he stated that said serial numbered documents pertained to the manufacture of June, July and August, 2002 and contained information regarding receipt, dispatch and accounts of CIL. He also agreed that file number, recovered from the residence of Shri Vinod Kumar Gupta, was a ledger for the mon....
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....y them except where the same was being supplied on the basis of invoices. 10. The investigation were further carried to the buyers of the goods in respect of the names of the buyers which appeared in the records recovered from the residence of Shri Vinod Kumar Gupta, revenue entertained a view that same relate to the final product of M/s. CIL. 11. Based upon the result of investigations, Revenue entertained a view that documents recovered from the premises of Shri Vinod Kumar Gupta relate to receipt of unaccounted raw material and clearance of final product by the manufacture M/s. CIL. Revenue also entertained a view that though on record Shri Sandeep Gupta was the director and Shri Ajay Singh, Managing Director of CIL but Shri Vinod Kumar Gupta was actively involved in the functioning of the company and were indulging in evasion of Central Excise duty by resorting to removal of goods. Accordingly, proceedings were initiated against various persons by way of issuance of show cause notice dated 18.9.06 proposing to confirm the demands in respect of clandestinely removed final product by M/s. CIL. The notice also proposed confirmation of interest and imposition of penalty on the ma....
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....produced a certificate of Chartered Accountants showing that there was no major capital expenditure and no alteration in the production capacity. As such, they were in no position to manufacture excess quantity to the extent of 9994.663 MT of finished goods, which the revenue is alleging to have been manufactured and cleared clandestinely. They also contended that during the year 2002-2003, the monthly average per MT consumption of electricity ranged from 203 to 348 unit depending upon the nature of goods and as per the allegations of Revenue, for the manufacture of June, 2002 to August 2002, the average per MT consumption of electricity would come out to 61 or 62 units, which is much less than the standard rate of consumption of electricity. As such, they contended that by no stretch of imagination, they can be held to have manufactured such huge quantity of final product. They also contended that Shri Vinod Kumar Gupta in his statement tendered before the officer have admitted that his family business is trading in iron and steel products and he was doing so in a name and style of proprietary unit M/s. Hari Shanker and Sons. He is neither the Director of the Company nor holding ....
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.... of duty to the extent of Rs. 4,10,342/- is in respect of shortages of final product detected by the officers at the time of their visit. While making the said annexures, the entries in respect of clearances reflected in the CIL statutory records were excluded and the balance entries in respect of which there were no corresponding records, were assumed to be relating to clandestine clearances. 17. The entire case of the Revenue is based upon the entries made in the documents recovered from Shri Vinod Kumar Gupta s residence. The said Shri Vinod Kumar Gupta is neither managing director or director of M/s. CIL and is not holding any post of profit in the said manufacturing unit. Further the Revenue has relied upon the statement of various persons to confirm the allegations of clandestine removal. 18. The appellants have strongly contended that the allegations of clandestine removal cannot be upheld based upon the entries made in the documents recovered from the third persons premises read with uncorroborated statement of various persons. As per the appellant, some of the entries made in the said records relate to manufactured goods at the appellants premises, whereas the remaining ....
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....ries made in the records were relatable to the goods manufactured by the appellant himself. Apart from the fact that no reliance can be placed upon uncorroborated, vague and unsubstantiated statements of various persons, it is also noted that as per the entries made in the said records, there is allegation of sale to 460 parties in the month of June and 523 in the month of July and 424 parties in the month of August, 2002. The Revenue has made inquiries only with three parties. These three parties have in unequivocal terms have stated that the goods received by them were the manufactured goods of the appellant. Similarly, there is no verification from the number of raw material suppliers, as detailed in the said records. 20. Apart from the fact that there is no sufficient evidence on record to reach to a conclusion of clandestine removal, we also observe that for removing the final product clandestinely, the same is first required to be manufactured. As such, it is very essential for the Revenue to establish with the production of evidence that such goods stand manufactured by the appellant. There is no cogent positive evidence to that effect available on record. Apart from the f....
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....e of capacity of production of such a huge quantity of goods, their clearance is virtually impossible. 21. Tribunal in the case of Galaxy Indo Feb Ltd. vs. CCE Lucknow [2010 (258) ELT 254] has dealt with an identical situation. For better appreciation, we produce para 9 and 10 of the said decision as under: "9. Perusal of records apparently disclose that the appellants had specifically raised the point relating to the impossibility of production capacity from the appellants factory to the extent of demand made by the Department. However, the adjudicating authority seems to have totally ignored the said specific ground of defence that the installed capacity could not permit production of huge quantity of processed fabrics as has been calculated by the Department. The records clearly disclose that as per the Department the total quantity of processed PB fabrics during the period from 1-6-1998 to 16-11-1998 was 7794848 mtrs. against the declared quantity of 1207490 mtrs. in the records maintained by the appellants. Curiously, the competent authority had under its order dated 18th December, 1998, few days after the raid by the Department had fixed the annual capacity of the producti....
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....cision to the facts of the present case, where the production capacity was fixed by the Commissioner prior to the period in question and it is not the Revenue s stand that subsequent to the fixation of ACP, the appellants have added any further machinery in their factory so as to enhance their production capacity. The Chartered Accountant s certificate clearly establish that no capital expenditure stand made by the assessee subsequently. Even the assumptive observations made by Commissioner may lead to enhancement in the production capacity to a little extent but same cannot lead to enhancement of the capacity to such a huge quantum which is almost four times the capacity fixed by the Commissioner. 22. The appellants have also submitted that as per the normal circumstances, the electricity consumption for manufacture of 1 MT of iron and steel ranges from 203 to 308 units. This also stand established by the electricity consumption pattern for the earlier years as also during subsequent period. The allegation of clandestine manufacture and removal are for three months i.e. June, July and August, 2002 and electricity consumption for manufacture of such high quantum of their final pro....