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M/s S.H. Haryana Wires Ltd., M/s. Narang Metals and B.S. Trading Co. Versus CCE, Faridabad

Clandestine removal of goods - manufacture of winding wires - search conducted in the premises of appellant - demand of duty - denial of CENVAT credit - imposition of penalties - dispute in RUD 22 - requirement of various documents to arrive at the truth - Held that: - no evidence been brought on record to allege clandestinely removal. It is well settled law that following parameters are essentially required to be proved for arriving at a conclusion of alleged clandestine removal: (i) That exces .....

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finished goods. - None of the above parameters are fulfilled and therefore the impugned order qua demanding duty of ₹ 93,13,644/- is not correct. - Denial of credit of ₹ 16,27,231/- on the ground that only invoices have been received in the factory and not the goods have been received - Held that: - To find out truth whether the goods have been accompanied with the invoices or not the statement of the transporter is required but no statement of the transporter has been record .....

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V.Padmanabhan, Member (Technical) Shri K.K. Anand, Advocate-for the appellant Shri G.M. Sharma, A.R.-for the respondent ORDER The appellants are in appeals against impugned order wherein the Commissioner (Appeals) has passed the following orders: (i) I confirm and order recovery of Central excise Duty amounting to ₹ 93.13.644.47 (i.e. Basic duty of ₹ 9107015.03 + Ed. Cess ₹ 182140.0 + H.Ed. Cess ₹ 24489.13) leviable on clandestine clearances of finished goods without paym .....

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bove section 11A of the Act ibid. (ii) I confirm the order recovery of Cenat Credit wrongly availed and utilized by M/s S.H. Haryana Wires Ltd. amounting to ₹ 16,27,231/- from them under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 under the extended period of limitation under proviso to above section 11A of the Act ibid. (iii) I order recovery of interest at appropriate rate under section 11AB of the Central Excise Act, 1 .....

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of Cenvat Credit so determined at sub para (ii) above. (v) I impose penalty of ₹ 93,13,644/- i.e. equivalent to the amount of duty determined at sub-para (i) above, on M/s S.H. Haryana wires Ltd, 49/4, Mathura Road, Village Prithla, Tehsil Palwal, Distt. Faridabad (Haryana) under Section 11AC of the Central Excise Act, 1944. Further, I also impose penalty of ₹ 16,27,231/- i.e. equivalent to the amount of Cenvat Credit determined at sub-para (ii) above, on M/s S.H. Haryana Wires ltd, .....

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f demands of duty and cenvat credit (i.e.) ₹ 1,09,40,875/- in total) so determined provided the reduced amount of penalty is also paid within 30 days from the date of receipt of this order. Further, no separate penalty under Rule 25 of the Central Excise Rules, 2002, as proposed in the show cuase notice, is required to be imposed for the same offence once the penalty has been imposed under section 11AC of the Act. (vi) I impose penalty of ₹ 20,00,000/- (Rupees Twenty lacs only) on Sh .....

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lty of ₹ 10,00,000 (Rupees Ten lakhs only) on M/s B.S. Trading Co., 883/13, Vijay Park, Gurgaon under Rule 25(1)(d) of the Central Excise Rules, 2002. (x) I impose penalty of ₹ 2,00,000/- (Rupees Two Lakhs Only) on ShriManjeet Singh, Proprietor of M/s B.S. Trading Co. 883/13, Vijay Park, Gurgaon under Rule 26 of the Central Excise Rules, 2002. 2. The facts of the case are that the main appellant, namely, M/s. S.H.Haryana Wires Ltd. is engaged in the manufacture of winding wires. On i .....

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oval of the goods during the period October,2004 to April, 2009 and the credit was sought to be denied to the tune of ₹ 16,27,231/- with reference to invoices issued by M/s B.S. Trading Co. and M/s Narang Metals and to impose penalties on all the appellants. The show cause notices were adjudicating and proposal made in the show cause notices were confirmed by way of demanding duty on account of clandestine removal to the to tune of ₹ 93,13,644/- and to deny the credit of ₹ 16,2 .....

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of ₹ 93,13,644/- has been confirmed on the ground that the main appellant cleared a quantity of 188878.57 kgs of winding wires during the impugned period. The duty has been confirmed on the ground that in the software, spool has passed the quality control test after which status "PS allotted to particular spool thereafter goods are weight and ready to dispatch for final labelling is affixed on the same "Y" status is given to the said goods. As per the department, the appell .....

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were printed against those clearances. It is his contention that the duty has been confirmed on the ground that where remarks PS of QC and remarks "Y" in final label print column were found on the spools of the finished goods were not found entered in RG-1 register. Therefore, it was presumed that the goods have been cleared clandestinely. It is his submission that majority of duty demand is based on RUD 22 which revealed that the department has presumed that against all spools the sta .....

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ot;location in software." 5. It is his contention that out of total quantity of 2,10,566 which was shown in RUD 22, a quantity of 1,52,997.880 was lying in Q' Location. It is his submission that the spools with proper sticker are thereafter tested in the quality department. The spools which was the quality test are shown on the software to the finished goods, although physically they are still lying in the production hall. The software clearly shows that actual position of the spools cl .....

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have requested for supply of soft copy of the printout of the hard disc but the department has provided only truncated and distorted version of data as RUD 2 but in original form was not supplied to the appellant. He further submits that the appellant has provided to the department stock position of various spools lying upto 4.6.2009 which was relied on as RUD 14 which revealed as on 4.6.2009 had a stock of 71055.55 kgs whereas the department while calculating the duty demand had taken into acc .....

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of 50000 kg which is practically impossible. On this, there is no finding was given by the adjudicating authority. Therefore, he submits that if the quantity of 1,52,997 which was lying in "Q" location and includes quantity of 50000 kg on a single spool and quantity of 19090.01 against which temporary invoices were issued was lying in de-location. Further a quantity of 37208.98 is difference between the actual stock available on 4.6.2009 and allowance of which has not been given by th .....

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ded several statements from the official of the main appellant as well as its directors, nobody ever stated that they had indulged in clandestine removal of finished goods. In fact, they were not questioned about the column "location in software" on the contrary the said column was purposefully removed while calculating the duty demand while preparing RUD 22. It is his submission that the closing stock was also not taken into properly as well as quantity of 50,000 kgs were added which .....

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hed goods (iii) identification of the alleged buyers of finished goods (iv) Factum of transportation of raw material as well as finished goods clandestinely (v) Receipt of sale proceeds through cheque or cash. (vi) Use of excess electricity (vii) Statements of buyers with some details of illicit manufacture and clearance of finished goods. (viii) Link between the private/internal records with the actual manufacture of the finished goods. It is submitted that none of the above parameters are fulf .....

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s from Sh. Manjeet Singh, Proprietor of M/s. B.S.Trading Co. and authorised signatory of M/s Narang Metals, Shri Harvir Singh, employee of the appellant and Shri Chander Bose, security supervisor of the main appellant were recorded. Shri Manjeet Singh in his statement dated 26.2.2008 had stated that only bills were supplied to the main appellant without goods. He further stated that the payments were received through cheques which was subsequently returned back in cash to Shri Sunil Mangla, Dire .....

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i Chander Bose and Shri Manjeet Singh. The main appellant sought cross examination of the witnesses on whose statements reliance was placed in the show cause notice but the same was not provided hence the said statements are not having the evidentiary value. 8. Further no statement of any transporter has been recorded to reveal the truth. It is contention of the appellant that the statements of Sh. Manjeet Singh, Proprietor and authorised signatory of M/s. Narang Metal were taken under duress. M .....

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ods, who have admitted that they have supplied only invoices and not the goods. The said statements have been corroborated by Shri Chander Bose and Shri Harvir Singh, therefore, these statements are reliable. Further, it is his submission that from the records of the appellant it is clear that after giving the spool the status as PS y the goods are ready for despatch but the same were not entered into RG-1 register and not found in stock, therefore, it is correctly held after detail discussion i .....

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and distorted. Therefore, it is essential to know the truth of the document RUD 22. The appellant has asked the copy of the hard disc taken by the investigating authority on 12.1.2007 and the copy of pen drive given to the investigating authority on 3.9.2009. Without supplying the copies said documents, truthfulness of the document RUD 22 is doubtful as claimed by the appellant, the document RUD 22 is as under: 12. On perusal of the above, there is significant difference in the said documents a .....

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effect has been given in the impugned order. There is discrepancy in calculating the closing stock. That query is required to be ascertianed by the adjudicating authority. Further, we have seen that on a spool of one kg 50000 kgs of winding wiers cannot be wounded which is practically impossible and the same has been shown by the appellant in their records maintained by them which is not correct by any stretch of imagination. That issue is to be addressed by both sides. We further find that the .....

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f the alleged buyers of finished goods (iv) Factum of transportation of raw material as well as finished goods clandestinely (v) Receipt of sale proceeds through cheque or cash. (vi) Use of excess electricity (vii) Statements of buyers with some details of illicit manufacture and clearance of finished goods. (viii) Link between the private/internal records with the actual manufacture of the finished goods. 15. We find that none of the above parameters are fulfilled and therefore the impugned ord .....

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