9911796707
TMI Blog2017 (5) TMI 1373X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional grounds arise from the facts already on record. In this view of the matter, the Miscellaneous Application is allowed and the grounds are admitted along with additional evidence. 3. The appellant M/s Hans Metal Limited (HML for short) purchases duty paid inputs, i.e. Billets & Blooms from (Steel Authority of India Ltd.) SAIL and availed Cenvat credit on the same. M/s Maitri Steels Ltd., (M/s MSL for short) had installed a shearing machine in their factory, which had the capability to cut the Billets/Blooms speedily. Both the companies are under the same management as they have common shareholders who are the members of the same family and also have got some common directoRs.M/s HML, sometimes send their Billets & Blooms, purchased from SAIL, to M/s MSL, for cutting on job work basis. After cutting, the cut or sheared Billets & Blooms were sent back to M/s HML, for further use in the manufacture of the products. M/s HML generally manufactures Mild Steel Bars & Rods which are classifiable under Chapter Sub-heading No.7214.90 of the erstwhile Central Excise Tariff Act, 1985 and were also manufacturing Angles, Shapes & Sections, Girders, Channels, etc. classifiable under Sub-h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay by same vehicle. When these entries of the registers were compared with the GRs resumed from their office premises on 04/01/2002 - (RUD No.9), it was observed that the description in the GR is the same as that appearing on the said register - RUD No.8145, except the name of the consignee, that is, in the GRs, the name of consignee was M/s MSL whereas in the said register entries were made against M/s HML. For example, Choudhary Transport Company on 20/11/2001, through their GR No.941, dated 20/11/2001, transported 29.200 MT of Billets through vehicle to the factory premises of M/s MSL and received Rs. 2,336/- as freight @ 80 per MT (page 5 of file No.C9 - RUD No.9) and Shri S.K. Tyagi issued the receipt - "pahunch" of the goods at M/s MSL on 21/10/2001 (page No.6 of file No.C9 of our RUD No.9) but in the above register - RUD No.81 at page 15 entries of this consignment had been shown against M/s HML on same day, by same vehicle. This also confirms that Iron & Steel products were transported from SAIL to M/s MSL on the invoices issued in the name of M/s HML (by SAIL) these were never transported back to M/s HML after cutting at M/s MSL. These goods were shown to have been receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed goods of MSL. From scrutiny of the records resumed from the house of Murli @ Murari Lal, it appeared to Revenue that MSL were maintaining receipt of raw materials in the factory in the registers marked as RCPT. Such registers are listed in Annexure 'A-1' & Annexure 'B' to the Panchnama, dated 15/04/2002, and are described as RCPT. These RCPT registers contained all information regarding day to day receipt of all materials in the factory premises of MSL. These were maintained date wise and contains information regarding consignor, truck number, number of pieces, description of materials and weight of the material received. For example, in RCPT register for the month of October, 2001 shown at Annexure 'B' at Serial No.29 of the Panchnama, dated 15/04/2002 - RUD No.45, on 01/10/2001, at Serial No.1; 29, pieces of Billets weighing 25.040 MT were received in the factory of MSL from SAIL, through Trailer No.UTC - 9585 and at Serial No.2; 29, pieces of Billets weighing 24.760 MT were received in the factory of M/s MSL from SAIL through Truck No.URK-1214. When the receipts of these Billets from MSL were compared with the RG 23-A part-I register of MSL - RUD No.48, receipt of the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gister records for the said consignment, it was observed that Invoice No.8236 & 8237 both dated 06/10/2001, where issued by SAIL in the name of HML and the credit of duty involved on 39.040 MT of the Billet was taken by HML in their monthly returns/RG 23 A Part-II register dated 06-07/10/2001. Thus, it appeared to Revenue that RCPT registers are genuine document and in cases where entries for receipt of consignments inside MSL were appearing in RCPT register but which were not entered in the statutory records maintained by MSL, SAIL had issued invoices in the name of HML and credit of duty on the basis of these invoices were taken by HML. A comparative chart of such differences has been drawn as indicated in Show Cause Notice for the disputed period marked as Annexure -'D' to the Show Cause Notice. Statement of Mr. S.K. Tyagi - Manager & Authorized Signatory of MSL was recorded under Section 14 on 15/04/2002, wherein he stated that his work connected with all types of purchases, and sales was controlled by the Head Office, that the raw material was Billets/Blooms/Slab which were received by trucks from SAIL - Panki, Kanpur and that sometimes also received Billet/Bloom from SAIL, Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Rajesh Tyagi the Authorized Signatory of M/s MSL, was also recorded on 13/05/2002 who stated that he was working as General Manager at M/s MSL and drawing salary of Rs. 7800 per month. He was in charge of the work related to bank, preparation of Central Excise returns. These returns are prepared on the basis of numerical figures given by Shri S.K. Tyagi the Authorised Signatory of M/s MSL. Accordingly, based on the documents purported to be recovered from the Wheat field - cowshed and also from the rented premises of Zakir Ali at the house of Mr. Murali, it appeared to Revenue that M/s MSL was using the Modus Operandi for clearance of unaccounted finished goods that is M.S. Strips, and cutting/scrap manufactured out of Billets, not accounted for in their books of accounts, transported through GR's of different transporters to the factory premises of M/s MSL and that Rajesh Tiwari has deliberately given false statement regarding denial of a signature appearing on loose invoices and he was instrumental in the systematic evasion of excise duty. It is, further, alleged in Show Cause Notice that when the records recovered (as mentioned in Annexure-A1 & 2 ) was shown to Shri Rajiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that these GRs were apparently similar to GR's issued by his transport company but he had not issued any such GRs from his transport company. He, further, stated that some person of other firm might have used similar GRs in their name, fraudulently and he had no knowledge of the same. On further enquiry, from Agra Steel Corporation, Agra the authorized signatory - Mr. Ashok Gard stated that order for supply of pig iron were received on telephone mainly or through brokers/commission agents. They wrote the name of the broker in the company's invoice. With reference to the invoices of M/s New Trimurti Roadlines, he stated that the deal was finalized through broker and the name of broker - Shri Vineet Vaid, Kanpur is mentioned. Further, for the transportation of goods the arrangement was made by him and when trucks reached their godown for loading. The loading was done by them and that they were not aware as to which Transporter GR's were issued as they did not pay the freight charges for transporting of the goods. On being enquired about arrangement of transport for sending pig iron purchased from Agra, Steel Corporation, Agra the authorized signatory - Mr. Rajeev Kant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 507 MT of MS Ingots valued at Rs. 48,462/- involving duty of Rs. 7,754/- @ 16% adv. was detected. This amount is recoverable from them under Section 11A of the Said Act. Further, during the investigation of records resumed from their premises, it has been observed that HCL had shown some receipt of pig iron from trading units of Agra through two transporters namely M/s New Trimurthi Roadlines, Agra & M/s Agra Sanwli Transport Co., Agra and by rail rack on A/c of M/s Sumer Sons, Agra but on further enquiry it has been found that 969.720 MT of pig iron although shown as received in M/s HCL but was never transported from Agra. Thus the Cenvat credit on these goods was wrongly taken by M/s HCL which amounts to Rs. 10,30,097/- (as shown in Annexure 'I') is also recoverable from them under Rule 57AH(1) of the erstwhile Central Excise Rules, 1944, Rule 12 of the erstwhile Cenvat Credit Rules, 2001 & Rule 12 of the Cenvat Credit Rules, 2002 read Section 11AB of the said Act. M/s HCL had shown the receipt of end cuttings from M/s MSL but on scrutiny of private records of MSL maintained in the register DSPCH, it has been observed that although invoices were issued in the name of M/s HCL to M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MS Ingots (as in Annexure 'J' to this notice) shown as received from HCL but which had been diverted by HCL to HML/open market. This amount of Rs. 8,13,489/- is also recoverable from them under Rule 57AH(1) of the erstwhile Central Excise Rules, 1944, Rule 12 of the erstwhile Cenvat Credit Rules, 2001 and the Rule 12 of the Cenvat Credit Rules, 2002 read with Section 11A & 11AB of the said Act. In addition, a shortage of 22.672 MT of billets involving Central Excise duty amounting to Rs. 34,099/- (amount of duty since debited by MSL vide their RG23A Pt.-II entry No.388 dated 04/01/2002) was detected during stock taking of the raw material on 04/01/2002 which also appears demandable from them under Rule 12 of the erstwhile Cenvat Credit Rules, 2001 read with Section 11AB of the said Act. Further, from the scrutiny of private records maintained in the form of DSPCH by MSL, it has been observed that MSL had clandestinely cleared end cuttings/scrap in the open market without issue of Central Excise invoices and without payment of Central Excise duty. The Central Excise duty involved on clearances of 256.696 MT end cuttings/scrap has been shown in Annexure 'H' to the Show Cause Notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sported from Agra and received in HCL. Thus, wrongly availing of credit of duty involved on such goods. Therefore, the said Shri Rajiv Kant, Shri Ajay Kant & Shri Vijay Kant also appear liable to penal action under Rule 209A of the erstwhile Central Excise Rules, 1944 read with Rule 26 of erstwhile Central Excise (No.2) Rules, 1944 and Rule 26 of Central Excise Rules, 2002. v) Shri S. K. Tyagi, Manager & Authorized Signatory of MSL who was managing day to day work at MSL also indulged in manipulation of records, clandestinely removed the finished goods without issue of proper Central Excise invoices and without payment of Central Excise duty. Therefore, he is also liable to penal action under Rule 209A of erstwhile Central Excise Rules, 1944 read with Rule 26 of erstwhile Central Excise (No.2) Rules, 1944 and Rule 26 of Central Excise Rules, 2002. vi) Shri Rajesh Dheer, the other Authorized Signatory of MSL was instrumental in systematic clandestine removal of finished goods by signing loose un-serial numbered invoices which were, in turn, used for clandestine removal of such unaccounted MS Strips manufactured by MSL, as discussed above. He is, therefore, also liable for penal ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of billets found short on the date of search that on 4th January, 2002 should not be demanded and similar amount already deposited be not appropriated and further why not Central Excise duty of Rs. 3,28,571/- involved on 256.696 MT of end cutting/scrap removed clandestinely as shown in Annexure 'H-2' to Show Cause Notice should not be demanded, for the Central Excise duty Rs. 1,39,676/- involved on 92.970 MT of billets removed clandestinely as shown in Annexure 'G' should not be demanded from them with further proposal to impose penalty under Rule 57AH(2) read with Rule 173Q of Central Excise Rules, 1944 read with Rule 25 of Central Excise Rules, 2001. 8. The Show Cause Notice was adjudicated on contest vide Order-in-Original dated 15/12/2005, (A) so far as HML is concerned:- (a) duty amounting to Rs. 1,51,17,528/- was confirmed being credit taken wrongly, further appropriated Rs. 5 lakhs debited on 09/02/2002. (b) penalty of equal amount was imposed under Section 11AC of the Act read with Rule 57AH(2) & Rule 173Q of Central Excise Rules, 1944 read with Rule 13(2) of Cenvat Credit Rules, 2001/2002. Demand of Rs. 7, 754/- + Rs. 10,30,097/- + Rs. 53,160/- were also imposed on H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chaubepur Road, Kanpur presented themselves. At the relevant time, Sushil Kumar Tyagi was present in the factory. Mr. Tyagi introduced himself as Authorized Representative. The officers informed their purpose of coming for search and also said that they have information that the factory is involved in clandestinely clearance involving duty evasion. Mr. Tyagi on being asked by the officers presented the statutory records for examination. The officers themselves in the presence of the witness/panchas searched the office situated in factory including the different rooms and the documents were recovered and inventorized were seized by the officers. During the course of search, personal search of Mr. Tyagi was taken which was not objected to. On such search, one diary was found. On the first page, of the diary, name of one, Shri Ram Kumar Thekedar was found written. On being asked by the officers who is Shri Ram Kumar Thekedar and where he resides, Mr. Tyagi answered that he lived with his father-in-law, Shri Murli at village Tatiyaganj, Kanpur which is about 1 km away from the factory. Then, Shri Tyagi along with officers went to the place of Shri Murli at Tatiyaganj, Kanpur (father-i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . S.K. Tyagi used to often meet. Further they used to keep documents relating to the factory namely, Maitri Steels Ltd. in the said room. Further on being asked Shir Ram Kumar Thekedar stated that the records found from the room rented out to Shri Zakir Ali in the house of his father-in-law, had been kept by Shri Zakir Ali 3/4 days ago, stating that he is going on leave. More specifically mentioning that only three days ago, the recovered documents had been kept there. Further Smt. Sukh Devi, wife of, Mr Murli also affirmed vide affidavit filed before Revenue and in her statement to the police officers (in a complaint case against Shri Zakir Ali) that the documents resumed from the rented room of Shri Zakir Ali from their house, had been placed there three days ago only. It was further mentioned that the Wheat field is not inside the factory but is adjacent to the factory. It is further pointed out that the preparation of the Panchnama itself is wrong and full of irregularities. It starts with recording the search in the premises of Maitri Steels Ltd., but it goes on to record search conducted in the different premises i.e. rented room of Shri Zakir Ali in the house of Mr. Murli, v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eking bail Shri Zakir Ali have absconded resulting into issue of non-bailable warrant for his production and also for confiscation proceedings under Section 81, 82 & 83 of the Criminal Procedure Code. It is further stated that the said Shri Zakir Ali, in his statement, before the police officer, have admitted that he had planted forged and fabricated documents in collusion with Mr. S. K. Tyagi and they had planted the documents in the Wheat field as well as in the rented room of Shri Zakir Ali in the house of Mr. Murli, and they had led the investigation team to recover the documents so planted. It is further urged that the impugned order has confirmed the demand against MSL holding that HML purchased duty paid inputs from SAIL and diverted them to MSL which were by used them in manufacture and clandestine clearance of M.S. Strips. It is said that the said finding is irrational and illogical. It is beyond comprehension as to why would HML in order to facilitate clandestine manufacture by MSL, purchase duty paid inputs and divert them to MSL, as no benefit accrues either to MSL or to HML by indulging in such diversion. Undisputedly the inputs in questions were procured from SAIL and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. Thus, the whole demand, against the appellants is perverse, not based on the records of the Adjudicating Authority, or books maintained in the ordinary course of business. Further the uncorroborated records (resumed) are not reliable, as there is no identification as to who maintained such records. Accordingly, the ld. Counsel for the appellant prays for allowing the appeal and set aside the impugned order. 12. The ld. A.R. for Revenue relies on the evidence as per the impugned order. 13. Having considered the rival contentions and on perusal of records, we find that the whole case by Revenue is based on the documents recovered from the wheat field adjacent to factory of MSL and those in Annexure B, recovered from the house of Shri Murli at Tatiyaganj, from room given to Mr. Zakir Ali on rent. From the sequence of events as detailed in the Panchnama dated 15/04/2002, it is evident that soon after start of the search and seizure, search of Shri Sushil Kumar Tyagi - Authorized Signatory of M/s MSL was taken wherein the diary was found, on the first page of which name of Ram Kumar Thekedar was written. There is no mention of any other record written and/or maintained in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, weeken the allegations of Revenue, and gives support to the grounds of the appellant. The reliability of the whole case become doubtful, as made out by Revenue. The basis for the demand raised appears illogical, as no apparent benefits is shown to have accrued to either of the appellants. The sending of goods on job work by M/s HML to M/s MSL was duly intimated to Revenue vide letter dated 02/01/2002. A confirmation letter dated 18/03/2002 was issued by Assistant Commissioner, to this fact (brought on record by appellants). Further appellants have led evidence that Mr. S. K. Tyagi had retracted his statement within a few days vide letters dated 17/04/2002 & 22/04/2002 addressed to the D. G. of DGCEI, New Delhi. The contention of Revenue that factory of M/s MSL was running for 7 more hours, than declared, is untenable, being based only on the basis of statements of some employee. The same does not stand in view of order dated 18/03/1998 passed by commissioner of Central Excise, Kanpur, determining the Annual Capacity of production at 17 MT per day. Further under the facts and circumstances, extended period of limitation is not invokable. The impugned order is also bad and unsusta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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