TMI Blog2018 (5) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt details of the said material, transactions of the sale money, transportation details of such goods, details of additional consumption of electricity for such suppressed production a prudent individual would not agree with the present conclusions of the Revenue. There is nothing on record from the Revenue side to come to a reasonable conclusion to say that there has been preponderance of probability of such suppressed production on the part of the appellant - The evidences in the form of approximation and averaging production as 77.6% and one statement of Shri Agarwal, Director of the appellant company cannot be called a prudent conclusion of the production estimate. Impugned order set aside - appeal dismissed - decided against Revenue. - D. B. Central/excise Appeal No. 26-27/2017 - - - Dated:- 2-5-2018 - K. S. Jhaveri And Banwari Lal Sharma, JJ. For the Appellant : Mr. Siddhartha Ranka with Mr. Saurav Harsh For the Respondent : Mr. Sameer Jain with Mr. Arjun Singh JUDGMENT 1. In both these appeals, common questions of law and facts are involved, hence they are decided by this common judgment. 2. By way of these appeals, the appellant has challenged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id investigation, a show cause notice was accordingly issued to the assessee respondent on 11.02.2008 demanding the duty evaded and interest thereon, proposing penalty and appropriation of the cenvat credit reversed by the assessee respondent on inputs found short. 3.5 Counsel for the appellant has taken us to the show cause notice wherein it has been stated as under: 4. That the assessee is manufacturing zinc content finished goods zinc oxide, zinc ingots, zinc alloys from raw materials-zinc dross, zinc scrap, zinc ingots etc. Raw material is being imported by the assessee and also purchased from local market. The imported raw material viz. zinc dross/zinc scrap used in the manufacture of zinc oxide etc. is being described in Bill of entry as zinc dross/scrap in various names as Seal or Scribe' or Scrub . These codes are also given along with zinc contents in description provided in ISRI (Institute of Scrap Recycling Industries) which are reproduced below: Code : ITEM Scribe: zinc scrap contain a maximum 5% unmeltables such as free iron, copper, aluminium and other metals. Scrub: Zinc dross in slab form with a minimum zinc content of 92%. Seal: Z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial a quantification arrived at for each different raw material issued for manufacture of zinc product, they are showing less production as detailed in Annexure A with compare to (percentage) yield 120.6% required as per zinc content in each type of Scrap. 6. That the value of clearance of suppressed production and clandestine removal of the zinc oxide has been calculated on average basis by calculating total value of clearances made by the assessee, divided by total clearance of zinc oxide in the particular year. 3.6 He has also taken us to the demand of total duty from the assessee through a chart which has been produced along with the show cause notice which reads as under: M/s Mittal Pigments Pvt. Ltd. Kota Quantity in quintal Year Raw material issued for production (Qntls.) Production to be as per % yield recovery 70%-84% (Qntls.) Production shown (Qntls.) Production suppressed (Qntls.) Average sale rate per quintal (Rs.) Value on which duty not paid (Rs.) Cenvat 16% (Rs.) C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee paid the required duty immediately which is clearly liable to be appropriated into Government Account. 20. Now. I take up the main issue of suppression of production of zinc oxide to the tune of 1545.047 MT worked out by the department on the basis of minimum contents of Zinc in the raw material used for the production as admitted by Shri Ramesh Kumar Agarwal. Director in his statement tendered under Section 14 of the Central Excise Act, 1944. The department has contended that the assessees were manufacturing zinc oxide from Zinc dross, Zinc scrap, zinc ingots etc. These raw materials either were imported or purchased from local market. The imported raw material viz. zinc dross/zinc scrap were described in Bill of entry as Seal or Scribe or Scrub . The Seal, Scribe' and Scrub codes have been provided in ISRI (Institute of Scrap Recycling Industries) which reads as under: Scribe: zinc scrap contain a maximum 5% unmeltables such as free iron, copper, aluminum and other metals. Scrub: zinc dross in slab form with a minimum zinc content of 92%. Seal: Zinc top dross with a minimum zinc content of 90%. Shelf: zinc dross content minimum of 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of raw materials produced by the assessee along with their reply to the Show Cause Notice that they had used following raw materials. (i) 2003-04 zinc Dross Scrap, zine Scrap Scribe, zinc Scrap Score. (ii) 2004-05 zinc Dross. Zinc Scrap Scribe. Zinc Dross shelf, score. zinc ingot etc. (iii) 2006-07 Zinc Scrap Scribe, Saves, Dross, Scrub, Scope, Shelf, Score. In view of above it is clear that the assessee used the type of scrap which at least contained zinc not less than 70% as per the norms prescribed by the Institute of Scrap recycling Industries (ISRI). 23. The assessee has contended that the production suppressed is mentioned to have been calculated at 70 to 84% of the yield recovery but the actual calculations have been made on 84%. it is not mentioned as to why the calculation at 84% has been done, why not at 70% contents of zinc in raw materials used in the manufacture which is the lowest contents accepted by the assessee. The 70% contents of zinc converted into 120% yield comes to 84% of the weight of raw materials used in the production of zinc oxide, as such l do not find any substance in the contention of the assessee. 24. The assessee also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shimla gave his written opinion dated 12.6.1998, wherein he has stated that the documents of this case have been carefully and thoroughly examined. The enclosed writings and signatures stamped and marked were all written by one and the same persons. From the above, it appears that all the documents were written by one and the same persons, though the dates and the name of the parties are different. When it is so then the genuineness of the documents cannot be accepted. 5.1 He contended that the said judgment is not applicable in the present case and he relied on the following judgments :- (1) In Krishna Screen Art. vs. Commissioner of Central Excise 2015 (316) E.L.T. 534 (Guj.) wherein it has been held as under:- 10. It can thus be seen that the findings and conclusions of the Tribunal were based on evidence on record. Such evidence was not confined to a single statement of the proprietor. It is true that reliance was placed on such a statement which was not impermissible since the statement was never retracted. However, it would be incorrect to suggest that the conclusions of the Tribunal were based on a single factor namely unretracted statement of the proprie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se authorities during the raid on the premise of the manufacturing unit of the appellant, as noted earlier, recorded two confessional statements. One was of Shri Maheshbhai Thakkar, an employee of the company who admitted that he was the dispatch supervisor. He would load the manufactured goods for dispatch. As per the kachha note details of which he would note down in his small diary. Once the diary is exhausted, he would hand over the same to the Director of the company Shri Nileshbhai Thakkar. He was shown two diaries of such description and agreed that the same were such diaries. He admitted that the goods shown to have been dispatched in the said diaries were actually so dispatched. In his statement dated 13-12-2009, Shri Nilesh Thakkar, Director of the company admitted that he was engaged in the day-to-day functioning of the company. He was also shown such two spiral diaries which contained his signatures. He admitted that the goods described in such diaries were actually dispatched as mentioned in the diaries and such goods were dispatched without bills or invoices. He admitted that value of such goods would be approximately ₹ 91.92 lacs on which Excise Duty payable wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the submissions made by Shri Shah, learned Counsel appearing on behalf of the assessee it appears that the main grievance is that though new evidences were produced for the year under consideration, which were not there in A.Y. 1989- 90, without considering the same and solely relying upon the decision of this Court for A.Y. 1989-90, the learned ITAT has materially erred in dismissing the appeals and confirming the additions made by the Assessing Officer. Therefore, it is the case on behalf of the assessee that the matter is required to be remanded to the learned ITAT to consider the new evidences produced which were not there for A.Y. 1989-90. Therefore, it is the case on behalf of the assessee that the decision of this Court for A.Y. 1989-90 shall not be applicable to the facts of the case on hand for other assessment years i.e. 1990-91 to 1994-95. 6.1 To appreciate the above more particularly whether the learned ITAT has missed to consider new evidences produced for the years consideration, the grounds on which the Assessing Officer made the additions are required to be considered. It appears that the Assessing Officer noticed the gold content in the final product as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.37% but were reflected in export documents having purity of 91.66% because the importers had desired such level of purity whereas the assessee to air on safer side used more gold so that stringent international standards were not even unintentionally breached, which would incur liability of rejection of consignment. Such explanation by the assessee was found unacceptable and inadequate and came to be rejected by all the lower Authorities which came to be confirmed by the High Court in Tax Appeal No. 346/2000 (A.Y. 1989-90). While confirming the additions made by the Assessing Officer after noting some submissions which are now made by the learned Counsel appearing on behalf of the assessee, the Division Bench has considered the submissions and observed and held as under in paras 7 to 10.1. 7. As can be seen from the questions framed, there are two main elements of assessee's contentions. Learned counsel Shri J.P. Shah's first contention [relatable to Question No. 2 framed above] was that the entire procedure of manufacturing ornaments was controlled by the State authorities under the Gold Control Act. Raw gold supplied to the karigars for preparation of ornaments wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took us through the evidence on record to contend that the revenue authorities and the Tribunal had concurrently come to the conclusion that there was sizeable discrepancy in the consumption of gold reflected by the assessee in its own books of account. The assessee was unable to explain such discrepancies. The assessee's explanation that it exported gold of greater purity and thereby greater quantity than what was reflected in the assessee's documents cannot be believed, and therefore, rightly not accepted by the authorities below. Counsel submitted that the onus was on the assessee to explain such discrepancies. 8. Having thus heard learned counsel for the parties and having perused the documents on record, it emerges that the revenue authorities as well as the Tribunal came to conclusion that there was considerable discrepancy in the quantity of gold recorded in the assessee's books at the time when the ornaments were manufactured and received from the artisans, as compared to the gold actually exported by the assessee to its foreign importers. 8.1 This is not even seriously disputed by the assessee. If we take as sample of such discrepancy that emerges in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. By making misdeclaration therefore, the assessee was seriously reducing quantity of gold that would be available for import against the export undertaken by it. The analysis made by the Customs authorities also matched with that of the assessee's own declaration regarding purity of gold. 9. Had the revenue relied solely on the Customs analysis, we would have further examined the assessee's contention that such analysis was based on the touchstone method which may not yield highly accurate results. In the present case, however, assessee itself declared certain purity of gold which also considered with the random testing carried out by the Customs authorities. 10. The difference between the two sets of declarations was not minor or insignificant. It could not have been passed off as mixing of impurity or error in measuring standards. It was simply a case where the assessee utterly failed to explain the considerable difference in the gold quantity in two sets of documents maintained by itself. 10.1 It can therefore not be stated that the finding of the authorities below, as confirmed by the Tribunal, are perverse. It is also not true that in coming to such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of arguments learned Counsel appearing for the Respondent submitted before us that although the aforesaid statements of Managing Director of the Company and other persons were recorded during the course of judicial proceedings but the same were retracted statements, and therefore, they cannot be relied upon. However, the statements were recorded by the Central Excise Officers and they were not police officers. Therefore, such statements made by the Managing Director of the Company and other persons containing all the details about the functioning of the company which could be made only with personal knowledge of the Respondents and therefore could not have been obtained through coercion or duress or through dictation. We see no reason why the aforesaid statements made in the circumstances of the case should not be considered, looked into and relied upon. 19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of their own volition and there is no allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corrobo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment were specially within his knowledge, viz., concealment of the 200 biscuits in his earlier rented house till he constructed the present house and shifted his residence and thereafter he brought to his house and concealed the same in his compound; and other details elaboration of which is not material. The question then is: whether it was influenced by threat of implicating his wife in the crime which is the sole basis for the claim that it was obtained by threat by PW-2 and PW-5? In that behalf, the High Court has held that it could not be considered to be induced by threat that his wife will be implicated in the crime and accordingly disbelieved his plea. It is seen that admittedly after the Appellant gave his statement, he was produced before the Magistrate though no complaint was filed and was released on bail. He did not complain to the Magistrate that Ex. P-4 statement was given under inducement, threat or duress. It was raised only subsequently making accusations against PW-5, the Inspector of Customs. Therefore, obviously it was only an afterthought. The High Court, therefore, rightly has not given any weightage to the same. It is true that the Magistrate has given vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th under Sections 24 to 30 of the Evidence Act and Section 164 of the Code. It is an admission against the maker of it, unless its admissibility is excluded by some of those provisions. If a confession is proved by unimpeachable evidence and if it is of voluntary nature, it when retracted, is entitled to high degree value as its maker is likely to face the consequences of confession by a statement affecting his life, liberty or property. Burden is on the accused to prove that the statement was obtained by threat, duress or promise like any other person as was held in Bhagwan Singh v. State of Punjab [MANU/SC/0035/1952 : AIR 1952 SC 214, para 30] If it is established from the record or circumstances that the confession is shrouded with suspicious features, then it falls in the realm of doubt. The burden of proof on the accused is not as high as on the prosecution. If the accused is able to prove the facts creating reasonable doubt that the confession was not voluntary or it was obtained by threat, coercion or inducement etc., the burden would be on the prosecution to prove that the confession was made by the accused voluntarily. If the Court believes that the confession was voluntar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the retracted confession is believed to be voluntary and true, it may form the basis of a conviction but the rule of practice and prudence requires that it should be corroborated by independent evidence. Therein also,, for the charges of capital offence, the trial Court did not accept the confessional statement of co-accused containing inculpatory and self-exculpatory statement. The High Court reversed the acquittal and convicted the accused, accepting that part of the confessional statement of the accused which was corroborated from other evidence. This Court upheld the conviction and held that it is not necessary that each item of fact or circumstance mentioned in the confessional statement requires to be corroborated separately and independently. It would be sufficient if there is general corroboration. The ratio in Kashmira Singh's case was referred to. 25. It would thus be seen that there is no prohibition under the Evidence Act to rely upon the retracted confession to prove the prosecution case or to make the same basis for conviction of the accused. The practice and prudence require that the Court could examine the evidence adduced by the prosecution to find out whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght in accepting the confessional statement of the Appellant, Ex. P-4 to be a voluntary one and that it could form the basis for conviction. The Magistrate had dwelt upon the controversy, no doubt on appreciation of the evidence but not in proper or right perspective. Therefore, it is not necessary for the learned Judge of the High Court to wade through every reasoning and give his reasons for his disagreement with the conclusion reached by the Magistrate. On relevant aspects, the learned Judge has dwelt upon in detail and recorded the disagreement with the Magistrate and reached his conclusions. Therefore, there is no illegality in the approach adopted by the learned Judge. We hold that the learned Judge was right in his findings that the prosecution has proved the case based upon the confession of the Appellant given in Ex. P-4 under Section 108 of the Evidence Act and the evidence of PWs 2, 3 and 5. The prosecution proved the case beyond doubt and the High Court has committed no error of law. 34. Having reached the finding that the Appellant has committed the offences under Section 135(1) (i) of the Act and Sections 85(1)(a) and 86 of the Gold (Control) Act, 1968 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. 14. In the instant case, no investigation was made by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties. The statement of so called buyers, namely M/s. Singhal Cement Agency, M/s. Praveen Cement Agency; and M/s. Taj Traders are based on memory alone and their statements were not supported by any documentary evidence/proof. The mischievous role of Shri Anil Kumar erstwhile Director with the assistance of Accountant Sri Vasts cannot be ruled out. 15. In view of the above, we are of the opinion that when there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ots, 1046 units electricity required. 4. So far as the various after allegations relating to the fictitious firms and the income from the share trading, the Tribunal recorded the finding that since the incriminating statements of share brokers etc. have been relied upon in the proceedings, it was incumbent upon the Revenue to produce them as well as the investigating officer for cross- examination by the appellants, as was repeatedly requested by them. In the absence of the same, the statements of the share brokers etc. cannot be relied upon. The Tribunal further observed that even if, for the sake of argument, it is accepted that the income shown in the balance sheets is not the income derived form the sources declared by the appellants, there is nothing on record to link it with the so called clandestine removal of the goods. 5. On consideration of the aforesaid findings, we are of the view that the findings of the Tribunal are based on the material on record and they cannot be said to be without any material and perverse. We find that the Revenue has invoked the proviso to Section 11A(1)of the Act but no case has been made out in the show cause notices or in the adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the new scheme of things, the Tribunals have been entrusted with the authority and the jurisdiction to decide the questions involving determination of the rate of duty of excise or of the value of goods for purposes of assessment. An appeal has been provided to this Court to over-see that the subordinate Tribunals act within the law. Merely because another view might be possible by a competent Court of law is no ground for interference under Section 130E of the Act though in relation to the rate of duty of customs or to the value of goods for purposes of assessment, the amplitude of appeal is unlimited. But because the jurisdiction is unlimited, there is inherent limitation imposed in such appeals. The Tribunal has not deviated from the path of correct principle and has considered all the relevant factors. If the Tribunal has acted bonafide with the natural justice by a speaking order, in our opinion, even if superior Court feels that another view is possible, that is no ground for substitution of that view in exercise of power under the Clause (b) of Section 130E of the Act. (5) Commr. of C. Ex., Jaipur-I vs. Welcure Drugs and Pharmaceutical Ltd. 2015 (317) ELT 436 where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court in its appellate jurisdiction under Section 35G ibid, would not again de novo hold yet another factual inquiry with a view to find out as to whether explanation offered by assessee and which did not find acceptance to the Tribunal is good or bad, or whether it was rightly accepted, or not. It is only when the factual finding recorded had been entirely de hors the subject, or that it had been based on no reasoning, or based on absurd reasoning to the extent that no prudent man of average judicial capacity could ever reach to such conclusion, or that it had been found against any provision of law, then a case for formulation of substantial question of law on such finding can be said to have been made out, such is not the case here. (7) D.B. Central/Excise Appeal No. 120 / 2017 Commissioner of Central Excise Jaipur-I Vs. Tara Chand Naresh Chand decided on 6.12.2017 wherein it has been held as under: 8. Taking into consideration the ratio laid down by the Allahabad High Court, as quoted above, only on the basis of statement of Tara Chand who was the partner of the Company, case of the department is not sustainable. 9. In that view of the matter, in our considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, therefore, no absolute conclusion should be drawn. They then say: A formula which does not apply to Indian conditions because of wide diversity in case varieties, milling performance etc. cannot therefore be used to establish under weighment of juice only because our mixed juice % does not correspond to it. Moreover inferential method of calculation merely gives rough idea of the value of data collected by other means and cannot be used to overrule actually found results. Apparently, their contention is that the particular ratio upon which a part of the calculations of the Assistant Chemical Examiner was based is founded on analysis of Java cane and is, therefore, no guide for determination of the ratio in respect of Indian cane. However, the point raised is a highly technical one and counsel on neither side was able to throw any light upon it. We would, therefore, not base any conclusion upon it but only observe that this argument was not considered by the Collector or by the Central Board of Revenue or the Central Government. In the circumstances, therefore, we must hold that the finding that 11,606 maunds of sugar were not accounted for by the appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical Examiner. But this could be attributed to a slight failure of the human element resulting from the fact that a special operation was being conducted by the operators in the presence of a Government official. We would, however, make it clear that these observations are just incidental and are not the basis of our decision. 6. Taking into consideration, we are of the opinion that the view taken by the Allahabad High Court is required to be accepted inasmuch as in the statement of Director and laboratory report, there is nothing on record to establish that the manufacturing process has taken place either by way of electricity bills, labour charges, transport charges or any corroborative piece of evidence is available. 6.1 In that view of the matter, the view taken by that tribunal is just and proper and does not require interference. For ready reference, the finding of the Tribunal is quoted below: 6.1 Further the department has not gone beyond the approximation of yield which they have shown as 70 to 84% in col.3 of Annexure-A attached to the show cause notice and average yield overall had been shown as 77.60% which has been made the basis for issuance of the show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible . 7. Considering above discussions and the case laws cited above, we conclude that the Revenue has failed to reasonably prove suppressed production and clandestine clearance on the part of the appellants. Consequently, the impugned order in respect of confirmation of duty for alleged suppressed production, and imposition of fine and penalty on the appellant No. 1 and imposition of personal penalty of ₹ 40 lakhs on Shri Agarwal who is appellant No. 2 are hereby set aside. The appellants will get the relief accordingly. 8. The impugned order has confirmed another Central Excise duty of ₹ 1,31,898/- on short found inputs which was deposited by the assessee and was appropriated to the government account. In this regard, there has not been any submissions by the appellants. Therefore, this part of the order confirming the said duty of ₹ 1,31,898/- does not warrant any intervention from this Tribunal. It is hereby sustained. 7. Therefore, the issues are required to be answered in favour of the assessee against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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