TMI Blog2018 (6) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... weighment slip and a few corresponding excise invoices - It will not be proper to treat payment of duty as admission of guilt and the department cannot be allowed to rely on the irregularity committed by them. It is settled law that one cannot take benefit of its own wrong. Existence of unaccounted stock of final product, believed to be kept for clearance without entering in books - Held that:- It is found that the manner of stock verification is not in conformity with the normal accounting of such goods. There is no dispute to the fact that the goods in question is accounted for by weight and not in numbers. Therefore, physical verification of such goods by counting the number of pipes cannot be appreciated. Moreover, the conversion from numbers into Kg (weight) has been made by using formula prescribed for pipes of BIS specifications and admittedly, the assessee -appellant is manufacturing both ISI and Non ISI Pipes - the quantity of goods found in excess of the recorded stock of goods as calculated by the department in Annexure-I to the Panchnama is unverifiable and hence appears to be incorrect - seizure and subsequent confiscation of incorrectly calculated stock of finished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the first set of appeals is against order of confiscation of seized goods and imposition of penalty and the second set of three appeals is against demand of duty with interest, on goods alleged to have been removed clandestinely without payment of duty and also against imposition of penalty on the appellants. It is also seen that while appeals preferred by the appellant assessee namely Apollo Pipes Ltd. are against confiscation of seized goods, confirmation of duty demand with interest and imposition of penalty on them under Rule 25 of Central Excise Rules, 2002, read with Section 11AC of Central Excise Act, the appeals field by individuals namely, Mr. Sameer Gupta and Mr. N. S. Rana are against imposition of penalty on them under Rule 26 of Central Excise Rules, 2002. Since both sets of appeals relate to proceedings initiated as a result of same investigations conducted by the departmental officers it is decided, in the interest of justice, to dispose of all the six appeals referred to above together. 2. The facts, in brief, are that the appellant company is engaged in manufacture of PVC Pipes, Tubes and Fittings, etc. falling under Chapter 39 of the First Schedule to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in invoice issued was lesser than those shown in the corresponding weighment tickets issued by M/s Jain Dharam Kanta. The officers took certain records in their possession for further investigation in the matter. A Panchnama detailing the search operations conducted by the officers was prepared on spot which was signed by the panches, officers and Mr. N. S. Rana. The calculation chart showing quantity of excess stock was enclosed as Annexure-1 to the said Panchnama and list of records resumed by the officer is contained in the Annexure-II to the Panchnama. The seized goods were handed over to Mr. N. S. Rana for safe custody under supardaginama dated 09/02/2007. The investigating officers recorded the statement of Mr. N. S. Rana on 09/02/2007 and also on 06/03/2007, as well as on 04/06/2007 under Section 14 of Act, 1944. On 15/02/2007, the officers recorded statement of Mr. Mukesh Kumar Sharma, Excise clerk of the appellant company. The officers also summoned and recorded statement of Mr. Sameer Gupta, Director of the appellant company on 06/06/2007. In course of investigation, the officers searched the business premises of M/s Jain Dharam Kantaa on 12/02/2007 and recorded statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 303/- (Excise duty ₹ 33,35,591 + Ed Cess ₹ 66,712/-) during the period from December, 2004 to February, 2007 by the appellant company and proposed demand and recovery of duty under Section 11A of the erstwhile Central Excise Act, 1944 alongwith interest under Section 11AB of the Central Excise Act, 1944 as well as imposition of penalty on the appellant assessee under Rule 25 to the Central Excise Rules, 2002 readwith Section 11AC of Central Excise Act, 1944. The notice also proposed imposition of penalty on Mr. Sameer Gupta, Director and Mr. N. S. Rana, General Manager of the appellant company under Rule 26 of Central Excise Rules, 2002. A detailed reply was submitted by the appellant to the learned Adjudicating Authority vide letter dated 27/04/2009 and 10/06/2009. Show Cause Notice dated 18/04/2008 was adjudicated upon on contest by the Additional Commissioner of Central Excise vide Order-in-Original No.79/ADDL.COMMR/2009-10 dated 26/02/2010 in which he has been pleased to confirm the demand of duty alongwith interest and also imposed penalty equal to the amount of duty so confirmed under Rule 25 of the Central Excise Rules, 2002 readwith Section 11AC of Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ISI and Non ISI Pipes. Therefore, conversion of number of pipes into weight in Kgs by using formula for ISI marked pipes in respect of entire stock of pipes in the present case is clearly erroneous. In absence of number of pipes and formula used for conversion of numbers into weight in Kgs it is virtually impossible to test veracity and correctness of the quantity in Kgs as calculated by the investigating officers. Under the circumstances the figures of so called unaccounted production as calculated by the investigating officers cannot be taken as correct calculation of weight of goods. He also submitted that the method of physical verification of stock of finished goods adopted by the officers was contrary to the normal method of physical verification and calculation of weight being unverifiable cannot be taken as proof of existence of unaccounted goods in the stock. 5. As regards difference in weight shown in the weighment slip and in the corresponding Central Excise invoice, the learned counsel submitted that due to non availability of heavy duty weighment bridge inside the factory premises, the truck load of goods are got weighed on Dharam Kanta outside the factory premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005-2006 2006-2007 108 126 4 44 Paras Traders 2005-2006 2006-2007 2 1 1 Nil Dhan Laxmi Tube Co. 2005-2006 2006-2007 1 3 Nil 1 Cash Sale 2005-2006 2006-2007 160 214 13 30 Learned counsel further submitted that the appellant was coerced to pay the amount of duty as calculated by the officers and was also pressurized to admit the guilt. The repeated summons and the date of deposit of the amount as per dictate of the investigating officers clearly suggests the duress under which the admission was made and the entire amount of duty was deposited by the appellant company. He also submitted such statement cannot be taken as a proof and adverse inference on the basis of such forcibly obtained statement is unauthorized by law. He summed up his submission by stating that the department does not have a single piece of evidence showing unaccounted production and clearance of goods by the appellant company w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the department stands paid by the assessee before issuing show cause notice, there is no pecuniary loss to the Government and as such levy of interest in this case is unwarranted and illegal. 8. As regards imposition of penalty on the appellant company the learned advocate submitted that due to non mention of specific clause of the penal provision contained in Rule 25 of the Central Excise Rules, 2005, imposition of penalty under the said rule is illegal in view of law laid down by the Hon ble Supreme Court in the case of Amrit Foods vs. CCE [2005 (190) E.L.T. 43 (S.C.)]. He also submitted that it has been consistently held in the following cases that penalty is not imposable in cases where duty stands paid before issuing of show cause notice:- (i) Commissioner vs. Rashtriya Ispat Nigam Ltd. [2004 (163) E.L.T. A53 (S.C.)] (ii) CCE vs. Gaurav Mercantiles Ltd. [2005 (190) E.L.T. 11 (Bom.)] (iii) CCE vs. S. B. Packaging Ltd. [2008 (223) E.L.T. 360 (P H)] (iv) CCE vs. Matsyodari Steel Alloys Pvt. Ltd. [2008 (225) E.L.T. 176 (Bom.)] 9. On behalf of other appellants, the learned counsel submitted that the department has not stated the role played by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd has been permitted by the competent jurisdictional Central Excise Authority for taking out excisable goods outside the factory premises for weighment purposes. It is also admitted fact that the loaded truck, after weighment, is brought back to the factory for preparation of excise invoice showing actual weight of the goods cleared against the same. From the charts showing supply of goods to the concerned buyers and the summary of such supplies submitted on behalf of the appellant company, it is seen that the discrepancy is only with reference to three regular buyers, two stray buyers and gate sale against cash payment. As per summary submitted on behalf of the appellant, it is found that number of invoices having lesser quantity is negligible compared to the total number of supplies made to the particular buyer. Therefore, in absence of any corroborative tangible evidence of clandestine removal, it appears to be improper to hold the appellant guilty of clandestine removal of goods solely on the basis of difference in weight recorded in the excise invoices. There is nothing on record to justify rejection of the cogent explanation offered by the appellant assessee before the low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us charge which has to be proved by way of tangible evidence and it cannot be held on the basis of suppositions and inferences [(Refer: Oudh Sugar Mills vs. UOI [1978 (2) E.L.T. (J 172) (S.C.)]. The Hon ble Allahabad High Court, which is the jurisdictional High Court, has in Para-12 of its judgment and order in the case of Continental Cement Company vs.UOI reported in 2014 (309) E.L.T. 411 (All.), had held that unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. The Hon ble court has further held that clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. 14. In the present case, I find that no investigation has been conducted by the department with the buyers or with transporters. There is absolutely no evidence of removal of goods without payment of duty by the appellant company save and except presumptions. In fact the buyers have given certificate to the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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