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TMI Blog2019 (2) TMI 1550X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from M/s. Oriental Veneer products Ltd. (c) The amount of Rs. 30 Lacs paid by M/s. Oriental Veneer products Ltd. should be appropriated towards the above demand. (d) The goods valued at Rs. 5.40 lakhs seized on 15.10.96 are liable for confiscation under Rule 173Q but, since it had been released provisionally on execution of Bond and Bank Guarantee, they are not available for confiscation and therefore I order an appropriation of an amount of Rs. 1,25,000/- in terms of the Bond and Bank Guarantee. (e) Interest at appropriate rate should be charged under Section 11AB of the Central Excise Act, 1944 on the above said confirmed duty amount. (f) Penalty of Rs. 39,93,852/- is imposed under Section 11AC ibid of the Act on M/s. Oriental Veneer products Ltd. However, as the penalty is imposed under Section 11AC no penalty is imposed under Rule 173Q or Rule 209 or Rule 226 of the Central Excise Rules, 1944. (g) Penalty of Rs. 15,00,000/- is imposed on Shri Vali N. Mithiborwala under Rule 209A of Central Excise Rules, 1944. (h) As I am of the opinion that the penalties imposed meet the ends of justice, I do not propose to confiscate the land, building, plant and machineries etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akash S Chandak Proprietor M/s Biz International Sangamner, Shri Nitin N Bangul Partner A N Industries Nasik, Shri Ashok S Vazirani Director Advance Particle Board Pvt Ltd Kadvali Village, Shri Kiran B Patel Partner M/s Wood and Paper Ind Baroda and Shri Haresh Patel Partner M/s Hans Enterprises Rebale New Mumbai were recorded. In their statements they admitted having received the goods by under-invoicing and making the balance payments in cash. 2.7 On the basis of the investigations carried out as above a show cause notice 11th April 1997 issued to the Appellant show cause as to why:- "(i) The value of goods declared in the invoice should not be enhanced from the declared value to Rs. 9.50 per square meter for the goods cleared from April '94 to October '96 as per Annexure 'A' to this Office, under Section 4 of the Central Excise Act, 1944, as the assessee has actually sold the goods for a higher value and also collected the difference of value from the buyers cash/cheque/demand draft; (ii) The goods valued at Rs. 2,84,32,681/-, which were cleared by misdeclaration of value should not be held liable for confiscation under Rule 173Q and/or Rule 209 and/or Rule 9(2) and/or Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confiscation and direct that this amount should be recovered from the Bond/Bank Guarantee executed. 17(b) The duty amount of Rs. 4,88,584/- (Rupees Four Lakhs Eighty Eight Thousand Five Hundred Eighty Four only) is hereby confirmed under Section 11A(1) of the Central Excise Act, 1944. 17(c) I impose a penalty of Rs. 3,00,000/- (Rupees Three Lakhs only) on the Managing Director, Shri Valibhai N. Mithiboriwalla, under Rule 209A of Central Excise Rules, 1944. 17(d) Since the show cause notice issued was after the provisions under Section 11AB and Section 11AC of Central Excise Act, 1944 have come into effect, I hold that the assessee is liable to the mandatory penalty and interest under these two Sections. Accordingly, I impose penalty of Rs. 4,88,584/- (Rupees Four Lakhs Eighty Eight Thousand Five Hundred Eighty Four only) on the assessee M/s. Oriental Veneer products Ltd., Shahapur, under Section 11AC. I also order that the interest at 20% under Section 11AB ibid. 18. The duty confirmed and the penalty levied above shall be adjusted from the amount already paid by the party." 2.10 Against this order of Commissioner, Appellants filed appeal before tribunal. This order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r proceeded to adjudicate the matter without supplying the documents again on the pretext that these documents were supplied earlier. iii. Appreciation of Evidence in form of Statements of Buyers- The entire case of revenue is based on the statements of the buyers, all the persons who were cross examined resiled from their statements and have unequivocally stated that their statements were neither true nor voluntary and the officers had used coercive methods and in certain case made the witnesses sign the statement without informing them contents of same. Respect of two Shri Ashok Wazirani and Shri Kiran Patel, cross examination was not allowed even after summoning them. iv. Bank Statement of Shri Vali Mithiborewala is the entire basis of the demand made even without stating the account of Shri Vali Mithiborewala is the account of appellant company or the money was being transferred from the account of that account to the account of company. v. In absence of pay in slips which as per the department bear the name of 11 customer and chits (as they have not been supplied along with relied upon documents), the demand made cannot be sustained. vi. Shri Mithiborewala has immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of Apex Court in case of D Bhoormall, has been discharged by the revenue. Accordingly he prayed for upholding the order of Commissioner. 5.1 We have considered the submissions made by the Appellants in their appeal and during the course of arguments and also the order of adjudicating Commissioner and the arguments advanced by learned Authorized Representative. 5.2 From the remand order as reproduced in para 2.10, supra, the matter was remanded by the tribunal to provided all the relied upon documents to the appellants and to re-adjudicate the matter. However the factum of non supply of all the relied upon documents has been stated by the Commissioner in his order himself in para 20 & 21. The said para's are reproduced below: "20. Since the notice continues to make a grievance about non-supply of following documents, statement of accounts No.16423 with DC Bank Ltd., Dongri, and Account No.4875 of DC Bank, Santacruz Pay-in-slips for these accounts, File No.17 of panchanama dt. 16.10.96, fax message dt. 14.10.96 sent by M/s. OVPL to M/s. Hans Enterprises, and as some of these are not forthcoming on records, it would be appropriate to examine the position and the evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to cross examine the persons whose statements are relied upon. The letter is significant in that it indicates that the line of defence has been finalized and also indirectly admits the veracity of Receipt dt. 12.4.97 and 29.4.97. Perusal of Annexure 'C' shows that the documents listed therein includes panchanamas at the Factory, residence and office premises, statement of Vali S. Najmuddin dated 15.10.96 statements of Ashok Gwalani dt. 19.10.96, Abhay Kankaria dt. 13.1.97, Jayprakash Chandak dt. 14.1.97, Nitin Bagul dt. 13.1.97, Ashok Vazirani dt. 10.3.95, Shri Kiran Patel dt. 10.3.97, Haresh Patel dt. 2.4.97 and Shrinivas Achayra dt. 15.10.96. Since copies of these were not called for, it appears that these crucial documents were admittedly supplied along with the SCN. Further, perusal of the show cause notice indicates no mention of M/s. Konark Plywood P. Ltd., M/s. Reliable Plywood P. Ltd., M/s. Welcome Plywood Pvt. Ltd., Shree Laxmi Mills, which goes to show that the statements of representative of other units mentioned in the show cause notice had been supplied. It is totally incredible that Annexure 'C' itself and copies of the relied upon documents had not been furnished t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spite of M/s. OVPL and their Advocate requesting for copy thereof none was furnished till the first adjudication by the CCE and also during these remand proceedings when only copy of Annexure 'C' was furnished, vide note dt. 4.2.05 of Supdt. Adjudication. It is, therefore, clear that M/s. OVPL were making a charade of asking for a copy of the fax message when the message had been sent by them, copy had been available with them and had been supplied to them by the Dept. along with show cause notice vide receipt dt. 12.4.97. It is also significant that the notices did not ask for the copies of the statements relied upon in the show cause notice at any stage of the proceedings during the initial adjudication or on remand. Of the documents claimed to have not been furnished to them, it is seen that i) Annex C has been supplied along with the SCN as evidenced by the receipt of the Noticee and the attendant circumstances of the case analysed above. ii) Fax message sent by them to M/s. Hans Enterprises was admittedly supplied to them which has been acknowledged during personal hearing on 9.2.05. iii) All other statements recorded in the course of investigation, such as M/s. Konark P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the Bank had furnished statements for part of the period and in respect of the remaining had stated that it is no longer available on the computer but they are making efforts to trace out the hard copies which will be submitted as soon as they are located. Be that it may, the fact is that copies were furnished to the Noticees and this has been admitted by them in their letter dated 26/6/97. 21. I have, therefore, no hesitation in rejecting the claim of M/s. OVPL, Shri Vali M. Mithiborwala and Shri Vipin Jain that copies of documents at Sr.Nos. 4,5,6 and 7 of Annexure 'C' had not been given to them. Their claim in this regard is bogus and is only intended as a spurious defence to assail any adjudication order as passed in violation of the principles of natural justice." 5.3 In respect of the statements, cross-examination and other evidences Commissioner has in his order recorded the findings as follows: "24. In defence the noticees have contended, inter alia, that (i) reliance cannot be placed on the statements recorded by the Excise officers from the following Shri V.N. Mithiborwala, on 15.10.96, Shrinivas Acharya on 15.10.96 as per the affidavits dated 17.10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to reimburse to Shri Vali Mithiborwala from time to time. (v) As regards the seized goods, it was contended that the same were not yet finished and therefore were not required to be entered in the RG1 register and not liable for confiscation. 25. On preponderance of probability, I am unable to persuade myself to accept that all the statements recorded by the Department, including the collection of intelligence, during the period of Oct 96 to March 97 was done forcibly with intention to book the case against M/s. Oriental Veneer Products Ltd. It is surprising that the affidavit dated 17.10.96 of Shri V.N. Mithiborwala is sworn but not filed before any authority and despite it being claimed that he was in a very agitated and depressed state of mind also gives evidence of cool calculation. In any case, after filing the letter dtd. 4.11.96, the matter has not been pursued by him at all. Likewise, it is difficult to believe the affidavit 19.10.96, of Shri Shrinivas Acharya, an employee of M/s. Oriental Veneer Products Ltd., that he merely signed under threat of further interrogation, harassment and detention and was too scared to bring the truth stated in the affidavit to the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and signatures as his and in his handwriting. He has categorically stated that there was a trade practice of low billing and he had paid in cash to the representative of Oriental Veneer Pvt. Ltd. His response to the Advocate's query as to how the cash was generated by him outside the books was plain - that he was having cash sales and there was a trade practice of low billing. Taking together his statement and cross examination I find that he has justified and confirmed that additional amount over and above the bill amount was paid in cash to the representative of Orient Veneer, who would be identified by him on personal recognition or was carrying duplicate bill etc. In respect of cross examination of Shri Kankaria, Shri Kankaria, owned up the signature on the statement as his own, but stated that the statement was not in his handwriting and he does not remember the contents. On being examined as to what part has been prepared by him and what part by officers, he stated that except his answers to question 7 and 12 the rest of the particulars in the statement are incorrect and do not pertain to him. But on questioning he admitted that the answer to question no.9 was correct and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated he does not have any records with him here and he does not remember. He agreed that he had not made any complaint about the manner of recording of statement and there was no enmity between him and the officers recording statement. Thus, the statement recorded under Section 14 ibid is voluntary and based on the questions put to him. Shri Bagul appeared to be influenced at the time of his cross examination and had not been able to explain and substantiate his statement during the cross examination that the officers had brought the format and filled in some figures. The cross examination of Shri Patel of Hans Enterprise, he identified the signatures on the statement but stated that he just signed without knowing the contents. He also has not complained about the manner of forceful recording of his statement and his admission during cross examination that he could not be arrested as he has not done anything wrong belies the claim of fear of arrest by officers. He accepted also that officers did not bear any enmity towards him. In the circumstances there is nothing in the cross examination which could cast any reflection on the statement recorded by Supdt. C. Ex. under Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is nothing to be received by the appellant from the department. 2. We are very clear that the document dated 29.4.1997 is sufficient to hold against the appellant that all documents have been supplied to it by the Department and that is acknowledged by the Director. Looking to the manner the appellant has followed dilatory tactics and caused prejudice to the interest of Revenue, Appellant is directed to produce its cash-book, journal, ledger and other subsidiary records for the financial year 1994-95 to 1996-97 before learned adjudicating authority to examine entire cash deposits made in its Bank account and sources thereof mentioned in such record for the said years. The cash-book so produced before the Commissioner to examine each and every transactions as appearing at page 66 of adjudication order, should reflect the cash deposits. The Commissioner shall also examine the cheque transactions, if such transactions were used in adjudication. This is only the working modality possible to serve the interest of justice against the submission of the appellant that copy of Pay-in-Slips are required to be produced by department against bank statements appearing in adjudication order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and such explanation with the order of Tribunal forwarded to the Hon'ble High Court of Bombay for appropriate order. 3. Appellant is also directed to file an affidavit by 10th August 2017 stating the reason why it has not made application to the adjudicating Commissioner for fixation of date of hearing and examination of its records as stated in the order of Tribunal passed on 30.5.2017. Copy of such affidavit be also served on Revenue by 8th August 2017." 5.6 Appellants against this order filed a writ petition before High Court (Writ Petition No 2528 of 2017). High Court vide its order dated 23.08.2018 allowed the writ petition as per order as follows: "5. After hearing both sides at some length, we find that the Tribunal in the peculiar facts and circumstances would have been well advised to dispose of the appeal on merits and finally. With great difficulties and obstacles parties get an opportunity to argue old appeals and the Tribunal therefore should not pass any orders which would delay the proceedings further. Public interest suffers adversely if any tentative and prima-facie view is expressed, like in the present manner, and it delays the final hearing of the appeal an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent dated 02.04.97 of Shri Haresh Patel. 15. Statement dated 15.10.96 of Shri Shrinivas Acharya." 5.10 Documents which are not produced have been relied in the show cause notice stating as follows: "The scrutiny of documents recovered under Panchanama dated 15.10.96 from the premises of the said assessee's office revealed that a) Chit paged at Sr.No.91 of document No.17 shows that the said assessee had supplied 2431.56 sq mts of face veneers to M/s. Bent Ply Products vide invoice No.338 dtd 29.09.96 sqr. mtr. at the rate of Rs. 8 per sqr.mtr., thereby suppressing sale value of face veneer to the extent of Rs. 16,534/- for that invoice. b) Chit paged at Sr.No.97 of documents No.17 shows that the said assessee has supplied 2073 sqr mtr of face veneers @ Rs. 10.50 per sqr.mtr. and 1382 sqr.mtr. of face veneers @ Rs. 12.50 per sqr.mtr. to M/s. Advance Particle Board Pvt. Ltd. vide invoice No.171 dtd 5.3.95 but had billed both for Re.1/- p.s.m. only thereby suppressing the value of face veneer to the extent of Rs. 35,068.50 to evade central excise duty. c) Chit given at Sr.No.99 to document No.17 shows that the said assessee had supplied 19,670 sqr.mtr. of face veneers @ Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of the said documents either in original or in form of any certified copy these paras cannot be said to be based on the available evidence for scrutiny.
5.11 Apart from the above discussions show cause notice is only narration of search operations and evidences recorded in form of statements of various person. Commissioner has in his order recorded that the persons making the statement have not testified their statements as correct and voluntary. Thus these statements in absence of other evidences cannot be called as reliable evidence in proceedings relating to evasion of duty.
5.12 Further another fact that needs consideration is that the amount which have been said to be received clandestinely against the duty evaded by way of undervaluation of goods is determined by way of deposits made in the bank accounts of the managing Director. How a person receiving the money in cash against such undervalued goods leave a trail by depositing the said amounts in his accounts has not been considered and answered by the revenue in these proceedings.
6.1 The Appeals filed by Appellant and Appellant 2 are allowed and the order of Commissioner set aside.
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