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TMI Blog2022 (3) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr. Deepak Gupta son of Mr. Naresh Gupta. During physical stock verification the officers found copper ingots - 11,480 Kgs. valued at Rs. 49,36,400/- and copper scrap weighing 25.732 Kg. valued at Rs. 1,06,78,780/-. As on demand the supervisor present - Mr. Rakesh Jain could not produce any documents in support of the stock. The same was seized and certain documents also resumed for further investigation. 3. Mr. Rakesh Kumar - Supervisor inter-alia stated that he is working in this unit for the last 6 months. The unit is run both on electricity as well as power from the generator. They receive copper scrap from various dealers. The accounts and management of the factory is looked after by Mr. Deepak Gupta. Most of the times they dispatch their finished product - copper ingots by vehicle No. DL1LB 5529 owned by one Mr. Pappu Puran. They have been receiving copper scrap from dealers like Mr. Pappu Puran, M/s Nalanda Metal, M/s Salim Metal. After manufacture of ingots they usually dispatch to the rolling Mills namely i) M/s Pappu Pal Rolling Mill, Mandoli, ii) M/s Raghupati Rolling Mills and iii) M/s Mahavir Rolling Mill. 4. The statement of Driver of the vehicle No. DL1LB5529 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in support of the goods lying in the factory premises appeared to be bogus. Further it appeared that the physical stock found in the factory on 05.11.2011 is liable to confiscation under Rule 24 of Central Excise Rules, as such stock appeared to be unaccounted with intention to clear without payment of duty. 8. It further appeared that M/s Jindal Cables had intentionally not maintained any stock register to clear the goods without payment of duty. Further, Mr. D.B. Jain, Accountant of M/s Jindal Cables admitted in his statement, that they have been clearing copper wire manufactured without raising invoices. It further appeared that Indian currency Rs. 4.65 lakhs was liable to be confiscated as the same appears to be sale proceeds of the goods manufactured and cleared by M/s Jindal Cables without payment of duty. It further appeared that both M/s Jindal Cables and M/s Jindal Metal have contravened the provisions of Rule 6, 4, 9, 10, 11 and 12 of Central Excise Rules. Accordingly, show cause notice dated 02.05.2012 was issued directing M/s Jindal Metal to file reply as to why not the goods valued at Rs. 1,56,15,180/- found during the course of physical verification be not confisca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire of 60 No. which were sold in the market. They were also drawing copper wire of very thin diameter. Since the turnover of M/s Jindal Cables was less than Rs. 1.5 crore they were not paying Central Excise duty. On being asked that the turnover of M/s Jindal Cables as per the balance-sheet for the year 2010 - 11 was Rs. 2,24,36,447/- then why they have not got themself registered and paid duty. It was stated, this amount includes trading turnover. 13. The officers also found documents of M/s G. N. Trading, Partnership concern of Mr. Naresh C. Gupta, which was in trading, also lying in the same premises. M/s G. N. Trading was the partnership firm and the other partner is Ms. Meenu Gupta daughter of Mr. Naresh C. Gupta. This firm was trading in copper wire and PVC wires etc. 14. Mr. D. B. Jain further stated that M/s Jain Trading Company (JTC), the documents of which (like account books, Ledger for the year 2009 - 10) were also found in the premises of M/s Jindal Cables, it was stated that JTC was actually a trading firm owned by him, which came into existence in 2008 and was engaged in trading of copper wire, aluminium wire and PVC wires. He further stated entries in note book - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of inspection, the factory was found closed and no worker was found. It further appeared that although as per their records they were having stock of copper ingots - raw material, copper wire rods - finished goods and copper scrap, but on physical verification no stock was found. Statement of Mr. Anil Kumar Goyal, Director was recorded who did not accept the fact that his company have done any job work for M/s Jindal Metal. Further RRM deposited Rs. 1,45,715/- towards the excise duty against shortage of goods found in their factory in physical verification valued at Rs. 13,97,780/-. 17. In follow-up investigation, the officers also visited M/s Chandra Rolling Mills, which was engaged in manufacture of copper wire rods from copper ingots/bar and were registered with the Department. During the proceedings, stock of finished goods was found tallied with the records. Further no incriminating documents were found. Further statement of Mr. Ashok Arora Director of M/s Chandra Rolling Mills was recorded who on being shown the photo copy of resumed documents from JM admitted that one gentleman has approached their unit for getting copper wire rods manufactured out of raw material to be su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and Sh. Naveen is employee of the company. Further, stated that they have not received any material from M/s Jindal Metal. Thus, M/s Jaishree Ram Engineering did not accept any receipt on kachhi parchi. In follow up investigation, Mr. Shobit Bansal from M/s B.P. International also stated that he has never received nor undertaken any job work activity for M/s Jindal Metal. 21. Statement of Mr. N. C. Gupta, Partner of M.s Jindal Cables was recorded who inter-alia stated that M/s Jindal Cables had come into existence in the year 2004-05 and they were engaged in manufacturing of copper wires as well as PVC cables. There were also trading in copper wires and PVC cables. They were not registered with the Central Excise Department as their turnover of dutiable goods was below the SSI exemption limit of Rs. 1.50 crores. 22. M/s Jindal Metal submitted a letter received by Revenue on 16.12.2011, inter alia stating/praying for release of the seized goods valued at Rs. 1,56,15,180/- stating that they have purchased copper scrap on various dates from scrap dealers as per list annexed to the letter, along with the invoices. It was also mentioned that the entries of the said goods could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' to punchnama drawn at residence containing handwritten kachhi parchi of various persons and asked to explain the entries made therein, he stated that those entries were related to dispatch of the goods, but he did not know much about the same. Further stated that the details will be given by Mr Deepak Gupta. 28. On being shown resumed file numbers at serial No. 42, 44 and 45 - Annexure 'A' to punchnama drawn at residence containing handwritten Kachhi Parchi, as well as print outs of accounts, on being asked to explain the entries therein, he stated that these related to receipt of the goods, entries in file No. 44 and 45 were related to miscellaneous expenditure. But he did not know much about the entries, and details may be asked from Mr. Deepak Gupta. It appeared to Revenue that Mr. N.C. Gupta denied to comment on most of the incriminating documents pertaining to M/s Jindal Metals and stated that Mr. D. K. Gupta could better comment on them. 29. Statement of Mr. D.K. Gupta was also taken on record on 27.04.2012. On being asked as to why the bills in support of the stock found on 05.11.2011 were submitted only vide letter dated 16.12.2011, found in the premises of M/s Jindal M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any valid documents from M/s Jindal Metal and thereafter converted them into copper wire rods which were dispatched according to directions of the M/s Jindal Metal. In reply he stated that he could not comment on the same. 36. On being shown the statement recorded on 05.11.2011 of Mr. Rakesh - Supervisor of M/s Jindal Metal, stating that they have dispatched 1078 numbers of copper ingots weighing 150.920 tonnes to Mr. Pappu Pal, RRM and MRM in the month of October and November, 2011, without any valid documents from M/s Jindal Metal. In reply, he stated that he could not comment on the same. 37. In his further statement Mr. D. K. Gupta inter alia stated that the documents resumed from the residential premises on 05.11.2011, probably belong to M/s G. N. Marketing which is a trading firm of Mr. N. C. Gupta. He further stated that he does not look after any work of M/s G. N. Marketing. On being shown file resumed Sl. No. 37 from the residence, he stated that the handwriting on the loose papers appear to be of Mr. D. B. Jain who is also residing on 2nd floor on rent and also engaged in trading under the name and style of M/s Jain Trading Company. Similarly, Neelgagan noteboo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wire of different sizes from M/s Jindal Cables without bill on kachhi parchi in the financial year 2011-12. Further, on being shown the transactions / clearances recorded in their name from the records found at M/s Jindal Cables; He accepted that in the financial year 2011-12, he had purchased 14180.4 kg. of copper wire valued at Rs. 66,11,139/- from M/s Jindal Cables without invoices. He further stated that he will pay duty and handed over a cheque dated 16.07.2015 for Rs. 4 lakhs towards his duty liability. However, Sh. Jitender Kumar within few days retracted his statement vide letter dated 04.08.2015. 41. Further enquiry was made at M/s Yash Cable Industries, Shahdara, who are engaged in manufacture of PVC insulated wire. The Proprietor is Amik Kumar Parak denied of having made any unaccounted purchases from M/s Jindal Cables. Similarly, Mr. Harish Chawla, Proprietor of M/s S. S. Cable Industries, Vishwas Nagar, New Delhi also denied having purchased any goods from M/s Jindal Cables without invoices. 42. In his further statement recorded on 27.07.2015, Mr. Deepak Kumar Gupta disagreed with the statement of Mr. Jitender Kumar of M/s Omex Cable Industries. Mr. Deepak Kumar Gup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B 5529 has stated that he have transported almost 100 trips for transporting of copper ingots manufactured by M/s Jindal Metal to various parties having weight of 5.5 to 6.0 MT in each trip. However, no papers were given to him for transportation. 47. Further, Mr. S. N. Bhutani alias Pappu Pal, Proprietor of M/s Krishna Rolling Mills had admitted in his statement that he has received approximately 116 tons of copper ingots from M/s Jindal Metal for converting to copper rods without proper invoices or challan. 48. It further appeared that though the affairs recorded in various kachhi parchi and other private records belong to clandestine manufacture and clearance by M/s Jindal Metal, but Mr. D. K. Gupta have denied the same as belonging to M/s Jindal Metal by stating that the author Mr. D. B. Jain and Mr. Rakesh Jain can explain these. 49. It further appeared to Revenue that at the time of inspection on 05.11.2011 production was going on in M/s Jindal Metal wherein the excise returns filed for the period April, 2011 to October, 2011, they have shown Nil turnover / production. The allegation of unit being in production for the last few months, seems to be corroborated with the att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les with option to redeem on payment of fine of Rs. 2 lakhs. Both the amounts of cash seized, were ordered to be appropriated with the redemption file. Further, duty of Rs. 1,45,715/- was confirmed on M/s Raghupati Rolling Mills and full appropriation of duty with amount already paid. Further, penalty under Rule 26 was imposed as follows:- Sl. No. Name Amount (Rs.) 1. Sh. Deepak Kumar Gupta 2,00,000/- 2. Sh. Rakesh Jain 2,00,000/- 3. M/s Shree Krishna Rolling Mills Prop. S. N. Bhutani 2,00,000/- 4. M/s Chandra Rolling Mills Pvt. Ltd., 2,00,000/- 5. M/s Tirupati Industries 2,00,000/- 6. Sh. Desh Bhushan Jain 2,00,000/- 51. Being aggrieved, the appellants are before this Tribunal. 52. Learned Counsel for the appellant urges that M/s Jindal Metal had filed interim reply and also additional submissions, denying all the allegation and they also prayed for cross-examination of panchas/ witnesses and the officials. However, the cross-examination was given only of few persons without any cogent reason. Thus, the appellant was prevented in contesting the allegations of Revenue, leading to miscarriage of justice. He further urges that the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s so as to prevent tampering. We have perused the said Panchnamas both dated 05.11.2011. Panchnama drawn at the factory premises suggests that the factory is built up on 102 sq. yards approx. and has basement, ground, first with a mezzanine floor and second floor. Wire drawing machines and other machines were also found installed at basement, ground and first floor and one electricity meter was also used in factory premises. Sh. Desh Bhushan Jain, Accountant states in the Panchnama that one more firm in the name of M/s NN Lite is also functioning in the same premises and is also engaged in manufacturing of PVC cables of copper. Further, panchanama merely states that some incriminating documents /kacchi parchies etc. annexed in (Annexure-A) were resumed. We find that the panchnama drawn at the factory premise is totally silent on the fact that wherefrom the incriminating documents/kacchi parchies has been resumed and seized whether from the portion occupied by the Appellant-Jindal Cables or from the portion occupied by M/s N.N. Lite. The investigating officers are expected to be true and fair while making investigation. It is necessary on the part of the investigating officers to di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) & 2(III) referred as RUD-62, 63 & 64 (for appellant - Jindal Cables) and relied upon by the Revenue, it is noticed that few names, figures are appearing and were hand-written. We observe that the Ld. Commissioner has not carried out corroboration of the seized private records/kacchi pachies. He should have further summoned the persons whose names were appearing on the private records such as of Ashwani, Prithviraj, Manoj Gahlot, Vicky, Sunny Sehgal, Amit Singhal, Tiwari, Rajkumar and others, for corroboration. We find that only the statements of the three purchasers/persons whose names are appearing in the said private records were taken i.e., Sh. Jitendra Kumar, Proprietor, M/s Omex Cable Industries; Sh. Amit Kumar Parak, Proprietor, M/s Yash Cable Industries and Sh. Harish Chawla, Proprietor, M/s S.S. Cable Industries were confronted with the details contained in the said documents. None of the said parties, except Sh. Jitendra Kumar, Proprietor of M/s Omex Cable Industries admitted clandestine receipt of material from appellant - Jindal Cables. Sh. Jitendra Kumar, too retracted his statement. The said documents remain uncorroborated and it is a settled law that demand cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that Sh. Deepak Kumar Gupta and Sh. Naresh Chand Gupta had categorically denied any relation to the contents of the various documents and had specifically stated that those were in the writings of Sh. Desh Bhushan Jain and the documents might be containing details of business of his proprietary concern M/s Jain Trading Co., (Concern of Sh. Desh Bhushan Jain). This was also brought to the notice in the reply dated 26.09.2017, that credence cannot be placed upon the statement of Sh. Desh Bhushan Jain. The Commissioner disregarded the statement of Sh. Deepak Kumar Gupta dated 04.09.2012, regarding the authenticity of the documents only on the basis that this statement was made almost a year after the statement of Sh. Desh Bhushan Jain was recorded, and as such was not given substantial evidentiary value by the Commissioner. Moreover, in cross-examination on 23.04.2017, Sh. Desh Bhushan Jain explained that his firm M/s Jain Trading Co. used to trade in various items like copper-wire, Scrap and PVC Wire. He further accepted that the bills (Invoices Nos. 77, 78, 82, 90, 60, 63, 65 & 69 of Book No.2) belonged to his firm. He even accepted that bill no. 82 tallies with the entry in K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration in respect of the goods alleged to be clandestinely removed. There is no evidence as to how the alleged 92683 kgs of copper wire have been transported as no statement of any transporter has been recorded and placed on record. It is settled proposition that that the demand of duty on goods alleged to be clandestinely removed have to be supported with evidence of procurement of inputs, employment of labour, freight, receipt of consideration, etc. i.e. evidence to corroborate, which is lacking in the present case. Therefore, the duty is levied only on assumption and presumption, as such is fit to be set-aside. 62. As per Annexure-A i.e., the list of documents resumed and seized from the factory as well as residential premises, it is seen that the records pertaining to other firms/parties 'were also found' like of M/s NN Lite, GN Marketing, M/s Jindal Metal, M/s Aggarwal Metal, M/s Jain Trading Co. Further, we have perused the VAT returns in form DVAT - 16 of the Appellant - Jindal Cables, annexed with the appeal paper book. While computing the sales turnover of the Appellant - Jindal Cables it is observed that, the Ld. Commissioner has presumed that all of the sales figures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y stated as to why the goods be not confiscated under Rule 25 of the Rules, for this we rely on the ruling in case of Amrit Food Vs. CCE - 2005 (190) ELT 433 (SC). Therefore, confiscation of goods is bad and therefore liable to be set-aside. 64. Regarding the currency amounting to Rs. 4,65,000/- seized from the factory premises of the Appellant-Jindal Cables, it is apparent from the reply filed by the Appellant that out of the total amount Rs. 1,45,283/- belong to the Appellant-Jindal Cables and Rs. 1,78,844/- belonged to M/s NN Lite, Rs. 63,786/- belonged to M/s G.N. Marketing and the balance amount of Rs. 77,087/- could only be explained by Sh. Desh Bhushan Jain from whose custody the currency was seized. We find that the Appellant also provided relevant extract of its cash books and that of M/s NN Lite and M/s GN Marketing. From the perusal of the Order, we find, the cogent explanation given, is not found untrue. Ld. Commissioner should have taken into account the relevant documentary evidence on record and expected to give finding on it. He has also not rejected the said cash books/documentary evidence provided by the appellant nor has brought on record any other contrary evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted to have said that he has been transporting copper ingots for the last three to four months, and he had transported approximately 5.5 to six tonnes of copper ingots to M/s Pappu Pal Rolling Mill, the preceding day. The appellant is alleged to have clandestinely cleared the copper ingots manufactured by him to various rolling mills for manufacture of copper rods on job work basis. The allegation that the appellant has cleared the said Copper rods directly from the premises of the rolling mills (job workers) to its buyers has been confirmed by the Commissioner in the impugned order. The said rolling mills are M/s Sh. Krishna Rolling Mills, (Pappu Pal), M/s Raghupati Rolling Mills, M/s Chandra Rolling Mills Pvt. Ltd. M/s Tirupati Industries and M/s Valson Rolling Mills Pvt. Ltd. who were registered with the Central Excise Department as manufacturers. Ld. Counsel specifically drew our attention to the fact that for the same period in question, show cause notices to various rolling mills have also been issued, but in none of them it is ever alleged that the said rolling mills have received the raw material i.e., copper ingot from the Appellant-Jindal Metal. The said rolling mills w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copper ingots from the appellant clandestinely. All these statements are duly incorporated in the show cause notice. We fail to understand as to why the statement of only one person is preferred over the others six mill owners. We observe that the ld. Commissioner have arbitrarily rejected the statement of other mill owners, which he shouldn't have. 68. Ld. Commissioner has relied upon the statement of Sh. Rakesh Jain. According to him Sh. Rakesh Jain, the Supervisor/Manager of the Jindal Metal in his statement dated 05.11.2011, has admitted that for manufacturing of copper ingots, appellant had received Copper scrap from M/s Perfect Metal, Sh. Pappu Puran, Sh. Nandan Metal and Shehjad Metal. He has also provided the details like names, mobile numbers etc. We are surprised to note that when whole case has been built up on the basis of the private note books seized from different premises and on the statements of various persons, then in the face of the statement of Sh. Rakesh Jain, that he had provided the telephone numbers of those persons (suppliers, etc.,), it is beyond any reason as to why no enquiry or investigation from those persons was made, given the fact that their deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olling Mills Pvt. Ltd.), Ashok Arora (Director in M/s Chandra Rolling Mills Pvt. Ltd.), Brijesh Kumar (Proprietor of M/s Tirupati Industries), Arun Kumar (Director of M/s Valson Rolling Mills Pvt. Ltd.), Desh Bhushan Jain, Hulash Chand Aggarwal (Director- M/s Jai Shri Ram Engineers Works Pvt. Ltd.), Govind Ram C/o Ganpati Tempo & Transport Service & Naresh Chand Gupta (Partner of M/s Jindal Cables) etc. The entire case is based on private records/Kacchi Parchies the corroboration of which is sought to be achieved by the statements made by some of the above persons. It is also a fact on record that Sh. Deepak Jain, Sh. Satya Narayan Bhutani, Sh. Jitender Kumar, in their cross-examination denied their earlier statement and did not support the allegations of Revenue. But ld. Commissioner held otherwise. It seems that none of these persons were examined at the stage of adjudication before being put up for cross-examination. Thus, in the circumstances, the statements are held not reliable as evidence. 71. Allegation of clandestine removal of copper ingots is for period from July, 2011 to 4.11.2011. Ld. Counsel for the appellant-Jindal Metal states that for manufacturing copper ingots, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, seizure of the cash being made from almirah at the first floor, it cannot be assumed that the same was recovered from the proprietor of the appellant - M/s Jindal Metal. We have perused the letter dated 30.12.2011 of Sh. Naresh Chand Gupta vide which he has explained that out of the said currency, Rs. 4,00,000/- was received as advance from one Sh. Dharam Pal for sale of the land at Saharanpur and the remaining Rs. 64, 000/- was kept by him for his day-to-day expenses. An affidavit dated 20.12.2011 was also filed by Sh. Dharam Pal.We agree with the above contention of the Ld. Counsel as also for another reason that Revenue has not led any contrary evidence on record, against the allegation, that the said currency was sale proceeds of the goods alleged to be clandestinely cleared by the appellant. 74. The Hon'ble High Court of Madhya Pradesh has held in the case of Union of India v M.S.S. Food Products Ltd. - 2011 (264) ELT 165 (MP) that under the Central Excise Act, 1944, excise duty is leviable on manufacture and production of excisable goods and the same is payable at the time of removal. Therefore, to establish the charge of clandestine removal of excisable goods, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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