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TMI Blog2022 (1) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/-. 3. M/s. Bansiwala Iron and Steel [Assessee] filed Excise Appeal No. 53572/2015 assailing the confirmation of demand of Rs. 38,89,972/- along with interest and imposition of penalty under Section 11AC. 4. Excise Appeal No. 53549/2015 is filed by Shri Murtaza Authorised Representative, assailing the personal penalty of Rs. 1,00,000/- imposed upon him under Rule 26 of the Central Excise Rules, 2002. 5. Excise Appeal No. 53550/2015 is filed by Shri Bansilal Jadiya, Manager, of the assessee assailing the personal penalty of Rs. 2,00,000/- imposed upon him under Rule 26 of the Central Excise Rules, 2002. 6. Appeal No. 53551/2015 is filed by Shri Abdul Hafiz, Partner of the assessee assailing the personal penalty of Rs. 1,00,000/- imposed upon him under Rule 26 of the Central Excise Rules, 2002. 7. Excise Appeal No. 53573/2015 is filed by Shri Amit Ghai working Partner, assailing the penalty of Rs. 10,00,000/- imposed upon him under Rule 26 of the Central Excise Rules, 2002. 8. Excise Appeal No. 53574/2015 is filed by Shri Saurabh Ghai, Authorised Signatory assailing of the assessee assailing the personal penalty of Rs. 5,00,000/- imposed upon him under Rule 26 of the Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81,16,116/- 6,68,736/- (duty @ 8.24%) As per the case booked by Commercial Tax Department Jaipur TOTAL 53,21,78,463/- 6,09,34,430/- 11. The Commissioner has, in the impugned order dropped demand with respect to A of the above table against which Revenue is in appeal. He confirmed the demand with respect to B to G of the above table against which the assessee is in appeal. Since each of these components of the demand is based on separate, distinct evidence, they were examined separately in the impugned order and each component was also argued individually by both sides before us. 12. Section 11A of the Central Excise Act is similar to Section 28 of the Customs Act, 1962 and Section 73 of Chapter V of the Finance 1994 (which deals with Service Tax) inasmuch as all these provide for recovery of duty/tax. However, this power is given to 'the proper officer' under Section 28 of the Customs Act while it is given to 'the central excise officer' under section 11A of the Central Excise Act and section 73 of the Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Act, 1994 are similar to the power under Section 28 of the Customs Act. However, this power has been conferred on 'the proper officer' under the Customs Act and on 'the Central Excise officer' in the other two Acts and this dissimilarity implies that the Central Excise officer need not be 'proper officer' and the similarity lies in the use of the definite article 'the' instead of 'a' or 'any' or 'any of the', etc. The meaning of the definite article 'the' when used in any law was explained by the Supreme Court in Consolidated Coffee Ltd. and others vs. Coffee Board, Bangalore (1980) 3 SCC 358 and it was held as follows: "14. Secondly, and more importantly, the use of the definite article 'the' before the word 'agreement' is, in our view, very significant. Parliament has not said 'an agreement' or 'any agreement' for or in relation to such export and in the context the expression 'the agreement' would refer to that agreement which is implicit in the sale occasioning the export." 16. The scope of the article 'the' was again examined by the Supreme Court in Shri Ishar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor was it argued before us. We, therefore, now proceed to discuss the arguments on merits from both sides and record our findings with respect to each of the demand above. Both sides relied on various case laws which apply to more than one component of the demand. Therefore, before we proceed to discuss the facts of each component of the demand, we proceed to discuss the case laws relied upon and the ratio laid down therein. 19. Learned Departmental Representative of the Revenue relied on the following case laws: i) National Boards vs. Commissioner of Central Excise, Calicut 2014 (313) ELT 113(Tri-Bang) wherein it is held that no standard formula can be applied across the board and each case is unique and the entirety of the particular material facts of the case. ii) Commissioner of Central Excise, Salem vs. CESTAT Chennai 2019 (366) ELT 647 (Mad) in which it has been held that if the department is able to prima facie establish a case of clandestine removal, violation of excise procedure, the burden shifts on the assessee to prove that he is innocent. The SLP against this judgment has been dismissed by the Supreme Court. iii) Power Control Corporation vs. CCE & ST Jaipur-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t held that if two parts of the statement are inextricably linked together, they must be read together but if they are severable, one part can be accepted which the court finds no reason to disbelieve. 20. Learned Counsel for the assessee relied on the following case laws: (i) Ambika International vs. UOI 2016-TIO-1238-HC P & H in which the High Court held that procedure prescribed under Section 9D of the Central Excise Act, 1944 is mandatory and must be followed to admit statements made before the officers of Central Excise. (ii) Commissioner of Central Excise, Delhi-I vs. Vishnu & Co. Pvt. Ltd. 2016 (332) ELT 793 (Del) in which Delhi High Court distinguished Bhoormull and said that it was passed in the context of Sea Customs Act where the initial onus of proof on the Department can be sufficiently discharged by circumstantial evidence and then the onus shifts on to the person who was found to be in the possession of contraband and similar provisions do not exist in the Central Excise Act. (iii) Ambika Organics vs. Commr. Of C Excise & Cus Surat-I 2016 (334) ELT (Tri-Ahm) in which a learned Member of this Tribunal doubted the accuracy of the statements considering the cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement is retracted, it does not nullify the statement completely. It must be appreciated in the context of the other evidence available on record. g) If cross-examination is held, the results of the cross-examination must also be considered. h) If documents in the form of Computer printouts are relied upon, then they must be accompanied by the necessary certificates to render them admissible as evidence. i) Demand cannot be raised presuming clandestine removal simply based on electricity consumption or figures in the balance sheets. They must be examined along with the other documentary evidence. 22. To sum up, every case of alleged clandestine removal must be examined based on the evidence available produced by the department. It is true that everything is recorded in the official records, then the production and removal cannot be clandestine. It can only be deduced from the records and other evidence collected during the investigation including the statements and cross examination. The totality of the evidence must be considered in each case to decide. 23. We now proceed to examine in detail the evidence produced to support the allegation of clandestine removal in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He said that he had deposed true facts before the inquiry officers but he was not allowed to write them. He further stated that his original statements were, therefore, not correct and the statement made during cross-examination is true. (b) The RUD 24 (booking registers) are third party documents. (c) The booking register is a rough record maintained by the staff of Shri Moin Khan according to his convenience and the statements made by Shri Moin Khan during the investigation. During cross-examination he did not support the allegation of clandestine removal. (d) GR wise registers maintained by Shri Moin Khan were, according to him, the records of actual transport of goods. These GR wise registers were resumed by the officers from him but they were returned. These registers had the invoice numbers issued against each of the GRs. (e) The booking registers do not indicate against which booking and which truck number available on the left side of the page of the register were supplied to M/s. Bansiwala. (f) The show cause notice and the table annexed thereto do not indicate the GR numbers of the transporters and the truck numbers but only alleged goods were clandestinely cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and forward linkages by way of documentary evidences such as investigation pertaining to purchase of raw-material financially flow back. 26. The assessee supports this part of the impugned order. Revenue is aggrieved by this part of the impugned order and has appealed against on the following grounds: (i) Booking registers resumed from the transporters indicate date wise entries destination for trucks provided by the transporter to the assessee. When the entries of trucks in these registers were compared with the invoices, it is found there were invoices against some entries and no invoices against others. On some dates even all entries matched with the invoices. Therefore, the Commissioner has wrongly held that booking registers did not relate to the actually supply of trucks and dispatch of goods from the factory by the assessee. (ii) Shri Moin Khan, proprietor of the transport company has admitted in his statements before the officers during investigation that in respect of all entries made in the booking registers, trucks were provided to the assessee. (iii) Shri Moin Khan in his statement 20.07.2012 also admitted that he provided trucks for 'Kachche ka Sariya' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on this account. 28. Learned Counsel for the appellant vehemently contends the Department's appeal and supports the impugned order so far as this part of the demand is concerned. He submits as follows: (i) The six booking registers were seized from New Vikas Transport Company on 14.09.2010, i.e., 22 months earlier while investigating a case of another company. (ii) Of the four statements dated 14.09.2010, 04.10.2010, 20.07.2012 and 16.11.2012 of Shri Moin Khan, proprietor of M/s. Vikas Transport Company, two, i.e., statements dated 14.09.2010 and 04.10.2010 were recorded while investigating a case against the another company before the initiation of the present proceedings against the appellant/assessee. (iii) Shri Moin Khan was cross-examined on 27.09.2012 and he clarified that there were two types of registers one for booking orders and another for actually supply of trucks for transport of the goods. All the bookings made do not necessarily result in transport of goods. The company may book a truck of the transporter company and may decide not to dispatch the goods subsequently. The only reliable document is another register called the GR register. Along with the GR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been assailed by the Revenue. (vii) So far as the alleged consumption of power as reported by AVVNL is concerned, this pertains to months of May, June and July of 2012 whereas the demand, based on the six booking registers covers the period 1.12.2007 to 14.09.2010. Therefore, the allegation of excess power consumption does not support the alleged clandestine manufacture and removal. (viii) Shri Hussain Khan, Labour Contractor is said to have stated that manufacture is being done in full force on Sundays by the assessee and the labour for the same is being paid in cash. Cross-examination of Shri Hussain Khan was not allowed by the adjudicating authority and therefore, the statement does not support the revenue's case. 29. We have considered the arguments of both sides and have perused the records. In so far as this part of the adjudication is concerned, the demand has been made based on the booking registers by the transporter supported by the statements of the transporter Shri Moin Khan recorded during investigation. It is further supported, according to the Revenue, by the fact that the consumption of power on Sundays to the same extent as on any other day by the facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that those statements were made under duress and that he was not allowed to write the correct facts by the Department at the time of recording the statements. He further explained that whenever a truck owner approached him, he would enter his details on the left side of the booking register and if he can find a suitable load for the destination, he would arrange. On the right side of the register, he would write details of customers who want trucks to transport goods. He further clarified that he has two types of registers one for booking the trucks in which he enters details as soon as he receives the orders. Another register called the GR register is maintained when the goods are actually dispatched. Every booking may not result in the goods actually being received and dispatched. Whenever the goods are received he makes the entry in the GR register and he would also make a corresponding entry of invoice number, etc. in the booking registers. It is for this reason that is in the booking register, against some entries there are invoice numbers while against others they are not. So far as the GR register is concerned, it matches with the GR issued by the transporter and the corresp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore him. 35. The next argument of the Revenue is that in respect of those entries in the booking register against which there is no corresponding invoice number there were clandestine clearances. The best person to explain the entries in the register is the one who maintained it, i.e., Shri Moin Khan himself. He clarified as to why there were invoice numbers against some entries in the booking registers but not against others. He also said that he told the correct position to the officers but he was not allowed to record it in his statements. He further said that whenever the booking resulted in actual transport of goods, a GR was issued and a GR register is also maintained by him which was also taken by the officers during the investigation but returned to him. We find Revenue also admits that there were invoice numbers against some entries in the booking registers. However, the demand has been raised against all entries in the booking register whether or not there were any invoice numbers against the entries (which show duty paid clearances of goods). Revenue has not established that what Shri Khan explained during cross examination was not correct and that their understanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding invoice numbers, and the truck numbers and the mobile phone numbers of the drivers were also given, the least Revenue could have done without any difficulty was to ask the drivers if they had transported the goods on those dates and if so, the details. This could have led to further evidence if there was any clandestine removal. The officers could also have cross checked the GR register with the booking register to see against which entries there were no invoice numbers and confined their investigations and consequent demand to that extent. They could have written to the AVVNL regarding power consumption for the relevant period (as they did for a period two years after the relevant period). They could have produced the labour contractor for examination and cross examination so as to make his statement admissible as evidence as per Section 9D of the Central Excise Act. We do not see why any of these obvious actions were impossible for the officers. At this stage, what is required by us is to determine, if there is sufficient material and evidence so as to convince a prudent man to believe in the probability of the fact of clandestine removal. In the factual matrix of this appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected in the Triplicate copy of the GRs without invoices and without paying duty in addition to clearing the goods on the strength of the original copy of the GRs which are supported by the invoices. The findings of the Commissioner with respect to B is a sub-paragraph of paragraph 132 which is reproduced below: "B. Investigation on the basis of statements of Shri Hussain Khan, Labour Contractor, Electricity Consumption Meter reading provided by AVVNL for the month of three months i.e., April, May and June 2012 and further corroborated by statement of Shri Vasudev Bherwani, part time accountant has established that production work was done in the factory on Sundays as per the normal capacity and was not recorded in the RG-1 Register properly, therefore, the demand of duty on the quantified value in the table to the Show Cause Notice which is based upon 42 GRs of New Vikas Transport Company, Ajmer alleging clandestine clearance of 536.69 MT of excisable goods valued at Rs. 1.83 crores is maintainable. The argument given by the notice that demand is raised on technical defect in triplicate/office copy of GR and minor variation in truck numbers due to typographical and other er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and date are entered in the GRs using carbon paper but details of the consignee and the actual weight are obtained at the time of loading and entered in the original and duplicate copy of the GRs which accompany the goods along with the invoice. These details are obtained by the transporter on phone and entered in the triplicate copy of the GR (the office copy). Therefore, these details are not entered using carbon copy. At times, in noting down the details on phone some errors may occur resulting in discrepancies between the original copy of the GRs (which reflect the correct details) and the triplicate copy of GRs (which are filled after ascertaining on phone and may result in some errors). Learned Counsel points out that in the chart provided by the learned Authorised Representative of the Department, there were no discrepancies between the invoice and the original GRs for this reason. He further submitted that GR is not a document under the Central Excise law and cannot be held against them. Learned Departmental Representative supports the impugned order and submits that the GR is the document which evidences that the goods were cleared from the factory and transported to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... landestinely manufactured on Sundays were cleared against the triplicate copies of the GRs. c) Statements of the labour contractor Shri Hussain Khan and part time accountant of the assessee that production does take place on Sundays. d) So far as the discrepancies between the original and triplicate copies of GRs and the explanation for the discrepancies provided by the assessee were dismissed as an afterthought. 49. We find that the primary evidence for this part of the demand are the triplicate copies of the GRs which, varied from the original copies in some details. These documents were prepared by the transporter. Shri Moin Khan, the transporter was cross examined about the discrepancies and he clarified that it is his practice to leave details of the consignee and the actual quantity while preparing the GRs which details are filled in the GRs after the goods are loaded at the factory. He obtains these details on phone from the driver and fills in the triplicate copies. Thus, the triplicate copies have all details filled using a carbon paper except the quantity and details of the consignee which are filled in with a pen later. Sometimes, errors are made in noting them so. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of three consignees, namely, Sudhir Kumar, Proprietor of M/s. Udai Ram and Sons, Balotra, dated 5.11.2012 of Shri Arpit Bhatia of M/s. Jugal Industries, Jaisalmer dated 21.11.2012 and of Shri Murtaza of M/s. Almadar Traders, Pratapgarh dated 25.10.2012 wherein they have admitted that the main noticee has cleared the different consignments of excisable goods on the strength of GRs and invoices mentioned in this table separately. The noticee has contested the demand on the grounds that no inquiry has been conducted from the authors of the GR, the drivers of the trucks and has relied on the cross-examination of three persons, held before the Commissioner on 15.4.2014, 21.3.2014 and on 12.3.2014 respectively. Since the demand in this regard is based on upon the admission of the co-noticees, contained in their statements and corroborated with the said documents, etc. there appears no need for further inquiry from the authors of the GR or from the truck drivers. I therefore, hold that the demand of duty amounting to Rs. 2,97,846/- made vide impugned table of the show cause notice, is recoverable from the notice, under proviso to erstwhile section 11A(1) now Section 11A(4) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Commissioner has found it proper to rely on the original statements made during investigation and ignore the cross examination before him without any giving any reason. He also recorded that the assessee argued that no inquiry was conducted with the authors of the GRs and the truck drivers and held that it is not necessary because the consignees had stated that they had received separate consignments under the cover of GRs and invoices. Errors do not automatically lead to conclusion of malice - be it by an assessee, transporter or an officer. If an officer issues an SCN with an error, it does not mean that the officer had an evil motive and so is it with errors by an assessee or a transporter. We find it surprising that having found that there were discrepancies in the GRs, learned Commissioner found that it was unnecessary to ask those who prepared the GRs about the discrepancies and concluded that separate consignments were cleared on the strength of the GRs without paying duty. He also found it unnecessary to ask the drivers if they had actually carried the consignments. He said that since the consignees have admitted to receiving the consignments, any inquiry with the driv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n affidavit along with the invoices and in the absence of such an affidavit, third party documents cannot be considered. He rejected the clarification given during the cross-examination as well as the invoices produced in support of the clarification and confirmed the demand based on the original statement before the authorities. 55. Learned counsel submits that the Commissioner rejected the invoices without verifying their genuineness. He also submits that the assessee was never questioned about the hand written slip recovered from M/s. Bajrang Iron. The slip was written by the son of Shri Bansilal Jadiya who was not even questioned. The slip itself is a third party document which cannot be used against the assessee without giving corroborative evidence. No efforts were made by the investigating officers to track the transporters to ascertain if the goods were delivered and if so, from whom to whom. The assessee had, obtained a report from National Highways Authority of India (NHAI) regarding the movement of trucks of the numbers mentioned in the slip which showed that they moved from Kota (where M/s. Bagherwal was located) to Chittorgarh (where M/s. Bajrang was located) and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its case that the trucks did not move from its place, Ajmer to Chittorgarh but moved from Kota (where Bagherwal is located) to Chittorgarh (where Bajrang is located) Thus, there is no basis left for this part of the demand and it cannot sustain and needs to be set aside. E. Demand of Rs. 37,476/- on 7.580 MT of goods valued at Rs. 3,03,200 seized from M/s. Rajasthan Enterprises, Chittorgarh 57. Steel Bars weighing 7.580 MT were seized by the officers from the premises of M/s. Rajasthan Enterprises, Chittorgarh, a dealer on 20.7.2012 after variation was found in the stocks. Steel bars bearing BRM mark (which belongs to the assessee herein) were found in the premises of M/s. Rajasthan Enterprises and also one invoice dated 5.7.2012 was found and the quantity found physically was in excess of what was indicated in the invoice. When questioned, Shri Abdul Hafiz, the owner said that he had received the excess quantity from the assessee without invoice and that it was transported from the assessee's factory to his business premises in his family owned vehicle RJ 09 G1536 about five days before the issue of the above invoice (i.e., about five days before 5.7.2012). Thereafter, the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Hafiz. Therefore, the Commissioner has upheld this part of the demand. 60. Learned counsel reiterates the submissions made before the Commissioner and argues that the department has not produced any clinching evidence of the goods having been clandestinely cleared by the assessee. Learned departmental representative supports the impugned order in respect of this part of the demand. 61. We have considered the submissions advanced from both sides and the records of the case. The undisputed fact is that the stock of the dealer M/s. Rajasthan Enterprises was taken and excess stock with BRM brand (which belongs to the assessee) was found. This stock taking was contested by the learned counsel on the ground that it was done through visual inspection and actual weight was not taken. However, it is not always necessary to weigh each piece in stock taking. For instance, if a bag of cement weighs 50 kg and 1000 bags are found somewhere, the weight can be calculated by just multiplying. TMT bars and rods are of standard widths and lengths. Since the specific gravity of iron and steel does not vary with the product, stock can be taken by simply counting how many rods of what thickne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout paying duty from the assessee's premises to the premises of M/s. Rajasthan Enterprises. The burden of proving, of course, rests on the Revenue which asserts so. The evidence produced by the Revenue is the statement that they were carried in the truck of the particular number which has not even passed that way during the relevant period. Therefore, this part of the demand cannot be sustained and needs to be set aside. F. Demand of Rs. 87,778/- on 27.3 MT of finished goods valued at Rs. 8,42,503/- 65. The assessee not only manufactures and sells but also trades in steel products. It had shown sale of 27.30 MT of finished goods in its trading account but there was no corresponding entry in the purchase ledger. Treating this as clandestine manufacture and sale, the demand was raised. The assessee's explanation was that these were the goods which they had manufactured and cleared on payment of duty on 29.1.2010 to M/s. ACCME (Urvashi Pumps) Engineers Pvt. Ltd. Jaipur but they were rejected by this buyer and returned under the cover of buyer's invoice No. S/36/10-11 dated 19.4.2010. Instead of bringing them back into the factory, they left them at the transporter's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n months. The day the next invoice is issued, they entered the goods returned seven months before. Given the factual matrix of this case, we find that the Commissioner was right in concluding that the assessee's explanation was not acceptable and that there is no corresponding purchase invoice for the goods sold on 11.11.2010 on a trading invoice and hence, it was a case of removal without paying duty. This part of the demand must be sustained and is upheld. G. Demand of Rs. 6,68,786/- on value of goods valued at Rs. 81,16,116/- found short when stock was taken by the officers of Commercial tax officers and based on unsigned slips found by those officers 68. When officers of Commercial tax department of the State Government took stock of the assessee's premises, they found shortage of goods weighing 39.835 MT. The assessee agreed and paid Commercial tax on this shortage. The officers also found some slips of paper on the premises of the assessee which were not entered in the books of account. The assessee paid Commercial tax on these quantities as well. Thereafter, the assessment order issued by the Assistant Commissioner of Commercial Tax in this regard was appealed agai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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