9911796707
TMI Blog2002 (6) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... Procedure, maintaining RG 1 Registers Part I and II and periodically filing with the Excise Department RT 12 returns along with all the records and documents relating to the procurement of raw materials and production of final products, revealing all those aspects to the Department. 2.A Show Cause Notice dt. 11-6-98 leading to the present proceedings was issued to the appellant, their Managing Director Sri L.S. Mittal and two other persons, proposing demand of Excise duty of Rs. 91,15,488.00 under Proviso to Section 11A of the Central Excise Act, 1944 ("the Act" for short) and imposition of penalty under Rule 173Q(1) of the Central Excise Rules, 1944 ("the Rules" for short) against the appellant, besides imposition of penalty under Rule 209A of the Rules against Sri L.S. Mittal and the two other persons, Corrigendum dated ... 10-98 issued sought to make an arithmetical correction in respect of the show cause notice and further proposed imposition of penalty on the appellant under Section 11AC of the Act. The allegations as it appears from the show cause notice (and "Statement of Facts" appended thereto), are :- (i)(a) The 3rd Noticee identifying himself a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant through the 3rd Noticee (of M/s. B.S.C.) who used to tell him to prepare the invoices in the name of the appellant without any actual supply of goods, for which he used to receive Rs. 20,000/- to Rs. 25,000/- from the 2nd Noticee through the 3rd Noticee. He will deposit the cheques issued for the invoices in M/s. C.E.'s Bank Account. After two or three days, entire amount will be withdrawn and returned to the 2nd Noticee through the 3rd Noticee. He indulged in this activity without being aware of the consequences for paltry remuneration. (b) Following are the points regarding M/s. C.E. from the letter dtd. 10-11-97 by the Assistant Commissioner of Commercial Taxes addressed to Joint Commissioner of Commercial Taxes and as per the report of the Assistant Commissioner dtd. 27-12-97. The 4th Noticee had obtained Sales Tax Registration for M/s. C.E. in the name of one Sri Srinivas (an employee in M/s. Trilok Chand Agency of which the 4th Noticee is the proprietor). The 4th Noticee had witnessed the sales tax registration application filed by Sri Srinivas on 4-12-92 in the name of M/s. C.E. for trading in Iron and Steel Products in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such trader/dealer in iron & steel is functioning in the area and no such address exists, with the summons dtd. 24-12-97 sent to that address by registered post having been returned undelivered by the postal authorities. (vi) Investigations, conclusively establish that M/s. B.T.C., M/s. C.E., M/s. M.T.C. and B.T.C. have existed for the sole purpose of issuing invoices to the appellant to clear the excisable goods clandestinely without payment of duty, in the guise of trading. M/s. B.S.C. and M/s. C.E. have admitted the fact of mere issuance of invoices to the appellant against some consideration, without any supply of goods. Investigations have conclusively established that M/s. M.I.S., M/s. M.T.C. and M/s. B.T.C. did not factually exist and transact the business for which they are registered with the authorities. (vii)(a) The entries in the Finished Goods Register show that the appellant have procured M.S. Rounds, M.S. Defective Rounds, M.S. Squares from M/s. Pankaj Enterprises (for short M/s. P.E.) during 1993-94. None of the invoices of M/s. P.E. have been produced. (b) The abstract made in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the concerned persons, sought who were found to be untraceable. But, the fact remains that the original statements were not retracted. The appellant were not in possession of any purchase documents with reference to the supplier firms and did not produce any documentary evidence to substantiate their claim that these goods were legitimately and actually bought and traded in. In fact, in respect of M/s. Pankaj, the appellant have not even produced copies of invoices though they have purportedly effected purchases of 2,77,880 MTs. It is not as if the entire activity of trading was based on fictitious bills, but it was found that the appellant had indeed procured goods from the open market, which was found to be genuine. It is only in respect of the above cited firms and others listed the transactions were found to be fictitious. The appellant have failed to establish the genuineness of at least a few of his suppliers (if not all) which the Department has charged to exist only on paper, while the department has sufficiently established the non-existence of these purported suppliers by way of mahazar drawn at the sport, sales tax records and the like. (iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court are relied upon, it is not necessary to individually rebut the decisions relied upon by the appellant. (x) Discrepancies regarding duty calculation i.e. adoption of incorrect rate of duty for 1993-94 and short deduction of Rs. 5,00,000.00 for 1994-95 pointed out by the appellant, are acceded to and the demand is reduced to Rs. 85,32,259.00. (xi) Shri Trilok Chand Agarwal and Shri Nirmal Kumar Agarwal (3rd and 4th Noticee) have no doubt abetted and assisted Sri I.S. Mitttal (2nd Noticee) in the aforesaid contravention of the Act and the Rules. But, in totality of the factual position, there is refrain from penalizing the 3rd and 4th Noticees. 4.We have heard both sides and considered the material and find: - (a) Even according to the Show Cause Notice, M/s. B.S.C. and M/s. C.E have filed Sales Tax returns during the relevant period and as regards M/s. B.S.C. Assessment order dtd. 8-7-96 has been passed for 1993-94 seeking to levy Sales Tax (on a turn over of Rs. 1,38,13,904.85) after denying the exemption claimed on the ground of the sales being second s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994-95 and 1995-96 claiming exemption for all their sales as second sales and that their whereabouts are not known with the address of their proprietor as given having been found to be fictitious. The averment in the show cause notice that M/s. P.E. is a fictitious concern from which the appellant received only invoices without any material and findings do not enthuse us, since no enquiries to corroborate the same from Bank Account records have been made/produced relied upon. There is also inconsistency between the allegations in the show cause notice apart from their untenability. The allegation in the first instance is that M/s. B.S.C., M/s. C.E., M/s. M.T.C., M/s. M.I.S. and M/s. B.S.T. have existed for the sole purpose of issuing invoices to the appellant to clear the goods clandestinely without payment of duty in the guise of trading at the same time alleging subsequently that M/s. M.T.C. and M/s. M.I.S. did not factually exist. Therefore no reliance could be placed on the recorded statements of the 3rd and 4th Noticees who are in a position of co-accused and on the statements and letters of the officials of the Sales Tax and Central Excise Departments, unless the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their Sales Tax Returns far higher than the sale proceeds of the appellant's trade transactions, as set out in the show cause notice itself, could be construed as those which existed for the sole purpose of issuing invoices to the appellant to enable them to clear their goods clandestinely. (c) The fact of the appellant carrying on manufacturing activity in their factory (main plant) and trading activity in the godown (stock yard) has been recognized by the Department as evident from the approval of the plan indicating those specific areas, while granting Central Excise licence/registration to the appellant. As regards their manufacturing activity, the appellant have been filing periodical RT 12 returns during the period in question, apart from maintaining RG 1 Register Part I and Part II clearly revealing the details of purchase of raw materials and of goods manufactured by the appellant with the result that the Department was very well aware of all those figures, but never disputed them. Taxable event under Section 3 of the Act is manufacture and there cannot be levy of excise duty on the appellant unless it is established that the goods sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unable to locate their copies immediately, should have been complied by issue of a summon by investigating officer or the Adjudicator to bring these vital and relevant evidence on record. This conduct when coupled with the summary rejection of the Chartered Engineer's Certificate produced before the adjudicator, induces us to conclude, that evidence required by the Defence and material produced by the noticee, to defend the Show Cause Notice, has been denied and not considered. The order is therefore is bad in law and should be set aside. (d) The observations in the impugned order of the ld. Commissioner and reliance upon the Ruling of the Hon'ble Supreme Court in "D. Bhoormulls case", rather, "Collector of Customs v. D. Bhoormal" reported in 1983 (15) E.L.T. 1540, namely — "The prosecution or the department is not required to prove its case with mathematical precision to a demonstrable degree. Absolute proof being unattainable, the law accepts for it, probability as a working substitute. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of his innocence will not relieve the Department of the burden of producing some evidence in respect of the fact in issue. (e) The impugned order is totaly incorrect in lending credibility to the recorded statements of the 3rd and 4th Noticees, merely because they have not been retracted. They are in the shoes of a co-accused and the statements of a co-accused need strict corroboration. Here non-retraction will not make it as primary evidence. While the above deponents were summoned and the appellant were ready to cross-examine them, they have not turned up for Personal Hearing on 13-9-2000 and 29-9-2000, very obviously to avoid being cross-examined. Under such circumstances, the ld. Commissioner ought to have refrained from relying solely and only upon their statements. It is a settled law that when the witness fails to appear then the adjudicating authority is entitled to proceed with the adjudication, however, in such adjudication he shall not rely upon the statement of such witnesses who failed to appear for cross examination. This principle of law is clearly laid down by the Tribunal in the case of Arsh Castings Pvt. Ltd. [1996 (81) E.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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