Shri Bharat Shukla & Shapers Industries Limited Versus CGST, C.E. & C.C., Bhopal
Central Excise
2019 (1) TMI 172 – CESTAT NEW DELHI – TMI
CESTAT NEW DELHI – AT
Dated:- 2-1-2019
Excise Appeals No. E/51309 & 50891/2018 [SM] – FINAL ORDER No. 50001-50002/2019
Central Excise
MRS. RACHNA GUPTA, MEMBER (JUDICIAL)
Present for the Appellant: Mr. Anil Mishra, Advocate
Present for the Respondent: Mr. S. Nunthuk, DR
ORDER
PER: RACHNA GUPTA
Present Order disposes of two separate Appeals. With respect to the same SCN and same adjudication however pertaining to the Company and its Director, the facts relevant for the purpose are as follows:
The appellants are engaged in manufacture of TMT Bars and mis-rolls which are generated during manufacture of TMT Bars. Upon an intelligence the officers of Directorate General of Central Excise Intelligence, Bhopal conducted the simultaneous search of the factory premises of M/s Shapers Industries Limited and that of the office pre
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iew of the said confiscation and the penalty under Rule 25 of Central Excise Rules, 2002 was also proposed. The said SCN was initially adjudicated by Assistant Commissioner vide Order No. 11 dated 29.09.2017. Being aggrieved an Appeal before Commissioner (Appeals) was filed who vide Order under challenge i.e. one bearing No. 427 dated 22.01.2018 has upheld the demand thereby rejecting the Appeal. Resultantly, the Appeals are before this Tribunal.
2. I have heard Mr. Anil Mishra, Ld. Advocate for the appellant and Mr. S. Nunthuk, Ld. DR for the Department.
3. IT is submitted that the adjudicating authority below has passed the Order based on presumption and surmises as there is no other evidence on record proving the alleged clandestine removal of the finished goods of the appellant. It is submitted that Panchnama itself is vitiated for want of the witnesses proving the same. No opportunity of cross examination of panchas witnesses was given to the appellants. The appellant has relied
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ts, it is submitted on behalf of the Department that the Department had recovered incriminating documents during the simultaneous search of the factory as well as the office premises of the appellants. Resultantly, the alleged difference in stock quantity was noticed. The Director of appellant in his statement dated 01.06.2016 / 10.06.2016 has admitted the noticed shortcoming. Since, the same amounts to admission on the part of the appellant there was no further onus of the Department to prove the alleged clandestine removal. Finally justifying the Order the Appeals in hand are prayed to be dismissed.
5. After hearing both the parties and perusing the entire record, I observe that the adjudicating authority has confirmed the proposed confiscation of the stock and the penalties on the Director of the appellant Company on the ground of unaccounted production and clearances being evidenced by the categorical admission of the Director and Supervisor of the appellant Company. Also on the g
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notifications issued under these rules with intent to evade payment of duty,
Then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, as the case ay be, shall be liable to a penalty not exceeding the duty on the excisable gods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or [rupees tow thousand], whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice.
Rule 26 of Central Excise Rules 2002 defines as under:
(1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, sha
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on of the provisions of law and that too with an intention to evade duty. Hon'ble High Court of Delhi in the case Commissioner of Central Excise Vs. Ganpati Rolling Pvt. Ltd. 2016 (338) ELT 587 has held :
9. The opening words of Rule 25 is “Subject to the provisions of section 11ac of the ce act” and not an non-obstante clause which would have begun with the words “Notwithstanding the provisions of section 11ac of the ce act”. It is plain that the CE Rules are subordinate legislation and have to abide the discipline of the statute under which they are made. Where Rule 25(1) expressly begins with “Subject to the provisions of section 11ac of the ce act”, obviously the requirements of Section 11AC will have to constitute a condition subject to which the power under Rule 25 can be exercised. Rule 25 of the CE Rules itself came up for interpretation before the Gujarat High Court in Saurashtra Cement Ltd. (supra) wherein para 17 it was observed as under:
“17. It is also to be borne in mi
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sent, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to the provisions of Section 11 AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules.”
10. In other words, if the ingredients of Section 11AC are not shown to be fulfilled, the penalty under Section 11AC cannot be levied. Therefore, given the wording of Rule 25 of the CE Rules, the ingredients mentioned in Section 11AC have to be considered before determining the question of penalty. In the instant case it is not in dispute that the show cause notice ('SCN') made no reference to Section 11AC and, therefore, there was no occasion to adjudicate the issue of imposition of the penalty under Section 11AC of the Act.
Thus, it becomes clear that the Commissioner (Appeals) has committed an error while holding that mensrea is not required to Order c
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as to refrain himself and persons accompanying him from causing any damage to the documents as also to avoid any interpolation or inference in any manner with such documents and contents thereof. It was also necessary to record as to what steps were taken to safeguard the documents and to avoid possibility of any stranger interference with the seized materials. In other words, when any document is seized, it necessary to enclose the same in a cover and to seal such cover so that no other person gets opportunity to interfere with such document. All these things can of course be recorded briefly, but precisely. This aspect gains more importance once there is objection regarding veracity of the panchanama and the contents of the documents stated to have been seized in the course of such panchanama. A Panchnama should disclose proper description of the premises and the things found in the premises. The information in this regard assumes more importance when there is serious dispute about t
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the premises but also the movement of the officers and the panchas searching the premises and every relevant action of every such person has to be precisely recorded in the Panchnama to avoid any doubt about the seizure proceedings. None of such precautions were taken in the cases in hand.
Though mere irregularity and even illegality in case of search and seizure cannot by itself render the documents seized in the case of such search or seizure to be inadmissible in evidence but the fact of the present case is that the Panchnama merely records that the officers on search found certain records which does not give the description of so called record except saying that the same are described in the annexure to SCN. All this information was absolutely necessary to give credibility to the Panchnama particularly when the entire proceedings in that record are sought to be challenged and disputed and also particularly when the permission to cross examine the witnesses of Panchnama was sought
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29) ELT 399. This Tribunal also in the case of Shri Ganesh Alloys Vs. Chandigarh 2016 (337) ELT 595 wherein it was held that since the excess of stock was found merely on eye estimation and no physical stock taking or done the allegation of excess stock found and that the same has not been recorded in the statutory record were held not sustainable.
8. Finally, qua the alleged admission of the Director of appellant, I am of the opinion that allegations of clandestine removal are serious in nature and the clandestine activities are quasi criminal hence the revenue alleging the same is required to prove it by sufficient corroborative evidences. The Principle Bench, CESTAT in the case of Raj Ratan Industries Vs. CCE Kanpur 2013 (298) ELT 111 has held that the shortage detected at the time of visit of officers cannot admittedly lead to the findings of clandestine removal in absence of the evidences. It was also clarified that even if at the time of visit of officers, the appellant accepts
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t to his notice, the deficiency thereof has already been made good. He has also reflected his cooperation to the fact that he is still ready to make further payment if any is required. Such acknowledgement to my opinion cannot be fastened with the grave allegations of intentional malafide removal of the finished goods to cause loss to the Revenue Exchequer. As already said above that it was for the Department to prove by the cogent corroborative evidence, mere acceptance of excess at the time of visit of the officers by itself cannot be held to be a conclusive proof. Also the mere fact that excess finished goods found in the factory by itself cannot be held to be a ground to attribute any evidence to the asessesse so as to lead to the conclusion of malafide. The law stands settled as of now that the goods cannot be confiscated on the mere conclusion of non entry of the goods in the statutory documents unless there is evidence that such stock was not entered in RG-I Register either deli
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