Commissioner of Central Goods And Service Tax, Udaipur Versus Prem Jain Ispat Udyog Private Limited
Central Excise
2018 (9) TMI 1060 – RAJASTHAN HIGH COURT – TMI
RAJASTHAN HIGH COURT – HC
Dated:- 18-7-2018
D.B. Central/excise Appeal No. 10/2018
Central Excise
Mr. Kalpesh Satyendra Jhaveri And Mr. Vijay Kumar Vyas JJ.
For the Appellant(s) : Mr. Sidharth Ranka
For the Respondent(s) : Ms. Archana for Ms. Mahi Yadav
JUDGMENT
1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal filed by the appellant.
2. The counsel for the appellant has framed the following substantial questions of law:
1. Whether the ld. CESTAT has grossly erred in law in ignoring the vital evidences in the form of voluntary statements of the Director and General Manager of the Company and the loose slips recovered by the Department during the search in setting aside the order of the ld. Adjudicating Authorit
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lips, 25 slips of various dates were of different despatches, which correlate and reconcile with the excise invoices issued to the respective parties. They have further claimed that all the clearances were duty paid and there was no clandestine clearance. The adjudicating authority has carefully gone through the said 25 slips alongwith the connected invoices and other documents submitted by the assessee and has given detailed discussions in para 36 of the impugned order. With reference to each kachha parchi and the relevant invoice, he has recorded that the quantity, size, truck No. name of consignee mentioned in the invoice are completely matching with the details so given in the recovered kachha parchi. Further, he has recorded that the subject invoices have been duly entered in RG-1 register as well as the ledger account. In the light of the above, he has concluded that the subject consignee were cleared on payment of Central Excise duty. We have gone through the records of the case
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y 32 slips. These findings of the adjudicating authority have been challenged by the assessee in the present appeals. It is their submission that the goods covered by these seven slips were never despatched from the factory for various reasons. It is their submission that the kachha parchis were initially made for internal use indicating the quantity of material, name of the party, place to which goods to be despatched and other details. Later on, the relevant quantum of goods are identified from the stockyard and loaded into the despatch truck whose number is also included in the kachha parchi. In respect of these seven kachha parchis, the orders placed by the customers have got cancelled and hence no goods were despatched to the parties indicated in the kachha parchi.
8. On going through the impugned order, we note that the adjudicating authority has not given due consideration to the submissions made by the appellant. The allegation of clandestine removal has been upheld in respect
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stained. The assessee has cited a large number of decisions to support the contention that clandestine clearance cannot be upheld without tangible evidence.
4. We are of the opinion that valuation of seven parchis which were found will come to less than 50 lacs and in view of the circular of the Department dated 11.7.2018 which reads as under:
F.No.390/Misc./116/2017-JC
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes & Customs
(Judicial Cell)
********
'B' Wing, 4th Floor, HUDCO-VISHALA Building Bhikaji Cama Place, R.K. Puram, New Delhi-66
Dated 11.7.2018
INSTRUCTION
To
1. All Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/Commissioners of Customs/ Customs (Preventive)/ GST & CX;
2.All Principal Director Generals/ Director Generals of Customs, GST & CX;
3.Chief Commissioner (AR); Commissioner Directorate of Legal Affairs, CBIC;
4.
Subject : Reduction of Government Litigation – Raising of
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eals). All other terms and conditions of concerned earlier instructions will continue to apply
4. It may be noted that issues involving substantial questions of law as described in para 1.3 of the Instruction dt 17.08.2011 from F No 390/Misc/163/2010-JC would be contested irrespective of the prescribed monetary limits
5. Since withdrawal of Departmental Appeals is a long drawn activity requiring routine and constant monitoring, formats have been introduced in the Monthly Performance Report for all field formations to send monthly reports regarding status of withdrawal of appeals in the MPR (refer table M/ M-1). Details of the said cases should also be available in a separate register for further perusal by the Board as and when required. Tables are in the Annexure – A attached. The description of the Tables in brief is provided below:
(a) Table M: Position of withdrawal with reference to raised monetary limits SC/HC/CESTAT (as per instruction dated 11/07/2018)
b) Table M- 1: Remain
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d monetary limits SC 25Lakhs -1 Crores) / HC 20 -50 Lakhs/ CESTAT 10-20 Lakhs
S No
I. Zones (in alphabetical order)
II.Identified
III. Filed
IV. Withdrawn
SC
HC
CESTAT
TOTAL
SC
HC
CESTAT
TOTAL
SC
HC
FILED
WITHDRAWN
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
Table M -1
Cases remaining to be filed / withdrawn
(as per instruction -11/07/2018)
As on(Last working day)//
Remaining to be Filed/Withdrawn
S No
I. Zones (in alphabetical order)
I. Remaining to be filed*
II. Remaining to be withdrawn**
SC
HC
CESTAT
Total
SC
HC
CESTAT
Total
(a)
(b)
(c)
(d)
(a)
(b)
(c)
(d)
*identified minus filed in Table M
**filed minus withdrawn in Table M
5. We are not inclined to interfere in the appeal. Moreso, counsel for the respondent has relied on the decision of this Court in D.B. Central/excise Appeal No. 26/2017, Commissioner of Central Excise V/s Mittal Pigment Pvt. Ltd, decided
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er dated 19.5.2009. The department confirmed the duty demand along with interest for the period of five years alleging suppression of clandestine removal of the final product and also imposed penalty mainly based on the production approximation and on the statement of Director of the unit, Shri Agarwal, who is one of the appellants in this case.
6.2 The department has not gone beyond the approximation and the statement of Shri Agarwal. Any prudent person would not so conclude on extra production by approximation and by a mere statement of the Director of the company. Unless there are further corroborations in the form of documentary evidences, which could be like despatch details for the production, receipt details of the said material, transactions of the sale money, transportation details of such goods, details of additional consumption of electricity for such suppressed production a prudent individual would not agree with the present conclusions of the Revenue. There is nothing on
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e High Court in the case of Continental Cement Company (supra) has inter alia observed as under:
13. ……to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department….
14………
15. ……When there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible…….”
7. Considering above discussions and the case laws cited above, we conclude that the Revenue has failed to reasonably prove suppressed production and clandestine clearance on the part of the appellants. Consequently, the impugned order in respect of confirmation of duty for alleged suppressed production, and imposition of fine and penalty on the appellant No. 1 and imposition of personal penalty of Rs. 40 lakhs on Shri Agarwal who is appellant No. 2 are hereby set aside. The appellants will get the relief accordingly.
8. The imp
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at there is no substantial question of law. It is appreciation of fact and in view of decision by this Court reported in 2008 (221) E.L.T. 180 (Raj.), Union of India vs. Jain Plas Pack (P) Ltd., wherein it has been observed as under:-
“2. In appeal is the order passes by the Customs Excise and Service Tax Appellate Tribunal dated 3.8.2005 allowing the appeal of the respondent No. 1 by setting aside the demand of Rs. 72,707/- as the duty adjudicated on alleged removal of the fabric from the factory and like amount of the penalty levied by the Adjudicating Officer.
4. The manufacturer's case from the beginning was that the register found during the visit of Excise Authorities in question was not a register maintained for recording production but was a document maintained for the purpose of keeping supervision over the factory workers and on their daily production was entered on estimate basis only.
Before entries were made in RG-1 the product was actually weighed and actual weight was
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ons of Madras High Court in: 1. D.V.Kishore vs. Commr. Of Cus. (SeaportsImports), Chennai, 2017 (350) E.L.T. 527 (Mad.), wherein it has been observed:-
26. It is also the findings on the part of the Tribunal to state that there was no effective and reliable denial on the part played by the appellant either in the proceedings before the Commissioner or before the Tribunal.
27. In fact, the appellant had started retracting his statement of confession itself from the beginning and when that being so, such a finding as has been given by the Tribunal, would not stand in the legal scrutiny. The further reasons given by the Tribunal is that, even though the only defence apparently was that the statements had been retracted, the seizure of gold and the consensual deposition by other witnesses implicating the appellant and therefore, the same cannot be ignored.
2. S.M.A. Siddique vs. Government of India, 1989 (42) E.L.T. (Mad.), wherein it has been observed:-
2. Mr. K. Ramaswami, learned Co
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39;Silva v. Regional Transport Authority 65 LW 73 , a bench of this Court observed as follows : “We have no hesitation in making it clear that a quasi-judicial Tribunal like the Regional Transport Authority or the Appellate Tribunal therefrom cannot ignore the findings and Orders of competent Criminal Courts in respect of an offence, when the Tribunal proceeds to take any action on the basis of the commission of that offence. Let us take the instance before us. The offence consist in smuggling foodgrains. For that same offence, the petitioner was criminal prosecuted. He has also been punished by his permit being suspended for a period of three months. If the criminal case against him ends in discharge of acquittal, it means that the petitioner, is not guilty of the offence and therefore did not merit any punishment. It would indeed be a strange predicament when in respect of the same offence, he should be punished, by one Tribunal on the footing that he was guilty of the offence and th
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ng i.e., bleaching, dyeing, printing, finishing, packed in HDPE bags on comparison with recorded stock, a shortage of 175178 L. mtrs. of processed MMF valued at Rs. 31,53,204/- involving Central excise duty of Rs. 3,15,329/- was detected. Accordingly, a panchnama came to be drawn recording the said facts. Statement of a Director of the Company, Shri Rajnikant Omkarmal Agarwal also came to be recorded, under Section 14 of the Act, wherein apart from several other admissions, he admitted the contents of the panchnama. Statements of other employees of the Respondent were also recorded under Section 14 of the Act. Subsequently, a show cause notice came to be issued to the Respondent calling upon it to show cause as to why Central excise duty amounting to Rs. 4,30,275/- should not be demanded under Section 11A of the Act, as well as, as to why mandatory penalty and penal interest should not be imposed.
5. As can be seen from the order made by the adjudicating authority, before the adjudica
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atement of the Director of the Assessee Company, Shri Rajnikant Agarwal recorded on 10-7-2003, there was no other evidence in support of the charge of clandestine removal of goods. The statement recorded on 10-7-2003 had subsequently been retracted by Shri Rajnikant Agarwal. Thus, it is apparent that the only evidence in respect of clandestine removal against the Assessee was in the nature of the statement recorded under Section 14 of the Act, which had been subsequently retracted. Before the adjudicating authority, the Respondent Assessee had led evidence to establish that the charge of clandestine removal is not made out and that there was no shortage of material as recorded in the panchnama which was accepted by the adjudicating authority. The findings of the adjudicating authority stand confirmed by both the appellate authorities. Learned Counsel for the Appellant is not in a position to point out any evidence to the contrary, in support of the case of the revenue as regards shorta
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d flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects:
(i) To find out the excess production details.
(ii) To find out whether the excess raw materials have been purchased.
(iii) To find out the dispatch particulars from the regular transporters.
(iv) To find out the realization of sale proceeds.
(v) To find out finished product receipt details from regular dealers/buyers.
(vi) To find out the excess power consumptions.
13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department.
14. In the instant case, no investigation was mad
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for the Department to come to a conclusive factual finding that there was shortage of 14,25,900 pieces of particular size and if they were all mixed together.
The onus would lie upon the Department to undertake the said exercise which was not possible in such a short period due to the large number of inventory which was there at the site. Nothing was brought on record, in any manner, to show that to manufacture such a large amount of 14,25,900 pieces, there was material which had been consumed since neither any relevant record had been shown to show that electricity had been consumed or labour had been utilized to manufacture the said quantity. Neither the fact of purchase of raw material from the vendors or the sale to the consumers was brought on record. In the absence of any corroborative evidence, the levy of such a huge demand was, thus, totally arbitrary and has been rightly set aside.
9. It is apparent that the demand was raised and a sum of ` 14 lacs was taken on the same da
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