The Commissioner, Central Goods & Service Tax Versus M/s M.P. Enterprises
Central Excise
2018 (2) TMI 360 – CESTAT ALLAHABAD – TMI
CESTAT ALLAHABAD – AT
Dated:- 6-12-2017
Appeal No. E/70545/2017-EX[DB] With MISC. Application No. E/MISC/70315/2017 – Final Order No. 70274/2018
Central Excise
Mr. Anil Choudhary, Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical)
Shri Rajeev Ranjan, Joint Commissioner (AR), for Appellant
Shri A. S. Hasija, Consultant, Shri Jitendra Singh, Advocate & Shri Vineet Kumar Singh, Advocate for Respondent
ORDER
Per: Anil G. Shakkarwar
The present Miscellaneous Application is filed by Revenue, praying for early hearing. The respondent did not object to the same and therefore, the Miscellaneous Application is allowed and with the consent of both the sides main appeal is heard on merits.
2. The present appeal is directed against Order-in-Original No. 02/COMM/CEX/GZB/2017-18 dated 23/05/2017 passed by Commissioner of Central Ex
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ewing Tobacco valued at Rs. 20,79,122/- involving Central Excise duty of Rs. 18,40,688/- seized on 26/02/2015 at the premises of various transporters or during transit. Further there was a proposal to demand duty of Central Excise duty Rs. 18,40,688/- involved in said goods valued at Rs. 20,79,122/- On the basis of investigations and statements recorded of various persons including transporters and their representatives, another Show Cause Notice dated 03/01/2017 was issued to the respondent. The respondents were called upon to show cause as to why duty amounting to Rs. 7,38,84,583/- involved in the goods cleared clandestinely by the respondents should not be demanded under the provisions of proviso to Sub-section (1) of Section 11A of the Central Excise Act, 1944 and why an amount of Rs. Four Crores (Rs.4,00,00,000/-) deposited during investigation should not be appropriated. Further there was a proposal to impose penalty under Rule 26 of the Central Excise Rules, 2002 on 21 Co-notice
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ed, there was no recovery of unaccounted cash. Further they submitted before the Original Authority that the transporters never open the packages booked for transportation when the goods are booked for transportation and stated that goods were generally booked by Shri Manoj and Shri Tiwari both of whom were booking agents and were not in the employment of the respondent. They further submitted before the Original Authority that it was assumed in the said Show Cause Notices that the goods booked under the Bills of the alleged fake/pseudo firms were manufactured and cleared by the respondents irrespective of the description of the goods in the Bills issued by the said firms. They also stated that the calculation of duty was also on the basis of assumptions. Before the Original Authority, Shri Devendra Singh was cross-examined on 27/02/2017. On 06/03/2017, Shri Anil Mishra & Shri Tapan Das were cross-examined. They further submitted that there was no evidence to prove that the goods booke
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oduction and clearance and there was no unaccounted cash or any other hard evidence recovered from the factory premise of the appellant or their transporters or the buyers. He further held that the entire case was based upon the statements, which was denied during cross-examination. Therefore, he ordered confiscation of unaccounted finished goods valued at Rs. 7,14,533/- seized from the factory premises of the respondents and imposed redemption fine of Rs. 1,00,000/-. He further imposed penalty of Rs. 1,00,000/- under Rule 25 of the Central Excise Rules, 2002. In respect of other proposals in the Show Cause Notice dated 25/08/2015, he dropped the proceedings. He also dropped the proceedings in respect of demands of Central Excise duty amounting to Rs. 18,40,688/-. Further he has dropped the proceedings in respect of demand of Central Excise duty amounting to Rs. 7,38,84,583/- and dropped all the proceedings in respect of said Show Cause Notice dated 31/01/2017. Being aggrieved by the s
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ein the statements of various witnesses are not the sole evidence but have merely been used as corroboration of physical and documentary evidence gathered during investigations.
2.3 Various findings with regard to the evidentiary value of statements recorded by investigating officers are not only contrary to the facts on record but are self-contradictory displaying lack of application of mind. As an example, it has been recorded in Para-23 of the OIO that Shri Atul Kumar Chaurasia, Partner and Authorized representative of M/s MPE, though admitted various offences in his statements dated 26.02.2015, 27.02.2015 and 21.08.2015, denied everything in his statement dated 07.02.2016. Even a casual reading of the statement dated 07.02.2016 shows that he agreed with his previous statements which were shown to him on 07.02.2016.
2.4 Several case law have been cited in support of the findings, particularly those relating to evidentiary value of statements, but no attempt has been made to expl
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aon may have been fake goods (purportedly manufactured by someone other than M/s MPE). The said consignment, packed in 17 bags, was found to have finished goods valued at Rs. 4,35,600/-, the brand name on the goods i.e. VANI Premium, found on goods packed in 15 bags out of 17 bags pertains to M/s MPE and booked on a fake invoice of M/s Delite Trading Co. which was regularly being used by M/s MPE for booking illegal consignments. The said Manoj Ji, in his cross-examination claimed, inter alia, that the said consignment was booked by one of his employees namely Shri Mukesh Tiwari; that he (Manoj ji) came to know that Tiwari was booking fake consignments; that he (Manoj Ji) has terminated the services of the said Shri Mukesh Tiwari.
It is pertinent to mention that the name of one Mukesh Tiwari appeared during investigation as an employee of M/s MPE who used to come to the transport companies for onward booking of consignments containing goods manufactured by his company. Two summons, d
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goods, submitted Bonds/Bank guarantees and got all the goods released provisionally except one consignment.
However, based on this unusual deposition of someone who did not have the status of a witness, the A/A erred in holding all the finished goods seized at various places other than the factory premises as fake/counterfeit, thereby not only exonerating the main Noticee from the charge of clandestine removal, but also vacated the seizures without even confirming the demand of duty on these finished goods which were not accompanied by any duty-paying document.
The department never got a chance to conduct cross examine the said Shri Manoj Ji whose name was never mentioned by any employee of any transport company. It appears that the name and address of the said Shri Manoj Ji was provided by the main Noticee to the A/A with a request to summon him and make him available for cross-examination.
There is no precedent or provisions for allowing cross-examination of a witness on the
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een recorded in writing and given due space in the OIO. Unfortunately, the A/A erred in neither recording any grounds to allow defence witness nor providing any opportunity to the department to examine the witness, based on whose deposition before the A/A, seizure of the entire finished goods seized outside the factory were vacated and the evidentiary value of these illicitly removed finished goods was denied to the prosecution which was a corroborative evidence supporting the charge of evasion of duty on past clearances..
On this ground alone, the order appears to be illegal and is required to be set aside.
2.6 The main evidences collected during investigation and discussed in detail in the SCN can be summed up as under:-
i) Unaccounted Finished goods valued at Rs. 7,14,533/-(MRP value Rs. 15,8,7851/-) were seized from the factory premises. The goods being low value product, the amount represents enormous quantities in terms of no of units. As against a recorded balance of 15,56
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from a godown belonging to the main notice. Qty of raw tobacco, a perishable material, is 7225kgs. As in case of finished goods, packing material mainly comprising small tin boxes for packing of 10 gms, 50 gms of finished goods are of very low value and, therefore, the quantity is huge in term of nos. e.g. 94,906 as against recorded balance of 60,224.
iii) Even while not ordering confiscation of seized inputs on the ground that these were neither manufactured by M/s MPE nor Cenvat credit was taken by them, the A/A has not held the charge of the said inputs under seizure being unaccounted, as not proved. The A/A has, therefore, ered in not taking into account the evidentiary value of storing such huge quantities of unaccounted raw material/packing material by M/s MPE in their factory as well in their godown, even if it erred in not ordering confiscation of the same. Thus, while the A/A has accepted the charge in the SCN regarding the excess finished goods as well as the inputs being u
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ainer packed with finished goods were seized from a transporter in Ghaziabad. All the containers carried the Brand name of the main Noticee, name of the manufacturer printed on the labels is that of the main assessee and were covered by an invoice issued by the main assessee. However, on verification, it was revealed that the main Noticee had not taken the said sale invoice on record and no duty was paid. Moreover, the quantity mentioned in the said invoice was 9000 tin boxes while actual recovery was of 10,080 tins boxes.
vi) Another consignment of 10 bags found to contain identical goods valued at Rs. 2,88,000/- (MRP) was also seized from the same transporter the same day. However, this consignment, though identical to consignment of 21 packages in all respects, was covered by a fake invoice purportedly issued by another company which on investigation, was found to be non-existent. This physical as well as documentary evidence was further corroborated by the owner/staff of the tran
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t of the consignments booked by the main Noticee with the said transporter for delivery to a Mizoram based buyer were duly recorded by the main Noticee and were duty paid, there were several instances when more than one consignment was booked for transportation under invoices bearing the identical Nos. and Date of issue. Details are in Para 17.2 of the SCN dated 03.01.2017.
ix) M/s M. P. Enterprises, the main Noticees, voluntarily deposited Rs. 4 crore towards their duty liability not in one go but under 25 different challan spread over from 28.02.2015 to 20.03.2015. Rs. 4 crore is not a small amount by itself and also constitutes more than half of the total duty demanded in the case. Such an amount is not normally paid by any prudent person without being convinced of his liability to pay and the party did not lodge any protest or otherwise intimate the Department that they were pressurized to pay this amount. Such voluntary deposits by managements of assessee units of amounts toward
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oods had been received from M/s MPE for transportation; that presently they (i.e. M/s MPE) were using fake bills of M/s Delite Trading Company and M/s Frontier Trading Company and that they had transported the goods of M/s MPE on the bills of M/s D. K. Enterprises, M/s MPE, M/s Delite Trading Company and M/s Frontier Trading Company. During the course of his statement dated 26.02.2015, a chart (RUD-19) was prepared on the basis of computerized data and Booking register data provided by Shri Devender Singh containing the details of goods booked by M/s MPE at M/s NECC on the bills of fake firms namely M/s D. K. Enterprises, M/s MPE, M/s Delite Trading Company, M/s Frontier Trading Company etc., which was duly signed by Shri Devender Singh in his agreement and also for their correctness.
That the above statement dated 26.02.2015 of Shri Deveder Singh was corroborated by Shri Anil Mishra, another Booking Clerk of M/s NECC in his voluntary statement dated 02.03.2015. Both these statement
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g material were procured without bills for clandestine manufacturing and clearance of finished goods without payment of duty. He also admitted that the unaccounted finished goods seized from their factory premises were manufactured by them from the unaccounted raw material procured without bills. Shri Atul Kumar was also confronted with the Panchnamas drawn at the premises of different transporters and he admitted that the branded and unbranded goods seized at aforementioned transports were manufactured and clandestinely by them without bills or on bills of fake firms. During his statements, Shri Atul Kumar was also confronted with the bills of M/s Waxpol General Merchant, 1682, Gali Peepal Mahadev, Hauz Qazi, Delhi, M/s Delite Trading Company, B-78, Jhilmil Indl Area, Delhi, M/s D. K. Enterprises, B-12/5, Site-IV, Sahibabad Industrial Area, Sahabad, Ghaziabad which were recovered during search operation from various transporters and were used to book the finished goods of Bharat and V
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hibabad Indl Area, Sahibabad, Ghaziabad and M/s Waxpol General Merchant, 1682, Gali Peepal Mahadev, Hauz Qazi, Delhi, were fake and non-existent.
2.12 In spite of there being overwhelming evidences on record, the Adjudicating Authority has vacated the seizures made at the premises of the transport companies as well as from the trucks intercepted enroute; dropped the demand of duty of Rs. 18,41,688/- on the clandestinely cleared and seized goods raised in show cause notice dated 25.08.2015; dropped the demand of duty of Rs. 7,38,84,583/- raised in the impugned show cause notice dated 03.01.2017 and also dropped the penal proceedings proposed against the Co-Noticees even though duty paid nature of the finished goods was not established.
2.13 The Adjudicating Authority has ignored the presence of Brand names of M/s MPE on the products and name of the manufacturer as M/s MPE on the products recovered from the live consignments removed illegally from their factory and booked for onwar
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ied upon in the impugned show cause notices, were not retracted, which were recorded over a long period of time on various dates from February, 2015 to May, 2016.
2.15 That the Adjudicating Authority has erred in not considering the fact that all the statements relied upon in the impugned show cause notices were recorded under Section 14 of the Central Excise Act, 1944 and have evidentiary value. The Hon'ble Supreme Court in the case of Naresh J Sukhawani Vs Union of India [1996 (83) E.L.T. 258] has held that statement made before the Customs Officials is not a statement under Section 161 of Cr. P.C. Therefore, it is a material piece of evidence collected by the customs officials under Section 108 of the Customs Act, 1962, and it can be used as substantive evidence connecting the petitioners with the contravention of the Customs Act. The provisions of Section 14 of the Central Excise Act, 1944 under which the statements in the instant case were recorded, are at par with Section 108
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is reproduced below:-
Demand clandestine removal Shortage of inputs and finished goods Evidence of Statement of Director admitting that clearances shown in chart, prepared by Department on basis of entries in loose sheets and note-books found on premises of assessee and sister concern, were made without payment of duty or issuing of invoices Said confessional statement inculpatory and specific and was never retracted Said statement admissible evidence Clandestine clearance requires to be proved by sufficient evidence However, each individual case needs to be scrutinized and examined independently in factual matrix Statement of Director not taken under duress and no cross-examination asked for, therefore no reason to disallow this evidence Commissioner (Appeals) erred in holding not enough evidence proving clandestine clearance Demand upheld Section 11A of Central Excise Act, 1944. [Paras 14, 15 & 19]
2.17 That the Adjudicating Authority has erred in not considering the fact that
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ish their allegation. Further, the Adjudicating Authority, without bringing on record any evidence, documentary or otherwise, regarding recording of statements under coercion and without considering the fact that before cross-examination, no statement was ever retracted by any of the persons connected with the Co-Noticees, has discarded all the relied upon statements in utter disregard of the settled law as the Hon'ble Supreme Court of India in the case of Surjeet Singh Chhabra vs. Union of India reported as 1997 (89) ELT 646 (SC) has held as under:-
Since the dispute concerns the confiscation of the jewellery, whether at conveyor belt or at the green channel, perhaps the witnesses were required to be called. But in view of confession made by him, it binds him and, therefore, in the facts and circumstances of this case the failure to give him the opportunity to cross-examine the panch witnesses before the principle of natural justice. It is contended that the petitioner had retracte
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retraction and that subsequent retraction was mere afterthought to escape consequences of violations committed.
The ratio of the case supra is squarely applicable in the present case as the relations made by the witnesses in their written statement are corroboration of facts already on record.
2.18 That the Adjudicating Authority has erred in not considering the fact that none of the persons connected with the Co-Noticees had ever complained of threat or coercion before they were summoned for cross-examination and in these circumstances the retractions made by the said persons of the Co-Noticees during cross-examination, was nothing but an afterthought and such retractions have no credence. In this regard, reliance is placed on the judgment of the Hon'ble CESTAT, Bangalore in the case of National Boards Vs. Commissioner of Central Excise, Calicut reported as 2014 (313) ELT 113 (Tri. Bang), wherein the Hon'ble CESTAT had held that When none of the witnesses complained of threat or c
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fice of the Collector of Central Excise or not need not be gone into.
Similar view has been taken by the Hon'ble CESTAT, Mumbai in the case of M/s P.B. Nair C&F Pvt. Ltd. Vs Commissioner of Customs (General), Mumbai reported as 2015 (318) ELT 437 (Tri-Mumbai) by holding as under:-
Evidence Statement Retraction of Confessional statement under Section 108 of Customs Act, 1962 Proceedings under Section 108 ibid is a judicial proceeding and if any retraction of confession to be made, to be made before same authority who originally recorded the statement Confessional statements never retracted before the authority before whom the statement was recorded, belated retractions of statements after about one and half years cannot take away the evidentiary value of original statement. [Para 5.5]
In the instant case, not to speak of making retractions to the officer to whom the statements were given, even no retraction or complaint about obtaining statements under coercion, was ever made by
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ated as retraction of his earlier statements dated 26.2.2015, 27.2.2015 and 21.8.2015, which were never retracted by him at any point of time.
2.21 That the Adjudicating Authority has relied upon the judgement of the Hon'ble Supreme Court of India in the case of Vinod Solanki vs Union of Idia reported as 2009 (233) ELT 157 (SC) and the judgement of the Hon'ble Punjab & Haryana High Court in the case of Ambika International Vs Union of India & Another in CWP No. 12615 of 2016, by holding that a statement recorded behind the back of an assessee cannot be relied upon without giving an opportunity of cross-examination and if statement alleged to be obtained under coercion, the burden to disprove the allegation is upon the department. However, the Adjudicating Authority in the Order-in-Original has not at all discussed and given any finding that as to how he had come to the conclusion that the statements relied upon the impugned show cause notices were obtained under coercion, especially
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value, the facts and circumstances are vastly different. In case cited supra, searches were conducted on 25.10.1994, the statements of accused person were recorded on 26.10.1994 and 27.10.1994 and the accused was arrested and produced before the Hon'ble Court with request for remand on 28.10.1994. The accused person filed written retraction before the Hon'ble Court before whom he was produced for remand, which was the first opportunity available to him. However, in the instant case no retractions were ever filed by any of the witnesses including Shri Atul Kumar Chaurasia and they merely alluded to unexplained pressure by the officers during cross-examination. Thought the Hon'ble Supreme Court granted benefit to the accused on the ground that there were no other evidences corroborating the retracted confessional statement, but an important observation was also recorded by the Apex Court which appears to have missed the attention of the A/A (Though it is one of the Head notes) and is rep
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d raw materials/packing material in the factory premises & godown of M/s MPE, clearly substantiate and prove the fact that M/s MPE were engaged in clandestine manufacture and clearances of their finished goods and that they had evaded the Central Excise duty on their finished goods, as rightly alleged in the impugned show cause notice dated 3.1.2017. The A/A ordered the confiscation of unaccounted finished goods and did not reject the charge against the seized inputs being unaccounted.
2.23 The question of evidentiary value of retracted confessional statement of accused person was discussed in detail by the 3-Judge Bench of the Hon'ble Supreme Court in the case of K. I. Pavunny Vs. Assistant Collector of Central Excise dated 3.2.1997. the accused K. I. Pavunny was acquitted by the Hon'ble Trial Court on the ground of retraction of statement given before Customs Authorities, but the Hon'ble High Court set aside the order. The Apex Court upheld the order of the Hon'ble High Court admit
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ugh if it receives general corroboration.
It is seen that in Barkat Ram s case, this Court accepted the retracted confessional statement and upheld, on that basis, the conviction. In Vallabhda Liladhar s case and also in Rustom Das s case the retracted confessional statement found basis for conviction and in the latter the recoveries were relied as corroborative evidence. In Haroom Abdulla s case, this Court used the evidence of co-accused as corroborative evidence.
There is no discussions in the OIO as to whether the A/A conducted any exercise to weigh the evidences vis-`-vis confessional statements or whether any grounds were found to consider the confessional statements as having been recorded under threat, coercion or inducements, even though there was no formal retraction by any of the witnesses prior to their appearance for cross-examination.
2.24 That the Adjudicating Authority has erred in not considering the fact that though the overwhelming and plausible evidences to
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ce is place on the judgment of the Hon'ble Supreme Court in the case of CC Vs. D. Bhoormull reported as 1983 (13) ELT 1546 (SC), wherein the Hon'ble Apex Court has held that the Department is not required to prove its case with mathematical precision, but what is required is the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of facts in the issue and that the Department would be deemed to have discharged it burden (of proof) if it adduces so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of fact sought to be proved.
The above judgment of the Hon'ble Apex Court was also followed by the Hon'ble CESTAT, New Delhi in the case of Devi Dass Garg Vs. CCE [2010 (257) ELT 289 (CESTAT)], wherein the Hon'ble CESTAT has upheld the clandestine removal of Pan Masala and Gutkha by holding as under:-
Clandestine removal Pan Masals and Gutkha manufactured and cle
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f erstwhile Central Excise Rules, 1994 Rule 26 of Central Excise Rules, 2002 [Paras 4, 5, 5.2 , 5.3, 5.6, 5.7.2, 6]
Evidence Preponderance of probability Confiscation of goods, confirmation of duty evaded and imposition of penalty Standard of proof required in departmental proceedings is preponderance of probability Adjudicating Authority or Tribunal to evaluate evidence of both sides and decide what is most probable Section 11A of Central Excise Act, 1994.
Similarly in the case of MP Agro Vs. CCE-2003 (158) ELT 763 (CESTAT), the charge of clandestine removal was sustained when there was huge difference between raw material used and final product cleared. In Patel Products Vs. CCE-2003 (151) ELT 650 (CEGAT), the material was found to be stored in unregistered premises; In Sita Cement Vs. CCE-2003 (153) ELT 204 (CEGAT), it was held that though assumptions and presumptions cannot discharge onus of Revenue to prove its charge but, at the same time, mathematical precision is not requi
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tions committed by duty evaders. In all such situations, best judgment methods are applied by applying a formula based on reasonableness and justice to the assessee as well to the Government exchequer. In the instant case, as the officers found bags in all the live consignments seized by them to be almost identical, the proportion in which goods of various packagings and varieties were found in the seized consignments, were applied to the past clearances, as only no of packages were available. This method was the best under the circumstances and is not a mere presumption or figment of imagination. However, if M/s MPE had disputed the quantum of duty arrived at in the impugned show cause notice, they were at liberty to adduce evidence to arrive at the correct quantum of duty but the Adjudicating Authority straight away dropped the demand of duty in spite of plethora of evidences available on record to prove that M/s MPE had evaded the Central Excise duty by illicitly procuring the unacc
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Foods India Pvt. Ltd., reported as 2011 (270) ELT 643 (SC) wherein the Hon'ble Apex Court has held as under:-
Clandestine removal Proof Managing Director admitting clandestine clearance and voluntarily paid duty Statement of proprietor of buyer and of production supervisor also show clandestine removal Adjudicating Authority s finding that unaccounted finished goods recovered from eight dealers, firms created dealing in similar products from same premises by same persons, invoices issued by firms other than respondent and parallel set of invoices of same serial numbers used Tribunal set aside demand ignoring said materials Specific allegation of maintenance of two sets of invoices, one for excisable goods and other for non-excisable goods, not considered and discussed by Tribunal Excisable goods removed clandestinely as non-excisable goods Act of assessee Respondent to voluntarily come forward and pay Excise duty to sort out issue also ignored by Tribunal Clandestine removal proved M
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the Managing Director of the Company on his own volition deposited amount of Rs. 11 lakhs towards excise duty and therefore in the facts and circumstance of the present case, the aforesaid statement of the counsel for the respondents cannot be accepted. This fact clearly proves the conclusion that the statements of the concerned persons were of their volition and not outcome of any duress. (emphasis supplied)
2.28 The adjudicating Authority has erred in vacating the seizures of finished goods seized at the premises of the transporters as well as from their trucks intercepted enroute. The Adjudicating Authority while vacating the said seizures has held that there is no evidence incontrovertibly linking the party (M/s MPE) with the seized goods as the seized goods were brought to the transporters premises not by anybody from the party but by their booking agent who admitted to bungling.
It has been repeatedly admitted by employees of transport companies that the goods were brought t
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their fake/counterfeit goods (NAKLI MAAL). I removed him from my employment when I came to know about this fact.
This is the only reference to goods being fake in his apparently unauthorized and illegal deposition. Manoj Ji did not claim that all the finished goods under seizure at various places were booked by Mukesh Tiwari and were fake; he did not claim that the goods booked by Mukesh Tiwari with Jaipur Golden Transport Company were fake.
Even if the said Mukesh Tiwari, who was in employment of Manoj Ji was the same person who was earlier an employee of M/s MPE, he could not have joined Manoj Ji before May, 2015 while all the seizures had already been effected on 26.02.2015. Therefore, even if the A/A accepted the general statement made by Manoj Ji during his illegal deposition as trustworthy without any further verification, the same does not have any bearing on the finished goods under seizure.
2.29 Therefore, the finding of the Adjudicating Authority is totally fallacious
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panies, as well as the un-retracted statement by the partner of M/s MPE clearly show that the goods belong to M/s MPE and is further corroborated from the fact that M/s MPE not only deposited Rs. 4 Crore towards duty liability and obtained provisional release of almost all the goods.
No evidence to show duty-paid nature of the finished goods under seizure appeared either during investigation or during Adjudication proceedings. Therefore, there are no grounds for the A/A to vacate the seizures, drop the demand of duty on finished goods illicitly removed from the manufacturer s premises, exonerate the manufacturer from penalty.
2.30 That the Adjudicating Authority has committed a grave error in vacating the seizures of the unaccounted raw materials seized in the factory premises as well as in the godown of M/s MPE on the ground that the said unaccounted raw materials were neither manufactured by M/s MPE nor they had availed Cenvat credit thereon. The Adjudicating Authority in support
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ounted finished goods seized from their factory premises were manufactured by them from the unaccounted raw materials procured without bils. The Adjudicating Authority has ignored the fact that if any producer, manufacturer, registered persons of a warehouse or a registered dealer does not account for the excisable goods i.e. raw materials (inputs), the unaccounted raw materials are liable to confiscation under Sub-clause (b) of Rule 25(1) of the Central Excise Rules, 2002, which reads as under:-
(b) does not account for any excisable goods produced or manufactured or stored by him; or
From the above Sub-clause (b), it is clear that not only the unaccounted excisable goods produced or manufactured by a manufacturer are liable to confiscation under the above Sub-clause, but even the unaccounted excisable goods stored by a manufacturer are also liable to confiscation under the above Sub-clause and this issue has already been set at rest by the Hon'ble CESTAT, Kolkata in the case of K
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ble to penalty. The argument of the ld. Adcocate is that the expression excisable goods mentioned in Caluse (b) of the said Sub-rule, referes only to the goods manufactured by the manufacturer and cannot be made applicable to excisable goods procured by him as raw materials to be used in the manufacture of finished excisable goods is, in my opinion, an incorrect interpretation of the said clause. The said Rule 25 is a penal provision and enumerated various situations and clause (b) of the Sub-rule (1) is directed against non-accountal of excisable goods produced or manufactured or stored refers, inter alia, also to a manufacturer, who does not account for any excisable goods produced or manufactured or stored by him. The word or in the said clause should be read disjunctively. The word excisable goods defined at Section 2(d) of Central Excise Act, 1944 as was in force during the relevant period reads as :
Excisable goods means goods specified in [the First Schedule and the Second Sch
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found in the factory premises were not stored in a routine manner, but were purposely kept unaccounted. As per the categorical statement of the Director, Mr. Kamlesh Ladha, it is evident that the said excisable goods were procured with a specific intention to use it as raw material in the manufacture of finished excisable goods intented to be removed clandestinely without payment of duty. In such cirecumstances, in my opinion, Clause (b) of Rule 25(1) of Central Excise Rules, 2002 could be invoked for confiscation of the said non-accounted excisable goods stored in the factory premises for its use as raw materials by a manufacturer. All these judgments referred to by the appellants were distinguishable on the facts. In none of these cases, admission like the one made by the Director, Shri Ladha that the raw materials were procured with ain intention for its utilization in the manufacture of finished goods meant to be removed without payment of duty, was present. Therefore, the judgmen
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on as rightly proposed in the impugned Show Cause Notice.
5. Heard the ld. A. R. for Revenue, who presented the above stated grounds of appeal.
6. Heard the Counsel for the respondent, who has summarized the grounds raised by Revenue as follows:-
(i) That the Adjudicating Authority instead of relying on the statements recorded during investigation, has considered retractions of the witnesses recorded during cross-examination before him in the adjudication proceedings.
(ii) That the respondent s authorized representative in his initial statements has admitted clearance of goods without payment of duty, and
(iii) That respondent by voluntarily depositing Rs. 4 crore during the investigation of the case admitted guilt of clandestine removal of goods.
They further submitted that Shri Atul Chaurasia in his statement 07/12/2016 denied that there was any clearance of goods without payment of duty. They submitted that the statements were retracted but did not stand the scrutiny durin
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ments recorded and the said statements did not stand the scrutiny during cross-examination before the Original Authority. Therefore, Original Authority has dropped the demand and Revenue has not submitted any sustainable ground to establish that the said finding of Original Authority is not sustainable.
7. Having considered the rival contentions and on perusal of the facts on record, we find that the Original Authority has dropped the demand in respect of 21 Co-noticees in respect of whom there was a proposal to impose personal penalty under Rule 26 of the Central Excise Rules, 2002 and that Revenue has not filed appeals against that part of the order and against those 21 Co-noticees. Therefore, it can be reasonably concluded that Revenue has accepted that those 21 Co-noticees were innocent. We, further, find that the entire Show Cause Notice for demand of Central Excise duty amounting to Rs. 7,38,84,853/- was based on the statements and the said statements did not stand the scrutiny
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