2018 (9) TMI 1060 – RAJASTHAN HIGH COURT – TMI – Monetary limit involved in appeal – Clandestine removal – principles of Natural Justice – 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 Authority? – Whether the ld. Adjudicating Authority grossly erred in law in ignoring the voluntary statements of the Director and General Manager of the Company while dropping the partial demand? – penalty on the Director and General Manager of the Company – sub section (3) & (5) respectively of Section 35G of the Central Excise Act, 1944.
–
Held that:- The 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, the appeal is not maintainable in view of monetary limits.
–
No substa
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tial demand? 3. Whether the ld. CESTAT has grossly erred in law in setting aside the penalties on the Director and General Manager of the Company who were actively engaged in clandestine removal of the goods? 4. Any other question of law as the Hon ble High Court may formulate and decide the same in terms of sub section (3) & (5) respectively of Section 35G of the Central Excise Act, 1944. 3. However, taking into consideration, the observation made by the Tribunal which reads as under: 6. Revenue has challenged the dropping of demand to the extent of ₹ 30.85 lakhs. The demand of about ₹ 60 lakhs was proposed in the show cause notice on the basis of the quantification relying on 32 kachha parchis recovered during search proceedings. The assessee contended during the course of adjudication that out of 32 slips, 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
goods covered by 25 kachha parchis have been cleared on payment of duty, we find no reason to take a different view. Consequently, we uphold the dropping of demand of ₹ 30,85,849/- and reject the Revenue s appeal. 7. The adjudicating authority has confirmed the demand amounting to about ₹ 30 lakhs on the basis of seven kachha parchis in respect of which the assessee was not in a position to submit proof for clearance of goods under invoices without payment of duty. He has further recorded that both Sh. J. D. Pant, General Manager as well as Sh. P.C. Jain, Director have given inculpatory statements under Section 14 of the Central Excise Act to the effect that goods covered by kachha parchis were clandestinely cleared without payment of duty. Further, the assessee has also paid the entire duty for the goods covered by 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 covere
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rom the record that Revenue has not undertaken any verification either with the buyers or even with the transporters. No investigation appeared to have been carried out to prove that such goods were manufactured in the factory but not accounted for. 9. Clandestine clearance is a serious allegation and needs to be established on the basis of tangible evidence. It is well established fact that only on the basis of the inculpatory statement, the charges of clandestine clearance cannot be upheld. The inculpatory statements given by the General Manager and Director also do not specifically cover the seven parchis. In the absence of any corroborative evidence to indicate that the goods covered by seven parchis were cleared by the appellant, we are of the view that the charge of clandestine clearance and demand of duty cannot be sustained. The assessee has cited a large number of decisions to support the contention that clandestine clearance cannot be upheld without tangible evidence. 4. We a
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
of the powers conferred by Section 35R of the Central Excise Act, 1944 made applicable to Service Tax vide Section 83 of the Finance Act, 1944, the Central Board of Indirect Taxes and Customs fixes the following monetary limits below which appeal shall not be filed in the CESTAT, High and Supreme Court: S. No. Appellate Forum Monetary Limit 1. CESTAT ₹. 20,00,000/- 2. High Courts ₹. 50,00,000/- 3. Supreme Court ₹. 1,00,00,000/- 2. This instruction applies only to legacy issues i.e. matters relating to Central Excise and Service Tax, and will apply to pending cases as well. 3. Withdrawal process in respect of pending cases in above forums, as per the above revised limits, will follow the current practice that is being followed for the withdrawal of cases from the High Courts, CESTAT and Commissioner (Appeals). 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
as per instruction -11/07/2018) As on(Last working day)-/-/- Position of withdrawal in Departmental Cases raised 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 on 2.5.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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 record from t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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 ₹ 40 lakhs on Shri Agarwal who is appellant No. 2 are hereby set aside. The appellants will get the rel
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
l for respondent contended that 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 ₹ 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
o relied upon the decisions 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. R
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
the charges. In D'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 guil
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
various stages of processing 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 ₹ 31,53,204/- involving Central excise duty of ₹ 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 ₹ 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 adjud
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
urrently found that except for the statement 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
, clandestine removals, the mode and 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 cas
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
bolts and it was impossible 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =