2019 (1) TMI 172 – CESTAT NEW DELHI – TMI – Clandestine removal – demand based on assumptions and presumptions – alleged parallel invoices – the proposed confiscation of the stock and the penalties confirmed 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 – Held that:- Bare reading of provisions of Rule 25 and 26 of CER, 2002, makes it clear that the confiscation and penalty can be imposed subject to the provisions to Section 11AC of Central Excise Act, 1944 i.e. first of all it need to be seen as to whether the act of the appellant are that of fraud, collusion, wilful misstatement suppression of fact or any contravention of the provisions of law and that too with an intention to evade duty – Thus, it becomes clear that the Commissioner (Appeals) has committed an error while holding that mensrea is not required to Order confiscation under
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he confiscation has been the evidence as that of eye estimation for determination of stock but it has been a settled principle that the allegations of clandestine removal of eye estimation is not correct.
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The alleged admission of the Director of appellant – Held that:- The 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 – there is nothing on record to show that the officers of revenue had done anything for the weightment of the stock as arrived by them. They have not even produced any inventory to show that the stock was physically verified by them. Nor it is the case of the Revenue that the alleged excess stock was not entered in the RG Register deliberately and with malafide intent to remove goods clandestinely.
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The findings of adjudicating authority for the confiscation of the impugned stock and the imposition of the
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Director of the said Company on 01.06.2016. The incriminating documents were ceased and the Panchnama dated 01.06.2016 was prepared. After taking the physical stock of finished goods and comparing them to the stock declared by the officers of the appellant, the Department observed the following stock viz-a-viz physical stock position: Sl. No. Description of Goods Stock entered in Daily Production register (RG-I) Actual stock as per physical verification Stock found in excess Value of stock found in excess (Approx.) 1 TMT Bars 1702.235 MT 2456.000 MT 753.765 MT Rs.1,95,22,513.50 2 Mis-rolls 87.005 MT 98.000 MT 10.995 MT Rs.1,99,009.50 Resultantly, a SCN No. 3718 dated 28.11.2016 was served alleging the clandestine clearance of goods during the month of February to May 2016 and proposing the aforesaid seized stock to be confiscated under provisions of Rule 25 of Central excise Rules 2002 with the imposition of redemption fine in view of the said confiscation and the penalty under Rule 25
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) TMI 68 (Tri.-Del.). It is further submitted that the statement of Shri Bharat Shukla has only been relied upon alleging the same as the admission. On the contrary, there is no admission qua the excess stock allegedly found on 01.06.2016. Otherwise also, Rule 25 and Rule 26 cannot be invoked merely on the basis of admission Abu cement and others Vs. C.C.E., Indore 2018 (3) TMI 339 is relied upon. In addition, it is submitted that the physical verification of these stock is based on estimation of apparent volume. It has specifically been stated by Shri Suresh Sharma that there may be a variation from 3-3.5 MT in such estimation. It is impressed upon that such variation may result into an erroneous determination to the extent of more than 16%. Finally impressing upon the violation of principles of natural justice the order under challenge is prayed to be set aside. Appeals are prayed to be allowed. 4. While rebutting these arguments, it is submitted on behalf of the Department that the
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different consignees as seized alongwith the goods. It was also held that mensrea is not at all required to invoke Rule 25 and Rule 26 of Central Excise Rules. To adjudicate as to whether these findings are reasonable, the impugned Rules have to be looked into: Rule 25 of Central Excise Rules 2002 defines as under: (1) Subject to the provisions of section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer, – (a) Removes any excisable goods in contravention of any of the provisions of these rules or the notification issued under these rules; or (b) Does not account for any excisable goods produced or manufactured or stored by him; or (c) Engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under Section 6 of the Act; or (d) Contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of d
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rupees, whichever is greater. (2) Any person, who issues – (i) An excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii) Any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made there under like claiming of CENVAT credit under the Cenvat Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater. Bare reading of these provisions makes it clear that the confiscation and penalty can be imposed subject to the provisions to Section 11AC of Central Excise Act, 1944 i.e. first of all it need to be seen as to whether the act of the appellant are that of fraud, collusion, wilful misstatement suppression of fact or any contravention of the provisions of law and that too with an intention to evade duty. Hon ble High Co
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n 11AC of the Central Excise Act deals with penalty for short levy or non-levy of duty in certain cases. It says that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11ac, shall also be liable to pay a penalty equal to the duty so determined. For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short-levied or short-paid or the refund is erroneously granted by reasons of fraud, collusion or any wilful misstatement or suppression of facts. If these ingredients are not present, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to th
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Panchnama dated 01.06.2016 and the statements of the Company s Director allegedly being an admission are sufficient for proving the alleged clandestine removal. It is observed that: A Panchnama is a record of the things visually perceived or actually experience by the panchas in the course of investigation. If it is a search Panchnama, obviously, it should record everything that takes place in the course of search. Mere recording that the search officers offered for search of their person is not sufficient. In relation to the seizure of documents, it was necessary not only to record that the document were recovered from the premises but was also necessary to record a brief description of the exact place from where the documents were located in the premises and from where they were seized by the seizing officer. It was necessary to record as to what steps the seizing officer had taken so as to refrain himself and persons accompanying him from causing any damage to the documents as also
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t to be linked with the activities of the concerned party. The Panchnama and the proceedings in relation thereto should not leave any room to entertain any doubt as such and for the possibility of planting any article and/or document by third person or of the scope for interference by strangers with the documents or contents thereof. Obviously, therefore, any article or document seized from any premises is required to be properly sealed after being packed with necessary wrapper or envelope or covering, as the case may be, so as to avoid any possibility of third party interference with such article or document. In the absence of such steps being taken in the course of seizure of the articles or documents, certainly the credibility of not only of the seizure and recovery but of the material seized and recovered can also be doubted. I is also necessary to record not only the description of the premises but also the movement of the officers and the panchas searching the premises and every
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. Kolkata 2015 (324) ELT 641 (S.C.) has held that when the appellant has contested the truthfulness of the statements of the witnesses with a view discredit their testimony by way of cross examination the denial thereof by the adjudicating authority and mere reliance upon certain documents is not justified. The Hon ble Apex Court held that it was not for the adjudicating authority to presuppose as what could be the subject of cross examination. In absence of such opportunity the statement of witnesses is not worth reliance. 7. Further basis of confirming the confiscation has been the evidence as that of eye estimation for determination of stock but it has been a settled principle that the allegations of clandestine removal of eye estimation is not correct. I draw my support from the decision of Tribunal Mumbai in the case of Nilesh Steel and Alloys Pvt. Ltd. Vs. CCE, Aurangabad 2008 (229) ELT 399. This Tribunal also in the case of Shri Ganesh Alloys Vs. Chandigarh 2016 (337) ELT 595 wh
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shed goods by the appellant. In the present case also, the only contention of the Revenue is that the excess stock was admitted by Shri Bharat Shukla Director of the appellant however I observe that there is nothing on record to show that the officers of revenue had done anything for the weightment of the stock as arrived by them. They have not even produced any inventory to show that the stock was physically verified by them. Nor it is the case of the Revenue that the alleged excess stock was not entered in the RG Register deliberately and with malafide intent to remove goods clandestinely. 9. Per contra, the perusal of the statement of Shri Bharat Shukla makes it apparently clear that there seems some lacuna in the invoice however no finished goods has been cleared from his factory without making payment of the duty. He has also stated that whatever lacuna in the invoice was brought to his notice, the deficiency thereof has already been made good. He has also reflected his cooperatio
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ion of this Tribunal in the case of Salesar Steel and Power Ltd. Vs. C.C.E. Bilaspur 2016 (9) TMI 890. Finally relying upon the decision of Hon ble Punjab & Haryana in the case of C.C.E., Jalandhar Vs. Indo-German Fabs 2007 (209) ELT 184 relying upon the decision of Hon ble Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa 1978 (2) ELT 1159 wherein it was held that the element of mensrea is normally required to be shown for imposition of penalty and where the Department has failed to prove the said element of mensrea no case is made out to impose penalty. 10. In view of entire above discussion, I hereby hold that the findings of adjudicating authority for the confiscation of the impugned stock and the imposition of the penalty upon Mr. Bharat Shukla are the findings without any basis and without any cogent and corroborative evidence. The said findings are therefore set aside. Both the Appeals resultantly, stand allowed. [Pronounced in the open Court on 02.01.201
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