M/S Hans Ispat Limited vs Commissioners Of Central Excise

[ Arising out of OIA-413-415/2010/COMMR-A-/CMC/RAJ dated 7 & 08/09/2010 Passed by Commissioners of Central Excise, Customs and Service Tax-RAJKOT ]

M/s Hans Ispat Limited ] Shri Sajidmiyan Nasir ] Appellant(s) Shri Anwar Ul Islam ]

Vs.

Commissioners of Central Excise, ] Customs and Service Tax-RAJKOT ] Respondent(s)

Represented by

For Appellant(s) : Shri R Subramaniya, Advocate For Respondent(s) : Shri L Patra, Authorised Representative

For approval and signature :

Mr. H.K. Thakur, Honble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. H.K. Thakur, Honble Member (Technical)

Date of Hearing : 11/6/2015 Date of Decision : 29/6/2015

ORDER No. A/10890-10892/2015 dtd 29.6.2015

Per : Mr. H K Thakur;

The main appellant has filed this appeal with respect to OIA No 413-415/2010/COMMR-A-/CMC/RAJ dtd 7.9.2010 under which OIO No 19/ADC/2010 date 31.3.2010 was upheld. Under OIO date 31.3.2010 Adjudicating Authority confirmed a demand of Rs 31,97,437/-, against the main appellant alongwith interest and also imposed equivalent penalty under Rule 25 of the Central Excise Rules 2002, read with Section 11AC of the Central Excise Act 1944 giving option of 25% reduced penalty also as per provisions of Section 11AC, Central Excise Act 1944. Penalties of Rs 5 lac each were imposed upon Sajidmiyan Nazir, Director of the main appellant and Shri Anwar Ul Islam, Authorised Signatory of the main appellant, which were upheld up the first Appellate Authority and appeals had been filed by the other appellants with respect to such penalties imposed.

2. Shri R Subramaniya, Advocate, appearing on behalf of the appellants argued that shortage of 98.411 MT of MS scrap and 252.18 MT of SS flats indicated by the Central Excise officers during the visit was in fact not existing. So far as shoetage of 98.411 MT of MS Scrap is concerned, Learned Advocate argued that this shortage was wrongly calculated by the dept on the wrong notion that no stock of MS Scrap was lying in the factory premises Learned Advocate made the Bench go though Panchnama dtd 6.8.2008 wherein on Page 4 of this Panchnama it is mentioned that some quantity of MS Scrap was kept in the factory near the furnace. It is the case of main appellant that there were no shortages of scrap. Similarly for shortage of 252.18 MT of SS Flats it is argued by the Learned Advocate that no investigation has been made by the investigating officers from where wrongly main appellant procured excess raw materials for manufacturing of 252.18 MT of SS Flats. It was also the case of the Learned Advocate that the benefit of cum-duty price has been substantiated by the appellant. Learned Advocate relied upon the case law of Chandpur Enterprises Ltd Vs CCE&ST, Meerut [2014(310)ELT 904 (Tri.Del)] where it was held that shortage of scarp determined by eye estimation is not the method for calculating real shortage of raw materials. He also relies upon the judgement of Sisco Industries Ltd vs CCE, Allahabad [2013(297)ELT.457.(Tri.Del.)] .

3. Shri L Patra, Authorised Representative, appearing on behalf of Revenue argued that shortage of raw materials during the visit by the officers of Central Excise is the indication that appellant in indulging in the manufacture of excisable goods and subsequently clandestine clearance of such goods manufactured. That the shortage of finished goods in the stock establishes that the same have been cleared without payment of proper duty. He relies upon the case law of Singh Scrap Processing Pvt Ltd Vs CCE, Mumbai vi [2005(192) ELT. 673(Tri. Mum.)] to argue that onus to explain taking of proper credit on raw materials is on an assessee. That in this case appellant in their statement clearly admits that the shortage pointed by the officer of Central Excise is clandestinely cleared from the factory premises. It was his case that as per Syed Mohammad vs CC upheld Scrap Processing Pvt Ltd Vs CCE, Mumbai High Court [2010(251)ELT.376.(Bom.)] such a view was upheld. Learned Authorised Representative also relied upon the following case laws to argue that when a comparative statement on clandestine clearance is given by the appellant the other details like procurement of raw materials and consumption of electricity etc., are not required to be investigated and proved in each and every case.

i) Surie Engg Works vs CCE, New Delhi  2004(167)ELT.195(Tri.Del.)

ii) Motorol Technolog9es Ltd vs CCE, Vadodara  2009(245)ELT.278.(Tri.Ahmd)

iii) Syed Maohammad Vs CC  1993(65)ELT.117 (Tri.)

iv) Krishna Engg W0orks Ltd Vs CCE, Jalandhar  2010(256)129(Tri.Del.)

v) Jain Enterprises and Raichand Vs CC, Madras  1986(25)ELT.811(Tri)

vi) Karori Engg Works Vs CCE, New Delhi  2004(196)ELT.373(Tri.Del)

vii) Whale Stationery Products Ltd Vs CCE, Meerut  2004(168)ELT.405(Tri.Del)

4. Heard both sides and perused the case records. Facts leading to present appeal are that Revenue made a case against the appellant that there is clandestine removal of inputs and finished goods on the basis of shortage noted during the visits by the Central Excise Officers. Shri Mohammed Kaizar, Director of the main appellant in his statement dated 6.8.2008 admitted that there was a shortage of stock of MS Scrap on which Cenvat Credit was taken. It was further admitted that shortage of MS scrap is correct as they have been sold by the appellant the scrap in the local market to various individual traders without preparing any bills. With respect to shortage of SS Slabs, it was stated by Shri Mohammed Kaizer, Director, that they have cleared the goods without preparing any bills. On a specific question asked by the investigating officer as to whom the scrap and finished goods were sold, the appellant was not able to give the records for such sale. In the absence of addresses of the persons to whom the scrap and the finished goods were sold, investigating authorities cannot be faulted to carryout further investigation of the buyers. Shortage of raw materials, admitted by the appellant in spite of the fact that certain MS Scrap was under process on the day of visit of the Central Excise officers indicates that the main appellant was in the practice of receiving raw materials unscrupulously and using the same in the manufacture of finished goods removed of clandestinely. Inspite of some MS Scrap in process and lying near the furnace, in his statement the Director of the main appellant did not claim that raw materials in stock was incorrectly taken by the Dept. Officers. The statements taken by the investigators are not retracted. Therefore, taking a stand during appeal proceeding that stock taking of the raw-materials was done incorrectly is not sustainable and rejected.

5. Appellant has also taken an argument that the cum-duty benefit has not been extended to them. It is an accepted legal position that in case of clandestine removal of goods benefit of cum-duty price is required to be given. So far as duty liability on the clandestinely removed SS Flats is concered Adjudicating Authority should rework out the duty liability after allowing the benefit of cum-duty benefit and intimate the same to the appellant. After reworking of duty liability with respect to finished SS Plates, main appellant will be eligible to exercise 25% option of reduced penalty, if the duty is paid alongwith interest and penalty within one month from the receipt of such communication from the Adjudicating Authority. So far as imposition of penalties upon the other appellants is concerned, it is observed that they were involved in the clandestine removal of raw-materials and the finished goods. Therefore, the penalty imposed by the Adjudicating Authority upon the appellants is justified and has been correctly upheld by the first Appellate Authority.

6. Appeal filed by the main appellant is allowed only to the extent indicted herein above and the remaining appeals filed by the other appellants are rejected.

(Pronounced in the Court on 29.6.2015)

(H.K. Thakur) Member (Technical)

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