M/S Lark Wires & Infotech Ltd vs Commissioners Of Central Excise

(Arising out of OIA-COMMR-A/79-83/VDR-II/2007 Dated 25/04/2007, OIA-KLG/240/SRT-II/2007 Dated 10/08/2007 passed by Commissioners (Appeals) of Central Excise, Customs and Service Tax-SURAT-II)

1. M/s Lark Wires & Infotech Ltd

2. Shri Vikas Ladha, Director

3. Shri M J Deve, Senior Commercial Manager

4. Shri K S Tiwari, Production Manager

5. M/s. A.R. Enterprises, (Appeal No. 906/2007 and 1139/2008) : Appellant (s)

Vs

Commissioners of Central Excise, Customs and Service Tax-SURAT-II) : Respondent (s)

Represented by:

For Appellant (s) : Shri J. C. Patel, Advocate Shri Rahul Gajera, Advocate For Respondent (s): Shri T.K. Sikdar, Authorised Representative

For approval and signature:

Mr. P.K. Das, Honble Member (Judicial) Mr. P.M, Saleem, Honble Member (Technical)

1.

Whether Press Reporters 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 the 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. P.K. DAS, HONBLE MEMBER (JUDICIAL) Mr. P.M, SALEEM, HONBLE MEMBER (TECHNICAL)

Date of Hearing/Decision:15.09.2015

Order No. A/11424-11429/2015 Dated 15.09.2015

Per: P.K. Das

The relevant facts of the case, in brief, are that the M/s Lark Wires & Infortech Ltd (in short the appellant company) was engaged in the manufacture and clearance of the excisable goods viz., Enameled Copper Winding Wires, classifiable under Sub Heading No. 8544.00 of the Schedule to the Central Excise Tariff Act 1985. On 08.09.2003 the Central Excise Officers of Directorate General of Central Excise Intelligence (DGCEI) carried out search at the factory premises of the appellant company. No discrepancy was found on stock verification. The said officers seized the production reports and a personal diary of Mr. K.S. Tiwari, Production Manager of the appellant company. On the same day, the said officers also carried out search at the dealers premises namely M/s. A.R. Enterprises and at the residence of its Proprietor Shri Rajesh Kantawala, to whom the appellant used to sell the copper wires. The copper wires lying of the godown and the residence of the dealer were seized on the ground that, the same were received by the dealer without payment of duty from the appellant company. The statements of the employees of the appellant company and dealers were recorded on different dates.

2. A Show Cause Notice Dated 07.02.2004 was issued proposing demand of duty alongwith interest and to impose penalty on the appellant company. It has also proposed to impose penalty on the Director, employees of the appellant company and the dealer. The Adjudicating Authority confirmed the demand of duty of Rs. 21,32,268.00 alongwith interest and imposed penalty of equal amount of duty on the appellant company. It has appropriated the amount of Rs. 7,00,000.00 as deposited by the appellant company during investigation. Penalties were imposed on the other appellants, as under:-

(a) Shri Vikas Ladha, Director of the Appellant Company Rs. 2,00,000.00 (b) M/s A.R Enterprises (Dealer) Rs. 1,00,000.00 (c) Shri K.S. Tiwari, Production Manager of the Appellant Company Rs. 50,000.00

(d) Shri M.J. Dave, Senior Commercial Manager of the appellant company Rs. 50,000.00

3. By the impugned order, the Commissioner (Appeals) rejected the appeals filed by the appellants. The present appeals were filed by the appellant company and its Director, employees and the dealer.

4. Another Show Cause Notice Dated 04.03.2004 was issued to the dealer M/s A.R. Enterprises and the appellant company proposing for confiscation of the goods, seized on 08.12.2013 at the premises of the dealer. It has also proposed to impose penalty on the dealer and the appellant company. The Adjudicating Authority confiscated the seized goods and imposed redemption fine of Rs. 1,26,000.00 on the dealer and also imposed penalty of Rs. 74,000.00 under Rule 26 of the Central Excise Rules, 2002 on the dealer. No penalty was imposed on the appellant company. By the impugned order, Commissioner (Appeals) upheld the Adjudication Order. Hence, the dealer M/s. A.R. Enterprises filed another appeal before the Tribunal.

5. Shri J.C. Patel, the Learned Advocate is appearing on behalf of all the appellants except the dealer. Shri Willingdon C, Learned Advocate on behalf of the M/s A.R. Enterprises (i.e. dealer) by letter dated 15.09.2015 requested that the two appeals filed by M/s A.R. Enterprises may be decided on merit, and on the basis of written submissions alongwith case laws submitted by them.

6. After hearing both the sides and on perusal of the records, we find that the demand of duty of Rs. 13,64,527.00 and Rs. 5,75,062.00 were confirmed on the basis of the personal diary of Shri K.S. Tiwari, Production Manager of the appellant company. The demand of duty of Rs. 75,506.21.00 is on seized goods at the residence and godown of the dealer on the ground that Central Excise Invoices of the appellant company for the said goods, were not available. The amount of Rs. 1,17,172.00 was demanded on the appellant company, on account of alleged undervaluation of Wires, sold to the dealer as the goods were wrongly described as Second Grade in the Central Excise Invoices.

7. The Learned Advocate on behalf of the appellant company submitted that the demand of duty of Rs. 13,64,527.00 on the basis of personal diary of K.S. Tiwari, Production Manager cannot be sustained on the ground that there is no indication of clearance of the goods, in the said diary. The Learned Advocate particularly drew the attention of the Bench, the relevant portion of the diary. He submits that the Department had failed to produce any evidence of purchase of raw materials, production of the goods and the goods sold to the buyers etc. It is also submitted that during the visit to the factory, by the Central Excise Officers, no excess/shortage of raw materials or finished goods was found. In this context, he relied upon the various decisions of the Tribunal and High Court. The demand of Rs. 5,75,062.00 is also on the basis of the same diary. In this context, the Learned Advocate submits that the quantities reflected in the said diary are corroborating with R.G.I./Production register and cleared on payment of duty under Central Excise Invoices. He drew the attention of the Bench, the R.G.I./Production register. It is submitted that both the authorities had not examined this issue. It is also submitted that cross examination of Shri K.S. Tiwari was not allowed.

8. We find that both the demand of duty of Rs. 13,64,527.00 and 5,75,062.00 are on the basis of the seized diary of Shri K.S. Tiwari Production Manager of the appellant company. The appellant company contended that the amount of Rs. 5,75,062.00 is tallying with the R.G.I./Production register. On the other hand, the other amount of Rs. 13,64,527.00, the appellants are contesting the authenticity of the diary. In our considered view, the stand taken by the appellants are totally contradictory. The appellant cannot accept the diary on piecemeal basis. Once they have accepted the contents of the seized diary in respect of demand of duty of Rs. 5,75,062.00 tallying with finished goods register, it is the duty of the appellant company to justify the clearance of goods on the basis of the said diary on demand of Rs. 13,64,527.00, which they failed to do so. Hence, the demand of duty of Rs. 13,64,527.00 is justified. But, we find force in the submission of the Learned Advocate in respect of demand of duty of Rs. 5,75,062.00, as the lower authorities should have verified to documents as placed by the appellants.

9. The demand of duty of Rs. 1,17,172.00, we find from the impugned order that the appellants cleared the goods under the description of Second Grade Enameled Wires of Copper-SWG Mix Size. The Adjudicating Authority observed that the cartoons were indicating F or M for fine or medium type of goods. It was observed that the description the invoices were not tallying with the grade, size as mentioned in the production slip. We find that it is evident from the record that the appellant company cleared the goods, mix size, medium grade as mentioned in the invoices and cartoons, which were arising after the production stage. The material available on record would show that the goods cleared second quality. Thus, the finding of the Adjudicating Authority that these goods are not second quality is without any basis and the demand of duty is not proper.

10. The demand of duty of Rs. 75,506.21 is in respect of the goods seized from the residence and godown of the dealer, the Learned Advocate on behalf of the appellants contended that the said quantities were cleared under the cover of the Central Excise Invoices and on payment of duty and the copy of such invoices were at pages 306 to 310 of the appeal memorandum. In our view, this fact is also required to the examined by the Adjudicating Authority. The Learned Advocate cited the decision of the Honble High Court and Tribunal as the matter was decided on the basis of the evidences as stated above, We do not find any reason to discuss the details of the said case laws.

11. To sum up, the demand of duty of Rs. 13,64,527.00 alongwith interest and penalty is required to be upheld and the demand of duty of Rs. 1,17,172.00 alongwith interest and penalty cannot be sustained. The balance amount of demand of duty of Rs. 5,75,062.00 and 75,506.21.00 are required to be examined by the Adjudicating Authority with the documents. The penalty imposed on the appellant company and the dealer are to be determined as per outcome of the denove adjudication. In any event, the penalty imposed on the employees of the appellant company cannot be sustained for the reason that they worked on the basis of the instruction of the employer. There is no material available the employees of the appellant company had gained in any manner.

12. In view of the above discussions, we modify the impugned order, in so far as the demand of duty of Rs. 13,64,527 alongwith interest is upheld. The demand of duty of Rs. 1,17,172.00 alongwith interest and penalty is set-aside. We direct the Adjudicating Authority to examine the demand of duty of Rs. 75,506.21.00 and 5,75,062.00 alongwith interest and the confiscation of the goods, seized at the premises of the dealer. The Adjudicating Authority shall also re-determine of the penalty on the appellant company, its Director and M/s. A.R. Enterprises, the dealer. The penalty imposed on Shri K.S. Tiwari, Production Manager and M.J. Deve Senior Commercial Manager of the appellant company are set-aside and the appeals filed by the appellants are allowed. The appeals filed by the appellant company and M/s A.R Enterprises are disposed in the above terms.

(Dictated & Pronounced in open Court)

(P.M.Saleem) (P.K. Das) Member (Technical) Member (Judicial)

govind

7