M/S. N R Sponge Pvt. Ltd vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. 192/RPR-I/2013 dated 22/07/2013 passed by Commissioner of Customs &Central Excise(Appeals), Raipur (CG) ]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

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

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

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

M/s. N R Sponge Pvt. Ltd. Appellants

Vs.

Commissioner of Central Excise Respondent

ST, Raipur

Appearance:

Shri Abhey Mishra, Advocate for the Appellants

Shri V P Batra, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing /decision: 10.4.2015

FINAL ORDER NO. A/ 51576/2015-(SM)

Per Ashok Jindal :

The appellant is in appeal against the impugned order wherein the duty has been demanded on the allegation of clandestine removal of the goods without payment of duty.

2. The facts of the case are that appellant is manufacturer of sponge iron. A search was conducted at the end of transporter, namely, Barjrang Transport service on 31.10.2007 and certain records were seized. On verification of those records, it was found that the transporter was transporting the goods to the appellant also. Thereafter the investigation was conducted at the end of appellant. It was found that certain entries made in the records of the transporters are not found in the record of appellants for the period March/ June, 2006. The statement of appellants Accounts Manager was also recorded on 23.3.2011 who stated that Management took change in the year 2007 and appellant is selling the goods at the factory gate. Only buyers are arranging transportation. On this basis, the allegation was made against the appellant that the entries of the transporter which do not correspond to the records of the appellant, that the appellant clandestinely removed the goods and therefore, evaded the duty. In these set of facts, the show cause notice was issued to the appellant for demand of duty on these alleged clearance along with interest and imposition of penalty. Both the lower authorities confirmed the proposal made in the show cause notice. Therefore, appellant is before me by way of this appeal.

3. Learned Counsel for the appellant submits that in this case demand has been confirmed against the appellant on the basis of third party records without corroborative evidence and no investigation made at the end of buyers when the appellants records are not tallying with the transporter companies and appellants Accounts Manager stated that only buyers have arranged these transports. Moreover, nothing incriminating was found from the records of the appellants. Therefore, on the basis of third party record, demand cannot be confirmed against the appellant. To support this contention, he relied on the decision of Allahabad High Court in the case of Kumar Trading Company vs. Commissioner of Trade Tax, Lucknow [2008 (230) ELT 240 (All)] and Bhandary Industrial Metals Pvt. Ltd. vs. CCE Goa [ 2009 (245) ELT 613 (Tri-Mum)]

4. On the other hand learned AR reiterated the finding of the impugned order.

5. Heard the parties. Considered the submissions.

6. In this case, nothing incriminating have been found from the appellant. Moreover, the statement recorded after almost 4 years also does not reveal anything incriminating against the appellant. No investigation was conducted at the end of buyers when the appellant categorically stated that they are not arranging the transport of the goods and only buyers are arranging the transport of goods. In these circumstances, demand is not sustainable merely on the basis of entries made in the transporters register without any corroborative evidence. Same view has been taken by Honble Allahabad High Court in the case of Kumar Trading Company (supra) wherein Honble High Court has held as under:

 Apart from the extract of the booking register in which alleged 55 bookings in the name of M/s. Kumar Trading Company are mentioned. There are absolutely no material to connect such transactions with the applicant Firm. It appears that the alleged transactions of the booking register have been connected with the applicant merely on surmises and conjuncture without any specific material in this regard. It is settled principle of law that in case, if the Revenue wants to rely upon the entries of the document seized from the premises of third party, the burden lies upon the Revenue Authority to prove the genuineness and authenticity of the said entry and to connect the said entry with the dealer, in case, if the dealer denies to have any connection with such entry. In the present case, Revenue has failed to prove that such entries are related to the present applicant. In the circumstances, the view taken by the Tribunal and the authorities below connecting the entries of the booking register with the applicant is merely based on surmises and conjuncture.

7. In the case of Bhandary Industrial Metals Pvt. Ltd. (supra), this tribunal has held as under;-

13.?We also note that the recipient of the raw materials, allegedly removed clandestinely by BIM, do not stands interrogated by the revenue during the course of investigation. If the register maintained by the godown of BDM was for and on behalf of the said five units, they were best persons to explain the entries in the said register. When pointed out to Commissioner, he rejects the above plea of the appellants on the ground that such ball point tip manufacturers were not registered with the Central Excise department and such enquiry about their production would not have been of any relevance because what they did with the raw materials received by BIM was their discretion. We really fail to appreciate the above reasonings of the adjudicating authority. It is not that the enquires can only be conducted from the assessees, who are registered with the Central Excise department. If the revenue is seeking to rely upon the records maintained by another person, it is that another person, who is in a position to explain the entries made by him in such records. To shift the burden to the manufacturers and suppliers of the materials to justify such entries would be beyond all the principles of adjudication and justice.

8. As Revenue has failed to produce any corroborative evidence in support of their allegation and relying on the decisions discussed hereinabove, I hold that allegation of clandestine removal of goods is not sustainable against the appellant. Consequently, demand of duty along with interest and imposition of penalty are set aside. Appeal is allowed with consequential relief, if any.

(Dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

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