M/S. Sumeet Silk Mills vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-RKA/629-630/SRT-I/2008 dated 25.08.2008, Passed by Commissioner (Appeals) Central Excise, Service Tax & Customs, Surat)

M/s. Sumeet Silk Mills : Appellant (s)

VERSUS

Commissioner of Central Excise & S.T., Surat : Respondent (s)

Represented by :

For Appellant (s) : Shri Mukund Chauhan, Chartered Accountant For Respondent (s) : Commissioner of Central Excise & S.T., Surat

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Hon'ble 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. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Hon'ble Member (Technical)

Date of Hearing / Decision : 12.05.2015

ORDER No. A/10595/2015 Dated 12.05.2015

Per : Mr. P.K. Das;

The relevant facts of the case, in brief, are that the appellant are engaged in the processing (dyeing and printing) of Man Made fabrics (MMF) on job work basis and registered with the Central Excise authorities. On 10.07.2003, the officers of DGCEI visited the appellants factory and recovered certain records and documents, containing three files of loose papers, challans and packing slips. They have recorded statements of the Director and employees of the appellant Company and the four merchant manufacturers, who supplied the grey fabrics.

2. A show cause notice dated 10.11.2004 was issued proposing demand of Central Excise duty amounting to Rs. 31,06,075/- alongwith interest and to impose penalty. The adjudicating authority modified the demand of duty and reduced to Rs. 17,39,400/- alongwith interest and imposed penalty of equal amount of duty. It has also imposed penalties on the co-noticees. By the impugned order, Commissioner (Appeals) reduced the penalty imposed on the Director of the appellant Company and otherwise, the adjudication order was upheld.

3. The Learned Consultant for the appellant submits that demand of duty on the basis of a File, Annexure A-1, containing loose papers, would not indicate any clearances of the goods. He submits that department has not made any enquiry from the suppliers of grey fabric, sale of the goods etc. and confirmed the demand of duty based on documents in File A-1. He further submits that the appellant produced invoices in respect of the quantity indicated in File A-1 before the Commissioner (Appeals) who has not considered the documents. Regarding demand of duty on the basis of other Files, it is his submission that the adjudicating authority modified the demand on the basis of value of uniform shrinkages, as contended by the appellant. Both the lower authorities below have not extended the benefit of cum-duty price. He relied upon the decision of the Tribunal in the case of Mahavir Plastics vs. CCE, Mumbai  2010 (255) ELT 241 (Tri. Mumbai). He submits that appellant deposited an amount of Rs. 20 Lakhs during investigation which was appropriated in the adjudication order, but, the adjudicating authority had not extended the option to pay penalty 25% of the duty, under Section 11AC of the Central Excise Act, 1944.

4. The Learned Authorised Representative on behalf of the Revenue reiterates the findings of the Commissioner (Appeals). He submits that the investigating officers have recorded statements of the suppliers, excise clerk, programme supervisor and the Director of the appellant Company, who admitted clandestine removal of the goods and the same are corroborated with the Files recovered from the appellant. He further submits that none of the noticees had retracted statements at any point of time. He submits that cum-duty benefit should not be extended as they have not issued invoices, the statement of Shri Rajkumar Somani, Director of the appellant Company is corroborated with this fact.

5. After hearing both the sides and on perusal of the records, we find that the Central Excise officers during the visit of appellants factory recovered three Files containing various documents. It is seen that representatives of the appellant Company in their statements accepted the clandestine removal of the goods on the basis of the said documents. The adjudicating authority, after examining various documents in respect of sell of goods, modified the demand of duty. On perusal of the impugned order, we find that appellant produced copies of invoices before the Commissioner (Appeals) to establish that the goods in question were cleared on payment of duty. They have also contended before the Commissioner (Appeals) that adjudicating authority had not considered wastage of goods due to shrinkage. The Commissioner (Appeals) has given detailed finding on this issue, as reproduced below:-

5. The appellant have in their letter dated 04.8.2008 reproduced certain copies of invoices to show that goods mentioned in the register A/1 were cleared under Central Excise invoices on payment of duty. However, on perusal of these invoices these are found to be of period after the search operations. The investigations revealed that the file A/1 contained paper recovered from cabin of the program supervisor. In his statement dated 10.07.2003 Shri Tagariwala, program supervisor stated that the goods mentioned in the documents have already been dispatched on the dates appearing in the document. Further, the statement of Shri Tagariwala has been seen by the Director Shri Somani and admitted on 08.6.200r. First of all the documents now produced are of period after the search which can be easily manipulated. Secondly, the evidence on records show and establish that the goods were dispatched before the date of search on 10.7.2004. Thirdly, the appellant had sufficient opportunity to put up their claim. If the claim is indeed true, the appellant ought to explain what prevented them from placing the facts at the time of various statements of the Director. The plea of the appellant, in this regards, fails.

6. The appellant has taken another plea that quantity of processed fabrics has been ascertained taking wastages of 10% as against 18-22% reflected in invoices. These being polyester fabrics, it is common knowledge that shrinkages in such fabrics are nominal. The appellant are claiming shrinkage of 18% - 22% based on sample invoice and not as wastage approved by a technical agency of the government. Shrinkages of 10% was taken as claimed and admitted by the appellants Directors and employees. If indeed the shrinkages are higher, it was open to the appellant to demonstrate to the investigator the actual wastages. Nothing of this sort has been done. The plea of the appellants for recalculating the quantity (based on higher shrinkages) fail.

6. We find that the Central Excise officers visited appellants factory on 10.07.2003 and the appellant produced the copies of the invoices by 04.08.2008 before the Commissioner (Appeals). We agree with the findings of the Commissioner (Appeals) and such invoices, can not be accepted at this belated stage. It is also noted that the appellant have not submitted any reconciliation of the demand of duty in respect of the said invoices. The shrinkage as claimed on the basis of sample invoices, the appellant has not produced any authentic basis for shrinkage. Hence, we do not find any force in the submission of the learned Consultant.

7. We agree with the submission of the learned Consultant that the cum-duty benefit should be extended. The Tribunal in the case of Mahavir Plastics vs. CCE, Mumbai (supra) held that the price indicated in the documents deemed to be cum-duty price, even in the case of clandestine removal. We also agree with the submission of the learned Consultant that the appellant had paid duty during investigation and the adjudicating authority should have extended the benefit to pay reduced penalty of 25% of duty within stipulated period.

8. In view of the above discussion, we upheld the adjudication order subject to that the Adjudicating authority shall re-quantify the demand of duty by extending the benefit of cum-duty price. We also direct that the appellant may opt to pay the entire amount of duty alongwith interest and penalty of 25% of duty within 30days from the date of communication of this order, as per Section 11AC of the Central Excise Act, 1944. Appeal is disposed of in above terms.

(Dictated and pronounced in the Court)

(H.K. Thakur) (P.K. Das) Member (Technical) Member (Judicial) ..KL

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