Shri Sunil Kedia vs Cce, Raipur-I

IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI

Date of Hearing/Decision:21.01.2016

Excise Appeals Nos. E/53360 to 53365/2015-EX(SM)

(Arising out of Order-in-Appeal No.104/ADJ/DC/RD/CEX/2014 dated 30.09.2014 in Appeals Nos.53360 & 53361/2015, Order-in-Appeal No.BHO-EXCUS-002-091-15-16 dated 18.06.2015 in Appeal No.E/53362/2015, Order-in-Appeal No.101/ADJ/DC/RD/CEX/2014 dated 30.09.2014 in Appeal No.E/53363/2015, Order-in-Appeal No.105/ADJ/DC/RD/CEX/2014 dated 30.09.2014 in Appeal No.E/53364/2015 and Order-in-Appeal No.BHO-EXCUS-002-APP-099-15-16 dated 19.06.2015 in Appeal No.E/53365/2015, all are passed by the Commissioner (Appeals), Customs & Central Excise, Raipur).

M/s.Raipur Forging Pvt. Ltd.

Shri Sunil Kedia .Appellants

Krishna Iron Strips & Tubes Pvt. Ltd.

Shri Sunil Agarwal

Shri Ram Rolling Mill,

Shri Sandeep Gidwani.

Vs.

CCE, Raipur-I Respondent

Appearance:

Rep. by Ms. Neha Meena, Advocate for the appellants.

Rep. by Shri G.R. Singh, AR for the respondent.

For approval and signature:

Honble Shri B. Ravichandran, 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?

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?

Coram: Honble Shri B. Ravichandran, Member (Technical)

Final Order Nos.53965-53970/2016 dated:21.01.2016

Per B. Ravichandran:

These are six appeals filed against the orders of Commissioner (Appeals), Raipur. Three appeals are filed by appellant/assessee and three are by individuals against imposition of penalties. Since the issue involved is identical, these appeals are taken up together.

2. The brief facts of the case are that the officers of DGCEI, Raipur, based on certain intelligence, conducted certain search and inquiry with reference to activities of M/s. Indian Steel and Power Pvt. Ltd., Raipur. During the course of verification of the documents and pen drive recovered from the City office of the said company, officers recovered certain details of clearance of consignments of sponge iron from the ledger account of Sales Local for the year 2011-12. These clearances were suspected to be without payment of duty and without issuing central excise invoice. Shri Pankaj Jain, Director of the said company admitted such non-duty paid clearances. Among such clearances, 32.860 M.T. of sponge iron were said to have been cleared to Raipur Forgings Pvt. Ltd.; 36.330 MTS to M/s. Krishna Iron Strips & Tubes Pvt. Ltd.; 44.37 MTs of Sponge Iron to Shri M/s. Shriram Rolling Mills. As a follow up, statements of Shri Sunil Kedia, one of the Directors of M/s. Raipur Forgings Pvt. Ltd., Shri Sunil Agarwal, Director of M/s. Krishna Iron & Strips Pvt. Ltd. and Shri Sandeep Gidwani, Partner of M/s. Shriram Rolling Mills were recorded. All of them confessed to the receipt of the above sponge iron respectively in their units for further manufacture and unaccounted clearances of M.S. Angles, Channels, etc. Proceedings were initiated against the three appellants/assesses and the three individuals for demanding central excise duty and for imposing penalties. The Original Authority confirmed the demands and imposed penalties on the appellants /assesees and the individuals.

3. On appeal, the Commissioner (Appeals) vide the impugned orders upheld these findings of the Original Authority. Aggrieved by these orders, the appellants filed these appeals.

4. Ld. Counsel for the appellants submitted that the whole case against the appellant /assesses was based on recovery of certain details from third party and thereafter statements were recorded from the individuals of the appellant company. She submitted that there is no corroborative evidence regarding transportation of the said unaccounted raw materials, manufacture in respective units, first into M.S. Ingots and thereafter into M.S. Angles and plates. There are no corroborative evidences regarding details of sales of finished goods including transportation, money receipt, etc. As such, she submitted that the demand and penalty confirmed against the appellant are legally unsustainable. She relied on the various case laws in support of her defence.

5. Ld. AR reiterated the findings in the impugned orders and stated that the Director of the Supplier Company as well as the Director/Partner of the receiving companies admitted the unaccounted sales/receipt of sponge iron and manufacture thereafter into finished product. Hence, there is sufficient corroboration in the case. Ld. AR submitted that when there is an admission statement given before the officers, which was not retracted till the show cause notice was issued, the same is admissible as evidence and confirmation of duty has been rightly made by the lower authorities. He further submitted that the Tribunal in S.M. Steel Ropes  2014 (304) ELT 591 (Tribunal-Mumbai) held that duty demand can be confirmed based on the confessional statement which was voluntarily given.

6. I have heard both the sides and examined the appeal records.

7. The point for decision is sustainability of demand of duty on the finished products based on the evidence put-forth by the Revenue in the proceedings before the lower authorities. The case originated with the investigation conducted by the officers against M/s. Indian Steel and Power Pvt. Ltd., manufacturer of Sponge Iron. Based on the certain ledger accounts maintained in the pen drive and the statement confirming the contents of the pen drive given by the Director of the said company, further statements were recorded at the appellants end. On admission by the appellants regarding receipt and further manufacture of un-accounted excisable products, the investigation stopped. There was no further inquiry or verification regarding transportation, actual manufacture of M.S. ingots, thereafter M.S. Angles, using such clandestinely procured raw materials. In other words, the whole demand rests only on the admission statement of the Director/partner of the appellant /assessee. In the case relied on by the ld. AR, M/s. S.M. Steel Ropes (supra), there was recovery of delivery challans from the appellants premises during the investigation.

These were corroborated by the statement of the Director, who admitted to the turnover of the company. In the present set of appeals, there is no corroboration of the admission made by the Director/partner of the appellant/assesses. In Hissar Pipes Pvt. Ltd.  2015 (317) ELT 136 (Tribunal-Delhi) examined the various case laws in a similar sets of circumstances. The Tribunal relying on the decision in Commissiioner Vs. Manoj Kumar Pani - 2010 (260) ELT 92 (Tribunal), Tejwal Dyestuff Industries - 2007 (216) ELT 310 (Tribunal) and Honble Delhi High Court in Dhingra Metal Works  2010-TIOL-693-HC-DEL-IT held that though confessional statement may be starting point of investigation, in the absence of other evidence indicating clandestine removal, the same cannot be made the sole basis for deciding against the assessee. Though the admission is extremely important peace of evidence, it cannot be said to be conclusive evidence. In Collector of Customs Vs. D. Bhoormul, the Honble Supreme Court held that the Department would have deemed to have discharged its burden if it adduces only so much evidence, circumstantial or direct, as is sufficient, to raise a presumption in its favour with regard to existence of the fact sought to be proved.

As mentioned earlier in the present case, inquiries started with the manufacture of sponge iron and certain private records were recovered from the pen drive, statements of the manufacturer recorded regarding various unaccounted clearances. These are third partys records and evidence, which require corroboration. In the present case, the corroboration said to have been made is the admission statement of the appellant/assesses. Revenue stopped investigation on recording statement. No further verification or evidence was sought to be recovered for the clandestine manufacture, first of M.S. Ingots and thereafter, from M.S. Ingots to M.S. Angles, etc. and thereafter, their unaccounted clearance to various buyers. No verification was made in the appellants manufacturing unit or in their records. The admission made by the Director or Partners of the appellant /assesses gives a strong indication of the clandestine activity of the appellant /assessee. However, that by itself cannot be a conclusive evidence especially, as the product on which duty is demanded is M.S. Angles and Channels, etc., which are made from M.S.

Ingots, which

are in turn made from purported clandestinely received sponge iron. The statements did not provide details of receipts with dates, manufacture or sale to identifiable buyers etc. It is essential to have some piece of corroboration for such a clandestine activity other than the sole evidence of general admission statement of the Director or /partner. The contents of the statement itself was contested and denied later.

8. In view of the above discussion and analysis as above, I find the confirmation of demand and imposition of penalties in these appeals are not sustainable. Accordingly, the appeals are allowed.

[Operative portion already pronounced in open court]

( B. Ravichandran )

Member (Technical)

Ckp.

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