Per : Shri T. Anjaneyulu, Member (Judicial)
1. Heard both sides. The appeals are filed by the assessee against the Order-in-Appeal dated 9.10.2002 which confirms the Order-in-Original relating to duty and imposition of penalty.
2. The brief facts of the case are that the appellants are engaged in the manufacture of Hot re-rolled products falling under Chapter 72 of CETA, 1985. With effect from 1.8.97 the goods manufactured by the appellants were chargeable to duty under Section 3-A of the Act based on the annual capacity of production. Prior to 1.8.97 the appellants was availing Modvat facility under Rule 57-A. The factory was taken over by the present management in the year 1992. M/s. Omco Enterprises is the proprietary concern of Mr. Omprakash Girdharilal Mundra who is also a partner in the appellants firm. M/s. Omco Enterprises are the traders in an Iron & Steel Products. M/s. Supreme Steel Industries is another trading firm of Mr. Manmohan O. Mundra who have their godown in M.I.D.C. in the factory of Supreme Plastic Industries. Apart from the sales made directly to other buyers the appellants also sales the goods to M/s. Omco Enterprises and M/s. Supreme Steel.
3. One rerolling mill is installed in appellants factory. The annual production capacity of which had been fixed as 5600 MTs. In the rerolling industry, the ratio of the raw material consumption and the yield of the final product are generally fixed. Electricity is the major force required to run a rerolling mill. The production of the appellants factory during the last three financial years prior to imposition of duty under Section 3A of the Act with corresponding electricity consumption and the raw material consumption was as under :- Year Electricity Raw Material Production in MTs Consumed in Consumed in MTs
------ --------------- ---------------------- ----------------------- 1995 96 987100 6048.055 5725.160 1996 97 858411 6065.300 5780.690 1997 98 816150 6274.480 6023.390
4. On 24.9.97 the officers of the Preventive Branch, Central Excise, Nagpur visited appellants factory. During the search, the officers recovered Xerox copies of eight invoices. On comparison of the details in the said Xerox copies with the triplicate copies of the invoices bearing same serial numbers it was revealed that there was difference as to the details thereof. The officers also recovered a slip of paper bearing Sl. No. 23 dated 23.9.97 which showed details of removal of two consignments of MS Angles totally weighing 20.005 MTs in two trucks. In the follow up action the officers visited the office of the Transporter namely M/s. Sainath Transport Corporation. The officers found there 7 lorry loading memos showing clearances of goods from appellants factory through M/s. Sainath Transport Corpn. But in respect of which corresponding Central Excise invoices were not found. Based on the above referred investigations, a show cause notice was issued to the appellants firm for demand of duty of Rs. 3,61,862/- on the goods allegedly removed without payment of duty. Penalty under Section 11AC and interest under Section 11AB was proposed to be imposed / recovered on the appellants. In the same show cause notice the two partners of the appellants firm namely Mr. Omprakash Mundra and Mr. Manmohan Mundra were impleaded as notices on whom penalty under Rule 173-Q (1) was proposed to be imposed.
5. The appellants filed reply to the show cause notice interalia raising the following contentions:-
i) That the Xerox copies of the eight invoices relied upon in the show cause notice were not recovered from the factory premises which was substantiated by withdrawal memo which showed interpolation of the entry at Sl. No. 1 were the last page no. 183 was struck off and instead page No. 191 was mentioned. The interpolation was done behind the back of the appellants. It was further contended that the Xerox copies source is showed obvious hampering the details which might have been done by some disgruntled employee and therefore those were not reliable documents. In addition it was submitted that all the eight Xerox copies showed the name of the consignee as M/s. Rajesh Steel Traders and M/s. Jamnadas & Co. and investigations carried out at their end did not reveal that the consignments shown to have been cleared under the eight Xerox copies of the invoices were not received by them. ii) With regard to the seven loading slips recovered from M/s. Sainath Transport Corporation, it was submitted that the transporter Mr. S.R. Deshmukh, Proprietor, on receiving a telephone used to issue loading slip in the name of the appellants firm notwithstanding the fact that the truck summoned from him were used in the other associated firms i.e. M/s. Supreme Steels and M/s. Omco Enterprises. iii) With regard to the slip No. 23 it was submitted that the said slip was of 23.9.97 when the appellants unit had come under Section 3A of the Act and therefore demand of duty to that extent was not maintainable.
6. The Additional Commissioner, Central Excise, Nagpur passed order in the matter confirming the demand of duty of Rs.3,19,495/- and imposing equal penalty under Section 11AC of the Act. He also imposed a redemption fine of Rs.2,00,000/- in lieu of confiscation of land, building, plant and machinery allegedly used in connection with the manufacture and clearances of the excisable goods without payment of duty.
7. The appellants filed an appeal before the Commissioner (Appeals), Central Excise, Bhopal against the Order-in-Original, and the same was rejected and confirmed the demand & imposition of penalty.
8. The ld. Counsel for the appellants submits that the lower authorities have not considered the basic contention with regard to interpolation of entries in the Xerox copies of the documents relied upon by the department for comparing the same with the triplicate copies of the invoices bearing same serial numbers despite the fact that several such discrepancies were highlighted by them to establish tampering of the copies of the documents; and discarded the plea of planting of the eight Xerox copies of the invoices as an after thought by referring to the statements of the assessee.
9. The ld. DR reiterates the findings of the lower authorities.
10. Considered the submissions made by both sides at length and perused the records. On comparison of relied upon Xerox copies of invoices with that of triplicate copies, it is clearly noticed that the tampering of the invoices had taken place and some alterations had been made on Photostat copies of invoices. The fact of existence of such Xerox copies without having more evidential value can not be made sole ground for drawing presumption of clandestine removal. The lower authorities relied upon solely on the statements of the partner and authorized signatory of the appellants to validate the allegation of clandestine clearance holding that they have accepted that they were maintaining parallel sets of invoices under rule 52A for effecting clandestine clearances of finished goods from their factory. The department had recorded the statements of the concerned persons on 24.9.1997 surprisingly in respect of 3 invoices only. This as per assumes significance when the allegation of clandestine removals being confirmed on the basis of such statements. Even these persons in their subsequent statements dated 25.9.1997 tersely made clear that they were utilizing a parallel set of blank pre-authenticated invoices for effecting clearance from their factory whenever the legitimate invoices were not properly made or needed some correction pointed. It thus implies that the appellants had made correction and issued such invoices for the same consignments; and rendered their retraction to earlier statements. Further I observe that in respect of duty liability of Rs.1,76,460/- for 7 consignments as mentioned in Annexure B, the reliance placed on the statement of third party which is impermissible in the light of the decision in Ureka Polymers Ltd. vs. CCE - 2001 (127) ELT 618. A show cause notice eventually alleged clandestine removal on the basis of statement of partner of the appellants. However, we noticed that nowhere such admission was made by the appellants, on the contrary the partner of the appellant in his statement dated 29.10.1999 apparently stated that they had not made clearances as shown in 7 loading memos from any of their firms or factory. Therefore no malafide could be attributed to these loading memos. The lower authorities failed to made definite observations for such allegation. Thus the entire exercises of investigation became nugatory and aimed to fasten undue duty liability on the appellants.
11. After giving careful consideration to the factual position as narrated above and the defence taken by the appellants, I find that there is no definite indication of clandestine removal of goods. There is nothing on record to corroborate and thus only statements cannot be made the basis for arriving at the enviable conclusion of clandestine removal. I find these evidences to be insufficient to allege unaccounted clearances to determine any demand of duty thereon. In view of the facts and circumstances as mentioned above, to my mind the duty demand ordered by the lower authorities is unsustainable and is liable to be set aside. Since the demand of duty cannot be determine, confiscation cannot be ordered and the penalty on all the appellants is also not required to be imposed.
12. Accordingly, in view of the facts and circumstances as mentioned above, the impugned order as it relates to the duty demand, confiscation and penalties imposed is unsustainable and is liable to be set aside. Appeals are allowed as indicated in above paragraphs. (Pronounced in Court on ) (T. Anjaneyulu) Member (Judicial)