HC dimisses revenue appeal as there was nothing to show that the amount of cash seized represented clandestine sale of excisable goods

Commissioner Of Central Excise (CCE) vs M/S Patran Pipes (P) Ltd. – There is concurrent finding of fact recorded by the Commissioner and the Tribunal that there was nothing to show that the amount of cash seized represented clandestine sale of excisable goods.

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

C.E.A. No. 203 of 2010 (O&M) & other connected cases being CEA Nos.204, 207 and 208 of 2010

Date of decision: 21.2.2011

Commissioner of Central Excise.              —–Appellant.

Vs.

M/s Patran Pipes (P) Ltd.                 —–Respondent

CORAM:- HONORABLE MR. JUSTICE ADARSH KUMAR GOEL HONORABLE MR. JUSTICE AJAY KUMAR MITTAL

Present:- Mr. Kamal Sehgal,Sr. Standing Counsel for the appellant.

—

ADARSH KUMAR GOEL, J.

1. This order will dispose of CEA Nos.203, 204, 207 and 208 of 2010 as it is stated that all the appeals are inter- connected.

2. C.E.A. No.203 of 2010 has been preferred by the revenue under Section 35G of the Central Excise Act, 1944 (for short, “the Act”) against the order of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi dated 27.10.2009, Annexure A-6, raising following substantial questions of law:-

“Whether for any fraudulent or clandestine removal/transaction where the players hatch the conspiracy and execute well crafted modus operandi, car the exchequer be made to bear the loss of revenue especially when the modus operandi had been admitted by the accused persons?”

3. Show Cause Notice was issued to M/s Paradise Steel Rolling Mills asking it to explain as to why amount of Rs.1,45,000/- cash seized on account of sale proceeds of goods removed clandestinely and sold to the respondent without payment of central excise duty be not confiscated and penalty imposed. It was alleged that M/s Ashwani Manoj Kumar was procuring iron and steel bars from various steel rolling mills without any bills. During search on 29.11.2001, certain incriminatory records were held from Manohar Lal who had come to visit the premises of M/s Paradise Steel Rolling Mills. Unaccounted cash of Rs.1,45,000/- was also seized, which was on account of sale   proceeds of unaccounted sale of goods. Notice was also issued to the respondent M/s Patran Pipes Pvt. Ltd. to whom the goods were allegedly sold. After due consideration, the Deputy Commissioner, Central Excise passed Order-in-Original dated 30.7.2003 confiscating the seized cash amount and imposing penalty of Rs.30,000/- against M/s Paradise Steel Rolling Mills, Rs.25,000/- against M/s Patran  Pipes Pvt. Ltd. and Rs.20,000/- against M/s Ashwani Manoj Kumar. On appeal, the Order-in-Original was set aside with the following finding:-

” . I agree with the above contention of the appellants in as much as the Department has failed to produce any documents or Corroborating evidence to prove their claim that the said amount was the sale proceed of the goods cleared by M/s Paradise Steel Rolling Mills. Not only this, Mr. A.K. Gupta has ever taken the name of M/s Paradise Steel Rolling Mills in his statement and as such the grounds taken by the department are not legally sustainable. Moreover, there is no firm in the name and style of M/s Ashwani Manoj Kumar as alleged in the Show Cause Notice. Mr. Manoj Kumar and “Ashwani Kumar are independent identities and filing Income Tax return. No allegation has been leveled in the Show Cause notice for the recovery of the duty on the goods cleared by M/s Paradise Steel Rolling Mills and no evidence has been collected in this regard to prove that such goods were cleared by them from their factory. The charges, therefore, seem to be leveled only on presumption and assumption. The penalty in the Show Cause Notice on the Appellants No.2 i.e. M/s Patran Pipes Pvt. Ltd., Patran has been proposed under Rule 25 but the same has been confirmed under Rule 26 of the Central Excise Rules, 1944, which is not legally correct. The Order- in-Original therefore, being not legal, proper and correct, is set aside.”

4. On appeal of the revenue, the matter was remanded to the Commissioner, on which the earlier order was reiterated and in second round of appeal of the revenue, the view taken by the appellate authority was upheld. It was held:-

“7. There is no doubt that questionable conduct of M/s Paradise Steel has been brought to record. But, when Sh. Naresh Joshi, partner of M/s Paradise Steel was examined on 07.01.2002, there was no question put to him as to whether any sum was due to M/s Paradise Steel Rolling Mills from M/s Patran Pipes and whether any sum was recoverable through Sh. Ashwani Kumar and Manoj Kumar. Similarly there was no question on the sum of Rs.1,45,000/- seized from the premises of Sh. Ashwani Kumar and Sh. Manoj Kumar. There is no statement at all recorded from Sh. Manoj Kumar nor from M/s Patran Pipes to bring a live link about the deal of goods whether flowing from M/s Paradise Steel. Record does not reveal whether this amount of Rs.1,45,000/- was due from M/s Patran Pipes prior to date of the seizure of the cash i.e. 29.11.2001. There is no contrary evidence of Revenue against sources of Rs.1,45,000/- explained by M/s Ashwani and Manoj Kumar brought out in adjudication. Invoices if any issued by M/s Paradise Steel in favour of M/s Patran Pipes showing sale of goods, if any, made by the former to the later are not in record. Of course, sale without invoices have been brought to record while controversy is on the recovery of cash of Rs.1,45,000/- from a third party. Cogent evidence showing that goods manufactured were not recorded in the books of M/s Paradise Steel have escaped payment of duty by clandestine removal has not come to record except mere suspicious and assumptions. Seizure of Rs.1,45,000/- being the only cause for the proceeding, in absence of evidence showing the seized money has direct nexus with clandestine removal there cannot be any assumption, presumption, surmise or suspicion to hold against the appellants since suspicion is not substitute of proof. When Sh. Naresh Joshi was never put to question as to the deal between M/s Patran Pipes and M/s Paradise Steel, nor also as to seizure of Rs.1,45,000/- nothing can be said that such sum was due to M/s Paradise Steel from M/s Ashwani and Manoj Kumar. There cannot be any presumption or suspicion for an arbitrarily taxation without any cogent evidence being brought on record. Finding and decision of the Ld. Commissioner (Appeals) can only impeachable if the same is perverse or contrary to law. But no cogent evidence has been brought out by Revenue to reverse his decision. Accordingly, Revenue’s Appeal has no legs to stand. While holding so the reasoning given by the Ld. Commissioner (Appeals) is not approved. He has baldly stated that cross examination did not establish the case of Revenue. It may be stated that cross-examination has demolished the case of Revenue but preponderance of probability was in favor of the Revenue. However, no cogent evidence having been brought to record to suggest deal of all the three parties with intimate connection or nexus of each other. This proves that the proceeding has been ill founded. Therefore, the adjudication is unsustainable in the eyes of law for which Revenue’s appeals are dismissed.”

5. We have heard learned counsel for the appellant.

6. A perusal of impugned orders shows that there is concurrent finding of fact recorded by the Commissioner and the  Tribunal that there was nothing to show that the amount of cash seized represented clandestine sale of excisable goods. The said finding is not shown in any manner to be perverse.

7. No substantial question of law arises.

The appeals are dismissed.

A photocopy of this order be placed on the file of each connected case.

February 21, 2011