Case Law Details
Shyam Ingot & Castings Pvt. Ltd Vs Commissioner of Customs (CESTAT Delhi)
The CESTAT, New Delhi in the matter of M/s Shri Shyam Ingot & Castings Pvt. Ltd. v. Commissioner of Customs & Central Excise [Excise Appeal No. 52550 of 2019-SM dated August 08, 2022] held that there shall be consonance between the allegation levelled by the Revenue and the records presented against the taxpayer. Further held that the allegation cannot be justified in absence of any admission from the assessee against the alleged clandestine transaction. Moreover, third party records and statement by Director of the Company cannot be used against the assessee for non-joinder of the parties.
Facts:
On the basis of intelligence, preventive officers of the Headquarter, Central Excise, Raipur (“the Respondent”) conducted searches at the factories and office premises of one M/s Pankaj Ispat Limited, Raipur (“M/s PIL”) and seized several records/ documents. On scrutinising the records/documents, discrepancies were revealed besides other by M/s PIL on against purchase of 245.960 MT of MS ingot from M/s Shri Shyam Ingot & Castings Pvt. Ltd. (“the Appellant”) without payment of excise duty. Accordingly, a follow up enquiry was conducted against the Appellant under summons mode. On comparison of information contained in the seized records of M/s PIL with the information contained in the records produced by the Appellant revealed that, the aforesaid quantities of M.S. ingots had not been accounted for in the records of the appellant’s factory. The Appellant, denied to the allegation of clandestinely removing 245.960 MT of M.S. Ingots during the relevant period to M/s PIL without payment of duty of Rs. 9,95,239/- in contravention of the various provisions of the Central Excise Act, 1944.
Show cause notice (“SCN”) was issued to the appellant for the demand of central excise duty amounting to Rs.7,95,239/- along with interest and penalty under Section 11AC(1)(c) of the Central Excise Act. The demand proposed in the SCN was affirmed along with 100% penalty upon the Director of the Appellant vide Order-In-Original (“OIO”), under Rule 26 of the Central Excise Rules, 2002 (“the Central Excise Rules”)
The Appellant aggrieved by the OIO, filed an appeal before the Commissioner (Appeals) which was consequently dismissed, alleging that the Director of M/s PIL has accepted the receipt of inputs. Being aggrieved by the decision of the Commissioner (Appeals), the Appellant filed appeal before this Tribunal.
Issue:
Whether excise duty can be demanded for clandestine removal based on third party evidence?
Held:
The CESTAT, New Delhi in Excise Appeal No. 52550 of 2019-SM dated August 08, 2022 held as under:
- Held that, there is no corroboration of the allegation of the Respondent with the records of this appellant, nor there is any admission on the part of the Appellant against the clandestine transaction. Further, the third-party records are not in consonance corroborated and unsubstantiated, and the statement of the Director of M/s PIL cannot be used against the Appellant both for non-joinder of the parties and also failure on the part of the Respondent to examine Sh. Pankaj Agarwal as its witness in the adjudication proceedings.
- Allowed the appeal and set aside the OIO.
FULL TEXT OF THE CESTAT DELHI ORDER
The issue involved in this appeal is whether the appellant has been rightly imposed duty and penalty.
2. Brief facts of the case are that on the basis of specific information, preventive officers, of the Headquarter, Central Excise, Raipur had conducted searches at the factory and office premises of one M/s Pankaj Ispat Limited, Raipur (M/s PIL in short) and seized several records/ documents. The scrutiny of these records/documents revealed that besides other discrepancies during the period 2010-11 to 2011-12, M/s PIL had purchased total 245.960 MT of MS ingot from the appellant without payment of excise duty, and without cover of central excise invoices, which had also been admitted by Sh. Pankaj Agarwal, Director of M/s PIL, in his statements dated 19.09.2012 and 02.10.2012. Accordingly, a follow up enquiry was conducted against the appellant’s company under summons mode, and the relevant records were obtained from them. The comparison of information contained in the seized records of M/s PIL with the information contained in the records produced by the appellant revealed that, the aforesaid quantities of M.S. ingots had not been accounted for in the records of the appellant’s factory. Sh. Vijay Agarwal, Director of the appellant, in his statement dated 03.07.2015 denied to have clandestinely removed 245.960 MT of M.S. Ingots during the relevant period to M/s PIL without payment of duty of Rs. 9,95,239/- in contravention of the various provisions of Central Excise Act, 1944 and the rules made thereunder. Therefore, a show cause notice dated 08.07.2015 was issued to the appellant for the demand of central excise duty amounting to Rs.7,95,239/- alongwith interest under Section 11AA/11A(4) and 11AA/11AB respectively of the Central Excise Act, 1944 and for the imposition of penalty under Section 11AC(1)(c) of the said Act. The aforesaid show cause notice was adjudicated vide order-in-original, whereby the demand of central excise duty totally amounting to Rs.7,95,239/- alongwith interest, was confirmed and a penalty of equivalent amount was imposed on the appellant. The Adjudicating Authority had also imposed penalty of Rs.7,95,239/- on the Director of the appellant under Rule 26 of the Central Excise Rules, 2002.
3. Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals). The Commissioner (Appeals) was pleased to dismiss the appeal observing that the transaction under dispute has been found recorded in the seized private records of M/s PIL alongwith clearance of the consignment of M.S. Ingot purchased on payment of duty during the relevant period. This appellant had admitted the duty paid transaction recorded in the seized record but have denied the non-duty paid clearances to M/s PIL. It is further observed that the Director of M/s PIL Sh. Pankaj Agarwal has accepted the receipt of inputs – S. Ingot from this appellant both duty paid and non-duty paid. Accordingly, he upheld the order-in-original.
4. Being aggrieved, the appellant is before this Tribunal.
5. Learned Counsel for the appellant urges that the whole case of Revenue is based on third party record as well as statement of the Director of M/s PIL. Nothing wrong or untrue have been found in the affairs of this appellant. Further, the Director of the appellant Sh. Vijay Agarwal in his statement recorded by the Department under Section 14 had categorically denied of any clandestine transaction which M/s PIL. It is further urged that no reliance can be placed on third party record unless the same has been admitted by the appellant or corroborated with evidence found in the record of the appellant. So far the statement of Sh. Pankaj Agarwal, Director of M/s PIL is concerned, it has got no evidentiary value as Sh. Pankaj Agarwal have not been examined by the assessing officer in the adjudication proceeding. Thus, there is clear violation of the provision of Section 9D of the Act. Further, the show cause notice is bad for non joinder of parties – M/s PIL and its Director are essential in these proceedings, who has not been joined in the show cause notice. Thus, the whole proceedings are vitiated. It is accordingly prayed to set aside the impugned order. Reliance is placed on the following rulings:-
i) Manmeet Ispat Pvt. Ltd., vs., CCE, C&ST, Raipur 2019 (368) ELT 1101 (Tri. Del.)
ii) Sarthak Ispat Pvt. Ltd., vs. CCE F.O. No. 515464-51565/2019 (SM) dt. 23.10.2019
iii) Rooplaxmi Industries India Pvt. Ltd., vs. CCE O. No. 51591/2019(SM) dt. 30.10.2019
Wherein this Tribunal in similar facts and circumstances has allowed the appeal.
6. Learned Authorised Representative Ms. Tamanna Alam for the Revenue relies on the impugned order.
7. Having considered the rival contention, I find that there is no corroboration of the allegation of Revenue with the record of this appellant. Nor there is any admission of the alleged clandestine transaction on the part of the appellant. Further, the third party record are not corroborated and unsubstantiated. Further, such third party record and the statement of the Director of M/s PIL cannot be used against this appellant both for non joinder of the parties and also failure on the part of Revenue to examine Sh. Pankaj Agarwal as its witness in the adjudication proceedings.
8. In view of my finding and observations as above, I allow this appeal and set aside the impugned order. The appellant is entitled to consequential relief.
(Pronounced on 03.08.2022).
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