Metal Gems Vs C.C.E. & S.T.-Daman (CESTAT Ahmedabad)
CESTAT Ahmedabad held that allegation of clandestine removals based upon the confessional statement of other persons or the documents recovered from the third party premises, without corroboration of the said documents is unsustainable
Facts-
M/s Metal Gems are engaged in the manufacture of Copper and Copper Alloy articles. On the basis of an intelligence that M/s Metal Gems are clearing the goods i.e. Copper wire/ Rod/ Pipe/tube without cover of the Central Excise invoices, without payment of Central Excise Duty and without accounting for the same, in their books of account, searches were conducted by the officers of DGCEI at the premises of M/s Metal Gems and M/s Moongipa Roadways Pvt. Ltd. and also seized several records and documents.
The documents recovered from M/s Moongipa Roadways Pvt. Ltd. were scrutinized and it appeared that they are engaged in the transportation of the consignment of Copper Pipes/ tubes/ coils from M/s Metal Gems, Daman. They have been showing the name of /details of the consignor and consignee when the goods are covered under proper central excise invoices and whenever the goods are not covered under proper invoices, they have been showing the consignment to have been booked in abbreviated form such as NKD, RKD, SMD, MKD, Lalitbhai, PD, KK, AE, etc. they have admitted that the consignment which have been transported by them under the abbreviated names have been received by them, for transportation, without the cover of any proper duty paying documents. They also admitted that persons of M/s Metal Gems have also been in continuous touch with the persons of the transporter for the purpose of transportation of their goods. On the basis of the investigation carried out at the transporters end and as per the statements of the persons/ directors of M/s Moongipa Roadways Pvt. Ltd., the investigation was extended to buyers of the goods, which were transported by M/s Moongipa Roadways Pvt. Ltd. by showing the names of the consignors/ consignees in abbreviated form and as self. The revenue calculated the duty demand on the basis of records/ register of transporter.
After completing the investigation,accordingly, the Show cause notice dtd. 31.03.2016 was issued which was culminated in the impugned adjudication order whereby the demand of Central Excise Duty along with interest and penalty was confirmed and a penalty under Rule 26 of Central Excise Rules, 2002 was also imposed on the Co-Noticees. Being aggrieved, Appellants filed these present appeals before the Tribunal.
Conclusion-
It is well settled law that clandestine removals cannot be arrived at based upon the confessional statement of other persons or the documents recovered from the third party premises, without corroboration of the said documents. The statements itself are not sufficient for holding so. No presumptions are available in respect of such documents unless they come from the proper custody and such documents raise serious doubts about their genuineness.
Similarly there is catena of judgments laying down that the inculpatory statements alone cannot be made the basis for arriving at a finding of clandestine removal.
Held that for establishing the fact of clandestine removal, there need to be sufficient evidence on record leading to conclusive proof of production of goods, their removal from the factory by any mode of transportation and clandestine clearance to the buyers. Mere doubts, howsoever strong cannot take the place of evidence required to be produced by the Revenue. The onus to establish such clandestine activities, resulting in confirmation of demand is placed heavily on the Revenue and is required to be discharged by production of sufficient evidences.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
All the present appeals are filed by the appellants against the Order-in-Original No. DMN-EXCUS-000-COM-45-18-19 dated 30.03.2019 passed by the Principal Commissioner, GST &Central Excise, Daman. These appeals arise from common order and investigations, hence we take up these appeals together for disposal.
1.1 The relevant facts of the case, in brief, as per records are that M/s Metal Gems are engaged in the manufacture of Copper and Copper Alloy articles. On the basis of an intelligence that M/s Metal Gems are clearing the goods i.e. Copper wire/ Rod/ Pipe/tube without cover of the Central Excise invoices, without payment of Central Excise Duty and without accounting for the same, in their books of account, searches were conducted by the officers of DGCEI at the premises of M/s Metal Gems and M/s Moongipa Roadways Pvt. Ltd. and also seized several records and documents. The officers recorded the statements of various persons including employees and partners of the Appellant and also the transporters, amongst others.
1.2 The documents recovered from M/s Moongipa Roadways Pvt. Ltd. were scrutinized and it appeared that they are engaged in the transportation of the consignment of Copper Pipes/ tubes/ coils from M/s Metal Gems, Daman. They have been showing the name of /details of the consignor and consignee when the goods are covered under proper central excise invoices and whenever the goods are not covered under proper invoices, they have been showing the consignment to have been booked in abbreviated form such as NKD, RKD, SMD, MKD, Lalitbhai, PD, KK, AE, etc. they have admitted that the consignment which have been transported by them under the abbreviated names have been received by them, for transportation, without the cover of any proper duty paying documents. They also admitted that persons of M/s Metal Gems have also been in continuous touch with the persons of the transporter for the purpose of transportation of their goods. On the basis of the investigation carried out at the transporters end and as per the statements of the persons/ directors of M/s Moongipa Roadways Pvt. Ltd., the investigation was extended to buyers of the goods, which were transported by M/s Moongipa Roadways Pvt. Ltd. by showing the names of the consignors/ consignees in abbreviated form and as self. The revenue calculated the duty demand on the basis of records/ register of transporter.After completing the investigation,accordingly, the Show cause notice dtd. 31.03.2016 was issued which was culminated in the impugned adjudication order whereby the demand of Central Excise Duty along with interest and penalty was confirmed and a penalty under Rule 26 of Central Excise Rules, 2002 was also imposed on the Co-Noticees. Being aggrieved, Appellants filed these present appeals before the Tribunal.
02. Shri Ankur Upadhyay, Learned Counsel appearing on behalf of the appellants submits that in the present matter it has been alleged that Appellant during the period April 2011 to November 2012 have clandestinely cleared 1126.193 MT. of finished goods without payment of duty to various buyers through M/s Moongipa Roadways (Transporter). The department arrived at the demand of Central Excise Duty against the Appellant solely on the basis of loading register maintained by the transporter. During the investigation carried out by the department at the factory and office premises of the Appellant nothing incriminating was found. Also not a single piece of evidence regarding unaccounted purchase of inputs in cash, suppression of production or clearances of manufactured goods was found at the premises of the Appellant. Further no excess electricity consumption was found and during the physical verification neither any excess or shortage of goods was found, hence all the charges of clandestine clearance of finished goods made against the Appellant without any corroborative evidence are baseless and are made on assumption & presumption basis, thus liable to be set aside.
2.1 He also submits that as per the loading register, details of parties to whom goods have been supplied is mentioned in abbreviated form under 63 code names, in respect of such code names no investigation has been done by the department apart from three parties, from whom nothing incrementing regarding the clandestine clearance of goods was found, therefore, in such circumstances demand of duty in respect of entire consignments allegedly cleared under 63 code names cannot be made against the Appellant. Shri Ramnivas Sharma, Manager in M/s Moongipa Roadways in his cross -examination in answer to question 14 stated that ‘code name’ mentioned by them was as per the instruction of Shri J.K. Yadav from their Mumbai office and in answer to question 15 he stated that they used to transport copper pipe for other parties as well as M/s R.R. Cables, M/s Salasar Copper, M/s Mandev Metals, M/s Parasmani, M/s Jalan etc., Most importantly in his answer to question 16 he mentioned that they used to transport goods for above parties in ‘code name’ only. Thus it is unambiguously clear that when details of various parties are mentioned in the loading register in code names than solely on the basis of loading register demand of clandestine clearance of goods cannot be made against Appellant. Hence demand is not sustainable on this ground alone.
2.2 He further submits that all the details related to third party which without any corroborated evidence are not reliable in the eyes of law. Therefore demand of duty is liable to be set aside. It is also evident that duty has also been calculated on the items which is not even manufactured by the Appellant such as Copper wires, rubber tubes, bath tubes, copper utensils, plastics goods thus duty cannot be demanded from the Appellant.
2.3 He also submits that impugned order has been passed in grave violation of principles of natural justice as the department has relied upon statement of 18 witnesses in the show cause notice in respect of which Appellant made various correspondences to the adjudicating authority for the cross examination of the said witnesses, however except four witnesses, cross examination of 14 witnesses was not allowed by the adjudicating authority. Therefore it is a settled law that statement of these 14 witnesses cannot be relied upon.
2.4 In support of above submission, heavy reliance has been placed by learned counsel for the appellant upon the judgments delivered in the following cases: –
