Anil Choudhary ORDER
Anil Choudhary, Member (J)
1. The appellant, M/s. Alok Ispat Pvt. Ltd., situated at 134/D, O.P. Jindal Industrial Park, Punjipathra, Raigarh (C.G.) is engaged in the manufacture of M.S. Ingots, which are dutiable and is registered with the Department. The appellant has been making regular compliances.
2. The issue involved in this appeal is whether the respondent commissioner is justified in confirming demand of Rs. 6,54,599/- (including cess) on the alleged clandestine removal and clearance of 218.220 M.T. of M.S. Ingots, on the basis of third party records, being entry in the diary of M/s. Monu Steels (Proprietor, Shri S.K. Pansari), is a broker/commission agent, who facilitates sales and purchase of Iron and Steel Materials, and also in the records of M/s. Gopal Traders (Proprietor, Shri Gopal Krishna Agarwal) is another broker/commission agent, who facilitates purchase and sales of Iron and steel products. Further, equal amount of penalty was imposed under Section 11AC along with interest. Another proposed demand of Rs. 8,73,77,090/- was dropped on account of presumed suppressed production and clearance of 28696.017 MT of M.S. Ingots, on the basis of excess consumption of electricity. Further, penalty under Rule 26 of the erstwhile Central Excise Rules was also imposed on M/s. Monu Steels and Shri Naren Kumar Mishra, Director of the appellant company and also on M/s. Gopal Traders.
3. Ld. Counsel for the appellants submit that the entire case of the department is based upon the entries in the diary recovered from one Mr. S.K. Pansari (proprietor of M/s. Monu Steels), and also on the statement of the said Mr. S.K. Pansari, without their being any corroborative evidence.
4. The Ld. Authorised Representative appearing for the Department reiterated the findings in the impugned order. He also submitted that the ld. Commissioner in the impugned order has specifically recorded that Shri Naren Kumar Mishra, Director of M/s. Alok Ispat Pvt. Ltd. had acknowledged the clearance of 218.220 MTs of MS ingots in his deposition made under Section 14 of Central Excise Act and the same has not been retracted by him.
5. So far as the statement of Shri Naren Kumar Mishra is concerned, while going through the same, I found that he has nowhere acknowledged the clearances of 218.220 MTs of MS ingots. Rather he stated as under:-
"After seeing all the entries pertaining to my unit and satisfying myself I am affixing my signature on Annexure-A as a token of having seen and perused the same. I submit that we had not cleared/removed MS ingots through the said commission agent, without issue of sale invoices or without payment of Central Excise duty. No commission has been paid by us to the said M/s. Monu Steels Raipur."
6. The finding of the ld. Commissioner about the statement of Mr. Naren Kumar Mishra at para 6.1 of the impugned order is based upon the mis-interpretation of the following statement, wherein Shri Naren Kumar Mishra on 31.10.2009 stated as under;
"I have seen and gone through the relevant records/registered/diaries recovered by the Central Excise Officer on 15.01.2007 from the premises of M.s Monu Steels (Prop. Shri S.K. Pansari), Commission Agent, Raipur and after seeing the entries pertaining to my unit and satisfying myself that Annexure-A has been prepared on the basis of such entries I am affixing my signature on it, as a token of having seen and perused the same."
7. Therefore, apart from the third party statement, no other corroborative evidence has been produced by the Department.
8. The said show cause notice is mainly based upon the entries recorded in the dairy of third party i.e. one Sh. S.K. Pansari, Proprietor of M/s. Monu Steel. The entire case of the Revenue is based upon the records recovered from the said Sh. S.K. Pansari, Proprietor of M/s. Monu Steel.
9. The ld. Advocate for the Appellant submitted that merely on the basis of diary entry of third party without any corroborative evidence, the department is not justified in proceeding against the Appellant.
10. The ld. Authorised Representative for the Department submitted that on the basis of dairy entries of Sh. S.K. Pansari, Proprietor of M/s. Monu Steel, the department had initiated proceedings against some other manufacturers also i.e. M/s. Shri Shyam Ingots and Casting Pvt. Ltd. and M/s. Nutan Ispat & Power Pvt. Ltd., Raipur, and that as per their record, the appellant has received 438.360 MT of Sponge Iron from various manufacturers, which has not been recorded in the books of the appellants evidencing illicit receipt of raw materials viz. sponge iron by the appellant, without any invoices and without payment of duty and accepted their irregularity and admitted the duty liability. Therefore on the basis of the same dairy entry, the department is justified in proceedings against the appellants in the present matter.
11. Since some of the manufacturers, i.e. M/s. Shri Shyam Ingots and Casting Pvt. Ltd. and M/s. Nutan Ispat & Power Pvt. Ltd., Raipur, whose name was also found in the dairy recovered from Sh. S.K. Pansari, Proprietor of M/s. Monu Steel accepted the irregularities and admitted the duty liability, therefore, no corroboration was required in those cases. But in the present case, the appellant did not admit the liability and submitted that the Revenue has not adduced any corroborative evidence to show the movement of the goods from the premises of the appellant to the premises of any buyer(s) or the customers, nor they brought on record any evidence as to who are the buyers of the goods allegedly sold through M/s. Monu Steel.
12. The ld. Counsel for the appellant also submitted that if the department's contention is accepted, that there might be sale of clandestine removal of goods through M/s. Monu Steel, then the onus is on the department to make an enquiry, at least from some of those customers, who might have purchased such goods. However, no such enquiry has been made from any of those persons or the buyers of the goods allegedly sold through M/s. Monu Steel.
13. In the impugned order, nowhere it has been discussed as to how the demand of duty is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of the goods. The entire demand is based upon the records recovered from Sh. S.K. Pansari, Proprietor of M/s. Monu Steel. There is no evidence expect the said statement and private dairy entry of 3rd party i.e. of Sh. S.K. Pansari, which contains the name of the appellant.
14. The law as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence is well settled. Only on the basis of statement of third party no demand could be made. The Hon'ble High Court of Judicature at Allahabad in the matter of Continental Cement Company Vs. Union of India - MANU/UP/1995/2014 : 2014 (309) ELT 411 (All.) and also this Tribunal in the cases of Raipur Forging Pvt. Ltd. Vs. CCE, Raipur, MANU/CE/0141/2016 : 2016-(335) ELT 297 (Tri.-Del.), CCE & ST, Raipur Vs. P.D. Industries Pvt. Ltd.- MANU/CE/0936/2015 : 2016 (340) ELT 249 (Tri.-Del.) and CCE & ST, Ludhiana Vs. Anand Founders & Engineers- MANU/PH/3994/2015 : 2016 (331) ELT 340 (P&H) have categorically held that the findings of clandestine removal cannot be upheld based upon the third party documents unless there is clinching evidence of clandestine manufacture and removal of the goods.
15. In an identical matter this Tribunal vide its order dated 04.04.2018 in Appeals Nos. E/50526-50527/2018 - EX(SM) in the case of M/s. Shree Consultant Pvt. Ltd. set aside the demand, which was also made only on the basis of the entries made in the records of M/s. Monu Steel and held as under:-
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4. I find that the entire case of the Revenue is based upon the records recovered from M/s. Monu Steels. Even in those records, the appellant's name has not been spelt correctly and it is based upon the statement of the representative of M/s. Monu Steels that the Revenue entertained a view that "S. Iron" refers to the appellant's clearances. When the Director of the appellant contacted by Revenue, he very clearly in his statement recorded by the officers, deposed that he does not even know M/s. Monu Steels. Further, the Revenue has not made any enquiries from the buyer M/s. Sapna Steels and has solely relied upon the entries made in the record of M/s. Monu Steels.
5. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. Reference can be made to Hon'ble Allahabad High Court decision in the case of Continental Cement Company Vs. Union of India - MANU/UP/1995/2014 : 2014 (309) ELT 411 (All.) as also Tribunal's decision in the case of Raipur Forging Pvt. Ltd. Vs. CCE, Raipur-I- MANU/CE/0141/2016 : 2016 (335) ELT 297 (Tri. Del.), CCE&ST, Raipur vs. P.D. Industries Pvt. Ltd. -MANU/CE/0936/2015 : 2016 (340) ELT 249 (Tri. Del.) and CCE&ST, Ludhiana vs. Anand Founders & Engineers -MANU/PH/3994/2015 : 2016 (331) ELT 340 (P&H). It stand held in all these judgements that the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods.
In the absence of any corroborative evidence and in view of the law declared in the above decisions, I find no justifiable reasons to uphold the impugned orders. Accordingly, the same are set aside and both the appeals are allowed with consequential relief to the appellants."
Similarly this Tribunal in the matter of Excise Appeal No. E/50874/2018 -Ex [SM] - M/s. Ashok Ispat Udyog Vs. Comm. of C. Ex., CGST, Raipur & Excise Appeal No. E/50812/2018-Ex [SM] - M/s. Vijay Chand Bothra Vs. Comm. of C. Ex., CGST, Raipur set aside the demand since the same was based only upon the diary entries of Sh. S.K. Pansari, Proprietor of M/s. Monu Steel, without there being any corroborative evidence.
16. Recently also this Tribunal in a batch of matters being Appeal Nos. E/51117-51118/2018-SM and E/50940, 51236, 51241/2018 - Arora (CG) Energy & Steel P. Ltd., Vs. CCE & ST, Raipur vide common order dated 15.06.2018 and also in the case of Suryoday Steel Plant Pvt. Ltd. and ors - Appeals Nos. E/51420-51371/2018-EX(SM) dated 2.7.2018 vide Final Order No. 52409-52410/2018 set aside the demand since the entire case of the Revenue is based upon the entries made in the records of M/s. Monu Steel, without there being any corroborative evidence.
17. In view of the above discussion and finding, the appeal is allowed and the impugned order is set aside. As a result, the penalty imposed on Shri Naren Kumar Mishra, Director of the appellant is also set aside.
(Pronounced on 06.01.2022.)
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