Sita Cement Ltd v. Commr. Of C. Ex. & Cus

Archana Wadhwa, Member (J)

1. Both the appeals are being disposed of by a common order as they are directed towards the same impugned order of the Commissioner of Central Excise & Customs, BBSR vide which he has confirmed the duty of Rs. 40,73,466/- (Rupees forty lakhs seventy three thousand four hundred sixty six only) against M/s. Sita Cement Ltd. along with imposition of personal penalty of an identical amount under the provisions of Section 11AC of the Central Excise Act, 1944. In addition, interest as applicable in terms of Section 11AB has also been ordered to be recovered. Personal penalty of Rs. 1,00,000/- (Rupees one lakh only) has been imposed on Shri Suresh Joshi, Managing Director of M/s. Sita Cement Ltd. under the provisions of Rule 209A of Central Excise Rules, 1944.

2. The appellants are engaged in the manufacture of cement falling under Chapter 25 of the First Schedule to the Central Excise Tariff Act, 1985. The officers of Central Preventive Unit, Central Excise & Customs of Bhu-baneswar-II Commissionerate during the course of road patrolling intercepted three trucks on 25-8-99 at about 15.20 hours. On demand the driver of the said trucks produced duplicate copies of three challans dated 25-8-99 in respect of 10 MT of Sita brand cement loaded in each of the above trucks. The said invoices showed the PLA debit entry numbers thereby giving the impression that the duty has been paid by the manufacturer from the PLA. However, the officers in order to cross-check the duty particulars visited the appellants factory. Another truck loaded with cement was found standing outside the factory premises. The challans meant for the goods loaded in the said truck, were shown to the officers. However, another truck which was also found loaded and standing out side the factory premises was not accompanied by any duty paying documents. The officers on entering the factory premises took over the PLA and RG 23A Pt. II records. On verification, it was found that PLA was maintained up to 27-7-99 and there was a balance of Rs. 2806/- only. Similarly, the entries of RG 23A Pt. II were completed only up to 24-7-99 with a balance of Rs. 1258/-. As such it became evident that the documents produced by the drivers of the trucks intercepted on the way and all the trucks standing outside the factory premises showing the duty payment particulars were fake inasmuch as no such entries were made either in the PLA or in RG 23A Pt. II register. As a result of such verification, the three trucks intercepted on the road were brought back to the factory and the same were seized along with cement loaded in the said total five trucks.

3. As a result of post seizure search of the factory undertaken by the Preventive Officer, it was found that the appellant is maintaining two sets of challan books. One set of challan book was containing the original and duplicate copy of the invoices and the second set of challan book was having triplicate and quadruplicate copy of the invoices. The same were recovered from the office almirah. It was informed by the appellants Representative person at the time of search and seizure that he was not looking after Central Excise matters and the person dealing with the same had fled away at the arrival of the Preventive Officers. The Officers seized the recovered challan books along with PLA and RG 23A Pt. II records and the other relevant documents.

4. Stock verification of the cement packed in bags was also conducted on 26-8-99 in the presence of the appellants representative and the Managing Director and shortage of 17794 bags was detected. It was also noticed that RG I register was written up to 31-7-99 only.

5. During the post seizure investigation, certain more records were also seized on 3-9-99 and subsequently some of them were submitted by the appellant himself. Scrutiny of these records revealed that the appellant was maintaining two sets of invoice books throughout the period in question. The first set of invoice book contained the original and duplicate copy of the invoice whereas the second set of invoice was having triplicate and quadruplicate copies. It was admitted by the appellants representative as also by the Managing Director in his statement recorded on various dates that two sets were being maintained by them. The first set showed the Sl. No. of the invoice, for example, like 151 to 500 whereas the second set was having Sl. No. as 000151 to 000500. Some of the original/duplicate copies of the challans were not found and the appellants were directed to produce the same but as recorded in the impugned order it is seen that the appellants avoided to produce the same by submitting that they were not readily available in their office. However, the Commercial Manager, Shri J. Dutta in his statement recorded before the officers admitted that those documents have been destroyed by their Head Office. Shri Joshi, another Representative of the appellants in his statement admitted the maintenance of two sets of book but reasoned that the same were used due to delay in getting books from the printing press and it was done to match the Serial Numbers.

6. The appellants immediately admitted that the duty have not been paid by them in respect of clearances effected on five trucks intercepted by the Preventive Officer en route and standing outside their factory. They also admitted that the challan numbers 501 to 1117 issued during the period 29-5-99 to 25-8-99, though reflected duty payment particulars but in fact no such duty has been paid by them. As such, they agreed to pay amount of duty of Rs. 9,76,880/- (Rupees nine lakhs seventy six thousand eight hundred eighty only) in respect of such challans.

7. Based upon the above facts, the appellants were issued a show-cause notice alleging clandestine removal of the goods. Accordingly, the notice proposed confirmation of demand of duty as also imposition of personal penalties upon the various persons. As such, the show cause notice culminated into the impugned order passed by the Commissioner.

8. We have heard Shri S.K. Bagaria, ld. Advocate for the appellants and Shri A.K. Pandit, ld. JDR for the Revenue.

9. The demand in question relates to four separate Annexures being Annexures "A", "B", "C" & "D" attached to the show cause notice. As regards Annexure "A" to the notice, the total amount of duty confirmed by the Commissioner is to the extent of Rs. 9,76,880/- (Rupees nine lakh seventy six thousand eight hundred eighty only). It is also noted that the appellants are not disputing the said duty liability except to the extent of Rs. 18,000/- (Rupees eighteen thousand only). It has been argued that in respect of Sl. No. 218, duty on 10 MT was erroneously mentioned as Rs. 20,000/- (Rupees twenty thousand only) in place of Rs. 2,000/- (Rupees two thousand only). As such, it has been contended that there was a mistake of about of Rs. 18,000/- (Rupees eighteen thousand only) and the amount payable comes to Rs. 9,58,880/- (Rupees nine lakh fifty eight thousand eight hundred eighty only). The appellant has already deposited the said amount and is also not in disputing the same. Accordingly, we confirm the same. As regards Rs. 18,000/- (Rupees eighteen thousand only) the Commissioner will verify the said mistake and if found to be correct, he will reduce the total duty confirmed by him by that extent.

10. As regards Annexures "B" & "C" to the show-cause notice, the same relate to duty quantum of Rs. 7,66,070/- (Rupees seven lakh sixty six thousand seventy only) and Rs. 18,57,984/- (Rupees eighteen lakh fifty seven thousand nine hundred eighty four only). Annexure "B" relates to Challan Nos. 1 to 500 issued during the period 1-4-99 to 29-5-99 and Annexure "C" relates to Challan Nos. 1 to 1075 for the period 1998 to 1999. The said demand of duty has been confirmed by the adjudicating authority on the ground that admittedly the appellants were maintaining two sets of invoices for clearance of the dutiable items and the entries of duty payment particulars reflected in the first set of invoices have been admitted to be false. As such, the adjudicating authority has concluded that the appellants have cleared the goods two times whereas they have paid duty only once. Shri Bagaria, Id. Advocate appears before us, admits that the appellants have, during the relevant period, maintained two sets of challan books. He, further, explains that the appellant was going through a very bad financial period. As such, they were clearing the goods from their factory by showing fake debit PLA entries. Subsequently, whenever they were having the finances, they used to prepare another set of identical invoices from the duplicate challan book and pay the duty giving the correct number of debit entries made in PLA. On a query from the Bench, he clarifies that the triplicate and quadruplicate copy of the invoices from the first set of book and the original and the duplicate copy of the invoices, from the second set of book was being destroyed by them. He however could not explain as to how the original copy of the invoices, which is supposed to accompany the original and duplicate copy of the invoices, which is meant for customer and the transporter, were being retained by the appellants. In any case, it is the appellants contention that the particulars in the first set of invoice book and in the second set of invoice book are identical, thus leading to conclusion that the clearances have been effected only once but due to financial problem being faced by the appellants, they have adopted this peculiar method of issuance of invoices from two sets of invoice books, However, we find no merits in the above contention of the ld. advocate and the assessee is required to pay duty at the time of clearance of the excisable goods from his factory and make the debit numbers in the said invoices. The appellants have been admittedly reflecting the debit particulars in the invoices being issued by them from their first set of invoice book but not actually making the debit entries. Not only that, they were also destroying the triplicate and quadruplicate copies of the invoices from the said challan books and were retaining the original and duplicate in their office which were otherwise meant for customer and the transporter. After about a few days, the second set of invoices were being prepared by them showing the same quantum of clearances to the same manufacturer and reflecting the PLA debit numbers. Such debit entries find placed in the statutory records. As such, modus operandi, adopted by the appellants clearly establishes mala fides on their part and the clearance of the cement under the two different set of invoices - once on payment of duty and at other time without payment of duty. The appellants have tried hard to rebut the findings of the adjudicating authority about the clandestine removal of the goods by referring to the precedent decision of the Tribunal laying down that the Department is required to prove its case beyond doubt. It has been urged before us that there are no findings by the Department as to how and from where they have procured the raw materials and there is no other corroborating evidences. However, we find that the cases of clandestine removal are required to be adjudged from the facts and circumstances of each and every case. The appellants raw material was clinker, which they were buying from outside as also were manufacturing themselves. Understandably, if an assessee is indulging into activities of the clandestine removal, he will take care and precaution not to reflect the procurement of raw-materials in their statutory records which raw materials were to be used by them in the manufacture of final product to be cleared from payment of duty. In most of the cases referred to (reported in 29 RLT 183, 31 RLT 324 & 32 RLT 845) by the ld. Advocate, we find that the allegations of the clandestine removal were either based upon the entries made in the private note book of Honorary Workers with the firm or the entries made in note book of the driver, or the private book maintained by the labourers etc. It was in these circumstances, the Tribunal observed that there was no sufficient materials on record to establish the allegations of the clandestine removal and the Department should have conducted further verification and investigation to establish the non-accounted production. No doubt the charge of clandestine removal is a serious charge and is required to be proved by the Revenue and cannot be discharged by raising assumption and presumption. What is relevant is the degree of such proof in each and every case. The department cannot be accepted to discharge the said onus by mathematical precision. In the instant case, the Revenue having caught the appellants, red-handed while clearing the goods by reflecting fake and false particulars about the payment of duty and having recovered the records maintained by them in the shape of two sets of invoice book, can be said to have discharged the burden placed upon them. Burden in such circumstances gets shifted to the assessee which is now required to prove his bona fides beyond doubt. The explanation coming from the appellants cannot be accepted as already discussed. Similarly, the argument advanced by the ld. Advocate that they have placed on record the records maintained by them which only reflected clearance once has to be rejected inasmuch as no assessee would keep records of his clandestine activities and the absence of the same either from the statutory records or from the private records maintained by him in the ordinary course of his business would not advance the appellants case.

11. It is also seen from the impugned order of the Commissioner that he has referred to some of the invoices which showed different destination and different truck numbers in the original/duplicate and in the triplicate/quadruplicate invoices. The appellants have, by referring to such invoice, tried to give explanation for the different truck numbers etc. by submitting that that was on account of human error. Similarly, the different PLA entry no. in some of the seized invoices, have also been accepted on account of human error. We are afraid that the above explanation now being tendered by the appellants, does not advance its case in any manner but only acts contrary to their interest. As such, we are of the view that the duty as confirmed in the impugned order relatable to Annexure "B" & "C" of the show-cause notice is sustainable. We order accordingly.

12. As regards Annexure "D" to the show-cause notice raising demand of duty of Rs. 4,72,532/- (Rupees four lakh seventy two thousand five hundred thirty two only) and relatable to Challan Numbers 201 to 1232 for the period 1997 to 1998, it is seen that all the four copies of the Challans were being prepared simultaneously. While original and duplicate copies showed the duty payment particulars, no duty was being paid at the time of removal of the goods but was being paid subsequently and was being entered in triplicate and quadruplicate copies and the particulars of debit was being shown in the copies. The appellants contention is that no two sets were being maintained by them during the said period and it is only that the duty paying particulars were being entered in the third and fourth copy after about one or two days of the clearance of the goods. Though we find that such a procedure adopted by the appellants on its own is not in accordance with law under the provisions of Central Excise Law, but we find that as in contrast to the earlier two Annexures, there was no duplicate set of invoices recovered from the appellants premises. The allegations are only based upon the fact that the duty was not being debited as shown in the original and duplicate copy but the same was being debited subsequently and reflected in the triplicate and quadruplicate copies of the invoices. This act on the part of the appellants though may attract some penal action but will not lead to the conclusion that the appellants have cleared the goods two times. As such, we extend the benefit of doubt to the appellants in respect of duty demand of Rs. 4,72,532/- (Rupees four lakh seventy two thousand five hundred thirty two only) covered by Annexure "D" to the show-cause notice.

13. As regards the personal penalty upon the appellants, in view of our findings above, the same is imposable upon the appellants. However, in view of the facts and circumstances of the case and in view of the fact that the benefit of about of Rs. 5 lakh (Rupees five lakh only) has also been extended to the appellants in respect of duty demand, we reduce the personal penalty from Rs. 40,73,466.00 (Rupees forty lakh seventy three thousand four hundred sixty six only) to Rs. 25 lakh (Rupees twenty five lakh only). However, we find no justification in interfering in the penalty of Rs. 1 lakh (Rupees one lakh only) imposed upon Shri Suresh Joshi, Managing Director of M/s. Sita Cement Ltd. under the provisions of Rule 209A of the Rules inasmuch as all the activities, as discussed by the Commissioner, were being carried out by the manufacturer with due knowledge and consent of the Managing Director. Appeals are disposed of in the above manner.