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Sairam Steel Pvt. Ltd V/S C.C.E., & S.T., Raipur


Company & Directors' Information:- C P S STEEL INDIA PRIVATE LIMITED [Active] CIN = U27104TZ2003PTC010552

Company & Directors' Information:- K V M STEEL PRIVATE LIMITED [Active] CIN = U29141DL1988PTC031248

Company & Directors' Information:- K STEEL PRIVATE LIMITED [Strike Off] CIN = U27104JH1973PTC000998

Company & Directors' Information:- M M STEEL PRIVATE LIMITED [Active] CIN = U27107MH2001PTC131270

Company & Directors' Information:- B L STEEL PVT LTD [Active] CIN = U51909WB1981PTC034021

Company & Directors' Information:- R K G STEEL PRIVATE LIMITED [Active] CIN = U27109DL2004PTC128852

Company & Directors' Information:- V B STEEL PRIVATE LIMITED [Active] CIN = U28112MH2010PTC211691

Company & Directors' Information:- I B STEEL COMPANY PRIVATE LIMITED [Strike Off] CIN = U28910MH2010PTC211344

Company & Directors' Information:- Y D STEEL PRIVATE LIMITED [Strike Off] CIN = U27109WB1997PTC086155

Company & Directors' Information:- J S C STEEL PRIVATE LIMITED [Active] CIN = U27106UP2013PTC061568

Company & Directors' Information:- C P STEEL PRIVATE LIMITED [Active] CIN = U27100WB2008PTC127447

Company & Directors' Information:- A. K. J. STEEL PRIVATE LIMITED [Active] CIN = U28112WB2010PTC144880

Company & Directors' Information:- C D STEEL PVT LTD [Under Liquidation] CIN = U27109WB1981PTC034340

Company & Directors' Information:- T M S STEEL PRIVATE LIMITED [Strike Off] CIN = U02710TZ1996PTC007498

Company & Directors' Information:- P M R STEEL PRIVATE LIMITED [Active] CIN = U51102DL2003PTC122675

Company & Directors' Information:- C T STEEL PVT LTD [Active] CIN = U27109WB2005PTC106634

Company & Directors' Information:- J S STEEL PRIVATE LIMITED [Active] CIN = U52190CT1978PTC001432

Company & Directors' Information:- E & G STEEL INDIA PRIVATE LIMITED [Strike Off] CIN = U28113PN2009PTC134643

Company & Directors' Information:- L N STEEL PRIVATE LIMITED [Active] CIN = U27310WB2007PTC118206

Company & Directors' Information:- K. D. W. STEEL PRIVATE LIMITED [Active] CIN = U28910UP2011PTC043976

Company & Directors' Information:- C K STEEL PVT LTD [Active] CIN = U29150WB1975PTC030259

Company & Directors' Information:- A M Q STEEL PRIVATE LIMITED [Strike Off] CIN = U27310UP2012PTC053823

Company & Directors' Information:- K STEEL & COMPANY PVT LTD [Strike Off] CIN = U51909WB1991PTC053960

Company & Directors' Information:- R C STEEL PVT LTD [Strike Off] CIN = U28112AS1980PTC001811

Company & Directors' Information:- P D STEEL PRIVATE LIMITED [Strike Off] CIN = U74899DL1989PTC038426

Company & Directors' Information:- A K STEEL PVT LTD [Strike Off] CIN = U99999DL1961PTC003566

Company & Directors' Information:- D H STEEL PRIVATE LIMITED [Strike Off] CIN = U27109RJ2012PTC039742

Company & Directors' Information:- N. V. STEEL PRIVATE LIMITED [Strike Off] CIN = U27310DL2009PTC186541

Company & Directors' Information:- STEEL INDIA PRIVATE LIMITED [Strike Off] CIN = U00349KA1958PTC001309

Company & Directors' Information:- STEEL CO PVT LTD [Strike Off] CIN = U51109WB1947PTC015981

    Excise Appeal Nos. E/50807 and 50848/2018-Ex [SM] [Arising out of Common Order-in-Original No. RPR/EXCUS/000/COM/CEX/096-097/2017 dated 28.12.2017 passed by the Commissioner, Customs, Central Excise & Service Tax, Raipur] and Final Order Nos. 52329-52330/2018

    Decided On, 28 June 2018

    At, Customs Excise Service Tax Appellate Tribunal New Delhi

    By, THE HONORABLE JUSTICE: AJAY SHARMA
    By, MEMBER

    For Petitioner: M. Saharan, Advocate And For Respondents: K. Poddar, DR.



Judgment Text


1. These are cases of clandestine removal of M.S. Ingots. Since the duties and imposition of penalties are based upon the same evidences leading to the conclusion of clandestine removal therefore both the appeals are being disposed of by this common order.

2. The question involved in these appeals is whether the Principal Commissioner vide its impugned order dated 28.12.2017 is justified in confirming the demand of Central Excise duty of Rs. 4,65,570/- along with interest and penalty in respect of clandestine removal of 154.580 mt of M.S. Ingots recovered from the appellant M/s. Sairam Steels Pvt. Ltd., Raigarh (CG) of which the appellant-Pawan Kumar Agarwal is Director.

3. I have Heard both the parties and perused the records. Two show cause notices were issued to the Appellants. In the First show cause notice the Appellants were asked to show cases as to why:-

(i) Central Excise duty amounting to Rs. 4,65,570/- (BED Rs. 4,546,44/- (+) Ed. Cess Rs. 9,129/- (as detailed in Annexure-A) on the suppressed production of 154.580 MT of M.S. Ingots which has been clandestinely removed without issue of Central Excise Invoice and without and without following Central Excise procedure should not be recovered from them under the provision of Section 11 A of Central Excise Act, 1944.

(ii) Interest should not be recovered from them under the Section 11AB of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004.

(iii) Mandatory penalty equal to amount of duty should not be imposed upon the Noticee under the provisions of Section 11 AC of the Central Excise Act, 1944 for indulging in suppression of production and clandestine removal of goods without payment of duty.

(iv) Penalty should not be imposed upon them under the provisions of Rule 25 of Central Excise Rules, 2002 for contravention of Rule 4, 6, 8, 10 and 11 of Central Excise Rules.

Therefore another show cause notice dated 14.06.2010 was issued to the appellants as to why:-

(i) Central Excise duty amounting to Rs. 6,38,05,258/- (BED Rs. 6,20,45,307/- (+) Ed. Cess Rs. 12,40,906/- & SHE Cess Rs. 5,19,045/- (as detailed above) on the suppressed production and clandestinely removed 20745.926 MTs of M.S. Ingots during the period 2006-07 (form June 2006) to 2009-10 (up to September 2009), without issue of Central Excise Invoice and without following Central Excise Procedure, should not be recovered from them invoking the provisions of extended period of 5 years under the provisions of Section 11 A of Central Excise Act, 1944.

(ii) Interest should not be recovered from them under the Section 11 AB of the Central Excise Act, 1944.

(iii) Mandatory penalty equal to amount of duty should not be imposed upon the Noticee No. I under the provisions of Section 11 AC of the Central Excise Act, 1944 for indulging in suppression of production and clandestine removal of goods without payment of duty.

(iv) Penalty should not be imposed upon them under the provisions of Rule 25 of Central Excise Rules, 2002 for contravention of Rule 4, 6, 8, 10 and 11 of Central Excise Rules.

4. In the 2nd show cause notice dated 14.06.2010, at the end of paragraph 8.7 (after Chart 'B') it has been specifically mentioned that "the Central Excise duty involved in the suppressed production and clandestine removals of 154.580 MT M.S. Ingots as detailed in Annexure-A involving Central Excise duty amounting to Rs. 4,65,570/- BED Rs. 4,56,441/- (+) Ed. Cess Rs. 9,129/-) removed during the year 2006-07 by Noticee No. 1, through Noticee No. 2 as recorded in the diaries recovered from M/s. Monu Steels, Raipur, prop Shri. S.K. Pansari, by the officers of Central Excise on 15.01.2007 as discussed in the foregoing paras [as detailed in Annexure-A], is included/involved in the total Central Excise duty evaded by Noticee No. 1 during 2006-07 worked above." Meaning thereby that the Central Excise duty amounting to Rs. 6,38,05,258/- (for production of 20745.926 MT of M.S. Ingots) is inclusive of Central Excise duty of Rs. 4,65,570/- (for production of 154.580 MT of M.S. Ingots).

5. The said show cause notices are 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. At the time of adjudication before the ld. Principal Commissioner, Sh. S.K Pansari proprietor of Monu Steel did not appear for cross-examination in any of the scheduled dates despite various opportunities given and the same has been recorded in the impugned order. From reading of the show cause notice dated 14.06.2010 it is clear that the appellant with intent to evade payment of duty suppressed reproduction of M.S. Ingots so manufactured out of such sponge iron and clandestinely removed 20745.926 MTs (including the quantity of 154.580 MT of M.S Ingots manufactured and cleared clandestine by the appellant in 2006-07) without issue of invoices and without payment of duty as recorded in the dairies of M/s. Monu Steel prop. Sh. S.K. Pansari. Therefore it is cleared that the Central Excise Duty amounting to Rs. 6,38,05,258/- is inclusive of the duty of Rs. 4,65,570/- in respect of clandestine removal of 154.580 MT of M.S. Ingots.

6. In the said show cause notice the total demand of Central Excise duty raised was amounting to Rs. 6,38,05,258/- on the suppressed production and clandestine removal of 20745.926 MTs of M.S Ingots during the period 2006-07 (June 2006) to 2009-10 (Sept. 2009). But the ld. Principal Commissioner vide impugned order dated 28.12.2017 although dropped the demand of Central Excise duty of Rs. 6,38,05,258/- being not sustainable for alleged suppressed production of 20745.926 MTs of M.S Ingots by the appellant, but still confirmed the demand of Central Excise duty of Rs. 4,65,570/- in respect of clandestine removal of 154.580 MTs of M.S Ingots.

7. 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. The ld. AR 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 manufacturer also i.e. M/s. Sh. Shyam Ingot and Casting Pvt. Ltd. and M/s. Nutan Ispat & Power Pvt. Ltd., Raipur and that day they accepted their irregularity and admitted the duty liability and therefore on the basis of the same dairy entry the department is justified in proceedings against the appellants in the present matter.

8. Since some of the manufactures i.e. M/s. Sh. Shyam Ingot and Casting Pvt. Ltd. and M/s. Nutan Ispat & Power Pvt. Ltd., Raipur, whose names were also found in the dairy recovered from Sh. S.K. Pansari proprietor of M/s. Monu Steel, accepted their 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 the same is recorded in para 6.6 of show cause notice dated 25.11.2009:

"6.6. Shri Pawan Kumar Agarwal was also made aware of the fact that in the diary of Shri. S.K. Pansari the names of several Steel manufacturers have been mentioned and that some of the manufactures have accepted these transactions as genuine and have discharged their duty liability, establishing thereby the authenticity of the of diary contents/entries.

In spite of such clear evidences of the authenticity of diaries of Noticee No. 2 indicating therein transaction pertaining to Noticee No. 1, Shri Pawan Kumar Agarwal, emphatically refuted to have had any transaction with either of them and also expressed his unawareness as to why Noticee No. 1's name appear in such diaries."

Para 6.2 of show cause notice dated 14.06.2010 also stated as under:

"6.2. x x x In reply Shri Pawan Kumar Agarwal, deposed that they had no transactions with or through the said M/s. Monu Steel (Prop. Shri S.K. Pansari), Raipur and that they had never paid commission to the said trader.

To the specific query as to why their units name figure in the list of units recorded in the documents/records recovered from M/s. Monu Steel (Prop. Shri S.K. Pansari), Raipur, Shri Pawan Kumar Agarwal submitted that he has no idea as to how their name features in the diaries and that this aspect can very well be explained by Shri. S.K. Pansari himself."

9. The ld. Advocate for the Appellant further 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 buyers or the customers nor they brought on record any evidence as to whose is buyers of the goods allegedly sold through M/s. Monu Steel. The ld. Counsel for the appellant also submitted that if the department's contention is accepted that their might be sale of clandestine removal of goods through M./s. Monu Steel, then the onus is on the department to make an enquiry from at least some of those customers who might have purchased such goods. However, no such enquiry has been made from any of those persons.

10. In the impugned order nowhere it has been discussed as to how the demand to duty of Rs. 4,65,570/- is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of the goods and also in view of the fact that the said amount is already included in the duty demand of Rs. 6,38,05,258/- which has been dropped in the impugned order by the ld. Principal Commissioner. There is absolutely no evidence on record to show that the appellant has cleared 154.580 MT of M.S. Ingots. 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 of 3rd party i.e. of Sh. S.K. Pansari which contains the name of the appellant.

11. 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 on 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 v. Union of India : 2014 (309) ELT 411 (All.) and also this Tribunal in the cases of Raipur Forging Pvt. Ltd. Bs. CCE, Raipur : 2016-(335) ELT 297 (Tri.-Del.), CCE & ST Raipur v. P.D. Industries Pvt. Ltd : 2016 (340) ELT 249 (Tri.-Del.) and CCE & ST, Ludhiana v. Anand Founders & Engineers : 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.

12. In an identical matter this tribunal vide its order dated 04.04.2018 in Appeal No. E/50526-50527/2018 -SM titled as, Shree Consultants Pvt. Ltd. v. C.C.E. & S.T. Raipur 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:

"xxx xxx xxx

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 v. Union of India : 2014 (309) ELT 411 (All.) as also Tribunal's decision in the case of Raipur Forging Pvt. Ltd. v. CCE, Raipur-I : 2016 (335) ELT 297 (Tri.-Del.), CCE & ST, Raipur v. P.D. Industries Pvt. Ltd : 2016 (340) ELT 249 (Tri.-Del.) and CCE & ST, Ludhiana v. Anand Founders & Engineers : 2016 (331) ELT 340 (P&H). It stand held in all these judgments that the findings of clandestine removal cannot be upheld based upon the t

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hird 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 v. Comm. of C. Ex., CGST, Raipur & Excise Appeal No. E/50812/2018-Ex [SM] M/s. Vijay Chand Bothra v. 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 their being any corroborative evidence. 13. 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., v. CCE & ST Raipur vide common order dated 15.06.2018 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. 14. In view of the above discussions and findings, the appeals are allowed and the impugned order is set aside. As a result the penalty imposed on the Sh. Pawan Kumar Agarwal, Director is also set aside.
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