Custom, Excise & Service Tax Tribunal
Adithya Ferro Alloys (P) Ltd vs Commissioner Of Central Excise on 10 October, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI Appeal Nos.E/137-138, 142, 146/2009 [Arising out of Order-in-Appeal No.60/2008 dt. 30.11.2008 passed by the Commissioner of Customs & Central Excise (Appeals), Tiruchirappalli] 1. Adithya Ferro Alloys (P) Ltd. 2. C. Sukumaran 3. G Rangarajan 4. R. Saravana Sankar Appellant Versus Commissioner of Central Excise, Tiruchirapalli Respondent
Appeal No. E/565/2009
[Arising out of Order-in-Appeal No.81/2009 dt. 04.06.2009 passed by the Commissioner of Customs & Central Excise (Appeals), Tiruchirappalli]
Commissioner of Central Excise,
Adithya Ferro Alloys (P) Ltd. Respondent
Shri K. Natarajan, Advocate
For the Assessee
Shri B. Balamurugan, AC (AR)
Shri K.P. Muralidharan, AC (AR)
For the Revenue
Honble Ms. Sulekha Beevi C.S. Member (Judicial)
Honble Shri Madhu Mohan Damodhar, Member (Technical)
Date of hearing : 03.10.2017
Date of Pronouncement :10.10.2017
FINAL ORDER No. 42305-42309 / 2017
All these appeals emanating out of common order they are taken up for common disposal.
2.1 The facts of the case are that Aditya Ferro Alloys Pvt. Ltd., appellant in Appeal No.E/137/2009 (hereinafter referred to as assessee) are manufacturers of MS ingots, CTD bars and TMT bars. Shri C. Sukumaran is the Managing Director of the company. Based on intelligence that assessee is indulging in clandestine removal of their final products without payment of Central Excise Duty, their factory premises and office premises, residential premises of
Shri. G. Rangarajan, Manager of assessee and some of the dealers premises were searched by the departmental officers and various documents seized. As a follow-up, premises of certain other dealers and the premises of Mr.Koteeswaran, Ex-Sales Representative of assessee were also searched on 02.07.2005 resulting in recovery of various documents. The search conducted at the premises of
Mr. Koteeswaran, Ex-Sales Representative of assessee resulted in seizure of 53 Nos. of invoices of assessee, issued to AVA Steels, Peralam and Sri Vari Traders, Peralam. On perusal of the said invoices of assessee it was appeared that more than one invoice was issued under the same serial number. Further, on comparison of the invoices with the invoices of assessee seized from the factory premises of the company, it appeared that the clearances shown in the invoices seized from the premises of Mr. Koteeswaran were not accounted by assessee. Department took the view that the invoices seized from the premises of Mr. Koteeswaran are the parallel set of invoices of assessee used for clearing bars and rods without accounting and without payment of Central Excise duty, involving evasion of duty of Rs.16,18,197/-.
2.2 The search conducted at the premises of Annai Agencies, Mayiladuthurai who are a dealer in CTD Bars, resulted in seizure of two notebooks containing the details of purchases made by them during the period from April, 2004 to June, 2005. On perusal of the above two notebooks it appeared that the purchases made by Annai Agencies from assessee were recorded in the said notebooks under the caption AFA, Adithya, Rengarajan. On comparison of the purchase entries made in these notebooks of Annai Agencies with the invoices of assessee, it was noticed that assessee have cleared CTD Bars to Annai Agencies without accounting in their statutory records. The duty on the clearances made to Annai Agencies as noted in the notebooks worked out to Rs.11,55,697/-.
2.3 The search conducted at the residential premises of
Shri Rangarajan resulted in seizure of various invoices of Sri Vari Traders, Peralam. On perusal of the same, it appeared that more than one invoice was issued by Sri Vari Traders under same Serial Nos. On comparison of the details contained in the said invoices with the office copy of the invoices of Sri Vari Traders, it was noticed that the clearances noticed in the seized invoices were not accounted by Sri Vari Traders. Hence it appeared that the clearances under the invoices of Sri Vari Traders seized from the residence of Shri. Rangarajan were the unaccounted clearances of bars and rods by assessee. The duty on such clearances worked out to Rs.4,30,649/-.
2.4 Similarly, on verification of the documents recovered from
Shri Balaji Traders, Madurai it appeared that the said dealer maintained parallel set of invoices; that the documents found in Pages 43 to 52 of the made-up file recovered from the dealer pertain to unaccounted sale of bars and rods received from assessee.
2.5 Further one of the purchase invoice No.140 dated 28.06.2005 of Sri Vari Traders for purchase of bars and rods was not accounted in the books of Shri Balaji Traders. On comparison of the said invoice with the invoices recovered from Sri Vari Traders, it appeared that the above clearance to Shri Balaji Traders was not accounted by Sri Vari Traders. The duty on the unaccounted clearances of bars and rods of assessee by Balaji Traders worked out to Rs.1,62,751/-.
2.6 From enquiries conducted with VKN Hardwares, Tiruvarur, it appeared that assessee had cleared a quantity of 5.020 MT of CTD bars to the said dealer on 29.06.2005 but the same was not accounted by assessee in their books of accounts. The duty on the above clearance worked out to Rs.17,961/-. Similarly, from the documents recovered from the Driver of Universal Transport, Karaikal and from the Trip Sheets in respect of the Lorries PY028 5008 and PY028 0010 submitted by Ashok Transport Service, Karaikal, it appeared that assessee had cleared bars and rods without accounting and the duty on such unaccounted clearances worked out to Rs.6,00,345/-.
2.7 Accordingly, a show cause notice dt. 25.09.2006 followed by a corrigendum dt. 12.10.2006 was issued inter alia, to the assessee proposing demand of Central Excise duty totally amounting to Rs.39,85,598/- for the period July 2003 to June 2006 along with interest liability thereon and imposition of penalties under various provisions. Show cause notice also proposed imposition of penalties on Shri C.Sukumaran, Managing Director of assessee,
Shri G. Rangarajan Sales Manager of assessee and Shri R. Saravana Sankar, Proprietor of Sri Vari Traders. After due process of adjudication, original authority vide an order dt. 26.04.2007, inter alia held that the charges of procurement of raw materials by assessee and the charge of unaccounted manufacture of MS ingots were not proved, however confirmed the other proposals for demand of duty liability along with interest thereon. In the result, demand of duty of Rs.14,20,482/- was confirmed along with interest liability and equal penalty imposed under Section 11AC of the Central Excise Act, 1944. Penalties under Rule 26 of the Central Excise Rules 2002 were also imposed: Rs.1 lakh on Shri C.Sukumaran (appellant in Appeal No.E/138/2009); Rs.50,000/- on Shri G. Rangarajan (appellant in Appeal No.E/142/2009) and Rs.25,000/- on Shri Saravana Sankar (appellant in Appeal No.E/146/2009). In appeal, Commissioner (Appeals) vide impugned order dt. 30.11.2008 upheld the order of original authority and rejected the appeals, hence Appeal Nos.E/137/2009, E/138/2009, E/142/2009 & E/146/2009.
3. Department is also aggrieved by the non-confirmation of some of the proposals in the SCN and is therefore before us. Hence Appeal No. E/565/2009.
4.1 On 03.10.2017, when the matter came up for hearing, on behalf of assessee, as also appellants viz. S/Shri C.Sukumaran, G.Rangarajan and R. Saravana Saankar, Ld. Advocate Shri K. Natarajan made a number of oral and written submissions which can be broadly summarized as under :
(i) Departmental officers seized some invoices from premises of person namely Mr. Koteeswaran alleged to be ex-sales representative of the asssessee. Statement was also recorded from
Mr. Koteeswaran however no SCN was issued to the said Mr. Koteeswaran. Neither was he cross examined by the adjudicating authority.
(ii) Even assuming that Mr.Koteeswaran was an ex-employee of the company, he becomes an interested party having grudge and grievance against the company as he was removed from his immediate job for his misdeeds. Therefore statement of such interested person cannot be counted.
(iii) All the scrap dealers, witnesses, transport people had stated that the statements had been recorded under duress during cross examination. The copy of the statement recorded from Kotteswaran was not made available to the assessee while issuing the SCN.
(iv) They relied upon the ratio of the following case laws :
(1) CCE, Delhi Vs. Mayfair Industries
2016 (338) E.L.T. 594 (Tri. Del.)
(2) Balajee Structurals (India) Pvt. Ltd. Vs. CCE, Raipur
2016 (341) E.L.T. 457 (Tri. Del.)
(3) CCE, Chennai Vs. Indian Steel & Allied Products
2016 (344) E.L.T. 292 (Tri. – Chennai)
(4) CC & CE, Bhopal Vs. Ramadevi Steels Pvt. Ltd.
2017 (345) E.L.T. 128 (Tri. Del.)
(5) Commissioner Vs. Rawalwasia Ispat Udyog Ltd.
2017 (347) E.L.T. A126 (S.C.)
(6) Golden Steel Corporation Ltd. Vs. CCE, Kolkata
2017 (347) E.L.T. 570 (Tri. – Kolkata)
(7) Shree Nakoda Ispat Ltd. Vs. CCE, Raipur
2017 (348) E.L.T. 313 (Tri. Del.)
(8) Rama Spinners Pvt. Ltd. Vs. CC & CE, Hyderabad
2017 (348) E.L.T. 321 (Tri. Hyd.)
4.2 In respect of appeal filed by department in Appeal No.E/565/2009, Ld. Advocate submits that the adjudicating authority has dropped the demand of duty for purchase of unaccounted raw materials since the same was based only on statement of scrap dealers without any evidence to corroborate the version and which statements have been recorded in cross examination. In respect of departments grievance against dropping of demand on allegation of unaccounted manufacture of MS ingots and CTD bars, ld. Advocate submits that department has relied only on the statement of Chemist of the assessee who had stated that 7 MTs can be produced per day. However such allegation was not supported by any corroborative evidence for which reason the same was correctly established by the adjudicating authority and upheld by Commissioner (Appeals).
5. On the other hand, Ld. A.R Shri B. Balamurugan AC (AR) submits that in respect of appeal Nos. E/137/2009, E/138/2009, E/142/2009 & E/146/2009, the confirmation of demand and penalties has been done by adjudicating authority and upheld by Commissioner (Appeals) based on the evidences available. He submits that the statement of Mr. Koteeswaran was very much a part of the relied upon documents (RUD) which was supplied along with SCN. In respect of the department appeals, he reiterated the grounds of appeal.
6. Heard both sides and have gone through the facts of the case.
7.1 We first intend to take up the appeals No. E/137/2009, E/138/2009, E/142/2009 & E/146/2009, filed by assessee as well as
S/Shri C.Sukumaran, G. Rangarajan and R. Saravana Kumar Sankar.
7.2 The major grievance that has been voiced by the assessee right from the adjudication stage is that copy of the Statement of
Shri Koteeswaran was not supplied to them. Another contention is that the when the notice states that invoices recovered from the premises of Mr. Koteeswaran are parallel sets of invoices and relied upon the statement given by him has also been relied upon, however no notice was issued to Mr. Koteeswaran. Hence entire proceedings are vitiated. Assessee is also aggrieved that Mr.Koteeswaran was not cross examined by the adjudicating authority.
7.3 Coming to the contention of non-issue of notice to Koteeswaran, we find from the SCN that said Mr. Koteeswaran comes into the picture for the reason that a made up file containing certain documents was recovered from his premises. We find that 53 sets of invoices made by the assessee to AV Steels and Shri Sri Vari Traders were found; that serial numbers in the invoices were found repeated in many cases. It was also noticed that when these invoices were compared with the actual invoices of assessee, there were variations in quantity, date and party names. It also emerged that the duty mentioned in the said invoices was not paid. These parallel sets of invoices, they were found in Mr.Koteeswaran’s residence were of the period from 3.7.2003 to 02.04.2004. The SCN only gives narration of the recovery and seizure of these documents from the residence of the said Mr. Koteeswaran. However, there has been no role ascribed to Mr.Koteeswaran in the whole modus operandi. Neither is there any charge or allegation in the body of the SCN that he has aided or abetted in facilitating clandestine removals/unaccounted clearances by the assessee and consequent evasion of central excise duty. On the other hand, specific contraventions have been listed in respect of other noticees like S/Shri C.Sukumaran and Rangarajan that they were concerning themselves in the activities of clandestine production, removal and suppression of facts and in the case of
Shri Saranana Sankar, that he was concerned with purchasing and dealing with excisable goods which he knew or reason to believe are liable for confiscation under Central Excise law. When the department themselves did not find any infraction, abetment or implicatory role on the part of Mr.Koteeswaran, his non-inclusion as a noticee in the Show Cause Notice cannot be touted as a ground by the assessee to set aside the entire proceedings ab initio. The contention of the assessee on this point will therefore not succeed.
7.4 Coming to the contention that no copy of statement of Mr.Koteeswaran was supplied to the assessee, a perusal of the lists of relied upon documents in Annexures A, B, C & D to the SCN indicates otherwise. The SCN not only encloses the mahazar drawn at the residence of Mr.Koteeswaran on 1.7.2005, but also the statement recorded from Mr.Koteeswaran and the made up file recovered under mahazar from his residence. The claim of the assessee that statement of Mr.Koteeswaran was not received by them does not merit acceptance since in their response to the SCN vide letter dt. 18.1.2007 of the assessee, referred to in para-10 of the order of adjudicating authority, they have made reference to the claims made by Shri Koteeswaran in his statement dt. 2.7.2005. Evidently, such a contention would not be able to be made without having received a copy of statement of Mr. Koteeswaran.
7.5 Coming to the contention that Shri Koteeswaran was not cross-examined. Facts on record brings out that in their own letter dt. 8.1.2007, in response to SCN, assessee had inter alia requested for cross examination of 9 persons, however they had not sought such cross examination of Mr.Koteeswaran. It is also seen that in response to the said request, cross examination of the witnesses was permitted and done by the counsel for the assessee on 12.2.2007 of all the 9 persons as per the request of the assessee. This being so, the lower authorities cannot be faulted for not having cross examination of Mr. Koteeswaran.
7.6 We are therefore unable to agree with the contentions of the assessee in respect of non-issue of SCN to Koteeswaran or for that matter, their contention that statement of Mr.Koteeswaran was not provided or that his cross-examination was conducted.
7.7 Coming to the demand of differential Central Excise duty, it is seen that whereas the SCN had proposed total demand of Rs.39,85,598/- on various counts, each of these allegations have been analyzed in detail by the adjudicating authority. In fact, the adjudicating authority has taken note of the retraction of the earlier statements by various persons during the cross examination. After detailed analysis, the adjudicating authority has found that the charge of unaccounted procurement of raw material is not sustainable since they have been based only on the statement of scrap dealers, which have been retracted in cross examination, without any other evidence to corroborate such allegations. He has also very fairly found that the charge of unaccounted manufacture of MG ingots/CTD bars based on a sole statement of Chemist of the assessee that unit was capable of producing 7 MTs per hour, without any tangible documentary evidence, without any allegation of unaccounted production based on consumption of electricity etc. will render the said charge vague and unsustainable. We find that the adjudicating authority has been equally, analytical and incisive in his approach with respect to the other charges and allegations made in the SCN and only after proper application of mind, has he held that the remaining allegations involving duty liability of Rs.14,20,482/- are proved.
8. In the circumstances, we are not able to perceive any infirmity in upholding of those findings by the lower appellate authority in the impugned order. Considering the elaborate modus operandi of the assessee, with an intent to evade central excise duty and defraud the exchequer by deceit, suppression of fact etc., we find that the extended period of limitation is very much invokable in this case and accordingly, the demand of duty of Rs.14,20,482/- under Section 11A (2) of the Central Excise Act, 1944 will sustain. So also penalty imposed under Section 11AC of the Act read with Rule 25 of Central Excise Rules, 2002 will also sustain. Interest liability under Section 11AB of the Act is also upheld. In the result, Appeal No.E/137/2009 is dismissed.
9. Coming to Appeal Nos.E/138/2009, E/142/2009 & E/146/2009, the penalties under Rule 26 of the Central Excise Rules, 2002 namely of Rs.1 lakh imposed on Shri C.Sukumaran, Rs.50,000/- on Shri
G. Ranga rajan and Rs.25,000/- on Shri Saravana Sankar are very much in keeping with their role and their acts and omissions. We do not find any reason to modify the order or set aside those penalties, for which reason these appeals E/137/2008, E/138/2009, E/142/2009 & E/146/2009 are dismissed.
10. Coming to departmental appeal No.E/565/2009, for the reasons already spelt out in para (7.7) above, we do not find any merit in this appeal for which reason it is dismissed.
Appeals are disposed of in the above terms.
(Pronounced in court on 10.10.2017) (Madhu Mohan Damodhar) (Sulekha Beevi C.S) Member (Technical) Member (Judicial) gs 15 Appeal Nos.E/137-138,142,146/2009 E/565/2009