Krishna Screen Art. vs Commissioner of Central Excise

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Akil Abdul Hamid Kureshi, J.—Leave to amend.

These appeals arise out of common judgement of Customs, Excise and Service Tax Appellate Tribunal (''the Tribunal'' for short).

We may refer to the facts and documents mentioned in Tax Appeal No. 1295 of 2014. In the amended form, the appellants have suggested following questions for our consideration:

"1. Whether confirmation of excise duty liability against the appellant firm without deciding whether the fabrics involved were processed on power operated machines is permissible in the facts of this case? In view thereof, whether the case is liable to be remitted back for deciding it afresh?

Whether or not the final order of the Appellate Tribunal on the appellants'' appeals is made in violation of principles of natural justice and therefore the case is liable to be remitted back to the Appellate Tribunal for deciding it afresh?

Whether confirmation of duty demand and imposition of penalties on the appellants are justified and sustainable in the facts of this case?

Whether confirmation of demand duty against M/s. Krishna Screen Art and fastening other liabilities of interest and penalties on appellants only on statements, but without any corroborative evidence supporting such statements, is permissible in law and in facts of this case?

Whether the Tribunal has committed a substantial error in confirming excise duty demand against Krishna Screen Art on the basis that all the fabrics (i.e. 30,58,906 meters) recorded in books and bills of Shri Govardhan Textile were processed by Krishna Screen Art on power operated machines though the fabrics were hand processed at Shri Govardhan Textile?"

Briefly, the controversy revolves around allegation of clandestine removal of goods by one M/s. Krishna Screen Art, a proprietary concern whose proprietor was one Mr. Rajen Ishwarlal Jariwala. The adjudicating authority after issuance of notice and adjudication thereof, confirmed the duty demand with interest and penalty upon which the assessees approached the Tribunal. The Tribunal, by the impugned judgement dated 23.04.2014, dismissed the appeals. Hence, the present proceedings.

Learned counsel Mr. Paresh Dave for the appellants vehemently contended that the Tribunal committed serious error in confirming the view of the Commissioner of the assessees'' having clandestinely removed the goods without payment of duty merely relying upon a so called confessional statement of Shri Rajen Jariwala which was not retracted. He pointed out that during the course of the investigation, the excise authority had recorded series of statements, four in all, of said Shri Rajen Jariwala. He had shortly after recording of the statement, retracted three of them. The Tribunal placed heavy reliance on the sole un-retracted statement dated 18.01.2005 in order to reject the appeals. He contended that this being the only piece of evidence, the Tribunal committed a serious error in confirming the order in original. He further submitted that there was no independent evidence of procurement of raw materials, consumption of electricity, source of purchasing raw material and sale of all the finished goods to the customers. On the contrary, whatever evidence available on record was against the department. He pointed out that alongwith the so called confessional statement of Mr. Rajen Jariwala dated 18.01.2005 there was a worksheet showing the details of samples cleared to various customers clandestinely. The department contacted only three of the customers, all of whom gave evidence in support of the assessee. Counsel placed heavy reliance on several decisions of this Court reference to which would be made at a later stage.

Having heard learned counsel for the appellants and having perused the documents on record and, in particular, the impugned judgement of the Tribunal, we are of the opinion that no substantial questions of law arise in these appeals. As would be clear from our reasons recorded hereinafter, the Tribunal has given its conclusion on the factual finding based on evidence on record. Such findings cannot be stated to be perverse. When the Tribunal is final fact finding authority, any interference in the factual conclusion of the Tribunal would be permissible only if it is demonstrated that such findings are perverse in sense that the same are not based on evidence on record or that irrelevant evidence is taken into account.

In the impugned judgement, the Tribunal noted that undisputedly Mr. Rajen Jariwala was the proprietor of M/s. Krishna Screen Art and M/s. Govardhan Textiles. He was also Karta of Rajenbhai Ishwarbhai Jariwala HUF. He also owned M/s. Sunira Traders and Textiles. Undisputedly, the packing and folding registers which were recovered from the site of M/s. Sunira Traders were maintained by the said firm and the panchnama was drawn for seizure of such documents witnessed by Mr. Rajen Jariwala. The Tribunal noted that the department had, in addition to recording four statements of Mr. Rajen Jariwala also recorded the statement of one Mr. Narendra Solanki in which he had stated that the packing and folding register which was recovered from the premises of M/s. Sunira Traders was maintained at the said place and which had two sections. The packing registers had some pages allotted for the work undertaken on behalf of M/s. Krishna Screen Art and the other part of the packing register was allotted to some other units. The Tribunal noted that:

"On perusal of the said packing register it transpires that the said packing register indicates job numbers and register serial number. On deeper perusal, we find that the said register indicates at specific pages which are allotted to Shri Krishna Screen Art; activity undertaken by them of cutting and folding of the processed fabrics, the entries thereto which have been culled out in the Annexure A to the show cause notice indicate that the said packing register specifically points out the activity undertaken by M/s. Sunira Traders for Shri Krishna Screen Print Art.

10.1 The statements of Shri Rajan Ishwar Jariwala and Shri Narendra Solanki indicated that the packing registers which were recovered from M/s. Sunira Traders were infact are co relatable for the activities. It is also noticed that the statements of Shri Rajan Ishwar Jariwala and more specifically statements dated 28.12.2004, 29.12.2004, 07.02.2005 and 08.02.2005 were recorded almost after three to four years from the date of first visit of the investigating officers.

During the entire recording of the statements on these dates, both Shri Rajan Ishwar Jariwala and Shri Narendra Solanki have admitted that the registers from which the duty liability has been worked out on Shri Krishna Screen Art was correct. We also find that the said entries in the packing register were sought to be disputed by the Ld. Counsel on the ground that only 10% of the entries match. We find no force in such an argument, as Shri Rajan Ishwar Jariwala who is the sole person who is aware of entire activity of Shri Krishna Screen Print Art, M/s. Shri Govardhan Textiles, M/s. Sunira Traders and M/s. Sunira Textiles, was in the knowledge of the entire activity and was the only beneficiary of the evaded duty, which was not paid on the mandate fabrics which were processed on machine in Shri Krishna Screen Print Art and cleared as hand processed material of M/s. Shri Govardhan Textiles."

The Tribunal further noted that though through affidavit, the three statements of Mr. Rajen Jariwala were sought to be retracted, there was nothing in these affidavits to suggest how such statements were recorded under duress. Independently of these affidavits the Tribunal noted that in any case, the statement dated 18.01.2005 was never retracted by Mr. Rajen Jariwala. In such statement, he had categorically stated that the goods processed in Shri Krishna Print Art and folded at M/s. Sunira Traders were cleared in the name of M/s. Shri Govardhan Textiles.

The Tribunal further dealt with the objections and contentions on behalf of the assessee''s on various issues including the absence of evidence of consumption of electricity for manufacturing such sizable quantity of the goods. In this respect, it was observed as under:

"As regards the argument made by the learned counsel to propose that there was no variation in electricity consumption to show such a huge manufacturing activity also needs to be discarded, as we find that the entire case is based upon the packing register maintained at the premises of M/s. Sunira Traders and accepted by the sole proprietor of the four units that the said register contains details of the processed fabrics received from Shri Krishna Screen Print Art; in view of such a categorical admission by the proprietor who is the sole beneficiary of nondischarge of duty, we find that it is not necessary to record any findings on various other submissions made by the Ld. Counsel for appellant."

It can thus be seen that the findings and conclusions of the Tribunal were based on evidence on record. Such evidence was not confined to a single statement of the proprietor. It is true that reliance was placed on such a statement which was not impermissible since the statement was never retracted. However, it would be incorrect to suggest that the conclusions of the Tribunal were based on a single factor namely unretracted statement of the proprietor. As noted, the Tribunal based its conclusion on several factors and evidences noted above.

We may now refer to the decisions cited by the counsel for the appellants.-

"1. In case of Commissioner of Central Excise Vs. Saakeen Alloys (P.) Ltd., the statements sought to be relied upon by the department was duly retracted. The Tribunal had ruled in favour of the assessee upon which the department had preferred appeal. Such appeal was dismissed confirming the view of the tribunal.

Likewise, in case of Suntrek Aluminum P. Ltd. Vs. Commissioner of Cus., C. Ex. and S.T., the confessional statement were retracted at the outset. The High Court also found that such statements were extracted by force and not voluntarily made. In view of such twin findings the appeal of the assessee was allowed.

In case of Commissioner of C. Ex., Cus. and Service TAX Vs. Vishwa Traders P. Ltd., the department was in appeal against the decision of the Tribunal holding that the findings were not perverse and therefore the High Court would not interfere. The Department''s appeal was dismissed. The judgement therefore does not lay down any ratio which could be applied in the present case.

In case of Commissioner of Central Excise Vs. Omkar Textile Mills Pvt. Ltd., once again the department was in appeal against the judgement of the Tribunal. Main evidence in support of the charge of the clandestine removal was the statement of the director. The High Court found that other than this so called confessional statement there was no other evidence. Such statement was also subsequently retracted. It was in this background the Court confirmed the view of the Tribunal dismissing the revenue''s appeal.

In 2014 (303) ELT page A82 in this case also the department was in appeal. High Court found that except the retracted statement of the Director, there was no other evidence on clandestine removal of the goods and therefore, confirmed the view of the Tribunal."

None of the decisions cited would cover the facts of the present cases.

All the appeals are, therefore, dismissed.