Decided on March 20,2015



D.N. Panda, Member (J) - (1.)EXCISE Duty demand of Rs. 25,17,024/ - arose on four counts in adjudication against the manufacturing company -appellant. Such demand of duty was followed by equal amount of penalty under section 11AC (hereinafter referred to as the Act.) of the said Act as well as levy of interest. The other appeal relates to imposition of penalty of Rs. 5,00,000/ - on the Director of the manufacturing company.
(2.)DURING visit by Central Excise officers on 04.10.2006 to the premises of M/s. N.R. Sponge Pvt. Ltd., who is the main appellant, following material facts and evidence surfaced: -
(i) The daily stock register was maintained by appellant company upto 30.09.2006. Investigating team asked the Director of the appellant -Company to furnish stock of the finished goods and inputs as on 04.10.2006 as per records. The position of stock so furnished revealed that finished goods of sponge iron 247.080 MT was as per record. But when physical verification of such goods was made and inventorised in panchnama dated 04.10.2006 that resulted with shortage of 2.580 MT of such goods. Therefore, investigation took custody of records and documents as detailed in the Annexure to the panchnama for further scrutiny.

(ii) Investigating team recovered certain loose sheets from factory which related to loading advices and gate passes showing removal of excisable goods. Such sheets were maintained by the appellant for the period from 28.09.2006 to 02.10.2006. On comparison of the entries contained therein with the Central Excise invoices, it was revealed that 562.130 MT of Sponge iron and 81.010 MT of Dolochar were removed by the appellant -Company without issue of invoice and without payment of duty.

(iii) Records listed at serial Nos. 3, 4, 6, 7, 8, 10, 11 & 12 of the Annexure -B to panchanama dated 04.10.2006 were examined by the investigating officers. Statement of the shift supervisor Shri Satyanarayan Kunthia recorded on 04.10.2006 revealed that either he or his colleagues had written the registers and 1 tonne of Iron Ore was resulting in manufacture giving rise to Sponge iron to the extent of 56%. They found the input and output ratio. Statement of Shri Adeh Dongare, another shift supervisor record on 17.04.2007 revealed consumption of raw material which was worked out on the basis of feed rate as well as dip of the bunker. Scrutiny revealed that the appellant -Company had suppressed production of 1580.950 MT of Sponge iron.

(iv) Scrutiny of the record mentioned at S. No. 22 of the Annexure to the panchnama dated 04.10.2006 which was pencil handwritten ledger revealed that the said ledger contained sale account of Sponge iron indicating the truck number and the payment receipt. When the entries therein were compared with Central Excise invoices issued by appellant -Company it came to the notice that in large number of cases entries in the ledger did not corroborate with Central Excise invoice. Accordingly, the ledger was photocopied and authenticated by the appellant -Company and were taken into custody by the team for scrutiny. Scrutiny thereof revealed that the appellant -manufacturer had removed 887.560 MT of Sponge iron without issue of Central Excise invoices and without payment of duty thereon.

(v) Statement dated 16.03.2007 of Shri Dhananjay Choundhary, Accountant/Cashier of the appellant -Company revealed that the ledger stated above was maintained by him and his subordinate. He also authenticated the photocopy of the ledger. He stated that the entries therein were correct and demonstrates evasion of duty. But he could not reveal whether the ledger in question maintained was with the knowledge Director Shri Sanjay Agrawal.

(vi) Statement dated 10.04.2007 of the Director Shri Sanjay Agrawal of the appellant -Company revealed that the ledger book pertained to the sale of the goods and entries therein were correct as and admitted to pay the duty on the goods which were cleared without invoices.

Search was conducted to the office/business premises of the transporter M/s. Purwanchal Road Carriers, Raipur, on 15.12.2005. Various bilty books were seized therefrom. Statement was recorded from Shri Rajendra Tiwari, an employee of the transporter company on 27.06.2007. He admitted that the consignment notes were prepared after unloading of the goods at the destination. After perusal of the disputed consignment notes he confirmed that the quantity of the goods mentioned therein have been transported from the consignor to the consignee resulting in removal of 69.180 MT of Sponge iron without issue of Central Excise invoice.

(3.)THE scrutiny of the bilty books recovered from the business premises of M/s. Giriraj Roadlines, Raipur on 20.12.2006 revealed that the appellant -Company had removed substantial quantities of Sponge iron without payment of duty. Statement of Shri Prabhakr Chapale, Proprietor of the transporter company recorded on 22.12.2006 revealed that the particulars appearing in the disputed consignment notes were correct and the goods were transported from consignor to the consignee through the consignment notes resulting in removal of 55.855 MT of Sponge iron without issue of Central Excise invoice.

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